Principles of Marketing
by Jeff Tanner and Mary Anne Raymond
Chapter 2
Strategic Planning
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Developing plans and strategies for
products and their
pricing
promotion
delivery
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The Value Proposition
A 30-second “elevator speech”*
 Here are the benefits of our product
 This is why it is superior to other ones
*Getting your point across to someone before the elevator reaches the bottom .
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Supporting The Value Proposition
What is the strategy that enables the value?
How do businesses develop and document this strategy?
Who develops this strategy?
This is planning
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5
Plans and Planning
Levels of planning
Long term corporate
SBU/Business plans
Functional plans
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The Marketing Plan
This is the revenue producing element in the corporate or strategic plan
It describes:
Which products
will be created
where we are going with products,
and how we will get there!
Supporting
research and
forecasts
How the products
will be delivered
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How the products
will be exchanged
for revenue
How the products
will be
communicated
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The Planning Process
The mission statement is the leading planning phrase.
It answers the question—“why does this company exist?”
A situation analysis is conducted to assess the current business environment.
Internal factors such as the company’s strengths and weaknesses
relative to this environment are explored.
External factors such as opportunities and threats are identified.
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The SWOT Analysis—Internal
Internal factors are strengths and/or weaknesses
(companies can control these factors)
• Strengths could be:
1. financial
2. market position
3. patents
4. management
5. costs
•
Weaknesses could be:
1. competitive position
2. organization structure
3. supplier dependency
4. product line
5. brand awareness
Key actions:
 Capitalize on a strength
 Address a weakness
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The SWOT Analysis—External
External factors are opportunities and threats
(companies can’t control these factors)
• Opportunities can be:
1. global markets
2. enabling technologies
3. growing consumer wealth
4. currency exchange rates
5. government spending
• Threats can be:
1. economic contraction
2. government regulations
3. social and political changes
4. trade barriers
5. taxes and mandated expenses
Actions required
 stay informed on global markets and issues
 anticipate and prepare for government actions
 monitor technology advances
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Objectives
An objective is something you want to have or some place you want to be.
• At a specific time in the future
• It must be measureable and achievable
Examples of a marketing objective:
• ABC, Inc. will increase its sales by 5% by the end of the next plan year.
• PepsiCo will increase the market share of Gatorade by 4% during the next year.
Marketing objectives must be consistent with other company’s objectives.
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Strategies
Strategies are the means for accomplishing objectives.
• they are the activities that the plans detail
Companies often employ several strategies to reach objectives.
Example:
• Wal-Mart has a pricing strategy of everyday low pricing (EDLP).
• Wal-Mart also has a strategy for opening new stores rapidly—globally.
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Strategic Choices
There are different types of product and market-entry strategies
that a firm can pursue in order to meet objectives.
Other choices include:
• licensing
• franchising
• contract manufacturing
• joint ventures
• direct investment
• diversification strategies
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Market
Penetration
Product
Development
Market
Development
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Key Takeaways
• Strategic planning includes a mission statement
• Each SBU may have its own mission statement and plans
planning • There are various levels of planning—corporate, functional, operational
• Objectives must have a specific time for performance
• Objectives must be achievable and measureable
objectives • Short term objectives may be identified as goals or milestones
• Market penetration and development
• Product development and diversification
strategies • Strategies should capitalize on strengths and address weaknesses
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Strategic Portfolio Planning
Two popular approaches
Boston Consulting
Group
BCG Matrix
General Electric
business and
industry planning
model
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Boston Consulting Group
market share
high
low
market growth
high
low
Stars
Question Mark
Harvest
or cease
production
Dog
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Cash Cow
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GE Market Attractiveness Model
invest
Evaluate SBU’s on the following factors:
Yellow—status quo
Red —divest
low
high
med
Market attractiveness
Green—invest for growth
high
med
Market share
Growth of the SBU
Size of the opportunity
Potential for profit
Environmental factors
Competitive conditions
low
1.
2.
3.
4.
5.
6.
maintain
Business strength (fit)
R.L. Sharman Lone Star College
dump
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Key Takeaways
The strategic planning process includes:
1. the company’s mission (why it exists)
2. the desired objectives for the plan period
-- must be measureable and achievable
3. description of strategies for reaching objectives
a. market penetration
b. market development
c. product development
d. diversification
Note: strategies should capitalize on a strength, or address a weakness
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More Key Takeaways
4. A group of businesses (SBUs) is called a portfolio.
5. Portfolio planning
-- organizations with multiple SBUs must allocate limited resources
-- two planning tools that can be used are BCG and GE
6. BCG—Boston Consulting group
-- a four quadrant matrix for market share and market growth
-- positioning products in the matrix establishes importance
-- helps make decisions regarding resource allocation
7. GE—General Electric industry attractiveness
-- nine cell matrix using stop light concept for investing, harvesting
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Planning Epilogue
“Plans are nothing, planning is everything!”
D.D. Eisenhower, General of the Army
Many times “plans” are not an accurate precursor to events encountered.
-- changes are required in order to reach objectives
Through the process of “planning the plan,” knowledge is acquired
that allows the timely altering of strategies and tactics for effect.
-- the planning process itself can identify contingency actions
-- enacting changes to meet the contingencies requires plan flexibility
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