Lesson 2 Str ate gic Planning and Mar keting Plans

Lesson Objectives
1. Explain strategic planning and how it relates to the
organisation’s mission, objectives and goals

2. Identify and define methods for designing the 3. 4. 5.
business portfolio, developing growth strategies and planning functional strategies Outline the marketing process Introduce the components of the marketing plan Explain the ways in which marketing organisations control and evaluate their marketing performance

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Strategic Planning
   
Visions demand a strategy, strategy requires a plan Organizations that fail to plan, plan to fail Plans help you anticipate and respond quickly to changes The main purpose of strategic planning is to help firms understand how to compete for the future

The process of developing and maintaining a strategic fit between the organization's goals and capabilities in the light of changing marketing opportunities
Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Figure 3.2: Strategy Hierarchy
Corporate Level

Corporate Strategy • Mission and vision • Objectives • Business portfolio strategy • Resource development • Corporate values

Strategic Business Unit Level

SBU Strategy

Functiona l Level of SBU Marketing Strategy R&D Strategy •Marketing Technology objectives Product •Product/markets development strategies

SBU Strategy • Business definition • Objectives • Product market portfolio • Competitive strategy • Resource allocation and management

SBU Strategy

Production and operation strategy

Finance and administration strategy

Human resources strategy

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Corporate, Business, and Marketing Strategy

• Business portfolio • Capital investments and resource allocation • Corporate culture • Corporate structure

Corporate Strat

• Building cor competencies

• Product/ market portfolio

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Business Strateg

Hierarchy of Objectives
Company Objectives Business Unit Objectives Functional Objectives

3M
Adhesives

Production

Finance

Marketing

HR

R&D

Marketing Objectives

Product

Place

Promotion

Price

Promotion Objectives

Personal Selling

Advertising

Sales Promotion

PR

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Figure 3.4: Steps in Strategic Planning

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Step 1: The Mission Statement
  
A statement of the organisation’s purpose – what it wants to accomplish in the larger environment. market oriented (not short term like product and technological definitions). based on organisational core competencies

Yahoo!’s mission is to connect people to their passion, their communities and the world’s knowledge.

Our mission is to organize the world’s information and make it universal accessible and useful.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Marketing Myopia
Sustained growth depends on how broadly companies define their businesses and how carefully they gauge their customers’ needs. . . Thus, companies should stop defining themselves by what they produced (productoriented) and instead reorient themselves toward customer needs (customer-oriented) - Theodore Levitt, Marketing Myopia

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Table 3.1: Product and Market Oriented Business Definitions

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

DO NOT O

Do not off me a
Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Do not offe

The 5Ws of the Mission Statement
Five basic questions to be answered: • Why we are here? • What we do? • Who we serve? • What we believe? • What are our core competencies or competitive advantages?

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Setting Company Objectives and Goals
Company objectives must be/have:  Compatible with company resources  Measurable  Time frame  Ownership & accountability Marketing objectives must be compatible with company objectives.
Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Step 2: Corporate Objectives & Goals

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Source: Kotler et al. (2007)

Step 3: The Business Portfolio
 A business portfolio is the collection of 
businesses and products that make up the company Four basic questions to be answered: • Which SBUs need to be built? • Which SBU to be maintained? • Which SBU to be harvested? • Which SBU to be divested?
Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

a) Analyze the Current Business Portfolio

Most portfolio analyses evaluate the SBUs of a firm on two important dimensions: the attractiveness of the SBU’s market and the strength of the SBU’s position in the market. The best known portfolio-planning analysis methods and tools were developed by the Boston Consulting Group and by General Electric.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Figure 3.6: Boston Consulting Group Approach

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Figure 3.7: GE’s Strategic Business-Planning Grid
Business Strength
Strong Average Weak

Industry Attractiveness

High

C

A
Medium

B

D

Low

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

b) Shape the Future Business Portfolio

Determine the future role of each SBU and choose the appropriate resource allocation strategy:  Build  Maintain  Harvest  Divest Developing strategies for growth (product/market expansion grid) or downsizing business portfolio

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Figure 3.9: Product/Market Expansion Grid

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Developing Growth Strategies
1. 2. 3. 4.
Market Penetration: promoting the company growth by increasing sales of current products to current markets. Market Development: promoting growth by identifying and developing new segments. Product Development: promoting growth by offering modified or new products. Diversification: starting up or acquiring businesses outside the current products and markets.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Step 4: The Marketing Strategy
Demographic Economic Environment
M An ark al eti ys ng is

