1. CHAPTER 2 Strategic Planning and the Marketing Environment
Real People, Real Choices
CHAPTER 2 Strategic Planning and the Marketing Environment

2. Chapter Objectives
Explain the strategic planning process
Describe the steps in the marketing planning process
Explain operational planning
Discuss important aspects of an organization’s internal environment
Explain why marketers scan an organization’s external business environment

3. Describe the marketing environment Outline marketing strategies
Marketing Plans
Describe the marketing environment
Outline marketing strategies
Identify plans for implementation & evaluation

4. Strategic Planning
Strategic planning: the managerial decision process that matches the organization’s resources & capabilities to its market opportunities for long-term growth
Firms may become multi-product companies with self-contained divisions
Strategic Business Units (SBUs)
Example: General Mills

5. Strategic Planning Steps
1. Define the organization’s mission (management)
2. Evaluate internal/external environments (marketing)
3. Set organizational or SBU objectives (management)
4. Establish the business portfolio (management)

6. Evaluate the Environment
Internal Environment
Strengths
Weaknesses
External Environment
Opportunities
Threats

7. Set Objectives
SBU objectives must support the overall objectives of the firm
Customer satisfaction
Sales
Market share

8. Establish the Business Portfolio
For firms with different SBUs, planning also includes allocating resources among the businesses
Each SBU is a separate profit center within the larger corporation
Each SBU is responsible for its own costs, revenues, & profits

9. Portfolio Management
The range of products owned by a large firm is called a business portfolio
Portfolio analysis allows a firm to assess the potential of its products and businesses
BCG Growth-Market Share Matrix

10. BCG Matrix
Method focuses on the potential of a firm’s existing successful products to generate cash that the firm can use to invest in new products
New products are chosen for their potential to become cash generators
Two dimensions:
Market growth rate
Relative market share

11. BCG Matrix: Stars
SBUs with dominant market share in high-growth markets
requires funding to keep up with production and promotion demands
strategies seek to maximize market share in the face of increasing competition

12. SBUs with dominant market share in a low-growth potential market
BCG Matrix: Cash Cows
SBUs with dominant market share in a low-growth potential market
product is well established and market share can be maintained with minimal funding
firms milk cows of profits to fund growth of other products in portfolio

13. BCG Matrix: Question Marks
SBUs with low market shares in fast-growth markets
sometimes called problem children
the firm has failed to compete effectively
The dilemma? Investing more money into the SBU may
improve market share in a high potential market OR
result in negative cash flow and failure

14. BCG Matrix: Dogs
SBUs with small market share in a slow-growth market
specialized products in limited markets unlikely to grow
firms may sell dogs to smaller firms or eliminate product from market

15. Developing Growth Strategies
Product-Market Growth Matrix illustrates different growth strategies
Market penetration: increase sales in existing markets
Market development: introduce existing products to new markets
Product development: introduce new products to existing markets
Diversification: introduce new products in new markets

16. Steps in the Marketing Planning Process
1. Perform a situation analysis
2. Set marketing objectives
3. Develop marketing strategies
Select a target market
Develop marketing mix strategies
4. Implement marketing strategies
5. Monitor and control strategies

17. The Economic Environment
The Business Cycle
All economies go through cycles of prosperity, recession, and recovery
The cycle directly affects marketers because of its effect on consumer behavior
The Power of Expectations
Consumer confidence represents consumer beliefs about what the future holds
Like business cycles, it affects consumer spending

18. The Competitive Environment
Analyzing the Competition
Strengths and weaknesses analysis
Competitive intelligence (CI)
Competition in the Microenvironment
Competition in the Macroenvironment

19. Competition: The Microenvironment
In the microenvironment, competition means the alternatives from which the target may choose
Level 1: competition for discretionary income (for income left after a consumer pays for necessities)
Level 2: product competition in which different products attempt to satisfy the same needs or wants
Level 3: brand competition in which competitors offering similar products compete for consumer choice

20. Competition: The Macroenvironment
Overall structure of industry
monopoly - when one seller controls market
oligopoly - relatively small number of sellers, each with a substantial share of market
monopolistic - many sellers compete for buyers; each offers a slightly different product and has a small share of market
perfect competition - many small sellers each offering the same product

21. The Technological Environment
Technology is an investment a firm must make to succeed
Patents protect inventions
Trends in electronic commerce
eBay
Amazon

22. The Legal Environment
Laws impact industries
Regulatory Agencies impact industries
Food and Drug Administration
Federal Trade Commission

23. The Sociocultural Environment
Characteristics of society
Demographics
Geographics
Psychographics
Cultural values & beliefs

24. Issues for Discussion
What are some examples of product lines that fit in each category of the BCG matrix?
Do you think planning is essential to a firm’s success?
Can planning ever hurt?
Can you identify organizations that should have contracted rather than expanded?

25. Issues for Discussion
What are some ways that the technological environment has changed marketing?
What are the advantages & disadvantages of governmental controls of marketing?