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PRINCIPLES OF MARKETING
Eighth Edition
Philip Kotler and Gary Armstrong
Chapter 2
Strategic Planning
and the
Marketing Process
 Copyright 1999 Prentice Hall
Strategic Planning Process
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• Strategic Planning involves developing an
overall company strategy for long-run
survival and growth.
• This process involves:
– Defining a Mission: Statement of an organization’s
purpose; should be market oriented.
– Setting Company Objectives: Supporting goals and
objectives to guide the entire company.
– Designing a Business Portfolio: Collection of businesses
and products that make up the company.
– Planning Functional Strategies: Detailed planning for
each department designed to accomplish strategic
objectives.
 Copyright 1999 Prentice Hall
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Mission
Mission Statements
Statements
Market
Market
Oriented
Oriented
Motivating
Motivating
Distinctive
Distinctive
Competencies
Competencies
Characteristics
Characteristics
of
of Good
Good Mission
Mission
Statements
Statements
Realistic
Realistic
Specific
Specific
Fit
Fit Market
Market
Environment
Environment

 Copyright
Copyright 1999
1998 Prentice
Prentice Hall
Hall
Designing the Business Portfolio
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• The best portfolio is the one that best fits
the company’s strengths and weaknesses to
the opportunities in the environment.
• 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
 Copyright 1999 Prentice Hall
Analyzing Current SBU’s:
Boston Consulting Group Approach
High
High
Stars
Low
Question Marks
• High growth & share
• Profit potential
• May need heavy
investment to grow
Cash Cows
Low
Market Growth Rate
Relative Market Share
• High growth, low share
• Build into Stars/ phase out
• Requires cash to hold
market share
Dogs
• Low growth, high share • Low growth & share
• Established, successful • Low profit potential
SBU’s
•Produces cash
 Copyright 1999 Prentice Hall
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Analyzing Current SBU’s:
GE Strategic Business-Planning Grid
Industry Attractiveness
Business Strength
Strong
Average
Weak
C
High
A
Medium
B
Low
 Copyright 1999 Prentice Hall
D
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Developing Growth Strategies
Product/ Market Expansion Grid
Existing
Products
Existing
Markets
1. Market
Penetration
New
Markets
2. Market
Development
New
Products
3. Product
Development
4. Diversification
 Copyright 1999 Prentice Hall
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Product/ Market Expansion Grid
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• Market Penetration: increase sales to present
customers with current products. How? Cut prices,
increase advertising, get products into more stores.
• Market Development: develop new markets with
current products. How? Identify new demographic
or geographic markets.
• Product Development: offering modified or new
products to current customers. How? New styles,
flavors, colors, or modified products.
• Diversification: new products for new markets.
How? Start up or buy new businesses.
 Copyright 1999 Prentice Hall
Marketing’s Role in Strategic
Planning
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• Process of Selecting Target Consumers
–Market Segmentation: determining distinct groups
of buyers (segments) with different needs.
–Market Targeting: evaluating and selecting which
target segments to enter.
–Market Positioning: products distinctive and
desirable place in the minds of target segments
compared to competing products.
• Marketing Strategies for Competitive Advantage
– Market-Leader
– Market Challenger
– Market-Follower
– Market-Nicher
 Copyright 1999 Prentice Hall
The Marketing Process
DemographicEconomic
Environment
Marketing
Intermediaries
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TechnologicalNatural
Environment
Product
Suppliers
Place
Target
Price
Consumers
Publics
Promotion
PoliticalLegal
Environment
Competitors
 Copyright 1999 Prentice Hall
SocialCultural
Environment
Marketing Mix- The Four P’s
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Price
Product
“Goods-and-service”
combination that a
company offers a
target market
Amount of money
that consumers
have to pay to obtain
the product
Target
Customers
Intended
Positioning
Activities that
persuade target
customers to buy
the product
Promotion
Company activities
that make the
product available
 Copyright 1999 Prentice Hall
Place
Managing the Marketing Effort
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Marketing Analysis of Company’s Situation
Marketing Planning
Develop Marketing
Strategies to
Achieve Marketing
Objectives
Develop
Marketing
Plans & Budget
Marketing
Implementation
Turn Marketing Plans
into
Action Plans
to Achieve
Marketing
Objectives
 Copyright 1999 Prentice Hall
Control
Measure
Results
Evaluate
Results
Take
Corrective
Action
Elements of a Marketing Plan
Executive Summary
Current Marketing Situation
Threats and Opportunities
Objectives and Issues
Marketing Strategy
Action Programs
Budgets
Controls
 Copyright 1999 Prentice Hall
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Marketing Implementation
Marketing Strategy
Decision
and
Reward
Organizational
Structure
Action
Programs
Human
Resources
Climate and
Culture
Implementation
Marketing Performance
 Copyright 1999 Prentice Hall
Marketing Control
Set Marketing Goals
Measure
Performance
Evaluate
Performance
Take Corrective
Action
 Copyright 1999 Prentice Hall
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Marketing Audits
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Environment
Function
Productivity
Types
of Marketing
Audits
Systems
 Copyright 1999 Prentice Hall
Strategy
Organization