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Developing Successful

2 Organizational and
Marketing Strategies

LEARNING Making the World a Better Place,

OBJECTIVES One Scoop at a Time!
After reading this chapter Ben & Jerry’s started in 1978 when longtime friends Ben Cohen and Jerry Green-
you should be able to: field headed north to Vermont to open an ice cream parlor in a renovated gas sta-
tion. Buoyed with enthusiasm, $12,000 in borrowed and saved money, and ideas
Describe three kinds of
LO 2-1 from a $5 correspondence course in ice cream making, Ben and Jerry were off
organizations and the and scooping. Their first flavor? Vanilla—because it’s a universal best seller.
three levels of strategy Other flavors such as Chunky Monkey, Cherry Garcia, Peanut Butter Cup, and
in them. many others soon followed.
The ice cream flavors weren’t the only extraordinary thing about the company
Describe core values, though. Ben and Jerry embraced a concept they called “linked prosperity,” which
LO 2-2
mission, organizational encouraged the success of all constituents including employees, suppliers, cus-
culture, business, and tomers, and neighbors. They set out to achieve linked prosperity with a three-part
goals. mission statement:
∙ Product Mission: To make, distribute and sell the finest quality all-natural
Explain why managers
LO 2-3 ice cream.
use marketing
dashboards and ∙ Economic Mission: To operate the company for sustainable financial growth.
marketing metrics. ∙ Social Mission: To operate the company in ways that make the world a
better place.
Discuss how an
LO 2-4 The mission statement guided the entrepreneurs’ decisions related to many
organization assesses
aspects of the business including purchasing practices, ingredient sourcing, man-
where it is now and
ufacturing, and involvement in the community.1
where it seeks to be.
Ben and Jerry’s mission-driven approach led them to successfully implement
Explain the three steps many highly creative organizational and marketing strategies. Some examples
LO 2-5 include:
of the planning phase
of the strategic ∙ Fairtrade. Ben & Jerry’s believes that farmers who grow ingredients for their
marketing process. ice cream products (such as cocoa, coffee, and vanilla) should receive a fair
price for their harvest. In return Fairtrade farmers agree to use sustainable
Describe the four farming practices, implement fair working standards, and invest in local
LO 2-6
components of the communities.
implementation phase ∙ B-Corp Certification. Ben & Jerry’s was one of the first companies involved
of the strategic in the Benefit Corporation movement, which has developed a rigorous set
marketing process. of principles and standards on which to evaluate companies in terms of
social and environmental performance, accountability, and transparency.
Discuss how managers The certification, provided by the nonprofit organization B-Lab, indicates
LO 2-7
identify and act on that Ben & Jerry’s is using the power of business to solve social and
deviations from plans. environmental problems.
∙ PartnerShop Program. PartnerShops are Ben & Jerry scoop shops that are inde-
pendently owned and operated by community-based nonprofit organizations. The
shops employ youth and young adults who may face barriers to employment to
help them build better lives. 27
As you can see, Ben & Jerry’s has a strong link between its mission and its strate-
gies. CEO Jostein Solheim explains that their purpose at Ben & Jerry’s is “to be part of
a global movement that makes changing the world seem fun and achievable.”2
Today, Ben & Jerry’s is owned by Unilever, which is the market leader in the global
ice cream industry—one that is expected to reach $74 billion by 2018.3 While custom-
ers love Ben & Jerry’s rich premium ice cream, many buy its products to support its
social mission. As a testament to its success, Ben & Jerry’s has over 7.5 million fans on
Facebook—the most of any premium ice cream marketer!
Chapter 2 describes how organizations set goals to provide an overall direction
to their organizational and marketing strategies. The marketing department of an
organization converts these strategies into plans that must be implemented and
then evaluated so deviations can be exploited or corrected based on the marketing

© Rafael Ben-Ari/Alamy
In studying today’s organizations, it is important to recognize (1) the kinds of organi-
Describe three kinds
LO 2-1 of organizations
zations that exist, (2) what strategy is, and (3) how this strategy relates to the three
and the three levels levels of structure found in many large organizations.
of strategy in them.
Kinds of Organizations
An organization is a legal entity that consists of people who share a common mission.
This motivates them to develop offerings (goods, services, or ideas) that create value
for both the organization and its customers by satisfying their needs and wants.4
Today’s organizations are of three types: (1) for-profit organizations, (2) nonprofit
organizations, and (3) government agencies.
A for-profit organization, often called a business firm, is a privately owned organization
such as Target, Nike, or Cree that serves its customers to earn a profit so that it can survive.
Profit is the money left after a for-profit organization subtracts its total expenses from its
total revenues and is the reward for the risk it undertakes in marketing its offerings.
In contrast, a nonprofit organization is a nongovernmental organization that serves
Video 2-1
Cree® LED
its customers but does not have profit as an organizational goal. Instead, its goals may
Bulb Ad be operational efficiency or client satisfaction. Regardless, it also must receive suffi- cient funds above its expenses to continue operations. Organizations like SIRUM and
Teach For America, described in the Making Responsible Decisions box, seek to solve
the practical needs of society and are often structured as nonprofit organizations.5 For
simplicity in the rest of the book, the terms firm, company, and organization are used
interchangeably to cover both for-profit and nonprofit organizations.
Last, a government agency is a federal, state, county, or city unit that provides a
specific service to its constituents. For example, the Census Bureau, a unit of the
U.S. Department of Commerce, is a federal government agency that provides popula-
tion and economic data.
Organizations that develop similar offerings create an industry, such as the computer
industry or the automobile industry.6 As a result, organizations make strategic decisions
that reflect the dynamics of the industry to create a compelling and sustainable advan-
tage for their offerings relative to those of competitors to achieve a superior level of
performance.7 Much of an organization’s marketing strategy is having a clear under-
standing of the industry within which it competes.

What Is Strategy?
An organization has limited human, financial, technological, and other resources
available to produce and market its offerings—it can’t be all things to all people!
Every organization must develop strategies to help focus and direct its efforts to
accomplish its goals. However, the definition of strategy has been the subject of
debate among management and marketing theorists. For our purpose, strategy
is an organization’s long-term course of action designed to deliver a unique
customer experience while achieving its goals.8 All organizations set a strate-
gic direction. And marketing helps to both set this direction and move the or-
ganization there.
Cree is an example of a for-
profit organization. Its Cree LED The Structure of Today’s Organizations
light bulb replaces traditional Large organizations are extremely complex. They usually consist of three organizational
incandescent bulbs, consumes levels whose strategies are linked to marketing, as shown in Figure 2–1.
85 percent less energy, and
lasts 25,000 hours. Corporate Level The corporate level is where top management directs overall
© H.S. Photos/Alamy strategy for the entire organization. “Top management” usually means the board of

Making Responsible Decisions Social
Social Entrepreneurs Are Creating New Types Responsibility
of Organizations to Pursue Social Goals
Each year a growing number of “social entrepreneurs” start Teach For America is another example of a creative
new ventures that address important social needs and nonprofit organization. Launched by college senior Wendy
issues. These new enterprises are often organized as non- Kopp, Teach For America is the national corps of outstand-
profit organizations that combine traditional approaches for ing recent college graduates who commit to teach for two

CHAPTER 2 Developing Successful Organizational and Marketing Strategies

generating revenue with the pursuit of social goals. The is- years in urban and rural public schools and become lifelong
sues they have focused on range from health care delivery, leaders in expanding educational opportunity. Each year
to increasing access to education, to improving agricultural more than 10,000 corps members teach 750,000 students.
efficiency. Some experts predict that these types of social These examples illustrate how organizations are
ventures represent the new way of doing business. changing to create value for a broad range of constituents
One indication of the influence of these new types of by addressing the needs and challenges of society.
organizations is Forbes magazine’s annual list of 30 Un-
der 30 Social Entrepreneurs. Each year 30 of the most in-
novative new social ventures are featured in the article.
For example, Kiah Willams left the Clinton Foundation to
start SIRUM (Supporting Initiatives to Redistribute Unused
Medicine). The organization works with health care sys-
tems to distribute unused prescription drugs (that would
otherwise be destroyed) to patients who can’t afford to
pay for the drugs. “We’re like the for unused
drugs,” explains Williams. © Forbes

directors and senior management officers with a variety of skills and experiences that
are invaluable in establishing the organization’s overall strategy.
The president or chief executive officer (CEO) is the highest ranking officer in the
organization and is usually a member of its board of directors. This person must
possess leadership skills ranging from overseeing the organization’s daily operations
to spearheading strategy planning efforts that may determine its very survival.

FIGURE 2–1 Board of directors

The board of directors
oversees the three levels
of strategy in organizations:
corporate, strategic Corporate level
business unit, and

Strategic business unit level

Functional level

Information Research and Manufacturing Human

Finance Marketing
systems development operations resources

In recent years, many large firms have changed the title of the head of
marketing from vice president of marketing to chief marketing officer
(CMO). These CMOs have an increasingly important role in top manage-
ment because of their ability to think strategically. Most bring multi-
industry backgrounds, cross-functional management expertise, analytical
skills, and intuitive marketing insights to their job. These CMOs are in-
creasingly called upon to be their organizations’ “visionaries for the fu-
ture” by staying in touch with consumers’ needs and wants.9
Strategic Business Unit Level Some multimarket, multiproduct
firms, such as Prada and Johnson & Johnson, manage a portfolio or group
of businesses. Each group is a strategic business unit (SBU), which is a
subsidiary, division, or unit of an organization that markets a set of re-
lated offerings to a clearly defined target market. At the strategic business
unit level, managers set a more specific strategic direction for their busi-
nesses to exploit value-creating opportunities. For less complex firms
with a single business focus, such as Ben & Jerry’s, the corporate and
business unit levels may merge.
Functional Level Each strategic business unit has a functional level,
where groups of specialists actually create value for the organization. The
term department generally refers to these specialized functions such as
Prada manages a portfolio
marketing and finance (see Figure 2–1). At the functional level, the orga-
or group of businesses—
nization’s strategic direction becomes its most specific and focused. Just as there is a
including perfume, leather
hierarchy of levels within an organization, there is a hierarchy of strategic directions
goods, and luggage—each of
set by managers at each level.
which may be viewed as a
A key role of the marketing department is to look outward by listening to customers,
strategic business unit (SBU).
developing offerings, implementing marketing program actions, and then evaluating
© Imaginechina via AP Images
whether those actions are achieving the organization’s goals. When developing market-
ing programs for new or improved offerings, an organization’s senior management may
form cross-functional teams. These consist of a small number of people from different
departments who are mutually accountable to accomplish a task or a common set of
performance goals. Sometimes these teams will have representatives from outside the
organization, such as suppliers or customers, to assist them.

learning review
2-1. What is the difference between a for-profit and a nonprofit organization?
2-2. What are examples of a functional level in an organization?


To be successful, today’s organizations must be forward-looking. They must anticipate
Describe core
LO 2-2 values, mission,
future events and then respond quickly and effectively to those events. In addition, they
organizational must thrive in today’s uncertain, chaotic, rapidly changing environment. A visionary
culture, business, organization must specify its foundation (why does it exist?), set a direction (what will
and goals. it do?), and formulate strategies (how will it do it?), as shown in Figure 2–2.10

Organizational Foundation: Why Does It Exist?

An organization’s foundation is its philosophical reason for being—why it exists. Suc-
cessful visionary organizations use this foundation to guide and inspire their employ-
ees through three elements: core values, mission, and organizational culture.

Organizational Organizational Organizational
foundation (why) direction (what) strategies (how)
Business 31
1 5


CHAPTER 2 Developing Successful Organizational and Marketing Strategies

Core Values An organization’s core values are the fundamental, passionate, and
Today’s visionary enduring principles that guide its conduct over time. A firm’s founders or senior man-
organizations use key
agement develop these core values, which are consistent with their essential beliefs
elements to (1) establish
a foundation and (2) set
and character. They capture the firm’s heart and soul and serve to inspire and motivate
a direction using its stakeholders—employees, shareholders, board of directors, suppliers, distributors,
(3) strategies that enable creditors, unions, government, local communities, and customers. Core values also are
them to develop and timeless and guide the organization’s conduct. To be effective, an organization’s core
market their products values must be communicated to and supported by its top management and employees;
successfully. if not, they are just hollow words.11

Mission By understanding its core values, an organization can take steps to define
its mission, a statement of the organization’s function in society that often identifies
its customers, markets, products, and technologies. Often used interchangeably with
vision, a mission statement should be clear, concise, meaningful, inspirational, and
Video 2-2
Inspiration and focus appear in the mission statement of for-profit organizations, as
Southwest well as nonprofit organizations and government agencies. For example:
Airlines ! Southwest Airlines: “To be dedicated to the highest quality of Customer
Service delivered with a sense of warmth, friendliness, individual pride, and
Company Spirit.”13
! American Red Cross: “To prevent and alleviate human suffering in the face
of emergencies by mobilizing the power of volunteers and the generosity
of donors.”14
! Federal Trade Commission: “To prevent business practices that are anticompetitive or
deceptive or unfair to consumers; to enhance informed consumer choice and public
understanding of the competitive process; and to accomplish
this without unduly burdening legitimate business activity.”
Each statement exhibits the qualities of a good mis-
sion: a clear, challenging, and compelling picture of an
envisioned future.15
Recently, many organizations have added a social ele-
ment to their mission statements to reflect an ideal that is
morally right and worthwhile. This is what Ben & Jerry’s
social mission statement shows in the chapter opener.
Stakeholders, particularly customers, employees, and
now society, are asking organizations to be exceptional
citizens by providing long-term value while solving
society’s problems.
Organizational Culture An organization must connect
Providing a warm, friendly with all of its stakeholders. Thus, an important corporate-
experience is part of level marketing function is communicating its core values and mission to them. These
Southwest Airlines' activities send clear messages to employees and other stakeholders about organizational
organizational strategy. culture—the set of values, ideas, attitudes, and norms of behavior that is learned and
© Southwest shared among the members of an organization.
Organizational Direction: What Will It Do?
As shown in Figure 2–2, the organization’s foundation
enables it to set a direction in terms of (1) the “business”
it is in and (2) its specific goals.

