Strategic Market Planning

The Big Picture

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Learning Objectives

Understand the importance of strategic planning

Define strategic business units (SBUs)

Explain business planning and its three levels

Describe the steps in strategic planning

Describe the steps in marketing planning

Understand a basic outline for a marketing plan

The Marketing Plan

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What is Business Planning?Composing the Big Picture

Business Planning: Ongoing process of making decisions that guides the firm both in the short term and for the long term

Identifies/builds on firm’s strengths Helps managers make informed decisions Develops objectives before action is taken

Marketing and Ethics

Marketing and Ethics

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Ethics Is Up Front in Marketing Planning

Business ethics: • Basic values that guide a firm’s

behavior Code of ethics:

• Written standards of behavior to which everyone in the organization must subscribe

Difference between value, morals, ethics (see supplemental PPT)

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Figure 2.1Three Levels of Business

Planning

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Managerial decision process that matches firm’s resources and capabilities to its market opportunities for long-term growth and survival• Top management defines firm’s purpose

and objectives• Strategic business units (SBUs) are

common in large firms

Strategic Planning

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Functional Planning

Accomplished by various functional areas of firm, such as marketing

Typically includes:• A broad three-to-five-year plan to

support the strategic plan • A detailed annual plan

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Operational Planning

First-line managers focus on day-to-day execution of functional plans

Typically includes one or more of the following: • Detailed annual plans• Semiannual plans• Quarterly plans

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All Business Planning Is an Integrated Activity

Strategic, functional, and operational plans must work together to benefit the whole firm• Plans are guided by firm’s mission

Planners at all levels must keep the “big picture” in mind when planning

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Strategic Planning: Frame the Picture

Very large multiproduct firms may have divisions called strategic business units (SBUs)• SBUs operate like separate businesses

Strategic planning is done at both the corporate and SBU levels

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Characteristics ofStrategic Business Units

(SBUs)

An SBU …g

has a distinct mission & specific target market has control over its resources has its own competitors has plans independent of other SBUs Charter Club, Alfani, Style & Co.

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Figure 2.2Steps in Strategic Planning

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Strategic Planning Step 1: Define the Mission

Key questions in determining the mission:• What business are we in? • What customers should we serve? • How do we develop firm’s capabilities and

focus its efforts? Mission statement (find a mission statement!)

• A formal document that describes the firm’s overall purpose and what it hopes to achieve in terms of its customers, products, and resources

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Step 1: Define the Mission (con’t)

Examples of mission statements• MADD: “to stop drunk driving, support

the victims of this violent crime, and prevent underage drinking.”

• National Book Swap: “to become the nation’s largest book club and in the process bring a lifetime of reading material to every American.”

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Step 2: Evaluate the Internal and External Environments

Situational analysis An assessment of a firm’s internal and

external environments Internal environmental assessment:

identifies the firm’s strengths and weaknesses

External environmental assessment: identifies opportunities and threats

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SWOT Analysis

An analysis of an organization’s strengths (S) and weaknesses (W) and the opportunities (O) and threats (T) in the external environment

SWOT enables the firm to develop strategies that maximize strengths and capitalize upon opportunities

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SWOT Analysis

©South-Western College Publishing

SS

WW

OO

TT

Strengths - things the firm does wellStrengths - things the firm does well

Weaknesses - things the firm does not!Weaknesses - things the firm does not!

Opportunities - conditions in the external environment that favor strengths

Opportunities - conditions in the external environment that favor strengths

Threats - conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.

Threats - conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.

Internal

External

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Internal Environment

Controllable elements inside a firm that influence how well the firm operates

Any examples?

Southwest Airlines’ employees reflect the “Southwest Spirit” and are considered a key strength of the firm.

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External Environment

Elements outside the firm that may affect it either positively or negatively.

The external environment is global and requires consideration of:• Legal/political/ethical trends• Economic trends• Competitive trends• Technological trends• Sociocultural trends• Demographic

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Table 2.2 Part AExample of a Partial SWOT

Analysis for McDonald’s

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Table 2.2 Part BExample of a Partial SWOT

Analysis for McDonald’s

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Step 3: Set Organizational(or SBU) Objectives

Organizational/SBU Objectives:• What the firm hopes to accomplish with

long-range business plan Need to be specific, measurable,

attainable and sustainable• May be financially focused, or focused

on other factors such as satisfaction

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Step 4: Establish the Business Portfolio

Business portfolio: • The group of different products or

brands owned by a firm and having different income-generating and growth capabilities

Portfolio analysis• Assesses the potential of a firm’s SBUs• BCG growth-market share matrix

Portfolio - BCG Matrix

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HIGH LOW

HIG

HL

OWM

arke

t Gro

wth

Rat

e

Relative Market Share

$

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Figure 2-3Boston Consulting Group (BCG)

Matrix

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Step 5: Develop Growth Strategies

Product-market growth or Ansoff’s matrix:Characterizes different growth strategies according to type of market and type of product

H. Igor Ansoff was a Russian American, applied mathematician and business manager. He is known as the father of Strategic management.f

The Ansoff Matrix was first published in the Harvard Business Review in 1957, and has given generations of marketers and business leaders a quick and simple way of thinking about growth. (mindtools.com)

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Figure 2-4Product-Market Growth Matrix

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Ansoff’s Opportunity Matrix

MarketPenetration

MarketDevelopment

Product Development

Diversification

Increase market share among existing customers

Attract new customers to existing products

Introduce new products into new markets

Create new products for present markets

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Example of Ansoff’s Strategic Opportunity Matrix-Starbucks

Present Market

New Market

Present Product New Product

Product DevelopmentStarbucks develops powdered instant coffee Via or Blond Roast.

Market PenetrationStarbucks sells more coffee to customers who register their reloadable Starbucks cards.

Market DevelopmentStarbucks opens stores in Brazil and Chile.

DiversificationStarbucks launches Hear Music and buys Ethos Water.

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Marketing Planning

Step 1: Perform a Situation Analysis• Builds on SWOT; identifies how

environmental trends affect the marketing plan

Step 2: Set Marketing Objectives• Specific to the firm’s brands and other

marketing mix-related elements• States what the marketing function must

accomplish if firm is to achieve its overall business objectives

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Marketing Planning: Step 3

Develop marketing strategies to achieve marketing objectives• Select a Target Market-

who is the customer for the firm’s products

• Develop Marketing Mix strategies (4 P’s)

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Marketing Mix Strategies

Product strategies:• Include product design, packaging,

branding, support services, and product variations and features

Pricing strategies:• Include setting prices for final

consumers, wholesalers, and retailers based on costs, demand, or competitors’ prices

First FlavorVideo

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Marketing Mix Strategies

Promotion strategies: • Advertising, sales

promotion, public relations, direct marketing, personal selling

Distribution (place) strategies: • How, when, and where

the product is available to targeted customers

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A unique blend of PRODUCT, PRICE,

PROMOTION AND PLACE (distribution)

strategies designed to produce mutually

satisfying exchanges with a target market.

The Marketing Mix

The elements of the marketing

mix are often referred to as the

“Four Ps”

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Step 4: Implement and Controlthe Marketing Plan

Control: • Measuring actual performance,

comparing performance to the objectives, making adjustments

Marketing metrics: • Return on marketing investment (ROMI)

Action plans:• Support plans that guide the execution

and control of marketing strategies at the operational level

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Metrics Moment

ROMI is the revenue or profit margin generated by investment in a specific marketing program divided by the cost of that program (expenditure) at a given risk level, as determined by management $

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Table 2.4Template for an Action Plan

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Operational Planning:Day-to-Day Execution of Plans

At the operational level, plans focus on the day-to-day execution of the marketing plan• Created by first-line managers• Cover short time frames• Marketing metrics gauge

success