Copyright © 2011 The McGraw-Hill Companies All Rights ReservedMcGraw-Hill/Irwin

Chapter 1Strategic

Planning and the Marketing Management

Process

1-2

Key Terms

Marketing Concept, Strategic Planning, Mission Statement, Organizational Objectives, Organizational Strategies, Competitive Advantage, Organizational Portfolio Plan, Marketing Information Systems, Marketing Research, Cross-Functional Teams

1-3

The Marketing Concept

Marketing concept means that an organization should seek to make a profit by serving the needs of customer groups

The marketing function should find effective and efficient means of making the business do what suits interests of customers

1-4

What is Marketing?

The American Marketing Association defines marketing as “an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders”

1-5

Major Types of Marketing (Figure 1.1)

1-6

What is Strategic Planning?

Before managers can develop plans for individual departments some larger plans or blueprint for the organization should exist

Objectives and strategies established at the top level provide context for planning in each of the divisions and departments

1-7

Strategic Planning

Includes all activities that lead to development of a clear organizational mission, objectives, and appropriate strategies

Plays a key role in achieving equilibrium between short and long term, by balancing acceptable financial performance

1-8

Strategic Planning

Helps prepare for inevitable changes in markets, technology, and competition, as well as in economic and political arenas

1-9

The Strategic Planning Process (Figure 1.2)

1-10

The Strategic Planning Process

Organizational mission - In developing a mission statement, management must take into account the: Organization’s history Organization’s distinctive competitiveness Organization’s environment

1-11

The Strategic Planning Process

Mission statements should be: Focused on markets rather than products Achievable Motivational Specific

1-12

The Strategic Planning Process

Organizational objectives They are the end point of an organization’s

mission and are what it seeks through the on-going, long-run operations of the organization

They must be specific, measurable, action commitments by which the organizational mission is to be achieved

1-13

The Strategic Planning Process

Organizational strategies The organizational strategy is a “grand

design” to get to where the organization wants to go

Involves choice of major directions organization will take in pursuing its objectives

1-14

Sample Organizational Objectives (Figure 1.3)

1-15

The Strategic Planning Process

Organizational growth based on products and markets Market penetration strategies Market development strategies Product development strategies Diversification

1-16

The Strategic Planning Process

Organizational strategies based on competitive advantage Ability to outperform competitors in

providing something that the market values

Porter suggests strategies based on cost leadership and differentiation

1-17

Organizational Growth Strategies (Figure 1.4)

1-18

The Strategic Planning Process

Organizational strategies based on value “Customer value” has become critical for

marketers as well as customers Firms must seek to build long-term

relationships with their customers by offering unique value

Many firms use one of three value strategies – best price, best product, or best service

1-19

The Strategic Planning Process

Choosing an appropriate strategy Management should select those

strategies consistent with its mission and capitalize on the organization’s distinctive competencies

Sustainable competitive advantage can be based on either the assets or skills of the organization

1-20

The Strategic Planning Process

Organizational portfolio plan Most organizations at a particular time are

a portfolio of businesses Management must decide which

businesses to build, maintain, eliminate, or which new businesses to add

The first step is to identify the various divisions, product lines, and so on that can be considered a “business"

1-21

The Strategic Planning Process

Organizations can identify strategic business units (SBUs) that: Have a distinct mission Have their own competitors Are a single business or collection of

related businesses Can be planned independently of the other

businesses Resource allocation can then be made

using portfolio models

1-22

The Strategic Planning Process

Complete strategic plan Facilitates development of marketing plans

for each product, product line, or division of the organization

Marketing plan serves as a subset of strategic plan

1-23

The Marketing Management Process

Defined as “the process of planning and executing the conception, pricing, promotion, and distribution of goods, services, and ideas to create exchanges with target groups that satisfy customer and organizational objectives”

1-24

Strategic Planning and Marketing Planning (Figure 1.5)

1-25

The Marketing Management Process

Situation analysis can be divided into six major areas of concern Cooperative environment Competitive environment Economic environment Social environment Political environment Legal environment

1-26

The Marketing Management Process

Marketing planning Establishing marketing objectives Selecting the target market Developing the marketing mix

1-27

The Marketing Management Process

Implementation and control Implementation involves putting the

marketing plan into action and performing tasks according to the predefined schedule

Controlling involves: Measuring results of implemented

marketing plan; comparing results with objectives

Making decisions on whether plan is achieving objectives

1-28

The Marketing Management Process

Marketing information systems and marketing research Satisfies the need for current, reliable, and

valid information

1-29

The Strategic Plan, The Marketing Plan, and Other Functional Area Plans

Strategic planning is a top-management responsibility

All strategic planning has marketing implications

Marketing objectives and strategies must be derived from the strategic plan

Planning done in all functional areas of the organization should be derived from strategic plan

1-30

The Cross-Functional Perspective in Planning (Figure 1.6)

1-31

A Blueprint for Management Action (Figure 1.7)

1-32

Portfolio Models - A Review of Portfolio Theory

Experience Curve and Resulting Profit (Figure A.1)

1-33

Portfolio Models – BCG Model

The Boston Consulting Group Portfolio Model (Figure A.2)

1-34

Portfolio Models – The General Electric Model

The General Electric Portfolio Model (Figure A.3)

1-35

Portfolio Models – The General Electric Model

Components of Industry Attractiveness and Business Strength at GE (Figure A.4)