Business A business describes the clear, broad, un-

derlying industry or market sector of an organization’s of-
fering. To help define its business, an organization looks
at the set of organizations that sell similar offerings—
those that are in direct competition with each other—such
as “the ice cream business.” The organization can then
begin to answer the questions “What do we do?” or
“What business are we in?”
In the first half of the 20th Professor Theodore Levitt saw that 20th-century
century, what “business” did American railroads defined their business too narrowly,
railroad executives believe proclaiming, “We are in the railroad business!” This myopic focus caused them to lose
they were in? The text reveals sight of who their customers were and what they needed. So railroads failed to develop
their disastrous error. strategies to compete with airlines, barges, pipelines, and trucks. As a result, many
railroads merged or went bankrupt. Railroads should have realized they were in “the
© Digital Vision
transportation business.”16
With today’s increased global competition, many organizations are rethinking their
business model, the strategies an organization develops to provide value to the custom-
ers it serves. Technological innovation is often the trigger for this business model
change. American newspapers are looking for a new business model as former subscrib-
ers now get their news online.17 Bookstore retailer Barnes & Noble, too, is rethinking
its business model as e-book readers like Amazon’s Kindle and Apple’s iPad have
gained widespread popularity.18
United Parcel Service (UPS), the company known for
its brown delivery trucks, is redefining its business. The
company recently launched a new campaign with the ta-
gline “United Problem Solvers,” which replaced its pre-
vious “We Love Logistics” campaign. Some of the
language from the campaign explains the new perspec-
tive: “Bring us your problems. Your challenges. Your
daydreams. Your scribbles. Your just about anything.
Why is UPS changing the Because we’re not just in the shipping business. We’re
definition of its business? See in the problem solving business.” Taking a lesson from Theodore Levitt, UPS now
the text for the answer. sees itself as a service that can solve important and complicated problems for its
UPS customers, rather than a package delivery business.19

Video 2-3
Goals Goals or objectives (terms used interchangeably in this book) are state-
ments of an accomplishment of a task to be achieved, often by a specific time. Goals convert an organization’s mission and business into long- and short-term performance
targets. Business firms can pursue several different types of goals:
! Profit. Most firms seek to maximize profits—to get as high a financial return on
their investments (ROI) as possible.
! Sales (dollars or units). If profits are acceptable, a firm may elect to maintain or
increase its sales even though profits may not be maximized.
! Market share. Market share is the ratio of sales revenue of the firm to the total
sales revenue of all firms in the industry, including the firm itself.
! Quality. A firm may seek to offer a level of quality that meets or exceeds the cost
and performance expectations of its customers.
! Customer satisfaction. Customers are the reason the organization exists, so their
perceptions and actions are of vital importance. Satisfaction can be measured
with surveys or by the number of customer complaints.

! Employee welfare. A firm may recognize the critical importance of its employ-
ees by stating its goal of providing them with good employment opportunities
and working conditions.
! Social responsibility. Firms may seek to balance the conflicting goals of stake- 33
holders to promote their overall welfare, even at the expense of profits.
Nonprofit organizations (such as museums and hospitals) also have goals, such as to
serve consumers as efficiently as possible. Similarly, government agencies set goals
that seek to serve the public good.

CHAPTER 2 Developing Successful Organizational and Marketing Strategies

Organizational Strategies: How Will It Do It?
As shown in Figure 2–2, the organizational foundation sets the “why” of organizations
and the organizational direction sets the “what.” To convert these into actual results, the
organizational strategies are concerned with the “how.” These organizational strategies
vary in at least two ways, depending on (1) a strategy’s level in the organization and (2)
the offerings an organization provides to its customers.
Variation by Level Moving down the levels in an organization involves creating
increasingly specific, detailed strategies and plans. So, at the corporate level, top man-
agers may struggle with writing a meaningful mission statement; while at the func-
tional level, the issue is who makes tomorrow’s sales call.
Variation by Product Organizational strategies also vary by the organization’s
products. The strategy will be far different when marketing a very tangible physical
good (Ben & Jerry’s ice cream), a service (a Southwest Airlines flight), or an idea (a
donation to the American Red Cross).
Most organizations develop a marketing plan as a part of their strategic marketing
planning efforts. A marketing plan is a road map for the marketing actions of an orga-
nization for a specified future time period, such as one year or five years. The planning
phase of the strategic marketing process (discussed later) usually results in a marketing
plan that directs the marketing actions of an organization. Appendix A at the end of
this chapter provides guidelines for writing a marketing plan.

learning review
2-3. What is the meaning of an organization’s mission?
2-4. What is the difference between an organization’s business and its goals?

Tracking Strategic Performance with Marketing Analytics

Although marketing managers can set strategic direction for their organizations, how do
Explain why
LO 2-3 managers use
they know if they are making progress in getting there? As several industry experts have
marketing observed, “You can’t manage what you don’t measure.”20 One answer to this problem is
dashboards and the growing field of data analytics, or big data, which enables data-driven decisions by
marketing metrics. collecting data and presenting them in a visual format such as a marketing dashboard.
Car Dashboards and Marketing Dashboards A marketing dashboard is
the visual display of the essential information related to achieving a marketing objec-
tive.21 Often, active hyperlinks provide further detail. An example is when a chief
marketing officer (CMO) wants to see daily what the effect of a new TV advertising
campaign is on a product’s sales.22
The idea of a marketing dashboard really comes from the display of information found on
a car’s dashboard. On a car’s dashboard, we glance at the fuel gauge and take action when
our gas is getting low. With a marketing dashboard, a marketing manager glances at a graph
or table and makes a decision whether to take action or to analyze the problem further.23
Dundas Data Visualization, Inc.

FIGURE 2–3 Dashboards, Metrics, and Plans The marketing dashboard of Sonatica, a hy-
An effective marketing pothetical hardware and software firm, appears in Figure 2–3. It shows graphic displays
dashboard, like this one of key performance indicators linked to its product lines.24 Each display in a marketing
from Sonatica, a dashboard shows a marketing metric, which is a measure of the quantitative value or
hypothetical hardware trend of a marketing action or result.25 Choosing which marketing metrics to display is
and software firm, helps
critical for a busy manager, who can be overwhelmed with irrelevant data.26
managers assess a
business situation
Today’s marketers use data visualization, which presents information about an or-
at a glance. ganization’s marketing metrics graphically so marketers can quickly (1) spot devia-
tions from plans during the evaluation phase and (2) take corrective actions.27 This
book uses data visualization in many figures to highlight in color key points described
in the text. The Sonatica marketing dashboard in Figure 2–3 uses data visualization
tools like a pie chart, a line or bar chart, and a map to show how parts of its business
are performing as of December 2015:
! Website Traffic Sources. The color-coded perimeter of the pie chart shows the
three main sources of website traffic (referral sites at 47 percent, search engines
at 37 percent, and direct traffic at 16 percent). These three colors link to those of
the circles in the column of website traffic sources. Of the 47 percent of traffic
coming from referral sites, the horizontal bullet graphs to the right show that
Sonatica’s Facebook visits comprise 15 percent of total website traffic, up from
a month ago (as shown by the vertical line).
! Sales Performance by SBU. The spark lines (the wavy lines in the far left col-
umn) show the 13-month trends of Sonatica’s strategic business units (SBUs).
For example, the trends in electronics and peripherals are generally up, causing
their sales to exceed their YTD (year to date) targets. Conversely, both software
and hardware sales failed to meet YTD targets, a problem quickly noted by a
marketing manager seeing the red “warning” circles in their rows at the far right.
This suggests that immediate corrective actions are needed for the software and
hardware SBUs.

Applying Marketing Metrics
How Well Is Ben & Jerry’s Doing?
As the marketing manager for Ben & Jerry’s, you need
Ben & Jerry’s Dollar Sales
to assess how it is doing within the United States in the
and Market Share
super-premium ice cream market in which it competes.
For this, you choose two marketing metrics: dollar sales $280 22
and dollar market share.

Market share (%)

260 21

Sales ($ millions)

CHAPTER 2 Developing Successful Organizational and Marketing Strategies

Your Challenge $250
$240 20.0
Scanner data from checkout counters in supermarkets 240 20
and other retailers show the total industry sales of super-
220 19
premium ice cream were $1.25 billion in 2015. Internal 18.4
company data show you that Ben & Jerry’s sold 50 million 200 18
units at an average price of $5.00 per unit in 2015. A
“unit” in super-premium ice cream is one pint. 0 17
2014 2015
Your Findings
Dollar sales and dollar market share can be calculated for
2015 using simple formulas and displayed on the Ben &
Jerry’s marketing dashboard as follows:
Your dashboard displays show that from 2014 to
Dollar sales($) = Average price × Quantity sold 2015 dollar sales increased from $240 million to
= $5.00 × 50 million units $250 million and that dollar market share grew from
= $250 million 18.4 to 20.0 percent.

Ben & Jerry’s sales ($) Your Action

Dollar market share(%) =
Total industry sales ($) The results need to be compared with the goals
$250 million established for these metrics. In addition, they should
= be compared with previous years’ results to see if
$1.25 billion
the trends are increasing, flat, or decreasing. This
= 0.20 or 20% will lead to marketing actions.

! Website Visits by State. The U.S. map shows that the darker the state, the greater
the number of website visits for the current month. For example, Texas has close
to 20,000 visits per month, while Illinois has none.
The Ben & Jerry’s dashboard in the Applying Marketing Metrics box shows how
the two widely used marketing metrics of dollar sales and dollar market share can help
the company assess its growth performance from 2014 to 2015. The Applying Marketing
Metrics boxes in later chapters highlight other key marketing metrics and how they can
lead to marketing actions.


To set a strategic direction, an organization needs to answer two difficult questions:
Discuss how
LO 2-4 an organization
(1) Where are we now? and (2) Where do we want to go?
assesses where it
is now and where A Look Around: Where Are We Now?
it seeks to be. Asking an organization where it is at the present time involves identifying its compe-
tencies, customers, and competitors.
Competencies Senior managers must ask the question: What do we do best?
The answer involves an assessment of the organization’s core competencies, which
are its special capabilities—the skills, technologies, and
resources—that distinguish it from other organizations and
provide customer value. Exploiting these competencies
can lead to success.28 Competencies should be distinctive
enough to provide a competitive advantage, a unique
strength relative to competitors that provides superior re-
turns, often based on quality, time, cost, or innovation.29

Customers Ben & Jerry’s customers are ice cream

and frozen yogurt eaters who have different prefer-
ences (form, f lavor, health, and convenience).
Medtronic’s pacemaker customers include cardiolo-
gists and heart surgeons who serve patients that need
this type of device. Lands’ End communicates a
Lands’ End’s unconditional remarkable commitment to its customers and its product quality with these uncon-
guarantee for its products ditional words:
highlights its focus on
Guaranteed. Period.®
© Rick Armstrong The Lands’ End website points out that this guarantee has always been an uncondi-
tional one. It reads: “If you’re not satisfied with any item, simply return it to us at any
time for an exchange or refund of its purchase price.” But to get the message across
more clearly to its customers, it created the two-word guarantee. The point is that
Lands’ End’s strategy must provide genuine value to customers to ensure that they
have a satisfying experience.30

Competitors In today’s global marketplace, the distinctions among competitors

are increasingly blurred. Lands’ End started as a catalog retailer. But today, Lands’
End competes with not only other clothing catalog retailers but also traditional depart-
ment stores, mass merchandisers, and specialty shops. Even well-known clothing
brands such as Liz Claiborne now have their own chain stores. Although only some of
the clothing in any of these stores directly competes with Lands’ End offerings, all of
these retailers have websites to sell their offerings over the Internet. This means there’s
a lot of competition out there.

Growth Strategies: Where Do We Want to Go?

Knowing where the organization is at the present time enables managers to set a direc-
tion for the firm and allocate resources to move in that direction. Two techniques to aid
managers with these decisions are (1) business portfolio analysis and (2) diversifica-
tion analysis.

Business Portfolio Analysis Successful organizations have a portfolio or range

of offerings (products and services) that possess different growth rates and market
shares within the industry in which they operate. The Boston Consulting Group
(BCG), an internationally known management consulting firm, has developed busi-
ness portfolio analysis. It is a technique that managers use to quantify performance
measures and growth targets to analyze their firms’ SBUs as though they were a col-
lection of separate investments.31 The purpose of this tool is to determine which SBU
or offering generates cash and which one requires cash to fund the organization’s
growth opportunities.
As described in the Marketing Matters box, let’s assume you are filling the shoes of
Apple CEO Tim Cook. Based on your knowledge of Apple products, you are currently
conducting a quick analysis of four major Apple SBUs through 2018. Try to rank them
from highest to lowest in terms of percentage growth in expected unit sales. We will

Marketing Matters Technology
Filling the Shoes of Apple CEO Tim Cook: Where Will Apple’s
Projected Future Growth for Its Major SBUs Come From?
Every CEO of a for-profit organization faces one problem 1. (Highest)
in common: trying to find ways to increase future sales
and profits to keep it growing! 2.
Put yourself in Tim Cook’s shoes. One of his jobs is to 3.

CHAPTER 2 Developing Successful Organizational and Marketing Strategies

search for new growth opportunities. Using your knowl-
edge about Apple products, do a quick analysis of four 4. (Lowest)
SBUs shown below to determine where Apple should al-
We’ll walk you through possible answers. You then can
locate its time and resources. Rate these growth opportu-
evaluate your performance over the next two pages and
nities from highest to lowest in terms of percentage
decide whether you’re really ready for Mr. Cook’s job!
growth in unit sales from 2015 to 2018:

iPod iPhone iPad/iPad mini Apple Watch

All product photos: © Apple

introduce you to business portfolio analysis as we look at the possible future of the
four Apple SBUs.
The BCG business portfolio analysis requires an organization to locate the position
of each of its SBUs on a growth-share matrix (see Figure 2–4). The vertical axis is the
market growth rate, which is the annual rate of growth of the SBU’s industry. The
horizontal axis is the relative market share, defined as the sales of the SBU divided by
the sales of the largest firm in the industry. A relative market share of 10× (at the left
end of the scale) means that the SBU has 10 times the share of its largest competitor,
whereas a share of 0.1× (at the right end of the scale) means it has only 10 percent of
the share of its largest competitor.
The BCG has given specific names and descriptions to the four resulting quadrants
in its growth-share matrix based on the amount of cash they generate for or require
from the organization:
1. Question marks are SBUs with a low share of high-growth markets. They require
large injections of cash just to maintain their market share, much less increase it.
The name implies management’s dilemma for these SBUs: choosing the right
ones to invest in and phasing out the rest.
2. Stars are SBUs with a high share of high-growth markets that may need extra
cash to finance their own rapid future growth. When their growth slows, they are
likely to become cash cows.
3. Cash cows are SBUs that generate large amounts of cash, far more than they can
use. They have dominant shares of slow-growth markets and provide cash to
cover the organization’s overhead and to invest in other SBUs.
FIGURE 2–4 40
Stars Question
Boston Consulting Group Marks
(BCG) business portfolio
analysis for four of Apple’s
consumer-related SBUs. High 20

Market growth rate

The red arrow indicates
typical movement of 10

(% per year)
a product through the iPhone 6 2 1 Apple Watch
matrix. 0
3 4

Low 220

iPad/iPad mini iPod Dogs
103 13 0.13
High Low
Relative unit market share
(share relative to largest competitor)
All product photos: © Apple

