Chapter 2 Strategic Planning in Contemporary Marketing

Chapter 2Strategic

Planning in Contemporary

Marketing

CHAPTER 2 Strategic Planning in Contemporary Marketing

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.

Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.


Chapter Objectives

5. Identify the basic elements of a marketing strategy.

6. Describe the environmental characteristics that influence strategic decisions.

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



o Planning - Anticipating future events and conditions and determining the best way to achieve organizational objectiveso Continuous process; creates a blueprint for

everyone in the organization

Marketing Planning: The Basis for Strategy and Tactics



o Marketing planning - Implementing planning activities devoted to achieving marketing objectiveso Many planning activities take place over

the Internet with virtual conferences

o An important trend in marketing planning centers on relationship marketing

Marketing Planning: The Basis for Strategy and Tactics



Strategic Planningo Determining an

organization’s primary objectives

o Adopting courses of action that will achieve these objectives

o Addresses long-term actions

Strategic Planning Versus Tactical Planning


Tactical Planningo Guides the

implementation of activities specified in the strategic plan

o Addresses shorter-term actions






o Defining the organization’s missiono Mission - Essential purpose that

differentiates one company from another

o Examples:

oMicrosoft Office: “Real life tools”

o Sephora: “The beauty authority”

o IBM: “Welcome to the decade of smart”

Steps in the Marketing Planning Process



o Defining the organization’s objectiveso Objectives - Guide the development of

marketing objectives and plans

oExamples:

oGenerate a 15 percent profit over the next 24 months

o Add 25 new outlets within the next year

o Cut manufacturing costs by 10 percent

Steps in the Marketing Planning Process



o Resources include: o Production

o Marketing

o Finance

o Technology

o Employees

Assessing Organizational Resources and Evaluating Environmental Risks and

Opportunities


o Strengths help planners:o Set objectives

o Develop plans

o Take advantage of marketing opportunities


oMarketing strategy - Selecting and satisfying target consumers through the marketing mix elements

o The final steps of the planning process:o Marketers put the marketing strategy into action

o Marketers monitor performance to ensure that objectives are achieved

Formulating, Implementing, and Monitoring a Marketing Strategy



o Porter’s Five Forces Modelo The threat of new entrants

o The bargaining power of buyers

o The bargaining power of suppliers

o The threat of substitute products

o Rivalry among competitors

Successful Strategies: Tools and Techniques




Source: Adapted with permission of The Free Press,a division of Simon and Schuster Adult PublishingGroup. From Competitive Strategy: Techniques forAnalyzing Industries and Competitors by Michael E. Porter. Copyright ©1980, 1998 by The Free Press. All rights reserved.


o First mover strategy – The company first to offer a product in a marketplace will be the long-term market winner

o Second mover strategy – Observing the innovations of first movers and then improving on them to gain advantage in the marketplace

First Mover and Second Mover Strategies



o Helps planners compare internal organizational strengths and weaknesses with external opportunities and threats

SWOT Analysis





o Limited periods when key requirements of a market and a firm’s particular competencies best fit together

o Requires a thorough analysis of:o Current and projected external environmental

conditions

o Current and projected internal company capabilities

o How, whether, and when the firm can reconcile environmental conditions and company capabilities

The Strategic Window



o The target market

o Marketing mix variables

Elements of a Marketing Strategy



o The group of people toward whom the firm directs its marketing efforts and merchandiseo Example: Boeing markets most of their

products to business buyers

o Diversity plays a critical roleo Example: Growing Hispanic population in

United States

The Target Market



o Targeting consumers in specific global markets represents a challenge and an opportunityo Example: In India, Walmart has made a

successful entry into retailing with smaller shops in urban areas and low prices

The Target Market



o Marketing mix - Blending of the four strategy elements to fit the needs and preferences of a specific target marketo Product

o Distribution

o Promotion

o Pricing

Marketing Mix Variables





o Deciding what goods or services the firm should offer to a group of consumerso Customer service

o Package design

o Brand names, trademarks, patents, and warranties

o Lifecycle of a product

o Product positioning

o New-product development

Product Strategy



oConsumers find their products in the proper quantities at the right times and places

o Involves modes of transportation, warehousing, inventory control, order processing, and selection of marketing channels

o Technology has opened new channels of distribution in many industries

Distribution Strategy



o Communication link between sellers and buyers

o Firms may communicate messages:

o Directly through salespeople

o Indirectly through advertisements and promotions

o Many companies use integrated marketing communications (IMC)

Promotion Strategy



o Methods of setting profitable and justifiable prices

o Subject to regulation and public scrutiny

o A good pricing strategy:o Creates value for customers

o Builds and strengthens customer relationships with a firm and its products

Pricing Strategy



o Five external dimensions that affect the marketing mix variables:o Competitive

o Political-legal

o Economic

o Technological

o Social-cultural

The Marketing Environment



o Technology continually changes the marketing environment

o Rule of three – The three strongest, most efficient companies dominate 70 and 90 percent of a marketo Example: Cereal manufacturers -

General Mills, Kellogg’s, and Post

The Marketing Environment



o Business portfolio analysiso An evaluation of a company’s products and

divisions to determine the strongest and weakest

Methods for Marketing Planning



o Key business units within diversified firms

o Each strategic business unit (SBU):o Has its own managers, resources, objectives,

and competitors

o Pursues its own distinct mission and develops its own plans independently

o SBUs help focus the attention of company managers

o Companies may have to redefine their SBUs as market conditions dictate

Strategic Business Units



o Developed by the Boston Consulting Group

o A market share/market growth matrix that plots market share against market growth potential

BCG ANALYSIS





Watch Strategic Planning and theMarketing Process at Preserve

o Do you consider Preserve’s strategy for the Preserve brand a first mover or second mover strategy? Explain.

o Perform a SWOT analysis on Preserve. Identify their core competency and their weaknesses in the marketplace.

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Chapter 2 Strategic Planning in Contemporary Marketing