Strategic Planning and Marketing Plans

Lesson 2Strategic Planning

and Marketing Plans

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Lesson Objectives

1. Explain strategic planning and how it relates to the organisation’s mission, objectives and goals

2. Identify and define methods for designing the business portfolio, developing growth strategies and planning functional strategies

3. Outline the marketing process

4. Introduce the components of the marketing plan

5. Explain the ways in which marketing organisations control and evaluate their marketing performance

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Strategic Planning

Visions demand a strategy, strategy requires a plan Organizations that fail to plan, plan to fail Plans help you anticipate and respond quickly to

changes The main purpose of strategic planning is to help

firms understand how to compete for the future

The process of developing and maintaining a strategic fit between the organization's goals and capabilities in the light of changing marketing opportunities

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Figure 3.2: Strategy Hierarchy

SBUStrategy

SBU Strategy• Business definition• Objectives• Product market portfolio• Competitive strategy• Resource allocation and management

Marketing Strategy•Marketing objectives•Product/marketsstrategies

Corporate Level

Functional Level of SBU

Strategic Business Unit Level

Corporate Strategy• Mission and vision• Objectives• Business portfolio strategy• Resource development• Corporate values

SBUStrategy

Finance andadministration

strategy

Production and operation

strategy

R&D StrategyTechnology

Product development

Human resources strategy

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Corporate, Business, and Marketing Strategy

Corporate Strategy

• Building core competencies

•Business portfolio•Capital investments and

resource allocation•Corporate culture•Corporate structure

•Product/ market portfolio•Resource allocation•Product-markets•Business culture•Strategic cost• Management

•Markets•Products and services•Profit-yielding strategies•Brand management•Profit improvement

Business Strategy

• Distinctive competencies• Developing competitive

position• Competitive advantage

Marketing Strategy

• Developing marketposition

• Customer satisfaction

Focus

Customer value creation, maintenance and defence

Focus

Economicvalue added

Focus

Economicvalue added

ShareholderValue

BusinessValue

CustomerValue

Corporate Strategy

• Building core competencies

•Business portfolio•Capital investments and

resource allocation•Corporate culture•Corporate structure

•Product/ market portfolio•Resource allocation•Product-markets•Business culture•Strategic cost• Management

•Markets•Products and services•Profit-yielding strategies•Brand management•Profit improvement

Business Strategy

• Distinctive competencies• Developing competitive

position• Competitive advantage

Marketing Strategy

• Developing marketposition

• Customer satisfaction

Focus

Customer value creation, maintenance and defence

Focus

Economicvalue added

Focus

Economicvalue added

ShareholderValue

BusinessValue

CustomerValue

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Hierarchy of Objectives

Company Objectives

Business Unit Objectives

Functional Objectives

3M

Adhesives

Production Finance Marketing HR R&D

Product Place Promotion Price

Personal SellingAdvertising

Sales Promotion

Marketing Objectives

Promotion Objectives PR

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Figure 3.4: Steps in Strategic Planning

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Step 1: The Mission Statement

A statement of the organisation’s purpose – what it wants to accomplish in the larger environment.

market oriented (not short term like product and technological definitions).

based on organisational core competencies

Our mission is to organize the world’s information and make it universal accessible and useful.

Yahoo!’s mission is to connect people to their passion, their communities and the world’s knowledge.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Marketing Myopia

Sustained growth depends on how broadly companies define their businesses and how carefully they gauge their customers’ needs. . . Thus, companies should stop defining themselves by what they produced (product-oriented) and instead reorient themselves toward customer needs (customer-oriented) - Theodore Levitt, Marketing Myopia

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Table 3.1: Product and Market Oriented Business Definitions

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

DO NOT OFFER ME THINGS.

Do not offer me clothes. Offer me attractive looks.

Do not offer me shoes. Offer me comfort for my feet and the

pleasure of walking…

Do not offer me furniture. Offer me comfort and the quietness of

a cosy place.

Do not offer me things. Offer me ideas, emotions, ambience,

feelings and benefits.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

The 5Ws of the Mission Statement

Five basic questions to be answered:• Why we are here?• What we do?• Who we serve?• What we believe?• What are our core competencies or competitive

advantages?

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Setting Company Objectives and Goals

Company objectives must be/have: Compatible with company resources Measurable Time frame Ownership & accountability

Marketing objectives must be compatible with company objectives.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education AustraliaSource: Kotler et al. (2007)

Step 2: Corporate Objectives & Goals

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Step 3: The Business Portfolio

A business portfolio is the collection of businesses and products that make up the company

Four basic questions to be answered:• Which SBUs need to be built? • Which SBU to be maintained?• Which SBU to be harvested?• Which SBU to be divested?

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

a) Analyze the Current Business Portfolio

Most portfolio analyses evaluate the SBUs of a firm on two important dimensions: the attractiveness of the SBU’s market and the strength of the SBU’s position in the market.

