1 Topic 12 Strategic Planning and the Marketing

1 Topic 12: Strategic Planning and the Marketing Process Marketing Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

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 the concept of a SWOT analysis and its major elements. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Objectives 5. Discuss how a strategy can be implemented through marketing plans. 6. Identify the basic elements of a marketing strategy. 7. Describe the environmental characteristics that influence strategy decisions. 8. Explain how the strategic business unit concept, the market share/market growth matrix, the market attractiveness/business strength matrix, and spreadsheet analysis can be used in marketing planning. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Planning 2 The process of anticipating future events and conditions and determining the best way to achieve organizational objectives. 2 A continuous process that includes identifying objectives and includes checkpoints. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Types of planning Marketing aspect Type of planning Responsibility Marketing as philosophy Vision Marketing as strategy Strategic marketing Marketing executive and plan other members of the strategic marketing team Marketing as tactics Marketing mix plans Developed by Cool Pictures and Multi. Media Presentations Top executive and top management team Managers responsible for product, price, promotion, and price programmes Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved. (Harrell, 2002)

Plans Formulated Within the Marketing Organization Planning helps us hit what we aim for. Developed by Cool Pictures and Multi. Media Presentations ! Product lines. ! Pricing decision. ! Selection of appropriate distribution channels. ! Promotional campaigns. Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Strategic Planning • The process of determining an organization’s primary objectives. • Adopting courses of action that includes allocation of necessary resources. • Typically longer term. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Tactical Planning • Guides the implementation of activities specified in the strategic plan. • Typically address shorter-term actions. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Planning at Different Management Levels Management Level Types of Planning Emphasized at This Level Examples Strategic planning Organization-wide objectives; fundamental strategies; long-term plans; total budget Tactical planning Quarterly and semi-annual plans; divisional budgets; divisional policies and procedures Operational planning Daily and weekly plans; unit budgets; departmental rules and procedures Top Management Board of directors Chief executive officer (CEO) Chief operating officer (COO) Divisional vice presidents Middle Management General sales manager Marketing research manager Advertising director Supervisory Management District sales manager Supervisors in staff Marketing departments Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Marketing’s role in strategic planning • Much overlap between overall company strategy and marketing strategy • Marketing looks at consumer needs and the company’s ability to satisfy them; these factors guide the company mission and objectives. • Some companies refer to their strategic planning as ‘strategic marketing planning’. Developed by Cool Pictures and Multi. Media Presentations (Kotler et al. , 2002) Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

The planning process Analysis Planning Develop strategic plans Develop marketing plans Developed by Cool Pictures and Multi. Media Presentations Implementation Carry out the plan Control Measure results Evaluate Corrective action (Kotler et al. , 2002) Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

The strategic plan • • The mission The strategic objectives The strategic audit – external and internal audit SWOT analysis Portfolio analysis Objectives and Strategies Developed by Cool Pictures and Multi. Media Presentations (Kotler et al. , 2002) Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Mission • The essential purpose that differentiates the company from others. • Specifies the organization’s overall goals and operational scope. • Provides general guidelines for future management actions. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

SWOT Analysis • An important strategic planning tool. • Helps planners to compare internal organizational strengths and weaknesses. • Acronym for – Strengths – Weaknesses – Opportunities – Threats • Provides managers with a critical view of the organization’s internal and external environments. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Elements of a Marketing Strategy Basic elements of a marketing strategy consist of: 1. The target market 2. The marketing mix variables of: ü product ü distribution ü promotion ü price Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Marketing Mix Product Strategy • Deciding what goods or services the firm should offer to a group of consumers. • Includes making decisions about – Customer service – Package design – Brand names – Trademarks – Patents – Warranties – Life cycle of a product – Positioning the product in the marketplace – New product development Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Marketing Mix Distribution Strategy • Ensures that consumers find their products in the proper quantities at the right times and places. • Involves: – modes of transportation – warehousing – inventory control – order processing – selection of marketing channels Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Marketing Mix Promotion Strategy • The Communication link between sellers and buyers – Communicate messages directly through salespeople or indirectly through advertisements and promotions. – Companies use an approach called integrated marketing communications (IMC) so the consumer receives a unified and consistent message. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Marketing Mix Pricing Strategy – Methods of setting profitable and justifiable prices. – Closely regulated and subject to considerable public scrutiny. – A major influence is competition. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Planning Tools for Marketing Four specific tools: 1. Strategic business unit 2. Market share/market growth matrix 3. Market attractiveness/business strength matrix 4. Spreadsheet analysis Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Strategic Business Units (SBUs) SBUs are key business units within diversified firms. • Each SBU – has its own managers, resources, objectives, and competitors. – pursues its own distinct mission. – develops its own plans independently. – focuses the attention of company managers so that they can respond effectively to changing consumer demand. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Market Attractiveness/ Business Strength Matrix • Rates SBUs according to the attractiveness of their markets and their organizational strengths. • Marketing attractiveness criteria include: – Market share – Growth – Size – Stability – Potential profitability – Extent of government regulations – Potential environmental and social impact – Competitive conditions Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Spreadsheet Analysis 1. 2. Helps planners anticipate marketing performance given specified sets of circumstances Lays out a rigid columns and rows that organize numerical information in a standardized, easily understandable format. Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Market Share/Market Growth Matrix A four-quadrant chart that plots market share—the percentage of a market that a firm controls—against market growth potential. Relative Market Share High Low Generate considerable income Have potential to become stars or cash cows Strategy: Invest more funds for future growth Strategy: Either invest more funds for growth or consider disinvesting Dogs Generate strong cash flow High Question Marks Cash Cows Low Industry Growth Rate Stars Generate little profits Strategy: Milk profits to finance growth of stars and question marks Strategy: Consider withdrawing Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

The business portfolio – BCG matrix Developed by Cool Pictures and Multi. Media Presentations (Kotler et al. , 2002) Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Whom will we compete against? • Portor’s Five Forces • Ansoff’s Product-Market Matrix Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Portor’s Five Forces Developed by Cool Pictures and Multi. Media Presentations (Rao and Steckel, 1998) Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Ansoff’s Product-Market Matrix Developed by Cool Pictures and Multi. Media Presentations (Rao and Steckel, 1998) Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Strategies in segmentation • Undifferentiated or mass marketing • Differentiated marketing • Concentration marketing Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Summary • Discussion has centered around: – Strategic and tactical planning – Planning at different organizational levels – The planning process – SWOT – Planning tools available Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Homework A Group Presentation devoted to -alternative marketing strategies on oil (oil product) market Developed by Cool Pictures and Multi. Media Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved.