MGM3211 Chapter 2

1. MGM3211Chapter 2 Strategic Planning and the Marketing Process

2. Market Utility Potential customers Business Needs Wants Demand Exchange Process Resources Objectives Technology know-how …. Influencing factors

3. Who are we? What do we do? Where do we want to be? What/who will effect us? Business objectives: What do we want? • Our business • Our customers Who are they? What do they do? How do they consume? How do they look at things? What affect them? Planning: How are we going to achieve our Objectives? • Our suppliers Who are they? How strong are they? How can they affect us? What will they do? • Our competitors & other threats What are they? How will they affect us, our customers and our competitors? What will change in the future? • External forces that will effect us

4. businesses need to consider the Planning Process to ensure the future they desire. The need to anticipate events or conditions and the ways to achieve personal objectives is critical to long term achievements.

5. Marketing Planning: The Basics for Strategy and Tactics • Planning: Process of anticipating future events and conditions and of determining the best way to achieve organizational goals • Marketing planning: Implementing planning activities devoted to achieving marketing objectives

6. Kraft • Adding Products to Increase Market Share

7. Strategic Planning versus Tactical Planning • Strategic planning: Process of determining an organization’s primary objectives and adopting courses action that will achieve those objectives • Tactical planning: Process that guides the implementation of activities specified in the strategic plan.

8. Strategic Planning versus Tactical Planning • Top management • Greater proportions of their time engaged in planning • Usually focus their planning activities on long-range strategic issues • Middle level managers • Focus on operational planning; creating and implementing tactical plans • Supervisors • Developing the specific programs to meet goals in their areas of responsibility

9. Table 2.1:Planning at Different Managerial Levels

10. Steps in the Marketing Planning Process

11. Defining the Mission of the Organization • Mission: the essential purpose that differentiates one company from others • A mission statement is usually a short statement of the purpose for a company to exist • The mission statement specifies the organization’s overall goals and operational scope and provides general guidelines for future management actions • EXAMPLES: • Our Mission is to design medicines to heal sick people. • Our Mission is to provide materials that others may employ to build shelters for people.

12. Determine Organizational Objectives • An organization lays out its basic objectives, or goals • These objectives in turn guide development of supporting marketing objectives and plans • Well-developed objectives should state specific, quantitative intentions along with deadlines for achieving them • Examples: • …… be the market leader by 2007 • ……to capture 30% market share by …. • …… to make RMx,000,000.00 profit in 2007

13. Assessing Organizational Resources and Evaluating Environmental Risks and Opportunities • This step involves a back-and-forth assessment of strengths, risks, and available opportunities.

14. Formulating, Implementing, and Monitoring a Marketing Strategy • Marketing strategy: a firm’s overall program for selecting and satisfying a target market • A marketing strategy is aimed at satisfying consumers in the selected target market through a careful balance of the elements of the marketing mix – each of which represents a subset of the overall marketing strategy

15. Successful Strategies: Tools and Techniques • All planning strategies have the goal of creating a sustainable competitive advantage for a firm. • An advantage where other companies cannot provide the same offering or value.

16. Porter’s Five Forces Model

17. First Mover and Second Mover Strategies • First mover strategy: Theory advocating that the company that is first to offer a product in a marketplace will be the long-term market winner. • Second mover strategy: Theory that advocates observing closely the innovations of first movers and then introducing new products that improve on the original offering to gain advantage in the marketplace.

18. Has AOL embraced the first or secondmover strategy?

19. SWOT is an acronym for strengths, weaknesses, opportunities, and threats • A SWOT analysis is a method of studying organizational resources and capabilities to assess the firm’s strengths and weaknesses and scanning its environment to identify opportunities and threats

20. SWOT Analysis

21. The Strategic Window • A limited period with an optimal fit between the key requirements of a market and the particular competencies of a firm

22. Elements of a Marketing Strategy • Blending the four strategy elements of marketing decision-making to satisfy chosen target markets • Product • Price • Place/Distribution • Promotion

23. Target Market • Group of people toward whom the firm decides to direct its marketing efforts

24. Marketing Mix Variables • Product Strategy • What goods or services to offer • Customer service • Package design • Brand names • Trademarks • Warranties • Product Life Cycle • Positioning • New-product development

25. Marketing Mix Variables • Distribution StrategyPlanning that ensures that consumers find their products in the proper quantities at the right times and places. • Modes of transportation • Warehousing • Inventory control • Order processing • Marketing channels

26. 7-Up • This ad, in a comical tone, illustrates the challenges of finding distribution for your product.

27. Elements of a Marketing Strategy • Marketing Mix Variables • Promotional Strategy • Blending together the various elements of promotion to communicate most effectively with the target market • Informing, persuading, and influencing a consumer’s purchase decision. Promotional mix: Personal selling Non-personal selling Advertising Sales promotion Tradeshows Direct selling Publicity and public relations Product placement

28. Marketing Mix Variables • Pricing Strategy • Deals with the methods of setting profitable and justifiable prices Price Perceived value Cost Mark-up/ margin Other

29. The Marketing Environment • Competitive • Political – Legal • Economic • Technological • Social – Cultural

30. The Competitive Environment • Competitive Environment: The interactive process that occurs in the marketplace among marketers of directly competitive products, marketers of products that can be substituted for one another, and marketers competing for the consumer’s purchasing power. • Monopoly (e.g. TNB) • Deregulation movement (e.g. IPP allowed to serve end users directly) • Oligopoly (e.g. RTM, TV3 group/ oil companies,..)

31. Types of Competition - • Competitors as threats • Directly Competitive Products (Pepsi vs. Coca-cola) • Indirectly Competitive Products • Involves products than can be substituted for one another (Pepsi/Coca-cola vs. other soft drinks) • All Consumer Purchases • Occurs in the sense that all firms compete for the buyers’ purchases • Competitors as partners • Strategic alliances (cooperation with others to create competitive advantages. e.g. Hyundai-SimeDarby Motors) • Competitors of tomorrow • “some of the most dangerous competitors are the ones that have yet to emerge” e.g. technology based companies

32. The Competitive Environment, as well as, changes in technology, has influenced the way Toyota differentiate their product offerings.

33. The Political-Legal Environment • Component of the marketing environment consisting of laws and interpretations of laws that require firms to operate under competitive conditions and to protect consumer rights. • Legislation affecting businesses worldwide has increased • Laws protect companies, consumers and the interests of society • Increased emphasis on socially responsible actions

34. The Economic Environment • Factors that influence consumer buying power and marketing strategies, including stage of the business cycle, inflation, unemployment, resource availability and income • Stages in the Business Cycle • Cyclical patterns consisting of the stages of prosperity, recession, depression, and recovery. High spending Demand for luxury Higher disposable income Cautious spending Low disposable income Regulated spending Demand for essentials

35. Inflation and Deflation • Inflation: The devaluation of money by reducing what it can buy through persistent price increases. • Deflation: Falling prices, better? – danger of downwards spiral • Unemployment • The proportion of people in the economy who do not have jobs and are actively looking for work.

36. Income • Influence consumers’ buying power • Discretionary income: the amount of money people have to spend after paying for necessities such as food, clothing, and housing. • Resource Availability • Resources are not unlimited • Demarketing: the process of reducing consumer demand for a good or service to a level that the firm can supply.

37. The International Economic Environment • Marketers must consider the economic environment of other nations • Changes in foreign currency rates may affect marketing decisions • Recessions in one part of the world may be offset by prosperity in another

38. Economic growth in other countries often means increased potential growth of foreign tourists for tourism destinations

39. The Technological Environment • The technological environment represents the application of knowledge in science, inventions, and innovations to marketing. The Toyota Prius: one of the First Hybrid Automobiles Available

40. The Social-Cultural Environment • The relationship between marketing and society and its culture • GardenBurger is a leader in marketing meatless products that satisfy demands of vegetarians and health-conscious consumers

41. Methods for Marketing Planning • Business Portfolio Analysis • Strategic Business Units (SBUs) are key business units within diversified firms • A division, product line, or single product may define an SBU • Firms redesign their SBUs as market conditions dictate “A Strategic Business Unit can encompass an entire company, or can simply be a smaller part of a company set up to perform a specific task. The SBU has its own business strategy, objectives and competitors and these will often be different from those of the parent company.” Wiki

42. 3M • Tape Products: A 3M Strategic Business Unit

43. The BCG Matrix • Market Share/ Market Growth Matrix: a marketing planning tool that classifies a firm’s SBU’s or products according to industry growth rates and market shares relative to competing products • Stars • Cash Cows • Dogs • Question Marks

44. Figure 2.10 • BCG Market Share/Market Growth Matrix