chapter 2 strategic market planning: take the big picture

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


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


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


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


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


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


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


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)


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


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


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


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.”


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


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


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


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


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


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


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


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


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)


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


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


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


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


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%


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


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.

chapter 2 strategic market planning: take the big picture

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