chapter 2 strategic market planning: take the big picture
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Chapter 2
Strategic Market Planning: Take the Big Picture
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-2
Chapter Objectives
Explain the strategic planning process Describe the steps in marketing planning Explain operational planning Explain the key role of implementation
and control on marketing planning Discuss some of the important aspects of
an organization’s internal environment
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-3
Real People, Real Choices: Decision Time at PaperBackSwap
Which trend should Richard latch onto in order to launch his new service into the limelight? – Option 1: Market the site as a way to help the
environment– Option 2: Use PaperBackSwap as a vehicle
to promote literacy– Option 3: Position the site as a cheap source
of entertainment
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-4
Business Planning:Compose the Big Picture
Business Planning: Ongoing process of making decisions that guides the firm both in the short term and for the long haul– Identifies/builds on firm’s strengths– Helps managers make informed decisions– Develops objectives before action is taken
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Ethics and Marketing Planning
Unethical marketing decisions damage the firm, society, and stakeholders
Business ethics: – Rules of conduct for an organization
Code of ethics: – Written standards of behavior to which
everyone in the organization must subscribe
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-6
Three Levels of Business Planning
Strategic planning: – Undertaken by top-level corporate
management
Functional planning:– Conducted by top functional-level managers
such as the chief marketing officer
Operational planning:– Done by supervisory managers
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Strategic Planning
Managerial decision process that matches firm’s resources and capabilities to its market opportunities for long-term growth and survival– Top management defines firm’s purpose and
objectives• Example: increase firm’s total revenues by
20% over next five years
– Strategic Business Units (SBUs)• Self-contained divisions
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Functional (Tactical) Planning
Accomplished by various functional areas of firm, such as marketing
Typically includes:– A broad 5-year plan to support strategic plan – A detailed annual plan
• Example: marketing plan objective—to gain a 40% share of a particular market with three new products during coming year
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-9
Operational Planning
First-line managers focus on day-to-day execution of functional plans
Such planning includes detailed annual, semiannual, or quarterly plans– Example: an objective may be set in terms of
units of a product a particular salesperson needs to sell per month (sales quota)
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-10
All Business Planning Is an Integrated Activity
Strategic, functional, and operational plans must work together to benefit the whole firm
Marketers must fully understand how they fit with the organization’s direction and resources
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Strategic Planning: Frame the Picture
Very large multiproduct firms may have divisions called strategic business units (SBUs)– SBUs operate like separate businesses with
their own mission, business objectives, resources, managers, and competitors
Strategic planning is done at both the corporate and SBU levels
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-12
Strategic Planning Step 1: Define the Mission
Answer three key questions:– What business are we in? – What customers should we serve? – How do we develop firm’s capabilities and
focus its efforts? Mission statement:
– A formal document that describes the firm’s overall purpose and what it hopes to achieve in terms of its customers, products, and resources
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-13
Step 1: Define the Mission
Examples of mission statements– MADD: “to stop drunk driving, support the
victims of this violent crime, and prevent underage drinking.”
– National Book Swap: “to become the nation’s largest book club and in the process bring a lifetime of reading material to every American.”
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-14
Step 2: Evaluate the Internal and External Environments
Situational analysis (business review)– An assessment of a firm’s internal and
external environments– Internal environment: controllable elements
inside of an organization– External environment: uncontrollable
elements outside of an organization that may affect its performance either positively or negatively
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-15
Internal Environment
Controllable elements inside a firm that influence how well the firm operates include:– People (human capital), physical facilities,
financial stability, corporate reputation, quality products, strong brands, technologies, etc.
These elements represent the key strengths and weaknesses of the firm
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-16
External Environment
Elements outside the firm that may affect it either positively or negatively include:– Economic, competitive, technological,
legal/political/ethical, and sociocultural trends– Trends manifest as opportunities or threats– Firm cannot directly control external factors
but can respond to them via planning
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SWOT Analysis
An analysis of an organization’s strengths (S) and weaknesses (W) and the opportunities (O) and threats (T) in the external environment
SWOT enables the firm to develop strategies that maximize strengths and capitalize upon opportunities
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Step 3: Set Organizationalor SBU Objectives
Organizational/SBU Objectives:– What the firm hopes to accomplish with long-
range business plan
Need to be specific, measurable, attainable and sustainable– May relate to sales, profitability, product
development, market share, productivity, ROI, customer satisfaction, or social responsibility
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Step 4: Establish the Business Portfolio
Business portfolio: – The group of different products or brands
owned by a firm and having different income-generating and growth capabilities
Portfolio analysis: – Assessing the potential of a firm’s SBUs– Helps make decisions regarding which SBUs
should receive more or less of the firm’s resources
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Step 5: Develop Growth Strategies
Product-market growth matrix:– Characterizes different growth strategies
according to type of market (new vs. existing) and type of product (new vs. existing).
– Matrix yields four potential strategies:• Market penetration• Product development• Market development• Diversification
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Marketing Planning: Steps 1 and 2
Perform a situation analysis– Builds on SWOT; identifies how environmental
trends affect the marketing plan
Set marketing objectives– Specific to the firm’s brands and other
marketing mix-related elements– States what the marketing function must
accomplish if firm is to achieve its overall business objectives
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Marketing Planning: Step 3
Develop marketing strategies to achieve marketing objectives– Select target market(s) where the firm’s
offerings are best suited– Develop marketing mix strategies:
• Marketing mix strategies: how marketing will accomplish its objectives in the firm’s target market by using product, price, promotion, and place (distribution)
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-23
Marketing Mix Strategies
Product strategies:– Include product design, packaging, branding,
support services, and product variations and features
Pricing strategies:– Include setting prices for final consumers,
wholesalers, and retailers based on costs, demand, or competitors’ prices
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-24
Marketing Mix Strategies
Promotion strategies: – Advertising, sales promotion, public relations,
direct marketing, personal selling
Distribution (place) strategies: – How, when, and where the product is
available to targeted customers
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-25
Step 4: Implement and Controlthe Marketing Plan
Control: – Measuring actual performance, comparing
performance to the objectives, making adjustments
Marketing metrics: – Return on marketing investment (ROMI)
Action plans:– Support plans that guide implementation and
control of marketing strategies
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-26
Create and Work with a Marketing Plan
Written marketing plans encourage concrete objectives and strategies
Operational plans focus on the day-to-day execution of the marketing plan
A firm’s corporate culture determines much of its internal environment—the values, norms, and beliefs that influence everyone in the firm
Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-27
Real People, Real Choices: Decision Made at PaperBackSwap
Richard chose both option 1 and 3– Richard felt that positioning the firm as a
provider of inexpensive entertainment while doing something positive for the environment stood the best chance of success
– Implementation: incorporated recycling symbol into corporate logo; encouraged use of Media Mail; members promoted to others
– Measuring success: over 5 million books posted; usage increased by 55%
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Keep It Real: Fast-Forward to Next Class Decision Time at eBay
Meet Robert Chatwani, General Business Manager of eBay
eBay is developing a new online marketplace to help small producers and artisans gain global access
The decision to be made: Select a course of action that would maximize long-term revenue and social impact
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Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice HallPublishing as Prentice Hall
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
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