CHAPTER

Strategic Planning and the Marketing Process

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 5 Identify the basic planning tools and elements of a marketing techniques, including strategy. Porters Five Forces 6 Describe the model, first and second environmental mover strategies, SWOT characteristics that analysis, and the strategic influence strategic window. decisions. 7 Describe the methods for marketing planning, including business portfolio analysis and the BCG matrix.

MARKETING PLANNING: THE BASIS FOR STRATEGY AND TACTICS

Planning Process of anticipating future events and conditions and of determining the best way to achieve organizational objectives. Marketing planning Implementing planning activities devoted to achieving marketing objectives.

STRATEGIC PLANNING VERSUS TACTICAL PLANNING

Strategic planning Process of determining an organizations primary objectives and adopting courses of action that will achieve these objectives. Provides long-term direction for decision makers.

Tactical planning Planning that guides the implementation of activities specified in the strategic plan.
Addresses shorter-term actions and current near-term activities.

PLANNING AT DIFFERENT ORGANIZATIONAL LEVELS

Focus on planning changes in different levels of the organization.

STEPS IN THE MARKETING PLANNING PROCESS

DEFINING THE ORGANIZATIONS MISSION AND OBJECTIVES
Mission Essential purpose that differentiates one company from another.
Examples: 3M: To solve unsolved problems innovatively. Mary Kay Cosmetics: To give unlimited opportunity to women. Merck: To preserve and improve human life. ObjectivesGuide the development of marketing objectives and plans. Examples: Generate a 10 percent profit over the next twelve months. Attain a 20 percent share of the market by 2010. Add 50 new stores within the next year.

ASSESSING ORGANIZATIONAL RESOURCES AND EVALUATING ENVIRONMENTAL RISKS AND OPPORTUNITIES

Resources include the capabilities of the firms production, marketing, finance, technology, and employees. Strengths help planners set objectives, develop plans, and take advantage of marketing opportunities.

FORMULATING, IMPLEMENTING, AND MONITORING A MARKETING STRATEGY

Should be efficient, flexible, adaptable, and implemented company-wide. Blends elements of the marketing mix: product, distribution, promotion, and price.

SUCCESSFUL STRATEGIES: TOOLS AND TECHNIQUES

Goal of tools and techniques is to create sustainable competitive advantage.

PORTERS FIVE FORCES MODEL

Porters Five Forces Model developed by strategy expert Michael Porter that identifies five competitive forces that influence planning strategies:

The threat of new entrants

The bargaining power of buyers The bargaining power of suppliers

The threat of substitute products

Rivalry among competitors

FIRST MOVER AND SECOND MOVER STRATEGIES

First mover strategy Theory advocating that the company that is first to offer a product in a marketplace will be the long-term market winner. Second mover strategy Theory that advocates observing closely the innovations of first movers and then improving on them to gain advantage in the marketplace.

SWOT ANALYSIS
SWOT analysis Analysis that helps planners compare internal organizational strengths and weaknesses with external opportunities and threats.

THE STRATEGIC WINDOW

Strategic window Limited periods during which the key requirements of a market and the particular competencies of a firm best fit together. Example: Soaring demand for cars in China.

ELEMENTS OF A MARKETING STRATEGY

THE TARGET MARKET
The group of people toward whom the firm directs its marketing efforts and merchandise. Need to pay attention to growing market segments. Example: Growing Hispanic population in United States.

MARKETING MIX VARIABLES

Marketing mix Blending of the four strategy elementsproduct, distribution, promotion, and pricingto fit the needs and preferences of a specific target market.

THE MARKETING ENVIRONMENT

Five external dimensions that affect the marketing mix variables: Competitive, political-legal, economic, technological, and socialcultural factors.

Rapid technological changes can spur lawsuits and create new forms of competition.
Rule of threeThe three strongest, most efficient companies dominate 70 to 90 percent of a market.

Example: Cereal manufacturersGeneral Mills, Kelloggs, and Post.

METHODS FOR MARKETING PLANNING

BUSINESS PORTFOLIO ANALYSIS
An evaluation of a companys products and divisions to determine the strongest and weakest ones. Strategic business units Key business units within diversified firms. Each has its own managers, resources, objectives, and competitors. Help focus the attention of managers. Example: Hewlett-Packards iPaq unit for its handheld computer.

BCG ANALYSIS
Developed by Boston Consulting Group. A market share/market growth matrix that plots market share against market growth potential.