1. © 2000 South-Western College Publishing 1 CHAPTER TWO STRATEGIC PLANNING DEVELOPING AND IMPLEMENTING A MARKETING PLAN Prepared by: Jack Gifford Miami University (Ohio)

2. © 2000 South-Western College Publishing 2 STRATEGIC PLANNING n Strategic Planning is the managerial process of creating and maintaining a fit between the organization’s objectives and resources and the evolving market opportunities. RESOURCES & OBJECTIVES EVOLVING MARKET OPPORUNITIES LONG RUN PROFITABILITY AND GROWTH PLUS

3. © 2000 South-Western College Publishing 3 STRATEGIC PLANNING n Strategic planning requires the long-run commitment of human and capital resources. n Strategic marketing management addresses two questions: –What is the organization’s main activity at a particular time? –What are its primary goals and how will these be achieved? n How do companies go about strategic planning? How do employees know how to implement the long-term goals of the firm? The answer is…...

4. © 2000 South-Western College Publishing 4 A MARKETING PLAN n Is the process of anticipating events and determining strategies to achieve organizational objectives in the future. n A written document n A guideline over time n Benchmark of progress to date n The components of a Marketing Plan always should include, at a minimum, the following...

5. © 2000 South-Western College Publishing 5 THE MARKETING PLAN CONTAINS, AT A MINIMUM…. n Business Mission Statement n Objectives n Situation Analysis (SWOT) n Marketing Strategy –Target Market Strategy –Marketing Mix Product Promotion Price Distribution n Implementation, Evaluation and Control

6. © 2000 South-Western College Publishing 6...AND ALSO OFTEN INCLUDES: n Budgets n Implementation timetables n Required marketing research efforts n Other elements of advanced strategic planning –Quality control programs –Supply chain management systems –Organizational structure changes –Management Information Systems –Others unique to specific industries

7. © 2000 South-Western College Publishing 7 THE MISSION STATEMENT n When we answer the question “What business are we in and where are we going?” we are well on our way to creating a mission statement –The creation and implementation of a mission statement profoundly affects long-run resource allocation, profitability, and survival. –Includes the long-run vision and values of the company –Must be customer oriented –May be for the entire business, or each strategic business unit (SBU) –Must not be too broad…or too narrow in scope –Avoids marketing myopia

8. © 2000 South-Western College Publishing 8 MARKETING MYOPIA n A business that defines itself in terms of its products or services instead of customer satisfaction or too narrowly instead of the markets, organizations, and benefits purchased. AT&T =

9. © 2000 South-Western College Publishing 9 MARKETING GOALS AND OBJECTIVES n Marketing Objectives –What is to be accomplished through marketing activities –Realistic, measurable, time specific –Internally consistent –Indicate the priorities of the organization

10. © 2000 South-Western College Publishing 10 MARKETING GOALS AND OBJECTIVES n Marketing objectives serve several functions –Communicate marketing management philosophies –Provide direction for lower- level management –Act as motivators –Help clarify executive thinking –Create a series of benchmarks and a basis for control

11. © 2000 South-Western College Publishing 11 CONDUCT A SITUATION ANALYSIS n Environmental Scan/ Situational Analysis n Two major components, the first set being... –Internal strengths –Internal weaknesses Production costs Marketing and people skills Financial resources Company or brand image Available technology Other

12. © 2000 South-Western College Publishing 12 CONDUCT A SITUATION ANALYSIS n Environmental Scan/ Situational Analysis n Two major components, the second set being… –External Opportunities –External Threats MACROENVIRONMENTAL FORCES INCLUDE Social forces Demographic forces Economic forces Technological forces Political forces Legal forces Competitive forces

13. © 2000 South-Western College Publishing 13 Corporate culture and the external opportunities and threats n Corporate culture is the pattern of basic assumptions an organization has accepted to cope with the firm’s internal environment and the changing external environment –It is revealed by the way it reacts to problems and opportunities –These organizational responses can be categorized into four types

14. © 2000 South-Western College Publishing 14 FOUR TYPES OF ORGANIZATIONAL RESPONSES TO EXTERNAL OPPORTUNITIES AND THREATS n Prospector n Reactor n Defender n Analyzer n Focuses on identifying and capitalizing on emerging market opportunities; emphasizes mkt. research & communications n Responds to emerging market forces when forced to do so n Tries to defend its “turf” or market domain n Combination of a conservative prospector and aggressive defender

