Student Notes Pages Marketing

Chapter 2: Strategic Planning

Introduction

Marketing
• Planning reduces risk
Second SA edition
Charles W. Lamb, Jr. • Planning uncovers both:
Joseph F. Hair, Jr.
Carl McDaniel
– opportunities; and
Christo Boshoff – threats
Nic S. Terblanche
• A plan is a written document
Chapter 14: • Strategic marketing planning
Putting it all together: The Strategic – a long term fit between the firm’s resources
Marketing Plan and market opportunities

14-1 14-2

Examples of ….. The Strategic Marketing Planning

Process Business
Mission
Statement

Strategic Marketing
Objectives

• Poor strategic planning: Situation

or SWOT
Analysis
– Pepsi, McCarthy Retail, LeisureNet
Competitive
Advantage
• Successful strategic planning:
Marketing Strategy
– ABSA, SA Breweries Target Market
Strategy

Positioning Strategy

• Success depends on: Marketing Mix

– Anticipation and continuous monitoring Product Distribution

– Protecting the firm’s competitive advantage Promotion Price

14-3 Implementation, 14-4

Evaluation, Control

The Mission Statement Strategic Marketing Objectives

• What business are we in? • Broad, non-specific

• Determines resource allocation • For the whole firm
• Marketing Myopia • Objectives are hierarchical
• Karos Hotels:
– Individual and first class facilities
– Location and convenience
– Guest service of an excellent standard
– Value for money

14-5 14-6

© 1997 South-Western College Publishing

Student Notes Pages Marketing
Chapter 2: Strategic Planning

Situation Analysis Types of Competition

S Things the firm does well. Type Description

One Seller, Unique Product, No Competitors or

W
Monopoly Close Substitutes
Things the firm does not do well.
Large Number of Sellers, Products
Monopolistic Distinguishable, Sellers believe they have
Competition competition - including substitutes

O Conditions in the external environment

that favour the firm’s strengths. Oligopoly Few Sellers, High Barriers to Entry, Inelastic
Demand, Seek Non-price Advantage

Pure Many Buyers and Sellers, Identical Products,

T
Conditions in the external environment Full knowledge, Easy entry, Elastic Demand,
that do not relate to existing strengths Competition Focus on Lower Costs
and exposes areas of current weakness.
14-7 14-8

Reacting to the External Strategic Alternatives

Environment

Culture Response Style Present Product New Product

Search for and capitalise on emerging

Prospector opportunities
Market Product
Present Market
Responds (not pro-active) to external market if Penetration Development
Reactor forced to, maintains the status quo

Defends its turf, continually looking for

Defender opportunities to reduce operating costs
Market
New Market Diversification
Development
Defend stable market, aggressively enter
Analyser emerging opportunities as “second in”

14-9 14-10

Evaluating Opportunities: BCG Portfolio Matrix

The BCG Matrix
Star

Question mark
• Four quadrants: High
Market Growth Rate

–Stars: market leader, growing market,

profitable but needs resources
–Cash cows: dominate in slow growth 10%
market
Cash Cow Dog
–Dogs: small market share in low growth
market Low
–Problem children (?): rapidly growing
market but little profit, needs a lot of
resources 10x 1x 0.1x
High Low
14-11 Market Share Dominance 14-12

© 1997 South-Western College Publishing

Student Notes Pages Marketing
Chapter 2: Strategic Planning

Strategic Options for Using the Strategic Options: Portfolio Matrix

Portfolio Matrix (cont)
• Stars: Build market share (“out market” them)
using the 4Ps
– lower prices, expanded distribution, increased ad spend, new
product features/improvements
• Build - Stars • Cash cows: Maintain market share (don’t rock the
boat )
• Hold- Problem Children – No changes to the 4 Ps, use cash to fund Stars and promising
Questions Marks to turn them into Cash Cows
• Harvest – Cash Cows • Question Marks – maintain cash flow by either:
• Divest- Dogs – reducing expenditure gradually (R&D, replacements) but faster
than declining sales; or
– improving marketing (see Stars above)
• Dogs - disinvest

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GE Matrix The Marketing Strategy

High
• Competitive advantage is the cornerstone
Market Attractiveness

• The target market

• Positioning strategy
Medium
• Marketing strategy objectives (see next
slide)
• The marketing strategy
– Product strategy: Chapters 8 and 9
Low – Distribution strategy: Chapter 10
– Promotional strategy: Chapter 11 and 12
– Pricing Strategy: Chapter 13
Strong Medium Weak
Business Position 14-15 14-16

Criteria for Marketing Objectives Effective Strategic Marketing

Planning

Marketing Objectives Must Be:

• must be based on accurate information
• must be in writing
Realistic
• must be flexible
Measurable • is an ongoing process
• is based on creativity
For a Defined Period of Time • must have top management’s support

Consistent with the Firm’s Objectives

14-17 14-18

© 1997 South-Western College Publishing