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Chapter 2
Chapter 2
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Chapter 2
Chapter 2
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Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
Chapter 2
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Chapter 2

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  • The title of Chapter 2 implies that businesses need to plan for a wide amount of factors in the marketplace in order to be successful and achieve an advantage in the marketplace. In today’s dynamic environment, strategic planning certainly does provide better tools and resources to help survive, compete, and thrive in the marketplace. \n\nIn this chapter, students learn that ethically sound strategic planning can take place at both the corporate and the SBU level in large firms and in a single stage in smaller businesses. Businesses conduct functional (including marketing) and operational planning. Successful businesses continually scan the organization’s internal environment and external business environment. By carefully following these strategies in an ethical manner, undeniably businesses can create their own advantage.\n\n
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  • Planning for the future is the key to prosperity. Business planning is an ongoing process of making decisions that guides the firm both in the short term and for the long term. Planning identifies and builds on a firm’s strengths, and it helps managers at all levels make informed decisions in a changing business environment.\n\nA business plan is a plan that includes the decisions that guide the entire organization.\n \nA marketing plan is a document that describes the marketing environment, outlines the marketing objectives and strategy, and identifies who will be responsible for carrying out each part of the marketing strategy.\n\nChapter 2 includes a pullout template of a marketing plan students can use as they make your way through the book. The template provides a framework that will enable students to organize marketing concepts by chapter and create a solid marketing plan of their own. The back of the template has a world map. Encourage students to keep this pullout as a handy reference after the class. Use Appendix A at the end of the book (pages 532–543) to show students a sample marketing plan. \n\n\n
  • A list of highly publicized corporate scandals (Enron, WorldCom, Martha Stewart, & the U.S. mortgage banking industry meltdown) emphasize the importance of making ethical marketing decisions and raises the issue of how damaging unethical practices can be to society at large.\n\nhttp://www.businessweek.com/magazine/content/06_52/b4015155.htm\n\nEthics are rules of conduct—how most people in a culture judge what is right and what is wrong. Business ethics are basic values that guide a firm’s behavior.\n\nMany firms develop their own code of ethics—written standards of behavior to which everyone in the organization must\nsubscribe—as part of the planning process. These documents eliminate confusion about what the firm considers to be ethically acceptable behavior by its people, and also set standards for how the organization interacts with its stakeholders.\n
  • A list of highly publicized corporate scandals (Enron, WorldCom, Martha Stewart, & the U.S. mortgage banking industry meltdown) emphasize the importance of making ethical marketing decisions and raises the issue of how damaging unethical practices can be to society at large.\n\nhttp://www.businessweek.com/magazine/content/06_52/b4015155.htm\n\nEthics are rules of conduct—how most people in a culture judge what is right and what is wrong. Business ethics are basic values that guide a firm’s behavior.\n\nMany firms develop their own code of ethics—written standards of behavior to which everyone in the organization must\nsubscribe—as part of the planning process. These documents eliminate confusion about what the firm considers to be ethically acceptable behavior by its people, and also set standards for how the organization interacts with its stakeholders.\n
  • Strategic planning is the managerial decision process that matches the firm’s resources (such as its financial assets and workforce) and capabilities (the things it is able to do well because of its expertise and experience) to its market opportunities for long-term growth.\n\nStrategic business units (SBUs)—individual units representing different areas of business within a firm that are different enough to each have their own mission, business objectives, resources, managers, and competitors.\n\nThe next level of planning is functional planning (sometimes called “tactical planning”). This level gets its name because the various functional areas of the firm, such as marketing, finance, and human resources get involved. Vice presidents or functional directors usually do this. We refer to what the functional planning marketers do as marketing planning.\n\nOperational planning focuses on the day-to-day execution of the functional plans and includes detailed annual, semiannual, or quarterly plans.\n\n
  • Step 1: Define the Mission\nQuestions asked in this stage include: What business are we in? What customers should we serve? How should we develop the firm’s capabilities and focus its efforts? Answers to these questions become part of the mission statement, a formal document that describes the organization’s overall purpose and what it hopes to achieve in terms of its customers, products, and resources. The ideal mission statement is not too broad, too narrow, or too shortsighted.\n
  • Step 1: Define the Mission\nQuestions asked in this stage include: What business are we in? What customers should we serve? How should we develop the firm’s capabilities and focus its efforts? Answers to these questions become part of the mission statement, a formal document that describes the organization’s overall purpose and what it hopes to achieve in terms of its customers, products, and resources. The ideal mission statement is not too broad, too narrow, or too shortsighted.\n
  • Step 1: Define the Mission\nQuestions asked in this stage include: What business are we in? What customers should we serve? How should we develop the firm’s capabilities and focus its efforts? Answers to these questions become part of the mission statement, a formal document that describes the organization’s overall purpose and what it hopes to achieve in terms of its customers, products, and resources. The ideal mission statement is not too broad, too narrow, or too shortsighted.\n
  • Step 1: Define the Mission\nQuestions asked in this stage include: What business are we in? What customers should we serve? How should we develop the firm’s capabilities and focus its efforts? Answers to these questions become part of the mission statement, a formal document that describes the organization’s overall purpose and what it hopes to achieve in terms of its customers, products, and resources. The ideal mission statement is not too broad, too narrow, or too shortsighted.\n
