Chapter 2

Strategic Planning and the Marketing Process

Formal Planning

Many companies operate without formal plans, yet these plans can provide many benefits such as:
– – – – – Encouraging management to think ahead systematically. Forcing managers to clarify objectives and policies. Better coordination of company efforts. Clearer performance standards for control. Helping the company to anticipate and respond quickly to environmental changes and sudden developments.

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Strategic Planning

Strategic Planning is the Process of Developing and Maintaining a Strategic Fit Between the Organization’s Goals and Capabilities and Its Changing Marketing Opportunities.
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Steps in Strategic Planning (Fig. 2.1)
Corporate Level Business unit, product, and market level

Defining the Company Mission

Setting Company Objectives and Goals

Designing the Business Portfolio

Planning, marketing, and other functional Strategies

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Defining the Company’s Business and Mission
A Mission Statement is a Statement of the Organization’s Purpose.
Market Oriented Realistic Specific Fit Market Environment Distinctive Competencies
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Characteristics of a Good Mission Statement:

Motivating

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Setting Company Objectives and Goals
M is s io n S ta te m e n t M a r k e t in g O b je c t iv e # 1 M a r k e t in g S tra te g y M a r k e t in g S tra te g y M a r k e t in g O b je c t iv e # 2 M a r k e t in g S tra te g y
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M a r k e t in g O b je c t iv e # 3 M a r k e t in g S tra te g y M a r k e t in g S tra te g y
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Designing the Business Portfolio
• •

The business portfolio is the collection of businesses and products that make up the company. The company must:
– analyze its current business portfolio or Strategic Business Units (SBU’s) – decide which SBU’s should receive more, less, or no investment – develop growth strategies for adding new products or businesses to the portfolio
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Analyzing Current SBU’s:
Boston Consulting Group Approach
Relative Market Share Market Growth Rate
High High Stars
• High growth & share • Profit potential • May need heavy investment to grow

Low Question Marks
• High growth, low share • Build into Stars or phase out • Require cash to hold market share

Cash Cows

Dogs

• Low growth, high share • Low growth & share • Established, successful • Low profit potential SBU’s •Produce cash
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Low

Analyzing Current SBU’s:
GE’s Strategic Business-Planning Grid
Business Strength
Strong Average Weak

Industry Attractiveness

High

C

A
Medium

B

D

Low

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Problems With Matrix Approaches
Can be Difficult, Time-Consuming, & Costly to Implement

Difficult to Define SBU’s & Measure Market Share/ Growth

Focus on Current Businesses, But Not future Planning

Can Lead to Unwise Expansion or Diversification
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Developing Growth Strategies in the Age of Connectedness
Product/ Market Expansion Grid
Existing Products Existing Markets New Markets 1. Market Penetration 2. Market Development
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New Products 3. Product Development 4. Diversification

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Product/ Market Expansion Grid

Market Penetration: making more sales to current customers without changing its products.
– How? Add new stores in current market areas, improve advertising, prices, service or store design.

 Market Development: develop new markets for its current products.
 How? Identify new demographic or geographic markets. R. Glenn Richey
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Product/ Market Expansion Grid

Product Development: offering modified or new products to current markets.
– How? New styles, flavors, colors, or modified products.

Diversification: new products for new markets.
– How? Start up or buy new businesses.
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Discussion Connections

Beyond evaluating current business, designing the business portfolio involves finding future businesses and products the company should consider. Apply the product/ market expansion grid to assess how one of the following companies might grow:
– – – – Dell computer Kodak Levi-Strauss E*Trade online investment services

Assign each of the choices to a separate small group, have the group develop the answer, then discuss each approach in class. R. Glenn Richey 14

Planning Cross-Functional Strategies
Marketing’s Role in Strategic Planning

Guiding Philosophy

Inputs to Strategic Planners

Designs Strategies

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The Marketing Process (Fig. 2.5)
DemographicEconomic Environment
M An ark al eti ys ng is

Marketing Intermediaries

TechnologicalNatural Environment
g tin g ke in ar n M lan P

Product Target Consumers Promotion

Suppliers

Place
g tin k e ol ar tr M Co n

Price
M Im a r pl ket em i n en g ta tio n

Publics

PoliticalLegal Environment

Competitors
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SocialCultural Environment 16

Connecting With Customers

Market Segmentation: determining distinct groups of buyers (segments) with different needs, characteristics, or behavior. Market Targeting: evaluating each segment’s attractiveness and selecting one or more segments to enter.

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Connecting With Customers

Market Positioning: arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. i.e. Chevy Blazer is “like a rock.”

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Marketing Strategies for Competitive Advantage

Strategy a Company Adopts Depends on Its Industry Position

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Developing the Marketing Mix
Product
“Goods-and-service” combination that a company offers a target market Target Customers Intended Positioning Activities that persuade target customers to buy the product Company activities that make the product available
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Price

Amount of money that consumers have to pay to Obtain the product

Promotion

Place

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The 4 P’s & 4C’s of the Marketing Mix

4 P’s
– – – – Product Price Place Promotion

4 C’s
– – – – Customer Solution Customer Cost Convenience Communication

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Managing the Marketing Effort (Fig. 2.7)
Marketing Analysis of Company’s Situation

Marketing Planning Develop Strategic Plans Develop Marketing Plans

Marketing Implementation Carry Out The Plans

Contro l Measure Results Evaluate Results Take Corrective Action

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Contents of a Marketing Plan (Table 2.2)
Executive Summary Current Marketing Situation Threats and Opportunity Analysis Objectives and Issues Marketing Strategy Action Programs Budgets Controls Glenn Richey R.
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Marketing Implementation
Marketing Strategy
Decision Organizational and Structure Reward Action Programs Human Resources Climate and Culture

Implementation
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Marketing Department Organization
Functional Combination Plan

Ways to Carry Out Marketing Activities

Geographic

Market Management
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Product Management
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Marketing Control Process (Fig. 2.8)

Set Goals

Measure Performanc e

Evaluate Performanc e

Take Corrective Action

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Review of Concept Connections
• •

Explain companywide strategic planning and its four steps. Discuss how to design business portfolios and growth strategies. Explain functional planning strategies and asses marketing’s role in strategic planning. Describe the marketing process and the forces that influence it. List the marketing management functions, including the elements of a marketing plan.
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