Chapter Two Strategic Planning and the Marketing Process Marketing: An Introduction Second Canadian Edition Armstrong, Kotler, Cunningham, Mitchell and Buchwitz Chapter Two Strategic Planning and the Marketing Process

Looking Ahead Explain companywide strategic planning and its four steps. Discuss business portfolio design and strategies. Explain marketing’s role in strategic planning and the importance of value chains and networks. Describe the elements of a customer-driven marketing strategy and mix. List the marketing management functions and elements of a marketing plan.

What Is 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 Corporate level Define the company mission. Set company objectives and goals. Design the business portfolio. Business unit, product and market levels. Plan marketing and other functional strategies.

Strategic Planning Defining a clear company mission. Mission Statement Setting supporting objectives. Designing a sound business portfolio. Coordinating functional strategies. Mission Statement States the organization’s purpose. Market and customer-oriented. Provides direction to internal stakeholders.

Mission Statement Answers What is our business? Who is the customer? What does the customer value? What should our business be?

Successful Mission Statements Are specific. Are realistic. Are motivating. Are customer-centric. Fit the market environment. Are based on distinctive competencies.

Strategic Business Unit (SBU) A unit of the company that has a separate mission and objectives and that can be planned independently from other company businesses. Can be a company division, a product line within a division or sometimes a single product or brand.

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 growth or downsizing.

Analyze Current Situation Portfolio analysis. Evaluates relative strength of all businesses in the company. Strategic Business Unit analysis. Evaluates strength of each independent business unit in company. Growth-Share Matrix key analysis tool.

BCG Growth-Share Matrix Stars ??? Cows Dogs Fix or abandon Use cash to make into a star Nurture to generate cash Defend position Industry attractiveness, market share, cash generation Business strength, growth rate, cash use

Potential Matrix Problems Can be time consuming and costly. Difficult to define SBUs and measure market share and growth. Focus on the current business, not future planning. Can place too much emphasis on growth. Can lead to poorly planned diversification.

Analyze Opportunities Product-Market Expansion Grid identifies four potential growth areas. Market Penetration Product Development Diversification Existing Products New Markets

Growth at Tim Horton’s To maintain its phenomenal growth in an increasingly over-caffeinated marketplace, Tim Horton’s uses an ambitious, well-planned multi-pronged growth strategy.

Tim Horton’s and PME Grid Market penetration. Make more sales to current customers without changing products. Add new stores in current market areas; improve advertising, prices, menu, service. Market development. Develop new markets for current products. Review new demographic such as women, youth. Examine large potential U.S. market.

Tim Horton’s and PME Grid Product development. Offering modified or new products to current markets. Add lunch offerings and iced drinks, sell coffee in supermarkets, co-brand products. Diversification. Start up or buy businesses outside current products and markets. Making and selling CDs, testing restaurant concepts or branding casual clothing.

Marketing’s Role in Strategic Planning Provide a guiding philosophy. Provide inputs to strategic planners. Design strategies to research objectives. Measure results.

The Value Chain/Network the series of departments which carry out value-creating activities to design, produce, market, deliver and support a firm’s products. Value delivery network. the network made up of the company, suppliers, distributors and ultimately, customers who “partner” with each other to improve the performance of the entire system.

The Marketing Process Analyze current situation. Analyze marketing opportunities. Select target markets. Develop the marketing mix. Manage the marketing effort.

Select Target Segment Segment market. Target segment. Position. Divide larger market into groups of people with similar demands and responses. Target segment. evaluate segments and select one or more segments to enter. Position. Create differentiation relative to competing products in minds of target customers.

Market Segmentation The process of dividing a market into distinct groups of buyers with different needs, characteristics or behaviours who might require separate products or marketing programs.

Segmentation Variables Market segment. A group of consumers who respond in a similar way to a given set of marketing efforts. Can be segmented along different dimensions: Demographic variables Geographic location Behavioural variables Psychographic variables

Target Marketing Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter. Good target segments must be able to sustain profitability. Example: Arm & Hammer’s baking soda Bayer Aspirin

Market Positioning Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers. Process begins with differentiating the company’s marketing offer so it gives consumers more value.

The Marketing Mix The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market.

Create Marketing Mix Product – offers the right product, service or experience. Price – controls perceived value and satisfaction. Place – allows customers easy access to product and support. Promotion – communicates the offer and the value proposition.

The Four Ps and the Four Cs PRODUCT provides CUSTOMER SOLUTION PRICE represents CUSTOMER COST PLACE provides CONVENIENCE PROMOTION is 2-way COMMUNICATION

Manage Marketing Effort Build strong operational marketing plan. Carry out the plan. Organize marketing department. Leverage value chain and value network. Exercise control. Set goals. Measure and evaluation performance. Take corrective action.

A Marketing Plan Executive summary. Current marketing situation. Summary of main goals/recommendations. Table of contents follows. Current marketing situation. Market description. Product review. Competitive review. Review of distribution.

Marketing Plan (cont’d) Threat and opportunity analysis. External trends and factors in the marketing environment. May affect the firm and its strategies. Objectives and issues. What the company wants to achieve with the plan. Sales, profits, market share, positioning.

Marketing Plan (cont’d) Marketing strategy. Marketing mix elements and expenditures. How the strategy fits the opportunity. Action program. How the strategy will be implemented. Budgets. Forecasted revenues and expenses. Controls.

Marketing Dept Organization Functional. Divided by task e.g.. Sales, advertising, research, customer service. Each functional area headed by specialist. Geographic. Teams focused on particular areas. Complete set of sales/marketing functions exist within each geographic team.

Marketing Dept Organization Product management. Teams focused on specific products or brands. Typical of large companies with many product lines or brands. Market or customer management. Teams focused on key customers or markets. Combination of two or more common.

Marketing Control Process Set goals. What do we want to achieve? Measure performance. What is happening? Evaluate performance. Why is it happening? Take corrective action. What should we do about it?

Looking Back Explain companywide strategic planning and its four steps. Discuss business portfolio design and strategies. Explain marketing’s role in strategic planning and the importance of value chains and networks. Describe the elements of a customer-driven marketing strategy and mix List the marketing management functions and elements of a marketing plan.