Marketing An Introduction Second Canadian Edition Armstrong Kotler

Marketing: An Introduction Second Canadian Edition Armstrong, Kotler, Cunningham, Mitchell and Buchwitz Chapter Two Strategic Planning and the Marketing Process 2 -1 Copyright © 2007 Pearson Education Canada

Looking Ahead • Explain companywide strategic planning and its four steps. • Discuss business portfolio design and strategies. • Explain marketing’s role in strategic planning and the importance of value chains and networks. • Describe the elements of a customer-driven marketing strategy and mix. • List the marketing management functions and elements of a marketing plan. 2 -2 Copyright © 2007 Pearson Education Canada

What Is Strategic Planning is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities. 2 -3 Copyright © 2007 Pearson Education Canada

Steps in Strategic Planning • Corporate level – Define the company mission. – Set company objectives and goals. – Design the business portfolio. • Business unit, product and market levels. – Plan marketing and other functional strategies. 2 -4 Copyright © 2007 Pearson Education Canada

Strategic Planning • Defining a clear company mission. – Setting supporting objectives. – Designing a sound business portfolio. – Coordinating functional strategies. • Mission Statement – States the organization’s purpose. – Market and customer-oriented. – Provides direction to internal stakeholders. 2 -5 Copyright © 2007 Pearson Education Canada

Mission Statement Answers • What is our business? • Who is the customer? • What does the customer value? • What should our business be? 2 -6 Copyright © 2007 Pearson Education Canada

Successful Mission Statements • Are specific. • Are realistic. • Are motivating. • Are customer-centric. • Fit the market environment. • Are based on distinctive competencies. 2 -7 Copyright © 2007 Pearson Education Canada

Strategic Business Unit (SBU) • A unit of the company that has a separate mission and objectives and that can be planned independently from other company businesses. • Can be a company division, a product line within a division or sometimes a single product or brand. 2 -8 Copyright © 2007 Pearson Education Canada

Business Portfolio • 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 growth or downsizing. 2 -9 Copyright © 2007 Pearson Education Canada

Analyze Current Situation • Portfolio analysis. – Evaluates relative strength of all businesses in the company. • Strategic Business Unit analysis. – Evaluates strength of each independent business unit in company. – Growth-Share Matrix key analysis tool. 2 -10 Copyright © 2007 Pearson Education Canada

BCG Growth-Share Matrix Stars Business strength, growth rate, cash use Defend position Cows Nurture to generate cash ? ? ? Use cash to make into a star Dogs Fix or abandon Industry attractiveness, market share, cash generation 2 -11 Copyright © 2007 Pearson Education Canada

Potential Matrix Problems • Can be time consuming and costly. • Difficult to define SBUs and measure market share and growth. • Focus on the current business, not future planning. • Can place too much emphasis on growth. • Can lead to poorly planned diversification. 2 -12 Copyright © 2007 Pearson Education Canada

Analyze Opportunities • Product-Market Expansion Grid identifies four potential growth areas. 2 -13 Existing Products New Products Existing Markets Market Penetration Product Development New Markets Market Development Diversification Copyright © 2007 Pearson Education Canada

Growth at Tim Horton’s • To maintain its phenomenal growth in an increasingly over-caffeinated marketplace, Tim Horton’s uses an ambitious, well-planned multi-pronged growth strategy. 2 -14 Copyright © 2007 Pearson Education Canada

Tim Horton’s and PME Grid • Market penetration. – Make more sales to current customers without changing products. – Add new stores in current market areas; improve advertising, prices, menu, service. • Market development. – Develop new markets for current products. – Review new demographic such as women, youth. – Examine large potential U. S. market. 2 -15 Copyright © 2007 Pearson Education Canada

Tim Horton’s and PME Grid • Product development. – Offering modified or new products to current markets. – Add lunch offerings and iced drinks, sell coffee in supermarkets, co-brand products. • Diversification. – Start up or buy businesses outside current products and markets. – Making and selling CDs, testing restaurant concepts or branding casual clothing. 2 -16 Copyright © 2007 Pearson Education Canada

Marketing’s Role in Strategic Planning • Provide a guiding philosophy. • Provide inputs to strategic planners. • Design strategies to research objectives. • Measure results. 2 -17 Copyright © 2007 Pearson Education Canada

The Value Chain/Network • Value chain. – the series of departments which carry out valuecreating activities to design, produce, market, deliver and support a firm’s products. • Value delivery network. – the network made up of the company, suppliers, distributors and ultimately, customers who “partner” with each other to improve the performance of the entire system. 2 -18 Copyright © 2007 Pearson Education Canada

