Marketing: Real People, Real Choices 3rd edition 2-1 ©2003 Prentice Hall, Inc

Chapter 2

Strategic Planning: Making Choices in a Wired World

Marketing: Real People, Real Choices 3rd edition 2-2 ©2003 Prentice Hall, Inc

Chapter Objectives

Explain the strategic planning process

Tell how firms gain a competitive advantage and describe the factors that influence marketing objectives

Marketing: Real People, Real Choices 3rd edition 2-3 ©2003 Prentice Hall, Inc

Chapter Objectives_2

Describe the steps in the marketing planning process

Explain how marketers implement and control the marketing plan

Marketing: Real People, Real Choices 3rd edition 2-4 ©2003 Prentice Hall, Inc

Strategic Planning: Guiding the Business

Strategic planning is the managerial decision process that matches the organization’s resources and capabilities to its market opportunities for long-term growth

Firms may become multi-product companies with self-contained divisions

– Strategic Business Units (SBUs)– Example: The Walt Disney Company

Marketing: Real People, Real Choices 3rd edition 2-5 ©2003 Prentice Hall, Inc

Strategic Planning at the Corporate Level

Defining the Organization’s Mission

Establish Corporate Objectives

Allocate Resources to the SBUs

Marketing: Real People, Real Choices 3rd edition 2-6 ©2003 Prentice Hall, Inc

Defining the Organization’s Mission

A mission may begin with these questions:

– What business are we in?

– What customers should we serve?

– How should we develop the firm’s capabilities and focus its efforts?

Marketing: Real People, Real Choices 3rd edition 2-7 ©2003 Prentice Hall, Inc

Avoiding Marketing Myopia

Describes firms with shortsighted visions and missions

Example: What business is Amtrak in?

Marketing: Real People, Real Choices 3rd edition 2-8 ©2003 Prentice Hall, Inc

Establishing Corporate Objectives

Grow directly from a mission statement

Specify outcomes that an organization seeks to achieve in a certain time period

– Example: Altria (Philip Morris)• To profitably grow our worldwide tobacco,

food, and beer business• To enhance shareholder value through a

balanced program of dividends and share repurchases

Marketing: Real People, Real Choices 3rd edition 2-9 ©2003 Prentice Hall, Inc

Planning for Growth: 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, and profits

Marketing: Real People, Real Choices 3rd edition 2-10 ©2003 Prentice Hall, Inc

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

Marketing: Real People, Real Choices 3rd edition 2-11 ©2003 Prentice Hall, Inc

BCG Matrix

Method focuses on potential for existing products to generate cash that the firm can then use to invest in new products

New products are chosen for their potential to become future cash generators

Two dimensions:

– Market growth rate– Relative market share

Marketing: Real People, Real Choices 3rd edition 2-12 ©2003 Prentice Hall, Inc

Strategic Planning at the SBU Level

Evaluating the Environment: SWOT Analysis

Setting Business Objectives

Creating a Competitive Advantage

Developing Growth Strategies

Marketing: Real People, Real Choices 3rd edition 2-13 ©2003 Prentice Hall, Inc

SWOT Analysis

Internal Environment

– Strengths

– Weaknesses External Environment

– Opportunities

– Threats See Table 2.1 for an example

Marketing: Real People, Real Choices 3rd edition 2-14 ©2003 Prentice Hall, Inc

Setting Business Objectives

SBU objectives must support the overall objectives of the firm

– Customer Satisfaction

– Profitability

– Market Standing

– Return on Investment

– Revenue and Sales

Marketing: Real People, Real Choices 3rd edition 2-15 ©2003 Prentice Hall, Inc

Creating Competitive Advantage

Identify what a firm does really well

• Distinctive competency - a firm’s capability that is superior to that of its competitors

Turn a distinctive competency into a differential benefit

• Differential benefits set products apart from competitors’ products by providing something unique that customers want

Marketing: Real People, Real Choices 3rd edition 2-16 ©2003 Prentice Hall, Inc

Developing Growth Strategies

Product-Market Growth Matrix illustrates different growth strategies

– Two dimensions• opportunities for growth in existing

or new markets• allocating resources into existing

products or new products

– Four strategies result

Marketing: Real People, Real Choices 3rd edition 2-17 ©2003 Prentice Hall, Inc

Tactical Planning: The Marketing Management

Process

Analyzing the Marketing Environment

Setting Marketing Objectives

Developing Marketing Strategies

– Preparing the Marketing Plan

Marketing: Real People, Real Choices 3rd edition 2-18 ©2003 Prentice Hall, Inc

Developing Marketing Strategies

Selecting a Target Market

Developing Marketing Mix Programs

– Product Strategies– Pricing Strategies– Promotion Strategies– Distribution Strategies

Marketing: Real People, Real Choices 3rd edition 2-19 ©2003 Prentice Hall, Inc

Operational Planning: Executing the Marketing

Plan Implementing the Marketing Plan

– The Marketing Budget

– Organizing the Marketing Function

Controlling the Marketing Plan

– Trend Analysis

– Marketing Research