Transcript Document

Strategic Market
Planning:
Take the Big Picture
Chapter Two
Chapter Objectives
 Explain business planning and its
three levels
 Describe the steps in strategic
planning
 Describe the steps in marketing
planning
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Real People, Real Choices:
Decision Time at First Flavor
 Should Jay diversify into new product
categories or focus on gaining market
acceptance for Peel ‘n Taste?
• Option 1: Investigate all three new
business ideas
• Option 2: Focus on Peel ‘n Taste only
until it gains market acceptance
• Option 3: Focus on Peel ‘n Taste but
investigate limited investment in
launching one of the new products
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Business Planning:
Compose the Big Picture
 Business Planning:
Ongoing process of making decisions
that guides 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
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Ethics Is Up Front
in Marketing Planning
 Business ethics:
• Basic values that guide a firm’s
behavior
 Code of ethics:
• Written standards of behavior to which
everyone in the organization must
subscribe
How to Write a Code of Ethics
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It’s Debatable
Class Discussion Question
Reverse mortgages (also called lifetime mortgages) are
available to individuals 62 or older. Reverse mortgages
release the equity in the home BACK to the property
owner in either monthly payments or one lump sum, and
defer the loan repayment until the owner dies, the home
is sold, or the owner leaves the property for at least 365
days (for example, goes into a nursing home or moves
to a second home during the winter months).
Is it ethical for mortgage bankers to offer such products
to consumers? Where do you stand?
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Figure 2.1
Three Levels of Business Planning
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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
• Strategic business units (SBUs) are
common in large firms
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Functional Planning
 Accomplished by various functional
areas of firm, such as marketing
 Typically includes:
• A broad three-to-five-year plan to
support the strategic plan
• A detailed annual plan
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Operational Planning
 First-line managers focus on day-today execution of functional plans
 Typically includes one or more of the
following:
• Detailed annual plans
• Semiannual plans
• Quarterly plans
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All Business Planning
Is an Integrated Activity
 Strategic, functional, and operational
plans must work together to benefit the
whole firm
• Plans are guided by firm’s mission
 Planners at all levels must keep the
“big picture” in mind when planning
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Strategic Planning:
Frame the Picture
 Very large multiproduct firms may have
divisions called strategic business
units (SBUs)
• SBUs operate like separate businesses
 Strategic planning is done at both the
corporate and SBU levels
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Figure 2.2
Steps in Strategic Planning
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Strategic Planning Step 1:
Define the Mission

Key questions in determining the mission:
• 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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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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More on Mission Statements
Had Xerox continued
to define their
mission in terms of
producing copy
machines instead of
providing “document
solutions”, today’s
digital age would
have made their
product and firm
obsolete.
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Step 2: Evaluate the Internal
and External Environments
 Situational analysis
• An assessment of a firm’s internal and
external environments
Internal
environmental assessment:
identifies the firm’s strengths and
weaknesses
External environmental assessment:
identifies opportunities and threats
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Internal Environment
 Controllable
elements
inside a firm
that influence
how well the
firm operates
 Name some
examples
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Southwest Airlines’ employees reflect
the “Southwest Spirit” and are
considered a key strength of the firm.
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External Environment
 Elements outside the firm that may
affect it either positively or negatively.
 The external environment is global and
requires consideration of:
• Legal/political/ethical trends
• Economic trends
• Competitive trends
• Technological trends
Visit
• Sociocultural trends Trendwatching.com
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Trends Present Opportunities
Recent
sociocultural
trends influencing
food marketing
stem from an
obesity epidemic in
the U.S. and
consumer desires
for low fat,
and organic foods
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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
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Table 2.2 Part A
Example of a Partial SWOT
Analysis for McDonald’s
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Table 2.2 Part B
Example of a Partial SWOT
Analysis for McDonald’s
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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 be financially focused, or focused
on other factors such as satisfaction
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Step 4: Establish the Business
Portfolio
 Business portfolio:
• The group of different products or
brands owned by a firm and having
different income-generating and growth
capabilities
 Portfolio analysis
• Assesses the potential of a firm’s SBUs
• BCG growth-market share matrix
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Figure 2-3
Boston Consulting Group (BCG) Matrix
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Stars Can Be Grown or Acquired
The recent
acquisition of
Marvel Comics will
most likely add to
the entertainment
company’s stable
of stars
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Step 5: Develop Growth Strategies
 Product-market growth matrix:
• Characterizes different growth
strategies according to type of market
and type of product
Jeep’s product
development
strategy offers
different vehicles
for different needs
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Figure 2-4
Product-Market Growth Matrix
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Marketing Planning
 Step 1: Perform a situation analysis
• Builds on SWOT; identifies how
environmental trends affect the
marketing plan
 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
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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
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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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First
Flavor
Video
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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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Step 4: Implement and Control
the Marketing Plan
 Control:
• Measuring actual performance,
comparing performance to the
objectives, making adjustments
 Marketing metrics:
• Return on marketing investment (ROMI)
 Action plans:
• Support plans that guide the execution
and control of marketing strategies at
the operational level
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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
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Table 2.4
Template for an Action Plan
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Operational Planning:
Day-to-Day Execution of Plans
 At the operational level, plans focus on
the day-to-day execution of the
marketing plan
• Created by first-line managers
• Cover short time frames
• Marketing metrics gauge
success
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Real People, Real Choices:
Decision Made at First Flavor
 Jay chose option 3
• Why do you think Jay chose to focus on
Peel ‘n Taste until it gained market
acceptance, while also investigating the
opportunity to launch one of the new
products with limited resources?
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Keep It Real: Fast-Forward to Next
Class Decision Time at eBay
 Meet Robert Chatwani, General
Business Manager of eBay
 eBay is developing a new online
marketplace to help small producers
and artisans gain global access
 The decision to be made:
How to create a marketplace for small
producers and artisans that would
maximize long-term revenue
and social impact
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All rights reserved. No part of this publication may be
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photocopying, recording, or otherwise, without the prior
written permission of the publisher. Printed in the United
States of America
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