MRKT Ch2

Strategic planning
The managerial process of creating and maintaining a fit between the organizations objectives and resources and the evolving market opportunities. The goal is long run profitability and growth.
Strategic marketing address two questions:
What is the organizations main activity at a particular time? How will it reach its goals?
Planning
The process of anticipating future events and determining strategies to achieve organizational objectives in the future
Marketing planning
Designing activities relating to marketing objectives and the changing marketing environment. The basis for all marketing strategies and decisions
Marketing plan
A written document that acts as a guidebook of marketing activities for the marketing manager, issues such as product lines, distribution channels, marketing communications, and pricing are all delineated in the marketing plan. Provides clearly stated activities that help employees and managers understand and work toward common goals.
Why write a marketing plan?
Allows you to examine the marketing environment in conjunction with the inner workings of the business. Serves as a reference point for the success of future activities, and allows the marketing manager to enter the marketplace with an awareness of possibilities and problems.
Elements of a marketing plan
Business mission statement, situation or SWOT analysis, defining objectives, delineating a target market, and establishing components of the marketing mix.
Marketing mix
product, distribution, promotion, price
Other elements
budgets, implementation timetables, required marketing research efforts or elements of advance strategic planning.
Mission statement
A statement of the firms business based on a careful analysis of benefits sought by present and potential customers and an analysis of existing and anticipated environmental conditions. Should focus on the market or markets the organization is attempting to serve rather than on the good or service offered.
Marketing myopia
Defining a business in terms of goods and services rather than in terms of the benefits that customers seek

*business mission statements that are stated too narrowly, narrow short term thinking

