Strategic Market

Planning:
Take the Big Picture

Chapter Two
 Chapter Objectives

 Explain business planning and its

three levels
 Describe the steps in strategic
planning
 Describe the steps in marketing
planning

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 Business Planning:
Compose the Big Picture
 Business Planning:
Ongoing process of making decisions
that guides the firm both in the short
term and for the long term
• Identifies/builds on firm’s strengths
• Helps managers make informed
decisions
• Develops objectives before action is
taken
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 Figure 2.1
Three Levels of Business Planning

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 Strategic Planning

 Managerial decision process that

matches firm’s resources and
capabilities to its market opportunities
for long-term growth and survival
• Top management defines firm’s
purpose and objectives
• Strategic business units (SBUs) are
common in large firms

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 Functional Planning

 Accomplished by various functional

areas of firm, such as marketing
 Typically includes:
• A broad three-to-five-year plan to
support the strategic plan
• A detailed annual plan

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 Operational Planning

 First-line managers focus on day-to-

day execution of functional plans
 Typically includes one or more of the
following:
• Detailed annual plans
• Semiannual plans
• Quarterly plans

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 All Business Planning
Is an Integrated Activity
 Strategic, functional, and operational
plans must work together to benefit the
whole firm
• Plans are guided by firm’s mission
 Planners at all levels must keep the
“big picture” in mind when planning

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 Strategic Planning:
Frame the Picture
 Very large multiproduct firms may have
divisions called strategic business
units (SBUs)
• SBUs operate like separate businesses
 Strategic planning is done at both the
corporate and SBU levels

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 Figure 2.2
Steps in Strategic Planning

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 Strategic Planning Step 1:
Define the Mission
 Key questions in determining the mission:
• What business are we in?
• What customers should we serve?
• How do we develop firm’s capabilities and
focus its efforts?
 Mission statement
• A formal document that describes the firm’s
overall purpose and what it hopes to achieve
in terms of its customers, products, and
resources

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 Step 2: Evaluate the Internal
and External Environments
 Situational analysis
• An assessment of a firm’s internal and
external environments
Internal environmental assessment:
identifies the firm’s strengths and
weaknesses
External environmental assessment:
identifies opportunities and threats

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 Internal Environment

 Controllable
elements
inside a firm
that influence
how well the
firm operates

Southwest Airlines’ employees reflect

 Name some the “Southwest Spirit” and are
considered a key strength of the firm.
examples
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 External Environment

 Elements outside the firm that may

affect it either positively or negatively.
 The external environment is global and
requires consideration of:
• Legal/political/ethical trends
• Economic trends
• Competitive trends
• Technological trends Visit
• Sociocultural trends Trendwatching.com
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 SWOT Analysis

 An analysis of an organization’s
strengths (S) and weaknesses (W) and
the opportunities (O) and threats (T) in
the external environment
 SWOT enables the firm to develop
strategies that maximize strengths and
capitalize upon opportunities

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 Table 2.2 Part A
Example of a Partial SWOT
Analysis for McDonald’s

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 Table 2.2 Part B
Example of a Partial SWOT
Analysis for McDonald’s

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 Step 3: Set Organizational
or SBU Objectives
 Organizational/SBU Objectives:
• What the firm hopes to accomplish with
long-range business plan
 Need to be specific, measurable,
attainable and sustainable
• May be financially focused, or focused
on other factors such as satisfaction

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 Step 4: Establish the Business
Portfolio
 Business portfolio:
• The group of different products or
brands owned by a firm and having
different income-generating and growth
capabilities
 Portfolio analysis
• Assesses the potential of a firm’s SBUs
• BCG growth-market share matrix
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 Figure 2-3
Boston Consulting Group (BCG) Matrix

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 Step 5: Develop Growth Strategies

 Product-market growth matrix:

• Characterizes different growth
strategies according to type of market
and type of product

Jeep’s product
development
strategy offers
different vehicles
for different needs
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 Figure 2-4
Product-Market Growth Matrix

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 Marketing Planning

 Step 1: Perform a situation analysis

• Builds on SWOT; identifies how
environmental trends affect the
marketing plan
 Step 2: Set marketing objectives
• Specific to the firm’s brands and other
marketing mix-related elements
• States what the marketing function
must accomplish if firm is to achieve its
overall business objectives
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 Marketing Planning: Step 3

 Develop marketing
strategies to achieve
marketing objectives
• Select target
market(s) where the
firm’s offerings are
best suited
• Develop marketing
mix strategies

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 Marketing Mix Strategies

 Product strategies:
• Include product design, packaging,
branding, support services, and
product variations and features
 Pricing strategies:
First
• Include setting prices for final Flavor
consumers, wholesalers, and Video
retailers based on costs, demand,
or competitors’ prices
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 Marketing Mix Strategies

 Promotion strategies:
• Advertising, sales
promotion, public
relations, direct
marketing, personal
selling
 Distribution (place)
strategies:
• How, when, and where
the product is available
to targeted customers
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 Step 4: Implement and Control
the Marketing Plan
 Control:
• Measuring actual performance,
comparing performance to the
objectives, making adjustments
 Marketing metrics:
• Return on marketing investment (ROMI)
 Action plans:
• Support plans that guide the execution
and control of marketing strategies at
the operational level
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 Metrics Moment

 ROMI is the revenue or

profit margin generated by
investment in a specific
marketing program
divided by the cost of that
program (expenditure) at a
given risk level, as
determined by
management

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 Table 2.4
Template for an Action Plan

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 Operational Planning:
Day-to-Day Execution of Plans
 At the operational level, plans focus on
the day-to-day execution of the
marketing plan
• Created by first-line managers
• Cover short time frames
• Marketing metrics gauge
success

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