Chapter 2 Strategic Planning and the Marketing Process

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Chapter 2 Strategic Planning and the

Marketing Process


Objectives

1. Distinguish between strategic planning and tactical planning.

2. Explain how marketing plans differ at various levels in an organization.

3. Identify the steps in the marketing planning process.

4. Describe the concept of a SWOT analysis and its major elements.


Objectives

5. Discuss how a strategy can be implemented through marketing plans.

6. Identify the basic elements of a marketing strategy.

7. Describe the environmental characteristics that influence strategy decisions.

8. Explain how the strategic business unit concept, the market share/market growth matrix, the market attractiveness/business strength matrix, and spreadsheet analysis can be used in marketing planning.


Planning

The process of anticipating future events and conditions and determining the best way to achieve organizational objectives.

A continuous process that includes identifying objectives and includes checkpoints.


Plans Formulated Within the Marketing Organization Product lines. Pricing decision. Selection of appropriate

distribution channels. Promotional campaigns.

Planning helps us hit what we aim for.


A portfolio of products has helped Kraft obtain the position of market leader.


Strategic Planning

• The process of determining an organization’s primary objectives.

• Adopting courses of action that include allocation of necessary resources.

• Typically longer term.


There are several businesses that offer help in strategic planning. The Patricia Seybold Group represents one such firm.


Tactical Planning

• Guides the implementation of activities specified in the strategic plan .

• Typically address shorter-term actions.


Planning at Different Management Levels

Daily and weekly plans; unit budgets; departmental rules and procedures

Operational planningDistrict sales managerSupervisors in staffMarketing departments

Supervisory Management

Quarterly and semi-annual plans; divisional budgets; divisional policies and procedures

Tactical planningGeneral sales managerMarketing research managerAdvertising director

Middle Management

Organization-wide objectives; fundamental strategies; long-term plans; total budget

Strategic planningBoard of directorsChief executive officer (CEO)Chief operating officer (COO)Divisional vice presidents

Top Management

Examples

Types of Planning Emphasizedat This LevelManagement Level


Mission

• The essential purpose that differentiates the company from others.

• Specifies the organization’s overall goals and operational scope.

• Provides general guidelines for future management actions.


SWOT Analysis• An important strategic planning tool.• Helps planners to compare internal

organizational strengths and weaknesses.• Acronym for

– Strengths – Weaknesses– Opportunities– Threats

• Provides managers with a critical view of the organization’s internal and external environments.


Elements of a Marketing Strategy

Basic elements of a marketing strategy consist of:1.The target market2.The marketing mix variables of: product distribution promotion price


Marketing MixProduct Strategy• Deciding what goods or services the firm should

offer to a group of consumers.• Includes making decisions about

– Customer service– Package design– Brand names– Trademarks– Patents– Warranties– Life cycle of a product– Positioning the product in the marketplace– New product development


Marketing Mix

Distribution (Place) Strategy• Ensures that consumers find their products in

the proper quantities at the right times and places.

• Involves:– modes of transportation– warehousing– inventory control– order processing– selection of marketing channels


Marketing Mix

Promotion Strategy• The Communication link between sellers and

buyers– Communicate messages directly through

salespeople or indirectly through advertisements and promotions.

– Companies use an approach called integrated marketing communications (IMC) so the consumer receives a unified and consistent message.


Marketing Mix

Pricing Strategy– Methods of setting profitable and justifiable

prices.– Closely regulated and subject to

considerable public scrutiny.– A major influence is competition.


Planning Tools for Marketing

Four specific tools:1. Strategic business unit2. Market share/market growth matrix3. Market attractiveness/business strength

matrix4. Spreadsheet analysis


Strategic Business Units (SBUs)

SBUs are key business units within diversified firms.

• Each SBU– has its own managers, resources,

objectives, and competitors.– pursues its own distinct mission.– develops its own plans independently.– focuses the attention of company

managers so that they can respond effectively to changing consumer demand.


Market Share / Market Growth MatrixA four-quadrant chart that plots market share—the percentage of a market that a firm controls—against market growth potential.

StarsGenerate considerable income

Strategy: Invest more funds for future growth

Question MarksHave potential to become stars or cash

cows

Strategy: Either invest more funds for growth or consider disinvesting

Cash CowsGenerate strong cash flow

Strategy: Milk profits to finance growth of stars and question marks

DogsGenerate little profits

Strategy: Consider withdrawing

Relative Market ShareHigh Low

Hig

hLo

w

Indu

stry

Gro

wth

Rat

e


The Boston Consulting GroupDevelopers of the Market Share / Market Growth Matrix


Market Attractiveness/Business Strength Matrix

• Rates SBUs according to the attractiveness of their markets and their organizational strengths.

• Marketing attractiveness criteria include:– Market share– Growth– Size– Stability– Potential profitability– Extent of government regulations– Potential environmental and social impact– Competitive conditions


Summary

• Discussion has centered around:– Strategic and tactical planning– Planning at different organizational

levels– The planning process– SWOT– Planning tools available

Documents

Chapter 2 Strategic Planning and the Marketing Process