4. Dogs are SBUs with low shares of slow-growth markets. Although they may
generate enough cash to sustain themselves, they may no longer be or may not
become real winners for the organization. Dropping SBUs that are dogs may be
required if they consume more cash than they generate, except when relation-
ships with other SBUs, competitive considerations, or potential strategic alli-
ances exist.32
An organization’s SBUs often start as question marks and go counterclockwise
around Figure 2–4 to become stars, then cash cows, and finally dogs. Because an orga-
nization has limited influence on the market growth rate, its main objective is to try to
change its relative dollar or unit market share. To do this, management decides what
strategic role each SBU should have in the future and either injects cash into or re-
moves cash from it.
According to Interbrand, a leading brand management consulting firm, Apple has
What can Apple expect in future
been consistently cited as one of the top global brands over the past decade in its an-
growth of sales revenues from
nual Best Global Brands survey. What has made Apple so iconic is not only its revolu-
its iPhone products . . .
tionary products but also its commitment to infusing the “human touch” with its
© Apple technology such that its customers connect with the brand on both a cognitive and an
emotional level. The late Steve Jobs was instrumental in creating Apple’s organiza-
tional culture and core values that will continue to guide its future.33
Using the BCG business portfolio analysis framework, Figure 2–4 shows that the
Apple picture might look this way from 2015 to 2018 for four of its SBUs:34
1. Apple Watch (wearable technology). Apple entered the wearable technology
market in April 2015 with its version of a smart watch, the Apple Watch. The
watch competes with Samsung, Pebble, and Motorola watches and a wide
range of other wearable technologies such as Fitbit and Jawbone fitness track-
ers. The market grew at a rate of more than 100 percent in 2015, and Apple
Watch sales were substantial despite a relatively high price and short battery
life. The Apple watch enters the market as a question mark and awaits con-
sumers’ response.35
2. iPhone (smartphones). Apple launched its revolutionary iPhone smartphone in
2007. iPhone unit sales skyrocketed and Apple’s U.S. market share has grown to

47.7 percent, exceeding the market share of its largest competitor, Samsung. The
smartphone market is expected to grow at an annual rate of 9.8 percent through
2018 due to growth in China and falling prices. High market share and high
growth suggest that Apple’s iPhone is a star.36 39
3. iPad/iPad mini (tablets). Launched in 2010, iPad unit sales reached 40 percent
market share by 2013—leading both Samsung’s Galaxy (18 percent) and Ama-
. . . or its iPod devices? zon’s Kindle (4 percent). Tablet sales are increasing although the rate of growth
© Apple is plummeting as consumers are substituting big-screen smartphones, or
“phablets,” for tablets. For Apple, its iPad SBU is a cash cow (high market share
in a low-growth market).37

CHAPTER 2 Developing Successful Organizational and Marketing Strategies

4. iPod (music players). Apple entered the music player market with its iPod
device in 2001. The product became a cultural icon, selling more that 50 mil-
lion units annually until 2010 when the iPhone integrated a music player.
Since 2010 sales have been declining dramatically and in October 2014 Apple
announced that it was discontinuing the iPod classic. Today Apple still sells
three iPod product lines—the nano, the shuffle, and the touch—although
declining sales and discontinued products suggest that this SBU is entering
the dog category.38
So, how did you—as Tim Cook—rank the growth opportunity for each of the four
SBUs? The Apple Watch represents the highest unit growth rate at more than 100 per-
cent. The iphone SBU is likely to continue growing at almost 10 percent, while the
iPad SBU is experiencing a declining growth rate. Despite the difference in growth
rates, the iPhone and iPad product lines together accounted for 72 percent of Apple’s
revenues in 2014. These revenues are used to pursue growth opportunities such as the
Apple Watch, a next generation phone, and a huge 13-inch iPad. Finally, no growth
and the discontinuation of the iPod classic may signal the beginning of the end for
Apple’s iPod.39
The primary strength of business portfolio analysis lies in forcing a firm to place
each of its SBUs in the growth-share matrix, which in turn suggests which SBUs will
be cash producers and cash users in the future. Weaknesses of this analysis arise from
the difficulty in (1) getting the needed information and (2) incorporating competitive
data into business portfolio analysis.40

Diversification Analysis Diversification analysis is a technique that helps a

firm search for growth opportunities from among current and new markets as well
as current and new products.41 For any market, there is both a current product
(what the firm now sells) and a new product (what the firm might sell in the fu-
ture). And for any product there is both a current market (the firm’s existing cus-
tomers) and a new market (the firm’s potential customers). As Ben & Jerry’s seeks
to increase sales revenues, it considers all four market-product strategies shown in
Figure 2–5:
! Market penetration is a marketing strategy to increase sales of current products
Video 2-4
in current markets, such as selling more Ben & Jerry’s Bonnaroo Buzz Fair
B&J’s Bonnaroo
Buzz Ad
Trade–sourced ice cream to U.S. consumers. There is no change in either the basic product line or the markets served. Increased sales are generated by selling
either more ice cream (through better promotion or distribution) or the same
amount of ice cream at a higher price to its current customers.
! Market development is a marketing strategy to sell current products to new mar-
kets. For Ben & Jerry’s, Brazil is an attractive new market. There is good news
and bad news for this strategy: As household incomes of Brazilians increase,
consumers can buy more ice cream; however, the Ben & Jerry’s brand may be
unknown to Brazilian consumers.
! Product development is a marketing strategy of selling new products to current
markets. Ben & Jerry’s could leverage its brand by selling children’s clothing in
Four market-product MARKETS
strategies: alternative ways Current New
to expand sales revenues
Market penetration Product development
for Ben & Jerry’s using Selling more Ben & Jerry’s super- Selling a new product such as
diversification analysis. Current
premium ice cream to Americans children’s clothing under the Ben
& Jerry’s brand to Americans

Market development Diversification

Selling Ben & Jerry’s super- Selling a new product such as
premium ice cream to Brazilians children’s clothing under the Ben
for the first time & Jerry’s brand to Brazilians
for the first time

the United States. This strategy is risky because Americans may not see the com-
pany’s expertise in ice cream as extending to children’s clothing.
! Diversification is a marketing strategy of developing new products and selling
them in new markets. This is a potentially high-risk strategy for Ben & Jerry’s if
it decides to try to sell Ben & Jerry’s branded clothing in Brazil. Why? Because
the firm has neither previous production nor marketing experience from which to
draw in marketing clothing to Brazilian consumers.

learning review
2-5. What is the difference between a marketing dashboard and a marketing
2-6. What is business portfolio analysis?
2-7. Explain the four market-product strategies in diversification analysis.


After an organization assesses where it is and where it wants to go, other questions
Explain the three
LO 2-5 steps of the
emerge, such as:
planning phase 1. How do we allocate our resources to get where we want to go?
of the strategic 2. How do we convert our plans into actions?
marketing process. 3. How do our results compare with our plans, and do deviations require new plans?
To answer these questions, an organization uses the strategic marketing process,
whereby an organization allocates its marketing mix resources to reach its target markets.
This process is divided into three phases: planning, implementation, and evaluation, as
shown in Figure 2–6.

The Planning Phase of the Strategic Marketing Process

Figure 2–6 shows the three steps in the planning phase of the strategic marketing pro-
cess: (1) situation (SWOT) analysis, (2) market-product focus and goal setting, and
(3) the marketing program.

Step 1: Situation (SWOT) Analysis The essence of situation analysis is tak-

ing stock of where the firm or product has been recently, where it is now, and where it

Planning phase

Step 1 Step 2 Step 3

Situation (SWOT) Market-product focus Marketing program
analysis and goal setting Chapters 10–21
Chapters 2–8 Chapters 9 and 10

Corrective Actions
Marketing plan

CHAPTER 2 Developing Successful Organizational and Marketing Strategies

Implementation phase
Chapter 22


Evaluation phase
Chapter 22

The strategic marketing
process has three vital is headed in terms of the organization’s marketing plans and the external forces and
phases: planning, trends affecting it. An effective summary of a situation analysis is a SWOT analysis,
implementation, and an acronym describing an organization’s appraisal of its internal Strengths and Weak-
evaluation. The figure also nesses and its external Opportunities and Threats.
indicates the chapters in The SWOT analysis is based on an exhaustive study of four areas that form the
which these phases are foundation upon which the firm builds its marketing program:
discussed in the text.
! Identify trends in the organization’s industry.
! Analyze the organization’s competitors.
! Assess the organization itself.
! Research the organization’s present and prospective customers.
Assume you are responsible for doing the SWOT analysis for Ben & Jerry’s
shown in Figure 2–7. Note that the SWOT table has four cells formed by the combi-
nation of internal versus external factors (the rows) and favorable versus unfavorable
factors (the columns) that identify Ben & Jerry’s strengths, weaknesses, opportuni-
ties, and threats.
The task is to translate the results of the SWOT analysis into specific marketing
actions that will help the firm grow. The ultimate goal is to identify the critical
strategy-related factors that impact the firm and then build on vital strengths,
correct glaring weaknesses, exploit significant opportunities, and avoid disaster-
laden threats.
The Ben & Jerry’s SWOT analysis in Figure 2–7 can be the basis for these kinds of
specific marketing actions. An action in each of the four cells might be:
How can Ben & Jerry’s develop ! Build on a strength. Find specific efficiencies in distribution with parent-
new products and social company Unilever’s existing ice cream brands.
responsibility programs that ! Correct a weakness. Recruit experienced managers from other consumer product
contribute to its mission? firms to help stimulate growth.
The text describes how the ! Exploit an opportunity. Develop new product lines of low-fat, low-carb frozen
strategic marketing process Greek-style yogurt flavors to respond to changes in consumer tastes.
and its SWOT analysis can help. ! Avoid a disaster-laden threat. Focus on less risky international markets, such as
© Mike Hruby Brazil and Argentina.
Ben & Jerry’s: A SWOT OF
analysis to keep it FACTOR Favorable Unfavorable
growing. The picture
Strengths Weaknesses
painted in this SWOT
analysis is the basis for
management actions.

Opportunities Threats


Step 2: Market-Product Focus and Goal Setting Determining which products

will be directed toward which customers (step 2 of the planning phase in Figure 2–6)
is essential for developing an effective marketing program (step 3). This decision is
often based on market segmentation, which involves aggregating prospective buyers
into groups, or segments, that (1) have common needs and (2) will respond similarly to
a marketing action. This enables an organization to focus specific marketing programs
on its target market segments. The match between products and segments is often re-
lated to points of difference, or those characteristics of a product that make it supe-
rior to competitive substitutes. Goal setting involves specifying measurable marketing
objectives to be achieved. 
So step 2 in the planning phase of the strategic marketing process—deciding which
products will be directed toward which customers—is the foundation for step 3, devel-
oping the marketing program.

Step 3: Marketing Program Activities in step 2 tell the marketing manager

which customers to target and which customer needs the firm’s product offerings can
satisfy—the who and what aspects of the strategic marketing process. The how
aspect—step 3 in the planning phase—involves developing the program’s marketing
mix (the four Ps) and its budget. Figure 2–8 shows that each marketing mix element is
combined to provide a cohesive marketing program.
Putting a marketing program into effect requires that the firm commit time and
money to it in the form of a sales forecast (see Chapter 8) and budget that must be
approved by top management.

learning review
2-8. What are the three steps of the planning phase of the strategic market-
ing process?
2-9. What are points of difference and why are they important?

FIGURE 2–8 Marketing manager
The four Ps elements of
the marketing mix must
be blended to produce 43
a cohesive marketing
program. Product Price Promotion Place

CHAPTER 2 Developing Successful Organizational and Marketing Strategies


Cohesive marketing program Product Place


The Implementation Phase of the Strategic Marketing Process

As shown in Figure 2–6, the result of the hours spent in the planning phase of the stra-
Describe the four
LO 2-6 components of the
tegic marketing process is the firm’s marketing plan. Implementation, the second
implementation phase of the strategic marketing process, involves carrying out the marketing plan that
phase of the emerges from the planning phase. If the firm cannot execute the marketing plan—in
strategic marketing the implementation phase—the planning phase wasted time and resources.
process. There are four components of the implementation phase: (1) obtaining resources,
(2) designing the marketing organization, (3) defining precise tasks, responsibilities,
and deadlines, and (4) actually executing the marketing program designed in the plan-
ning phase.

Obtaining Resources A key task in the implementation phase of the strategic

marketing process is finding adequate human and financial resources to execute the
marketing program successfully. Small business owners often obtain funds from sav-
ings, family, friends, and bank loans. Marketing managers in existing organizations
obtain these resources by getting top management to divert profits from BCG stars or
cash cows.

Designing the Marketing Organization A marketing program needs a mar-

keting organization to implement it. Figure 2–9 shows the organization chart of a typi-
cal manufacturing firm, giving some details of the marketing department’s structure.
Four managers of marketing activities are shown to report to the vice president of
marketing or CMO. Several regional sales managers and an international sales man-
ager may report to the manager of sales. The product or brand managers and their
subordinates help plan, implement, and evaluate the marketing plans for their offer-
ings. However, the entire marketing organization is responsible for converting these
marketing plans into realistic marketing actions.

Defining Precise Tasks, Responsibilities, and Deadlines Successful im-

plementation requires that team members know the tasks for which they are responsi-
ble and the deadlines for completing them. To implement the thousands of tasks on a
new aircraft design, Lockheed Martin typically holds weekly program meetings. The
President/Chief Executive Officer

Vice Vice Vice Vice Vice Vice

President President President President President President
Information Research and Manufacturing Marketing Accounting Human
Systems Development Department Department* and Finance Resources
Department Department Department Department

Product or Manager Manager Manager

Brand Marketing Sales Advertising
Manager Research and Promotion

Associate Marketing Sales Regions

Product Assistants and
Managers Representatives

*Called chief marketing officer (CMO) in many organizations.

outcome of each of these meetings is an action item list, an aid to implementing a mar-
Organization of a typical
keting plan consisting of four columns: (1) the task, (2) the person responsible for
manufacturing firm,
completing that task, (3) the date to finish the task, and (4) what is to be delivered.
showing a breakdown of
the marketing department.
Within hours of completing a program meeting, the action item list is circulated to
those attending. This then serves as the starting agenda for the next meeting. Meeting
minutes are viewed as secondary and backward-looking. Action item lists are forward-
looking, clarify the targets, and put strong pressure on people to achieve their desig-
nated tasks by the deadline.
Suppose, for example, that you and two friends undertake a term project on the
problem, “How can the college increase attendance at its performing arts concerts?”
The instructor says the term project must involve a mail survey of a sample of students,
and the written report with the survey results must be submitted by the end of the 11-
week quarter. To begin, you identify all the project tasks and then estimate the time
required to complete each one. To complete it in 11 weeks, your team must plan which
activities can be done concurrently (at the same time) to save time.
Scheduling activities can be done efficiently with a Gantt chart, which is a graph of
a program schedule. Figure 2–10 shows a Gantt chart—invented by Henry L. Gantt—
used to schedule the class project, demonstrating how the concurrent work on several
tasks enables the students to finish the project on time. Software applications such as
Microsoft Project simplify the task of developing a program schedule or Gantt chart.
The key to all scheduling techniques is to distinguish tasks that must be done sequen-
tially from those that can be done concurrently. For example, Tasks 1 and 2 that are
shaded yellow in Figure 2–10 must be done sequentially. This is because in order to type
and copy the final questionnaire before mailing (Task 2), the student must have a final
draft of the questionnaire (Task 1). In contrast, Tasks 6 and 7 that are shaded blue can be
done concurrently. So writing the final report (Task 7) can be started before tabulating
the questions (Task 6) is completed. This overlap speeds up project completion.

