Chapter 2

Strategic Planning and the Marketing

Process
 Formal Planning
• Many companies operate without formal plans, yet
these plans can provide many benefits such as:
– Encouraging management to think ahead systematically.
– Forcing managers to clarify objectives and policies.
– Better coordination of company efforts.
– Clearer performance standards for control.
– Helping the company to anticipate and respond quickly to
environmental changes and sudden developments.

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 Strategic Planning

Strategic Planning is the Process of

Developing and Maintaining a Strategic Fit
Between the Organization’s Goals and
Capabilities and Its Changing Marketing
Opportunities.

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 Steps in Strategic Planning
(Fig. 2.1)
Business unit,
Corporate Level product,
and market
level

Planning,
Defining the Setting Designing marketing,
Company Company the Business
Objectives
and other
Mission Portfolio
and Goals functional
Strategies

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 Defining the Company’s
Business and Mission
A Mission Statement is a Statement of the Organization’s
Purpose.
Market Oriented
Characteristics of
Realistic a Good Mission
Statement:
Specific

Fit Market Environment

Distinctive Competencies

R. Glenn Richey Motivating 5

 Setting Company Objectives and
Goals

M is s io n
S ta te m e n t

M a r k e t in g M a r k e t in g M a r k e t in g
O b je c t iv e # 1 O b je c t iv e # 2 O b je c t iv e # 3

M a r k e t in g M a r k e t in g M a r k e t in g M a r k e t in g M a r k e t in g
S tra te g y S tra te g y S tra te g y S tra te g y S tra te g y

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 Designing the Business
Portfolio
• The business portfolio is the collection of businesses
and products that make up the company.
• The company must:
– analyze its current business portfolio or Strategic Business
Units (SBU’s)
– decide which SBU’s should receive more, less, or no
investment
– develop growth strategies for adding new products or
businesses to the portfolio

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 Analyzing Current SBU’s:
Boston Consulting Group Approach
Relative Market Share
High Low
Market Growth Rate

Stars Question Marks

High

• High growth & share • High growth, low share

• Profit potential • Build into Stars or phase out
• May need heavy • Require cash to hold
investment to grow market share

Cash Cows Dogs

• Low growth, high share • Low growth & share
Low

• Established, successful • Low profit potential

SBU’s
•Produce cash

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 Analyzing Current SBU’s:
GE’s Strategic Business-Planning Grid

Business Strength
Strong Average Weak
C
Attractiveness

High
A
Medium
Industry

B D

Low

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 Problems With Matrix
Approaches
Can be Difficult, Time-Consuming, & Costly to Implement

Difficult to Define SBU’s & Measure Market Share/ Growth

Focus on Current Businesses, But Not future Planning

Can Lead to Unwise Expansion or Diversification

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 Developing Growth Strategies in
the Age of Connectedness
Product/ Market Expansion Grid

Existing New
Products Products
Existing 1. Market 3. Product
Markets Penetration Development

New 2. Market
4. Diversification
Markets Development

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 Product/ Market Expansion Grid
• Market Penetration: making more sales to
current customers without changing its
products.
– How? Add new stores in current market areas,
improve advertising, prices, service or store design.
 Market Development: develop new
markets for its current products.
 How? Identify new demographic or
geographic markets.
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Product/ Market Expansion Grid
• Product Development: offering modified or
new products to current markets.
– How? New styles, flavors, colors, or modified
products.
• Diversification: new products for new
markets.
– How? Start up or buy new businesses.

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 Discussion Connections
• Beyond evaluating current business, designing the
business portfolio involves finding future businesses and
products the company should consider.
• Apply the product/ market expansion grid to assess how
one of the following companies might grow:
– Dell computer
– Kodak
– Levi-Strauss
– E*Trade online investment services
• Assign each of the choices to a separate small group,
have the group develop the answer, then discuss each
approach in class. R. Glenn Richey 14
 Planning Cross-Functional
Strategies

Marketing’s Role in Strategic Planning

Inputs to
Guiding Designs
Strategic
Philosophy Strategies
Planners

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 The Marketing Process
(Fig. 2.5)
Demographic- Marketing Technological-
Economic Intermediaries Natural
Environment Environment
ys ng

M lan
ar n
al eti

P
is

ke in
An ark

Product

tin g
M

g
Target
Suppliers Place Price Publics
Consumers

n
tio
en g
M Co n

ta
em i n
ar tr

Promotion

pl ket
k e ol

Im a r
tin

M
g

Political- Social-
Legal Competitors Cultural
Environment R. Glenn Richey Environment16
 Connecting With Customers
• Market Segmentation: determining distinct groups of
buyers (segments) with different needs, characteristics,
or behavior.

• Market Targeting: evaluating each segment’s

attractiveness and selecting one or more segments to
enter.

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 Connecting With Customers

Market Positioning: arranging for a product to

occupy a clear, distinctive, and desirable place
relative to competing products in the minds of
target consumers. i.e. Chevy Blazer is “like a rock.”

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Marketing Strategies for
Competitive Advantage

Strategy a Company
Adopts
Depends on Its
Industry Position

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 Developing the Marketing Mix
Product Price
“Goods-and-service” Amount of money
combination that a that consumers
company offers a have to pay to
target market Obtain the product

Target
Customers

Intended
Positioning

Activities that Company activities

persuade target that make the
customers to buy product available
the product
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Promotion Place
 The 4 P’s & 4C’s of the
Marketing Mix
• 4 P’s • 4 C’s
– Product – Customer Solution
– Price – Customer Cost
– Place – Convenience
– Promotion – Communication

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 Managing the Marketing Effort
(Fig. 2.7)
Marketing Analysis of Company’s Situation

Contro
Marketing Marketing l
Planning Implementation Measure
Results
Develop Strategic Carry Out
Plans The Evaluate
Plans Results
Develop
Marketing Take
Corrective
Plans
Action

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 Contents of a Marketing Plan
(Table 2.2)
Executive Summary
Current Marketing Situation
Threats and Opportunity Analysis
Objectives and Issues
Marketing Strategy
Action Programs
Budgets
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Marketing Implementation
Marketing Strategy

Decision
Human
Organizational and
Resources
Structure Reward

Action Climate and

Programs Culture

Implementation

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Marketing Performance
 Marketing Department
Organization

Functional

Combination
Plan Geographic
Ways to
Carry Out
Marketing
Activities
Market Product
Management Management
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 Marketing Control Process
(Fig. 2.8)

Set Measure Evaluate Take

Goals Performanc Performanc Corrective
e e Action

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 Review of Concept Connections
• Explain companywide strategic planning and its four
steps.
• Discuss how to design business portfolios and growth
strategies.
• Explain functional planning strategies and asses
marketing’s role in strategic planning.
• Describe the marketing process and the forces that
influence it.
• List the marketing management functions, including the
elements of a marketing plan.
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