  • Step 1: Define the Mission\nQuestions asked in this stage include: What business are we in? What customers should we serve? How should we develop the firm’s capabilities and focus its efforts? Answers to these questions become part of the mission statement, a formal document that describes the organization’s overall purpose and what it hopes to achieve in terms of its customers, products, and resources. The ideal mission statement is not too broad, too narrow, or too shortsighted.\n
  • Step 1: Define the Mission\nQuestions asked in this stage include: What business are we in? What customers should we serve? How should we develop the firm’s capabilities and focus its efforts? Answers to these questions become part of the mission statement, a formal document that describes the organization’s overall purpose and what it hopes to achieve in terms of its customers, products, and resources. The ideal mission statement is not too broad, too narrow, or too shortsighted.\n
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  • The title of Chapter 2 implies that businesses need to plan for a wide amount of factors in the marketplace in order to be successful and achieve an advantage in the marketplace. In today’s dynamic environment, strategic planning certainly does provide better tools and resources to help survive, compete, and thrive in the marketplace. \n\nIn this chapter, students learn that ethically sound strategic planning can take place at both the corporate and the SBU level in large firms and in a single stage in smaller businesses. Businesses conduct functional (including marketing) and operational planning. Successful businesses continually scan the organization’s internal environment and external business environment. By carefully following these strategies in an ethical manner, undeniably businesses can create their own advantage.\n\n
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  • Step 2: Evaluate the Internal and External Environment\nThis is referred to as a situation analysis, environmental analysis, or sometimes a business review. The analysis includes a discussion of the firm’s internal environment, which can identify a firm’s strengths and weaknesses, as well as the external environment in which the firm does business so the firm can identify opportunities and threats.\n\nThe internal environment is all controllable elements inside a firm that influence how well the firm operates. Examples include the firm’s people, its technologies, physical facilities, financial stability, and relationships with suppliers.\n\nThe external environment consists of elements outside the firm that may affect it either positively or negatively. The external environment for today’s businesses is global, so managers/marketers must consider elements such as the economy, competition, technology, law, ethics, and sociocultural trends. Unlike elements of the internal environment that management can control to a large degree, the firm can’t directly control these external factors, so management must respond to them through its planning process.\n\nStep 3: Set Organizational or SBU Objectives\nOrganizational objectives are a direct outgrowth of the mission statement and broadly identify what the firm hopes to accomplish within the general time frame of the firm’s long-range business plan. Objectives need to be specific, measurable, attainable, and sustainable. Objectives may relate to a number of elements such as revenue and sales, profitability, the firm’s standing in the market, or return on investment. \nWeb link: http://www.pg.com/en_US/products/all_products/index.shtml (Explore Procter & Gamble’s family of products)\n
  • Step 2: Evaluate the Internal and External Environment\nThis is referred to as a situation analysis, environmental analysis, or sometimes a business review. The analysis includes a discussion of the firm’s internal environment, which can identify a firm’s strengths and weaknesses, as well as the external environment in which the firm does business so the firm can identify opportunities and threats.\n\nThe internal environment is all controllable elements inside a firm that influence how well the firm operates. Examples include the firm’s people, its technologies, physical facilities, financial stability, and relationships with suppliers.\n\nThe external environment consists of elements outside the firm that may affect it either positively or negatively. The external environment for today’s businesses is global, so managers/marketers must consider elements such as the economy, competition, technology, law, ethics, and sociocultural trends. Unlike elements of the internal environment that management can control to a large degree, the firm can’t directly control these external factors, so management must respond to them through its planning process.\n\nStep 3: Set Organizational or SBU Objectives\nOrganizational objectives are a direct outgrowth of the mission statement and broadly identify what the firm hopes to accomplish within the general time frame of the firm’s long-range business plan. Objectives need to be specific, measurable, attainable, and sustainable. Objectives may relate to a number of elements such as revenue and sales, profitability, the firm’s standing in the market, or return on investment. \nWeb link: http://www.pg.com/en_US/products/all_products/index.shtml (Explore Procter & Gamble’s family of products)\n
  • Step 2: Evaluate the Internal and External Environment\nThis is referred to as a situation analysis, environmental analysis, or sometimes a business review. The analysis includes a discussion of the firm’s internal environment, which can identify a firm’s strengths and weaknesses, as well as the external environment in which the firm does business so the firm can identify opportunities and threats.\n\nThe internal environment is all controllable elements inside a firm that influence how well the firm operates. Examples include the firm’s people, its technologies, physical facilities, financial stability, and relationships with suppliers.\n\nThe external environment consists of elements outside the firm that may affect it either positively or negatively. The external environment for today’s businesses is global, so managers/marketers must consider elements such as the economy, competition, technology, law, ethics, and sociocultural trends. Unlike elements of the internal environment that management can control to a large degree, the firm can’t directly control these external factors, so management must respond to them through its planning process.\n\nStep 3: Set Organizational or SBU Objectives\nOrganizational objectives are a direct outgrowth of the mission statement and broadly identify what the firm hopes to accomplish within the general time frame of the firm’s long-range business plan. Objectives need to be specific, measurable, attainable, and sustainable. Objectives may relate to a number of elements such as revenue and sales, profitability, the firm’s standing in the market, or return on investment. \nWeb link: http://www.pg.com/en_US/products/all_products/index.shtml (Explore Procter & Gamble’s family of products)\n