Executing the Marketing Program Marketing plans are meaningless without ef-
fective execution of those plans. This requires attention to detail for both marketing strate-
gies and marketing tactics. A marketing strategy is the means by which a marketing goal

FIGURE 2–10 Students Week of quarter
This Gantt chart shows involved
how three students (A, B, Task description in task 1 2 3 4 5 6 7 8 9 1011
and C) can schedule 1. Construct, test on friends, and complete a 45
tasks to complete a term final draft of a questionnaire
project on time. Software 2. Type the final questionnaire C
applications, such as
3. Randomly select the names of 200 students
Microsoft Project, simplify A
from the school directory
the task of developing a
program schedule or 4. E-mail questionnaires C

CHAPTER 2 Developing Successful Organizational and Marketing Strategies

Gantt chart. 5. Monitor completed questionnaires B
6. Analyze data from completed questionnaires B
7. Write final report A, B, C
8. Type and submit final report C

KEY: Planned completion date Planned period of work Current date

Actual completion date Actual period of work

is to be achieved, usually characterized by a specified target market and a marketing pro-

gram to reach it. The term implies both the end sought (target market) and the means or
actions to achieve it (marketing program).
To implement a marketing program successfully, hundreds of detailed decisions are
often required to develop the actions that comprise a marketing program for an offer-
ing. These actions, called marketing tactics, are detailed day-to-day operational mar-
keting actions for each element of the marketing mix that contribute to the overall
success of marketing strategies. Writing ads and setting prices for new product lines
are examples of marketing tactics.

The Evaluation Phase of the Strategic Marketing Process

The evaluation phase of the strategic marketing process seeks to keep the market-
Discuss how
LO 2-7 managers identify
ing program moving in the direction set for it (see Figure 2–6). Accomplishing this
and act on requires the marketing manager to (1) compare the results of the marketing pro-
deviations gram with the goals in the written plans to identify deviations and (2) act on these
from plans. deviations—exploiting positive deviations and correcting negative ones.
Comparing Results with Plans to Identify Deviations At the end of its
fiscal year, which is September 30, Apple begins the evaluation phase of its strategic
marketing process. Suppose you are on an Apple task force in late 2005 that is respon-
sible for making plans through 2014. You observe that extending the 2000–2005 trend
of Apple’s recent sales revenues (line AB in Figure 2–11) to 2014 along line BC shows
an annual growth in sales revenue unacceptable to Apple’s management.
Looking at potential new products in the Apple pipeline, your task force set an ag-
gressive annual sales growth target of 25 percent per year—the line BD in Figure 2–11.
This would give sales revenues of $42 billion in 2010 and $104 billion in 2014.
This reveals a gray wedge-shaped gap DBC in the figure. Planners call this the
planning gap, the difference between the projection of the path to reach a new sales
revenue goal (line BD) and the projection of the path of a plan already in place (line
BC). The ultimate purpose of the firm’s marketing program is to “fill in” this planning
gap—in the case of your Apple task force, to move its future sales revenue line from
the slow-growth line BC up to the more challenging target of line BD.
This is the essence of evaluation: comparing actual results with goals set. To reach
aggressive growth targets in sales revenues, firms like Apple must continuously look
for a new BCG SBU or product cash cow or star.
The evaluation phase of
the strategic marketing
process requires that the
organization compare
actual results with goals
to identify and act on
deviations to fill in its
“planning gap.” The text
describes how Apple is
working to fill in its
planning gap.
Apple logos: Left: © Mickey
Pfleger/LIFE Images/Getty
Images; Right: © Jerome
Favre/Bloomberg via Getty

Acting on Deviations When evaluation shows that actual performance differs

from expectations, managers need to take immediate marketing actions—exploiting
positive deviations and correcting negative ones. Comparing the explosion in Apple’s
actual sales revenues from 2006 to 2014 (line BE in Figure 2–11) to its target sales
revenues (line BD) shows Apple’s rare, world-class ability to both generate and antici-
pate consumer demand and commercialize new technologies for its revolutionary of-
ferings. Let’s consider some of its marketing actions:
! Exploiting a positive deviation. Favorable customer reactions to Apple’s iPhone
(2007) and its iPad (2010) enable it to sell the products globally and to introduce
improved versions and models, such as the iPad mini (2012) and the Apple
Watch (2015).
! Correcting a negative deviation. As Apple’s desktop PCs became dated, it moved
aggressively to replace them with new iMacs and MacBooks. Also, Apple re-
freshed its MacBook Air and MacBook Pro lines of laptops (2013).
As we saw earlier in the BCG business portfolio analysis of the four Apple product
lines, the firm has several stars and cash cows to fill in its planning gap. We shall ex-
plore Apple’s market-product strategies in more detail later in Chapters 9 and 10.

learning review
2-10. What is the implementation phase of the strategic marketing process?
2-11. How do the goals set for a marketing program in the planning phase
relate to the evaluation phase of the strategic marketing process?

LO 2-1 Describe three kinds of organizations and the metrics to the quantitative objectives established in their
three levels of strategy in them. marketing plan, which is a road map for the marketing ac- 47
An organization is a legal entity that consists of people who tivities of an organization for a specified future time period,
share a common mission. It develops offerings (goods, ser- such as one year or five years.
vices, or ideas) that create value for both the organization LO 2-4 Discuss how an organization assesses where it is
and its customers by satisfying their needs and wants. To- now and where it seeks to be.
day’s organizations are of three types: for-profit organiza- Managers of an organization ask two key questions to set

CHAPTER 2 Developing Successful Organizational and Marketing Strategies

tions, nonprofit organizations, and government agencies. A a strategic direction. The first question, “Where are we
for-profit organization serves its customers to earn a profit now?” requires an organization to (a) reevaluate its com-
so that it can survive. Profit is the money left after a for- petencies to ensure that its special capabilities still provide
profit organization subtracts its expenses from its total reve- a competitive advantage; (b) assess its present and pro-
nues and is the reward for the risk it undertakes in marketing spective customers to ensure they have a satisfying cus-
its offerings. A nonprofit organization is a nongovernmental tomer experience—the central goal of marketing today;
organization that serves its customers but does not have and (c) analyze its current and potential competitors from
profit as an organizational goal. Instead, its goals may be a global perspective to determine whether it needs to rede-
operational efficiency or client satisfaction. A government fine its business.
agency is a federal, state, county, or city unit that provides a The second question, “Where do we want to go?” re-
specific service to its constituents. Most large for-profit and quires an organization to set a specific direction and allo-
nonprofit organizations are divided into three levels of strat- cate resources to move it in that direction. Business
egy: (a) the corporate level, where top management directs portfolio and diversification analyses help an organization
overall strategy for the entire organization; (b) the strategic do this. Managers use business portfolio analysis to assess
business unit level, where managers set a more specific stra- the organization’s strategic business units (SBUs), product
tegic direction for their businesses to exploit value-creating lines, or individual products as though they were a collec-
opportunities; and (c) the functional level, where groups of tion of separate investments (cash cows, stars, question
specialists actually create value for the organization. marks, and dogs) to determine the amount of cash each
LO 2-2 Describe core values, mission, organizational should receive. Diversification analysis is a tool that helps
culture, business, and goals. managers use one or a combination of four strategies to in-
Organizations exist to accomplish something for someone. crease revenues: market penetration (selling more of an ex-
To give organizations direction and focus, they continu- isting product to existing markets); market development
ously assess their core values, mission, organizational (selling an existing product to new markets); product devel-
culture, business, and goals. Today’s organizations opment (selling a new product to existing markets); and di-
specify their foundation, set a direction, and formulate versification (selling new products to new markets).
strategies—the “why,” “what,” and “how” factors, respec- LO 2-5 Explain the three steps of the planning phase of
tively. Core values are the organization’s fundamental, the strategic marketing process.
passionate, and enduring principles that guide its conduct An organization uses the strategic marketing process to al-
over time. The organization’s mission is a statement of its locate its marketing mix resources to reach its target mar-
function in society, often identifying its customers, mar- kets. This process is divided into three phases: planning,
kets, products, and technologies. Organizational culture is implementation, and evaluation. The planning phase con-
a set of values, ideas, attitudes, and norms of behavior that sists of (a) a situation (SWOT) analysis, which involves tak-
is learned and shared among the members of an organiza- ing stock of where the firm or product has been recently,
tion. To answer the question, “What business are we in?” where it is now, and where it is headed and focuses on the
an organization defines its “business”—the clear, broad, organization’s internal factors (strengths and weaknesses)
underlying industry category or market sector of its offer- and the external forces and trends affecting it (opportunities
ing. Finally, the organization’s goals (or objectives) are and threats); (b) a market-product focus through market
statements of an accomplishment of a task to be achieved, segmentation (grouping buyers into segments with com-
often by a specific time. mon needs and similar responses to marketing programs)
LO 2-3 Explain why managers use marketing dashboards and goal setting, which in part requires creating points of
and marketing metrics. difference (those characteristics of a product that make it
Marketing managers use marketing dashboards to visually superior to competitive substitutes); and (c) a marketing
display on a single computer screen the essential informa- program that specifies the budget and actions (marketing
tion required to make a decision to take an action or further strategies and tactics) for each marketing mix element.
analyze a problem. This information consists of key perfor- LO 2-6 Describe the four components of the
mance measures of a product category, such as sales or implementation phase of the strategic marketing process.
market share, and is known as a marketing metric, which is The implementation phase of the strategic marketing pro-
a measure of the quantitative value or trend of a marketing cess carries out the marketing plan that emerges from the
activity or result. Most organizations tie their marketing planning phase. It has four key components: (a) obtaining
resources; (b) designing the marketing organization to per- the marketing program actions a firm takes to achieve the
form product management, marketing research, sales, and goals set forth in its marketing plan.
advertising and promotion activities; (c) developing sched- LO 2-7 Discuss how managers identify and act on
ules to identify the tasks that need to be done, the time that deviations from plans.
is allocated to each one, the people responsible for each The evaluation phase of the strategic marketing process
task, and the deadlines for each task—often with an action seeks to keep the marketing program moving in the direction
item list and Gantt chart; and (d) executing the marketing that was established in the marketing plan. This requires the
strategies, which are the means by which marketing goals marketing manager to compare the results from the market-
are to be achieved, and their associated marketing tactics, ing program with the marketing plan’s goals to (a) identify
which are the detailed day-to-day marketing actions for deviations or “planning gaps” and (b) take corrective actions
each element of the marketing mix that contribute to the to exploit positive deviations or correct negative ones.
overall success of a firm’s marketing strategies. These are


2-1 What is the difference between a for-profit and a nonprofit served. Rather, selling more of the product or selling the product
organization? at a higher price generates increased sales. (2) Market develop-
Answer: A for-profit organization is a privately owned organiza- ment, which is a marketing strategy to sell current products to
tion that serves its customers to earn a profit so that it can new markets. (3)  Product development, which is a marketing
survive. A nonprofit organization is a nongovernmental organi- strategy of selling new products to current markets. (4) Diversi-
zation that serves its customers but does not have profit as an fication, which is a marketing strategy of developing new prod-
organizational goal. Instead, its goals may be operational ucts and selling them in new markets. This is a potentially
efficiency or client satisfaction. high-risk strategy because the firm has neither previous produc-
2-2 What are examples of a functional level in an organization? tion nor marketing experience on which to draw in marketing a
Answer: The functional level in an organization is where groups new product to a new  market.
of specialists from the marketing, finance, manufacturing/opera- 2-8 What are the three steps of the planning phase of the strate-
tions, accounting, information systems, research and develop- gic marketing process?
ment, and/or human resources departments focus on a specific Answer: The three steps of the planning phase of the strategic
strategic direction to create value for the organization. marketing process are: (1) Situation analysis, which involves
2-3 What is the meaning of an organization’s mission? taking stock of where the firm or product has been recently,
Answer: A mission is a clear, concise, meaningful, inspirational, where it is now, and where it is headed in terms of the organiza-
and long-term statement of the organization’s function in soci- tion’s marketing plans and the external forces and trends affect-
ety, often identifying its customers, markets, products, and tech- ing it. To do this, an organization uses a SWOT analysis, an
nologies. It is often used interchangeably with vision. acronym that describes an organization’s appraisal of its internal
2-4 What is the difference between an organization’s business Strengths and Weaknesses and its external Opportunities and
and its goals? Threats. (2) Market-product focus and goal setting, which deter-
Answer: An organization’s business describes the clear, broad, un- mine what products an organization will offer to which custom-
derlying industry or market sector of an organization’s offering. An ers. This is often based on market segmentation—aggregating
organization’s goals (or objectives) are statements of an accom- prospective buyers into groups or segments that have common
plishment of a task to be achieved, often by a specific time. Goals needs and will respond similarly to a marketing action. (3) Mar-
convert an organization’s mission and business into long- and short- keting program, which is where an organization develops the
term performance targets to measure how well it is doing. marketing mix elements and budget for each offering.
2-5 What is the difference between a marketing dashboard and 2-9 What are points of difference and why are they important?
a marketing metric? Answer: Points of difference are those characteristics of a prod-
Answer: A marketing dashboard is the visual computer display uct that make it superior to competitive substitutes—offerings
of the essential information related to achieving a marketing ob- the organization faces in the marketplace. They are important
jective. Each variable displayed in a marketing dashboard is a factors in the success or failure of a new product.
marketing metric, which is a measure of the quantitative value 2-10 What is the implementation phase of the strategic marketing
or trend of a marketing action or result. process?
2-6 What is business portfolio analysis? Answer: The implementation phase carries out the marketing plan
Answer: Business portfolio analysis is a technique that manag- that emerges from the planning phase and consists of: (1) obtain-
ers use to quantify performance measures and growth targets to ing resources; (2) designing the marketing organization; (3) defin-
analyze their firms’ SBUs as though they were a collection of ing precise tasks, responsibilities, and deadlines; and (4) executing
separate investments. The purpose of this tool is to determine the marketing program designed in the planning phase.
which SBU or offering generates cash and which one requires 2-11 How do the goals set for a marketing program in the plan-
cash to fund the organization’s growth opportunities. ning phase relate to the evaluation phase of the strategic
2-7 Explain the four market-product strategies in diversification marketing process?
analysis. Answer: The planning phase goals or objectives are used as the
Answer: The four market-product strategies in diversification benchmarks with which the actual performance results are com-
analysis are: (1) Market penetration, which is a marketing strat- pared in the evaluation phase to identify deviations from the
egy to increase sales of current products in current markets. written marketing plans and then exploit positive ones or correct
There is no change in either the basic product line or the markets negative ones.

business p. 32 marketing dashboard p. 33 organizational culture p. 31
business portfolio analysis p. 36 marketing metric p. 34 points of difference p. 42 49
core values p. 32 marketing plan p. 33 profit p. 28
diversification analysis p. 39 marketing strategy p. 44 situation analysis p. 40
goals (objectives) p. 32 marketing tactics p. 45 strategic marketing process p. 40
market segmentation p. 42 mission p. 31 strategy p. 28
market share p. 32 objectives (goals) p. 32 SWOT analysis p. 41

CHAPTER 2 Developing Successful Organizational and Marketing Strategies

1 (a) Using Medtronic as an example, explain how a 5 What is the main result of each of the three phases
mission statement gives it a strategic direction. (b) of the strategic marketing process? (a) planning,
Create a mission statement for your own career. (b) implementation, and (c) evaluation.
2 What competencies best describe (a) your college 6 Parts of Tasks 5 and 6 in Figure 2–10 are done
or university and (b) your favorite restaurant? both concurrently and sequentially. (a) How can
3 Compare the advantages and disadvantages of Ben this be? (b) How does it help the students meet the
& Jerry’s attempting to expand sales revenues by term paper deadline? (c) What is the main advan-
using (a) a product development strategy or (b) a tage of scheduling tasks concurrently rather than
market development strategy. sequentially?
4 Select one strength, one weakness, one opportu- 7 The goal-setting step in the planning phase of the
nity, and one threat from the Ben & Jerry’s SWOT strategic marketing process sets quantified objec-
analysis shown in Figure 2–7. Suggest an action tives for use in the evaluation phase. What does a
that a B&J marketing manager might take to ad- manager do if measured results fail to meet objec-
dress each factor. tives? Exceed objectives?


