Strategic Planning and the Marketing Management Process

Strategic Planning and the Marketing Management Process

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Chapter Outline

The marketing concept

What is marketing?

What is strategic planning?

The marketing management process

The strategic plan, the marketing plan, and other functional area plans

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Marketing Concept

Organizations should seek to make profit by serving the needs of customer groups

Purpose: To keep the attention of marketing managers on customer orientation

Principal task of the marketing function: Find effective and efficient means of making the business cater to the interests of customers

Marketing: Activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large

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Figure 1.1: Major Types of Marketing

Type Description Example
Product Marketing designed to create exchange for tangible products Strategies to sell Gateway computers
Service Marketing designed to create exchanges for intangible products Strategies by Allstate to sell insurance
Person Marketing designed to create favorable actions toward persons Strategies to elect a political candidate
Place Marketing designed to attract people to places Strategies to get people to vacation in national or state parks
Cause Marketing designed to create support for ideas, causes, or issues or to get people to change undesirable behaviors Strategies to get pregnant women not to drink alcohol
Organization Marketing designed to attract donors, members, participants, or volunteers Strategies designed to attract blood donors

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Strategic Planning

Activities that lead to the development of organizational mission, organizational objectives, and appropriate strategies to achieve organizational objectives

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Organizational Mission

Mission statement defines the direction in which the organization is heading and how it will succeed in reaching its desired goal

Elements to consider when developing a mission statement

Organization’s history: Objectives, accomplishments, mistakes, and policies

Organization’s distinctive competencies: Things that an organization does well thereby giving it an advantage

Organization’s environment: Opportunities, constraints, and threats that must be identified before a mission statement is developed

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Effective Mission Statement

Focused on markets rather than products

Achievable

Motivating

Specific

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Organizational Objectives

Define what an organization seeks through its ongoing, long-run operations of the organization

Must be specific, measurable, action commitments

Can be converted into specific action

Provide direction

Establish long-run priorities for the organization

Facilitate management control

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Figure 1.3: Sample Organizational Objectives

Area of Performance Possible Objective
Market standing To make our brands number one in their field in terms of market share
Innovations To be a leader in introducing new products by spending no less than 7 percent of sales for research and development
Productivity To manufacture all products efficiently as measured by the productivity of the workforce
Physical and financial resources To protect and maintain all resources: equipment, buildings, inventory, and funds
Profitability To achieve an annual rate of return on investment of at least 15 percent
Manager performance and responsibility To identify critical areas of management depth and succession
Worker performance and attitude To maintain levels of employee satisfaction consistent with our own and similar industries
Social responsibility To respond appropriately whenever possible to societal expectations and environmental needs

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Organizational Strategies

Involve the choice of major directions the organization will take in pursuing its objectives

Organizations can pursue various strategies based on products and markets, competitive advantage, and value

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Organizational Strategies Based on Products and Markets

Focuses primarily on increasing the sale of present products to present customers

Market penetration

Focuses on finding new customers for present products

Market development

Focuses on developing new products that would be directed primarily to present customers

Product development

Seeks growth through new products for customers not currently being served

Diversification

Jump to Organizational Strategies Based on Products and Markets, Appendix

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Figure 1.4: Organizational Growth Strategies

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Organizational Strategies Based on Competitive Advantage

Cost leadership strategy: Firms to focus on being the low-cost company in its industry

Efficiency is stressed

No-frills products are offered

Strategy based on differentiation: Firms seek to be unique in their industry or market segment along particular dimensions that customers value

Firms can charge a premium price

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Organizational Strategies Based on Value

Stresses on the concept of customer value

Focuses on developing and delivering superior value to customers as a way to achieve organizational objectives

Value strategies

Best price

Best product

Best service

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Choosing an Appropriate Strategy

Management should:

Select those strategies consistent with its mission

Capitalize on the organization’s distinctive competencies that lead to a sustainable competitive advantage

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

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Organizational Portfolio Plan

