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Chapter 2

Chapter 2 - Take the Big Picture.docx

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Simon Fraser University
Business Administration
BUS 343
Jason Ho

Marketing Chapter 2: Take the Big Picture 1. Business Planning: Plan Well and Prosper Planning enables a firm to speak in a clear voice in the marketplace so that customers understand what the firm is and what it has to offer that competitors dont have, especially as it decides how to create value for customers, clients, partners and society at large. - Planning identifies and builds on a firms strengths and it helps managers at all levels make informed decisions in a changing business environment. Ethics is Up Front in Marketing Planning The issue of unethical practices can be damaging to society at large. - Thousands of people lose their jobs and in many cases, the pensions they counted on to support them in retirement vanish overnight. - Other stakeholders are punished as well, including stockholders who lose their investments and consumers who end up paying for worthless merchandise or services. Levels of Planning Business planning usually occurs on an annual basis at three levels: strategic planning, marketing planning and operational planning. - Strategic Planning: o The top management team defines the firms purpose and specifies what the firm hopes to achieve over the new few years. o It can occur at two different levels: (1) Overall corporate strategic planning which determines the organizations different business and product pursuits and (2) Individual business units do strategic planning for their products. o Large multifaceted organizations find it more effective to organize their operations into SBUs where focus can be given to specific business opportunities. - Marketing (Functional) Planning: o The various functional areas of the firm are involved. o It typically includes both a broad three to five year plan to support the firms strategic plan and a detailed annual plan for the upcoming year. o It develops lower-level strategies and tactics for achieving the objectives specified in the strategic plan. o It contains details regarding the marketing mix elements. o A tactic at the organizational level becomes the strategy at the functional level and functional level tactics become operational strategies. - Operational Planning: o It is conducted by people such as sales managers, marketing communications managers, brand managers and marketing research managers. o Example of an operational plan: It will show exactly how many units of a product a salesperson needs to sell per month or how many television commercials the firm will place on certain networks during a season. All business planning is an integrated activity. - These plans must work together for the benefit of the whole and always work within the context of the organizations mission and objectives. Strategic Planning: Guiding the Business In small firms that are not large enough to have separate SBUs, the process of strategic planning is basically the same. Step 1: Define the Mission The top managements first step is to answer questions and these become the lead items in the organizations strategic plan. - The answers become part of a mission statement which is ideally not too broad, narrow or short-sighted. Step 2: Evaluate the Internal and External Environment This process is referred to as a situational analysis, environmental analysis or sometimes a business review. External Environment There are four main categories of considerations. - (1) Looking for trends or issues in the macro or general environment that might have a positive or negative effect on the organization. o These may be PESTO trends or issues that might impact a particular industry and business. - (2) In includes detailed consumer analysis. o This is where marketers would look for trends, issues or considerations with respect to changing consumer segments, segment profiles and segment sizes. - (3) It also includes industry analysis. o Industry considerations might include factors like industry size and competitiveness, industry structure, industry dynamics, stage of the product life cycle and industry success factors. - (4) Give consideration to competitive analysis. o Identifying the key competitors, understanding their strategies and strengths and weaknesses, as well as anticipating likely future strategic changes. Internal Environment Marketers need a solid understanding of their own organization and its abilities to create value and compete effectively. - (1) The current strategy of the organization and assess how well that strategy is working. - (2) The resources and competencies of the organization: its technology, intellectual capital and other assets. - (3) The organization of the firm its structure, culture and systems. - (4) The beliefs, values and preferences of senior management in an organization in order to consider organization-appropriate alternatives in making key marketing decisions. Step 3: Set Organizational or SBU Objectives After they construct a mission statement and understand the decision environment, top management sets organizational or strategic business unit objectives.- Organization and SBU objectives are a direct outgrowth of the mission statement and broadly identify what the firm hopes to accomplish within the general time frame of the firms long-range business plan. - To be effective, objectives need to be specific, measurable and attainable. o Attainability is especially important. o That a firms objectives are sustainable is also critical. o To ensure measurability, objectives are often stated in numerical terms. Step 4: Establish the Business Portfolio For companies with several different SBUs, strategic planning includes making decisions about how to best allocate resources across these businesses to ensure growth for the total organization. - Each SBU has its own focus within the firms overall strategic plan and each has its own target market and strategies for reaching its objectives. - Each SBU is a separate profit centre within the larger corporation; each SBU within the firm is responsible for its own costs, revenues and profits. The range of different businesses that a large firm operates is called its business portfolio. - Portfolio analysis helps management decide which of its current SBUs should receive more or less of the firms resources and which of its SBUs are most consistent with the firms overall mission. - The BCG model focuses on determining the potential of a firms existing successful SBUs to generate cash that the firm can then use to invest in other businesses. o The vertical axis represents the attractiveness of the market: the market gro
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