1 Read Appendix A, “Building an Effective Mar- 2 Using Chapter 2 and Appendix A as guides, focus
keting Plan.” Then write a 600-word executive your marketing plan by (a) writing your mission
summary for the Paradise Kitchens marketing statement in 25 words or less, (b) listing three non-
plan using the numbered headings shown in the financial goals and three financial goals, (c) writ-
plan. When you have completed the draft of your ing your competitive advantage in 35 words or
own marketing plan, write a 600-word executive less, and (d) creating a SWOT analysis table.
summary to go in the front of your own market- 3 Draw a simple organization chart for your
ing plan. organization.

VIDEO CASE 2 IBM: Using Strategy to Build a “Smarter Planet”

“‘Smarter Planet’ is not an advertising campaign, it’s the next major revolution in the global marketplace
not even a marketing campaign, it is a business strat- will be the instrumentation and integration of the
egy,” explains Ann Rubin, world’s processes and infrastructures, generating
Video 2-5 vice president of advertising unprecedented amounts of data. The data captured
IBM Video Case at IBM. and analyzed in industries such as banking, energy, The “Smarter Planet” strat- health care, and retailing will allow IBM to help busi-
egy is based on the idea that nesses be more efficient, productive, and responsive.
THE COMPANY managers, and all employees create the culture
through the strategies they select and the detailed
Founded in 1911, IBM has a history of innovation plans for accomplishing them.
and focus on customers. The blue covers on its com- IBM’s strategies are based on its assessment of fun-
puters, blue letters in the IBM logo, and dark blue damental changes in the business environment. First,
suits worn by IBM salespeople led to the now popu- IBM sees global changes such as fewer trade barriers,
lar company nickname, “Big Blue.” Today, it has the growth of developing economies, and increasing
over 380,000 employees in more than 170 countries. access to the World Wide Web. These changes neces-
Forbes magazine ranks IBM as the fifth most valu- sitate a new type of corporation that IBM calls the
able brand in the world. The company is a leading “globally integrated enterprise.” Second, IBM foresees
developer of new business technologies, receiving a new model of computing that includes computa-
more than 5,000 patents each year. Some of its well- tional capability in phones, cameras, cars, and other
known inventions include the automated teller ma- appliances and allows economic, social, and physical
chine (ATM), the hard disk drive, the magnetic stripe systems to be connected. This connectivity creates a
card, relational databases, and the Universal Product “smarter planet.” Finally, IBM predicts a growing de-
Code (UPC). In addition, IBM recently mand for technological solutions that
gained attention for its artificial intel- help organizations measure and achieve
ligence program called Watson, which specific outcomes.
challenged two Jeopardy! game show As a result, IBM began to shift from
champions and won! According to Vir- commodity-based businesses such as
ginia Rometty, the current CEO of PCs and hard disk drives, to “customiz-
IBM, “IBM is an innovation able” businesses such as software and
© Peter Probst/Alamy
company.” services. The change in IBM was so
substantial that it has described its plan
in a document called the 2015 Road Map. The Map
VALUES, MISSION, AND STRATEGY describes four strategic opportunities: (1) growth mar-
Recently, IBM initiated a project to facilitate online kets such as China, India, Brazil, and Africa, (2) busi-
discussions of key business issues among 50,000 em- ness analytics and optimization, (3) cloud and smarter
ployees to identify common themes and perspectives. computing, and (4) the connected, “smarter” planet.
According to Sam Palmisano, former CEO of IBM, These opportunities suggest a strategy that delivers
“We needed to affirm IBM’s reason for being, what value through business and IT innovation to selected
sets the company apart, and what should drive our industries with an integrated enterprise. The overarch-
actions as individual IBMers.” The results were three ing strategy that highlights IBM’s capabilities is called
underlying values of IBM’s business practices: “Building a Smarter Planet.”
(1) dedication to every client’s success, (2) innovation
that matters—for our company and for the world, and
(3)  trust and personal responsibility in all relation-
ships. These values now come to life at IBM in its The Smarter Planet initiative is designed for clients
“policies, procedures, and daily operations,” explains who value IBM’s industry and process expertise, sys-
Palmisano. tems integration capability, and research capacity. A
IBM’s core values also help to define its mission, smarter planet, while global by definition, happens on
or its general function in society. In clear, concise, in- the industry level. It is driven by forward-thinking or-
spirational language, IBM’s mission statement is: ganizations that share a common outlook: They see
change as an opportunity, and they act on possibilities,
! At IBM, we strive to lead in the invention, develop-
not just react to problems.
ment and manufacture of the industry’s most ad-
John Kennedy, vice president of marketing, explains,
vanced information technologies, including
“‘A Smarter Planet’ actually surfaced from observing
computer systems, software, storage systems, and
what was happening in our clients. They were looking
to take the vast amount of data that was being generated
! We translate these advanced technologies into
inside their companies and looking to better understand
value for our customers through our professional
it.” To IBM “smart” solutions have three characteristics.
solutions, services, and consulting businesses
They are instrumented, they are intelligent, and they are
interconnected. Millions of digital devices, now con-
The mission, and the values it represents, helps de- nected through the Internet, produce data that can be
fine the organizational culture at IBM. Executives, turned into knowledge through advanced computational

cent, reduce inventory levels by 25 percent, and
increase sales by 10 percent.


Marketing and communications professionals at IBM
have developed the marketing plan for IBM’s Smarter
Planet strategy. The general goal is to describe the

CHAPTER 2 Developing Successful Organizational and Marketing Strategies

company’s view of the next era of information tech-
nology and its impact on business and society. The
execution of the plan includes messaging from IBM
leaders, an advertising campaign, an Internet pres-
ence, and public relations communications. In addi-
tion, IBM measures and tracks the performance of the
marketing activities.
The importance of the Smarter Planet strategy was
first communicated through a message from the top.
Palmisano prepared a “Letter from the Chairman” for
the annual report. His message was a powerful state-
ment. Smarter Planet, according to Palmisano, “is not a
metaphor. It describes the infusion of intelligence into
the way the world actually works.”
© IBM Corporation IBM also used a print and television advertising
campaign to add detail to the general message. The ads
focused on the ability to improve the world now, with
IBM’s help. “I think what’s different about Smarter
power. IBM believes that this knowledge can help re-
Planet,” says Ann Rubin, “is that it was not inward fac-
duce costs, cut waste, improve efficiency, and increase
ing, it was looking out at what the world needed. We
productivity for companies, industries, and cities.
felt like we could go out there and influence the world
Since introducing the Smarter Planet strategy, IBM
for the better.”
has collaborated with more than 600 organizations
IBM recently celebrated its 100th anniversary! Its
around the globe. The success of the strategy is evi-
record of success is testimony to the resilience of a
dent in the broad range of industries where “smart”
business model that encourages long-term strategies
solutions are being implemented. They include bank-
that can say “Welcome to a Smarter Planet.”42
ing; communications; electronics, automotive and
aerospace; energy and utilities; government; health
care; insurance; oil and gas; retailing; and transporta-
tion. Each industry has reported a variety of 1 What is IBM’s Smarter Planet business strategy?
applications. How does this strategy relate to IBM’s mission and
In a study of 439 cities, for example, smart solu- values?
tions such as ramp metering, signal coordination, and 2 Conduct a SWOT analysis for IBM’s Smarter
accident management reduced travel delays by more Planet initiative. What are the relevant trends to
than 700,000 annually, saving each city $15 million. A consider for the next three to five years?
study by the U.S. Department of Energy found that 3 How can IBM communicate its strategy to compa-
consumers with smart electric meters cut their power nies, cities, and governments?
usage and saved 10 percent on their power bills. Re- 4 What are the benefits of the Smarter Planet initia-
tailers who implemented smart systems to analyze tive to (a) society and (b) IBM?
buying behavior, merchandise assortment, and de- 5 How should IBM measure the results of the
mand were able to cut supply chain costs by 30 per- Smarter Planet strategy?
Chapter Notes
1. “Our Values,” from Ben & Jerry’s website, http://www. 10. Taken in part from Jim Collins and Morten T. Hansen, Great By, April 3, 2015; and “Ice Cream Choice (New York: HarperCollins Publishers, 2011); and Jim
History Revealed! What Was Ben & Jerry’s First Ice Cream Collins and Jerry I. Porras, Built to Last: Successful Habits of
Flavor?” BusinessWire, November 15, 2011, http://www. Visionary Companies (New York: HarperCollins Publishers, 2002), p. 54.
Ice-Cream-History-Revealed!-Ben-Jerry%E2%80% 11. Collins and Porras, Built to Last: Successful Habits of Visionary
99s-Ice#.VR8B7J50yM8. Companies, p. 73; Patrick M. Lencioni, “Make Your Values
2. Nick Craig and Scott Snook, “From Purpose to Impact,” Harvard Mean Something,” Harvard Business Review, July 2002, p. 6;
Business Review, May 2014, pp. 105–11; Joe Van Brussel, Aubrey Malphurs, Values-Driven Leadership: Discovering and
“Ben & Jerry’s Become B-Corp Certified, Adds Credibility Developing Your Core Values for Ministry, 2nd ed. (Grand
to Impact Investing Movement,” Huffington Post: Business, Rapids, MI: BakerBooks, 2004), p. 31; and Catherine M. Dalton,
October 23, 2012, “When Organizational Values Are Mere Rhetoric,” Business
2012/10/23/ben-and-jerrys-b-corp-impactinvesting Horizons 49 (September–October 2006), p. 345.
_n_2005315.html; and “What Are B-Corps?” B-Corporation 12. Collins and Porras, Built to Last, pp. 94–95; and Tom Kratten-
website, see maker, “Write a Mission Statement That Your Company Is Will-
b-corps. ing to Live,” Harvard Management Communication Letter,
3. “Global Ice Cream,” press release posted at March 2002, pp. 3–4., October 10, 2014. 13. Courtesy of Southwest Airlines, https://www.southwest.
4. Roger Kerin and Robert Peterson, Strategic Marketing Problems: com/html/about-southwest.
Cases and Comments, 13th ed. (Upper Saddle River, NJ: Prentice 14. Courtesy of The American National Red Cross, http://www.
Hall, 2013), p. 140.
5. “Introducing Forbes’ 30 Under 30 Social Entrepreneurs, Class 15. See!/thirty-
of 2015,”, January 5, 2015; Richard Murphy thousand-foot-view/mission-andvision;
and Denielle Sachs, “The Rise of Social Entrepreneurship Sug-; and
gests a Possible Future for Global Capitalism,” www.forbes. about-ftc.
com, May 2, 2013; and 16. Theodore Levitt, “Marketing Myopia,” Harvard Business
6. For a discussion on how industries are defined and offerings are Review, July–August 1960, pp. 45–56.
classified, see the Census Bureau’s Economic Classification 17. Nu Yang and Rich Kane, “10 Newspapers That Do It Right,”
Policy Committee Issues Paper #1 ( Editor & Publisher, March 2015, pp. 52–67; and Nu Yang,
eos/www/naics/history/docs/issue_paper_1.pdf), “Calling All Newspapers,” Editor & Publisher, January 2015,
which aggregates industries in the NAICS from a “production- pp. 34–40.
oriented” view; see also the American Marketing Association 18. Jim Milliot, “E-books Gained, Online Retailers Slipped in
definition at 2014,” Publishers Weekly, March 30, 2015, pp. 4–5; and Jeffrey
Dictionary.aspx?dLetter=I. A. Trachtenberg, “What’s Barnes & Noble’s Survival Plan?”
7. W. Chan Kim and Reneé Mauborgne, “Blue Ocean Strategy: The Wall Street Journal, April 18, 2014, p. B1.
From Theory to Practice,” California Management Review 47, 19. Laura Stevens, “UPS Launched New Ad Campaign,” The Wall
no. 3 (Spring 2005), p. 105; and Michael E. Porter, “What Is Street Journal, March 8, 2015; and “UPS Abandons ‘We Love
Strategy?” Harvard Business Review, November–December Logistics’ in Favor of ‘United Problem Solvers,’” Supply Chain
1996, p. 2. 24/7, March 10, 2015,
8. The definition of strategy reflects thoughts appearing in Porter, 20. Andrew McAfee and Erik Brynjolfsson, “Big Data: The
“What Is Strategy?” pp. 4, 8; a condensed definition of strategy Management Revolution,” Harvard Business Review,
is found on the American Marketing Association website October 2012, pp. 61–68. 21. The definition is adapted from Stephen Few, Information
aspx?dLetter=S; Gerry Johnson, Kevan Scholes, and Richard Dashboard Design: The Effective Visual Communication of
Wittington, Exploring Corporate Strategy (Upper Saddle River, Data (Sebastopol, CA: O’Reilly Media, Inc., 2006), pp. 2–46.
NJ: Prentice Hall, 2005), p. 10; and Costas Markides, “What Is 22. Koen Pauwels et al., Dashboards & Marketing: Why, What,
Strategy and How Do You Know If You Have One?” Business How and What Research Is Needed? (Hanover, NH: Tuck
Strategy Review 15, no. 2 (Summer 2004), p. 5. School, Dartmouth, May 2008).
9. Frank Holland, “Tomorrow’s CMO Will Be Plugged into the 23. 21 Few, Information Dashboard Design; Michael T. Krush, Raj
Entire Marketing Cycle,” Adweek, January 9, 2015, p. 1; George Agnihotri, Kevin J. Trainor, and Edward L. Nowlin, “Enhancing
S. Day and Robert Malcolm, “The CMO and the Future of Organizational Sensemaking: An Examination of the Interactive
Marketing,” Marketing Management, Spring 2012, pp. 34–43; Effects of Sales Capabilities and Marketing Dashboards,” Indus-
Gordon Wyner, “Getting Engaged,” Marketing Management, trial Marketing Management, July 2013, pp. 824–35; Bruce H.
Fall, 2012, pp. 4–9; Christine Moorman, “Ten Trends from the Clark, Andrew V. Abela, and Tim Ambler, “Behind the Wheel,”
CMO SurveyTM,” Marketing Management, Fall 2012, pp. Marketing Management, May–June 2006, pp. 19–23; Spencer E.
15–17; John Kador, “The View from Marketing: How to Get the Ante, “Giving the Boss the Big Picture,” BusinessWeek, Febru-
Most from Your CMO,” Chief Executive, July–August 2011, ary 13, 2006, pp. 48–49; and Dashboard Tutorial (Cupertino,
pp. 60–61; Jessica Shambora, “Wanted: Fearless Marketing CA: Apple Computer, Inc., 2006).
Execs,” Fortune, April 15, 2011, p. 27; Roger A. Kerin, “Strategic 24. Few, Information Dashboard Design, p. 13.
Marketing and the CMO,” Journal of Marketing, October 2005, 25. Mark Jeffery, Data-Driven Marketing: The 15 Metrics Everyone
pp. 12–13; and The CMO Council: Biographies of Selected in Marketing Should Know (Hoboken, NJ: John Wiley & Sons,
Advisory Board Members, 2010), chapter 1; Michael Krauss, “Balance Attention to Metrics
board.php. with Intuition,” Marketing News, June 1, 2007, pp. 6–8; John

