Chapter 2

Strategic Planning and the Marketing Process

Strategic Planning
48)

(pp. 47-

Strategic Planning is the process of developing and maintaining a strategic fit between the organizations goals & capabilities and its changing marketing opportunities.
Strengths, Weaknesses Opportunities, Threats Many companies operate without formal plans, yet strategic planning provides many benefits such as: Encouraging management to think ahead systematically.

Forcing managers to clarify objectives and policies. Better coordination of company efforts, and clearer performance standards for control. Helping the company to anticipate and respond
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Steps in Strategic Planning

(Fig. 2.1, p. 48)
Corporate Level Business unit, product, and market level

Setting Setting Defining the Defining the company company company company objectives objectives mission mission and goals and goals

Designing Designing the business the business portfolio portfolio

Planning Planning marketing, marketing, and other and other functional functional strategies strategies

Marketings role: (pp. 60-61)

Guiding philosophy (customer orientation) Inputs to planning Marketing strategy

Defining the Companys Business & Mission (pp. 4853) Mission Statement = statement of organizations
purpose Market Oriented Market Oriented Realistic Realistic
Table 2.1 Not product- or technology- oriented Marketing myopia

Specific Fit Market Environment Fit Market Environment

Characteristics of good mission statements

Distinctive Competencies Distinctive Competencies

Beyond sales & profits, visionary

Motivating Motivating
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Objectives & strategies follow from the mission

Designing the Business Portfolio (pp. 53-54)

The business portfolio is the collection of businesses and products that make up the company. The company must:

analyze its current business portfolio or Strategic Business Units (SBUs) decide which SBUs should receive more, less, or no investment develop growth strategies for adding new products or businesses to the portfolio
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Boston Consulting Group Approach Growth-Share Matrix (pp. 54-55)

Relative Market Share

Market Growth Rate

High Stars

Low Question Marks Question Marks

High

High mkt. growth & share High mkt. growth, low share High mkt. growth, low share Profit potential Build into Stars or phase out Build into Stars or phase out Heavy investment neededVery heavy investment Very heavy investment to finance rapid growth needed if to build share needed if to build share hold build (or harvest or divest) build (or harvest or divest)

Cash Cows Cash Cows

Dogs Dogs

Low growth, high share Low mkt. growth & share Low growth, high share Low mkt. growth & share Established, successful Low profit potential Established, successful Low profit potential Produce cash Produce cash hold (or harvest or hold (or harvest) hold (or harvest) divest)
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Low

Problems With Matrix Approaches (pp. 56-57)

Can be difficult, time-consuming, & costly to implement Can be difficult, time-consuming, & costly to implement
((difficult to define SBUs & measure market share & growth rate )) difficult to define SBUs & measure market share & growth rate

Focuses on current businesses, but not future planning Focuses on current businesses, but not future planning

Can lead to unwise expansion or diversification Can lead to unwise expansion or diversification

Growth Strategies
(pp. 57-60)

Product / Market Expansion Grid

Existing Products New Products 3. 1. Market PenetrationProduct Development Existing Markets
Product extensions More usage Competitors customers New products Nonusers

2. Market Development 4. Diversification New New demographic Markets

New geographic Highest risk lose focus

Product / Market Expansion Grid (pp. 57-60)

Market Penetration: selling more to current customer markets without changing products.

How? Add new stores in current market areas, improve advertising, prices, service, packaging, store design, etc.

Market Development: developing new

markets for current products.
How? Identify new demographic or geographic markets.
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Product / Market Expansion Grid (pp. 57-60)

Product Development: offering modified or new products to current markets.

How? New styles, flavors, versions, etc. New complementary products.

Diversification: new products for new markets.

How?

Start up or buy new businesses.

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Discussion Connections

Apply the product / market expansion grid to assess how one of the following companies might grow:

Kelloggs Kodak Levi-Strauss Toys R Us Dell Computer E*Trade online investment services

The Marketing Process

(Fig. 2.5, pp. 63-76)
DemographicEconomic Environment
M A a rk 1 n e al t ys in is g

Marketing Intermediaries
2 ing t g ke nin ar n M Pla

TechnologicalNatural Environment

Product Target Consumers Promotion

PoliticalLegal Environment

Competito rs

3 Im Ma p l rk em et en ing ta ti on

Suppliers
4

Place
ng ti ke ol ar tr M on C

Price

Publics

SocialCultural Environment
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Chapter Review

(pp. 77-78)

Explain companywide strategic planning and its four steps. Discuss how to design mission statements, business portfolios, and growth strategies. Explain marketings role in strategic planning. Describe the marketing process and the forces that influence it.
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