Copyright © 2011 The McGraw-Hill Companies All Rights ReservedMcGraw-Hill/Irwin Chapter 1 Strategic Planning and the Marketing Management Process

1-2 Key Terms Marketing Concept, Strategic Planning, Mission Statement, Organizational Objectives, Organizational Strategies, Competitive Advantage, Organizational Portfolio Plan, Marketing Information Systems, Marketing Research, Cross-Functional Teams

1-3 The Marketing Concept  Marketing concept means that an organization should seek to make a profit by serving the needs of customer groups  The marketing function should find effective and efficient means of making the business do what suits interests of customers

1-4 What is Marketing?  The American Marketing Association defines marketing as “ an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders ”

1-5 Major Types of Marketing (Figure 1.1)

1-6 What is Strategic Planning?  Before managers can develop plans for individual departments some larger plans or blueprint for the organization should exist  Objectives and strategies established at the top level provide context for planning in each of the divisions and departments

1-7 Strategic Planning  Includes all activities that lead to development of a clear organizational mission, objectives, and appropriate strategies  Plays a key role in achieving equilibrium between short and long term, by balancing acceptable financial performance

1-8 Strategic Planning  Helps prepare for inevitable changes in markets, technology, and competition, as well as in economic and political arenas

1-9 The Strategic Planning Process (Figure 1.2)

1-10 The Strategic Planning Process  Organizational mission - In developing a mission statement, management must take into account the:  Organization’s history  Organization’s distinctive competitiveness  Organization’s environment

1-11 The Strategic Planning Process  Mission statements should be:  Focused on markets rather than products  Achievable  Motivational  Specific

1-12 The Strategic Planning Process  Organizational objectives  They are the end point of an organization’s mission and are what it seeks through the on- going, long-run operations of the organization  They must be specific, measurable, action commitments by which the organizational mission is to be achieved

1-13 The Strategic Planning Process  Organizational strategies  The organizational strategy is a “grand design” to get to where the organization wants to go  Involves choice of major directions organization will take in pursuing its objectives

1-14 Sample Organizational Objectives (Figure 1.3)

1-15 The Strategic Planning Process  Organizational growth based on products and markets  Market penetration strategies  Market development strategies  Product development strategies  Diversification

1-16 The Strategic Planning Process  Organizational strategies based on competitive advantage  Ability to outperform competitors in providing something that the market values  Porter suggests strategies based on cost leadership and differentiation

1-17 Organizational Growth Strategies (Figure 1.4)

1-18 The Strategic Planning Process  Organizational strategies based on value  “Customer value” has become critical for marketers as well as customers  Firms must seek to build long-term relationships with their customers by offering unique value  Many firms use one of three value strategies – best price, best product, or best service

1-19 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  Sustainable competitive advantage can be based on either the assets or skills of the organization

1-20 The Strategic Planning Process  Organizational portfolio plan  Most organizations at a particular time are a portfolio of businesses  Management must decide which businesses to build, maintain, eliminate, or which new businesses to add  The first step is to identify the various divisions, product lines, and so on that can be considered a “business"

1-21 The Strategic Planning Process  Organizations can identify strategic business units (SBUs) that:  Have a distinct mission  Have their own competitors  Are a single business or collection of related businesses  Can be planned independently of the other businesses  Resource allocation can then be made using portfolio models

1-22 The Strategic Planning Process  Complete strategic plan  Facilitates development of marketing plans for each product, product line, or division of the organization  Marketing plan serves as a subset of strategic plan

1-23 The Marketing Management Process  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”

1-24 Strategic Planning and Marketing Planning (Figure 1.5)

1-25 The Marketing Management Process  Situation analysis can be divided into six major areas of concern  Cooperative environment  Competitive environment  Economic environment  Social environment  Political environment  Legal environment

1-26 The Marketing Management Process  Marketing planning  Establishing marketing objectives  Selecting the target market  Developing the marketing mix

1-27 The Marketing Management Process  Implementation and control  Implementation involves putting the marketing plan into action and performing tasks according to the predefined schedule  Controlling involves:  Measuring results of implemented marketing plan; comparing results with objectives  Making decisions on whether plan is achieving objectives

1-28 The Marketing Management Process  Marketing information systems and marketing research  Satisfies the need for current, reliable, and valid information

1-29 The Strategic Plan, The Marketing Plan, and Other Functional Area Plans  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

1-30 The Cross-Functional Perspective in Planning (Figure 1.6)

1-31 A Blueprint for Management Action (Figure 1.7)

1-32 Portfolio Models - A Review of Portfolio Theory Experience Curve and Resulting Profit (Figure A.1)

1-33 Portfolio Models – BCG Model The Boston Consulting Group Portfolio Model (Figure A.2)

1-34 Portfolio Models – The General Electric Model The General Electric Portfolio Model (Figure A.3)

1-35 Portfolio Models – The General Electric Model Components of Industry Attractiveness and Business Strength at GE (Figure A.4)