Chapter 2

Strategic Market Planning: Take the Big Picture

Business Planning: Compose the Big Picture

Business Planning: Ongoing process of making decisions that guide the firm both in the short term and for the long haul
Identifies/builds on firms strengths Helps managers make informed decisions Develops objectives before action is taken

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Figure 2.1
Three Levels of Business Planning

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Strategic Planning
Managerial decision process that matches firms resources and capabilities to its market opportunities for long-term growth and survival
Top management defines firms purpose and objectives
Example: increase firms total revenues by 20% over next five years

Strategic Business Units (SBUs)

Self-contained divisions
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SWOT - Starbucks
Growth Strategy for the US
Strength profitable and cash-rich Threat New potentially damaging competition (Walmart & Kicks) Strategy indicated
Reinforce positioning Introduce flanker brand to compete with Wal-mart on the lower end (Seattle Coffee Company)

SWOT - Starbucks
Growth Strategy for France Strength high quality, global management expertise Strength cash-rich and profitable Opportunity No concept like Starbucks exists in France Threat sock juice damaging pre-existing attitudes US-France political tensions Strategy Target a more receptive segment the young French Sell the American Starbucks experience (coffee, ambience, music, healthful (no-smoking), internet, a cool place to hang out)

Objective
Attitudes in the target segment

Functional (Tactical) Planning

Accomplished by various functional areas of firm, such as marketing Typically includes:
A broad 5-year plan to support strategic plan A detailed annual plan
Example: marketing plan objective: to gain a 40% share of a particular market with three new products during coming year
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Operational Planning
First-line managers focus on day-today execution of functional plans Such planning includes detailed annual, semiannual, or quarterly plans
Example: an objective may be set in terms of units of a product a particular salesperson needs to sell per month (sales quota)

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All Business Planning Is an Integrated Activity

Strategic, functional, and operational plans must work together to benefit the whole firm Marketers must fully understand how they fit with the organizations direction and resources

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Strategic Planning: Frame the Picture

Very large multiproduct firms may have divisions called strategic business units (SBUs)
SBUs operate like separate businesses with their own mission, business objectives, resources, managers, and competitors

Strategic planning is done at both the corporate and SBU levels

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Strategic Business Units (SBUs)

Large firms like the Walt Disney Company usually operate several SBUs. Disney SBUs include theme parks, movie studios, TV networks, and cruise line

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Strategic Planning Step 1: Define the Mission

Answer three key questions:
What business are we in? What customers should we serve? How do we develop firms capabilities and focus its efforts?

Mission statement:
A formal document that describes the firms overall purpose and what it hopes to achieve in terms of its customers, products, and resources
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Step 1: Define the Mission

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 nations largest book club and in the process bring a lifetime of reading material to every American
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Coca Colas Mission Statement

Everything we do is inspired by our enduring mission:
To Refresh the World in body, mind, and spirit. To Inspire Moments of Optimism through our brands and our actions. To Create Value and Make a Difference everywhere we engage.

http://www.missionstatements.com/fortu ne_500_mission_statements.html
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Step 2: Evaluate the Internal and External Environments

Situational analysis (business review)
An assessment of a firms internal and external environments Internal environment: Controllable elements inside of an organization External environment:Uncontrollable elements outside of an organization that may affect its performance either positively or negatively
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Internal Environment
Controllable elements inside a firm that influence how well the firm operates include:
People (human capital), physical facilities, financial stability, corporate reputation, quality products, strong brands, technologies, etc.

These elements represent key strengths and weaknesses of the firm

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External Environment
Elements outside the firm that may affect it either positively or negatively:
Economic, competitive, technological, legal/political/ethical, and sociocultural trends Trends manifest as opportunities or threats Firm cannot directly control external factors but can respond to them via planning
Visit Trendwatching.com
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Trends Present Opportunities

Recent sociocultural trends influencing food marketing stem from consumer desires for low fat, low carb, and organic foods
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SWOT Analysis
An analysis of an organizations 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
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Step 3: Set Organizational or SBU Objectives

Organizational/SBU Objectives:
What the firm hopes to accomplish with longrange business plan

Need to be specific, time-bound and measurable

May relate to sales, profitability, product development, market share, productivity, ROI, customer satisfaction, or social responsibility
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Are these good objectives?

Increase sales by 15% Achieve recall by December 2010 20% of my consumers should know about my brand Within 6 months of the launch of the product, consumers should be brand loyal 60% of the consumers should like my brand within six months of launch

Figure 2-2
SBUs and the Strategic Plan

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Step 4: Establish the Business Portfolio

Business portfolio:
The group of different products or brands owned by a firm and having different incomegenerating and growth capabilities

Portfolio analysis:
Assessing the potential of a firms SBUs Helps make decisions regarding which SBUs should receive more or less of the firms resources
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Figure 2-3
Boston Consulting Group (BCG) Matrix

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Step 5: Develop Growth Strategies

Product-market growth matrix:
Characterizes different growth strategies according to type of market (new vs. existing) and type of product (new vs. existing). Matrix yields four potential strategies:

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Market penetration Product development Market development Diversification

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Figure 2-4
Product-Market Growth Matrix

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Marketing Planning: Step 1

Perform a situation analysis
Builds on SWOT; identifies how environmental trends affect the marketing plan
What trends impact the marketing plan for Netflix?
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Marketing Planning: Step 2

Set marketing objectives
Specific to the firms brands and other marketing mixrelated elements States what the marketing function must accomplish if firm is to achieve its overall business objectives
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Marketing Planning: Step 3

Develop marketing strategies to achieve marketing objectives
Select target market(s) where the firms offerings are best suited Develop marketing mix strategies:
Marketing mix strategies: how marketing will accomplish its objectives in the firms target market by using product, price, promotion, and place (distribution)
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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
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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

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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 implementation and control of marketing strategies
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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
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Creating and Working with a Marketing Plan

Written marketing plans encourage concrete objectives and strategies Operational plans focus on the day-today execution of the marketing plan A firms corporate culture determines much of its internal environmentthe values, norms, and beliefs that influence everyone in the firm
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Corporate Culture
The way employees dress reflects their organizations corporate culture.

Think about the way people dress at a firm that is familiar to you. What does the typical attire at that firm say about the culture of the organization?

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