  • Step 2: Evaluate the Internal and External Environment\nThis is referred to as a situation analysis, environmental analysis, or sometimes a business review. The analysis includes a discussion of the firm’s internal environment, which can identify a firm’s strengths and weaknesses, as well as the external environment in which the firm does business so the firm can identify opportunities and threats.\n\nThe internal environment is all controllable elements inside a firm that influence how well the firm operates. Examples include the firm’s people, its technologies, physical facilities, financial stability, and relationships with suppliers.\n\nThe external environment consists of elements outside the firm that may affect it either positively or negatively. The external environment for today’s businesses is global, so managers/marketers must consider elements such as the economy, competition, technology, law, ethics, and sociocultural trends. Unlike elements of the internal environment that management can control to a large degree, the firm can’t directly control these external factors, so management must respond to them through its planning process.\n\nStep 3: Set Organizational or SBU Objectives\nOrganizational objectives are a direct outgrowth of the mission statement and broadly identify what the firm hopes to accomplish within the general time frame of the firm’s long-range business plan. Objectives need to be specific, measurable, attainable, and sustainable. Objectives may relate to a number of elements such as revenue and sales, profitability, the firm’s standing in the market, or return on investment. \nWeb link: http://www.pg.com/en_US/products/all_products/index.shtml (Explore Procter & Gamble’s family of products)\n
  • A SWOT analysis, a summary of the ideas developed in the situation analysis, allows managers to focus clearly on the meaningful strengths (S) and weaknesses (W) in the firm’s internal environment and opportunities (O) and threats (T) coming from outside the firm (the external environment).\n
  • 4.4Step 4: Establish the Business Portfolio\nFor companies with several different SBUs, strategic planning includes making decisions about how to best allocate resources across these businesses to ensure growth for the total organization. Each SBU has its own focus within the firm’s overall strategic plan, and each has its own target market and strategies for reaching its objectives.\n\nJust as we call the collection of different stocks an investor owns a portfolio, the range of different businesses that a large firm operates is its business portfolio.\n\nPortfolio analysis is a tool management uses to assess the potential of a firm’s business portfolio. It helps management decide which of its current SBUs should receive more—or less—of the firm’s resources, and which of its SBUs are most consistent with the firm’s overall mission.\n\nThe BCG growth-market share matrix is one model managers use to assist in the portfolio management process. The BCG model focuses on determining the potential of a firm’s existing successful SBUs to generate cash that the firm can then use to invest in other businesses.\n\nSBUs are categorized as:\n\nStars are SBUs with products that have a dominant market\nshare in high-growth markets.\nCash cows have a dominant market share in a low-growthpotential market.\nQuestion marks—sometimes called “problem children”—are SBUs with low market shares in fast-growth markets.\nDogs have a small share of a slow-growth market.\n\n
  • 4.4Step 4: Establish the Business Portfolio\nFor companies with several different SBUs, strategic planning includes making decisions about how to best allocate resources across these businesses to ensure growth for the total organization. Each SBU has its own focus within the firm’s overall strategic plan, and each has its own target market and strategies for reaching its objectives.\n\nJust as we call the collection of different stocks an investor owns a portfolio, the range of different businesses that a large firm operates is its business portfolio.\n\nPortfolio analysis is a tool management uses to assess the potential of a firm’s business portfolio. It helps management decide which of its current SBUs should receive more—or less—of the firm’s resources, and which of its SBUs are most consistent with the firm’s overall mission.\n\nThe BCG growth-market share matrix is one model managers use to assist in the portfolio management process. The BCG model focuses on determining the potential of a firm’s existing successful SBUs to generate cash that the firm can then use to invest in other businesses.\n\nSBUs are categorized as:\n\nStars are SBUs with products that have a dominant market\nshare in high-growth markets.\nCash cows have a dominant market share in a low-growthpotential market.\nQuestion marks—sometimes called “problem children”—are SBUs with low market shares in fast-growth markets.\nDogs have a small share of a slow-growth market.\n\n
  • 4.4Step 4: Establish the Business Portfolio\nFor companies with several different SBUs, strategic planning includes making decisions about how to best allocate resources across these businesses to ensure growth for the total organization. Each SBU has its own focus within the firm’s overall strategic plan, and each has its own target market and strategies for reaching its objectives.\n\nJust as we call the collection of different stocks an investor owns a portfolio, the range of different businesses that a large firm operates is its business portfolio.\n\nPortfolio analysis is a tool management uses to assess the potential of a firm’s business portfolio. It helps management decide which of its current SBUs should receive more—or less—of the firm’s resources, and which of its SBUs are most consistent with the firm’s overall mission.\n\nThe BCG growth-market share matrix is one model managers use to assist in the portfolio management process. The BCG model focuses on determining the potential of a firm’s existing successful SBUs to generate cash that the firm can then use to invest in other businesses.\n\nSBUs are categorized as:\n\nStars are SBUs with products that have a dominant market\nshare in high-growth markets.\nCash cows have a dominant market share in a low-growthpotential market.\nQuestion marks—sometimes called “problem children”—are SBUs with low market shares in fast-growth markets.\nDogs have a small share of a slow-growth market.\n\n
