Title: CHAPTER 2 Strategic Planning and the Marketing Environment: The Advantage is Undeniable
1CHAPTER 2Strategic Planning and the Marketing
Environment The Advantage is Undeniable
M A R K E T I N G
Real People, Real Choices Fourth Edition
Michael R. Solomon Greg W. Marshall
Elnora W. Stuart
2Chapter Objectives
- Explain the strategic planning process
- Describe the steps in the marketing planning
process - Explain operational planning
- Discuss important aspects of an organizations
internal environment - Explain why marketers scan an organizations
external business environment
3Business Planning
- Business plans
- guide entire organization or its business units
- Bplans.com provides several examples
4Marketing Plans
- Describe the marketing environment
- Outline marketing strategies
- Identify plans for implementation and evaluation
5Strategic Planning
- Strategic planning is the managerial decision
process that matches the organizations resources
and capabilities to its market opportunities for
long-term growth - Firms may become multi-product companies with
self-contained divisions - Strategic Business Units (SBUs)
- Example The Walt Disney Company
6Figure 2.1 Planning at Different Levels
7Lower Levels of Planning
- Functional
- Conducted by mid-level managers
- Includes Marketing as well as Finance,
Operations, HRM, etc.
- Operational
- Conducted by first-line managers
- Includes day-to-day execution of tactical plans
8Operational Planning
9Strategic Planning Steps
Define the organizations mission
Evaluate internal/external environments
Set objectives
Establish the business portfolio
10Define the Organizations Mission
- A mission may begin with these questions
- What business are we in?
- What customers should we serve?
- How should we develop the firms capabilities and
focus its efforts?
11Sample Mission Statements
- MADD To stop drunk driving, support the victims
of this violent crime, and prevent underage
drinking. - Armour To find new technology and enhance the
performance of every athlete and outdoorsman.
Lighter. Faster. Stronger. Better.
12Evaluate the Internal/External Environment
Weaknesses
Strengths
Opportunities
Threats
13Set Organizational and SBU Objectives
- SBU objectives must support the overall
objectives of the firm
Profitability
Customer Satisfaction
Market Standing
Revenue and Sales
Return on Investment
14Establish the Business Portfolio
- For firms with different SBUs, planning also
includes allocating resources among the
businesses - Each SBU is a separate profit center within the
larger corporation - Each SBU is responsible for its own costs,
revenues, and profits
15Crest
Crest toothpaste products are part of PGs
portfolio that ranges from personal care products
to coffee
16Figure 2.2 The Role of SBUs
17Portfolio Management
- The range of products owned by a large firm is
called a business portfolio - Portfolio analysis allows a firm to assess the
potential of its products and businesses - BCG Growth-Market Share Matrix
18Boston Consulting Group
19Figure 2.3 BCG Matrix
20BCG Matrix
- Method focuses on the potential of a firms
existing successful products to generate cash
that the firm can then use to invest in new
products - New products are chosen for their potential to
become future cash generators - Two dimensions
- Market growth rate
- Relative market share
21BCG Matrix Stars
- SBUs with dominant market share in high-growth
markets - requires funding to keep up with production and
promotion demands - strategies seek to maximize market share in the
face of increasing competition
22BCG Matrix Cash Cows
- SBUs with dominant market share in a low-growth
potential market - product is well established and market share can
be maintained with minimal funding - firms milk cows of profits to fund growth of
other products in portfolio - too many cows can become a liability due to the
lack of growth potential
23BCG Matrix Question Marks
- SBUs with low market shares in fast-growth
markets - sometimes called problem children
- the firm has failed to compete effectively
- The dilemma? Investing more money into the SBU
may - improve market share in a high potential market
OR - result in negative cash flow and failure
24BCG Matrix Dogs
- SBUs with small market share in a slow-growth
market - specialized products in limited markets unlikely
to grow - firms may sell dogs to smaller firms or eliminate
product from market
25Disneys Touchstone
Disney emphasizes its movie brand for grownups as
a star
26Developing Growth Strategies
- Product-Market Growth Matrix illustrates
different growth strategies - Two dimensions
- opportunities for growth in existing or new
markets - allocating resources into existing products or
new products - Four strategies result
27Figure 2.4 Product-Market Growth Matrix
28Steps in the Marketing Planning Process
- 1. Perform a situation analysis
- 2. Set marketing objectives
- 3. Develop marketing strategies
- Select a target market
- Develop marketing mix strategies
- 4. Implement marketing strategies
- 5. Monitor and control strategies
29Under Armour Woman
Under Armour targets athletes of both sexes who
seek moisture control when they play or work out
30Jet Blue
Part of Jet Blues product strategy is to provide
in-flight diversions to bored passengers
31Operational Planning
- Day-to-day execution of the marketing plan
- Performed by first-line supervisors
- Timed over 1-2 months
32The Internal Business Environment
- Corporate Resources and Competencies
- Corporate Culture
- Risk-Taking Cultures
- Profit-Centered versus People-Centered Cultures
33Where to Work
- Fortune Magazine publishes a list of the top
places to work - these represent balanced firms
emphasizing people and profit - J.M. Smucker
34The Economic Environment
- The Business Cycle
- All economies go through cycles of prosperity,
recession, and recovery - The cycle directly affects marketers because of
its effect on consumer behavior - The Power of Expectations
- Consumer confidence represents consumer beliefs
about what the future holds - Like business cycles, it affects whether
consumers buy or cut back on spending
35Consumer Confidence Index
Source http//www.conference-board.org/economics/
consumerconfidence/index.cfm posted July 27, 2004
36The Competitive Environment
- Analyzing the Competition
- Strengths and weaknesses analysis
- Competitive intelligence (CI)
- Competition in the Microenvironment
- Competition in the Macroenvironment
37Competition The Microenvironment
- In the microenvironment, competition means the
alternatives from which the target may choose - Level 1 competition for discretionary income
(for income left after a consumer pays for
necessities) - Level 2 product competition in which different
products attempt to satisfy the same needs or
wants - Level 3 brand competition in which competitors
offering similar products compete for consumer
choice
38Competition The Macroenvironment
- Overall structure of industry
- monopoly - when one seller controls market
- oligopoly - relatively small number of sellers,
each with a substantial share of market - monopolistic - many sellers compete for buyers
each offers a slightly different product and has
a small share of market - perfect competition - many small sellers each
offering the same product
39Competition The Macroenvironment
Share of Market per Firm High Low
Number of Firms in Market High Low
Monopoly Oligopoly Monopolistic
Competition Perfect Competition
40The Technological Environment
- Technology is an investment a firm must make to
succeed - Patents protect inventions
41The Legal Environment
- Regulatory Agencies
- Food and Drug Administration
- Federal Trade Commission
- Federal Communications Commission
- Interstate Commerce Commission
- Consumer Product Safety Commission
- Environmental Protection Agency
42The Sociocultural Environment
- Characteristics of society
- Characteristics of people in that society
- Cultural values and beliefs
43Issues for Discussion_1
- Do you think the BCG Matrix is a useful way for
organizations to examine their businesses? What
are some examples of product lines that fit in
each category? - Do you think planning is essential to a firms
success? Can planning ever hurt? - Can you identify organizations that should have
contracted rather than expanded?
44Issues for Discussion_2
- What are some ways that the technological
environment has changed marketing? What
predications might you make for how technology
will change marketing in the future? - What are the advantages and disadvantages of
governmental controls of marketing? What new laws
would you recommend?