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ch 2_

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MKTG 2030
Ben Kelly

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MKTG2030 Textbook Notes Jessica Gahtan Chapter 2: Strategic Market Planning: Take the Big Picture Business Planning: Plan Well and Prosper Business planning: an ongoing process of decision-making that guides the firm both in the short and long term Business Plan: a plan that includes the decisions that guide the entire organization Marketing plan: a document that describes the marketing environment, outlines the marketing objectives and strategies, and identifies how the company will implement and control the strategies embedded in the plan Ethics Is Up Front in Marketing Planning Unethical decisions usually come back to bite you later Levels of Planning Strategic Planning: a managerial decision process that marches an organization’s resource and capabilities to its market opportunities for long-term growth and survival ­ Decisions focus on the firm’s ability to respond to changes and opportunities Strategy: what a firm is going to do to achieve an objective Tactics: reflect how a strategy is going to be enacted or realized ­ in large firms strategic planning can occur at two different levels: (1) overall corporate strategic planning (determines the org’s different business and product pursuits) (2) individual business units do strategic planning for their products Strategic Business Units (SBUs): a semi-autonomous entity which operates as an independent business with its own mission and objectives, and with its own marketing strategy- large companies organize businesses this way so that focus can be given to specific business opportunities Functional planning: a decision process that concentrates on developing detailed plans for strategies and tactics for the short term, supporting an organization’s long-term strategic plan ­ Marketing planning typically includes both a broad 3-5 year plan to support the firm’s strategic plan and a detailed annual plan for the coming year ­ The marketing plan contains details regarding the marketing mix elements, while the strategic plan doesn’t contain this level of detail Operational planning: planning that focuses on the day-to-day execution of the functional plans and includes detailed annual, semiannual or quarterly plans ­ all business planning is an integrated activity Strategic Planning: Guiding the Business Step 1: Define the Mission Mission statement: a formal document that describes the organization’s overall purpose and what it hopes to achieve in terms of its customers, products and resources- shouldn’t be too broad, too narrow or too shortsighted; they should inspire customers and other stakeholders to want to do business with an organization Step 2: Evaluate the Internal and External Environment ­ AKA situational analysis, environmental analysis, or business review External environment: the uncontrollable elements outside of an organization that may affect its performance either positively or negatively. These include macro environmental factors like regulatory or technological factors, consumer behavior trends, industry factors such as industry concentration, and competitive factors such as the number and sophistication of competitors 4 main categories of consideration: 1. Macro or general environmental- PESTO- Political (including legal or regulatory), economic, social or cultural, technological, or other trends or issues that might impact a particular industry and business 2. Consumer analysis: look for trends, issues, or considerations with respect to changing consumer segments, segment profiles and segment sizes 3. Industry analysis: industry size, competitiveness, structure, dynamics, stage of the product life cycle- looking for factors that might positively or negatively impact our strategic decisions 4. Competitive analysis: identifying the key competitors, understanding their strategies and strengths and weaknesses as well as anticipating likely future strategic changes Page | 1 MKTG2030 Textbook Notes Jessica Gahtan Internal environment: all the controllable elements inside an organization- including its people, its facilities, how it does things- that influence the ops of the org ­ Current strategy and performance; organizational systems, structure, and culture; skills and resources; preferences and values Step 3: Set Organizational or SBU Objectives ­ Goals need to be specific, measurable and attainable Step 4: Establish the business portfolio ­ Strategic planning includes making decisions about how to best allocate resources across these businesses to ensure growth for the total organization Business portfolio: the group of different products or brands owned by an organization and characterized by different income-generating and growth capabilities ­ Diversification reduces the firm’s dependence on any one product line or any one group of customers Portfolio analysis: a tool management uses to assess the potential of a firm’s business portfolio- helps mgmt. decide which of its SBUs should receive more or less of the firm’s resources, and which are most consistent with the firm’s overall mission BCG Growth-market share matrix: a portfolio analysis model developed by the Boston Consulting Group that assesses the potential of successful products to generate cash that a firm can then use to invest in new products Step 5: Develop Growth Strategies Market Penetration Strategies seek to increase the sales of existing products to existing markets such as current users, nonusers, and users of competing brands w/in a market – firm could increase sales by cutting prices, improving distribution, or conducting promotions aimed at attracting users of competing brands Market Development Strategies introduce existing products to new markets; can mean expanding into a new geographic area, reaching new customer segments w/in an existing geo market Product Development Strategies create growth by selling new products in existing markets; could mean extending the firm’s product line by developing new variations of the item, or altering or improving the product to provide enhanced performance; create growth by taking market share from competitors Diversification