marketing strategy Strategic Marketing Planning 2 2 C H A P T E R

The Strategic Planning Process 2-2 Exhibit 2.1

The Strategic Planning Process Situation Analysis –An in-depth analysis of the organization’s internal and external environments Internal Consumer External 2-3

Organizational Mission vs. Organizational Vision Mission Statement –Answers… “What business are we in?” –Clear and concise explanation of the organization’s reason for existence Vision Statement –Answers… “What do we want to become?” –Tends to be future oriented –Represents where the organization is headed 2-4

Organizational Mission vs. Organizational Vision Elements of the Mission Statement –Five basic questions to be answered: Who are we? Who are our customers? What is our operating philosophy(basic beliefs, values, ethics, and so on)? What are our core competencies or competitive advantages? What are our responsibilities with respect to being a good steward of our human, financial, and environmental resources? 2-5

The Best Mission Statements 2-6 Exhibit 2.2 (1 of 2)

The Best Mission Statements 2-7 Exhibit 2.2 (2 of 2)

Organizational Mission vs. Organizational Vision 2-8 Mission Width and Stability –Width: coverage of business domain Too broad : resource allocation and development of core competencies Too narrow : neglect of opportunities, no growth area Too broad or too narrow mission may not serve its purpose –Stability: Frequency of modifications –Should be changed least frequently

Organizational Mission vs. Organizational Vision 2-9 Mission with Customer Focus –Ben and Jerry’s 3-part Mission Statement Product Mission Economic Mission Social Mission –Tylenol : 100 million $ “The choice is obvious given J & J’s mission statement Mission Shared and Supported by Employees Mission Communicated to Everyone The one and only part of strategy known to others

Corporate or Business-Unit Strategy (Corporate or) Business-Unit Strategy –The central scheme or means for: Carrying out the organization’s mission and Achieving the organization’s desired goals and objectives Utilizing and integrating the organization’s resources in the functional areas Developing competitive, or differential, advantage –Capabilities that allow it to serve customers' needs better than the competition –What are the examples of competitive advantage? –What characteristics of CA is desirable? 2-10

Corporate or Business-Unit Strategy Larger firms –Devise separate strategies for each strategic business unit (SBU), subsidiary, division, product line, or other profit center within the parent firm Small businesses –Corporate strategy and business-unit strategy are essentially the same –Business-unit strategy determines the nature and future direction of each business unit, including its competitive advantages, the allocation of its resources, and the coordination of the functional business areas within. 2-11

Functional Goals and Objectives All business functions must support the organization’s mission and goals. Functional objectives should be expressed in clear, simple terms. All functional objectives should be reconsidered for each planning period. 2-12

Functional Strategy Functional strategies are designed to integrate efforts focused on achieving the area’s stated objectives. The functional strategy must: –Fit the needs and purposes of the functional area –Be realistic with the organization’s resources and environment –Be consistent with the organization’s mission, goals, and objectives. The effects of each strategy must be evaluated periodically. In marketing strategy, the process focuses on: –Selecting one or more target markets and –Developing a marketing program (or marketing mix) that satisfies the needs and wants of members of that target market. 2-13

Implementation Involves activities that execute the functional strategy. Functional plans have two target markets to satisfy: –External market: customers, suppliers, investors, potential employees, the society at large –Internal market: employees, managers, executives A company must rely on its internal market for a functional strategy to be implemented successfully (internal marketing). 2-14

Evaluation and Control Designed to keep activities on target with goals and objectives Coordination among functional areas is a critical issue –Open lines of communication is the key Evaluation and control is both an ending and beginning –Occurs after a strategy has been implemented –Serves as the beginning point for planning in the next cycle 2-15

The Strategic Planning Process Marketing Plan –Detailed formulation of the actions needed to carry out the marketing program –A written document that provides the blueprint or outline of the organization’s marketing activities, including the implementation, evaluation and control of those activities Clearly explains how the organization will achieve its goals and objectives. Serves as the road map for implementing the marketing strategy. Instructs employees as to their roles/functions in fulfilling the plan. Provides specifics regarding the allocation of resources Includes the specific marketing tasks, responsibilities of individuals, and the timing of all marketing activities. 2-16

The Marketing Plan –Different from a business plan Business plan encompasses other business issues such as organization, ownership, operations, financial strategy, human resources, risk management as well as marketing –Requires a great deal of information from many different sources –Should be well organized –A good marketing plan is: Comprehensive in information & alternative consideration Flexible to changes inside and outside Consistent in context, and understanding in all ranks Logical to sell the idea 2-17

Marketing Plan Structure I. Executive Summary Synopsis of the overall marketing plan Introduces major aspects of the marketing plan Written lastly II. Situation Analysis Summarizes information about 3 key environments: –Internal environment –Customer environment –Firm’s external environment including competition 2-18

