Marketing Real People, Real Choices: Ch. 3- Strategic Market Planning

business planning

an ongoing process of making decisions that guides the firm both in the short term and in the long term

business plan

a plan that includes the decisions that guide the entire organization

marketing plan

a document that describes the marketing environment, outlines the marketing objectives and strategy, and identifies how the company will implement and control the strategies embedded in the plan.

strategic planning

A managerial decision process that matches an organization's resources and capabilities to its market opportunities for long-term growth.

strategic business units (SBUs)

individual units within the firm that operate like separate businesses, with each having its own mission, business objectives, resources, managers, and competitors

functional planning

a decision process that concentrates on developing detailed plans for strategies and tactics for the short term, supporting an organization's long-term strategic plan.

market planning

The functional planning marketers do. Market planning typically includes both a broad three- to five-year marketing plan to support the firm's strategic plan and a detailed annual plan for the coming year.

operational planning

a decision process that focuses on developing detailed plans for day-to-day activities that carry out an organization's functional plans

mission statement

a formal statement in an organization's strategic plan that describes the overall purpose of the organization and what it intends to achieve in terms of its customers, products, and resources

situation analysis

an assessment of a firm's internal and external environments

internal environment

the controllable elements inside an organization, including its people, its facilities, and how it does things that influence the operations of the organization

external environment

the uncontrollable elements outside an organization that may affect its performance either positively or negatively

SWOT analysis

an analysis of an organization's strengths and weaknesses and the opportunities and threats in its external environment

Business Portfolio

The group of different products or brands owned by a firm and having different income-generating and growth capabilities

portfolio analysis

a management tool for evaluating a firm's business mix and assessing the potential of an organization's strategic business units

BCG growth-market share matrix

a portfolio analysis model developed by the Boston Consulting Group that assesses the potential of successful products to generate cash that a firm can then use to invest in new products

stars

SBUs with products that have a dominant market share in high-growth markets

cash cows

SBUs with a dominant market share in a low-growth-potential market

question marks

SBUs with low market shares in fast-growth markets

dogs

SBUs with a small share of a slow-growth market. They are businesses that offer specialized products in limited markets that are not likely to grow quickly.

market penetration strategy

growth strategies designed to increase sales of existing products to current customers, nonusers, and users of competitive brands in served markets

market development strategies

growth strategies that introduce existing products to new markets

product development strategies

growth strategies that focus on selling new products in existing markets

diversification strategies

growth strategies that emphasize both new products and new markets

Steps in Market Planning

1. perform a situation analysis

2. set marketing objectives

3. develop marketing strategies

4. implement and control the marketing plan

control

a process that entails measuring actual performance, comparing this performance to the established marketing objectives, and then making adjustments to the strategies or objectives on the basis of this analysis

activity metrics

metrics focused on measuring and tracking specific activities taken within a firm that are part of different marketing processes

outcome metrics

metrics focused on measuring and tracking specific events identified as key business outcomes that result from marketing processes

return on marketing investment (ROMI)

quantifying just how an investment in marketing has an impact on the firm's success, financially and otherwise

action plan

individual support plans included in a marketing plan that provide guidance for implementation and control of the various marketing strategies within the plan. Action plans are sometimes referred to as "marketing programs".

leading indicators

performance indicators that provide insight into the performance of current efforts in a way that allows a marketer to adjust relevant marketing activities (hopefully) resulting in performance improvements against the current action plan

lagging indicators

performance indicators that provide insight into the performance of an action plan based on outcomes realized

operational plans

Plans that focus on the day-to-day execution of the marketing plan. Operational plans include detailed directions for the specific activities to be carried out, who will be responsible for them, and time lines for accomplishing the tasks.

3.1 Objective Summary: Explain business planning and its three levels.

Business planning is the ongoing process of decision making that guides the firm in both the short term and long term. A business plan, which includes the decisions that guide the entire organization or its business units, is different from a marketing plan, which is a process and resulting document that describes the marketing environment, outlines the marketing objectives and strategies, and identifies how the company will implement and control the strategies embedded in the plan.

Planning takes place at three key levels. Strategic planning is the managerial decision process that matches the firm's resources and capabilities to its market opportunities for long-term growth. Large firms may have a number of self-contained divisions called strategic business units (SBUs). In such cases, strategic planning takes place at both the overall corporate level and within the SBU. Functional planning gets its name because the various functional areas of the firm, such as marketing, finance, and human resources, get involved. And operational planning focuses on the day to day execution of the functional plans and includes detailed annual, semiannual, or quarterly plans.

3.2 Objective Summary: Describe the steps in strategic planning.

For large firms that have a number of self-contained business units, the first step in strategic planning is for top management to establish a mission for the entire corporation. Top managers then evaluate the internal and external environment of the business and set corporate-level objectives that guide decision making within each individual SBU.

In small firms that are not large enough to have separate SBUs, strategic planning simply takes place at the overall firm level. The first step in strategic planning is defining the mission-a formal document that describes the organization's overall purpose and what it hopes to achieve in terms of its customers, products, and resources. Step 2 is to evaluate the internal and external environment through a process known as situational analysis, which is later formatted as a SWOT analysis that identifies the organization's strengths and weaknesses, opportunities, and threats. Step 3 is to set organizational or SBU objectives that are specific, measurable, attainable, and sustainable. Step 4 is to establish the business portfolio, which is the range of different businesses that a large firm operates. To determine how best to allocate resources to the various businesses, or units, managers use the Boston Consulting Group (BCG) growth-market share matrix to classify SBUs as stars, cash cows, question marks, or dogs. The final step, Step 5, in strategic planning is to develop growth strategies. Marketers use the product-market growth matrix to analyze four fundamental marketing strategies: market penetration, market development, product development, and diversification.

3.3 Objective Summary: Describe the steps in market planning.

Once big-picture issues are considered, it's up to the lower-level functional-area managers, such as the marketing manager, production manager, and finance manager, to develop the functional marketing plans-the nuts and bolts-to achieve organizational and SBU objectives. The steps in this market planning process are quite similar to the steps at the strategic planning level. An important distinction between strategic planning and market planning, however, is that marketing professionals focus much of their planning efforts on issues related to the Four Ps of the marketing mix. Managers start off by performing a situation analysis of the marketing environment. Next, they develop marketing objectives specific to the firm's brand, sizes, and product features. Then marketing managers select the target market(s) for the organization and decide what marketing mix strategies they will use. Product strategies include decisions about products and product characteristics that will appeal to the target market. Pricing strategies state the specific prices to be charged to channel members and final customers. Promotional strategies include plans for advertising, sales promotion, public relations, publicity, personal selling, and direct marketing used to reach the target market. Distribution (place) strategies outline how the product will be made available to targeted customers when and where they want it. Once the marketing strategies are developed, they must be implemented, which is the last step in developing the marketing plan. Control is the measurement of actual performance and comparison with planned performance. Maintaining control implies the need for concrete measures of marketing performance called "marketing metrics."

Operational planning is done by first-line supervisors such as sales managers, marketing communication managers, and market research managers and focuses on the day-to-day execution of the marketing plan. Operational plans generally cover a shorter period of time and include detailed directions for the specific activities to be carried out, who will be responsible for them, and time lines for accomplishing the tasks. To ensure effective implementation, a marketing plan must include individual action plans, or programs, that support the plan at the operational level. Each action plan necessitates providing a budget estimate, schedule, or time line for its implementation and appropriate metrics so that the marketer can monitor progress and control for discrepancies or variation from the plan. Sometimes, variance from a plan requires shifting or increasing resources to make the plan work; other times, it requires changing the objectives of the plan to recognize changing conditions.