Kotler Armstrong Principles of Marketing 4 e Chapter

Kotler, Armstrong Principles of Marketing 4 e Chapter 2 Strategic Marketing and Planning

Chapter Objectives 1. Explain strategic planning. 2. Describe the marketing management and planning process. 3. Identify the sections of a marketing plan and specify the contents of each section. 4. Discuss the development of marketing strategy and its implementation. 5. Explain the ways in which marketing organisations control and evaluate their marketing performance. 11/28/2020

Marketing Process • The process of analysing marketing opportunities, researching and selecting target markets, designing market strategies, planning marketing programs, implementing (including organising) and controlling the marketing effort.

Strategic Planning • Most organisations operate according to formal plans. • Managers are often too busy and have no time for planning. • Planning can help make sense of a changing environment. • Organisations failing to plan are planning to fail. • The need for flexibility has led to a resurgence in the process of scenario planning.

Strategic Planning • The process of developing and maintaining a strategic fit between the organisation’s goals and capabilities in the light of changing marketing opportunities. • It relies on developing a clear: – Company mission – Objectives – Sound Business Portfolio – Coordinated Functional Strategies

Strategy Hierarchy 1. Corporate Strategy level 2. Strategic Business Unit (SBU) Level 3. Functional Level of SBU (eg Marketing Strategy)

Figure 2. 1 The Strategy Hierarchy

Marketing Management and Planning • This involves four levels of decision making: – – The corporate. The divisional. The business unit. Product levels. • The organisation’s head office is responsible for a corporate strategic plan, each division develops a divisional plan that cover the allocation of funds to each SBU in the division. • Marketing plans operate at two levels, the strategic and tactical.

The company's overall mission and objectives are defined by the: A. B. C. D. E. functional plan strategic plan marketing plan customer analysis CEO

Marketing or Business Plan? • Marketing planning procedures and content vary considerably among companies. • The plan is variously called a ‘business plan’, a ‘marketing plan’ and sometimes an ‘operating plan’.

Marketing or Business Plan? • The business plan incorporates the plans of all functions—production, R&D, finance, human resources, IT and marketing. 1. The marketing plan has its focus on customer acquisition, retention and the resources required. It include the resources needed to implement specific marketing functions (such as selling, advertising, sales promotion and market research). 2. Most marketing plans cover one year, but some cover a few years. 3. Plans vary in their length from under ten pages to over 50. 4. Frequently cited shortcomings of marketing plans, are lack of realism, insufficient market and competitive analysis and a short-run focus.

Figure 2. 2 Analysis, Planning, Implementation and Control

Table 2. 1 Contents of a Marketing Plan

The Nature and Contents of a Marketing Plan Executive Summary – The marketing plan should open with a brief summary of the plan. – This executive summary is aimed at the senior management to enable them to grasp quickly the plan’s major thrust, its goals and recommendations. – The summary should be no more than one page long.

The Nature and Contents of a Marketing Plan Current marketing situation – This section presents relevant background data on the target market, product, competition, distribution and the macroenvironment. – The data are drawn from a product fact book or database maintained by the product manager.

The Nature and Contents of a Marketing Plan • Product Situation – This states the sales, product prices, contribution margin and profits for past years. • Competitive Situation – Identify and describe the main competitors in terms of size, goals, market share, product quality, marketing strategies and other characteristics. • Distribution Situation – This presents data on the size and importance of each marketing (distribution) channel. • Macro-environment Situation – A brief summary of the broad macro trends-demographic, economic, technological, political/legal and sociocultural that affect the product line’s future.

The Nature and Contents of a Marketing Plan Opportunity and issue analysis – After summarising the current marketing situation, the product manager proceeds to identify the major: • Opportunities and threats, • Strengths and weaknesses • Issues analysis

The Nature and Contents of a Marketing Plan Objectives – After the product manager has summarised the issues involved with the product line, he or she must decide on the plan’s objectives. Two types of objectives must be set: • Financial • Marketing

The Nature and Contents of a Marketing Plan Marketing strategy – The marketing logic by which the business unit hopes to achieve its marketing objectives. Marketing strategy consists of specific strategies for target markets, marketing mix and marketing expenditure level. – The marketing strategy often comes after the positioning strategy statement.