  • 4.4Step 4: Establish the Business Portfolio\nFor companies with several different SBUs, strategic planning includes making decisions about how to best allocate resources across these businesses to ensure growth for the total organization. Each SBU has its own focus within the firm’s overall strategic plan, and each has its own target market and strategies for reaching its objectives.\n\nJust as we call the collection of different stocks an investor owns a portfolio, the range of different businesses that a large firm operates is its business portfolio.\n\nPortfolio analysis is a tool management uses to assess the potential of a firm’s business portfolio. It helps management decide which of its current SBUs should receive more—or less—of the firm’s resources, and which of its SBUs are most consistent with the firm’s overall mission.\n\nThe BCG growth-market share matrix is one model managers use to assist in the portfolio management process. The BCG model focuses on determining the potential of a firm’s existing successful SBUs to generate cash that the firm can then use to invest in other businesses.\n\nSBUs are categorized as:\n\nStars are SBUs with products that have a dominant market\nshare in high-growth markets.\nCash cows have a dominant market share in a low-growthpotential market.\nQuestion marks—sometimes called “problem children”—are SBUs with low market shares in fast-growth markets.\nDogs have a small share of a slow-growth market.\n\n
  • 4.4Step 4: Establish the Business Portfolio\nFor companies with several different SBUs, strategic planning includes making decisions about how to best allocate resources across these businesses to ensure growth for the total organization. Each SBU has its own focus within the firm’s overall strategic plan, and each has its own target market and strategies for reaching its objectives.\n\nJust as we call the collection of different stocks an investor owns a portfolio, the range of different businesses that a large firm operates is its business portfolio.\n\nPortfolio analysis is a tool management uses to assess the potential of a firm’s business portfolio. It helps management decide which of its current SBUs should receive more—or less—of the firm’s resources, and which of its SBUs are most consistent with the firm’s overall mission.\n\nThe BCG growth-market share matrix is one model managers use to assist in the portfolio management process. The BCG model focuses on determining the potential of a firm’s existing successful SBUs to generate cash that the firm can then use to invest in other businesses.\n\nSBUs are categorized as:\n\nStars are SBUs with products that have a dominant market\nshare in high-growth markets.\nCash cows have a dominant market share in a low-growthpotential market.\nQuestion marks—sometimes called “problem children”—are SBUs with low market shares in fast-growth markets.\nDogs have a small share of a slow-growth market.\n\n
  • 4.4Step 4: Establish the Business Portfolio\nFor companies with several different SBUs, strategic planning includes making decisions about how to best allocate resources across these businesses to ensure growth for the total organization. Each SBU has its own focus within the firm’s overall strategic plan, and each has its own target market and strategies for reaching its objectives.\n\nJust as we call the collection of different stocks an investor owns a portfolio, the range of different businesses that a large firm operates is its business portfolio.\n\nPortfolio analysis is a tool management uses to assess the potential of a firm’s business portfolio. It helps management decide which of its current SBUs should receive more—or less—of the firm’s resources, and which of its SBUs are most consistent with the firm’s overall mission.\n\nThe BCG growth-market share matrix is one model managers use to assist in the portfolio management process. The BCG model focuses on determining the potential of a firm’s existing successful SBUs to generate cash that the firm can then use to invest in other businesses.\n\nSBUs are categorized as:\n\nStars are SBUs with products that have a dominant market\nshare in high-growth markets.\nCash cows have a dominant market share in a low-growthpotential market.\nQuestion marks—sometimes called “problem children”—are SBUs with low market shares in fast-growth markets.\nDogs have a small share of a slow-growth market.\n\n
  • 4.4Step 4: Establish the Business Portfolio\nFor companies with several different SBUs, strategic planning includes making decisions about how to best allocate resources across these businesses to ensure growth for the total organization. Each SBU has its own focus within the firm’s overall strategic plan, and each has its own target market and strategies for reaching its objectives.\n\nJust as we call the collection of different stocks an investor owns a portfolio, the range of different businesses that a large firm operates is its business portfolio.\n\nPortfolio analysis is a tool management uses to assess the potential of a firm’s business portfolio. It helps management decide which of its current SBUs should receive more—or less—of the firm’s resources, and which of its SBUs are most consistent with the firm’s overall mission.\n\nThe BCG growth-market share matrix is one model managers use to assist in the portfolio management process. The BCG model focuses on determining the potential of a firm’s existing successful SBUs to generate cash that the firm can then use to invest in other businesses.\n\nSBUs are categorized as:\n\nStars are SBUs with products that have a dominant market\nshare in high-growth markets.\nCash cows have a dominant market share in a low-growthpotential market.\nQuestion marks—sometimes called “problem children”—are SBUs with low market shares in fast-growth markets.\nDogs have a small share of a slow-growth market.\n\n
  • 4.4Step 4: Establish the Business Portfolio\nFor companies with several different SBUs, strategic planning includes making decisions about how to best allocate resources across these businesses to ensure growth for the total organization. Each SBU has its own focus within the firm’s overall strategic plan, and each has its own target market and strategies for reaching its objectives.\n\nJust as we call the collection of different stocks an investor owns a portfolio, the range of different businesses that a large firm operates is its business portfolio.\n\nPortfolio analysis is a tool management uses to assess the potential of a firm’s business portfolio. It helps management decide which of its current SBUs should receive more—or less—of the firm’s resources, and which of its SBUs are most consistent with the firm’s overall mission.\n\nThe BCG growth-market share matrix is one model managers use to assist in the portfolio management process. The BCG model focuses on determining the potential of a firm’s existing successful SBUs to generate cash that the firm can then use to invest in other businesses.\n\nSBUs are categorized as:\n\nStars are SBUs with products that have a dominant market\nshare in high-growth markets.\nCash cows have a dominant market share in a low-growthpotential market.\nQuestion marks—sometimes called “problem children”—are SBUs with low market shares in fast-growth markets.\nDogs have a small share of a slow-growth market.\n\n
