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Chapter One
Strategic Planning and
the Marketing
Management Process
Marketing concept, Customer needs,
The American Marketing Association,
McGraw-Hill/Irwin
Marketing Management, 8e
© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
The Marketing Concept
• An organization should seek to make a profit by serving the
needs of customers
• The purpose of the marketing concept is to rivet (Fix) the
attention of marketing managers on serving broad classes of
customer needs
• The principal task of the marketing function operating under
the marketing concept is to find effective and efficient means
of making the business do what suits the interests of
customers
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What is Marketing?
• “The process of planning and executing conception, pricing,
promotion and distribution of ideas, goods and services to
create exchanges that satisfy individual and organizational
goals.”
- The American Marketing Association
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What is Strategic Planning?
• The objectives and strategies established at the top level
provide the context for planning in each of the divisions and
departments by divisional and departmental managers
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Major Types of Marketing
Type
Description
Product
Marketing designed to create exchange for tangible
products
Service
Marketing designed to create exchanges for
intangible products
Person
Marketing designed to create favorable actions
toward persons
Place
Marketing designed to attract people to places
Cause
Marketing designed to create support for ideas,
causes, or issues or to get people to change
undesirable behaviors
Organization
Marketing designed to attract donors, members,
participants, or volunteers
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Strategic Planning and Marketing
Management
• Includes all activities that lead to the development of a clear
organizational mission, objectives, and appropriate
strategies
• Plays a key role in achieving an equilibrium by balancing
acceptable financial performance
• Prepares for inevitable changes in markets, technology, and
competition, as well as in economic and political arenas
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The Strategic Planning Process
• Mission statement
- In developing a mission statement, management must take into
account three key elements
• The organization’s history
• The organization’s distinctive competitiveness
• The organization’s environment
• Mission statement should be
- Achievable
- Motivational
- Specific
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Missions vs. Strategic Visions
•
A mission statement focuses on
current business activities -- “who we
are and what we do”
-
Current product and service
offerings
Customer needs being served
Technological and business
capabilities
•
A strategic vision concerns a firm’s
future business path -- “where we are
going”
-
-
Markets to be pursued
Future technology-productcustomer focus
Kind of company that
management is
trying to create
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Vision Statement
We want to sell a variety of
products on a daily basis to
every living person on the earth.
PepsiCo.
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Vision Statement
To be the world leader in
transportation products
and services.
General Motors Corp.
Source: 1993 Annual Report
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Vision Statement
Absolutely, positively overnight!
Federal Express
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Vision Statement
A computer on every desk and in
every home.
Microsoft
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Whirlpool Mission Statement
To shape and lead the major home
appliance industry globally, becoming
one of the world’s great companies
while creating value for shareholders,
employees, customers, suppliers,
government leaders and communities.
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The Strategic Planning Process
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The Strategic Planning Process
• Create discrete (Distinct) objectives
- The end-points of an organization’s mission are what it seeks
through on-going, long-run operations
• Organizational strategy
- Involves the choice of major directions the organization will take
in pursuing its objectives.
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The Strategic Planning Process
• Create marketing strategy
Organizational growth strategies
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The Strategic Planning Process
• Organizational growth based on products and markets
- Four paths organizations take in order to grow
•
•
•
•
Market penetration strategies
Market development strategies
Product development strategies
Diversification
• Organizational strategies based on competitive advantage
- Competitive advantage is an ability to outperform competitors in
providing something that the market values
- Porter suggests strategies based on cost leadership or a strategy
based on differentiation &Focus
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The Strategic Planning Process
• Organizational strategies based on value
- “Customer value” has become critical for marketers as well as
customers
- To succeed firms must seek to build long-term relationships with
their customers by offering unique value
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The Strategic Planning Process
• Choosing an appropriate strategy
- Management should select those strategies consistent with its
mission and capitalize on the organization’s distinctive
competencies
- A sustainable competitive advantage can be based on either the
assets or skills of the organization
- The key to sustaining a competitive advantage is to continually
focus and build on the assets and skills that will lead to long-term
performance gains
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The Strategic Planning Process
• Organizational portfolio plan
- Organizations at a particular time are a portfolio of businesses that
is, product lines, divisions, schools
- Management must decide which businesses to build, maintain, or
eliminate, or which new businesses to add
- Organizations can create strategic business units (SBU) which
could be a single product, product line, or division
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The Marketing Management Process
• The Marketing Management Process can be defined as “the
process of planning and executing the conception, pricing,
promotion, and distribution of goods, services, and ideas to
create exchanges with target groups that satisfy customer
and organizational objectives.”
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The Marketing Management Process
Strategic planning and marketing planning
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The Marketing Management Process
• Situation analysis
-
The cooperative environment
The competitive environment
The economic environment
The social environment
The political environment
The legal environment
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The Marketing Management Process
• Marketing planning
- Establishing marketing objectives
- Selecting target market
- Developing marketing mix
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The Marketing Management Process
• Implementation and control of marketing plan
- Implementing the marketing plan involves putting the plan
into action and performing marketing tasks according to the
predefined schedule.
- Controlling the marketing plan involves three basic steps
• The results of the implemented marketing plan are
measured
• These results are compared with objectives
• Decisions are made on whether the plan is achieving
objectives.
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The Marketing Management Process
• Marketing information systems and marketing research
- Throughout the marketing management process, current, reliable,
and valid information is needed to make effective marketing
decisions
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The Marketing Management Process
• Strategic planning is a top-management responsibility
• All strategic planning has marketing implications
• Marketing objectives and strategies must be derived from
the strategic plan
• Planning done in all functional areas of the organization
should be derived from strategic plan
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The Marketing Management Process
Marketing’s role in cross functional strategic plan
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Corporate Strategy
Portfolio Analysis
BCG (Boston Consulting Group) Matrix
- Product life cycle and funding decisions
•
•
•
•
Question marks
Stars
Cash cows
Dogs
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BCG Matrix
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GE Business Screen
Long-term industry attractiveness
Business strength/competitive position
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The Market Attractiveness-Business Position Matrix
Business Position
Low
Medium
High
High
Low
Market Attractiveness
Medium
Figure 7.5
Invest/
Grow
Selective
Investment
Harvest/
Divest
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Industry attractiveness at
• Industry attractiveness
-
Market size
Market growth
Profitability
Cyclicality
Ability to recover from inflation
World scope
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Business strength at
• Business strength
- Market position
•
•
•
•
Domestic market share
World market share
Share growth
Share compared with leading competitor
- Competitive strengths
•
•
•
•
Quality leadership
Technology
Marketing
Relative profitability
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