CH2 350

Strategic Planning

the process of developing and maintaining a profitable long-term fit between the organization’s goals and capabilities and its changing marketing opportunities

• Goal: Involves adapting the firm to take advantage of opportunities that will likely emerge in its evolving environment

• Marketing’s role: Company-wide strategic planning guides marketing strategy and planning. The company’s broader strategy must also be customer focused.

4 Steps in Strategic Planning

Corporate Level:

1. Defining the company mission.

2. Setting company objectives and goals.

3. Designing the business portfolio.

Business Unit Level:

4. Planning marketing and other functional strategies

Mission Statement

is a statement of the organization’s purpose—what it wants to accomplish in the larger environment

• Starts with: What is our business? Who is the customer? What do consumers value?

• Must be market oriented (defined in terms of satisfying customer and societal needs), not myopically product or technology-oriented

  • meaningful, specific, yet motivating, NOT focused on making sales/profits

  • ex) Ritz-Carlton Experience, SW Airlines efficient philosophy, Otis Worldwide

Market-Oriented vs. Product-Oriented Definitions

Starbucks (Market-Oriented): "We sell the “Starbucks Experience,” one that enriches people’s lives one moment, one human being, one extraordinary cup of coffee at a time".

Sephora (Market-Oriented): "We sell lifestyle and self-expression by helping customers to unlock their beauty potential".

Church & Dwight / Touchland Acquisition Case

Church & Dwight, the company behind Arm & Hammer, purchased Touchland (hand sanitizer) as a profitable addition to its portfolio

• Goal: To connect in a meaningful way with Gen Z (13 - 28 year olds) and even Gen Alpha (12 and under), who are often unfamiliar with older Church & Dwight brands.

Business Portfolio

the collection of businesses and products that make up the company

• The best business portfolio achieves the best fit between opportunities in the environment and the company’s strengths and weaknesses

Business Portfolio Analysis

whereby management evaluates and plans for the future of the products and businesses that make up the company

SBU (Strategic Business Unit)

A company division, a product line within a division, or sometimes a single product or brand

Cash cows (BCG Matrix)

low-growth but high-market share, profitable businesses or products.

• SBUs need less investment and produce cash to support other SBUs.

Stars (BCG Matrix)

high-growth, high-share businesses or products

• need heavy investments to finance their rapid growth.

  • they will slow down and turn into cash cows

Question marks (BCG Matrix)

low-share business units in high-growth markets.

• require a lot of cash to hold their share

• management must decide which to build into stars and which to phase out.

Dogs (BCG Matrix)

low-growth, low-share businesses and products

• may generate enough cash to just maintain themselves but do not promise to be large sources of cash

Product/Market Expansion Grid

useful device for identifying growth opportunities

• 4 aspects

Market Penetration (P/M Grid)

Existing products and existing markets. Making more sales to current customers without changing original products.

• ex) Starbucks adding new stores in current areas or expanding its food menu (which accounts for more than 20% of revenue).

Market Development (P/M Grid)

Existing products and new markets. Identifying and developing new markets (demographic or geographic) for current products.

• ex) Starbucks expanding swiftly in China, with a goal of reaching more than 9,000 stores by mid-decade.

Product Development (P/M Grid)

New products and existing markets. Offering modified or new products to current markets. ex) Starbucks developing Via instant coffee, K-Cup packs, or adding a line of plant-based Oatly oat milk selections.

Diversification (P/M Grid)

New products and new markets. Starting up or buying businesses beyond current products and markets. ex) Starbucks created the ultra-premium Starbucks Reserve brand, with Roasteries and Princi Bakery and Café shops, entering the "ultra-premium" market.

Downsizing Strategy

Carefully prune, harvest, or divest brands or businesses that no longer fit the overall strategy. Reasoning: A firm may have grown too fast, entered areas where it lacks expertise, or the market environment changed. ex) P&G sold off numerous major brands (Crisco, Pringles, Duracell) to focus on a more selective set of household care and beauty/grooming products.

Marketing’s Key Roles in Strategic Planning

1. Provides a guiding philosophy (the marketing concept). 2. Provides critical insights to strategic planners (assessing market conditions, identifying opportunities). 3. Facilitates design and execution of market-focused strategies.

Internal Value Chain

Each company department is a link in the company’s internal value chain The firm’s success depends on how well each department performs and coordinates activities.

Department Conflict Example

Marketing might ask for perfect, over-engineered products to delight customers, but this can increase purchasing costs, disrupt production schedules, and reduce overall profitability.

Value Delivery Network

The network the company must look beyond its internal value chain

• value chains of suppliers, distributors, and customers

Nature of Modern Competition

Competition no longer takes place only between individual competitors. Rather, it takes place between the entire value delivery network created by these competitors.

• ex) Ford’s performance against Toyota depends on the quality of Ford’s overall value delivery network versus that of Toyota.

Market Targeting

Tesla appealed to market niche

• began by focusing on a narrow sliver of the market: high-performance all-electric vehicles (EVs) targeted toward a small, largely untapped segment of affluent, technology-obsessed buyers

• established Tesla as a capable and innovative industry pioneer

  • Tesla grew, it entered the core mainstream market.

  • Customers care far less about technology and sustainability and seek reliable, high-value, low-risk products.

  • They suffer from range anxiety, and many find Tesla’s rather sparse interiors insufficient for the price.

Positioning

arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers

Differentiation

actually differentiating the company’s market offering to create superior or different customer value relative to the competition

• Effective positioning begins with differentiation

Marketing Mix

the set of marketing tools that the firm blends to produce the response it wants in the target market

• The goal is to establish strong positioning in target markets

Product

Captures the offering from the company to the target market. Includes: Variety, Quality, Design, Features, Brand name, Packaging, Services

Price

The amount of money customers must pay to obtain the product. Includes: List price, Discounts, Allowances, Payment period, Credit terms

Promotion

Activities that communicate the benefits of the product and persuade target customers to buy it.

• Includes: Advertising, Personal selling, Sales promotion, Public relations

Place

Company activities that make the product available to consumers.

• Includes: Channels, Coverage, Locations, Inventory, Transportation, Logistics

5 Marketing Management Functions

1. Analysis (Provides information)

2. Planning (Develops strategic and marketing plans)

3. Organization

4. Implementation (Carries out the plans)

5. Control (Measures results, evaluates, takes corrective action).

SWOT Analysis

Strengths (Internal, Positive): Internal capabilities that may help a company reach its objectives.

Weaknesses (Internal, Negative): Internal limitations that may interfere with a company's ability to achieve its objectives.

Opportunities (External, Positive): External factors that the company may be able to exploit to its advantage.

Threats (External, Negative): Current and emerging external factors that may challenge the company’s performance

Key Questions in Implementation Plans

Who will do it?

What will be done?

When will it be done?

How much will it cost?

Chief Marketing Officer

aka Chief customer experience/value officer

• CMO’s role is to champion the customer’s cause and is now responsible for the entire customer experience

Operating Control vs. Strategic Control

Operating Control: Checking ongoing performance against the annual plan (short-term goals, sales, profits).

Strategic Control: Looking at whether the company’s basic strategies are well matched to its opportunities (periodically reassessing the overall approach).

Marketing ROI

the net return from a marketing investment divided by the costs of that investment

• measures the profits generated by investments in marketing

Customer-Centered Metrics

Beyond standard measures (sales, market share), companies use customer relationship measures such as

• customer satisfaction

• engagement

• retention

• lifetime value

• equity

because these capture both current and future performance.

Marketing Dashboard

Meaningful sets of marketing performance measures in a single display used to monitor strategic marketing performance.