Strategic Planning and the Marketing Process Chapter 2 Strategic Planning and the Marketing Process

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.

Strategic Planning Strategic Planning is the Process of Developing and Maintaining a Strategic Fit Between the Organization’s Goals and Capabilities and Its Changing Marketing Opportunities.

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

Fit Market Environment Distinctive Competencies Defining the Company’s Business and Mission A Mission Statement is a Statement of the Organization’s Purpose. Characteristics of a Good Mission Statement: Market Oriented Realistic Fit Market Environment Distinctive Competencies Motivating Specific

Setting Company Objectives and Goals

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 (SBU’s) decide which SBU’s should receive more, less, or no investment develop growth strategies for adding new products or businesses to the portfolio

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

Analyzing Current SBU’s: GE’s Strategic Business-Planning Grid Business Strength Strong Average Weak C High A Medium Industry Attractiveness D B Low

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

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

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.

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.

Planning Cross-Functional Strategies Marketing’s Role in Strategic Planning Guiding Philosophy Inputs to Strategic Planners Designs Strategies

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

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

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.”

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

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

The 4 P’s & 4C’s of the Marketing Mix Product Price Place Promotion 4 C’s Customer Solution Customer Cost Convenience Communication

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

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

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

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

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

Discussion Compare the General Electric strategic business-planning grid and the Boston Consulting Group approach? How do the industry attractiveness and business strength dimensions of the GE grid compare with the market growth rate and relative market share dimensions of the BCG grid? What other similarities and differences do you see? Where would a SBU located in the yellow zone of the GE grid most likely be located in the BCG grid? What strategy might this suggest for the SBU?