STRATEGIC MARKET PLANNING Marketing 360 Brian Gillespie

Value  Value (from Customer’s Perspective)  Sum of benefits we receive from a product  Value (from Seller’s Perspective)  Profits…but also, prestige, pride, making community happy  Lifetime value of a customer How much is this customer worth to us in the long-term? Long-term thinking  develop relationships with customers  Value (to Shareholders)  Created when company has competitive advantage over rivals  Distinctive competency (company’s superior capability)  Differential benefit (unique benefit of product)  Value (to Society)  What is the impact of product/service on society?

The Marketing Mix Marketing Mix Price Strategies (what will we charge?) Promotion Strategies (how will we inform and encourage customers to buy our product?) Place Strategies (where will we deliver product/service?) Product Strategies (what will we produce and for whom?)

Why Study Marketing?  Plays an Important Role in Society  Promotes efficient transfer of desired products to meet needs  Can be used to promote worthwhile social causes  Fundamental to the Success of Businesses  Assessing needs, designing products, pricing product, promoting products, distribution strategies, servicing customer  Great Career Opportunities  Roughly 25-33% of people perform marketing related activities  Marketing Affects You Everyday  Become a wiser consumer

The Dark Side of Marketing  Illegal practices like “bait and switch”  Societal health problems  Diabetes, heart disease, cancer, alcoholism, domestic violence  Psychological Costs  Many ads encourage us to feel bad about ourselves  Financial Burdens  Consumer debt  Environmental degradation and resource depletion

Ethics in Strategic Market Planning  Unethical business decisions impact all stakeholders  Job loss  Environmental effects  Most times unethical decisions do not go unnoticed  Enron  Martha Stewart  Sub-prime mortgage meltdown

Preventing Unethical Activities  Business ethics  Underlying values and philosophies that dictate actions in an organization  The ethical culture of an organization  Code of ethics  Written standards of behavior to which everyone in the organization must subscribe

Three Levels of Business Planning  Strategic Planning  Managerial decision process matching an organization’s resources and capabilities to its market opportunities for long-term growth  Functional (Marketing) Planning  Decision process that develops detailed short-term strategies that support an organization’s strategic plans  Operational Planning  Decision process that develops detailed day-to-day strategies that carry out an organizations functional plans

Strategic Planning  Five steps to strategic planning  Step 1: define the mission  Step 2: situational analysis  Step 3: set organizational or strategic business unit objectives  Step 4: establish the business portfolio  Step 5: develop growth strategies

Step 1: Define the Mission  Mission Statement  Formal statement in an organization’s strategic plan that describes overall purpose of the organization and what it plans to achieve in terms of customers, products, resources  Too narrow = marketing myopia  Too broad = no direction  Could have one for each Strategic Business Unit (SBU) Individual units in the firm that operate like separate businesses, each with its own mission, objectives, resources, managers, & competitors

Mission Statements  Washington State University  As a public, land-grant and research institution of distinction, Washington State University enhances the intellectual, creative, and practical abilities of the individuals, institutions, and communities that we serve by fostering learning, inquiry, and engagement.  Starbucks  Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow.

Creating a Mission Statement  In groups, pretend you are opening a new chain of Mexican – Chinese fusion restaurants in the Pacific Northwest  Create a mission statement for your new concept restaurant

Step 2: Situational analysis  Internal Environment  Controllable elements in organization  People, corporate culture, facilities, processes  External Environment  Uncontrollable elements outside organization that may affect performance  Both positive and negative

SWOT Analysis  Internal analysis  Strengths  Weaknesses  External analysis  Opportunities  Threats  What would a SWOT analysis for The Coug look like?

Step 3: Set Organizational or SBU Objectives  Objectives flow from the mission statement  Organization size typically determines whether or not SBUs exist, and if they have their own objectives  Effective objectives are  Realistic, specific, measurable, and well-matched with mission statement  Example  Ok: Our objective is to better serve customers  Better: Our objective is to obtain customer satisfaction ratings of at least 90% in 2011, and retain at least 85% of our 2010 customers as repeat customers in 2011

Step 4: Establish the Business Portfolio  Portfolio  Collection of brands or units owned by organization that have different income generating potential  Portfolio Analysis  Evaluating an organization’s business mix and assessing the potential of an organization’s SBUs

BCG Growth-Market Share Matrix 17 Product is dominant in category Product is a miss

Step 5: Develop Growth Strategies  BCG matrix does not address how to grow SBUs, but the Product-Market Growth Matrix does  Market penetration strategies  Designed to increase sales of existing products to current customers, nonusers, and users of competitors  Market development strategies  Strategies that introduce existing products into new markets  Product Development Strategies  Strategies that focus on selling new product to existing markets  Diversification Strategies  Strategies that emphasize both new products and new markets

Product-Market Growth Model Market penetration Market penetration Seek to increase sales of existing products to existing markets Examples ??? Product development Product development Create growth by selling new product in existing markets Examples ??? Market development Market development Introduce existing products to new markets Examples ??? Diversification strategies Diversification strategies Emphasize both new products and new markets to achieve growth Examples ??? New market (customers) =No New product =NoNew product =Yes New market (customers) =Yes

Which Quadrant of the Product- Market Growth Matrix is This?

Functional (Marketing) Planning  Decision process that develops detailed short-term strategies that support an organization’s strategic plans  Step 1: perform a situational analysis  Step 2: set marketing objectives  Step 3: develop marketing strategies  Step 4: implement and control the marketing plan

Step 3: Develop Marketing Strategies  Select a Target Market  Market opportunity analysis – size and sales potential of target group, and assessment of key competitors  Develop Marketing Mix Strategies  Product, Price, Promotion, Place of Distribution

Step 4: Implement and Control the Marketing Plan  Action Plans  Implementation of marketing strategies  Responsibilities, Time Line, Budget, Measurement and Control  Control  Monitoring progress  Compare actual performance to marketing objectives and adjust strategy/objectives as needed  Must have good marketing metrics  Marketing audits  Evaluation of objectives, strategies, structure, performance of marketing organization  Should be comprehensive, systematic, independent, periodic