Strategic Market Strategic Market Planning:Planning:

Take the Big PictureTake the Big Picture

Chapter TwoChapter Two© 2012 Pearson Education, Inc. publishing as Prentice-Hall

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Chapter ObjectivesChapter Objectives

Explain business planning and its Explain business planning and its three levelsthree levels

Describe the steps in strategic Describe the steps in strategic planningplanning

Describe the steps in marketing Describe the steps in marketing planningplanning

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Real People, Real Choices: Real People, Real Choices: Decision Time at First FlavorDecision Time at First Flavor

Should Jay diversify into new product Should Jay diversify into new product categories or focus on gaining market categories or focus on gaining market acceptance for Peel ‘n Taste? acceptance for Peel ‘n Taste? • Option 1:Option 1: Investigate all three new Investigate all three new

business ideasbusiness ideas

• Option 2:Option 2: Focus on Peel ‘n Taste only Focus on Peel ‘n Taste only until it gains market acceptanceuntil it gains market acceptance

• Option 3:Option 3: Focus on Peel ‘n Taste but Focus on Peel ‘n Taste but investigate limited investment in investigate limited investment in launching one of the new productslaunching one of the new products

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Business Planning:Business Planning:Compose the Big PictureCompose the Big Picture

Business Planning:Business Planning: Ongoing process of making decisions Ongoing process of making decisions that guides the firm both in the short that guides the firm both in the short term and for the long termterm and for the long term

• Identifies and builds on firm’s strengthsIdentifies and builds on firm’s strengths

• Helps managers make informed Helps managers make informed decisionsdecisions

• Develops objectives before action is Develops objectives before action is takentaken

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Ethics Is Up Front Ethics Is Up Front in Marketing Planningin Marketing Planning

Unethical marketing decisions damage Unethical marketing decisions damage the firm, society, and stakeholders the firm, society, and stakeholders

Business ethics Business ethics • Basic values that guide a firm’s Basic values that guide a firm’s

behaviorbehavior Code of ethics Code of ethics •Written standards of behavior, which Written standards of behavior, which

everyone in the organization must everyone in the organization must subscribesubscribe

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Three Levels of Business Three Levels of Business PlanningPlanning

Strategic planning Strategic planning • Undertaken by top-level corporate Undertaken by top-level corporate

managementmanagement Functional planningFunctional planning• Conducted by top functional-level Conducted by top functional-level

managers such as the chief marketing managers such as the chief marketing officerofficer

Operational planningOperational planning• Done by supervisory managersDone by supervisory managers

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Managerial decision process that Managerial decision process that matches firm’s resources and matches firm’s resources and capabilities to its market opportunities capabilities to its market opportunities for long-term growth and survival:for long-term growth and survival:

• Top management defines firm’s Top management defines firm’s purpose and objectivespurpose and objectives

• Strategic business units (SBUs) are Strategic business units (SBUs) are common in large firmscommon in large firms

Strategic PlanningStrategic Planning

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Functional PlanningFunctional Planning

Accomplished by various functional Accomplished by various functional areas of firm, such as marketingareas of firm, such as marketing

Typically includes:Typically includes:

• A broad three-to-five year-plan to A broad three-to-five year-plan to support the strategic plan support the strategic plan

• A detailed annual planA detailed annual plan

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Operational PlanningOperational Planning

First-line managers focus on day-to-First-line managers focus on day-to-day execution of functional plansday execution of functional plans

Typically includes one or more of the Typically includes one or more of the following: following:

• Detailed annual plansDetailed annual plans

• Semiannual plansSemiannual plans

• Quarterly plansQuarterly plans

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All Business Planning All Business Planning Is an Integrated ActivityIs an Integrated Activity

Strategic, functional, and operational Strategic, functional, and operational plans must work together to benefit the plans must work together to benefit the whole firmwhole firm

• Plans are guided by firm’s missionPlans are guided by firm’s mission

Planners at all levels must keep the Planners at all levels must keep the “big picture” in mind when planning“big picture” in mind when planning