Strategic business unit (SBU):
A subgroup of a single business or a collection of related businesses within the larger organizations. A properly defined SBU should have a distinct mission and target market, control over its resources, its own competitors, and plans independent of other SBU’s in the organization.
SWOT analysis
Identifying internal strengths and weaknesses and also examining external opportunities and threats.
When examining internal strengths and weaknesses:
the marketing manager should focus on organizational resources such as production costs, marketing skills, financial resources, company or brand image, employee capabilities, and available technology.
When examining external opportunities and threats:
marketing managers must analyze aspects of the marketing environment.
Environmental scanning
The collection and interpretation of information about forces, events, and relationships in the external environment that may affect the future of the organization or the implementation of the marketing plan. Helps identify market opportunities and threats and provides guidelines for the design of marketing strategy.
The six most often studied macro environmental forces are:
social, demographic, economic, technological, political and legal, and competitive
Marketing objective
A statement of what is to be accomplished through marketing activities.
To be useful, stated objectives should meet several criteria:
realistic, measurable, time-specific, compared to a benchmark
Competitive advantage
The set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition
Three types of competitive advantages:
cost, product/service differentiation, and niche strategies
Cost competitive advantage
Being the low cost competitor in an industry while maintaining satisfactory profit margins. Enables a firm to deliver superior customer value.
Experience curves
Curves that show costs declining at a predictable rate as experience with a product increases. Allow management to forecast costs and set prices based on anticipated costs as opposed to current costs.
Costs can be reduced in a variety of ways:
1. experience curves – reflects learning by doing, technology advances, and economies of scale
2. efficient labor
3. no frills goods and services
4. government subsidies
5. product design
6. reengineering
7. production innovations
8. new methods of service delivery – walk in clinics, booking flights online, self check in kiosks at the airport
Product/service differentiation competitive advantage
The provision of something that is unique and valuable to buyers beyond simply offering a lower price than the competitors
Niche competitive advantage
The advantage achieved when a firm seeks to target and effectively serve a small segment of the market
Sustainable competitive advantage
An advantage that cannot be copied by the competition
Sources of competitive advantage
cost, product/service differentiation, niche strategies
Ansoff’s strategic opportunity matrix:
Market penetration, market development, product development, diversification
Market penetration
A marketing strategy that tries to increase market share among existing customers
Market development
A marketing strategy that entails attracting new customers to existing products
Product development
A marketing strategy that entails the creation of new products for current customers
Diversification
A strategy of increasing sales by introducing new products into new markets
To determine the future cash contributions and cash requirements expected for each SBU, managers can use the:
Boston Consulting Groups (BCG) portfolio matrix
Portfolio matrix
A tool for allocating resources among products or strategic business units on the basis of relative market share and market growth rate
Relative market share
The measure of market share used in the portfolio approach, the ratio between the company’s share and the share of the largest competitor.
Star
In the portfolio matrix, a business unit that is a fast growing market leader. Star SBU’s usually have large profits but need a lot of cash to finance rapid growth. The best marketing tactic is to protect existing market share by reinvesting earnings in product improvement.
Cash cow
In the portfolio matrix, a business unit that usually generates more cash than it needs to maintain its market share. Low growth market, but the product has a dominant market share. Basic strategy is to maintain market dominance by being the price leader and making technological imporvements in the product.
Problem child (question mark)
In the portfolio matrix, a business unit that has low growth potential and a small market share. Need a great deal of cash, without it they become ‘dogs’. Strategy options are to invest heavily to gain better market share, acquire competitors to get the necessary market share, or drop the SBU.
Dog
In the portfolio matrix, a business unit that has low growth potential and a small market share. Most eventually leave the marketplace. Strategy options are to harvest or divest.
After classifying the company’s SBU’s in the portfolio matrix:
the next step is to allocate future resrouces for each.
Four basic strategies for allocating future resources:
1. build – if an org. has an SBU that has the potential to be a star (problem child at present), this is the appropriate goal. may give up short term profits and use its financial resrouces to achieve this goal.
2. hold – if a successful cash cow, a key goal would be to hold or preserve market share.
3. harvest – appropriate for all SBU’s except those classified as stars, basic goal is to increase the short term cash return without too much concern for th elong run impact.
4. divest – getting rid of SBU’s with low shares of low growth markets is often appropriate, problem children and dogs are most suitable.
Marketing strategy
The activities of selecting and describing one or more target markets and developing and maintaining a marketing mix that will produce mutually satisfying exchanges with target markets
Market segment
A group of individuals or organizations that share one or more characteristics, may have relatively similar product needs.
Target market strategy
Identifies the market segment on which to focus
Market opportunity analysis (MOA)
The descriptions and estimation of the size and sales potential of market segments that are of interest to the firm and the assessment of key competitors in these market segments.
Three general strategies for selecting target markets:
1. Appeal to the entire market with one marketing mix
2. Concentrate on one segment
3. Appeal to multiple market segments using multiple marketing mixes
Marketing mix
A unique blend of the four P’s designed to produce mutually satisfying exchanges with a target market
Four P’s
Product, place, promotion, and price, which together make up the marketing mix
Product strategies
Marketing mix typically starts with the product “P”. Includes not only the physical unit but also its package, warranty, after sale service, brand name, company image, value, and many other factors.
Place strategies
Concerned with making products available when and where customers want them. Involves all the business activities concerned with storing and transporting raw materials or finished products.
Promotion strategies
Includes advertising, public relations, sales promotion, and personal selling. Promotions role in the marketing mix is to bring about mutually satisfying exchange with target markets by informing, education persuading, and reminding them of the benefits of a product.
Pricing strategies
Often the most flexible of the four P’s, and the quickest element to change.
Implementation
The process that turns a marketing plan into action assignments and ensure that these assignments are executed in a way that accomplishes the plan’s objectives.
Evaluation
Entails gauging the extent to which marketing objectives have been achieved during the specified time
Four common reasons for failing to achieve a marketing objective are:
1. unrealistic marketing objectives
2. inappropriate marketing strategies in the plan
3. poor implementation
4. changes in the environment after the objective was specified and the strategy was implemented
Control
Provides the mechanisms for evaluating marketing results in light of the plans objectives and for correcting actions that do not help the organization reach those objectives within budget guidelines
Marketing audit
A thorough, systematic, periodic evaluation of the objectives, strategies, structure, and performance of the marketing organization. Helps management allocate marketing resources efficiently.
Four characteristics of a marketing audit:
1. comprehensive
2. systematic – covers the org. marketing environment, internal marketing system, and specific marketing activities, the diagnosis is follow by an action plan with both short run and long run proposals for improving overall marketing effectiveness
3. Independent – normally conducted by an inside or outside party who is independent enough to have top managements confidence and to be objective
4. periodic – should be carried out on a regular basis
Effective strategic planning
requires continual attention, creativity, and management commitment