Marketing Plan Structure III. SWOT Analysis –Strengths –Weaknesses –Opportunities –Threats –Analysis of the SWOT matrix –Developing the competitive advantages –Establishing a strategic focus 2-19

Marketing Plan Structure IV. Marketing Goals and Objectives Formal statements of desired and expected outcomes of the marketing plan –Goals: Broad, simple statements of what is to be accomplished –Objectives: More specific and essential to planning 2-20

Marketing Plan Structure V. Marketing Strategy Outlines how the firm will achieve its marketing objectives. –Primary target market Including secondary target market if relevant –Product strategy –Pricing Strategy –Distribution/supply chain strategy –Integrated marketing communication strategy (promotion) 2-21

Marketing Plan Structure VI. Marketing Implementation What specific marketing activities will be undertaken? How will these activities be performed? When will these activities be performed? Who is responsible for the completion of these activities? How will the completion of planned activities be monitored? How much will these activities cost? –Strategic issues The overall approach, organization structure, internal marketing issues –Tactical marketing activities Specific marketing programs (mix) 2-22

Marketing Plan Structure VII. Evaluation and Control –Formal controls Establishing performance standards, assessing actual performance by comparing it with these standards, and taking corrective action if necessary. Input, process, output controls –Informal controls Employee self-control, social and cultural control –Implementation schedule and timeline –Marketing audits A systematic examination of the firm's marketing objectives, strategy, and performance—can be used to pinpoint potential causes for discrepancies. 2-23

Using the Marketing Plan Structure Tips for using the marketing plan framework to develop a marketing plan: –Plan ahead –Revise, revise, revise –Be creative –Use common senses and judgment –Think ahead to implementation –Update regularly –Communicate to others 2-24

Purposes and Significance of the Marketing Plan A good marketing plan will: –Explain both the present and future situations of the organization –Specify the outcomes that are expected –Describe the specific actions that are to take place –Identify the resources that will be needed –Permit the monitoring of each action and its results It is a major means of communicating the strategy to top executives 2-25

In many organizations, marketing is not given a place of importance in the organizational hierarchy. Why do you think this happens? What are the consequences for a firm that gives little importance to marketing relative to other business functions? 2-26 Discussion Question

Organizational Aspects of the Marketing Plan Handling of the marketing plan –Drafted by marketing manager, brand manager, or product manager –Prepared by Marketing Director or VP of Marketing –Approval by President, Chairman, or CEO Top managers ask two questions: –Will the marketing plan achieve the desired goals and objectives? –Are there alternative uses of resources that would better meet the firm’s objectives? 2-27

Major Obstacles to Developing and Implementing Marketing Plans 2-28 Exhibit 2.4

Maintaining Customer Focus and Balance in Strategic Planning Changes in the focus and content of strategic plans over the last two decades: –Renewed emphasis on the customer –Advent of balanced strategic planning Changes require a shift in focus: –From products to the requirements of specific target market segments –From customer transactions to customer relationships –From competition to collaboration 2-29

Customer-Focused Strategic Planning –Puts customer needs and wants first Customer > Selling > Product (quality) > Production (efficiency) –Focuses on long-term, value-added relationships –Focuses on understanding customers (info generation & dissemination) in ways that enhance sustainable competitive advantages –Instills a corporate culture that places customers at the top of the organizational hierarchy –Finds ways to cooperate with suppliers and competitors to serve customers more effectively and efficiently GM & Toyota : joint production of vehicles (Corolla, Pontiac Vibe) and developing new fuel-cell technology 2-30

Traditional versus Market-Oriented Organizational Structures 2-31 Exhibit 2.5

Balanced Strategic Planning –Borne out of necessity because the traditional financial indicators could not capture value created by an organization’s intangible assets (customer relationships, processes, HR, innovation and information) –Considers financial indicators plus three additional perspectives: Customer perspective Internal Processes perspective Learning and Growth perspective –Explicitly consider those factors that are critical to strategy execution during strategy formulation Employee training, corporate culture, organizational learning, and executive leadership 2-32

The Balanced Performance Scorecard 2-33 Exhibit 2.6

Principles of Successful Firms Using The Balanced Performance Scorecard 1) Translate the Strategy into Operational Terms 2) Align the Organization to Strategy 3) Make Strategy Everyone’s Everyday Job 4) Make Strategy a Continual Process 5) Mobilize Change through Executive Leadership –Emphasize that strategy and performance is a multidimensional issues. 2-34

Discussion Question What are some of the potential difficulties in approaching strategic planning from a balanced perspective? Isn’t financial performance still the most important perspective to take in planning? Explain. 2-35