The Nature and Contents of a Marketing Plan Action programs – The marketing plan must specify the broad marketing programs designed to achieve the business objectives. Each marketing strategy element must now be elaborated to answer: • • What will be done? When will it be done? Who will do it? How much will be spent?

The Nature and Contents of a Marketing Plan Projected profit-and-loss statement – Action plans allow the product manager to build a supporting budget. • On the revenue side, this budget shows the forecast sales volume in units and the average price. • On the expense side, it shows the cost of production, physical distribution and marketing broken down into finer categories. The difference between revenues and sales is the projected profit.

Action programs outline: A. B. C. D. E. what will be done when it will be done who will do it how much will be spent all of the above

The Nature and Contents of a Marketing Plan Controls – This section outlines the controls for monitoring the plan’s progress. Typically, the goals and budget are spelled out for each month or quarter. – Senior management can review the results of each period and identify businesses that are not attaining their goals. – Managers of lagging businesses must explain what is happening and the actions they will take to improve plan fulfillment. – A contingency plan outlines the steps that management would take in response to specific adverse developments. The purpose of contingency planning is to encourage managers to think about difficulties that might lie ahead.

The Nature and Contents of a Marketing Plan • Analysing market opportunities – Requires a reliable marketing information system. – This is includes market research to gather information about the marketing environment (macro and micro). – Requires understanding of consumer markets. – Requires close attention to competitors.

Evaluating the Marketing Plan • How does your marketing plan measure up? Before implementing the marketing plan it can be useful to evaluate it by answering the following questions: – Do your marketing objectives relate directly to the company’s strategic initiatives? – Do your marketing objectives relate directly to what you learned in your situational analysis? – Do your marketing objectives relate directly to the capacity of your current marketing mix to handle them? – Do your marketing objectives relate directly to your business’s strengths and to the opportunities available? – Do your marketing objectives relate directly to your business’s weaknesses and to the threats that endanger it?

Evaluating the Marketing Plan – Are your marketing objectives clear, measurable statements of what is to be achieved? – Do your marketing objectives, strategies and tactics relate to each other? – Does each strategy in your marketing plan contain a cost/benefit evaluation? – Is every person involved in implementation included in the marketing planning process in some way? – Is the plan clearly visible on your desk every day? – Is your business’s vision truly a ‘shared vision’? If you can answer all these questions positively you have a powerful marketing plan ready for implementation.

Implementing Marketing Plan • Marketing implementation is the process that turns marketing strategies and plans into marketing actions in order to accomplish strategic marketing objectives. • Implementation involves day-to-day, month-to-month activities that effectively put the marketing plan to work. • Whereas marketing planning addresses the: – what and why of marketing activities, – implementation addresses the who, where, when and how

Reasons For Poor Implementation of Marketing Plans • Isolated Planning • Trade-offs Between Long and Short Term Objectives • Natural Resistance To Change • Lack of Financial and Marketing Integration • Overemphasis on the Document

Factors For Successful Implementation • Action program that pulls all the people and activities together. • Formal organisation structure. • A company’s decision and reward systems (operating procedures that guide planning, budgeting, remuneration and other activities). • Careful human resources planning. • Marketing strategies must fit with its company culture. Company culture is a system of values and beliefs shared by people in an organisation—the company’s collective identity and meaning.

Figure 2. 3 Functional Organisation

Figure 2. 4 Geographic Organisation

Figure 2. 5 Project Management Organisation

Table 2. 3 Possible Future Scenarios for Brand Management

Controlling and Evaluating Performance • Marketing control is the process of measuring and evaluating the results of marketing strategies and plans, and taking corrective action to ensure that marketing objectives are attained. • Operating control involves checking ongoing performance against the annual plan and taking corrective action when necessary. • Strategic control involves looking at whether the company’s basic strategies are well matched to its opportunities.

Controlling and Evaluating Performance • Marketing Audit is a comprehensive, systematic, independent and periodic examination of a company’s strategies and activities to determine problem areas and opportunities and to recommend a plan of action to improve the company’s marketing performance.

Figure 2. 6 The Control Process

Which of the following is not part of a corporate strategy? A. mission and vision B. objectives C. resource deployment D. tactics E. corporate values