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Chapter 2

Strategic Market Planning: Take the Big Picture

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall2-2

Business Planning:Compose the Big Picture Business Planning:

Ongoing process of making decisions that guide the firm both in the short term and for the long haul– Identifies/builds on firm’s strengths– Helps managers make informed decisions– Develops objectives before action is taken


Figure 2.1Three Levels of Business Planning


Strategic Planning

Managerial decision process that matches firm’s resources and capabilities to its market opportunities for long-term growth and survival– Top management defines firm’s purpose and

objectives• Example: increase firm’s total revenues by

20% over next five years– Strategic Business Units (SBUs)

• Self-contained divisions

SWOT - Starbucks

Growth Strategy for the US– Strength – profitable and cash-rich– Threat – New potentially damaging competition (Wal-

mart & Kicks)– Strategy indicated

• Reinforce positioning• Introduce flanker brand to compete with Wal-mart on

the lower end (Seattle Coffee Company)

SWOT - Starbucks

Growth Strategy for France– Strength – high quality, global management expertise– Strength – cash-rich and profitable– Opportunity – No concept like Starbucks exists in France– Threat – “sock juice” – damaging pre-existing attitudes– US-France political tensions

Strategy– Target a more receptive segment – the young French– Sell the American Starbucks experience (coffee, ambience,

music, healthful (no-smoking), internet, a cool place to hang out) Objective

– Attitudes in the target segment


Functional (Tactical) Planning

Accomplished by various functional areas of firm, such as marketing

Typically includes:– A broad 5-year plan to support strategic plan – A detailed annual plan

• Example: marketing plan objective: to gain a 40% share of a particular market with three new products during coming year


Operational Planning

First-line managers focus on day-to-day execution of functional plans

Such planning includes detailed annual, semiannual, or quarterly plans– Example: an objective may be set in terms of

units of a product a particular salesperson needs to sell per month (sales quota)


All Business Planning Is an Integrated Activity Strategic, functional, and operational

plans must work together to benefit the whole firm

Marketers must fully understand how they fit with the organization’s direction and resources


Strategic Planning: Frame the Picture Very large multiproduct firms may have

divisions called strategic business units (SBUs)– SBUs operate like separate businesses with

their own mission, business objectives, resources, managers, and competitors

Strategic planning is done at both the corporate and SBU levels


Strategic Business Units (SBUs)

Large firms like the Walt Disney Company usually operate several SBUs. Disney SBUs include theme parks, movie studios, TV networks, and cruise line


Strategic Planning Step 1: Define the Mission Answer three key questions:

– What business are we in? – What customers should we serve? – How do we develop firm’s capabilities and

focus its efforts? Mission statement:

– A formal document that describes the firm’s overall purpose and what it hopes to achieve in terms of its customers, products, and resources


Step 1: Define the Mission

Examples of mission statements– MADD: “to stop drunk driving, support the

victims of this violent crime, and prevent underage drinking”

– National Book Swap: “to become the nation’s largest book club and in the process bring a lifetime of reading material to every American”

Coca Cola’s Mission Statement

“Everything we do is inspired by our enduring mission:– To Refresh the World… in body, mind, and spirit.– To Inspire Moments of Optimism… through our

brands and our actions.– To Create Value and Make a Difference…

everywhere we engage.”

http://www.missionstatements.com/fortune_500_mission_statements.html





Step 2: Evaluate the Internal and External Environments Situational analysis (business review)

– An assessment of a firm’s internal and external environments

– Internal environment: Controllable elements inside of an organization

– External environment:Uncontrollable elements outside of an organization that may affect its performance either positively or negatively


Internal Environment

Controllable elements inside a firm that influence how well the firm operates include:– People (human capital), physical facilities,

financial stability, corporate reputation, quality products, strong brands, technologies, etc.

These elements represent key strengths and weaknesses of the firm


External Environment

Elements outside the firm that may affect it either positively or negatively:– Economic, competitive, technological,

legal/political/ethical, and sociocultural trends– Trends manifest as opportunities or threats– Firm cannot directly control external factors

but can respond to them via planning

Visit Trendwatching.com

http://trendwatching.com/

http://trendwatching.com/


Trends Present Opportunities

Recent sociocultural trends influencing food marketing stem from consumer desires for low fat, low carb, and organic foods


SWOT Analysis

An analysis of an organization’s strengths (S) and weaknesses (W) and the opportunities (O) and threats (T) in the external environment

SWOT enables the firm to develop strategies that maximize strengths and capitalize upon opportunities


Step 3: Set Organizationalor SBU Objectives Organizational/SBU Objectives:

– What the firm hopes to accomplish with long-range business plan

Need to be specific, time-bound and measurable– May relate to sales, profitability, product

development, market share, productivity, ROI, customer satisfaction, or social responsibility

Are these good objectives?

Increase sales by 15% Achieve recall by December 2010 20% of my consumers should know about

my brand Within 6 months of the launch of the

product, consumers should be brand loyal 60% of the consumers should like my brand

within six months of launch


Figure 2-2SBUs and the Strategic Plan


Step 4: Establish the Business Portfolio Business portfolio:

– The group of different products or brands owned by a firm and having different income-generating and growth capabilities

Portfolio analysis: – Assessing the potential of a firm’s SBUs– Helps make decisions regarding which SBUs

should receive more or less of the firm’s resources


Figure 2-3Boston Consulting Group (BCG) Matrix


Step 5: Develop Growth Strategies

Product-market growth matrix:– Characterizes different growth strategies

according to type of market (new vs. existing) and type of product (new vs. existing).

– Matrix yields four potential strategies:• Market penetration• Product development• Market development• Diversification


Figure 2-4Product-Market Growth Matrix


Marketing Planning: Step 1

Perform a situation analysis– Builds on SWOT;

identifies how environmental trends affect the marketing plan

What trends impact the marketing plan for Netflix?



Set marketing objectives– Specific to the firm’s brands

and other marketing mix-related elements

– States what the marketing function must accomplish if firm is to achieve its overall business objectives



Develop marketing strategies to achieve marketing objectives– Select target market(s) where the firm’s

offerings are best suited– Develop marketing mix strategies:

• Marketing mix strategies: how marketing will accomplish its objectives in the firm’s target market by using product, price, promotion, and place (distribution)


Marketing Mix Strategies

Product strategies:– Include product design, packaging, branding,

support services, and product variations and features

Pricing strategies:– Include setting prices for final consumers,

wholesalers, and retailers based on costs, demand, or competitors’ prices


Marketing Mix Strategies

Promotion strategies: – Advertising, sales promotion, public relations,

direct marketing, personal selling Distribution (place) strategies:

– How, when, and where the product is available to targeted customers


Step 4: Implement and Controlthe Marketing Plan Control:

– Measuring actual performance, comparing performance to the objectives, making adjustments

Marketing metrics: – Return on marketing investment (ROMI)

Action plans:– Support plans that guide implementation and

control of marketing strategies


Metrics Moment

ROMI is the revenue or profit margin generated by investment in a specific marketing program divided by the cost of that program (expenditure) at a given risk level, as determined by management


Creating and Working with a Marketing Plan Written marketing plans encourage

concrete objectives and strategies Operational plans focus on the day-to-

day execution of the marketing plan A firm’s corporate culture determines

much of its internal environment—the values, norms, and beliefs that influence everyone in the firm


Corporate Culture

The way employees dress reflects their organization’s corporate culture.

Think about the way people dress at a firm that is familiar to you. What does the typical attire at that firm “say” about the culture of the organization?

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