Davis, Measuring Marketing: 103 Key Metrics Every Marketer to a Simmer as Prices Drop and Markets Mature, According to
Needs (Singapore: John Wiley & Sons [Asia], 2007); and Paul IDC,” press release, December 1, 2014, International Data
W. Farris, Neil T. Bendle, Phillip E. Pfeifer, and David J. Reibstein, Corporation (IDC),
Marketing Metrics, 2nd ed. (Upper Saddle River, NJ: Wharton jsp?containerId=prUS25282214.
School Publishing, 2010). 37. Jack Linshi, “5 Charts That Show Why the iPad’s Fifth Birthday 53
26. David Burrows, “Too Many Metrics: The Perils of Training Is Bittersweet,”, April 6, 2015; “The State of
Marketers to Calculate ROI,” Marketing Week, September 11, the Tablet Market,” TabTimes Weekly, April 10, 2015, http://
2014, p. 42; Art Weinstein and Shane Smith, “Game Plan,”;
Marketing Management, Fall 2012, pp. 24–31; Alexander Chi- and Larry Magid, “Apple’s Tablets Selling Well but Market
ang, “Special Interview with Stephen Few, Dashboard and Data Share Slips While Samsung Grows, Forbes, May 1, 2013,
Visualization Expert,” Dundas Dashboard, July 14, 2011; Ste-

CHAPTER 2 Developing Successful Organizational and Marketing Strategies

phen Few, Now You See It (Oakland, CA: Analytics Press, apples-tablet-market-share-slips-and-samsunggrows.
2009), chapters 1–3; and Jacques Bughin, Amy Guggenheim 38. Don Reisinger, “iPod History: 10 Milestones in the Wearable
Shenkan, and Mark Singer, “How Poor Metrics Undermine Music Player’s Evolution,” eWeek, October 31, 2014, p. 1-1;
Digital Marketing,” The McKinsey Quarterly, October 2008. James Hall, “MP3 Players Are Dead,” Business Insider,
27. The now-classic reference on effective graphic presentation is December 26, 2012,
Edward R. Tufte, The Visual Display of Quantitative Information, mp3-players-are-dead-2012-12; Zak Islam, “Smartphones
2nd ed. (Cheshire, CT: Graphics Press, 2001); see also Few, Heavily Decrease Sales of iPod, MP3 Players,” Tom’s Hardware,
Information Dashboard Design, chapters 3–5. December 31, 2012,
28. George Stalk, Phillip Evans, and Lawrence E. Shulman, “Com- news/SmartphonesiPod-MP3-Players-Sales,20062.html.
peting on Capabilities: The New Rules of Corporate Strategy,” 39. “Company Profile: Apple Inc.” MarketLine, November 6, 2014,
Harvard Business Review, March–April 1992, pp. 57–69; and
Darrell K. Rigby, Management Tools 2007: An Executive’s 40. Strengths and weaknesses of the BCG technique are based on
Guide (Boston: Bain & Company, 2007), p. 22. Derek F. Abell and John S. Hammond, Strategic Market Plan-
29. Kerin and Peterson, Strategic Marketing Problems, pp. 2–3; and ning: Problem and Analytic Approaches (Englewood Cliffs, NJ:
Derek F. Abell, Defining the Business (Englewood Cliffs, NJ: Prentice Hall, 1979); Yoram Wind, Vijay Mahajan, and Donald
Prentice Hall, 1980), p. 18. Swire, “An Empirical Comparison of Standardized Portfolio
30. Robert D. Hof, “How to Hit a Moving Target,” BusinessWeek, Models,” Journal of Marketing, Spring 1983, pp. 89–99; and
August 21, 2006, p. 3; and Peter Kim, Reinventing the Market- J. Scott Armstrong and Roderick J. Brodie, “Effects of Portfolio
ing Organization (Cambridge, MA: Forrester, July 13, 2006), Planning Methods on Decision Making: Experimental Results,”
pp. 7, 9, and 17. International Journal of Research in Marketing, Winter 1994,
31. Adapted from The Experience Curve Reviewed, IV: The Growth pp. 73–84.
Share Matrix of the Product Portfolio (Boston: The Boston Con- 41. H. Igor Ansoff, “Strategies for Diversification,” Harvard
sulting Group, 1973). See also https://www.bcgperspectives. Business Review, September–October 1957, pp. 113–24.
com/content/classics/strategy_the_product_portfolio 42. IBM: This case was written by Steven Hartley. Sources: Jessi
(registration and login required for access). Hempel, “IBM’s Super Second Act,” Fortune, March 21, 2011,
32. Roger A. Kerin, Vijay Mahajan, and P. Rajan Varadarajan, Con- pp. 114–24; Bruce Upbin, “IBM Plays Jeopardy!” Forbes, Janu-
temporary Perspectives on Strategic Marketing Planning (Boston: ary 17, 2011, pp. 36–37; Kurt Badenhausen, “The World’s Most
Allyn & Bacon, 1990), p. 52. Valuable Brands,” Forbes, May 13, 2015; Jeffrey M. O’Brien,
33. “The Top 100 Brands: Best Global Brands 2014,” Interbrand, “IBM’s Grand Plan to Save the Planet,” Fortune, May 4, 2009, pp. 84–91; IBM 2009 Annual Report; IBM 2010 Annual Report;
34. See the Apple press release library at Samuel J. Palmisano, “Our Values at Work on Being an IBMer,”
com/pr/library/. IBM website, see;
35. Joseph Palenchar, “Apple Watch the One to Watch,” The Week and “Welcome to the Decade of Smart,” IBM website,
in Consumer Electronics, March 16, 2015,
36. Parmy Oson, “Apple’s U.S. iPhone Sales Surpass Android for sustainable_development/12jan2010/files/palmisano_
First Time in Years,”, February 4, 2014, p. 2-2; and decadeofsmart-12jan2010.pdf.
“Worldwide Smartphone Growth Forecast to Slow from a Boil

“If you have a real product with a distinctive point of dif- for the purpose of raising capital, it has the addi-
ference that satisfies the needs of customers, you may tional function of being an important sales docu-
have a winner,” says Arthur R. Kydd, who has helped ment. So it contains elements such as the strategic
launch more than 60 start-up firms. “And you get a real focus, organizational structure, and biographies of
feel for this in a well-written marketing or business plan,” key personnel that would rarely appear in an inter-
he explains.1 nal marketing plan. The elements of a marketing
This appendix (1) describes what marketing and busi- plan for each of these two audiences are compared
ness plans are, including the purposes and guidelines in in Figure A–1.
writing effective plans, and (2) provides a sample market- ! The kind and complexity of the organization. A
ing plan. neighborhood restaurant has a less detailed mar-
keting plan than Apple, which serves international
markets. The restaurant’s plan would be relatively
simple and directed at serving customers in a lo-
MARKETING PLANS AND cal market. In Apple’s case, because there is a hi-
BUSINESS PLANS erarchy of marketing plans, various levels of
detail would be used—such as the entire organiza-
After explaining the meanings, purposes, and audiences tion, the strategic business unit, or the product/
of marketing plans and business plans, this section de- product line.
scribes some writing guidelines for them and what exter- ! The industry. Both the restaurant serving a local
nal funders often look for in successful plans. market and Apple, selling electronic devices glob-
ally, analyze elements of their industry. However,
Meanings, Purposes, and Audiences their geographic scopes are far different, as are the
complexities of their offerings and, hence, the time
A marketing plan is a road map for the marketing ac- periods likely to be covered by their plans. A one-
tions of an organization for a specified future time period, year marketing plan may be adequate for the restau-
such as one year or five years.2 No single “generic” mar- rant, but Apple may need a five-year planning
keting plan applies to all organizations and all situations. horizon because product development cycles for
Rather, the specific format for a marketing plan for an complex, new electronic devices may be many years.
organization depends on the following:
In contrast to a marketing plan, a business plan is a
! The target audience and purpose. Elements in- road map for the entire organization for a specified fu-
cluded in a particular marketing plan depend heav- ture period of time, such as one year or five years.3 A key
ily on (1) who the audience is and (2) what its difference between a marketing plan and a business plan
purpose is. A marketing plan for an internal audi- is that the business plan contains details on the research
ence seeks to point the direction for future market- and development (R&D)/operations/manufacturing ac-
ing activities and is sent to all individuals in the tivities of the organization. Even for a manufacturing
organization who must implement the plan or who business, the marketing plan is probably 60 or 70 percent
will be affected by it. If the plan is directed to an of the entire business plan. For firms like a small restau-
external audience, such as friends, banks, venture rant or an auto repair shop, their marketing and business
capitalists, or crowdfunding sources like Kickstarter plans are virtually identical. The elements of a business

Marketing plan Business plan
For internal For external For internal For external
Element of the plan audience audience audience audience
(to direct (to raise (to direct (to raise 55
the firm) capital) the firm) capital)
1. Executive summary
2. Description of company
3. Strategic plan/focus

APPENDIX A Building an Effective Marketing Plan

4. Situation analysis
5. Market-product focus
6. Marketing program strategy and tactics
7. R&D and operations program
8. Financial projections
9. Organization structure
10. Implementation plan
11. Evaluation
Appendix A: Biographies of key personnel
Appendix B, etc.: Details on other topics

FIGURE A–1 plan typically targeted at internal and external audiences appear in the two right-hand
Elements in typical columns in Figure A–1.
marketing and business
plans targeted at different The Most-Asked Questions by Outside Audiences
Lenders and prospective investors reading a business plan or a marketing plan that is
used to seek new capital are probably the toughest audiences to satisfy. Their most-
asked questions include the following:
1. Is the business or marketing idea valid?
2. Is there something unique or distinctive about the product or service that sepa-
rates it from substitutes and competitors?
3. Is there a clear market for the product or service?
4. Are the financial projections realistic and healthy?
5. Are the key management and technical personnel capable, and do they have a
track record in the industry within which they must compete?
6. Does the plan clearly describe how those providing capital will get their money
back and make a profit?
Rhonda Abrams, author of books on writing business plans, observes, “Although
you may spend five months preparing your plan, the cold, hard fact is that an investor
or lender can dismiss it in less than five minutes. If you don’t make a positive impres-
sion in those critical first five minutes, your plan will be rejected.”4 While her com-
ments apply to plans seeking to raise capital, the first five questions listed above apply
equally well to plans prepared for internal audiences.

Writing and Style Suggestions

There are no magic one-size-fits-all guidelines for writing successful marketing and
business plans. Still, the following writing and style guidelines generally apply:5
! Use a direct, professional writing style. Use appropriate business terms without jar-
gon. Present and future tenses with active voice (“I will write an effective marketing
plan”) are generally better than past tense and passive voice (“An effective market-
ing plan was written by me”).
! Be positive and specific to convey potential success. At the same time, avoid
superlatives (“terrific,” “wonderful”). Specifics are better than glittering gener-
! Use numbers for impact, justifying projections with reasonable quantitative as-
sumptions, where possible.
! Use bullet points for succinctness and emphasis. As with the list you are reading,
bullets enable key points to be highlighted effectively.
! Use A-level (the first level) and B-level (the second level) headings under the
numbered section headings to help readers make easy transitions from one topic
to another. This also forces the writer to organize the plan more carefully.
! Use visuals where appropriate. Photos, illustrations, graphs, and charts enable
massive amounts of information to be presented succinctly.
! Shoot for a plan 15 to 35 pages in length, not including financial projections and
appendices. An uncomplicated small business may require only 15 pages, while
a high-technology start-up may require more than 35 pages.
! Use care in layout, design, and presentation. Use 11- or 12-point type (you are
now reading 10.5-point type) in the text. Use a serif type (with “feet,” like that
you are reading now) in the text because it is easier to read, and sans serif (with-
out “feet”) in graphs and charts like Figure A–1. A bound report with a nice
cover and a clear title page adds professionalism.
These guidelines are used, where possible, in the sample marketing plan that follows.


To help interpret the marketing plan for Paradise Kitchens, Inc. that follows, we will
describe the company and suggest some guidelines for interpreting the plan.6

Background on Paradise Kitchens, Inc.

Randall and Leah Peters have over 40 years of food industry experience for General
Foods and Pillsbury with a number of diverse responsibilities. With these backgrounds
and their savings, they co-founded Paradise Kitchens, Inc. to produce and market a
new line of high-quality frozen chili products.

Interpreting the Marketing Plan

The marketing plan on the next pages, based on an actual Paradise Kitchens plan, is
directed at an external audience (see Figure A–1). For simplicity, let us assume it is
early 2016, the Peters have company data through 2015, and they are developing a
five-year marketing plan through 2020. Some details and dates have been altered, but
the basic logic of the plan has been kept.
Notes in the margins next to the Paradise Kitchens plan fall into two categories:
1. Substantive notes are in blue boxes. These notes explain the significance of an
element in the marketing plan and are keyed to chapter references in this text-
2. Writing style, format, and layout notes are in red boxes and explain the editorial
or visual rationale for the element.
A word of encouragement: Writing an effective marketing plan is hard but also
challenging and satisfying work. Dozens of the authors’ students have used effective
marketing plans they wrote for class in their interviewing portfolio to show prospec-
tive employers what they could do and to help them get their first job.

