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Chapter 2

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Department
Marketing
Course
MKTG 2030
Professor
Neil Smith
Semester
Summer

Description
MKTG Chapter 2 Strategic Planning A managerial decision process that matches an organizations resources and capabilities to its market opportunities for long-term growth and survival. -planning for the future is a key to prosperity businesses succeed because they are capable of developing and implementing superior strategies in the marketplace consumer interests, technology, economy and competition is ever-changing and firms need to plan to meet the challenges of this dynamic environment -Business planning occurs on an annual basis at 3 levels: strategic planning, marketing planning and operational planning -Strategic planning is done by top level corporate management what they do: 1. Define the mission 2. Evaluate the internal and external environment 3. Set organizational or SBU objectives 4. Establish the business portfolio (if applicable) 5.develop growth strategies and tactics Strategy what a firm is going to do to achieve an objective Tactics how a strategy is going to be implemented -strategic plans are usually developed for a period of 3-5 years and take a long term view of the strategic health of the business STRATEGIC PLANNING: GUIDING THE BUSINESS Step 1: Define the Mission -First step is to answer questions such as: what business are we in? What customers should we serve? How should we develop the firms capabilities and focus its efforts? answers to these questions become the lead items in the organizations strategic plan and part of the mission statement Mission statement a formal statement in an organizations strategic plan that describes the overall purpose of the organization and what it intends to achieve in terms of its customers, products and resources. -the ideal mission statement is not too broad, too narrow or too short-sighted it should also inspire customers and other stakeholders to want to do business with an organization Step 2: Environmental/Situational Analysis -assessment of an organizations environment, both, internal and external process is referred to as situational analysis, environmental analysis or sometimes a business review External environment: the uncontrollable elements outside of an organization that may affect its performance either positively or negatively includes everything from consumers to government regulations to competitors to the economy There are 4 main categories of considerations: -macro or general environment: political or legal, economic, social or cultural, technological, or other (p.e.s.t.o) trends or issues, joint venture laws -includes detailed consumer analysis: look for trend, issues or considerations with respect to changing consumer segments, segment profiles and segment sizes focused on understanding specific market segments -competitive analysis: identifying the key competitors, understanding their strategies and strengths and weaknesses, as well as anticipating likely future strategic changes -industry analysis: include factors like industry size and competitiveness, industry structure, industry dynamics (trends, norms, etc), stage of product life cycle, and industry key success factors. Internal environment: the controllable elements inside an organization, including its people, its facilities, and how it does things that influence the operations of the organization -marketers need to understand the current strategy and assess how well that strategy is working (performance), relative market share of the products, effectiveness of current marketing mix -organization systems, structure and culture (e.g. hierarchical): structure, culture and systems (how they get work done) -Skills and resources: technology, intellectual capital and other assets firms physical facilities can be an important asset for creating customer value, as can financial stability, relationship with suppliers and channel members, its corporate reputation and ownership of strong brands in the marketplace. -beliefs, values and preferences of senior management (towards SBU): need to be understood for marketers to consider organization-appropriate alternatives in making key marketing decisions Step 3: Set organizational of SBU objectives -top management sets organizational or strategic business units (SBU) objectives (very large corporations are normally divided into self contained divisions or SBUs) -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 (to see if they have met them or not, so often stated in numerical terms) and attainable (need to be realistic objectives) -objectives may relate to revenue and sales, profitability, the firms standing in the market, return on investment, productivity, product development, customer relations and satisfaction and social responsibility Step 4: Establish the business portfolio-for companies with several different SBUs, strategic planning includes making decisions about how to best allocate resources across those businesses to ensure growth for the total organization Business portfolio the group of different products or brands owned by an organization ad characterized by different income-generating and growth capabilities range of different businesses a large firm operates -diversified business portfolio reduces the firms dependence on one product line or one group of customers Step 5: Develop growth strategies Marketers use the product market growth matrix to analyze different growth strategies vertical axis represents opportunities for growth (in new and existing markets) horizontal measures if the firm would be better off putting its resources into existing products or acquire new products Market penetration strat
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