MKTG 2030 Chapter Notes - Chapter 2: Consumerism, Cash Flow Statement, Price Discrimination

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24 May 2012

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MKTG Chapter 2
Strategic Planning A managerial decision process that matches an organization’s 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
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
-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 organization’s 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
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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
-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 firm’s 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 firm’s standing in the market, return on
investment, productivity, product development, customer relations and satisfaction and social
Step 4: Establish the business portfolio
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-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 firm’s dependence on one product line or one group of
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 strategy: growth strategies designed to increase sales of existing products to current
customers, nonusers and users of competitive brands in served markets can increase sales by cutting
prices, improving distribution or conducting promotions aimed at attracting users of competing brands
Market development strategy: growth strategies that introduce existing products to new markets
expanding into a new geographic area or reaching new customer segments within an existing
geographic market
Product development strategy: growth strategies that focus on selling new products in served markets
product development may mean extending the firms product line by developing new variations of the
item, or altering of improving the product for enhanced performance
Diversification strategies: growth strategies that emphasize both new products and new markets
The Marketing Planning Process
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