STRATEGIC PLANNING AND THE MARKETING MANAGEMENT PROCESS Chapter 1 STRATEGIC PLANNING AND THE MARKETING MANAGEMENT PROCESS

Introduction Marketing combines economics, psychology, anthropology, sociology, statistics and demographic. Identifies and provides tools to satisfy need and wants of target market. It is around us every day. Improves quality of life. Resolves conflicts between consumer and societal needs/wants.

The Essence of Marketing Customer focus: needs and wants Research emphasis Exchange process Relationship basis Competitive environment Satisfaction emphasis Efficiency Process to satisfy needs/wants of consumers and society

Definition of marketing Process Planning and executing Conception, pricing, promotion and distribution Goods and services Create exchanges Individuals and organizational goals

The Complexity of Marketing Multiple decision making process Interrelated factors Interaction between buyer and seller Global factor-important for survival

History of Marketing Thought Production Concept-industrial revolution (late 18th century) Product Concept-innovation (1920s) Selling Concept-promotion (1940s) Marketing Concept-customer satisfaction (1960s) Social Responsibility-consumerism and improve quality of life (1970s)

Marketing Theory Goods Vs. services-tangible/intangible Product categories-durable/non-durable Consumer Vs. industrial markets Profit Vs. nonprofit Intermediaries Vs. end users Domestic Vs. international Small firms Vs. large firms

The Marketing Mix Product Place Price Promotion

Selling versus Marketing Inward-looking Vs. outward-looking Short-term Vs. long-term Sales volume Vs. customer satisfaction Mass production Vs. innovation (needs satisfaction) Profit focus Vs. Brand loyalty

Marketing and Strategic Planning Focus to entire organization Future oriented Understanding customers Understanding Competitors Planning concepts (medium and long term) Marketing intelligence (need discovery) Strengths and weaknesses Strategy assessment-long term goals Organization response to environmental challenge

Marketing and Strategic Planning (Cont.) Top management concerns Follow the environmental changes-Microsoft Corporation Global approach-Sears Vs Wall-Mart The organizational strategic plan: Organizational vision and mission Organizational objectives Organizational Strategies Organizational portfolio plans

Organizational Mission Organization’s history Reason for existence The organization’s distinctive competencies Shows the direction that the organization is heading The organization’s environment It becomes absolute overtime

Mission Statements The most widely used management tool: What is our business? Who is the customers? What do customers value? What will our business be? Focus on market rather than product Achievable Motivational Specific

Organizational Objectives End points of an organization’s mission and they must be specific, measurable and action oriented: Market standing Innovations Productivity Physical and financial resources Profitability Manager responsibility Workers performance Social responsibility

Organizational Strategies Strategies based upon product/market Market penetration Market development Product development Diversification Strategies based upon competitive advantage Porter’s competitive advantage-low cost advantage-Wal-Mart Differentiation-Microsoft, Rolex, L.L.Bean

Product/Market Strategy Market penetration-to use more, changing product offering and positioning:exp. tuna fish in water. Product development-adding new features Market development-taking the product to a new market: internationalization Diversification:(a) related, and (b)unrelated industries.

Organizational Strategies(Cont.) Organizational strategies based upon value Product leadership-innovative approach Operational excellence-Dell computer Customer intimacy-relationship marketing Organizational Portfolio Plan Boston Consulting Group model GE model

The Boston Consulting Group Portfolio Model Relative Market Share High Low Stars Question Marks Cash cows Dogs Market Growth Rate Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Figure A-2

The General Electric Portfolio Model Business Strength Strong Average Weak Industry Attractiveness B A High C Medium Low Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Figure A-3

Components of Industry Attractiveness and Business Strength at GE Market size Market Growth Profitability Cyclicality Ability to recover from inflation World scope Business Strength Market Position Domestic market share World market share Share growth Share compared with leading competitor Competitive strengths Quality leadership Technology Marketing Relative profitability Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. Figure A-4

Product Portfolios Criticism of BCG matrix: (1) cash flow is applicable to limited number of markets, (2)brand leader should not be milked because new brand may not be a leader. Economies of scale-the more are sold, the more are made, and the lower the unit cost. Product mix-product width and depth Product mix decision: 1.line stretching, 2.line rationalization

MARKETING MANAGEMENT PROCESS Process of planning, execution, pricing, promotion, distribution of goods and services. Situation analysis Organizational objectives and mission Cooperative environment-suppliers, resellers Competitive environment Economic environment Social environment-cultures and traditions Political and Legal environment

MARKETING MANAGEMENT PROCESS (CONT.) Marketing Planning Setting the objectives Selecting the target market Developing the marketing mix Implementation and Control