  • Step 5: Develop Growth Strategies\nPart of the strategic planning at the SBU level entails evaluating growth strategies. The product-market growth matrix is used to analyze different growth strategies. The matrix provides four different fundamental marketing strategies.\n•Market penetration: increasing sales of existing products to existing markets.\n•Market development: introducing existing products to new markets.\n•Product development: selling new products in existing markets.\n•Diversification: emphasizing both new products and new markets to achieve growth.\n\n
  • Step 5: Develop Growth Strategies\nPart of the strategic planning at the SBU level entails evaluating growth strategies. The product-market growth matrix is used to analyze different growth strategies. The matrix provides four different fundamental marketing strategies.\n•Market penetration: increasing sales of existing products to existing markets.\n•Market development: introducing existing products to new markets.\n•Product development: selling new products in existing markets.\n•Diversification: emphasizing both new products and new markets to achieve growth.\n\n
  • Step 5: Develop Growth Strategies\nPart of the strategic planning at the SBU level entails evaluating growth strategies. The product-market growth matrix is used to analyze different growth strategies. The matrix provides four different fundamental marketing strategies.\n•Market penetration: increasing sales of existing products to existing markets.\n•Market development: introducing existing products to new markets.\n•Product development: selling new products in existing markets.\n•Diversification: emphasizing both new products and new markets to achieve growth.\n\n
  • Step 5: Develop Growth Strategies\nPart of the strategic planning at the SBU level entails evaluating growth strategies. The product-market growth matrix is used to analyze different growth strategies. The matrix provides four different fundamental marketing strategies.\n•Market penetration: increasing sales of existing products to existing markets.\n•Market development: introducing existing products to new markets.\n•Product development: selling new products in existing markets.\n•Diversification: emphasizing both new products and new markets to achieve growth.\n\n
  • Step 5: Develop Growth Strategies\nPart of the strategic planning at the SBU level entails evaluating growth strategies. The product-market growth matrix is used to analyze different growth strategies. The matrix provides four different fundamental marketing strategies.\n•Market penetration: increasing sales of existing products to existing markets.\n•Market development: introducing existing products to new markets.\n•Product development: selling new products in existing markets.\n•Diversification: emphasizing both new products and new markets to achieve growth.\n\n
  • The following steps are involved in the marketing planning process:\nStep 1: Perform a Situation Analysis\nThe first step in developing a marketing plan is for marketing managers to conduct an analysis of the marketing environment. To do this, managers build on the company’s SWOT analysis by searching out information about the environment that specifically affects the marketing plan.\nStep 2: Set Marketing Objectives\nMarketing objectives are specific to the firm’s brands, sizes, product features, and other marketing-mix elements\nStep 3: Develop Marketing Strategies\nMarketing strategies are decisions about what activities must be accomplished to achieve the marketing objectives. Usually this means deciding which markets to target and actually developing the marketing mix strategies (product, price, promotion, and place [supply chain]) to support how the product is positioned in the market.\nSelect a Target Market\nThe target market is the market segment(s) a firm selects because it believes its offerings are most likely to win those customers. The firm assesses the potential demand—the number of consumers it believes are willing and able to pay for its products—and decides if it is able to create a sustainable competitive advantage in the marketplace among target consumers.\n•Product strategies include decisions such as product design, packaging, branding, support services (such as maintenance), if there will be variations of the product, and what product features will provide the unique benefits targeted customers want.\n•The pricing strategy determines how much a firm charges for a product. In addition to setting prices for the final consumer, pricing strategies usually establish prices the company will charge to wholesalers and retailers. A firm may base its pricing strategies on costs, demand, or the prices of competing products.\n•A promotional strategy is how marketers communicate a product’s value proposition to the target market. Marketers use promotion strategies to develop the product’s message and the mix of advertising, sales promotion, public relations and publicity, direct marketing, and personal selling that will deliver the message.\n•Distribution strategies outline how, when, and where the firm will make the product available to targeted customers (the place component). In developing a distribution strategy, marketers must decide whether to sell the product directly to the final customer or to sell through retailers and wholesalers.\nStep 4: Implement and Control the Marketing Plan\nIn practice, marketers spend much of their time managing the various elements involved in implementing the marketing plan.\n\nDuring the implementation phase, marketers must have some means to determine to what degree they are actually meeting their stated marketing objectives. Often called control, this formal process of monitoring progress entails three steps: (1) measuring actual performance, (2) comparing this performance to the established marketing objectives or strategies, and (3) making adjustments to the objectives or strategies on the basis of this analysis.\n\nEffective control requires appropriate marketing metrics, which, as we discussed in Chapter 1, are concrete measures of various aspects of marketing performance. You will note throughout the book a strong emphasis on metrics within each chapter. Today’s CEOs are keen on quantifying just how an investment in marketing has an impact on the firm’s success, financially and otherwise. Think of this overall notion as return on marketing investment (ROMI).\n\nHow does the implementation and control step actually manifest itself within a marketing plan? One very convenient way is through the inclusion of a series of action plans that support the various marketing objectives and strategies within the plan. We sometimes refer to action plans as “marketing programs.” The best way to use action plans is by including a separate action plan for each important element involved in implementing the marketing plan.\n\nFour elements of the action plan form the overall implementation and control portion of the marketing plan.\n•Responsibility\n•Time line\n•Budget\nMeasurements and controls\n