Involves the allocation of resources across the organization’s product lines, divisions, or businesses

Initially, product lines that can be considered a business are identified and are called strategic business units or S B Us

Characteristics of S B Us

Have a distinct mission and their own competitors

Are a single business or collection of related businesses

Can be planned independently of the other businesses of the total organization

Portfolio models: Methods to determine how resources should be allocated among the various S B Us

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Marketing Management

Process of planning and executing the conception, pricing, promotion, and distribution of goods, services, and ideas

Creates exchanges with target groups that satisfy customer and organizational objectives

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Situation Analysis, 1

Analyzing the position of the firm and its marketing department in terms of its past, present, and future situation

Major areas of concern

Cooperative environment: Includes all firms and individuals who have a vested interest in the firm’s accomplishing its objectives

Competitive environment: Includes primarily other firms in the industry that rival the organization for both resources and sales

Economic environment: Includes the state of macroeconomy and changes in it

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Situation Analysis, 2

Social environment: Includes general cultural and social traditions, norms, and attitudes

Political environment: Includes the attitudes and reactions of the general public, social and business critics, and other organizations

Legal environment: Includes a host of federal, state, and local legislation directed at protecting both business competition and consumer rights

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Marketing Planning: Outputs, 1

Establishing marketing objectives: Provides the framework for the marketing plan

Selecting the target market

Identifying customer needs and organizing resources accordingly

What do customers want or need?

What must be done to satisfy these wants or needs?

What is the size of the market?

What is its growth profile?

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Marketing Planning: Outputs, 2

Ranking the market according to profitability, present and future sales volume, and the match between what it takes to appeal successfully to the segment and the organization’s capabilities

Developing the marketing mix

Marketing mix: Set of controllable variables that must be managed to satisfy the target market and achieve organizational objectives

Comprises product, price, promotion, and place

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Implementation of the Marketing Plan

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

Requires close monitoring and coordination

Measuring results of implemented marketing plan

Comparing results with objectives

Making decisions on whether plan is achieving objectives

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Marketing Information System and Marketing Research

Provides information needed to make effective marketing decisions

Information should be current, reliable, and valid

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Strategic Plan, Marketing Plan, and Other Functional Area Plans

Ways in which marketing executives are involved in the strategic planning process

Influencing the process by providing important inputs in the form of information and suggestions relating to customers, products, and middlemen

Being aware of what the process of strategic planning involves as well as the results

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Figure 1.6: The Cross-Functional Perspective in Planning

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Figure 1.7: A Blueprint for Management Action

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APPENDICES

Strategic Planning, Appendix

One is a base box, which is partially overlapped by two boxes. The box on the right is labeled the organization’s strategic plan. Within this box are four boxes, which are placed one below the other diagonally. The top box is labeled organizational mission. An arrow extends from this box to the one below it. The second box is labeled organizational objectives. An arrow extends from this box to the one below it. The third box is labeled organizational strategies. An arrow extends from this box to the one below it. The fourth box is labeled organizational portfolio plan. An arrow extends from the box labeled organizational strategies to the bottom of another box, which overlaps the base box on the top-left corner. The box on the top-left corner is labeled the environment. It has six sub-points. The sub-points are cooperative, competitive, economic, social, political, and legal. An arrow extends from the right of the box labeled the environment to the box labeled the organization’s strategic plan.

Jump back to Strategic Planning

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Figure 1.4: Organizational Growth Strategies, Appendix

In row 1, column 1 is divided by a diagonal line. The lower half of the diagonal line is labeled markets. The upper half is labeled products. Column 2 is labeled present products. Column 3 is labeled new products. In row 2, column 1 is labeled present customers. Column 2 is labeled market penetration. Column 3 is labeled product development. In row 3, column 1 is labeled new customers. Column 2 is labeled market development. Column 3 is labeled diversification.