strategies emphasize both new products and new markets to achieve growth * So far: the strategic design process includes developing the mission statement, assessing the internal and external environment, setting objectives, establishing the business portfolio, developing growth strategies Page |2 MKTG2030 Textbook Notes Jessica Gahtan Marketing Planning Process ­ Solid planning means that a firm has a viable product at a price consumers are willing to pay, means to get that product to the place consumers want it, and a way to communicate (promote) the product to the right customers (offer them a product that is perceived by the intended customers as being more valuable than the money being asked for it) Step 1: Perform a Situational Analysis to Understand the Decision Context ­ A strategic assessment is conducted to identify the key facts, factors, or observations in the external and internal environments that have the most important implications or bearings on the marketing planning SWOT analysis: seeks to identify meaningful strengths (S) and weaknesses (W) in the organization’s internal environment, and opportunities (O) and threats (T) from the external environment Fatal Business Flaws: Failure to innovate No differentiation, inability to Observed in an org’s current create and defend a sustainable strategy relative to its competitive competitive advantage environment Failure to Create Value Not a large enough market Observed by comparing org’s segment wants a particular offer current strategy relative to segment profile analysis Failure to persist over time Insufficient margins, volume or Observed in both the internal and resources, often related to a external environment failure to create value, sometimes related to an inability to communicate that value Failure to maintain uniqueness Offers are imitable or substitutable; can’t limit direct competition; can’t defend positioning Failure to prevent ‘appropriation’ Holdup or slack; Holdup- evident in an industry or of value Holdup- org is held hostage by competitive analysis powerful stakeholders (i.e. unions) who are able to negotiate terms Slack- evident in an analysis of that erode the profitability of the the organizational structure, org systems, and culture or in the current strategy and performance Slack- wasteful or inefficient with their resources Failure to be flexible and adapt Inability to deal with uncertainty Degree of uncertainty is often and ambiguity; in highly volatile, assessed in an industry analysis, fast changing industries (i.e. inability of management to plan or fashion) effective risk adapt could be an issue in an management and other risk assessment of an org’s mitigators can be difficult to fully management and systems save self in event of risk b/c some events can’t be anticipated Using SWOT Analysis ­ Marketers use SWOT to make strategic and tactical decisions ­ Internal strengths & external opportunities provide rationale to support a particular course of action ­ Internal weaknesses & external threats provide reasons why a particular course of action might not be appropriate- weaknesses and threats aren’t absolute, both can be mitigated/ addressed through the marketing strategy ­ Key with SWOT is to not get bogged down in analysis paralysis Step 2: Set Marketing Objectives Metrics are the measures marketers use to assess their performance Step 3: Develop Marketing Strategies Strategic Orientation is a discussion of how well the org will compete in its chosen market(s); includes a discussion of growth strategies, SWOT, customer value creation strategies, etc. Page |3 MKTG2030 Textbook Notes Jessica Gahtan Differentiation is how a brand will be known to its customers as being better than competitive brands Defendability discusses sources of sustainable competitive advantage (= the ability of a firm to outperform the competition, providing customers with a benefit the competition cannot) and the systems, competencies, technologies, or other resources that enable an org to defend its chosen positioning Brand personality is a discussion of how the intended differentiation will be captured in the creation of brand meaning Develop Marketing Mix Strategies Product Strategies include decisions such as product design, packaging, branding, support services, variations, what product features will provide the unique benefits the targeted customers want Pricing Strategies determine how much a firm will charge for a product; a firm may base its pricing strategy on costs, demand, or the prices of competing products Communication Strategy how the marketers communicate a product’s value proposition to the target market; advertising, sales promotion, public relations, publicity, direct marketing, personal selling Distribution Strategies outline how, when, and where the firm will make the product available to targeted customers (the place component); will they sell directly to the final customer or through retailers and wholesalers; choice of which retailers should be involved depends on the other 3 P decisions Step 4: Develop and Implementation Plan ­ Describes the tactics of how to do what the marketing plan laid out; action plan- says what needs to be done, by whom, when it needs to be done by; usually organized by marketing objective and the strategies outlined above to meet each objective ­ Implementation plan also involves control plans, like metrics for how you will measure performance and benchmarks or targets that indicate success or lack thereof Return on Marketing Investment (ROMI) is the revenue or profit margin generated by investment in a specific marketing campaign or program divided by the cost of that program at a given risk level ­ Critical to think of marketing as an investment not an expense- drives firms to use marketing strategically to enhance the business ­ ROMI is the revenue or profit margin generated by investment in a specific marketing campaign or program divided by expenditure at a given risk level 6 common objectives to relying exclusively on ROMI for measuring marketing success: 1. In accounting statements- marketing expenditures are an expense not an investment 2. Other bottom-line performance measures consider profit or cash flo
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