1. Chapter 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 term
Identifies/builds on firm’s strengths
Helps managers make informed decisions
Develops objectives before action is taken

2. Ethics and Marketing Planning
Unethical marketing decisions damage the firm, society, and various stakeholders
Business ethics:
Rules of conduct for an organization
Code of ethics (code of conduct):
Written standards of behavior to which everyone in the organization must subscribe

3. 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.

4. Level 1- Strategic Planning
Match firm’s resources and capabilities to market opportunities for long-term growth (5 – 10 years) 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
P&L (Profit-and-loss) responsibility

5. Level 2 - Functional Planning
Accomplished by various functional areas of firm, such as marketing
Typically includes:
A broad 2 to 5-year plan to support the 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
CWLC Example: increase enrollment by 5% (with simultaneous 10% reduction in marketing budget)

6. Level 3 - 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)

7. 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 overall direction and resources

8. Level 1 - 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
Example: ARAMARK –SBUs included Entertainment, Food Services, Uniform Services, AER
Strategic planning is done at both the corporate and SBU levels
For a small company/organization, strategic planning is done for the company as a whole

9. 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

10. Mission should not be too broad, too narrow/ shortsighted
“Marketing Myopia” : defining the mission too narrowly in terms of a specific product offering
Better to define the mission in terms of what customer needs are satisfied
Example: Railroad vs. transportation
Example: Childcare vs. Education - or-
Childcare vs. Family Care

11. 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

12. Internal Environment
Controllable elements inside a firm that influence how well the firm operates include:
People (human capital) – asset or liability?
physical facilities – sufficient, superior, inhibiting growth?
financial stability – supports or inhibits growth?
corporate reputation – good, neutral, poor? (why?)
quality products – are they truly of high quality?
strong brands – are they truly strong brands?
Technologies – moving company forward or holding company back?
These elements represent key strengths and weaknesses of the firm (working for or against you?)

13. External Environment (See supporting detail in Ch. 3)
Elements outside the firm that may affect it either positively or negatively:
Economic, competitive, technological, legal/political/ethical, regulatory, 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 & Google.com/trends

14. External Environment Example – Texas Lottery
Effects of economy – sales up or down
Competition – will adjacent state riverboat gambling affect border sales of lottery tickets?
Technology – effects on current/future games
Legal/political/ethical – effects of revenues directed to TX General Fund vs. Education
Regulatory – what if lobbyists succeed in introducing gaming machines into state?
Socio cultural – how might green movement affect the Lottery?

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

16. 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.

17. 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, measurable, attainable, and sustainable
May relate to sales, profitability, product development, market share, productivity, ROI, customer satisfaction, or social responsibility

18. 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
Example: AER
Stand-alone centers
B&A programs
Summer programs

19. Boston Consulting Group (BCG) Matrix Do you build, hold, harvest, or divest?
iPhone &
Samsung
Smartphones
LG & Motorola
Smartphones
High $
??? $
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.
Nokia Cell Phones
Sony Ericsson Cell Phones
Lower $
??? $

20. Step 5: Develop Growth Strategies Product-Market Growth Matrix
Orange Juice
Breakfast
Snack Bev
Reeces
PB Cups
Pieces
P Butter
Ice Cream
Baby Shampoo
Babies
Oily Hair
Baking Soda
Kitchen use
Other uses for new mkts

21. Functional (Marketing) Planning:
Accomplished by various functional areas of firm
Typically includes a broad 5-year plan to support strategic plan and a detailed annual plan
In this class (Marketing), we will focus on the marketing plan
Step 1: Perform a situation analysis
Builds on SWOT – identifies how environmental trends/external environment (ch. 3) affect the marketing plan

22. 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.

23. 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)

24. 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

25. 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

26. 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)
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).

27. Creating and Working with a Marketing Plan
Operational plans focus on the day-to-day execution of the marketing plan
Ex: TLC strategic planning process
Semi-annual, 2 day retreat
Involved key partners (ad agency, online game provider, scratch ticket manufacturer)
Determine objectives and options to accomplish
Evaluate what needs to be done by who by when and whether it is realistic to accomplish
Assign deadline dates and accountability
Refer your students back to the tear-out marketing plan guideline, located between pages 50 and 51 of the text.

28. SBUs and the Strategic Plan

29. Corporate Culture
A firm’s corporate culture determines much of its internal environment—the values, norms, and beliefs that influence everyone in the firm
i.e. The way employees dress reflects their organization’s corporate culture.
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.