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1 Chapter 2 Strategic Planning and the Marketing Process.

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1 1 Chapter 2 Strategic Planning and the Marketing Process

2 2 Formal Planning Many companies operate without formal plans, yet these plans can provide many benefits such as: Encouraging management to think ahead systematically. Forcing managers to clarify objectives and policies. Better coordination of company efforts. Clearer performance standards for control. Helping the company to anticipate and respond quickly to environmental changes and sudden developments.

3 3 Strategic Planning Strategic Planning is the Process of Developing and Maintaining a Strategic Fit Between the Organizations Goals and Capabilities and Its Changing Marketing Opportunities.

4 4 Steps in Strategic Planning (Fig. 2.1) Defining the Company Mission Setting Company Objectives and Goals Designing the Business Portfolio Planning, marketing, and other functional Strategies Corporate Level Business unit, product, and market level

5 5 Market Oriented Realistic Fit Market Environment Distinctive Competencies Motivating Specific Characteristics of a Good Mission Statement: A Mission Statement is a Statement of the Organizations Purpose. Defining the Companys Business and Mission

6 6 Setting Company Objectives and Goals

7 7 Designing the Business Portfolio The business portfolio is the collection of businesses and products that make up the company. The company must: analyze its current business portfolio or Strategic Business Units (SBUs) decide which SBUs should receive more, less, or no investment develop growth strategies for adding new products or businesses to the portfolio

8 8 Question Marks High growth, low share Build into Stars or phase out Require cash to hold market share Question Marks High growth, low share Build into Stars or phase out Require cash to hold market share Stars High growth & share Profit potential May need heavy investment to grow Cash Cows Low growth, high share Established, successful SBUs Produce cash Cash Cows Low growth, high share Established, successful SBUs Produce cash Dogs Low growth & share Low profit potential Dogs Low growth & share Low profit potential Relative Market Share High Low Market Growth Rate Low High Analyzing Current SBUs: Boston Consulting Group Approach ?

9 9 Business Strength High Medium Low StrongAverageWeak A B C D Industry Attractiveness Analyzing Current SBUs: GEs Strategic Business-Planning Grid

10 10 Can be Difficult, Time-Consuming, & Costly to Implement Difficult to Define SBUs & Measure Market Share/ Growth Focus on Current Businesses, But Not future Planning Can Lead to Unwise Expansion or Diversification Problems With Matrix Approaches

11 11 1. Market Penetration 2. Market Development 3. Product Development 4. Diversification Existing Markets New Markets Existing Products New Products Product/ Market Expansion Grid Developing Growth Strategies in the Age of Connectedness

12 12 Product/ Market Expansion Grid Market Penetration: making more sales to current customers without changing its products. How? Add new stores in current market areas, improve advertising, prices, service or store design. Market Development: develop new markets for its current products. How? Identify new demographic or geographic markets.

13 13 Product/ Market Expansion Grid Product Development: offering modified or new products to current markets. How? New styles, flavors, colors, or modified products. Diversification: new products for new markets. How? Start up or buy new businesses.

14 Discussion Connections Beyond evaluating current business, designing the business portfolio involves finding future businesses and products the company should consider. Apply the product/ market expansion grid to assess how one of the following companies might grow: Dell computer Kodak Levi-Strauss E*Trade online investment services Assign each of the choices to a separate small group, have the group develop the answer, then discuss each approach in class.

15 15 Guiding Philosophy Inputs to Strategic Planners Marketings Role in Strategic Planning Designs Strategies Planning Cross-Functional Strategies

16 16 Target Consumers Product PlacePrice Promotion Marketing Implementation Marketing Planning Marketing Control Marketing Analysis Competitors Marketing Intermediaries PublicsSuppliers Demographic- Economic Environment Technological- Natural Environment Political- Legal Environment Social- Cultural Environment The Marketing Process (Fig. 2.5)

17 17 Connecting With Customers Market Segmentation: determining distinct groups of buyers (segments) with different needs, characteristics, or behavior. Market Targeting: evaluating each segments attractiveness and selecting one or more segments to enter.

18 18 Connecting With Customers Market Positioning: arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. i.e. Chevy Blazer is like a rock.

19 19 Marketing Strategies for Competitive Advantage Strategy a Company Adopts Depends on Its Industry Position

20 20 Target Customers Intended Positioning Product Goods-and-service combination that a company offers a target market Price Amount of money that consumers have to pay to Obtain the product Activities that persuade target customers to buy the product Promotion Company activities that make the product available Place Developing the Marketing Mix

21 21 The 4 Ps & 4Cs of the Marketing Mix 4 Ps Product Price Place Promotion 4 Ps Product Price Place Promotion 4 Cs Customer Solution Customer Cost Convenience Communication 4 Cs Customer Solution Customer Cost Convenience Communication

22 22 Marketing Planning Develop Strategic Plans Develop Marketing Plans Marketing Planning Develop Strategic Plans Develop Marketing Plans Marketing Implementation Carry Out The Plans Marketing Implementation Carry Out The Plans Marketing Analysis of Companys Situation Control Measure Results Evaluate Results Take Corrective Action Managing the Marketing Effort (Fig. 2.7)

23 23 Executive Summary Current Marketing Situation Threats and Opportunity Analysis Objectives and Issues Marketing Strategy Action Programs Budgets Controls Contents of a Marketing Plan (Table 2.2)

24 24 Marketing Strategy Marketing Performance Implementation Climate and Culture Action Programs Decision and Reward Organizational Structure Human Resources Marketing Implementation

25 25 Market Management Combination Plan Product Management Geographic Functional Ways to Carry Out Marketing Activities Marketing Department Organization

26 26 Marketing Control Process (Fig. 2.8) Set Goals Measure Performance Evaluate Performance Take Corrective Action

27 27 Review of Concept Connections Explain companywide strategic planning and its four steps. Discuss how to design business portfolios and growth strategies. Explain functional planning strategies and asses marketings role in strategic planning. Describe the marketing process and the forces that influence it. List the marketing management functions, including the elements of a marketing plan.


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