© 2000 south-western college publishing 1 chapter two strategic planning developing and...

© 2000 South-Western College Publishing

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CHAPTER TWO

STRATEGIC PLANNING

DEVELOPING AND IMPLEMENTING A MARKETING

PLAN

Prepared by: Jack GiffordMiami University (Ohio)

© 2000 South-Western College Publishing

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STRATEGIC PLANNING

Strategic Planning is the managerial process of creating and maintaining a fit between the organization’s objectives and resources and the evolving market opportunities.

RESOURCES &

OBJECTIVES

EVOLVING MARKET

OPPORUNITIES

LONG RUN PROFITABILITY AND GROWTH

PLUS

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STRATEGIC PLANNING

Strategic planning requires the long-run commitment of human and capital resources.

Strategic marketing management addresses two questions:– What is the organization’s main activity at a particular

time?– What are its primary goals and how will these be

achieved?

How do companies go about strategic planning? How do employees know how to implement the long-term goals of the firm? The answer is…...

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A MARKETING PLAN

Is the process of anticipating events and determining strategies to achieve organizational objectives in the future.

A written document A guideline over time Benchmark of progress to date The components of a Marketing Plan always

should include, at a minimum, the following...

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THE MARKETING PLAN CONTAINS, AT A MINIMUM…. Business Mission Statement Objectives Situation Analysis (SWOT) Marketing Strategy

– Target Market Strategy– Marketing Mix

• Product• Promotion• Price• Distribution

Implementation, Evaluation and Control

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...AND ALSO OFTEN INCLUDES:

Budgets Implementation timetables Required marketing research efforts Other elements of advanced strategic planning

– Quality control programs– Supply chain management systems– Organizational structure changes– Management Information Systems– Others unique to specific industries

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THE MISSION STATEMENT When we answer the question “What business are

we in and where are we going?” we are well on our way to creating a mission statement– The creation and implementation of a mission statement

profoundly affects long-run resource allocation, profitability, and survival.

– Includes the long-run vision and values of the company

– Must be customer oriented

– May be for the entire business, or each strategic business unit (SBU)

– Must not be too broad…or too narrow in scope

– Avoids marketing myopia

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MARKETING MYOPIA

A business that defines itself in terms of its products or services instead of customer satisfaction or too narrowly instead of the markets, organizations, and benefits purchased.

AT&T =

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MARKETING GOALS AND OBJECTIVES

Marketing Objectives– What is to be

accomplished through marketing activities

– Realistic, measurable, time specific

– Internally consistent– Indicate the priorities of

the organization

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MARKETING GOALS AND OBJECTIVES

Marketing objectives serve several functions– Communicate marketing

management philosophies– Provide direction for lower-

level management– Act as motivators– Help clarify executive thinking– Create a series of benchmarks

and a basis for control

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CONDUCT A SITUATION ANALYSIS

Environmental Scan/ Situational Analysis

Two major components, the first set being...– Internal strengths– Internal weaknesses

•Production costs

•Marketing and people skills

•Financial resources

•Company or brand image

•Available technology

•Other

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CONDUCT A SITUATION ANALYSIS

Environmental Scan/ Situational Analysis

Two major components, the second set being…– External Opportunities– External Threats

MACROENVIRONMENTAL FORCES INCLUDE

•Social forces

•Demographic forces

•Economic forces

•Technological forces

•Political forces

•Legal forces

•Competitive forces

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Corporate culture and the external opportunities and threats

Corporate culture is the pattern of basic assumptions an organization has accepted to cope with the firm’s internal environment and the changing external environment– It is revealed by the way it reacts to

problems and opportunities– These organizational responses can be

categorized into four types

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FOUR TYPES OF ORGANIZATIONAL RESPONSES TO EXTERNAL OPPORTUNITIES AND THREATS

Prospector

Reactor

Defender

Analyzer

Focuses on identifying and capitalizing on emerging market opportunities; emphasizes mkt. research & communications

