BUS 348 Chapter 3

STRATEGIC MARKET PLANNING: TAKE THE BIG PICTURE

Ethics in Marketing Planning

• Ethics Is Job One in Marketing Planning
    - Marketing actions that are shown to be unethical will hinder long-term relationships.
    - Consequences of low ethical standards:
      - Investment loss for stockholders.
      - Job losses within the firm.
      - Erosion of consumer confidence in the economy.

Business Ethics Overview

• Business ethics: Fundamental values guiding a firm’s behavior.
• Code of ethics: A formal document outlining written standards of behavior that all employees must adhere to.

AMA Code of Ethics (Table 2.7)

• Ethical Norms:
    - Do no harm.
    - Foster trust in the marketing system.
    - Embrace ethical values.
• Ethical Values:
    - Honesty
    - Responsibility
    - Fairness
    - Respect
    - Transparency
    - Citizenship

Developing a Sustainable Marketing Mix

• Target marketing strategies: Focus on environmentally conscious or 'green' customers.
• Product strategies: Incorporate fair trade suppliers into production processes.
• Price strategies: Ensure pricing is fair and reflects sustainable practices.
• Place/Distribution strategies: Adopt locavorism to support local economies.
• Promotion strategies: Market sustainably produced products effectively.

Overview of Business Planning

• Planning is Essential: Guides both short-term and long-term firm decisions while building on strengths, improving decision-making, and developing objectives.

Three Levels of Business Planning

1. Strategic Planning:
      - Conducted by top-level corporate management.
      - Steps:
        1. Define the mission.
        2. Evaluate the internal and external environment.
        3. Set organizational or SBU objectives.
        4. Establish the business portfolio (if applicable).
        5. Develop growth strategies.

2. Functional (Market) Planning:
      - Managed by functional-level management like the CMO.
      - Steps:
        1. Perform a situation analysis.
        2. Set marketing objectives.
        3. Develop marketing strategies.
        4. Implement and control the marketing plan.

3. Operational Planning:
      - Conducted by supervisory managers.
      - Steps:
        1. Develop action plans to implement the marketing plan.
        2. Use marketing metrics to monitor the effectiveness of the plan.

Steps in Strategic Planning (Figure 2.2)

• Step 1: Define the mission.
• Step 2: Evaluate the internal and external environment.
• Step 3: Set organizational or SBU objectives.
• Step 4: Establish the business portfolio.
• Step 5: Develop growth strategies.

Step 1: Define the Mission

• Key Questions:
    - What business are we in?
    - What customers should we serve?
    - How do we develop the firm's capabilities and focus its efforts?
• Mission Statement:
    - A formal document outlining the firm’s purpose, goals concerning customers, products, and resources.
• Example: FORTUNE 500 companies' mission statements illustrate diverse focuses.

Importance of Mission Statements

• Example of Xerox:
    - If Xerox focused narrowly on copy machines instead of embracing “document solutions,” it risks obsolescence in the digital era.
• Ideal Characteristics:
    - Should not be too broad, narrow, or shortsighted.

Step 2: Evaluate Internal and External Environments

• Situational Analysis:
    - Assessment of internal strengths and weaknesses, as well as external opportunities and threats.
• Internal Environmental Assessment: Identifies controllable factors inside a firm influencing operations, such as:
    - Key technologies.
    - Patents.
    - Financial stability.
    - Supplier relationships.
    - Reputation.
    - Human capital (e.g., Southwest Airlines utilizes its workforce’s positive culture as a strength).

External Environmental Factors

• Factors outside the firm affecting its operations, which can be categorized into:
    - Legal/Political/Ethical Trends.
    - Economic Trends.
    - Competitive Trends.
    - Technological Trends.
    - Sociocultural Trends: Recent trends indicate consumer backlash toward high-fat, unhealthy foods amidst obesity concerns.

SWOT Analysis

• Definition: Analysis of organizational strengths (S), weaknesses (W), opportunities (O), and threats (T).
• Purpose: Helps firms develop strategies to maximize strengths and leverage opportunities.

Example of a Partial SWOT Analysis for McDonald's (Table 2.2)

• Strengths:
    - Exceptional research and product development.
    - Global franchise operations.
    - Strong financial position.
    - Consistency in product and service quality.
    - Growing presence in the coffee market.
• Weaknesses:
    - Historically slow to adapt to consumer trends towards healthier options.

Opportunities and Threats for McDonald's (Table 2.2)

• Opportunities:
    - Innovate bistro-style locations to attract trends towards upscale dining formats.
• Threats:
    - Alignment with both Baby Boomers and Gen Z for new product innovation.
    - Emerging competition employing innovative marketing strategies.
    - Negative associations with obesity in media damaging brand reputation.

Step 4: Establish Business Portfolio

• Definition: A collection of various businesses operated by a large firm, often in strategic business units (SBUs).
• Example: Disney runs diverse operations such as theme parks and studios.
• Portfolio Analysis: Evaluates growth potential of SBUs and product lines, often using the Boston Consulting Group (BCG) Growth-Share Matrix.

Boston Consulting Group (BCG) Matrix (Figure 2-3)

• Categories:
    - Stars: High-growth markets with dominant market share.
    - Cash Cows: Low-growth markets retaining dominant market share.
    - Question Marks: High-growth markets with low market share.
    - Dogs: Low-growth markets with low market share.

Step 5: Develop Growth Strategies

• Product-Market Growth Matrix: Differentiates growth strategies by market and product type.
• Example: Jeep offers diversified vehicles catering to varying consumer needs.

Product-Market Growth Matrix (Figure 2-4)

• Existing Markets:
    - Market Penetration Strategy: Increase sales of existing products within current markets.
    - Market Development Strategy: Introduce existing products to new markets.
• New Markets:
    - Product Development Strategy: Launch new products in existing markets.
    - Diversification Strategy: Target new markets and products for growth.

Marketing Planning: Develop and Execute Marketing Strategy

• Effective implementation of the four Ps (Product, Price, Promotion, Place) necessitates meticulous planning.
• Steps align closely with strategic planning but emphasize the marketing mix specifics.

The Marketing Plan

• Blueprint of a Company’s Marketing:
    - Executive summary.
    - Situation analysis.
    - Objectives.
    - Target market.
    - Marketing mix strategies.
    - Implementation and control measures.
    - Budget allocations.

Steps in Market Planning (Figure 3.5)

• Step 1: Situation analysis.
• Step 2: Set marketing objectives.
• Step 3: Develop marketing strategies.
• Step 4: Implement and control the marketing plan.

Step 1: Perform a Situation Analysis

• Builds upon SWOT findings, examining how external trends will influence marketing plans.

Step 2: Set Marketing Objectives

• Define specific goals for the firm’s brands and related marketing mix elements.
• Articulate what the marketing function must achieve to help realize overall business objectives.

Step 3: Develop Marketing Strategies

• Craft strategies that tap into target markets aligning with the firm’s offerings.
• Marketing Mix Strategies:
    - Product Strategies: Design, packaging, branding, support services, and features.
    - Pricing Strategies: Pricing for end consumers, wholesalers, and retailers based on costs, demand, or competitor prices.

Step 4: Implement and Control the Marketing Plan

• Control: Involves measuring actual performance, assessing alignment with objectives, and making necessary adjustments.
• Marketing Metrics:
    - Return on marketing investment (ROMI) as a measure of effectiveness.
    - Example Calculation of ROMI:
      - Revenue from Marketing Investment = $150,000
      - Cost of Marketing Program = $30,000
      - Hence, ROMI = $\frac{150,000}{30,000} = 5.0$