Strategic Planning and the Marketing Process Chapter 2 Strategic Planning and the Marketing Process

Chapter Objectives Distinguish between strategic planning and tactical planning. Explain how marketing plans differ at various levels in an organization. Identify the steps in the marketing planning process. Describe successful planning tools and techniques, including Porter’s Five Forces model, first and second mover strategies, SWOT analysis, and the strategic window. Identify the basic elements of a marketing strategy. Describe the environmental characteristics that influence strategy decisions. Describe the methods for marketing planning, including business portfolio analysis and the BCG matrix.

Why do Planning?

Why do Planning? To asses the company’s position [strengths and weaknesses], and the opportunities and threats it faces. To set goals, establish priorities, and develop strategies. To plan the deployment of resources needed to attain the goals selected. To give firm direction. To make sure the goals of all parties are aligned. To ensure that different functional areas have coordinated efforts. To outline potential alternative actions the firm can take. To project costs. To assess performance.

Marketing Planning: The Basics for Strategy and Tactics Planning: Process of anticipating future events and conditions and of determining the best way to achieve organizational goals Marketing planning: Implementing planning activities devoted to achieving marketing objectives

Strategic Planning versus Tactical Planning Strategic planning: Process of determining an organization’s primary objectives and adopting courses action that will achieve those objectives Tactical planning: Process that guides the implementation of activities specified in the strategic plan.

Strategic Planning versus Tactical Planning Top management Greater proportions of their time engaged in planning Usually focus their planning activities on long-range strategic issues Middle level managers Focus on operational planning; creating and implementing tactical plans Supervisors Developing the specific programs to meet goals in their areas of responsibility

Table 2.1: Planning at Different Managerial Levels

Steps in the Marketing Planning Process

Defining the Mission of the Organization Mission: the essential purpose that differentiates one company from others The mission statement specifies the organization’s overall goals and operational scope and provides general guidelines for future management actions “An effective mission statement should be brief enough to fit on a T-Shirt.” – Peter Drucker.

Determine Organizational Objectives An organization lays out its basic objectives, or goals, in its mission statement These objectives in turn guide development of supporting marketing objectives and plans Well-developed objectives should state specific, quantitative intentions along with deadlines for achieving them

Assessing Organizational Resources and Evaluating Environmental Risks and Opportunities This step involves a back-and-forth assessment of strengths, risks, and available opportunities.

Formulating, Implementing, and Monitoring a Marketing Strategy Marketing strategy: a firm’s overall program for selecting and satisfying a target market A marketing strategy is aimed at satisfying consumers in the selected target market through a careful balance of the elements of the marketing mix – each of which represents a subset of the overall marketing strategy

Successful Strategies: Tools and Techniques All planning strategies have the goal of creating a sustainable competitive advantage for a firm. An advantage where other companies cannot provide the same offering or value.

Porter’s Five Forces Model

First Mover and Second Mover Strategies First mover strategy: Theory advocating that the company that is first to offer a product in a marketplace will be the long-term market winner. Second mover strategy: Theory that advocates observing closely the innovations of first movers and then introducing new products that improve on the original offering to gain advantage in the marketplace.

SWOT is an acronym for strengths, weaknesses, opportunities, and threats A SWOT analysis is a method of studying organizational resources and capabilities to assess the firm’s strengths and weaknesses and scanning its environment to identify opportunities and threats Strengths reflect Core Competencies – what the company does well

SWOT Analysis

The Strategic Window A limited period with an optimal fit between the key requirements of a market and the particular competencies of a firm.

Elements of a Marketing Strategy Blending the four strategy elements of marketing decision-making to satisfy chosen target markets Product Price Distribution Promotion

Target Market Group of people toward whom the firm decides to direct its marketing efforts

Marketing Mix Variables Product Strategy What goods or services to offer Customer service Package design Brand names Trademarks Warranties Product Life Cycle Positioning New-product development

Figure 2.7 Quaker: Using the Product and the Promotional Strategies to Appeal to the Toastables market

Elements of the Champion Product Strategy

Marketing Mix Variables Distribution Strategy Planning that ensures that consumers find their products in the proper quantities at the right times and places. Physical Distribution Modes of transportation Warehousing Inventory control Order processing Marketing Channels Retailers Wholesalers