Color-Coding Legend 57
The Table of Contents Blue boxes explain significance Red boxes give writing style,
provides quick access of marketing plan elements. format, and layout guidelines.
to the topics in the plan,
usually organized by
section and subsection

APPENDIX A Building an Effective Marketing Plan


Seen by many experts as

the single most important FIVE-YEAR MARKETING PLAN
element in the plan, the Paradise Kitchens,® Inc.
two-page Executive
Summary “sells” the plan Table of Contents
to readers through its
clarity and brevity. For 1. Executive Summary
space reasons, it is not 2. Company Description
shown here, but the
Building Your Marketing Paradise Kitchens,® Inc. was started by co-founders Randall F. Peters and Leah E.
Plan exercise at the end of Peters to develop and market Howlin’ Coyote® Chili a, unique line of single serve and
Chapter 2 asks the reader microwavable Southwestern/Mexican style frozen chili products. The Howlin’ Coyote
to write an Executive line of chili was first introduced into the Minneapolis–St. Paul market and expanded
Summary for this plan. to Denver two years later and Phoenix two years after that.

To the Company’s knowledge, Howlin’ Coyote is the only premium-quality,

authentic Southwestern/Mexican style frozen chili sold in U.S. grocery stores. Its high
The Company Description quality has gained fast, widespread acceptance in its targeted markets. In fact, same-
highlights the recent his- store sales doubled in the last year for which data are available. The Company believes
tory and recent successes the Howlin’ Coyote brand can be extended to other categories of Southwestern/Mexican
of the organization. food products, such as tacos, enchiladas, and burritos.

Paradise Kitchens believes its high-quality, high-price strategy has proven success-
The Strategic Focus and
ful. This marketing plan outlines how the Company will extend its geographic cover-
Plan sets the strategic
age from 3 markets to 20 markets by the year 2020.
direction for the entire
organization, a direction
with which proposed
3. Strategic Focus and Plan
actions of the marketing
plan must be consistent. This section covers three aspects of corporate strategy that influence the market-
This section is not ing plan: (1) the mission, (2) goals, and (3) core competency/sustainable competitive
included in all marketing advantage of Paradise Kitchens.
plans. See Chapter 2.

The mission of Paradise Kitchens is to market lines of high-quality Southwestern/
The qualitative Mission
Mexican food products at premium prices that satisfy consumers in this fast-growing
statement focuses the
food segment while providing challenging career opportunities for employees and
activities of Paradise
above-average returns to stockholders.
Kitchens for the stake-
holder groups to be
served. See Chapter 2.
The Goals section sets
For the coming five years Paradise Kitchens seeks to achieve the following
both the nonfinancial and
financial targets—where
Nonfinancial goals
possible in quantitative
1. To retain its present image as the highest-quality line of Southwestern/Mexican
terms—against which the
products in the food categories in which it competes.
company’s performance
2. To enter 17 new metropolitan markets.
will be measured. See
3. To achieve national distribution in two convenience store or supermarket
Chapter 2.
chains by 2016 and five by 2017.
4. To add a new product line every third year.
5. To be among the top five chili lines—regardless of packaging (frozen or
canned—in one-third of the metro markets in which it competes by 2017
and two-thirds by 2019.
Lists use parallel con- Financial goals
struction to improve 1. To obtain a real (inflation-adjusted) growth in earnings per share of 8 percent
readability—in this case per year over time.
a series of infinitives 2. To obtain a return on equity of at least 20 percent.
starting with “To . . .” 3. To have a public stock offering by the year 2017.

Core Competency and Sustainable Competitive Advantage

In terms of core competency. Paradise Kitchens
seeks to achieve a unique ability to (1) provide dis-
tinctive, high-quality chilies and related products
using Southwestern/Mexican recipes that appeal to
Photos or sample ads and excite contemporary tastes for these products
can illustrate key points and (2) deliver these products to the customer’s
effectively, even if they are table using effective manufacturing and distribution
not in color as they appear systems that maintain the Company’s quality
here. standards.
To translate these core competencies into a sustain- To help achieve national
able competitive advantage, the Company will work distribution through chains,
Paradise Kitchens introduced
closely with key suppliers and distributors to build
this point-of-purchase ad that
A brief caption on photos the relationships and alliances necessary to satisfy the adheres statically to the glass
and sample ads ties them high taste standards of our customers. door of the freezer case.
to the text and highlights
their reason for being


To improve readability,
each numbered section

APPENDIX A Building an Effective Marketing Plan

usually starts on a new
page. (This is not done in
this plan to save space.)

The Situation Analysis is 4. Situation Analysis

a snapshot to answer the This situation analysis starts with a snapshot of the current environment in which
question “Where are we Paradise Kitchens finds itself by providing a brief SWOT (strengths, weaknesses,
now?” See Chapter 2. opportunities, threats) analysis. After this overview, the analysis probes ever-finer
levels of detail: industry, competitors, company, and consumers.

The SWOT analysis iden-

tifies strengths, weak- SWOT Analysis
nesses, opportunities, Figure 1 shows the internal and external factors affecting the market opportuni-
and threats to provide a ties for Paradise Kitchens. Stated briefly, this SWOT analysis highlights the great
solid foundation, strides taken by the company since its products first appeared on grocers’ shelves.
which is the springboard Figure 1. SWOT Analysis for Paradise Kitchens

to identify subsequent Internal Factors Strengths Weaknesses

actions in the marketing Management Experienced and entrepreneurial Small size can restrict options
management and board
plan. See Chapter 2.
Offerings Unique, high-quality, high-price Many lower-quality, lower-price
products competitors
Marketing Distribution in three markets with No national awareness or
Each long table, graph, excellent consumer acceptance distribution; restricted shelf space
in the freezer section
or photo is given a figure Personnel Good workforce, though small; Big gap if key employee leaves
number and title. It then little turnover

appears as soon as possi- Finance Excellent growth in sales revenues Limited resources may restrict
growth opportunities when
ble after the first reference compared to giant competitors
in the text, accommodat- Manufacturing Sole supplier ensures high quality Lack economies of scale of huge
ing necessary page breaks.
R&D Continuing efforts to ensure quality Lack of canning and microwavable
This avoids breaking long in delivered products food processing expertise
tables like this one in the
External Factors Opportunities Threats
middle. Short tables or Consumer/Social Upscale market, likely to be stable; Premium price may limit access
graphs are often inserted Southwestern/Mexican food to mass markets; consumers
category is fast-growing segment due value a strong brand name
in the text without figure to growth in Hispanic American
numbers because they population and desire for spicier foods

don’t cause serious prob- Competitive Distinctive name and packaging in Not patentable; competitors can
its markets attempt to duplicate product; others
lems with page breaks. better able to pay slotting fees
Technological Technical breakthroughs enable Competitors have gained
smaller food producers to achieve economies in canning and
many economies available to large microwavable food processing
Economic Consumer income is high; More households “eating out,”
convenience important to U.S. and bringing prepared take-out
Effective tables seek households into home
to summarize a large Legal/Regulatory High U.S. Food & Drug Administration Mergers among large competitors
amount of information in standards eliminate fly-by-night being approved by government
a short amount of space.
The text discussion of Fig-
ure 1 (the SWOT Analysis
table) elaborates on its
more important elements.
This “walks” the reader
through the information
from the vantage point of
the plan’s writer.

The Industry Analysis sec- In the Company’s favor internally are its strengths: an experienced management
tion provides the backdrop team and board of directors, excellent acceptance of its product line in the three
for the subsequent, more metropolitan markets within which it competes, and a strong manufacturing and
detailed analysis of com- distribution system to serve these limited markets. Favorable external factors
petition, the company, and include the increasing appeal of Southwestern/Mexican foods, the strength of the
the company’s customers. upscale market for the Company’s products, and food-processing technological break-
Without an in-depth under- throughs that make it easier for smaller food producers to compete.
standing of the industry, Among unfavorable factors, the main weakness is the limited size of Paradise
the remaining analysis Kitchens relative to its competitors in terms of the depth of the management team,
may be misdirected. See the available financial resources, and the national awareness and distribution of product
Chapter 2. lines. Threats include the danger that the Company’s premium prices may limit
access to mass markets and competition from the “eating-out” and “take-out”
Sales of Mexican entrees
are significant and pro- Industry Analysis: Trends in Frozen and Mexican Foods
vide a variety of future Frozen Foods. According to Grocery Headquarters, consumers are flocking to the
opportunities for Paradise frozen food section of grocery retailers. The reasons: hectic lifestvles demanding
Kitchens. increased convenience and an abundance of new, tastier, and nutritious products.7 By
2014, total sales of frozen food in supermarkets, drugstores, and mass merchan-
disers reached $31 billion. Prepared frozen meals, which are defined as meals or
entrees that are frozen and require minimal preparation, accounted for about one-
Even though relatively
quarter of the total frozen food market.8
brief, this in-depth treat-
ment of sales of Mexican Sales of Mexican entrees now exceed $500 million. Heavy consumers of frozen
foods in the U.S. demon- meals, those who eat five or more meals every two weeks, tend to be kids, teens, and
strates to the plan’s read- adults 35–44 years old.9
ers the company’s Mexican Foods. Currently, Mexican foods such as burritos, enchiladas, and tacos
understanding of the are used in two-thirds of American households. These trends reflect a generally more
industry within which it favorable attitude on the part of all Americans toward spicy foods that include red
competes. chili peppers. The growing Hispanic population in the United States, over 51 million
and about $1.3 trillion in purchasing power, partly explains the increasing demand for
Mexican food. This Hispanic purchasing power is projected to be over $1.6 trillion in
The Competitor Analysis 2018.10
section demonstrates that
Competitor Analysis: The Chili Market
the company has a realistic
The chili market represents over $500 million in annual sales. On average, consumers
understanding of its major
buy five to six servings annually, according to the NPD Group. The products fall
chili competitors and their
primarily into two groups: canned chili (75 percent of sales) and dry chili (25 percent
marketing strategies.
of sales).
Again, a realistic assess-
ment gives confidence
that subsequent marketing
actions in the plan rest on
a solid foundation. See
Chapters 2, 3, 8, and 9.

This page uses a “block”
style and does not indent
each paragraph, although
an extra space separates 61
each paragraph. Compare
this page with the opposite
page, which has indented
paragraphs. Most readers
find that indented para-

APPENDIX A Building an Effective Marketing Plan

graphs in marketing plans
and long reports are easier Bluntly put, the major disadvantage of the segment’s dominant product, canned chili,
to follow. is that it does not taste very good. A taste test described in an issue of Consumer
Reports magazine ranked 26 canned chili products “poor” to “fair” in overall sensory
The Company Analysis quality. The study concluded, “Chili doesn’t have to be hot to be good. But really good
provides details of the chili, hot or mild, doesn’t come out of a can.”
company’s strengths and Company Analysis
marketing strategies that
The husband-and-wife team that co-founded Paradise Kitchens, Inc. has
will enable it to achieve
44 years of experience between them in the food-processing business. Both have
the mission and goals
played key roles in the management of the Pillsbury Company. They are being
identified earlier. See
advised by a highly seasoned group of business professionals, who have extensive
Chapters 2 and 8.
understanding of the requirements for new-product development.
The Company now uses a single outside producer with which it works closely to
The “A heading” for this
maintain the consistently high quality required in its products. The greater volume has
section (“4. Situation Anal-
increased production efficiencies, resulting in a steady decrease in the cost of goods sold.
ysis”) identifies the major
section of the plan. The “B Customer Analysis
heading” of Customer In terms of customer analysis, this section describes (1) the characteristics of
Analysis has a more customers expected to buy Howlin’ Coyote products and (2) health and nutrition
dominant typeface and concerns of Americans today.
position than the lower-level
Customer Characteristics. Demographically, chili products in general are purchased
“C heading” of Customer
by consumers representing a broad range of socioeconomic backgrounds. Howlin’
Characteristics. These
Coyote chili is purchased chiefly by consumers who have achieved higher levels of
headings introduce the
education and whose income is $50,000 and higher. These consumers represent 50 per-
reader to the sequence
cent of canned and dry mix chili users.
and level of topics covered
within each major “A level” The household buying Howlin’ Coyote has one to three people in it. Among married
section. The organization couples, Howlin’ Coyote is predominantly bought
of this texibook uses this by households in which both spouses work. While
kind of structure and women are a majority of the buyers, single men
headings. represent a significant segment.
Because the chili offers a quick way to make a tasty
meal, the product’s biggest users tend to be those
most pressed for time. Howlin’ Coyote’s premium
Satisfying customers and pricing also means that its purchasers are skewed
providing genuine value to toward the higher end of the income range. Buyers
them is why organizations range in age from 25 to 54 years old and often live The five Howlin’ Coyote entrees offer
exist in a market economy. in the western United States where spicy foods are a quick, tasty meal with high-quality
This section addresses the ingredients.
more readily eaten.
question “Who are the
customers for Paradise
Kitchens’s products?”
See Chapters 5, 6, 7, 8,
and 9.
This section demonstrates Health and Nutrition Concerns. Coverage of food issues in the U.S. media is
the company’s insights often erratic and occasionally alarmist. Because Americans are concerned about their
into a major trend that has diets, studies from organizations of widely varying credibility frequently receive
a potentially large impact. significant attention from the main news organizations. For instance, a study of fat
levels of movie popcorn was reported in all the major media. Similarly, studies on the
healthfulness of Mexican food have received prominent play in print and broadcast
reports. The high caloric levels of much Mexican and southwestem-style food have
been widely reported and often exaggerated. Some Mexican frozen-food competitors,
such as Don Miguel, Mission Foods, Ruiz Foods, and José Olé, plan to offer or have
recently offered more “carb-friendly” and “fat-friendly” products in response to
this concern.

Howlin’ Coyote is already lower in calories, fat, and sodium than its competitors,
and those qualities are not currently being stressed in its promotions. Instead, in the
space and time available for promotions, Howlin’ Coyote’s taste, convenience, and
The size of headings flexibility are stressed.
should give a professional
5. Market-Product Focus
look to the report and not
overwhelm the reader. This section describes the five-year marketing and product objectives for Paradise
These two headings are Kitchens and the target markets, points of difference, and positioning of its lines of
too large. Howlin’ Coyote chilies.

Marketing and Product Objectives

Howlin’ Coyote’s marketing intent is to take full advantage of its brand
As noted in Chapters 2, potential while building a base from which other revenue sources can be mined—
9, and 10, the chances of both in and out of the retail grocery business. These are detailed in four areas
success for a new product below:
significantly increase if Current markets. Current markets will be grown by expanding brand and fla-
objectives are set for the vor distribution at the retail level. In addition, same-store sales will be grown
product itself and if target by increasing consumer awareness and repeat purchases, thereby leading to
market segments are the more efficient broker/warehouse distribution channel.
identified for it. Diversifi-
New markets. By the end of Year 5, the chili, salsa, burrito, and enchilada
cation analysis, discussed
business will be expanded to a total of 20 metropolitan areas, which represent
in Chapter 2, helps iden-
53 percent of the 38 major U.S. metropolitan markets. This will represent
tify the market segments
70 percent of U.S. food store sales.
to target. This section
makes these explicit for Food service. Food service sales will include chili products and smothering
Paradise Kitchens. The sauces. Sales are expected to reach $693,000 by the end of Year 3 and $1.5 million
objectives also serve by the end of Year 5.
as the planned targets New products. Howlin’ Coyote’s brand presence will be expanded at the retail
against which marketing
activities are measured in
program implementation
and evaluation.