Marketing Channels

Technological Natural Environment
g tin g ke in ar n M lan P

Product

Suppliers

Place
g tin ke ol ar tr M Con

Target Price Consumers Promotion
Im M pl ark em e en ting ta ti o n

Publics

Political Legal Environment

Competitors

Social Cultural Environment

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

The Marketing Process
(1) Analyzing marketing opportunities (2) Segmenting the market (3) Targeting markets (4) Positioning products (5) Crafting the marketing mix (4Ps) (6) Implementing and managing the marketing effort

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Analysing Marketing Opportunities

Marketing opportunity is an area of buyer need and interest in which there is a high probability that a company can perform profitably by satisfying that need. Think of some companies who have identified marketing opportunities.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Sources of Marketing Opportunities
1. supplying something in short supply 2. supplying an existing product/service in a new/superior way 3. supplying a new product or service

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Targeted Marketing
 
To succeed in today’s competitive marketplace, companies must be consumer centred As there are too many consumers with too many needs, a company must divide up the total market, choose the best segments and design strategies for profitably serving chosen segments better than its competitors do This process involves four steps: demand measurement and forecasting, market segmentation, targeting and positioning (Lesson 4)
Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Target Consumers (2)

Demand Measurement and Forecasting A company needs to analyse, estimate and identify the current and future size of the market before entering the market. Demand can be forecasted by a variety of methods and scenario planning is an important part of this process. Market Segmentation Dividing a market into direct groups of buyers who might require separate products or marketing mixes; the process of classifying customers into groups with different needs, characteristics or behaviour.
Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Marketing Strategies for Competitive Advantage
Market Leader Market Challenger

STRATEGY A COMPANY ADOPTS DEPENDS ON ITS INDUSTRY POSITION

Market Nicher

Market Follower
Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Developing the Marketing Mix

 The marketing mix is the set of

controllable variables; product, price, place and promotion (4 Ps) that the company uses to meet the target markets needs and wants.  Organisations that include service components use the extended marketing mix (7Ps).
Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Marketing Mix at
P d ct ro u
A dvertising solutions based ads) B usiness S olutions m odels ) G oogle S tore

(S ellin

Price

 List price w A or ith dW $50 per day (advert tim individuals click es D iscounts at G oogle.

and allow a

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

P aym period ent relationship w ith

at cu

A Marketing Plan or a Business Plan?
  
The business plan incorporates the plans of all functions —production, R&D, finance, human resources, IT and marketing. The marketing plan has its focus on customer acquisition, retention and the resources required. It is the central document for directing and coordinating the marketing effort.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Figure 4.1: The Relationship Between Analysis, Planning, Implementation and Control

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Table 4.1: Contents of a Marketing Plan
Section I. Executive Summary and Table of Contents Description Brief overview of the proposed plan II. Current Marketing Situation Background data on the market, product, competition, distribution and macro environment III. SWOT and Issue Analysis Identify main: strengths, weaknesses, opportunities, threats facing the product line IV. Objectives V. Marketing Strategy VI. Action Programs Define financial objectives and marketing goals such as sales volume, market share and profit Present broad marketing approach that will be used to achieve the plan’s objectives Present special marketing programs designed to achieve the business objectives

VII. Projected Profit and Loss Forecast the plan’s expected financial outcomes Statement VIII. Controls Indicates how Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia the plan will be monitored

The Marketing Plan in Detail
Executive Summary

 

Aimed at senior management to enable them to grasp quickly the plan’s major thrust, its goals and recommendations The summary should be no more than one page long

Current Marketing Situation  Relevant background data on the target market, product, competition, distribution and the macro-environment SWOT and Issues Analysis  Opportunities and Threats  Strengths, Weaknesses and  Issues facing the product line
Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

The Marketing Plan in Detail
Objectives  Two types of objectives must be set: • Financial • Marketing Marketing Strategy  The marketing strategy is often presented in list form after the inclusion of a positioning strategy statement which typically includes: • Target Market • Product positioning • Product line • Price • Communication • Sales • Promotion

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

The Marketing Plan in Detail
Action Programs  Each marketing strategy element must now be elaborated to answer: • What will be done? • When will it be done? • Who will do it? • How much will be spent?