Marketing Mix Variables Promotional Strategy Blending together the various elements of promotion to communicate most effectively with the target market Informing, persuading, and influencing a consumer’s purchase decision. Main Elements Advertising Promotion IMC – Integrated Marketing Communications that ensure a unified and consistent message

Figure 2.8 Promoting the Healthful Benefits of Milk

Advertising As a Part of the Pepto-Bismol Promotional Strategy

Marketing Mix Variables Pricing Strategy Deals with the methods of setting profitable and justifiable prices Figure 2.9 Timex: Offering Customers Style and Durability- at a Lower price

The Marketing Environment –Marketing Concerns: Competitive Political – Legal Economic Technological Social – Cultural Rule of three [P.52] – The three strongest, most efficient companies dominate 70% to 90% of the market. Examples: Fast Food, Cereal, Running Shoes, Airlines, Pharmaceuticules.

Methods for Marketing Planning Business Portfolio Analysis – evaluate divisions/products to determine strengths and weaknesses Strategic Business Units (SBUs) are key business units within diversified firms A division, product line, or single product may define an SBU Firms redesign their SBUs as market conditions dictate

3M Tape Products: A 3M Strategic Business Unit

The Boston Consulting Group Matrix Market Share/ Market Growth Matrix: a marketing planning tool that classifies a firm’s SBU’s or products according to industry growth rates and market shares relative to competing products Stars Cash Cows Dogs Question Marks

Figure 2.10 BCG Market Share/Market Growth Matrix

Chapter 2 Appendix, Addendum Chapters 3, 22 The Marketing Plan

Organizational Planning Why are we in business? – Vision, Mission How do we do business? – Values, Climate, Culture Where are we now? – SWOTs, Competition, Constraints Where do we want to be? - Strategies How do we get there? – Tactics, Resources How do we know we’ve arrived? – Budgets, Controls, Reports, Milestones Addendum Chapter 22, P.672 Gap Analysis

The Marketing Plan Contains detailed descriptions of the resources and actions needed to achieve stated marketing objectives.

Why do a Marketing Plan? To obtain external/internal financing To provide direction for overall business and marketing strategies To support the development of long-term and short-term organizational objectives To guide employees in achieving these objectives To serve as a standard against which the company’s/unit’s progress can be measured and evaluated

Marketing Plan Project

Define the Organization’s Mission Mission – the essential purposes that differentiates us from other companies. Examples on PP.42,43

Marketing Objectives Objectives = Goals Set by target market[s], product categories in terms of sales, market share, profit, advertising/promotion objectives, customer loyalty, etc. Must be measurable Must have a time set for completion Examples: Chapter Two,P.43 and Addendum Chapter 3 P.76

Perform a Situation Analysis SWOT is an acronym for strengths, weaknesses, opportunities, and threats A SWOT analysis is a method of studying organizational resources and capabilities to assess the firm’s strengths and weaknesses and scanning its environment to identify opportunities and threats Strengths reflect Core Competencies – what the company does well

SWOT Analysis

Develop a Marketing Strategy Overall, a companywide program for selecting a particular target market and then satisfying consumers in that market through the marketing mix - product, distribution, promotion, and price. Compare to competitors Describe in terms of: market penetration, market development, product development, or diversification Describe products as: Star, Cash Cow, Question Mark, or Dog Describe in terms of: invest/grow, selectivity/earnings, or harvest/divest Describe in terms of: price leadership, product differentiation, product leadership, or following in price/product. Refer to Addendum Chapter 3, P.76

Tactical Plans Market Structure Competitive Analysis Target Markets/Customers Product/Services Offering New Products/Marketing Research Pricing Strategy & Tactics Promotional Plans – Advertising & Promotion Distribution Strategy Physical Distribution Marketing Channels Marketing Staff Marketing Budgets Sales Plan Supporting Documents

Monitoring Results Benchmarking Customer Satisfaction Research Marketing Cost Analysis Sales Analysis Marketing Audit Addendum Chapter 22, PP.679-689

Next Class January 31 Catch up on Chapters 5 and 8 Read Chapters 9 and 10