Strategic Planning and the Marketing Process Chapter 2 Strategic Planning and the Marketing Process “If you do not know where you are going, any road will take you there!”

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.

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.

Steps in Strategic Planning (Fig. 2.1) Business unit, product, and market level Corporate Level Planning, marketing, and other fuctional Strategies Setting Company Objectives and Goals Defining the Company Mission Designing the Business Portfolio

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

Mission Statement – Dell Corporation Dell's mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of: Highest quality Leading technology Competitive pricing Individual and company accountability Best-in-class service and support Flexible customization capability Superior corporate citizenship Financial stability

Mission Statement – McDonald’s “To be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness and value, so that we make every customer in every restaurant smile. To achieve our mission, we are focused on three worldwide strategies: Be the best employer for our people in each community around the world. Deliver operational excellence to our customers in each of our restaurants. Achieve enduring profitable growth by expanding the brand and leveraging the strengths of the McDonald's system through innovation and technology. “

Mission Statements – Cont’d "To provide economy and quality minded travelers with a premier, moderate priced lodging facility which is consistently perceived as clean, comfortable, well-maintained, and attractive, staffed by friendly, attentive and efficient people" – Courtyard by Marriott “We at Four Seasons will be recognized as a national premier resort by providing a quality experience for our guests' property owners, and ourselves, through maximum service, value, and satisfaction while maintaining an economically sound business environment.” – Four Seasons

Setting Company Objectives and Goals

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

Analyzing Current SBU’s: Boston Consulting Group Approach Relative Market Share High Low Stars High growth & share Profit potential May need heavy investment to grow Question Marks High growth, low share Build into Stars or phase out Require cash to hold market share ? Market Growth Rate Low High Cash Cows Low growth, high share Established, successful SBU’s Produce cash Dogs Low growth & share Low profit potential

Problems With Matrix Approaches Can be Difficult, Time-Consuming, & Costly to Implement Difficult to Define SBU’s & Measure Market Share/ Growth Problems With Matrix Approaches Focus on Current Businesses, But Not future Planning Can Lead to Unwise Expansion or Diversification

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

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.

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.

Planning Cross-Functional Strategies Marketing’s Role in Strategic Planning Guiding Philosophy Inputs to Strategic Planners Designs Strategies

The Marketing Process (Fig. 2.5) Demographic- Economic Environment Technological- Natural Environment Marketing Intermediaries Target Consumers Product Place Price Promotion Implementation Marketing Planning Control Analysis Suppliers Publics Political- Legal Environment Social- Cultural Environment Competitors

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.

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.”

Developing the Marketing Mix Price Amount of money that consumers have to pay to Obtain the product 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 Promotion Company activities that make the product available Place

The 4 P’s & 4C’s of the Marketing Mix Product Price Place Promotion 4 C’s Customer Solution Customer Cost Convenience Communication

Managing the Marketing Effort (Fig. 2.7) Marketing Analysis of Company’s Situation Managing the Marketing Effort (Fig. 2.7) Control Marketing Planning Develop Strategic Plans Develop Marketing Implementation Carry Out The Plans Measure Results Evaluate Results Take Corrective Action

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

Review of Concept Connections Explain company-wide 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.