1. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-1 Chapter 2 Strategic Planning and the Marketing Process

2. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-2 Chapter 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 successful planning tools and techniques, including Porter’s Five Forces model, first and second mover strategies, SWOT analysis, and the strategic window. 5.Identify the basic elements of a marketing strategy. 6.Describe the environmental characteristics that influence strategy decisions. 7.Describe the methods for marketing planning, including business portfolio analysis and the BCG matrix.

3. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-3 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

4. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-4 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.

5. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-5 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

6. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-6 Steps in the Marketing Planning Process

7. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-7 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

8. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-8 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

9. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-9 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.

10. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-10 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

11. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-11 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.

12. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-12 Porter’s Five Forces Model Porter’s Five Forces Model

13. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-13 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.

14. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-14 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

15. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-15 SWOT Analysis SWOT Analysis

16. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-16 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.

17. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-17 Elements of a Marketing Strategy Blending the four strategy elements of marketing decision-making to satisfy chosen target markets Product Price Distribution Promotion

18. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-18 Target Market Target Market Group of people toward whom the firm decides to direct its marketing efforts

19. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-19 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

20. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-20 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

21. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-21 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.

22. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-22 Marketing Mix Variables Marketing Mix Variables Pricing Strategy Pricing Strategy Deals with the methods of setting profitable and justifiable prices

23. Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 2-23 The Marketing Environment The Marketing Environment Competitive Political – Legal Economic Technological Social – Cultural