Responds to emerging market forces when forced to do so

Tries to defend its “turf” or market domain

Combination of a conservative prospector and aggressive defender

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STRATEGIC WINDOW Is the limited time

period in which there is an optimal FIT between external market Opportunities and internal corporate Strengths

SWOT

Optimal match

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STRATEGIC OPPORTUNITIES MATRIX EXAMPLE: DAIMLER-CHRYSLER

PRODUCT

MARKET

PRESENT NEW

PRESENT

NEW

MarketPenetration

Market

Development

Product

Development

Diversification

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PORTFOLIO MATRIX EXAMPLE: MICROSOFT CORPORATION

MARKET SHARE DOMINANCEM

AR

KE

T G

RO

WT

H R

AT

EHIGH LOW

L

OW

HIG

H

?

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PORTFOLIO MATRIX (continued)Allocating future resources for each

Build– Invest in a problem

child that has the potential to become a star

Hold– Hold and protect; use

cash flow to maintain market share

Harvest– Increase short-term

cash flow from any source except stars

Divest– Sell off or close dogs

and sometimes problem children that cannot be converted to stars

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MARKET ATTRACTIVENESS / STRENGTH MATRIX: EXAMPLE KODAK CORPORATION

BUSINESS POSITON[ STRENGTH MINUS WEAKNESSES ]

MA

RK

ET

AT

TR

AC

TIV

EN

ESS

[ O

PP

OR

TU

NIT

IES

MIN

US

TH

RE

AT

S ]

LO

W

ME

DIU

M

HIG

H

STRONG MEDIUM WEAK

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MARKET ATTRACTIVENESS / STRENGTH MATRIX (CONTINUED)

To maintain a strong business position in an attractive market (SMILEY FACE), a company must develop a sustainable competitive advantage– One or more unique aspects of an organization that are

valued by the target market(s) and cannot be easily replicated by competition

• Superior skills, such as management capabilities and expertise)

• Superior resources( well known brand name, patents, unique technology, or superior economies of scale)

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DIFFERENTIAL ADVANTAGE Important to target market(s) Why you purchase “A” instead of “B” Athletic Shoes ??? Soft drink ???

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MARKETING PLAN (continued)

Marketing Strategy– Target Market Strategy

• Identifies which market segment or segments to focus on

• This topic will be discussed in detail in Chapter 7

Owners of pets

Male business executives

Parents of children under 3

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TARGET MARKET STRATEGY

How do we “cluster” potential customers for our products or services around meaningful buying attributes?

Is usually multidimensional– SAUDI KINGDOM SHOPPNG CENTRE?

– TREK BICYCLES?

MEN

1ST FLOOR

WOMEN 2ND FLOOR

???

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MARKETING PLAN (continued)

Marketing Mix: The 4 “Ps”– Product strategies– Price strategies– Promotion strategies– Distribution strategies (Place)

Gillette Mach 3 razor

•New triple cutting surface

•Sold through retailers

•Introductory price $3.29

•Promoted on TV, magazines and newspapers

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THE MARKETING MIX

PRODUCT OR

SERVICE

PRICE

PROMOTION

PLACE

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IMPLEMENTATION, EVALUATION AND CONTROL

Implementation– The process that turns marketing plans into

action assignments– Assures execution in a way that accomplishes

the plans’ objectives Evaluation and control

– Gauging the extent to which marketing objectives have been achieved during the specific time period.

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EVALUATION AND CONTROL

The broadest control device available to marketing managers is the marketing audit

A marketing audit is a comprehensive, systematic, periodic, and independent evaluation of the goals, strategies, structure, and performance of the marketing organization

AUDIT

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EFFECTIVE STRATEGIC PLANNING

Effective strategic planning requires continual attention, creativity, and management commitment– Should be an ongoing process– Is based on information and creativity– Requires top management support and participation

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FOUR COMMON REASONS FOR FAILURE TO ACHIEVE MARKETING OBJECTIVES

Objectives were unrealistic Inappropriate objectives for the plan Poor implementation Unanticipated changes in the internal or external

environments Violations of any of the three principles of effective

strategic planning