Copyright 2012 Pearson Education Inc Publishing as Prentice

Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 02 Strategic Market Planning The Big Picture

Learning Objectives § § Understand the importance of strategic planning § Describe the steps in marketing planning § Understand a basic outline for a marketing plan Define strategic business units (SBUs) Explain business planning and its three levels Describe the steps in strategic planning 2 -

The Marketing Plan Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

What is Business Planning? Composing the Big Picture § Business Planning: Ongoing process of making decisions that guides the firm both in the short term and for the long term Identifies/builds on firm’s strengths § Helps managers make informed decisions § Develops objectives before action is taken § 2 -

Marketing and Ethics Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Ethics Is Up Front in Marketing Planning § Business ethics: • Basic values that guide a firm’s behavior § Code of ethics: • Written standards of behavior to which everyone in the organization must subscribe § Difference between value, morals, ethics (see supplemental PPT) 2 -

Figure 2. 1 Three Levels of Business Planning 2 -7

Strategic Planning § Managerial decision process that matches firm’s resources and capabilities to its market opportunities for long-term growth and survival • Top management defines firm’s purpose and objectives • Strategic business units (SBUs) are common in large firms 2 -

Functional Planning § Accomplished by various functional areas of firm, such as marketing § Typically includes: • A broad three-to-five-year plan to support the strategic plan • A detailed annual plan 2 -

Operational Planning § First-line managers focus on day-to-day execution of functional plans § Typically includes one or more of the following: • Detailed annual plans • Semiannual plans • Quarterly plans 2 -

All Business Planning Is an Integrated Activity § Strategic, functional, and operational plans must work together to benefit the whole firm • Plans are guided by firm’s mission § Planners at all levels must keep the “big picture” in mind when planning 2 -

Strategic Planning: Frame the Picture § Very large multiproduct firms may have divisions called strategic business units (SBUs) • SBUs operate like separate businesses § Strategic planning is done at both the corporate and SBU levels 2 -

Characteristics of Strategic Business Units (SBUs) An SBU … g Ø Ø Ø 13 has a distinct mission & specific target market has control over its resources has its own competitors has plans independent of other SBUs Charter Club, Alfani, Style & Co.

Figure 2. 2 Steps in Strategic Planning 2 -14

Strategic Planning Step 1: Define the Mission § Key questions in determining the mission: • What business are we in? • What customers should we serve? • How do we develop firm’s capabilities and focus its efforts? § Mission statement (find a mission statement!) • A formal document that describes the firm’s overall purpose and what it hopes to achieve in terms of its customers, products, and resources 2 -

Step 1: Define the Mission (con’t) § Examples of mission statements • MADD: “to stop drunk driving, support the victims of this violent crime, and prevent underage drinking. ” • National Book Swap: “to become the nation’s largest book club and in the process bring a lifetime of reading material to every American. ” 2 -

Step 2: Evaluate the Internal and External Environments § Situational analysis An assessment of a firm’s internal and external environments Internal environmental assessment: identifies the firm’s strengths and weaknesses § External environmental assessment: identifies opportunities and threats § 2 -

SWOT Analysis § An analysis of an organization’s strengths (S) and weaknesses (W) and the opportunities (O) and threats (T) in the external environment § SWOT enables the firm to develop strategies that maximize strengths and capitalize upon opportunities 2 -

SWOT Analysis Internal External 19 S W O T Strengths - things the firm does well Weaknesses - things the firm does not! Opportunities - conditions in the external environment that favor strengths Threats - conditions in the external environment that do not relate to existing strengths or favor areas of ©South-Western College Publishing current weakness.

