1. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-1 Marketing Planning: The Basics for Strategy and Tactics Planning: Process of anticipating future events and conditions and of determining the best way to achieve organizational goals Marketing planning: Implementing planning activities devoted to achieving marketing objectives

2. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-2 Strategic Planning versus Tactical Planning Strategic Planning versus Tactical Planning Strategic planning: Process of determining an organization’s primary objectives and adopting courses action that will achieve those objectives Tactical planning: Process that guides the implementation of activities specified in the strategic plan.

3. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-3 Strategic Planning versus Tactical Planning Strategic Planning versus Tactical Planning Top management  Greater proportions of their time engaged in planning  Usually focus their planning activities on long-range strategic issues Middle level managers  Focus on operational planning; creating and implementing tactical plans Supervisors  Developing the specific programs to meet goals in their areas of responsibility

4. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-4 Steps in the Marketing Planning Process

5. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-5 Defining the Mission of the Organization Defining the Mission of the Organization Mission Mission: the essential purpose that differentiates one company from others The mission statement specifies the organization’s overall goals and operational scope and provides general guidelines for future management actions

6. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Citigroup 399 Park Ave. New York, NY 10043 Slogan / Motto Knowledge is your greatest asset Description Citigroup is a financial institution divided into these major segments: Global Consumer, Corporate and Investment Banking, and Global Wealth Management. Citigroup Global Consumer business offers banking services such as bank accounts, deposits, loans, portfolio and investment management, insurance, etc. The Corporate and Investment Banking business involves banking transactions on an international level. Global Wealth Management involves having portfolio management and investment advisory services. 2-6

7. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Citigroup Mission Statement Our goal for Citigroup is to be the most respected global financial services company. Like any other public company, we're obligated to deliver profits and growth to our shareholders. Of equal importance is to deliver those profits and generate growth responsibly. 2-7

8. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-8 Mission Statement Mission Statement: The Strategic Plan starts with the Mission Statement. The MS explains in general terms the organization's goals and their purpose. e.g. SKYPE, a vendor of phone services that routes phone calls over the Internet, “ Skype aims to delight you by offering free global telephony, to make unlimited, superior voice calls via. Its next generation peer to peer software. Skype’s mission is providing a simple, reliable and friendly communications tool that just works. We aim for people to communicate with friends, families, and colleagues more flexibly, more cost effectively, and with better sound quality than ever previously imagined.

9. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-9 Determine Organizational Objectives Determine Organizational Objectives An organization lays out its basic objectives, or goals, in its mission statement These objectives in turn guide development of supporting marketing objectives and plans Well-developed objectives should state specific, quantitative intentions along with deadlines for achieving them

10. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-10 Assessing Organizational Resources and Evaluating Environmental Risks and Opportunities Assessing Organizational Resources and Evaluating Environmental Risks and Opportunities This step involves a back-and-forth assessment of strengths, risks, and available opportunities.

11. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-11 Formulating, Implementing, and Monitoring a Marketing Strategy Formulating, Implementing, and Monitoring a Marketing Strategy Marketing strategy: a firm’s overall program for selecting and satisfying a target market A marketing strategy is aimed at satisfying consumers in the selected target market through a careful balance of the elements of the marketing mix – each of which represents a subset of the overall marketing strategy

12. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-12 Successful Strategies: Tools and Techniques All planning strategies have the goal of creating a sustainable competitive advantage for a firm. An advantage where other companies cannot provide the same offering or value.

13. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-13 Porter’s Five Forces Model Porter’s Five Forces Model Barriers to Entry: how hard it is to enter the market Barriers to Entry: how hard it is to enter the market Degree of Rivalry: how many firms are competing for the pie. Degree of Rivalry: how many firms are competing for the pie. Power of Suppliers: how much power do your suppliers have over your firm. Power of Suppliers: how much power do your suppliers have over your firm. Power of Buyers: how much power do your buyers have over your firm. Power of Buyers: how much power do your buyers have over your firm. Threat of Substitutes: If your price goes too high do your customers have real alternatives that they could move to? Threat of Substitutes: If your price goes too high do your customers have real alternatives that they could move to?

14. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-14 Porter’s Five Forces Model Porter’s Five Forces Model

15. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Porter’s Five Forces Model Competition has increased overall as a result of the internet and e-Commerce. The internet and IT has made it possible to both focus on the top and bottom lines and market share is expanded and costs are cut. Many products and services exist just online, major companies have gone online to successfully augment the brick and mortar corporations, and the playing field is all the way to edges of cyberspace, wherever that is. We will further evaluate this stepping through all five forces. 2-15

16. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Buyer power is higher when buyers have more choices. Businesses are forced to add value to their products and services to get loyalty. Many loyalty programs include excellent services that customers demand on-line. Customers want to solve their problems and many times they are more successful on-line than on- phone. Also, we see internet savvy businesses springing up offering more valuable goods and services at lower costs. Now with the advent of eBay, many people are assuming roles as drop shippers. Individuals can have a thriving business selling goods of larger companies without having to carry inventory. 2-16 Porter’s Five Forces Model

17. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Supplier power is higher when buyers have fewer choices from whom to buy. As mentioned earlier, drop shipping has increased the amount of suppliers available. All an individual has to do is form and agreement to sell products for the company. The company takes care of all the logistics. The same is true of associates programs that amazon.com and google.com offer. Associates allow a webmaster to earn money by recommending products from others. This increases supplier offerings. 2-17 Porter’s Five Forces Model

18. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Threat of substitute products or services is high when there are many product alternatives. This is different than having many suppliers. Examples of alternatives are exchanging brand names, substituting credit card capabilities, and looking at better values from cheaper sources. The internet allows this with the "global economy". I can substitute my product by purchasing from companies overseas where labour, services and products are cheaper, but of comparable quality. 2-18 Porter’s Five Forces Model

19. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Threat of new entrants is high when it is easy for new competition to enter the market. Well, what have we been talking about? Now, small operations can open shop with less than $10.00 per month and make a lot of money. As inventive as people are, there are always opportunities to do improve a product or service or just create and sell something new. Recently, many new entrants have made even more money authoring Ebooks that tell others how to do what they did. Rivalry among competitors is high when competition is more intense within industries. 2-19 Porter’s Five Forces Model

20. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-20 First Mover and Second Mover Strategies First Mover and Second Mover Strategies First mover strategy: Theory advocating that the company that is first to offer a product in a marketplace will be the long- term market winner. Second mover strategy: Theory that advocates observing closely the innovations of first movers and then introducing new products that improve on the original offering to gain advantage in the marketplace.

21. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-21 SWOT SWOT is an acronym for strengths, weaknesses, opportunities, and threats SWOT analysis A SWOT analysis is a method of studying organizational resources and capabilities to assess the firm’s strengths and weaknesses and scanning its environment to identify opportunities and threats

22. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-22 SWOT Analysis SWOT Analysis

23. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-23 The Strategic Window The Strategic Window A limited period with an optimal fit between the key requirements of a market and the particular competencies of a firm HR Block HR Block recognizes the strategic window of their business.

24. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-24 Elements of a Marketing Strategy Blending the four strategy elements of marketing decision-making to satisfy chosen target markets Product Price Distribution Promotion

25. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-25 Target Market Target Market Group of people toward whom the firm decides to direct its marketing efforts

26. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-26 Marketing Mix Variables Marketing Mix Variables Product Strategy Product Strategy  What goods or services to offer  Customer service  Package design  Brand names  Trademarks  Warranties  Product Life Cycle  Positioning  New-product development

27. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-27 Marketing Mix Variables Marketing Mix Variables Distribution Strategy Distribution Strategy Planning that ensures that consumers find their products in the proper quantities at the right times and places.  Modes of transportation  Warehousing  Inventory control  Order processing  Marketing channels

28. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-28 Marketing Mix Variables Marketing Mix Variables Promotional Strategy Promotional Strategy  Blending together the various elements of promotion to communicate most effectively with the target market  Informing, persuading, and influencing a consumer’s purchase decision.  IMC

29. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-29 Marketing Mix Variables Marketing Mix Variables Pricing Strategy Pricing Strategy Deals with the methods of setting profitable and justifiable prices

30. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-30 The Marketing Environment The Marketing Environment Competitive Political – Legal Economic Technological Social – Cultural Rule of three

31. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-31 Methods for Marketing Planning Business Portfolio Analysis Business Portfolio Analysis Strategic Business Units Strategic Business Units (SBUs) are key business units within diversified firms  A division, product line, or single product may define an SBU  Firms redesign their SBUs as market conditions dictate

32. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-32 The BCG Matrix The BCG Matrix Market Share/ Market Growth Matrix Market Share/ Market Growth Matrix: a marketing planning tool that classifies a firm’s SBU’s or products according to industry growth rates and market shares relative to competing products  Stars  Cash Cows  Dogs  Question Marks

33. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-33 Figure 2.10 Figure 2.10 BCG Market Share/Market Growth Matrix