The best known portfolio-planning analysis methods and tools were developed by the Boston Consulting Group and by General Electric.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Figure 3.6: Boston Consulting Group Approach

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Business Strength

High

Medium

Low

Strong Average Weak

A

B

C

D

Ind

ustr

y

Att

racti

ven

ess

Figure 3.7: GE’s Strategic Business-Planning Grid

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

b) Shape the FutureBusiness Portfolio

Determine the future role of each SBU and choose the appropriate resource allocation strategy: Build Maintain Harvest Divest

Developing strategies for growth (product/market expansion grid) or downsizing business portfolio

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Figure 3.9: Product/Market Expansion Grid

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Developing Growth Strategies

1. Market Penetration: promoting the company growth by increasing sales of current products to current markets.

2. Market Development: promoting growth by identifying and developing new segments.

3. Product Development: promoting growth by offering modified or new products.

4. Diversification: starting up or acquiring businesses outside the current products and markets.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

TargetConsumers

Product

Place Price

Promotion

Mar

ketin

g

Impl

emen

tatio

n

Marketing

Planning

Marketing

Control

Mar

ketin

g

Analys

is

Competitors

MarketingChannels

PublicsSuppliers

Demographic -Economic

Environment

Technological -Natural

Environment

Political -Legal

Environment

Social -Cultural

Environment

Step 4: The Marketing Strategy

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

(1) Analyzing marketing opportunities (2) Segmenting the market (3) Targeting markets (4) Positioning products (5) Crafting the marketing mix (4Ps) (6) Implementing and managing the

marketing effort

The Marketing Process

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Analysing Marketing Opportunities

Think of some companies who have identified marketing opportunities.

Marketing opportunity is an area of buyer need and interest in which there is a high probability that a company can perform profitably by satisfying that need.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

1. supplying something in short supply 2. supplying an existing product/service

in a new/superior way 3. supplying a new product or service

Sources of Marketing Opportunities

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Targeted Marketing

To succeed in today’s competitive marketplace, companies must be consumer centred

As there are too many consumers with too many needs, a company must divide up the total market, choose the best segments and design strategies for profitably serving chosen segments better than its competitors do

This process involves four steps: demand measurement and forecasting, market segmentation, targeting and positioning (Lesson 4)

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Target Consumers (2)

Demand Measurement and Forecasting

A company needs to analyse, estimate and identify the current and future size of the market before entering the market. Demand can be forecasted by a variety of methods and scenario planning is an important part of this process.

Market Segmentation

Dividing a market into direct groups of buyers who might require separate products or marketing mixes; the process of classifying customers into groups with different needs, characteristics or behaviour.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Marketing Strategies for Competitive Advantage

Market Nicher

Market Follower

Market Challenger

Market Leader

STRATEGY A COMPANY ADOPTSDEPENDS ON ITS

INDUSTRY POSITION

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Developing the Marketing Mix

The marketing mix is the set of controllable variables; product, price, place and promotion (4 Ps) that the company uses to meet the target markets needs and wants.

Organisations that include service components use the extended marketing mix (7Ps).

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Marketing Mix at

Product Advertising solutions (AdWords for text- based ads)

Business Solutions (Search Appliance models)

Google Store (Selling tangible items)

Price List price with AdWords ranges from $0.05 to $50 per day (advertisement, the amount of times individuals click, ads ranking).

Discounts and allowances are not available at Google.

Payment period at Google is based on its relationship with customers (the credit history of the customer)

Credit terms: a monthly credit limit for those customers with good financial record ($50 to $500/month)

Place The internet.

Promotion Word-of-mouth instead of advertising (viral marketing)

Credible brand (ordinal name)

Any displayed advertisements are designated as “sponsored links.”

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

A Marketing Plan or a Business Plan?

The business plan incorporates the plans of all functions —production, R&D, finance, human resources, IT and marketing.

The marketing plan has its focus on customer acquisition, retention and the resources required.

It is the central document for directing and coordinating the marketing effort.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Figure 4.1: The Relationship Between Analysis, Planning, Implementation and Control

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Table 4.1: Contents of a Marketing Plan

Section Description

I. Executive Summary and Table of Contents

Brief overview of the proposed plan

II. Current Marketing Situation

Background data on the market, product, competition, distribution and macro environment

III. SWOT and Issue Analysis

Identify main: strengths, weaknesses, opportunities, threats facing the product line

IV. Objectives Define financial objectives and marketing goals such as sales volume, market share and profit

V. Marketing Strategy Present broad marketing approach that will be used to achieve the plan’s objectives

VI. Action Programs Present special marketing programs designed to achieve the business objectives

VII. Projected Profit and Loss Statement

Forecast the plan’s expected financial outcomes

VIII. Controls Indicates how the plan will be monitored

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The Marketing Plan in Detail

Executive Summary

Aimed at senior management to enable them to grasp quickly the plan’s major thrust, its goals and recommendations

The summary should be no more than one page long

Current Marketing Situation Relevant background data on the target market, product,

competition, distribution and the macro-environment

SWOT and Issues Analysis Opportunities and Threats Strengths, Weaknesses and Issues facing the product line

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

The Marketing Plan in Detail

Marketing Strategy The marketing strategy is often presented in list form after

the inclusion of a positioning strategy statement which typically includes:

• Target Market• Product positioning• Product line• Price• Communication• Sales• Promotion

Objectives Two types of objectives must be set:

• Financial • Marketing

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

The Marketing Plan in Detail

Action Programs Each marketing strategy element must now be

elaborated to answer: • What will be done?• When will it be done?• Who will do it? • How much will be spent?