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Strategic Planning: Strategic Planning: Frame the PictureFrame the Picture

Very large multiproduct firms may have Very large multiproduct firms may have divisions called strategic business divisions called strategic business units (SBUs):units (SBUs):

• SBUs operate like separate businesses SBUs operate like separate businesses with their own mission, business with their own mission, business objectives, resources, managers, and objectives, resources, managers, and competitorscompetitors

Strategic planning is done at both the Strategic planning is done at both the corporate and SBU levelscorporate and SBU levels

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Strategic Planning Step 1: Strategic Planning Step 1: Define the MissionDefine the Mission

Key questions in determining the mission:Key questions in determining the mission:

• What is our type of business? What is our type of business?

• What customers should we serve? What customers should we serve?

• How do we develop firm’s capabilities and How do we develop firm’s capabilities and focus its efforts?focus its efforts?

Mission statementMission statement

• A formal document that describes the firm’s A formal document that describes the firm’s overall purpose and what it hopes to achieve overall purpose and what it hopes to achieve in terms of its customers, products, and in terms of its customers, products, and resourcesresources

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Step 1: Define the MissionStep 1: Define the Mission

Examples of mission statements Examples of mission statements include:include:

• MADD:MADD: “to stop drunk driving, support “to stop drunk driving, support the victims of this violent crime, and the victims of this violent crime, and prevent underage drinking.”prevent underage drinking.”

• National Book Swap:National Book Swap: “to become the “to become the nation’s largest book club and in the nation’s largest book club and in the process bring a lifetime of reading process bring a lifetime of reading material to every American.”material to every American.”

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Step 2: Evaluate the Internal Step 2: Evaluate the Internal and External Environmentsand External Environments

Situational analysis:Situational analysis:

• An assessment of a firm’s internal and An assessment of a firm’s internal and external environmentsexternal environmentsInternal environmental assessment:Internal environmental assessment:

Identifies the firm’s strengths and Identifies the firm’s strengths and weaknesses weaknesses

External environmental assessment: External environmental assessment: Identifies opportunities and threatsIdentifies opportunities and threats

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Internal EnvironmentInternal Environment

Controllable elements inside a firm that Controllable elements inside a firm that influence how well the firm operates influence how well the firm operates include:include:

• Technologies, physical facilities, Technologies, physical facilities, financial stability, corporate reputation, financial stability, corporate reputation, quality products, strong brands, quality products, strong brands, technologies, human and intellectual technologies, human and intellectual capital, etc.capital, etc.

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External EnvironmentExternal Environment

Elements outside the firm that may Elements outside the firm that may affect it either positively or negativelyaffect it either positively or negatively

The external environment is global and The external environment is global and requires consideration of:requires consideration of:

• Economic trendsEconomic trends

• Competitive trendsCompetitive trends

• Technological trendsTechnological trends

• Legal/political/ethical trendsLegal/political/ethical trends

• Sociocultural trendsSociocultural trends

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SWOT AnalysisSWOT Analysis

An analysis of an organization’s An analysis of an organization’s strengths strengths (S)(S) and weaknesses and weaknesses (W)(W) and and the opportunities the opportunities (O)(O) and threats and threats (T)(T) in in the external environmentthe external environment

SWOTSWOT enables the firm to develop enables the firm to develop strategies that maximize strengths and strategies that maximize strengths and capitalize upon opportunitiescapitalize upon opportunities

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Step 3: Set OrganizationalStep 3: Set Organizationalor SBU Objectivesor SBU Objectives

Organizational/SBU ObjectivesOrganizational/SBU Objectives

•What the firm hopes to accomplish with What the firm hopes to accomplish with long-range business planlong-range business plan

Need to be specific, measurable, Need to be specific, measurable, attainable and sustainable:attainable and sustainable:

• May relate to sales, profitability, product May relate to sales, profitability, product development, market share, development, market share, productivity, ROI, customer productivity, ROI, customer satisfaction, or social responsibilitysatisfaction, or social responsibility

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Step 4: Establish the Business Step 4: Establish the Business PortfolioPortfolio

