Market Planning

Business Planning: Compose the Big Picture 2-2 Business Planning: Ongoing process of making decisions that guide 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

Figure 2.1 Three Levels of Business Planning 2-3

Strategic Planning 2-4 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

SWOT - Starbucks Growth Strategy for the US Strength – profitable and cash-rich Threat – New potentially damaging competition (Wal-mart & Kicks) Strategy indicated Reinforce positioning Introduce flanker brand to compete with Wal-mart on the lower end (Seattle Coffee Company)

SWOT - Starbucks Growth Strategy for France Strength – high quality, global management expertise Strength – cash-rich and profitable Opportunity – No concept like Starbucks exists in France Threat – “sock juice” – damaging pre-existing attitudes US-France political tensions Strategy Target a more receptive segment – the young French Sell the American Starbucks experience (coffee, ambience, music, healthful (no- smoking), internet, a cool place to hang out) Objective Attitudes in the target segmen t

Functional (Tactical) Planning 2-7 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 2-8 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 2-9 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 2-10 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 Business Units (SBUs) 2-11 Large firms like the Walt Disney Company usually operate several SBUs. Disney SBUs include theme parks, movie studios, TV networks, and cruise line

Strategic Planning Step 1: Define the Mission 2-12 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 2-13 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”

Coca Cola’s Mission Statement 2-14 “Everything we do is inspired by our enduring mission: To Refresh the World… in body, mind, and spirit. To Inspire Moments of Optimism… through our brands and our actions. To Create Value and Make a Difference… everywhere we engage.” atements.html

Step 2: Evaluate the Internal and External Environments 2-15 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 2-16 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 key strengths and weaknesses of the firm

External Environment 2-17 Elements outside the firm that may affect it either positively or negatively: 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

Trends Present Opportunities 2-18 Recent sociocultural trends influencing food marketing stem from consumer desires for low fat, low carb, and organic foods

SWOT Analysis 2-19 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 Organizational or SBU Objectives 2-20 Organizational/SBU Objectives: What the firm hopes to accomplish with long-range business plan Need to be specific, time-bound and measurable May relate to sales, profitability, product development, market share, productivity, ROI, customer satisfaction, or social responsibility

Are these good objectives? Increase sales by 15% Achieve recall by December % of my consumers should know about my brand Within 6 months of the launch of the product, consumers should be brand loyal 60% of the consumers should like my brand within six months of launch

Figure 2-2 SBUs and the Strategic Plan 2-22

Step 4: Establish the Business Portfolio 2-23 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

Figure 2-3 Boston Consulting Group (BCG) Matrix 2-24

Step 5: Develop Growth Strategies 2-25 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

Figure 2-4 Product-Market Growth Matrix 2-26

Marketing Planning: Step Perform a situation analysis Builds on SWOT; identifies how environmental trends affect the marketing plan What trends impact the marketing plan for Netflix?

Marketing Planning: Step 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 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 2-30 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 2-31 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 Control the Marketing Plan 2-32 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

Metrics Moment 2-33 ROMI is the revenue or profit margin generated by investment in a specific marketing program divided by the cost of that program (expenditure) at a given risk level, as determined by management

Creating and Working with a Marketing Plan 2-34 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

Corporate Culture 2-35 The way employees dress reflects their organization’s corporate culture. Think about the way people dress at a firm that is familiar to you. What does the typical attire at that firm “say” about the culture of the organization?