  • The following steps are involved in the marketing planning process:\nStep 1: Perform a Situation Analysis\nThe first step in developing a marketing plan is for marketing managers to conduct an analysis of the marketing environment. To do this, managers build on the company’s SWOT analysis by searching out information about the environment that specifically affects the marketing plan.\nStep 2: Set Marketing Objectives\nMarketing objectives are specific to the firm’s brands, sizes, product features, and other marketing-mix elements\nStep 3: Develop Marketing Strategies\nMarketing strategies are decisions about what activities must be accomplished to achieve the marketing objectives. Usually this means deciding which markets to target and actually developing the marketing mix strategies (product, price, promotion, and place [supply chain]) to support how the product is positioned in the market.\nSelect a Target Market\nThe target market is the market segment(s) a firm selects because it believes its offerings are most likely to win those customers. The firm assesses the potential demand—the number of consumers it believes are willing and able to pay for its products—and decides if it is able to create a sustainable competitive advantage in the marketplace among target consumers.\n•Product strategies include decisions such as product design, packaging, branding, support services (such as maintenance), if there will be variations of the product, and what product features will provide the unique benefits targeted customers want.\n•The pricing strategy determines how much a firm charges for a product. In addition to setting prices for the final consumer, pricing strategies usually establish prices the company will charge to wholesalers and retailers. A firm may base its pricing strategies on costs, demand, or the prices of competing products.\n•A promotional strategy is how marketers communicate a product’s value proposition to the target market. Marketers use promotion strategies to develop the product’s message and the mix of advertising, sales promotion, public relations and publicity, direct marketing, and personal selling that will deliver the message.\n•Distribution strategies outline how, when, and where the firm will make the product available to targeted customers (the place component). In developing a distribution strategy, marketers must decide whether to sell the product directly to the final customer or to sell through retailers and wholesalers.\nStep 4: Implement and Control the Marketing Plan\nIn practice, marketers spend much of their time managing the various elements involved in implementing the marketing plan.\n\nDuring the implementation phase, marketers must have some means to determine to what degree they are actually meeting their stated marketing objectives. Often called control, this formal process of monitoring progress entails three steps: (1) measuring actual performance, (2) comparing this performance to the established marketing objectives or strategies, and (3) making adjustments to the objectives or strategies on the basis of this analysis.\n\nEffective control requires appropriate marketing metrics, which, as we discussed in Chapter 1, are concrete measures of various aspects of marketing performance. You will note throughout the book a strong emphasis on metrics within each chapter. Today’s CEOs are keen on quantifying just how an investment in marketing has an impact on the firm’s success, financially and otherwise. Think of this overall notion as return on marketing investment (ROMI).\n\nHow does the implementation and control step actually manifest itself within a marketing plan? One very convenient way is through the inclusion of a series of action plans that support the various marketing objectives and strategies within the plan. We sometimes refer to action plans as “marketing programs.” The best way to use action plans is by including a separate action plan for each important element involved in implementing the marketing plan.\n\nFour elements of the action plan form the overall implementation and control portion of the marketing plan.\n•Responsibility\n•Time line\n•Budget\nMeasurements and controls\n
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  • Transcript

    • 1. Chapter 2Module 1
    • 2. Objectives• Understand what business planning means• Understand the big picture in business and marketing planning• Understand the strategic planning process• Understand the steps in marketing planning
    • 3. Business PlanningBusiness planning is an ongoing process of preparing for thefuture, then taking steps to reach goals in the short and long term. Itguides the entire organization.- helps managers make decisions in a changing business environment.A Marketing Plan is a document that details and describes themarketing environment, marketing strategies and objectives, andidentifies who is responsible for carrying out tasks. It should cover allof the 4 P’s.Consider Ethical decisions up front..... See the marketing plan outline pullout in your book!
    • 4. Marketing EthicsBusiness Ethics are basic values that guide a firm’s behavior andinfluence it’s business planning.Codes of Ethics help firms avoid confusion on the right or wrongdecision. These set of standards should be followed by everyone in theorganization.
    • 5. Marketing EthicsBusiness Ethics are basic values that guide a firm’s behavior andinfluence it’s business planning.Codes of Ethics help firms avoid confusion on the right or wrongdecision. These set of standards should be followed by everyone in theorganization. neral ics under the “Ge AMA Code of Eth that point #2, it states Norms” section in ting oster trust in the marke“Marketers must f k of any marketpla ce thin system.” Can you seems blurred by a is lineexa mples in which th duct category? Th at or propa rticular company are any companie s out thereis , do you feel that ” of being trustworthy ?there that “walk the line
    • 6. Marketing EthicsBusiness Ethics are basic values that guide a firm’s behavior andinfluence it’s business planning.Codes of Ethics help firms avoid confusion on the right or wrongdecision. These set of standards should be followed by everyone in theorganization.Consider this... neral ics under the “Ge AMA Code of Eth that point #2, it states Norms” section in ting oster trust in the marke“Marketers must f k of any marketpla ce thin system.” Can you seems blurred by a is lineexa mples in which th duct category? Th at or propa rticular company are any companie s out thereis , do you feel that ” of being trustworthy ?there that “walk the line
    • 7. Three Levels of Business Planning• Strategic Planning (including SBU’s)• Functional Planning• Operational Planning All business planning is an integrated activity. This means that the organization’sstrategic, functional, and operational plans must work together for the benefit of the whole.
    • 8. Strategic Planning
    • 9. Strategic Planning What is strategy?