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

The Marketing Plan in Detail

Projected Profit-and-Loss Statement

Action plans allow the product manager to build a supporting budget.

Shows the forecast sales volume in units and the average price.

Costs include production, physical distribution and marketing broken down into finer categories.

The difference between revenues and sales is the projected profit.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

The Marketing Plan in Detail

Controls The goals and budget are spelled out for each month or

quarter. Senior management can review the results of each

period and identify businesses that are not attaining their goals.

Managers of lagging businesses must explain what is happening and the actions they will take to improve plan fulfillment.

A contingency plan outlines the steps that management would take in response to specific adverse developments.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Evaluating the Marketing Plan (1)

How does your marketing plan measure up? Before implementing the marketing plan it can be useful to evaluate it by answering the following questions:1. Do your marketing objectives relate directly to the

company’s strategic initiatives?2. Do your marketing objectives relate directly to what you

learned in your situational analysis?3. Do your marketing objectives relate directly to the

capacity of your current marketing mix to handle them?4. Do your marketing objectives relate directly to your

business’s strengths and to the opportunities available?5. Do your marketing objectives relate directly to your

business’s weaknesses and to the threats that endanger it?

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Evaluating the Marketing Plan (2)

6. Are your marketing objectives clear, measurable statements of what is to be achieved?

7. Do your marketing objectives, strategies and tactics relate to each other?

8. Does each strategy in your marketing plan contain a cost/benefit evaluation?

9. Is every person involved in implementation included in the marketing planning process in some way?

10. Is the plan clearly visible on your desk every day?

11. Is your business’s vision truly a ‘shared vision’?

If you can answer all these questions positively you have a powerful marketing plan ready for implementation.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Implementing the Marketing Plan

To turn marketing strategies and plans into marketing actions in order to accomplish strategic marketing objectives.

Implementation involves day-to-day, month-to-month activities that effectively put the marketing plan to work.

Whereas marketing planning addresses the what and why of marketing activities, implementation addresses the who, where, when and how.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Reasons for Poor Implementation

Isolated planning Trade-offs between long and short-term

objectives Natural resistance to change Lack of financial and marketing integration Overemphasis on the document

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Factors for Successful Implementation

Action program that pulls all the people and activities together.

Formal organisation structure. A company’s decision and reward systems (operating

procedures that guide planning, budgeting, remuneration and other activities).

Careful human resources planning. Marketing strategies must fit with its company culture.

Company culture is a system of values and beliefs shared by people in an organisation—the company’s collective identity and meaning.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Marketing Department Organisation

Implementation is affected by the structure of the organisation.

The most common form of marketing organisation is by job function.

Product management organisation or geographical organisation could be other approaches.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Figure 4.2: Functional Organisation

MarketingDirector/Manager

New-ProductManager

SalesManager

AdvertisingManager

MarketingResearchManager

CustomerService

Manager

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Figure 4.4: Product Management Organisation

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Controlling and Evaluating Performance

Marketing Control: The process of measuring and evaluating the results of marketing strategies and plans and taking corrective action to ensure that marketing objectives are attained.

Marketing Audit: A comprehensive, systematic and periodic examination of a company’s environment, objectives, strategies and activities to determine problem areas and opportunities and to recommend a plan of action to improve the company’s marketing performance.

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Figure 4.5: The Control Process

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Step 1. Ask “Where Are We Now?”

SWOT Analysis Strengths

• Competencies? Sustainable Competitive Advantages? Unique Selling Points?

Weakness Opportunities Threats

Internal

External

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

SWOT should result in information about: Firm itself Trends in industry Competitors Customers

Need to translate into action plan

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Objectives: Make a profit Develop the organization Be socially useful

Company objectives affect marketing objectives Objectives must be compatible Coy resources may limit opportunities

• Financial strength, marketing strength, production capability and flexibility

Step 2: Ask “Where Do We Want To Go?”

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Step 3: Segment, Target, Position

Market Segmentation Identify buyers 1) with common needs, and 2) will

respond similarly

Targeting Select a segment and focus efforts and resources

on it

Positioning How consumers see your product Points of difference, company philosophy etc

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Step 4: Develop Marketing Program

Strategies for the 4Ps What product to offer? At what price? How to promote to consumers? Where to place them for sale?

Estimate budgets

Kotler, Brown, Adam, Burton, Armstrong: Marketing 7e © 2007 Pearson Education Australia

Step 5: Implement & Control

Implementation Obtain resources Organize the team Develop schedules Working with other departments Executing plan

Control Steer to stay to plan Steps 4 & 5: Iterative process May need update of 4P strategies