1. Strategic Market Planning: Take the Big Picture
Chapter 2
Strategic Market Planning: Take the Big Picture

2. Business Planning: Compose the Big Picture
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
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3. Figure 2.1 Three Levels of Business Planning
Corporate management typically includes the chief executive officers (CEOs), president, chief financial officers (CFOs), and other top level planners. Planning done at the strategic level is long range (3–5 years). The mission, objectives, business portfolio, and growth strategy decisions set at this level “set the stage” and FLOW THROUGH to the functional and operational planning levels; both functional and operational plans need to be consistent with the corporate strategic plan, and further the mission and goals of the organization following the growth strategies set forth in the corporate plan. Functional level is performed by either Vice Presidents or top level functional area managers (VP Sales for many industrial or business-to-business firms; VP of Marketing for many consumer goods firms). Operational planning flows from the marketing plan, and is further developed by supervisory managers who might be product or brand managers, advertising managers, sales managers for particular products, divisions, or geographic territories, publicists, specialists in marketing research, etc.
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4. Strategic Planning
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
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5. 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)

6. SWOT - Starbucks Objective 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 segment

7. Functional (Tactical) Planning
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
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8. Operational Planning
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)
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9. All Business Planning Is an Integrated Activity
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
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10. Strategic Planning: Frame the Picture
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
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11. Strategic Business Units (SBUs)
Large firms like the Walt Disney Company usually operate several SBUs. Disney SBUs include theme parks, movie studios, TV networks, and cruise line
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12. Strategic Planning Step 1: Define the Mission
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
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13. Step 1: Define the Mission
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”
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14. Coca Cola’s Mission Statement
“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.”
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15. Step 2: Evaluate the Internal and External Environments
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
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16. Internal Environment
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
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17. External Environment
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
Trendwatching.com offers a free monthly trend insight newsletter via monthly. Many of the articles posted on this Web site are of interest to marketers in general, and professors can often find current examples that demonstrate the integration of trends, products, and marketing communication campaigns.
Visit Trendwatching.com
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18. Trends Present Opportunities
Recent sociocultural trends influencing food marketing stem from consumer desires for low fat, low carb, and organic foods
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19. SWOT Analysis
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
A nice outside-the-class activity assigned prior to lecture might challenge half of the students to identify the internal and external strengths of a well-known local business (bar, restaurant, club) or the University itself, while the other half of class identifies current trends stemming from the external environment that are relevant to the business. Class time could then be devoted to demonstrating the SWOT process using the information gathered by the class.
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20. Step 3: Set Organizational or SBU Objectives
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
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21. Are these good objectives?
Increase sales by 15%
Achieve recall by December 2010
20% 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

22. Figure 2-2 SBUs and the Strategic Plan
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23. Step 4: Establish the 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
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24. Figure 2-3 Boston Consulting Group (BCG) Matrix
The purpose of the BCG matrix is to aid management in decisions related to financial resource allocation by classifying the various SBUs into one of four categories based on the SBUs market growth rate and relative market share.
The market growth rate is meant to provide an estimate of market attractiveness, while the relative market share serves as a proxy for company strength in the market. Market growth rate is usually measured in terms of the annual growth rate. Relative market share is typically measured by calculating the SBU’s market share relative to its’ largest competitor. Thus a relative share of .1 would mean that the SBU has only 1/10th of the share of its largest competitor (falling into the low relative market share cell), while a relative share of 2 would indicate that SBU is the market leader, with twice the market share of its largest competitor (falling within the high market share cell). Some caution should be exercised when discussing market growth rates, as this figure does not take into account the overall size of the market itself.
The text describes each of the four subcategories adequately, but the build, hold, harvest, and divesture strategies might require additional explanation.
Building is most appropriate for question marks, as their relative shares must grow if they are going to evolve into stars. Building requires substantial resource investment, and if resources are limited, funds may be better allocated to Stars. Stars require heavy investment so that their relative market share keeps pace with and capitalizes upon the market growth. Of course the market growth rate will eventually decline, and Stars eventually grow into Cash Cows. Cash cows need less investment to hold their market share, and consistently produce more money than they consume. Harvesting occurs when the decision is make to “milk the cash cow” which results in the elimination of R&D, reduced advertising and promotional expenses, and other cost cutting measures. However, too little resource investment (Harvesting) may result in a slippage of the relative market share to the point where a once profitable cash cow degrades into a dog. Companies face two alternatives with dogs: Divesting the business early in its life as a dog while it is in relatively good shape can make a decent return; harvesting the business decreases the future value of the dog when divested, but harvesting can also provide income in a steady stream over time.
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25. Step 5: Develop Growth Strategies
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
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26. Figure 2-4 Product-Market Growth Matrix
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27. Marketing Planning: Step 1
Perform a situation analysis
Builds on SWOT; identifies how environmental trends affect the marketing plan
What trends impact the marketing plan for Netflix?
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28. Marketing Planning: Step 2
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
The objective of the California almond growers is to increase consumption of almonds.
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29. Marketing Planning: Step 3
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)
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30. Marketing Mix Strategies
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
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31. Marketing Mix Strategies
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
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32. Step 4: Implement and Control the Marketing Plan
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
Examples of metrics: cost of a prospect, customer acquisition cost, click through rate, response rate, (coupon) redemption rate, sales calls per day, customer retention rate, etc.
Some metrics are based on survey data that requires systematic, ongoing marketing research (customer satisfaction, perceived product quality, perceived service quality, company/product reputation).
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33. Metrics Moment
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
The key word “investment” is highlighted in this slide as it implies that marketers must think of marketing as an investment to accomplish goals, rather than simply as one of many expenses which provide little benefit/return to the firm. Although ROMI is a commonly used metric, there are several major objections to relying exclusively on ROMI, as discussed in the Metrics Moment for Chapter 2:
Marketing expenditures aren’t treated as an investment in the firm’s accounting statements, which perpetuates the “marketing is an expense” mentality.
ROMI requires the profit to be divided by the expenditure, yet all other bottom-line performance measures consider profit or cash flow after deducting expenses.
Calculating ROMI requires knowing what would have happened if marketing expenditures had never taken place, a virtual impossibility.
ROMI has become a fashionable term for marketing productivity in general, yet firms often calculate ROMI quite differently, which can cause confusion.
ROMI ignores the effect of marketing assets of the firm such as brand equity (which is chiefly built via advertising), and tends to lead managers toward more short-term decision perspectives that focus on short-term incremental profits and expenses without looking at the longer-term effects of any change in brand equity.
ROMI can be used properly if a firm uses an appropriate and consistent measurement process and combines the use of this metric with other critical marketing metrics, such as marketing payback (how quickly marketing costs are recovered).
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34. Creating and Working with a Marketing Plan
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
Refer your students back to the tear-out marketing plan guideline, located between pages 50 and 51 of the text.
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35. Corporate Culture
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?
If you need to prompt students, you might ask them about firms that require uniforms vs. those that don’t. Another interesting question to raise deals with the impact of casual dress trends in the United States.
It may also be worthwhile to discuss some other factors that manifest as symbols of corporate culture, such as work space arrangements (offices and cubicles vs. open arrangements with no barriers), pet friendly workplaces, flex-time, etc.
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