Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Strategic and Marketing Planning

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Chapter 2 Objectives 1.Recognize the nature and scope of planning including the five key elements that are crucial to planning activities 2.Understand each of the fundamental steps involved in developing a strategic plan

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Chapter 2 Objectives 3.Appreciate the fundamentals of marketing planning.

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Chapter 2—Strategy Defined Finding a fit between an organization and its environment Pertains directly to an organization’s ability to adapt to changing environmental forces and matching organizational capabilities to the opportunities that exist within the current marketing environment.

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. The Nature and Scope of Planning Planning is the basis for sound decision making in any situation in life. Key elements to any planning: 1)Timing 2)Tasks 3)Responsibility 4)Follow-up 5)Budgeting Objective 1

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. The Nature and Scope of Planning The scope of planning –Strategic planning or the overall game plan has a 3-5 year time horizon Corporate strategy takes place at the highest levels of the organization Business strategy attempts to achieve and maintain competitive advantages in specific product-market domains Objective 1

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. The Nature and Scope of Planning The scope of planning –Marketing planning has a shorter time horizon, 1 year, than strategic planning Performed at the marketing level of what otherwise could be termed the product or product-line level of the organization. Objective 1

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. The Nature and Scope of Planning The scope of planning –Tactical planning Involves specifying details that pertain to the organization’s activities for a certain period of time. Detailed account of the short-term activities of a firm Objective 1

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Fundamentals of Strategic Planning The six fundamental steps: 1.Establishing the Organizational Mission 2.Defining Strategic Business Units 3.Specifying Organizational Objectives Objective 2

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Fundamentals of Strategic Planning The six fundamental steps: 4.Analyzing Strategic Business Unit Performance 5.Assessing Organizational Growth Opportunities 6.Developing Marketing Plans Objective 2

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Fundamentals of Strategic Planning 1.Establishing the Organization’s Mission Mission statement is a guideline for the organization’s decision making for both the short and long run. Objective 2

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Fundamentals of Strategic Planning 2.Defining Strategic Business Units Strategic Business Units (SBUs) or smaller divisions, to facilitate planning and general operations Objective 2

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Fundamentals of Strategic Planning 3.Specifying Organizational Objectives Well developed organizational objectives should be SMART Specific Measurable Achievable Relevant Time-bound Objective 2

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Fundamentals of Strategic Planning 4.Analyzing SBU performance: Allocating Resources in the Product-Portfolio Five resource allocation strategies 1)Build 2)Maintain 3)Niche 4)Harvest 5)Divest Objective 2

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Fundamentals of Strategic Planning Five resource allocation strategies 1)Build—improve the SBU’s position in the marketplace by investing additional resources. 2)Maintain—hold steady the SBU’s current position in the market place. Objective 2

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Fundamentals of Strategic Planning Five resource allocation strategies 3)Niche—narrow the focus of the SBU’s intended market. 4)Harvest—utilize the SBU to generate resources for other SBUs. 5)Divest—discontinue all investment in an SBU so that resources can be redirected to other SBUs. Objective 2

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Fundamentals of Strategic Planning 5.Assessing Organizational Growth Opportunities Three avenues for growth 1)Developing growth within current operations—intensive growth 2)Achieving growth by acquiring other businesses that are directly related to existing operations—integrative growth 3)Developing growth by acquiring other businesses not directly related to existing operations—diversification growth Objective 2

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Fundamentals of Strategic Planning 5.Assessing Organizational Growth Opportunities 1)Intensive Growth Strategies a)Market penetration—sell more of existing products to existing markets b)Market development—find new markets for existing products c)Product development—develop new products for existing markets d)Product diversification—develop new products for new markets Objective 2

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Fundamentals of Strategic Planning 5.Assessing Organizational Growth Opportunities 2)Integrative Growth Strategies a)Backward integration b)Horizontal integration c)Forward integration Objective 2

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Fundamentals of Strategic Planning 5.Assessing Organizational Growth Opportunities 3)Diversification Growth Strategies Growth through the acquisition of other businesses that are not directly related to existing operations. Can be accomplished through concentric diversification, horizontal diversification and conglomerate diversification Objective 2

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Fundamentals of Marketing Planning Variations in Marketing Planning –Marketing plans vary in Scope –Marketing plans vary in Length –Marketing plans vary in Formality Objective 3

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Fundamentals of Marketing Planning The Traditional Marketing Plan 1.Executive Summary 2.Market Situation Analysis 3.SWOT Analysis 4.Specification of Marketing Objectives Objective 3

Copyright ©2005 by South-Western, a division of Thomson Learning. All rights reserved. Fundamentals of Marketing Planning The Traditional Marketing Plan 5.Formulation of Marketing Strategies 6.Preparation of Action Programs and Budgets 7.Development of Control Procedures Objective 3