    • 10. Strategic Planning What is strategy? + Identify opportunities+ Match competencies with market needs
    • 11. Strategic Planning What is strategy? + Identify opportunities + Long-term course of action+ Match competencies with + Managerial Processes market needs + Seeks long-term growth & $$
    • 12. Strategic Planning What is strategy? + Identify opportunities + Long-term course of action+ Match competencies with + Managerial Processes market needs + Seeks long-term growth & $$ Driven by Corporate Mission/Vision
    • 13. Strategic Planning What is strategy? + Identify opportunities + Long-term course of action+ Match competencies with + Managerial Processes market needs + Seeks long-term growth & $$ Driven by Corporate Mission/VisionDell is committed to being a good neighbor in the communities we callhome. We must continue to grow responsibly – protecting our natural resources and practicing sustainability in all its forms – and improve the communities where we live and work through our financial and volunteer efforts
    • 14. Strategic Planning What is strategy? + Identify opportunities + Long-term course of action + Match competencies with + Managerial Processes market needs + Seeks long-term growth & $$ Driven by Corporate Mission/VisionDell is committed to being a good neighbor in the communities we callA mission describes the overall purpose ofhome. We must continue to grow responsibly – protecting our natural the organization and what it intends to resources and practicing sustainability in all its forms – and improve the communities where we live and work through our financial andachieve in terms of products, customers, & volunteer efforts resources
    • 15. Mission StatementsThe mission of Big Brothers/Big Sisters of America is to make a positivedifference in the lives of children and youth, primarily through aprofessionally-supported, one-to-one relationship with a caring adult, and toassist them in achieving their highest potential as they grow to becomeconfident, competent, and caring individuals, by providing committedvolunteers, national leadership and standards of excellencePatagonia: Build the best product, cause no unnecessary harm, use businessto inspire and implement solutions to the environmental crisis.Googles mission: to organize the worlds information and make it universally accessibleand useful.
    • 16. End Module 1
    • 17. Chapter 2Module 2
    • 18. Strategy & Planning What is it we really do? What business are we really in??
    • 19. Strategy & Planning What is it we really do? What business are we really in??
    • 20. Strategy & Planning + Identify opportunities+ Match competencies with market needs What is it we really do? What business are we really in??
    • 21. Strategy & Planning + Identify opportunities+ Match competencies with market needs What is it we really do? Specific Measurable What business are we really in?? Attainable Relevant Time-based
    • 22. Strategy & Planning + Identify opportunities+ Match competencies with market needs What is it we really do?profit Specific Measurable What business are we really in?? Attainable Relevant Time-based
    • 23. Strategy & Planning + Identify opportunities+ Match competencies with market needs What is it we really do?profit Mkt Specific Share Measurable Efficiency What business are we really in?? Attainable Relevant Time-based
    • 24. Strategy & Planning + Identify opportunities+ Match competencies with market needs What is it we really do?profit Mkt Specific Share Measurable Efficiency What business are we really in?? Attainable Relevant quality Time-based
    • 25. Strategy & Planning + Identify opportunities+ Match competencies with market needs Competencies? What are we really What is it we good at? really do?profit Mkt Specific Share Measurable Efficiency What business are we really in?? Attainable Relevant quality Time-based
    • 26. Strategy & Planning + Identify opportunities+ Match competencies with market needs Competencies? What are we really What is it we good at? really do?profit Mkt Specific Share Measurable Efficiency What business are we really in?? Attainable Relevant quality Time-based
    • 27. Strategy & Planning + Identify opportunities+ Match competencies with market needs Competencies? What are we really What is it we good at? really do?profit Mkt Specific Share Measurable Efficiency What business are we really in?? Attainable Relevant quality Time-based
    • 28. Strategy & Planning + Identify opportunities+ Match competencies with market needs Competencies? What are we really What is it we good at? really do?profit Mkt Specific Share Measurable Efficiency What business are we really in?? Attainable Relevant quality Time-based
    • 29. Strategy & Planning + Identify opportunities+ Match competencies with market needs Competencies? What are we really What is it we good at? really do?profit Mkt Specific Share Measurable Efficiency What business are we really in?? Attainable Relevant quality Time-based
    • 30. Steps in Strategic Planning
    • 31. Steps in Strategic Planning Internal External
    • 32. Steps in Strategic Planning Internal Where have we been, External and where are we going??
    • 33. Steps in Strategic Planning Internal Where have we been, Usually @ the functional level. External and where are we going?? (marketing, finance, logistics)
    • 34. Steps in Strategic Planning Internal Where have we been, External and where are we going??
    • 35. S.W.O.T. Strengths/weakness: are internal to the firm, controllable factors that influence performance.Employee capital, financial stability, customer loyalty, corporate relationships, ability to predict market changes... Opportunity/threat: are external to the firm, uncontrollable environmental factors. Economic factors, global marketplace trends, competition, technology, laws & regulations
    • 36. S.W.O.T. Strengths/weakness: A are internal to the firm, comprehensive influence performance. controllable factors that SWOT analysis gives you insightsEmployee capital, financial stability, customer loyalty, corporate into how to improve firmmarket changes... relationships, ability to predict performance and how to take advantage of current or Opportunity/threat: are external to the firm, projected opportunities uncontrollable environmental factors. & avoid threats. Economic factors, global marketplace trends, competition, technology, laws & regulations
    • 37. Strategic Planning...
    • 38. Strategic Planning... Have distinct target markets, competitors, objectives, profits, and competencies. Analyze the portfolio
    • 39. Strategic Planning... Have distinct target markets, competitors, objectives, profits, and competencies. Analyze the portfolio
    • 40. Strategic Planning... Have distinct target markets, competitors, objectives, profits, and competencies. Analyze the portfolio
    • 41. Strategic Planning... Have distinct target markets, competitors, objectives, profits, and competencies. Analyze the portfolio
    • 42. Strategic Planning... Have distinct target High Stars Question Marks markets, competitors, objectives, profits, and competencies.Market Growth Rate Cash Cows Dogs Analyze the portfolio Low High Low Relative Market Share
    • 43. Strategic Planning... Have distinct target High Stars Question Marks markets, competitors, objectives, profits, and competencies.Market Growth Rate Cash Cows Dogs Analyze the portfolio iPad? Low iPhone? High Low MacBook Air? Relative Market Share iPod?