Jump back to Figure 1.4: Organizational Growth Strategies

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Organizational Strategies Based on Products and Markets, Appendix

There are four small rectangular boxes partially overlapping four large rectangular boxes. Each pair of small and large boxes is placed one below the other. The content in the large box explains the term provided in the small box. In the first pair of boxes, the small box is labeled market penetration. The content in the large box reads focuses primarily on increasing the sale of present products to present customers. In the second pair of boxes, the small box is labeled market development. The content in the large box reads focuses on finding new customers for present products. In the third pair of boxes, the small box is labeled product development. The content in the large box reads focuses on developing new products that would be directed primarily to present customers. In the fourth pair of boxes, the small rectangle is labeled facilitate diversification. The content in the large box reads seeks growth through new products for customers not currently being served.

 

Jump back to Organizational Strategies Based on Products and Markets

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Marketing Management, Appendix

On the left side of the base box are three boxes, which are stacked vertically on top of each other. The top box is labeled strategic plan. Below this are four sub-points. The sub-points are organizational mission, organizational objectives, organizational strategies, and organizational portfolio plan. An arrow connects this box to the box below it, which is labeled the marketing plan. Below this are four sub-points. The sub-points are situational analysis, marketing objectives, target market selection, and marketing mix. Below marketing mix are four more sub-points. The sub-points are labeled product strategy, promotion strategy, pricing strategy, and distribution strategy. An arrow connects the marketing plan box to the box below it. This box is labeled implementation and control. There is a box on the top-right corner. This box reads marketing information system and marketing research. A double-ended arrow extends from this box to the first box labeled the strategic plan, to the second box labeled the marketing plan, and to the third box labeled implementation and control on the left.

Jump back to Marketing Management

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Figure 1.6: The Cross-Functional Perspective in Planning, Appendix

There is a box on top that is labeled strategic plan, and there are four sub-points below it. The sub-points are mission, objectives, strategies, and portfolio plan. An arrow extends from this box and points to another box that is labeled functional area plans derived from strategic plan. This box consists of a table. The table contains 5 columns and 2 rows. Row 1 contains headers. In row 1, column 1 is labeled production plan. Column 2 is labeled marketing plan. Column 3 is labeled human resource plan. Column 4 is labeled financial plan. Column 5 is labeled technology plan. Row 2 contains the same 6 points in each column. The points are objectives, forecast, budgets, strategies and programs, and polices. An arrow extends from the table to a box labeled the strategic plan.

Jump back to Figure 1.6: The Cross-Functional Perspective in Planning

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Figure 1.7: A Blueprint for Management Action, Appendix

There is a base box, which is divided by a line with dashes horizontally. Starting from the top, the first box is labeled achieve an annual rate of return on investment of at least 15 percent. There is content on the left of this box that reads one organizational objective. The first box is connected by arrows to two boxes below it. The boxes are beside each other. The left box is labeled market penetration. Below this box is a description that reads improve position of present products with present customers. The box on the right is labeled market development. Below this box is a description that reads find new customers for present products. There is content on the left of these boxes that reads two possible organizational strategies from the product-market matrix. These three boxes are present in the first-half of the figure. The second-half of the figure has four large boxes above and four small boxes below. Starting from left, the four large boxes are marketing department objective, production department objective, marketing department objective, and production department objective. The marketing department objective is to increase rate of purchase by existing customers by 10 percent by year-end. The production department objective is to design additional features into product that will induce new uses by existing buyers. The marketing department objective is increase market share by 5 percent by attracting new market segments for existing use by year-end. The production department objective is to design additional features into product that will open additional markets with new uses. There is content on the left of these box that reads two possible marketing objectives and two possible production objectives derived from the strategic plan. Arrows extend from these boxes and point to four small boxes below. Starting from left, they are labeled marketing strategies programs, production strategies programs, marketing strategies programs, and production strategies programs. There is content on the left of these boxes that reads specific course of action of the marketing and production departments designed to achieve the objective.

Jump back to Figure 1.7: A Blueprint for Management Action

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