Chapter 2: Strategic Planning
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Transcript of Chapter 2: Strategic Planning
by Jeff Tanner and Mary Anne Raymondby Jeff Tanner and Mary Anne Raymond
Principles of Marketing
Chapter 2Chapter 2Strategic PlanningStrategic Planning
©2010 Flat World Knowledge, Inc.
©2010 Flat World Knowledge, Inc.
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Developing plans and strategies for
products and their pricing promotion delivery
The Value PropositionThe Value Proposition
A 30-second “elevator speech”*
Here are the benefits of our product
This is why it is superior to other ones
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*Getting your point across to someone before the elevator reaches the bottom .
Supporting The Value PropositionSupporting The Value Proposition
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What is the strategy that enables the value?
How do businesses develop and document this strategy?
Who develops this strategy?
This is planning
Plans and PlanningPlans and Planning
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Levels of planning
The Marketing PlanThe Marketing Plan
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This is the revenue producing element in the corporate or strategic plan
It describes:where we are going with products, and how we will get there!
The Planning ProcessThe Planning Process
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The mission statement is the leading planning phrase. It answers the question—“why does this company exist?”
A situation analysis is conducted to assess the current business environment.
Internal factors such as the company’s strengths and weaknesses relative to this environment are explored.
External factors such as opportunities and threats are identified.
A SWOT
analysi
s
The SWOT Analysis—InternalThe SWOT Analysis—Internal
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Internal factors are strengths and/or weaknesses (companies can control these factors)
• Strengths could be: 1. financial 2. market position 3. patents 4. management 5. costs
• Weaknesses could be: 1. competitive position 2. organization structure 3. supplier dependency 4. product line 5. brand awareness
Key actions: Capitalize on a strength Address a weakness
The SWOT Analysis—ExternalThe SWOT Analysis—External
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External factors are opportunities and threats (companies can’t control these factors)
• Opportunities can be: 1. global markets 2. enabling technologies 3. growing consumer wealth 4. currency exchange rates 5. government spending
• Threats can be: 1. economic contraction 2. government regulations 3. social and political changes 4. trade barriers 5. taxes and mandated expenses
Actions required stay informed on global markets and issues anticipate and prepare for government actions monitor technology advances
ObjectivesObjectives
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An objective is something you want to have or some place you want to be.
• At a specific time in the future
• It must be measureable and achievable
Examples of a marketing objective:
• ABC, Inc. will increase its sales by 5% by the end of the next plan year.
• PepsiCo will increase the market share of Gatorade by 4% during the next year.
Marketing objectives must be consistent with other company’s objectives.
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Strategies are the means for accomplishing objectives.• they are the activities that the plans detail
Companies often employ several strategies to reach objectives.
Example:
• Wal-Mart has a pricing strategy of everyday low pricing (EDLP).
• Wal-Mart also has a strategy for opening new stores rapidly—globally.
StrategiesStrategies
Strategic ChoicesStrategic Choices
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There are different types of product and market-entry strategies that a firm can pursue in order to meet objectives.
Other choices include:• licensing• franchising• contract manufacturing• joint ventures• direct investment• diversification strategies
Key TakeawaysKey Takeaways
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Strategic Portfolio PlanningStrategic Portfolio Planning
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Two popular approaches
Boston Consulting GroupBoston Consulting Group
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low market share high
low
mark
et
gro
wth
hig
h
Cash Cow
Question Mark
Dog
Stars
Use cash cow funds t
o invest
in high growth
products
Harvest or ceaseproduction
R.L. Sharman Lone Star College
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Evaluate SBU’s on the following factors:
1. Market share2. Growth of the SBU3. Size of the opportunity4. Potential for profit5. Environmental factors6. Competitive conditions
Green—invest for growth
Yellow—status quo
Red —divest
high med low
hig
hm
ed
low
Business strength (fit)
Mark
et
att
ract
iveness
investmaintain
dump
GE Market Attractiveness ModelGE Market Attractiveness Model
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The strategic planning process includes: 1. the company’s mission (why it exists) 2. the desired objectives for the plan period -- must be measureable and achievable 3. description of strategies for reaching objectives a. market penetration b. market development c. product development d. diversification
Note: strategies should capitalize on a strength, or address a weakness
Key TakeawaysKey Takeaways
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4. A group of businesses (SBUs) is called a portfolio.
5. Portfolio planning -- organizations with multiple SBUs must allocate limited resources -- two planning tools that can be used are BCG and GE
6. BCG—Boston Consulting group -- a four quadrant matrix for market share and market growth -- positioning products in the matrix establishes importance -- helps make decisions regarding resource allocation 7. GE—General Electric industry attractiveness
-- nine cell matrix using stop light concept for investing, harvesting
More Key TakeawaysMore Key Takeaways
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“Plans are nothing, planning is everything!”D.D. Eisenhower, General of the Army
Many times “plans” are not an accurate precursor to events encountered. -- changes are required in order to reach objectives
Through the process of “planning the plan,” knowledge is acquired that allows the timely altering of strategies and tactics for effect. -- the planning process itself can identify contingency actions -- enacting changes to meet the contingencies requires plan flexibility
Planning EpiloguePlanning Epilogue