Chapter 2 Strategic Planning and the Strategic Marketing Process

I. What is Strategic Planning? The process of developing and maintaining a viable fit between the organization’s objectives and resources and its changing environment. It involves developing a:  clear mission  supporting objectives  supporting strategies

II. Three Organizational Levels  Corporate Level  Business Unit Level Strategic Business Units  Functional Level

III. Components of the Strategic Plan  Organizational Mission – defines the core purpose of the organization – why it exists.  Organizational Objectives – statements of what the organization wishes to accomplish in the on-going, long- run operation of the firm. Profitssales market sharecustomer satisfaction  Organizational Strategies – major directions the organization will take in pursuing its objectives. Business Portfolio Analysis

WHERE AN “A” IN A CORRESPONDENCE COURSE IN ICE CREAM MAKING CAN LEAD! 2-5

Business Portfolio Analysis  A technique which uses market growth rate and relative market share to identify what combination of SBUs will best achieve organizational objectives.  Market growth rate – annual sales growth rate of the SBU’s industry.  Relative market share – the sales of the SBU divided by the sales of the largest firm in the industry.

SETTING STRATEGIC DIRECTIONS WHERE DO WE WANT TO GO? LO4  Business Portfolio Analysis (BCG) Business Portfolio Analysis (BCG) Market Growth Rate Stars Cash Cows Dogs Question Marks Relative Market Share High Low 2-7

Business Portfolio Analysis (cont.)  Cash Cows – SBU’s that have a high relative market share in a low sales growth market.  Stars – SBU’s that have a high relative market share in a high sales growth market.  Question marks – SBU’s that have a low relative market share in a high sales growth market.  Dogs – SBU’s that have a low relative market share in a low sales growth market.

Kodak Consumer-Related Products What SBU type in the BCG growth-share matrix? Kodak digital picture frameKodak film Kodak digital photo printerKodak digital camera LO4 2-9

IV. Strategic Marketing Process Process whereby an organization allocates it marketing mix resources to reach its target markets. Planning Implementation Evaluation

Planning Phase – Situation Analysis  This is a complete analysis of the firm’s situation which assesses internal strengths and weaknesses and external threats and opportunities (SWOT)  Internal analysis (controllable factors) – assess the firm itself to identify strengths and weaknesses  External analysis (uncontrollabe factors) – assess the firm’s external environment to identify opportunities and threats  Identify ways to build on a strength, correct a weakness, exploit an opportunity, or avoid a threat.

Slide 2-34 FIGURE 2-6 FIGURE 2-6 Ben & Jerry’s: a SWOT analysis to get it growing again

Planning Phase – Marketing Objectives  Specific levels of performance desired for a product or product line to be achieved by a given date.  Stated in terms of market share, sales, profit  Should be measureable, attainable, specific, and consistent with organizational objectives

Planning Phase – Target Market  One or more specific groups of potential consumers toward which an organization directs its marketing program.  Why focus on the needs of a subgroup of a market rather than the entire market?

Planning Phase: Product Positioning  The process where marketers try to create a product image or identity in the minds of their target market relative to competitive products.

Planning Phase: Marketing Mix Program  Product – good, service, or idea to satisfy the consumer’s needs.  Price – what is exchanged for the product.  Promotion – means of communication between the seller and buyer.  Place – means of getting the product to the consumer  Marketing mix decisions are based on the needs of the target market and the positioning strategy.

Slide 2-40 Elements of the marketing mix that comprise a cohesive marketing program

Implementation Phase  Process of putting the marketing plan into action.  Involves great attention to detail

Evaluation  Involves measuring the results of the actions from the implementation phase and comparing them with goals set in the planning phase. sales analysis marketshare analysis expense to sales analysis