Business portfolio Business portfolio

• The group of different products or The group of different products or brands owned by a firm and having brands owned by a firm and having different income-generating and growth different income-generating and growth capabilitiescapabilities

Portfolio analysis:Portfolio analysis:

• Assesses the potential of a firm’s SBUsAssesses the potential of a firm’s SBUs

• BCG growth-market share matrixBCG growth-market share matrix

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Step 5: Develop Growth Step 5: Develop Growth StrategiesStrategies

Product-market growth matrix:Product-market growth matrix:

• Characterizes different growth Characterizes different growth strategies according to type of market strategies according to type of market and type of productand type of product

• Matrix yields four potential strategies:Matrix yields four potential strategies:Market penetrationMarket penetrationProduct developmentProduct developmentMarket developmentMarket developmentDiversificationDiversification

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Marketing PlanningMarketing Planning

Step 1: Perform a situation analysis:Step 1: Perform a situation analysis:• Builds on SWOT; and identifies how Builds on SWOT; and identifies how

environmental trends affect the environmental trends affect the marketing planmarketing plan

Step 2: Set marketing objectives:Step 2: Set marketing objectives:• Specific to the firm’s brands and other Specific to the firm’s brands and other

marketing mix-related elementsmarketing mix-related elements

• States what the marketing function States what the marketing function must accomplish if the firm is to must accomplish if the firm is to achieve its overall business objectivesachieve its overall business objectives

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Marketing PlanningMarketing Planning

Step 3: Develop marketing strategies to Step 3: Develop marketing strategies to achieve marketing objectives:achieve marketing objectives:

• Select target market(s) where the firm’s Select target market(s) where the firm’s offerings are best suitedofferings are best suited

• Develop marketing mix strategies: Develop marketing mix strategies: PProduct strategies roduct strategies Price strategies Price strategies Promotion strategies Promotion strategies Distribution (place) strategiesDistribution (place) strategies

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Marketing PlanningMarketing Planning

Step 4: Implement and control the marketing Step 4: Implement and control the marketing plan :plan :• Measure actual performanceMeasure actual performance

• Compare performance to the objectivesCompare performance to the objectives

• Make adjustmentsMake adjustments Marketing metrics Marketing metrics • Return on marketing investment (ROMI)Return on marketing investment (ROMI)

Create action plansCreate action plans• Support plans that guide implementation and Support plans that guide implementation and

control of marketing strategiescontrol of marketing strategies

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Operational Planning:Operational Planning:Day-to-Day Execution of PlansDay-to-Day Execution of Plans Marketing planning occurs at the Marketing planning occurs at the

functional level.functional level. At the operational level, plans focus on At the operational level, plans focus on

the day-to-day execution of the the day-to-day execution of the marketing plan:marketing plan:

• Created by first-line managersCreated by first-line managers

• Cover short time framesCover short time frames

• Marketing metrics gauge successMarketing metrics gauge success

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Real People, Real Choices: Real People, Real Choices: Decision Made at First FlavorDecision Made at First Flavor

Jay chose option 3Jay chose option 3•Why do you think Jay chose to focus on Why do you think Jay chose to focus on

Peel ‘n Taste until it gained market Peel ‘n Taste until it gained market acceptance, while also investigating the acceptance, while also investigating the opportunity to launch one of the new opportunity to launch one of the new products with limited resources?products with limited resources?

2-26© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

Keep It Real:Keep It Real: Fast-Forward to Fast-Forward to Next Class Decision Time at eBayNext Class Decision Time at eBay

Meet Robert Chatwani, General Meet Robert Chatwani, General Business Manager of eBayBusiness Manager of eBay

eBay is developing a new online eBay is developing a new online marketplace to help small producers marketplace to help small producers and artisans gain global accessand artisans gain global access

The decision to be made includes: The decision to be made includes: How to create a marketplace for small How to create a marketplace for small producers and artisans that would producers and artisans that would maximize long-term revenue maximize long-term revenue and social impact and social impact

2-27© 2012 Pearson Education, Inc. publishing as Prentice-Hall.

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