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Chapter 2

PRINCIPLES OF MARKETING Eighth Edition Philip Kotler and Gary Armstrong. Chapter 2. Strategic Planning and the Marketing Process. Strategic Planning involves developing an overall company strategy for long-run survival and growth. This process involves:

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Chapter 2

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  1. PRINCIPLES OF MARKETING Eighth Edition Philip Kotler and Gary Armstrong Chapter 2 Strategic Planning and the Marketing Process

  2. Strategic Planninginvolves developing an overall company strategy for long-run survival and growth. This process involves: Defining a Mission: Statement of an organization’s purpose; should be market oriented. Setting Company Objectives: Supporting goals and objectives to guide the entire company. Designing a Business Portfolio: Collection of businesses and products that make up the company. Planning Functional Strategies: Detailed planning for each department designed to accomplish strategic objectives. Strategic Planning Process

  3. The best portfolio is the one that best fits the company’s strengths and weaknesses to the opportunities in the environment. The company must: analyze its currentbusiness portfolio or Strategic Business Units (SBU’s) decide which SBU’s should receive more, less, or no investment develop growth strategies for adding newproducts or businesses to the portfolio Designing the Business Portfolio

  4. Analyzing Current SBU’s:Boston Consulting Group Approach Relative Market Share High Low • Stars • High growth & share • Profit potential • May need heavy • investment to grow • Question Marks • High growth, low share • Build into Stars/ phase out • Requires cash to hold • market share Market Growth Rate Low High • Dogs • Low growth & share • Low profit potential • Cash Cows • Low growth, high share • Established, successful • SBU’s • Produces cash

  5. Business Strength Strong Average Weak C High A Medium D B Low Analyzing Current SBU’s:GE Strategic Business-Planning Grid Industry Attractiveness

  6. Developing Growth Strategies Product/ Market Expansion Grid 1. Market Penetration 3. Product Development Existing Products New Products Existing Markets 2. Market Development 4. Diversification New Markets

  7. Market Penetration: increase sales to present customers with current products. How? Cut prices, increase advertising, get products into more stores. Market Development: develop new markets with current products. How? Identify new demographic or geographic markets. Product Development: offering modified or new products to current customers. How? New styles, flavors, colors, or modified products. Diversification: new products for new markets. How? Start up or buy new businesses. Product/ Market Expansion Grid

  8. Process of Selecting Target Consumers Market Segmentation: determining distinct groups of buyers (segments) with different needs. Market Targeting: evaluating and selecting which target segments to enter. Market Positioning: products distinctive and desirable place in the minds of target segments compared to competing products. Marketing Strategies for Competitive Advantage Market-Leader Market Challenger Market-Follower Market-Nicher Marketing’s Role in Strategic Planning

  9. Demographic- Economic Environment Technological- Natural Environment Marketing Intermediaries Marketing Analysis Marketing Planning Product Target Consumers Suppliers Place Price Publics Promotion Marketing Implementation Marketing Control Political- Legal Environment Social- Cultural Environment Competitors The Marketing Process

  10. Marketing Mix- The Four P’s Price Amount of money that consumers have to pay to obtain the product Product “Goods-and-service” combination that a company offers a target market Target Customers Intended Positioning Activities that persuade target customers to buy the product Promotion Company activities that make the product available Place

  11. Marketing Analysis of Company’s Situation Managing the Marketing Effort Control Marketing Implementation Turn Marketing Plans into Action Plans to Achieve Marketing Objectives Marketing Planning Develop Marketing Strategies to Achieve Marketing Objectives Develop Marketing Plans & Budget Measure Results Evaluate Results Take Corrective Action

  12. Executive Summary Current Marketing Situation Threats and Opportunities Objectives and Issues Elements of a Marketing Plan Marketing Strategy Action Programs Budgets Controls

  13. Marketing Strategy Marketing Implementation Organizational Structure Decision and Reward Human Resources Marketing Performance Action Programs Climate and Culture Implementation

  14. Set Marketing Goals Marketing Control Measure Performance Evaluate Performance Take Corrective Action

  15. Environment Strategy Function Types of Marketing Audits Productivity Organization Systems Marketing Audits

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