Internal Environment § Controllable elements inside a firm that influence how well the firm operates § Any examples? Southwest Airlines’ employees reflect the “Southwest Spirit” and are considered a key strength of the firm. 2 -

External Environment § § Elements outside the firm that may affect it either positively or negatively. The external environment is global and requires consideration of: • Legal/political/ethical trends • Economic trends • Competitive trends • Technological trends • Sociocultural trends • Demographic 2 -

Table 2. 2 Part A Example of a Partial SWOT Analysis for Mc. Donald’s © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 2 -22

Table 2. 2 Part B Example of a Partial SWOT Analysis for Mc. Donald’s © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 2 -23

Step 3: Set Organizational (or SBU) Objectives § Organizational/SBU Objectives: • What the firm hopes to accomplish with long-range business plan § Need to be specific, measurable, attainable and sustainable • May be financially focused, or focused on other factors such as satisfaction 2 -

Step 4: Establish the Business Portfolio § Business portfolio: • The group of different products or brands owned by a firm and having different income-generating and growth capabilities § Portfolio analysis • Assesses the potential of a firm’s SBUs • BCG growth-market share matrix 2 -

HIGH $ LOW Market Growth Rate Portfolio - BCG Matrix HIGH Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall LOW Relative Market Share

Figure 2 -3 Boston Consulting Group (BCG) Matrix © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 2 -27

Step 5: Develop Growth Strategies Product-market growth or Ansoff’s matrix: Characterizes different growth strategies according to type of market and type of product H. Igor Ansoff was a Russian American, applied mathematician and business manager. He is known as the father of Strategic management. f The Ansoff Matrix was first published in the Harvard Business Review in 1957, and has given generations of marketers and business leaders a quick and simple way of thinking about growth. (mindtools. com) 2 -

Figure 2 -4 Product-Market Growth Matrix © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 2 -29

Ansoff’s Opportunity Matrix Market Penetration 30 Increase market share among existing customers Market Development Attract new customers to existing products Product Development Create new products for present markets Diversification Introduce new products into new markets

Example of Ansoff’s Strategic Opportunity Matrix-Starbucks Present Product 31 Present Market Penetration New Market Development Starbucks sells more coffee to customers who register their reloadable Starbucks cards. Starbucks opens stores in Brazil and Chile. New Product Development Starbucks develops powdered instant coffee Via or Blond Roast. Diversification Starbucks launches Hear Music and buys Ethos Water.

Marketing Planning § Step 1: Perform a Situation Analysis • Builds on SWOT; identifies how environmental trends affect the marketing plan § Step 2: Set Marketing Objectives • Specific to the firm’s brands and other marketing mix-related elements • States what the marketing function must accomplish if firm is to achieve its overall business objectives 2 -

Marketing Planning: Step 3 § Develop marketing strategies to achieve marketing objectives • Select a Target Marketwho is the customer for the firm’s products • Develop Marketing Mix strategies (4 P’s) © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 2 -

Marketing Mix Strategies § Product strategies: • Include product design, packaging, branding, support services, and product variations and features § Pricing strategies: • Include setting prices for final consumers, wholesalers, and retailers based on costs, demand, or competitors’ prices © 2012 Pearson Education, Inc. publishing as Prentice-Hall. First Flavor Video 2 -

Marketing Mix Strategies § Promotion strategies: • Advertising, sales promotion, public relations, direct marketing, personal selling § Distribution (place) strategies: • How, when, and where the product is available to targeted customers © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 2 -

The Marketing Mix A unique blend of PRODUCT, PRICE, PROMOTION AND PLACE (distribution) strategies designed to produce mutually satisfying exchanges with a target market. The elements of the marketing mix are often referred to as the “Four Ps” 36

Step 4: Implement and Control the Marketing Plan § Control: • Measuring actual performance, comparing performance to the objectives, making adjustments § Marketing metrics: • Return on marketing investment (ROMI) § Action plans: • Support plans that guide the execution and control of marketing strategies at the operational level 2 -

Metrics Moment § ROMI is the revenue or profit margin generated by investment in a specific marketing program divided by the cost of that program (expenditure) at a given risk level, as determined by management $ 2 -

Table 2. 4 Template for an Action Plan © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 2 -39

Operational Planning: Day-to-Day Execution of Plans § At the operational level, plans focus on the day-to-day execution of the marketing plan • Created by first-line managers • Cover short time frames • Marketing metrics gauge success 2 -