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Dr Zain Yousafzai Strategic Marketing Planning Chapter 20 (page 556-581) Strategic Marketing planning Planning as Part of Management The management process, as applied to marketing, consists of following: The planning stage includes. Setting goals Developing both strategies and tactics to reach these goals The implementation stage entails. Designing and staffing the marketing organization and then directing the actual operation of the organization according to the plan The evaluation stage consists ofAnalyzing past performance in relation to organizational goals The Nature of Planning Planning is very important before the decisions. Planning is deciding now what to do later, including how and when to do it. Without a plan, we cannot get any thing done effectively, because we do not know what needs to be done or how to do it. Management should first decide what it intends to accomplish as a total organization and develop a strategic plan to achieve these results. Essential Planning Concepts Mission: An organization’s mission states what customers it serves, what needs it satisfies, and what types of products it offers. A mission statement indicates, in general terms, the boundaries for an organization’s activities. Objectives and Goals: (Differences between objectives and goals) Goals are the overall achievements of objectives. An objective is simply a desired outcome. Effective planning must begin with a set of objectives that are to be achieved by carrying out plans. Objective should be: Clear and specific Stated in writing Ambitious, but realistic Consistent with one another Quantitatively measurable when possible Tied to a particular time period Strategies and Tactics: A strategy is a broad plan of action by which an organization intends to reach its objectives and, in turn, to fulfill its mission. A tactics is a means by which a strategy is implemented. Tactic is a more specific, detailed course of action than a strategy. Tactics generally cover shorter periods than strategies. Key Questions for an Organization: The concepts of mission, objectives, strategies, and tactics raise important questions that must be answered by an organization seeking success in business or, more specifically, in marketing. Scope of Planning Planning may cover long or short periods. Long range planning deals with company wide issues such as expanding or contracting production, markets, and product lines. Long range planning typically covers three years or five years or less and responsibility of top-level management. Short range planning typically covers one year or less and is the responsibility of middle and lower level managers. Marketing (Fourteenth Edition) Etzel, Walker, Stanton. 1 Dr Zain Yousafzai Strategic Marketing Planning Chapter 20 (page 556-581) Strategic Company Planning Strategic company planning consists of four essential steps. 1. Define the organizational mission: The firs step influences subsequent planning. For some firms. All that needs to be done is to review the existing mission statement and confirm that it is still suitable. However, this straightforward step is too often ignored. 2. Analyze the situation: A situation analysis consists of gathering and studying information pertaining to one or more specified aspects of and organization. 3. Set organizational Objective: The third step in strategic company planning, deciding on a set of objectives, guiding the organization in fulfilling its mission. Objectives also provide standards for evaluating performance. 4. Select strategies to achieve these objectives: The fourth steps, selecting appropriate strategies, indicate how the firm is going to get there. Organizational strategies represent broad plans of action by which an enterprise intends to fulfill its mission and achieve its goals. Strategic Marketing Planning Strategic marketing planning is a five-step process: 1. Situation Analysis The first steps, situation analysis, involves analyzing where the company’s marketing program has been how it has been doing, and what it is likely to face in the years ahead. The results of this activity enable management to determine if it is necessary to revise the old plans or devise new ones to achieve the company’s objectives. Situation analysis normally covers external environmental forces and internal nonmarketing resources. A situation analysis is critical, but it can be costly, time consuming, and frustrating. 2. Marketing Objectives The next step in the strategic marketing planning is to determine marketing objectives. Marketing goals should be closely related to company wide goals and strategies. In fact, a company strategy often translates into a marketing goal. Strategic planning involves matching an organization’s resources with its market opportunities. Each marketing objective should be assigned a priority based on its urgency and its potential impact on an area of focus and in turn, the organization. The resources should be allocated in line with these priorities. 3. Positioning and Differential Advantage The third step in strategic marketing planning actually entails two complementary decisions: how to position a product in the market place and how to distinguish it from competitors. Positioning referring to a product’s image in relation to competing products as well as other products marketed by the same company. Differential advantage refers to any feature of an organization or brand perceived by customers to be desirable and different from those of the competition. The concepts of differential advantage and differential disadvantage apply to both goods and services and, in areas such as retailing, to entire firms. 4. Target Markets and Market Demand Selecting target markets is the fourth step in marketing planning. A market consists of people or organizations with needs to satisfy, money to spend, and the willingness to spend it. A target market refers to a group of people or organizations at which a firm directs a marketing program. To choose one or more target market, a firm must forecast demand in market segments that appear promising. Marketing (Fourteenth Edition) Etzel, Walker, Stanton. 