Strategic Planning and the Marketing Management Process Chapter One Strategic Planning and the Marketing Management Process Marketing concept, Customer needs, The American Marketing Association, © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. McGraw-Hill/Irwin Marketing Management, 8e

The Marketing Concept An organization should seek to make a profit by serving the needs of customers The purpose of the marketing concept is to rivet (Fix) the attention of marketing managers on serving broad classes of customer needs The principal task of the marketing function operating under the marketing concept is to find effective and efficient means of making the business do what suits the interests of customers

What is Marketing? “The process of planning and executing conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals.” - The American Marketing Association

What is Strategic Planning? The objectives and strategies established at the top level provide the context for planning in each of the divisions and departments by divisional and departmental managers

Major Types of Marketing Description Product Marketing designed to create exchange for tangible products Service Marketing designed to create exchanges for intangible products Person Marketing designed to create favorable actions toward persons Place Marketing designed to attract people to places Cause Marketing designed to create support for ideas, causes, or issues or to get people to change undesirable behaviors Organization Marketing designed to attract donors, members, participants, or volunteers

Strategic Planning and Marketing Management Includes all activities that lead to the development of a clear organizational mission, objectives, and appropriate strategies Plays a key role in achieving an equilibrium by balancing acceptable financial performance Prepares for inevitable changes in markets, technology, and competition, as well as in economic and political arenas

The Strategic Planning Process Mission statement In developing a mission statement, management must take into account three key elements The organization’s history The organization’s distinctive competitiveness The organization’s environment Mission statement should be Achievable Motivational Specific

Missions vs. Strategic Visions A strategic vision concerns a firm’s future business path -- “where we are going” Markets to be pursued Future technology-product-customer focus Kind of company that management is trying to create A mission statement focuses on current business activities -- “who we are and what we do” Current product and service offerings Customer needs being served Technological and business capabilities

Vision Statement We want to sell a variety of products on a daily basis to every living person on the earth. PepsiCo.

Vision Statement To be the world leader in transportation products and services. General Motors Corp. Source: 1993 Annual Report

Absolutely, positively overnight! Vision Statement Absolutely, positively overnight! Federal Express

Vision Statement A computer on every desk and in every home. Microsoft

Whirlpool Mission Statement To shape and lead the major home appliance industry globally, becoming one of the world’s great companies while creating value for shareholders, employees, customers, suppliers, government leaders and communities.

The Strategic Planning Process

The Strategic Planning Process Create discrete (Distinct) objectives The end-points of an organization’s mission are what it seeks through on-going, long-run operations Organizational strategy Involves the choice of major directions the organization will take in pursuing its objectives.

The Strategic Planning Process Create marketing strategy Organizational growth strategies

The Strategic Planning Process Organizational growth based on products and markets Four paths organizations take in order to grow Market penetration strategies Market development strategies Product development strategies Diversification Organizational strategies based on competitive advantage Competitive advantage is an ability to outperform competitors in providing something that the market values Porter suggests strategies based on cost leadership or a strategy based on differentiation &Focus

The Strategic Planning Process Organizational strategies based on value “Customer value” has become critical for marketers as well as customers To succeed firms must seek to build long-term relationships with their customers by offering unique value

The Strategic Planning Process Choosing an appropriate strategy Management should select those strategies consistent with its mission and capitalize on the organization’s distinctive competencies A sustainable competitive advantage can be based on either the assets or skills of the organization The key to sustaining a competitive advantage is to continually focus and build on the assets and skills that will lead to long-term performance gains

The Strategic Planning Process Organizational portfolio plan Organizations at a particular time are a portfolio of businesses that is, product lines, divisions, schools Management must decide which businesses to build, maintain, or eliminate, or which new businesses to add Organizations can create strategic business units (SBU) which could be a single product, product line, or division

The Marketing Management Process The Marketing Management Process can be defined as “the process of planning and executing the conception, pricing, promotion, and distribution of goods, services, and ideas to create exchanges with target groups that satisfy customer and organizational objectives.”

The Marketing Management Process Strategic planning and marketing planning

The Marketing Management Process Situation analysis The cooperative environment The competitive environment The economic environment The social environment The political environment The legal environment

The Marketing Management Process Marketing planning Establishing marketing objectives Selecting target market Developing marketing mix

The Marketing Management Process Implementation and control of marketing plan Implementing the marketing plan involves putting the plan into action and performing marketing tasks according to the predefined schedule. Controlling the marketing plan involves three basic steps The results of the implemented marketing plan are measured These results are compared with objectives Decisions are made on whether the plan is achieving objectives.

The Marketing Management Process Marketing information systems and marketing research Throughout the marketing management process, current, reliable, and valid information is needed to make effective marketing decisions

The Marketing Management Process Strategic planning is a top-management responsibility All strategic planning has marketing implications Marketing objectives and strategies must be derived from the strategic plan Planning done in all functional areas of the organization should be derived from strategic plan

The Marketing Management Process Marketing’s role in cross functional strategic plan

Corporate Strategy Portfolio Analysis BCG (Boston Consulting Group) Matrix Product life cycle and funding decisions Question marks Stars Cash cows Dogs

BCG Matrix

GE Business Screen Long-term industry attractiveness Business strength/competitive position

The Market Attractiveness-Business Position Matrix High Medium Low Invest/ Grow Selective Investment Harvest/ Divest Figure 7.5

Industry attractiveness at Market size Market growth Profitability Cyclicality Ability to recover from inflation World scope

Business strength at Business strength Market position Domestic market share World market share Share growth Share compared with leading competitor Competitive strengths Quality leadership Technology Marketing Relative profitability