A heading should be 63
spaced closer to the text
that follows (and that it
describes) than the preced-
ing section to avoid confu-
sion for the reader. This

APPENDIX A Building an Effective Marketing Plan

rule is not followed for the
Target Markets heading,
which now unfortunately level through the addition of new products in the frozen-foods section. This will
appears to “float” between be accomplished through new-product concept screening in Year 1 to identify
the preceding and following new potential products. These products will be brought to market in Years 2
paragraphs. and 3.

Target Markets
This section identifies the
specific niches or target The primary target market for Howlin’ Coyote
markets toward which the products is households with one to three people,
company’s products are where often both adults work, and with individual
directed. When appro- income typically above $50,000 per year. These
priate and when space households contain more experienced, adventur-
permits, this section often ous consumers of Southwestern/Mexican food
To help buyers see the many
includes a market-product and want premium quality products. different uses for Howlin’ Coyote
grid. See Chapter 9. chili, recipes are even printed on the
inside of the packages.
Points of Difference
The “points of difference”—characteristics that make Howlin’ Coyote chilies
An organization cannot unique relative to competitors—fall into three important areas:
grow by offering only “me- ! Unique taste and convenience. No known competitor offers a high-quality,
too products.” The greatest “authentic” frozen chili in a range of flavors. And no existing chili has the same
single factor in a new prod- combination of quick preparation and home-style taste that Howlin’ Coyote
uct’s failure is the lack of does.
significant “points of differ- ! Taste trends. The American palate is increasingly intrigued by hot spices. In
ence” that set it apart from
response to this trend, Howlin’ Coyote brands offer more “kick” than most
competitors’ substitutes.
other prepared chilies.
This section makes these
points of difference explicit.
! Premium packaging. Howlin’ Coyote’s packaging graphics convey the unique,
See Chapter 10.
high-quality product contained inside and the product’s nontraditional

A positioning strategy
In the past, chili products have been either convenient or tasty, but not both.
helps communicate the
Howlin’ Coyote pairs these two desirable characteristics to obtain a positioning in
unique points of difference
consumers’ minds as very high-quality “authentic Southwestern/Mexican tasting”
of a company’s products
chilies that can be prepared easily and quickly.
to prospective customers
in a simple, clear way.
This section describes
this positioning. See
Chapters 9.
Everything that has gone
before in the marketing plan
sets the stage for the mar-
keting mix actions—the four
Ps—covered in the market-
ing program. See Chapters
10 through 21. 6. Marketing Program
The four marketing mix elements of the Howlin’ Coyote chili marketing program
are detailed below. Note that “chile” is the vegetable and “chili” is the dish.
This section describes in
detail three key elements
Product Strategy
of the company’s product
After first summarizing the product line, this section describes Howlin Coyote’s
strategy: the product line,
approach to product quality and packaging.
its quality and how this is
achieved, and its “cutting Product Line. Howlin’ Coyote chili, retailing for $3.99 for an 11-ounce serving, is
edge” packaging. See available in five flavors: Green Chile Chili, Red Chile Chili, Beef and Black Bean Chili,
Chapters 10 and 11. Chicken Chunk Chili, and Mean Bean Chili.

Unique Product Quality. The flavoring systems of the Howlin’ Coyote chilies are
proprietary. The products’ tastiness is due to extra care lavished upon the ingredients
This Price Strategy section during production. The ingredients used are of unusually high quality. Meats are low-
makes the company’s price fat cuts and are fresh, not frozen, to preserve cell structure and moistness. Chilies are fire-
point very clear, along with roasted for fresher taste. Tomatoes and vegetables are of select quality. No preservatives
its price position relative to or artificial flavors are used.
potential substitutes. When
appropriate and when Packaging. Reflecting the “cutting edge” marketing strategy of its producers,
space permits, this section Howlin’ Coyote bucks conventional wisdom in its packaging. It specifically avoids
might contain a break-even placing predictable photographs of the product on
analysis. See Chapters 13 its containers. Instead, Howlin’ Coyote’s package
and 14. shows a Southwestern motif that communicates
the product’s out-of-the-ordinary positioning. As
noted earlier, both women and men represent sig-
nificant segments of actual purchasers of Howlin’
This “introductory over-
Coyote Chili. The southwestern motif on the
view” sentence tells the
packaging is deliberately designed to appeal to
reader the topics covered
both women and men.
in the section—in this
case in-store demon-
Price Strategy The southwestern motif makes
strations, recipes, and
Howlin’ Coyote’s packages stand out
cents-off coupons. While At a $3.99 retail price for an 11-ounce
in a supermarket’s freezer case.
this sentence may be package. Howlin’ Coyote chili is priced com-
omitted in short memos or parably to the other frozen offerings but higher than the canned and dried chili
plans, it helps readers see varieties. However, the significant taste advantages it has over canned chilies
where the text is leading. and the convenience advantages over dried chilies justify this pricing strategy.
These sentences are used This retail price also provides adequate margins for wholesalers and retailers in
throughout this plan. This Howlin’ Coyote’s channel of distribution.
textbook also generally
uses these introductory
Promotion Strategy
overview sentences to aid
Key promotion programs feature in-store demonstrations, recipes, and cents-off
your comprehension.

Elements of the Promotion
Strategy are highlighted
in terms of the three key 65
promotional activities the
company is emphasizing:
in-store demonstrations,
recipes, and cents-off cou-
pons. For space reasons,

APPENDIX A Building an Effective Marketing Plan

the company’s online strat-
egies are not shown in the
plan. See Chapters 17, 18, In-Store Demonstrations. In-store demonstrations enable consumers to try
and 19. Howlin’ Coyote products and discover their unique qualities. Demos will be
conducted regularly in all markets to increase awareness and trial purchases.

Recipes. Because the products’ flexibility of use is a key selling point, recipes are
Another bulleted list adds offered to consumers to stimulate use. The recipes are given at all in-store demonstra-
many details for the reader, tions, on the back of packages, through a mail-in recipe book offer, and in coupons
including methods of gain- sent by direct-mail or freestanding inserts.
ing customer awareness,
trial, and repeat purchases Cents-Off Coupons. To generate trial and repeat purchase of Howlin’ Coyote prod-
as Howlin’ Coyote enters ucts, coupons are distributed in four ways:
new metropolitan areas. ! In Sunday newspaper inserts. These inserts are widely read and help generate
! In-pack coupons. Each box of Howlin’ Coyote
The Place Strategy is chili will contain coupons for $1 off two more
described here in terms packages of the chili. These coupons will be
of both (1) the present included for the first three months the product is
method and (2) the new shipped to a new market. Doing so encourages
one to be used when the repeat purchases by new users.
increased sales volume ! Direct-mail chili coupons. Those households
makes it feasible. See that fit the Howlin’ Coyote demographics
Chapters 15 and 16. described previously will be mailed coupons.
! In-store demonstrations. Coupons will be passed
out at in-store demonstrations to give an addi-
All the marketing mix tional incentive to purchase.
decisions covered in the
Place (Distribution) Strategy
just-described marketing
Howlin’ Coyote is distributed in its present
program have both rev- Sunday newspaper inserts encourage
markets through a food distributor. The distributor
enue and expense effects. consumer trial and provide recipes to
buys the product, warehouses it, and then resells
These are summarized in show how Howlin’ Coyote chili can be
and delivers it to grocery retailers on a store-by- used in summer meals.
this section of the market-
store basis. As sales grow, we will shift to a more
ing plan.
efficient system using a broker who sells the prod-
ucts to retail chains and grocery wholesalers.

Note that this section con-

7. Financial Data and Projections
tains no introductory over-
view sentence. While the Past Sales Revenues
sentence is not essential, Historically, Howlin’ Coyote has had a steady increase in sales revenues since its
many readers prefer to introduction in 2007. In 2011, sales jumped spectacularly, due largely to new
see it to avoid the abrupt
start with Past Sales
The graph shows more
clearly the dramatic growth
of sales revenue than data
in a table would do.

The Five-Year Projections

section starts with the
judgment forecast of cases
sold and the resulting net Figure 2. Sales Revenues for Paradise
sales. Gross profit and Kitchens, Inc.
promotion strategies. Sales
then operating profit— $6,000
have continued to rise, but
critical for the company’s at a less dramatic rate. Sales $5,123
survival—are projected. An revenues appear in Figure 2.

actual plan often contains

Sales revenues ($000s)

many pages of computer- Five-Year Projections
generated spreadsheet Five-year financial projec- 3,174
projections, usually shown tions for Paradise Kitchens 2,428
in an appendix to the plan. appear below. These projec- 2,000
tions reflect the continuing
growth in the number of cases 1,000
sold (with eight packages 210 380
Because this table is very of Howlin’ Coyote chili 0
2007 2009 2011 2013 2015
short, it is woven into the per case). Year
text, rather than given a
figure number and a title.
Projections (000s)
Actual Year 1 Year 2 Year 3 Year 4 Year 5
Financial Element 2015 2016 2017 2018 2019 2020
Because the plan proposes
to enter 17 new metropoli- Cases sold (000s) 353 684 889 1,249 1,499 1,799
tan markets in the coming Net sales ($000s) $5,123 $9,913 $12,884 $18,111 $21,733 $26,080
five years (for a total of 20), Gross profit ($000s) $2,545 $4,820 $6,527 $8,831 $10,597 $12,717
it is not possible to simply Operating profit ($000s) $339 $985 $2,906 $2,805 $3,366 $4,039
extrapolate the trend in
Figure 2. Instead, manage- 8. Organization
ment’s judgment must be Paradise Kitchens’s present organization appears in Figure 3. It shows the four
used. Methods of making people reporting to the President. Below this level are both the full-time and part-time
sales forecasts—including employees of the Company.
the “lost horse” technique
Figure 3. The Paradise Kitchens Organization
used here—are discussed
in Chapter 8.
Board of Directors

The Organization of President & CEO

Paradise Kitchens
appears here. It
reflects the bare-bones
organizational structure
Director Vice President Director Finance Director
of successful small busi- Operations Marketing & Admin. Sales
nesses. Often a more
elaborate marketing
plan will show the new
positions expected to be
added as the firm grows.


APPENDIX A Building an Effective Marketing Plan

The Implementation Plan At present, Paradise Kitchens operates with full-time employees in only essential
shows how the company positions. It now augments its full-time staff with key advisors, consultants, and
will turn its plan into subcontractors. As the firm grows, people with special expertise will be added to
results. Charts are often the staff.
used to set deadlines and
assign responsibilities for 9. Implementation Plan
the many tactical market-
ing decisions needed to Introducing Howlin’ Coyote chilies to 17 new metropolitan markets is a complex
enter a new market. task and requires that creative promotional activities gain consumer awareness and
initial trial. Counting the three existing metropolitan markets in which Paradise Kitch-
ens competes, by 2020 it will be in 20 metropolitan markets or 53 percent of the top
38 U.S. metropolitan markets. The anticipated rollout schedule to enter these metro-
politan markets appears in Figure 4.
Figure 4. Rollout Schedule to Enter New U.S. Markets

The essence of Evaluation New Markets Cumulative Cumulative Percentage of

is comparing actual sales Year Added Each Year Markets 38 Major U.S. Markets
Last (2015) 2 5 16
with the targeted values
Year 1 (2016) 3 8 21
set in the plan and taking
Year 2 (2017) 4 12 29
appropriate actions. Note Year 3 (2018) 2 14 37
that the section briefly Year 4 (2019) 3 17 45
describes a contingency Year 5 (2020) 3 20 53

plan for alternative

actions, depending on The diverse regional tastes in chili will be monitored carefully to assess whether
how successful the entry minor modifications may be required in the chili recipes. As the rollout to new met-
into a new market turns ropolitan areas continues, Paradise Kitchens will assess manufacturing and distribu-
out to be. tion trade-offs. This is important in determining whether to start new production with
selected high-quality regional contract packers.

10. Evaluation
Monthly sales targets in cases have been set for Howlin’ Coyote chili for each
Various appendices may
metropolitan area. Actual case sales will be compared with these targets and
appear at the end of the
tactical marketing programs modified to reflect the unique sets of factors in each
plan, depending on the
metropolitan area.
plan’s purpose and audi-
ence. For example, résu-
més of key personnel or Appendix A. Biographical Sketches of Key Personnel
detailed financial spread-
sheets often appear in Appendix B. Detailed Financial Projections
appendices. For space
reasons these are not
shown here.

© 1996 Paradise Kitchens, Inc. All photos & ads reprinted with permission.
Appendix Notes
1. Personal interview with Arthur R. Kydd, St. Croix Management 5. Some of these points are adapted from Abrams, The Successful
Group. Business Plan, pp. 41–49; others were adapted from William
2. Examples of guides to writing marketing plans include William Rudelius, Guidelines for Technical Report Writing (Minneapo-
A. Cohen, The Marketing Plan, 5th ed. (New York: Wiley and lis: University of Minnesota, undated). See also William Strunk
Sons, 2006); and Roman G. Hiebing Jr., and Scott W. Cooper, Jr. and E. B. White, The Elements of Style, 4th ed. (Needham
The Successful Business Plan: A Disciplined and Comprehen- Heights, MA: Allyn & Bacon, 2000).
sive Approach (New York: McGraw-Hill, 2008). 6. Personal interviews with Randall F. and Leah E. Peters, Paradise
3. Examples of guides to writing business plans include Rhonda Kitchens, Inc.
Abrams, Business Plan in a Day, 2nd ed. (Palo Alto, CA: The 7. Rebecca Zimoch, “The Dawn of the Frozen Age,” Grocery
Planning Shop, a Division of Rhonda, Inc., 2009); Rhonda Headquarters, December 2002; see www.groceryheadquarters.
Abrams, The Successful Business Plan, 5th ed. (Palo Alto, CA: com.
The Planning Shop, a Division of Rhonda, Inc., 2010); Joseph 8. “Frozen Food Production in the U.S.: Market Research Report,”
A. Covello and Brian J. Hazelgren, The Complete Book of Busi- IBISWorld, March 2015; and Annie Gasparro, “Frozen Foods
ness Plans, 2nd ed. (Naperville, IL: Sourcebooks, 2006); Joseph Grow Cold as Tastes Shift to Fresher Fare,” The Wall Street
A. Covello and Brian J. Hazelgren, Your First Business Plan, Journal,, June 26, 2014.
5th ed. (Naperville, IL: Sourcebooks, 2005); and Mike 9. Chuck Van Hyning, NPD’s National Eating Trends; see
McKeever, How to Write a Business Plan, 8th ed. (Berkeley,
CA: Nolo, 2007). 10. Jeffrey M. Humphreys, “The Multicultural Economy 2009,”
4. Abrams, The Successful Business Plan, p. 41. Georgia Business and Economic Conditions 69, no. 3 (Third
Quarter, 2009), pp. 1–13.