Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Strategic Planning and the Marketing Process Chapter 2

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Objectives 1.Distinguish between strategic planning and tactical planning. 2.Explain how marketing plans differ at various levels in an organization. 3.Identify the steps in the marketing planning process. 4.Describe the concept of a SWOT analysis and its major elements.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Objectives 5.Discuss how a strategy can be implemented through marketing plans. 6.Identify the basic elements of a marketing strategy. 7.Describe the environmental characteristics that influence strategy decisions. 8.Explain how the strategic business unit concept, the market share/market growth matrix, the market attractiveness/business strength matrix, and spreadsheet analysis can be used in marketing planning.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Planning  The process of anticipating future events and conditions and determining the best way to achieve organizational objectives.  A continuous process that includes identifying objectives and includes checkpoints.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Plans Formulated Within the Marketing Organization  Product lines.  Pricing decision.  Selection of appropriate distribution channels.  Promotional campaigns. Planning helps us hit what we aim for.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. A portfolio of products has helped Kraft obtain the position of market leader.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Strategic Planning The process of determining an organization’s primary objectives. Adopting courses of action that include allocation of necessary resources. Typically longer term.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. There are several businesses that offer help in strategic planning. The Patricia Seybold Group represents one such firm.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Tactical Planning Guides the implementation of activities specified in the strategic plan. Typically address shorter-term actions.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Planning at Different Management Levels Daily and weekly plans; unit budgets; departmental rules and procedures Operational planningDistrict sales manager Supervisors in staff Marketing departments Supervisory Management Quarterly and semi-annual plans; divisional budgets; divisional policies and procedures Tactical planningGeneral sales manager Marketing research manager Advertising director Middle Management Organization-wide objectives; fundamental strategies; long- term plans; total budget Strategic planningBoard of directors Chief executive officer (CEO) Chief operating officer (COO) Divisional vice presidents Top Management Examples Types of Planning Emphasized at This Level Management Level

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Mission The essential purpose that differentiates the company from others. Specifies the organization’s overall goals and operational scope. Provides general guidelines for future management actions.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. SWOT Analysis An important strategic planning tool. Helps planners to compare internal organizational strengths and weaknesses. Acronym for –Strengths –Weaknesses –Opportunities –Threats Provides managers with a critical view of the organization’s internal and external environments.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Elements of a Marketing Strategy Basic elements of a marketing strategy consist of: 1.The target market 2.The marketing mix variables of: product distribution promotion price

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Marketing Mix Product Strategy Deciding what goods or services the firm should offer to a group of consumers. Includes making decisions about –Customer service –Package design –Brand names –Trademarks –Patents –Warranties –Life cycle of a product –Positioning the product in the marketplace –New product development

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Marketing Mix Distribution Strategy Ensures that consumers find their products in the proper quantities at the right times and places. Involves: –modes of transportation –warehousing –inventory control –order processing –selection of marketing channels

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Marketing Mix Promotion Strategy The Communication link between sellers and buyers –Communicate messages directly through salespeople or indirectly through advertisements and promotions. –Companies use an approach called integrated marketing communications (IMC) so the consumer receives a unified and consistent message.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Marketing Mix Pricing Strategy –Methods of setting profitable and justifiable prices. –Closely regulated and subject to considerable public scrutiny. –A major influence is competition.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Planning Tools for Marketing Four specific tools: 1.Strategic business unit 2.Market share/market growth matrix 3.Market attractiveness/business strength matrix 4.Spreadsheet analysis

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Strategic Business Units (SBUs) SBUs are key business units within diversified firms. Each SBU –has its own managers, resources, objectives, and competitors. –pursues its own distinct mission. –develops its own plans independently. –focuses the attention of company managers so that they can respond effectively to changing consumer demand.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Market Share / Market Growth Matrix A four-quadrant chart that plots market share—the percentage of a market that a firm controls—against market growth potential. Stars Generate considerable income Strategy: Invest more funds for future growth Question Marks Have potential to become stars or cash cows Strategy: Either invest more funds for growth or consider disinvesting Cash Cows Generate strong cash flow Strategy: Milk profits to finance growth of stars and question marks Dogs Generate little profits Strategy: Consider withdrawing Relative Market Share HighLow High Low Industry Growth Rate

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. The Boston Consulting Group Developers of the Market Share / Market Growth Matrix

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Market Attractiveness/ Business Strength Matrix Rates SBUs according to the attractiveness of their markets and their organizational strengths. Marketing attractiveness criteria include: –Market share –Growth –Size –Stability –Potential profitability –Extent of government regulations –Potential environmental and social impact –Competitive conditions

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Spreadsheet Analysis 1.Helps planners anticipate marketing performance given specified sets of circumstances 2.Lays out a rigid grid of columns and rows that organize numerical information in a standardized, easily understandable format.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Summary Discussion has centered around: –Strategic and tactical planning –Planning at different organizational levels –The planning process –SWOT –Planning tools available