Strategic Planning and the Marketing Process Chapter Objectives 1 Distinguish between strategic planning and tactical planning.

2 Explain how marketing plans differ at various levels in an organization.

3 Identify the steps in the marketing planning process.

4 Describe successful planning tools and techniques, including Porter’s Five Forces model, first and second mover strategies, SWOT analysis, and the strategic window.

5 6 Identify the basic elements of a marketing strategy.

Describe the environmental characteristics that influence strategic decisions.

7 Describe the methods for marketing planning, including business portfolio analysis and the BCG matrix.

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Strategic Vs. Tactical

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Strategic Planning and the Marketing Process MARKETING PLANNING: THE BASIS FOR STRATEGY AND TACTICS

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Planning

Process of anticipating future events and conditions and of determining the best way to achieve organizational objectives.

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Marketing planning

Implementing planning activities devoted to achieving marketing objectives.

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Strategic Planning and the Marketing Process Strategic Planning versus Tactical Planning Strategic planning: Process of determining an organization’s primary objectives and adopting courses action that will achieve those objectives Tactical planning: Process that guides the implementation of activities specified in the strategic plan.

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Strategic Planning and the Marketing Process

Steps in the Marketing Planning Process

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Strategic Planning and the Marketing Process

PLANNING AT DIFFERENT ORGANIZATIONAL LEVELS • Focus on planning changes in different levels of the organization.

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Defining the Mission of the Organization

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Mission

: the essential purpose that differentiates one company from others – The mission statement specifies the organization’s overall goals and operational scope and provides general guidelines for future management actions

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DEFINING THE ORGANIZATION’S MISSION AND OBJECTIVES •

Mission

 Essential purpose that differentiates one company from another.

 Specifies the organization’s overall goals and operational scope and provides general guidelines for future management actions • Examples: • 3M : “To solve unsolved problems innovatively.” • Mary Kay Cosmetics : “To give unlimited opportunity to women.” • Merck : “To preserve and improve human life.” • Objectives—Guide the development of marketing objectives and plans.

• Examples: • Generate a 10 percent profit over the next twelve months.

• Attain a 20 percent share of the market by 2010.

• Add 50 new stores within the next year.

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ASSESSING ORGANIZATIONAL RESOURCES AND EVALUATING ENVIRONMENTAL RISKS AND OPPORTUNITIES • Resources include the capabilities of the firm’s production, marketing, finance, technology, and employees.

• Strengths help planners set objectives, develop plans, and take advantage of marketing opportunities.

FORMULATING, IMPLEMENTING, AND MONITORING A MARKETING STRATEGY • Should be efficient, flexible, adaptable, and implemented company-wide.

• Blends elements of the marketing mix: product, distribution, promotion, and price.

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SUCCESSFUL STRATEGIES: TOOLS AND TECHNIQUES

• Goal of tools and techniques is to create sustainable competitive advantage. PORTER’S FIVE FORCES MODEL •

Porter’s Five Forces

Model developed by strategy expert Michael Porter that identifies five competitive forces that influence planning strategies: • The threat of new entrants • The bargaining power of buyers • The bargaining power of suppliers • The threat of substitute products • Rivalry among competitors

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FIRST MOVER AND SECOND MOVER STRATEGIES •

First mover strategy

Theory advocating that the company that is first to offer a product in a marketplace will be the long-term market winner. •

Second mover strategy

innovations of first movers and then improving on them to gain advantage in the marketplace.

Theory that advocates observing closely the SWOT ANALYSIS •

SWOT analysis

threats. Analysis that helps planners compare internal organizational strengths and weaknesses with external opportunities and THE STRATEGIC WINDOW •

Strategic window

Limited periods during which the key requirements of a market and the particular competencies of a firm best fit together. • Example: Soaring demand for cars in China.

SWOT ANALYSIS •

SWOT analysis

Analysis that helps planners compare internal organizational strengths and weaknesses with external opportunities and threats.

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ELEMENTS OF A MARKETING STRATEGY

THE TARGET MARKET • The group of people toward whom the firm directs its marketing efforts and merchandise.

• Need to pay attention to growing market segments.

• Example: Growing Hispanic population in United States. MARKETING MIX VARIABLES •

Marketing mix

Blending of the four strategy elements—product, distribution, promotion, and pricing—to fit the needs and preferences of a specific target market.

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THE MARKETING ENVIRONMENT • Five external dimensions that affect the marketing mix variables: • Competitive, political-legal, economic, technological, and social cultural factors.

• Rapid technological changes can spur lawsuits and create new forms of competition.

• Rule of three—The three strongest, most efficient companies dominate 70 to 90 percent of a market.

• Example: Cereal manufacturers— General Mills , Kellogg’s , and Post .

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METHODS FOR MARKETING PLANNING

BUSINESS PORTFOLIO ANALYSIS • An evaluation of a company’s products and divisions to determine the strongest and weakest ones.

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Strategic business units

Key business units within diversified firms.

• Each has its own managers, resources, objectives, and competitors.

• Help focus the attention of managers.

• Example: Hewlett-Packard’s iPaq unit for its handheld computer.

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BCG ANALYSIS • Developed by Boston Consulting Group .

• A market share/market growth matrix that plots market share against market growth potential.