The Marketing Process • • • Analyze current situation. Analyze marketing opportunities. Select target markets. Develop the marketing mix. Manage the marketing effort. 2 -19 Copyright © 2007 Pearson Education Canada

Select Target Segment • Segment market. – Divide larger market into groups of people with similar demands and responses. • Target segment. – evaluate segments and select one or more segments to enter. • Position. – Create differentiation relative to competing products in minds of target customers. 2 -20 Copyright © 2007 Pearson Education Canada

Market Segmentation • The process of dividing a market into distinct groups of buyers with different needs, characteristics or behaviours who might require separate products or marketing programs. 2 -21 Copyright © 2007 Pearson Education Canada

Segmentation Variables • Market segment. – A group of consumers who respond in a similar way to a given set of marketing efforts. – Can be segmented along different dimensions: • • 2 -22 Demographic variables Geographic location Behavioural variables Psychographic variables Copyright © 2007 Pearson Education Canada

Target Marketing • Involves evaluating each market segment’s attractiveness and selecting one or more segments to enter. • Good target segments must be able to sustain profitability. • Example: – Arm & Hammer’s baking soda – Bayer Aspirin 2 -23 Copyright © 2007 Pearson Education Canada

Market Positioning • Arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers. • Process begins with differentiating the company’s marketing offer so it gives consumers more value. 2 -24 Copyright © 2007 Pearson Education Canada

The Marketing Mix The set of controllable, tactical marketing tools that the firm blends to produce the response it wants in the target market. 2 -25 Copyright © 2007 Pearson Education Canada

Create Marketing Mix • Product – offers the right product, service or experience. • Price – controls perceived value and satisfaction. • Place – allows customers easy access to product and support. • Promotion – communicates the offer and the value proposition. 2 -26 Copyright © 2007 Pearson Education Canada

The Four Ps and the Four Cs • PRODUCT provides CUSTOMER SOLUTION • PRICE represents CUSTOMER COST • PLACE provides CONVENIENCE • PROMOTION is 2 -way COMMUNICATION 2 -27 Copyright © 2007 Pearson Education Canada

Manage Marketing Effort • Build strong operational marketing plan. • Carry out the plan. – Organize marketing department. – Leverage value chain and value network. • Exercise control. – Set goals. – Measure and evaluation performance. – Take corrective action. 2 -28 Copyright © 2007 Pearson Education Canada

A Marketing Plan • Executive summary. – Summary of main goals/recommendations. – Table of contents follows. • Current marketing situation. – Market description. – Product review. – Competitive review. – Review of distribution. 2 -29 Copyright © 2007 Pearson Education Canada

Marketing Plan (cont’d) • Threat and opportunity analysis. – External trends and factors in the marketing environment. – May affect the firm and its strategies. • Objectives and issues. – What the company wants to achieve with the plan. – Sales, profits, market share, positioning. 2 -30 Copyright © 2007 Pearson Education Canada

Marketing Plan (cont’d) • Marketing strategy. – Marketing mix elements and expenditures. – How the strategy fits the opportunity. • Action program. – How the strategy will be implemented. • Budgets. – Forecasted revenues and expenses. • Controls. 2 -31 Copyright © 2007 Pearson Education Canada

Marketing Dept Organization • Functional. – Divided by task e. g. . Sales, advertising, research, customer service. – Each functional area headed by specialist. • Geographic. – Teams focused on particular areas. – Complete set of sales/marketing functions exist within each geographic team. 2 -32 Copyright © 2007 Pearson Education Canada

Marketing Dept Organization • Product management. – Teams focused on specific products or brands. – Typical of large companies with many product lines or brands. • Market or customer management. – Teams focused on key customers or markets. • Combination of two or more common. 2 -33 Copyright © 2007 Pearson Education Canada

Marketing Control Process • Set goals. – What do we want to achieve? • Measure performance. – What is happening? • Evaluate performance. – Why is it happening? • Take corrective action. – What should we do about it? 2 -34 Copyright © 2007 Pearson Education Canada

Looking Back • Explain companywide strategic planning and its four steps. • Discuss business portfolio design and strategies. • Explain marketing’s role in strategic planning and the importance of value chains and networks. • Describe the elements of a customer-driven marketing strategy and mix • List the marketing management functions and elements of a marketing plan. 2 -35 Copyright © 2007 Pearson Education Canada