    • 44. Strategic Planning... High Analyzing the target Have distinct portfolio Stars Question Marks markets, competitors, gives managers insights objectives, profits, and into the SBU’s competencies. performance, fit withMarket Growth Rate missions, and needs for Cash Cows Dogs Analyze the portfolio resources. iPad? Low iPhone? High Low MacBook Air? Relative Market Share iPod?
    • 45. Strategic Planning... Have distinct target Stars - generate revenue, but are Analyzing thepromote. portfolio High costly to produce & Stars Question Marks markets, competitors, gives managers insights objectives, profits, and Cash Cows - needs minimal into the other products. SBU’s funding, profits feed competencies. performance, fit withMarket Growth Rate Dogs - specialized products in missions, and needs for limited markets, are often sold off Cash Cows Dogs Analyze the portfolio resources. Question Marks - “problem children”, some fail to compete, but iPad? can be improved.. Most products Low start here. iPhone? High Low MacBook Air? Relative Market Share iPod?
    • 46. Strategic Planning... Prod. Penetration Development Mkt Development Diversification
    • 47. Strategic Planning... Prod. Penetration Development Mkt Development Diversification
    • 48. Strategic Planning... Prod. Penetration Development Mkt Development Diversification
    • 49. Strategic Planning... Prod. Penetration Development Mkt Development Diversification
    • 50. Strategic Planning... Prod. Penetration Development Mkt Development Diversification
    • 51. Strategic Planning... Prod. Penetration Development Mkt Development Diversification
    • 52. Market Planning Set Develop Market SWOT Objectives Strategies Specific to the brand Select target market or SBU; tactical objectives to meet the Marketing mix strategies overall strategy Product Price Implement Promo /Control PlaceMonitor marketing activities ResponsibilityCalculate returns (ROI) BudgetTime LInes
    • 53. Market Planning Set Develop Market SWOT Objectives Strategies Specific to the brand Select target market or SBU; tactical objectives to meet the Marketing mix strategies overall strategy Product Price Implement Promo /Control PlaceMonitor marketing activities A target market Responsibility Budget is ??Calculate returns (ROI)Time LInes
    • 54. Market Planning Set Develop Market SWOT Objectives Strategies Specific to the brand Select target market or SBU; tactical objectives to meet the Marketing mix strategies overall strategy Product Price Implement Promo /Control PlaceMonitor marketing activities ResponsibilityCalculate returns (ROI) BudgetTime LInes
    • 55. Growth through Innovation SAP Executive Insight Week 1: Supplement
    • 56. Awesome, but... Consumers EXPECT product innovations: and it no longer serves as a competitive advantage to achieve long term growth.
    • 57. Case in point...
    • 58. Innovation!
    • 59. Beyond Products“More than half of the participants didn’t see new products or services as the basisof their competitive advantage; instead, they look to the introduction of newbusiness models” Growth: cannot come only from product innovation. Firms must figure out how to offer new value propositions to customers. The reason: today’s dynamic global economy and intense competition. How?: through business model innovation. WHAT’S THAT???
    • 60. The Old IdeaR&D: If I build it they will come... Old business models relied on improving products, advancing product-related technologies, and giving customers new “widgets” that were better than their old “widgets”.. Our pizza is cooler than their pizza. Not Good Enough? Good enough for old markets. Today’s customers are demanding, sensitive, and have high switching propensities. Think about pizza? Are you loyal to only one place?
    • 61. New InnovationBusiness model innovation: impactsthe enterprise holistically by doing normal business functions in a new way. Changing how Focusing on Become more you interact with Supply-chain to flexible in today’s customers. improve dynamic market. efficiencies, reduce Change the way Become costs, increase you handle all“customer-centric” distribution business functions by streamlining them.
    • 62. New InnovationBusiness model innovation: impactsthe enterprise holistically by doing normal Changing how business functions in a new way. you interact with customers. Focusing on Supply-chain to Become Become more flexible in today’s improve efficiencies, reduce “customer-centric” dynamic market. Change the way costs, increase you handle all distribution business functions by streamlining them.
    • 63. New InnovationBusiness model innovation: impactsthe enterprise holistically by doing normal Changing how business functions in a new way. you interact with customers. Focusing on Supply-chain to Become Become more flexible in today’s improve efficiencies, reduce “customer-centric” dynamic market. Change the way costs, increase you handle all distribution business functions by streamlining them.
    • 64. But, complacency will kill you....
    • 65. But, complacency will kill you....
    • 66. But, complacency will kill you....
    • 67. But, complacency will kill you....
    • 68. But, complacency will kill you....
    • 69. Be Customer Centric Everything you do: in all areas of the business should have the end-consumer in mind: Segmentation, logistical processes, product ordering, customer service, shipping contractors, Redefine the Redefine your Address Needs customer market segments. surrounding the experience. main product. Ordering pizza Can your customer groupings What else could Pizza Hut Class registration change? For what reason? offer?Planning a movie date Catered parties for kids? Not on demographics, maybe “Party-to-go” delivery? on technological savviness? App users?
    • 70. End Chapter 2

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