15. © 2000 South-Western College Publishing 15 STRATEGIC WINDOW n Is the limited time period in which there is an optimal FIT between external market Opportunities and internal corporate Strengths SWOTSWOT Optimal match

16. © 2000 South-Western College Publishing 16 STRATEGIC OPPORTUNITIES MATRIX EXAMPLE: DAIMLER-CHRYSLER PRODUCT MARKETMARKET PRESENT NEW PRESENTPRESENT NEWNEW Market Penetration Market Development Product Development Diversification

17. © 2000 South-Western College Publishing 17 PORTFOLIO MATRIX EXAMPLE: MICROSOFT CORPORATION MARKET SHARE DOMINANCE MARKET GROWTH RATE HIGH LOW LOW HIGH ?

18. © 2000 South-Western College Publishing 18 PORTFOLIO MATRIX (continued) Allocating future resources for each n Build –Invest in a problem child that has the potential to become a star n Hold –Hold and protect; use cash flow to maintain market share n Harvest –Increase short-term cash flow from any source except stars n Divest –Sell off or close dogs and sometimes problem children that cannot be converted to stars

19. © 2000 South-Western College Publishing 19 MARKET ATTRACTIVENESS / STRENGTH MATRIX: EXAMPLE KODAK CORPORATION BUSINESS POSITON [ STRENGTH MINUS WEAKNESSES ] MARKET ATTRACTIVENESS [ OPPORTUNITIES MINUS THREATS ] LOW MEDIUM HIGH STRONG MEDIUM WEAK

20. © 2000 South-Western College Publishing 20 MARKET ATTRACTIVENESS / STRENGTH MATRIX (CONTINUED) n To maintain a strong business position in an attractive market (SMILEY FACE), a company must develop a sustainable competitive advantage –One or more unique aspects of an organization that are valued by the target market(s) and cannot be easily replicated by competition Superior skills, such as management capabilities and expertise) Superior resources( well known brand name, patents, unique technology, or superior economies of scale)

21. © 2000 South-Western College Publishing 21 DIFFERENTIAL ADVANTAGE n Important to target market(s) n Why you purchase “A” instead of “B” n Athletic Shoes ??? n Soft drink ???

22. © 2000 South-Western College Publishing 22 MARKETING PLAN (continued) n Marketing Strategy –Target Market Strategy Identifies which market segment or segments to focus on This topic will be discussed in detail in Chapter 7 Owners of pets Male business executives Parents of children under 3

23. © 2000 South-Western College Publishing 23 TARGET MARKET STRATEGY n How do we “cluster” potential customers for our products or services around meaningful buying attributes? n Is usually multidimensional –SAUDI KINGDOM SHOPPNG CENTRE? –TREK BICYCLES? MEN 1ST FLOOR WOMEN 2ND FLOOR ???

24. © 2000 South-Western College Publishing 24 MARKETING PLAN (continued) n Marketing Mix: The 4 “Ps” –Product strategies –Price strategies –Promotion strategies –Distribution strategies (Place) Gillette Mach 3 razor New triple cutting surface Sold through retailers Introductory price $3.29 Promoted on TV, magazines and newspapers

25. © 2000 South-Western College Publishing 25 THE MARKETING MIX PRODUCT OR SERVICE PRICE PROMOTION PLACE

26. © 2000 South-Western College Publishing 26 IMPLEMENTATION, EVALUATION AND CONTROL n Implementation –The process that turns marketing plans into action assignments –Assures execution in a way that accomplishes the plans’ objectives n Evaluation and control –Gauging the extent to which marketing objectives have been achieved during the specific time period.

27. © 2000 South-Western College Publishing 27 EVALUATION AND CONTROL n The broadest control device available to marketing managers is the marketing audit n A marketing audit is a comprehensive, systematic, periodic, and independent evaluation of the goals, strategies, structure, and performance of the marketing organization AUDIT

28. © 2000 South-Western College Publishing 28 EFFECTIVE STRATEGIC PLANNING n Effective strategic planning requires continual attention, creativity, and management commitment –Should be an ongoing process –Is based on information and creativity –Requires top management support and participation

29. © 2000 South-Western College Publishing 29 FOUR COMMON REASONS FOR FAILURE TO ACHIEVE MARKETING OBJECTIVES n Objectives were unrealistic n Inappropriate objectives for the plan n Poor implementation n Unanticipated changes in the internal or external environments n Violations of any of the three principles of effective strategic planning