Chapter 2 - Business Planning:
Compose the Big Picture
 Business Planning:
Ongoing process of making decisions
that guide 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
Ethics and Marketing Planning
 Unethical marketing decisions damage the
firm, society, and various stakeholders
 Business ethics:
– Rules of conduct for an organization
 Code of ethics (code of conduct):
– Written standards of behavior to which
everyone in the organization must
subscribe
Three Levels of Business Planning
Level 1- Strategic Planning
 Match firm’s resources and capabilities to
market opportunities for long-term growth (5
– 10 years) and survival
– Top management defines firm’s purpose and
objectives
• Example: increase firm’s total revenues by
20% over next five years
– Strategic Business Units (SBUs)
• Self-contained divisions
• P&L (Profit-and-loss) responsibility
Level 2 - Functional Planning
 Accomplished by various functional areas of
firm, such as marketing
 Typically includes:
– A broad 2 to 5-year plan to support the
strategic plan
– A detailed annual plan
• Example: marketing plan objective: to gain a 40% share
of a particular market with three new products during
coming year
• CWLC Example: increase enrollment by 5% (with
simultaneous 10% reduction in marketing budget)
Level 3 - Operational Planning
 First-line managers focus on day-to-day
execution of functional plans
 Such planning includes detailed annual,
semiannual, or quarterly plans
– Example: an objective may be set in terms of
units of a product a particular salesperson
needs to sell per month (sales quota)
All Business Planning
Is an Integrated Activity
 Strategic, functional, and operational plans
must work together to benefit the whole firm
 Marketers must fully understand how they fit
with the organization’s overall direction and
resources
Level 1 - Strategic Planning:
Frame the Picture
 Very large multiproduct firms may have
divisions called strategic business units
(SBUs)
– SBUs operate like separate businesses with their
own mission, business objectives, resources,
managers, and competitors
– Example: ARAMARK –SBUs included Entertainment,
Food Services, Uniform Services, AER
 Strategic planning is done at both the corporate
and SBU levels
 For a small company/organization, strategic
planning is done for the company as a whole
Strategic Planning Step 1:
Define the Mission
 Answer three key questions:
– What business are we in?
– What customers should we serve?
– How do we develop firm’s capabilities and
focus its efforts?
 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
 Mission should not be too broad, too
narrow/ shortsighted
– “Marketing Myopia” : defining the mission too
narrowly in terms of a specific product
offering
• Better to define the mission in terms of what
customer needs are satisfied
• Example: Railroad vs. transportation
• Example: Childcare vs. Education - orChildcare vs. Family Care
Step 2: Evaluate the Internal
and External Environments
 Situational analysis (business review)
– An assessment of a firm’s internal and
external environments
– Internal environment: Controllable elements
inside of an organization
– External environment: Uncontrollable
elements outside of an organization that may
affect its performance either
positively or negatively
Internal Environment
 Controllable elements inside a firm that
influence how well the firm operates include:
–
–
–
–
–
–
–
People (human capital) – asset or liability?
physical facilities – sufficient, superior, inhibiting growth?
financial stability – supports or inhibits growth?
corporate reputation – good, neutral, poor? (why?)
quality products – are they truly of high quality?
strong brands – are they truly strong brands?
Technologies – moving company forward or holding
company back?
 These elements represent key strengths and
weaknesses of the firm (working for or against you?)
External Environment
(See supporting detail in Ch. 3)
 Elements outside the firm that may affect it
either positively or negatively:
– Economic, competitive, technological,
legal/political/ethical, regulatory, and
sociocultural trends
– Trends manifest as opportunities or threats
– Firm cannot directly control external factors
but can respond to them via planning
Visit Trendwatching.com & Google.com/trends
External Environment Example –
Texas Lottery
 Effects of economy – sales up or down
 Competition – will adjacent state riverboat
gambling affect border sales of lottery tickets?
 Technology – effects on current/future games
 Legal/political/ethical – effects of revenues
directed to TX General Fund vs. Education
 Regulatory – what if lobbyists succeed in
introducing gaming machines into state?
 Socio cultural – how might green movement
affect the Lottery?
Trends Present Opportunities
Recent sociocultural trends influencing food marketing
stem from consumer desires for low fat, low carb, and
organic foods.
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
Step 3:Set Organizational or SBU
Objectives
 Organizational/SBU Objectives:
– What the firm hopes to accomplish with longrange business plan
 Need to be specific, measurable,
attainable, and sustainable
– May relate to sales, profitability, product
development, market share, productivity,
ROI, customer satisfaction, or
social responsibility
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:
– Assessing the potential of a firm’s SBUs
– Helps make decisions regarding which SBUs should
receive more or less of
the firm’s resources
– Example: AER
• Stand-alone centers
• B&A programs
• Summer programs
Boston Consulting Group (BCG) Matrix
Do you build, hold, harvest, or divest?
iPhone &
Samsung
Smartphones
High $
Nokia Cell
Phones
Lower $
LG &
Motorola
Smartphones
??? $
Sony Ericsson
Cell Phones
??? $
Step 5: Develop Growth Strategies
Product-Market Growth Matrix
Orange Juice
Reeces
•
•
•
•
•
•
Breakfast
Snack Bev
PB Cups
Pieces
P Butter
Ice Cream
Baby Shampoo
Baking Soda
•
•
•
•
Babies
Oily Hair
Kitchen use
Other uses
for new mkts
Functional (Marketing) Planning:
 Accomplished by various functional areas of
firm
 Typically includes a broad 5-year plan to
support strategic plan and a detailed annual
plan
 In this class (Marketing), we will focus on the
marketing plan
 Step 1: Perform a situation analysis
– Builds on SWOT – identifies how environmental
trends/external environment (ch. 3) affect the
marketing plan
Marketing Planning: 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
Marketing Planning: Step 3
 Develop marketing strategies to achieve
marketing objectives
– Select target market(s) where the firm’s offerings
are best suited
– Develop marketing mix strategies:
• Marketing mix strategies: how marketing will
accomplish its objectives in the firm’s target
market by using product, price, promotion, and
place (distribution)
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
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
Step 4: Implement and Control
the Marketing Plan
 Control:
– Measuring actual performance, comparing
performance to the objectives, making
adjustments
 Marketing metrics:
– Return on marketing investment (ROMI)
Creating and Working
with a Marketing Plan
 Operational plans focus on the day-to-day
execution of the marketing plan
 Ex: TLC strategic planning process
– Semi-annual, 2 day retreat
– Involved key partners (ad agency, online game
provider, scratch ticket manufacturer)
– Determine objectives and options to accomplish
– Evaluate what needs to be done by who by when
and whether it is realistic to accomplish
– Assign deadline dates and accountability
SBUs and the Strategic Plan
Corporate Culture
 A firm’s corporate culture
determines much of its internal
environment—the values,
norms, and beliefs that
influence everyone in the firm
i.e. The way employees dress
reflects their organization’s
corporate culture.