2 Dr Zain Yousafzai Strategic Marketing Planning Chapter 20 (page 556-581) 5. Marketing Mix For each market, management must design a marketing mix, which is the combination of multiple aspects of four elements. 1. A product, 2. How it is distributed, 3. Promoted, 4. In addition, its price. These four elements are intended to the target markets and to achieve the organizations marketing objectives. Each marketing mix element contains numerous options. Further, decisions regarding one element affect the others. Marketers need to consider these options and relationships when designing a marketing mix for a particular target market. Annual Marketing Planning An annual marketing plan is the blueprint for a year is marketing activity for a specified organizational division or major product. Purposes and Responsibilities An annual marketing plan serves several purposes: It summarizes the marketing strategies and tactics that will be used to achieve specified objectives in the upcoming year. Thus it becomes the “how to do it” guide for executives and other employees involved in marketing. The plan also points to what needs to be done with respect to the other steps in the management process implementation and evaluation of the marketing program. The plan should outline who is responsible for which activities, when they are to be carried out, and how much time and money can be spent. Recommended Contents Annual planning has a shorter period and is more specific with respect to the plans laid. In an annual plan, more attention is devoted to tactical details than in other levels of planning. As an example, strategic marketing planning might stress personal selling within the marketing mix. If so, the annual plan might recommend increased college recruiting as a source of additional sales people. Selected Planning Models Models have been designed to assist with strategic planning. Most of these models can be used with both strategic company planning and strategic marketing planning. We briefly discuss several planning models that have received ample attention. Strategic Business Units More effective planning and operations, a multidivisional or multi product organization should be divided according to its major markets or products. Each such entity is called a strategic business unit (SUB). Each SBU may be a major division in an organization, a group of related product, or even a single major product or brand. To make planning more effective, a large, diverse organization may divide itself into smaller planning units called Strategic Business Units The unit should: Be a separately identifiable business Have a distinct mission Marketing (Fourteenth Edition) Etzel, Walker, Stanton. 3 Dr Zain Yousafzai Strategic Marketing Planning Chapter 20 (page 556-581) Have separate competitors Have a separate group of executives charged with profit responsibility Have its own strategic plan Product Market Growth Matrix There are four fundamental product market growth strategies 1. Market penetration: A company tries to sell more of its present products to its present markets. Supporting tactics might include greater spending on advertising or personal selling. 2. Marketing development: A firm continues to sell its present products, but to a new market. Firms that depend to a large degree on just a few customers often engage in market development to spread their risk. 3. Product Development: An organization develops new products to sell too its existing markets. Such moves are intended to better satisfy, and generate more revenues from existing customers. 4. Diversification: A company new develops new products to sell to new markets. As market, conditions change over time. A company may shift product market growth strategies. BCG Matrix (Boston Consulting Group) A model developed by a management-consulting firm, the Boston Consulting Group. The BCG matrix dates back over years. Using this model, an organization classified each of its SBUs according to two factors. Its market share relative to competitors and the growth rate of the industry in which the SBU operates. According to two factors its market share relative to competitors and the growth rate of the industry in which the SBU operates. When the factors are divided simply into high and low categories, a 2x2 grid is created. Stars: High market shares and high industry growth rates typically of SBUs or major products Cash cows (Sources of income) These SBU’s have high market share and low growth Question marks: SBUs characterized by low market shares but high industry growth rates fit in this category. Dogs: These SBUs have low market shares operate in industries with low growth rates. GE Business Screen GE Business screen appears to be very similar to the BCG matrix. This planning model, developed by General Electric with the assistance of the McKinsey consulting firm, also involves two factors and result a grid. Management can use the GE business screen to classify SBUs or major produces based on two factors such as 1. “Market attractiveness” 2. “Business position.” Invest Strategy Protect Strategy Harvest Strategy Divest Strategy Marketing (Fourteenth Edition) Etzel, Walker, Stanton. 4 Dr Zain Yousafzai Strategic Marketing Planning Chapter 20 (page 556-581) Assessment of the Planning Models These planning models have been praised and criticized. The models for helpful planning aids are ongoing. Two consultants urged firms to develop their organizational strategies in terms of value disciplines. According to these models, a firm must increase the value offered to customers by cutting prices, Improving products, Or enhancing service. The three value disciplines of the models 1. Operational excellence, 2. Product leadership, 3. Or customer intimacy Marketing (Fourteenth Edition) Etzel, Walker, Stanton. 5