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

The Marketing Plan in Detail
Projected Profit-and-Loss Statement

   

Action plans allow the product manager to build a supporting budget. Shows the forecast sales volume in units and the average price. Costs include production, physical distribution and marketing broken down into finer categories. The difference between revenues and sales is the projected profit.
Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

The Marketing Plan in Detail
Controls  The goals and budget are spelled out for each month or quarter.  Senior management can review the results of each period and identify businesses that are not attaining their goals.  Managers of lagging businesses must explain what is happening and the actions they will take to improve plan fulfillment.  A contingency plan outlines the steps that management would take in response to specific adverse developments.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Evaluating the Marketing Plan (1)

How does your marketing plan measure up? Before implementing the marketing plan it can be useful to evaluate it by answering the following questions: 1. Do your marketing objectives relate directly to the

company’s strategic initiatives? 2. Do your marketing objectives relate directly to what you learned in your situational analysis? 3. Do your marketing objectives relate directly to the capacity of your current marketing mix to handle them? 4. Do your marketing objectives relate directly to your business’s strengths and to the opportunities available? 5. Do your marketing objectives relate directly to your business’s weaknesses and to the threats that endanger it?

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Evaluating the Marketing Plan (2)
6. Are your marketing objectives clear, measurable statements of what is 7. 8. 9. 10. 11.
to be achieved? Do your marketing objectives, strategies and tactics relate to each other? Does each strategy in your marketing plan contain a cost/benefit evaluation? Is every person involved in implementation included in the marketing planning process in some way? Is the plan clearly visible on your desk every day? Is your business’s vision truly a ‘shared vision’?

If you can answer all these questions positively you have a powerful marketing plan ready for implementation.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Implementing the Marketing Plan
  
To turn marketing strategies and plans into marketing actions in order to accomplish strategic marketing objectives. Implementation involves day-to-day, month-to-month activities that effectively put the marketing plan to work. Whereas marketing planning addresses the what and why of marketing activities, implementation addresses the who, where, when and how.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Reasons for Poor Implementation
 Isolated planning  Trade-offs between long and short-term   
objectives Natural resistance to change Lack of financial and marketing integration Overemphasis on the document

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Factors for Successful Implementation
    
 Action program that pulls all the people and activities together. Formal organisation structure. A company’s decision and reward systems (operating procedures that guide planning, budgeting, remuneration and other activities). Careful human resources planning. Marketing strategies must fit with its company culture.
Company culture is a system of values and beliefs shared by people in an organisation—the company’s collective identity and meaning.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Marketing Department Organisation

 Implementation is affected by the

structure of the organisation.  The most common form of marketing organisation is by job function.  Product management organisation or geographical organisation could be other approaches.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Figure 4.2: Functional Organisation
Marketing Director/Manager

Sales Manager

Advertising Manager

Marketing Research Manager

Customer Service Manager

New-Product Manager

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Figure 4.4: Product Management Organisation

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Controlling and Evaluating Performance

Marketing Control: The process of measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that marketing objectives are attained. Marketing Audit: A comprehensive, systematic and periodic examination of a company’s environment, objectives, strategies and activities to determine problem areas and opportunities and to recommend a plan of action to improve the company’s marketing performance.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Figure 4.5: The Control Process

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Step 1. Ask “Where Are We Now?”

 SWOT Analysis
 Strengths
Internal • Competencies? Sustainable Competitive Advantages? Unique Selling Points?

External

 Weakness  Opportunities  Threats
Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

 SWOT should result in information
about:

 Firm itself  Trends in industry  Competitors  Customers

 Need to translate into action plan
Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Step 2: Ask “Where Do We Want To Go?”
 Objectives:
 Make a profit  Develop the organization  Be socially useful Company objectives affect marketing objectives  Objectives must be compatible  Coy resources may limit opportunities
• Financial strength, marketing strength, production capability and flexibility
Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Step 3: Segment, Target, Position
 Market Segmentation
 Identify buyers 1) with common needs, and 2) will
respond similarly

 Targeting
 Select a segment and focus efforts and resources
on it

 Positioning
 How consumers see your product  Points of difference, company philosophy etc
Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Step 4: Develop Marketing Program

 Strategies for the 4Ps
 What product to offer?  At what price?  How to promote to consumers?  Where to place them for sale?  Estimate budgets

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Step 5: Implement & Control
 Implementation
    
Obtain resources Organize the team Develop schedules Working with other departments Executing plan

 Control

 Steer to stay to plan  Steps 4 & 5: Iterative process  May need update of 4P strategies
Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

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