Developing Marketing Strategies and Plans

Chapter 2Chapter 2

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Learning Objectives• Understand company-wide strategic planning and its four Understand company-wide strategic planning and its four

steps.steps.• Learn how to design business portfolios and develop Learn how to design business portfolios and develop

strategies for growth and downsizing.strategies for growth and downsizing.• Understand marketing’s role in strategic planning and Understand marketing’s role in strategic planning and

how marketers partner with others.how marketers partner with others.• We will address the following questions:We will address the following questions:

■ ■ How is strategic planning carried out at the corporate, How is strategic planning carried out at the corporate, division, and business-unit levels?division, and business-unit levels?

■ ■ What are the major steps in planning the marketing What are the major steps in planning the marketing process?process?

■ ■ How can a company effectively manage the marketing How can a company effectively manage the marketing process?process?

The Value-Delivery Process• The traditional view of marketing is that the firm makes The traditional view of marketing is that the firm makes

something and then sells it (Fig-2.1a) In this view, something and then sells it (Fig-2.1a) In this view, marketing takes place in the second half of the process.marketing takes place in the second half of the process.

• Instead of emphasizing making and selling, companies see Instead of emphasizing making and selling, companies see themselves involved in a three-phase value creation and themselves involved in a three-phase value creation and delivery sequence (Figure -2.1b).delivery sequence (Figure -2.1b).

• The value creation and delivery sequence can be divided The value creation and delivery sequence can be divided into three phases. The first phase, choosing the value, into three phases. The first phase, choosing the value, represents the strategic “homework” that marketing must do represents the strategic “homework” that marketing must do before any product exists. The marketing staff must before any product exists. The marketing staff must segment the market, select the appropriate market target, segment the market, select the appropriate market target, and develop the offer’s value positioning. The formula and develop the offer’s value positioning. The formula “segmentation, targeting, positioning(STP)” is the essence “segmentation, targeting, positioning(STP)” is the essence of strategic marketing. of strategic marketing.

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The Value-Delivery Process• In the second phase, providing the value, marketing must In the second phase, providing the value, marketing must

determine specific product’s features, prices, and determine specific product’s features, prices, and distribution. Developing specific product features, prices, distribution. Developing specific product features, prices, and distribution occurs at this stage and is part of and distribution occurs at this stage and is part of tactical tactical marketing. marketing.

• The task in the third phase is communicating the value by The task in the third phase is communicating the value by utilizing theutilizing the sales force, sales promotion, advertising, and sales force, sales promotion, advertising, and other communication tools to announce and promote the other communication tools to announce and promote the product.product.

• Thus, as Figure 2.1 shows, the marketing process actually Thus, as Figure 2.1 shows, the marketing process actually begins before there is a product and continues while it is begins before there is a product and continues while it is being developed and after it becomes available.being developed and after it becomes available.

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The Value-Delivery Process

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What is the Value Chain?

• The The value chainvalue chain is a tool for identifying was to is a tool for identifying was to create more customer value because every firm is create more customer value because every firm is a synthesis/mixture of a synthesis/mixture of primary and support primary and support activitiesactivities performed to design, produce, market, performed to design, produce, market, deliver, and support its productdeliver, and support its product

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The Value Chain

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What is Holistic Marketing?• Holistic marketingHolistic marketing sees itself as integrating the sees itself as integrating the

value exploration, value creation, and value delivery value exploration, value creation, and value delivery activities with the purpose of building long-term, activities with the purpose of building long-term, mutually satisfying relationships and co-prosperity mutually satisfying relationships and co-prosperity among key stakeholders.among key stakeholders.

.What is Marketing Plan?.What is Marketing Plan?A A marketing planmarketing plan is the central instrument for is the central instrument for

directing and coordinating the marketing effort. directing and coordinating the marketing effort. It operates at a strategic and tactical level. It operates at a strategic and tactical level.

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Levels of a Marketing Plan

• Strategic levelStrategic level Target marketing decisionsTarget marketing decisions Value propositionValue proposition Analysis of marketing opportunitiesAnalysis of marketing opportunities

• Tactical LevelTactical Level Product featuresProduct features PromotionPromotion MerchandisingMerchandising PricingPricing Sales channelsSales channels ServiceService

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Steps in the Marketing Process• The marketing process consists of analyzing market The marketing process consists of analyzing market

opportunities, researching and selecting target markets, opportunities, researching and selecting target markets, designing marketing strategies, planning marketing designing marketing strategies, planning marketing programs, and organizing, implementing, and programs, and organizing, implementing, and controlling the marketing effort. The four steps in the controlling the marketing effort. The four steps in the marketing process are:marketing process are:

• 1. 1. Analyzing market opportunities,Analyzing market opportunities,• 2. 2. Developing marketing strategies,Developing marketing strategies,• 3. 3. Planning marketing programs,Planning marketing programs,• 4. 4. Managing the marketing effort,Managing the marketing effort,• Figure 1-9 presents a grand summary of the marketing process Figure 1-9 presents a grand summary of the marketing process

and the factors that shape the company’s marketing strategy.and the factors that shape the company’s marketing strategy.2- 10

Factors Influencing Company Marketing Strategy

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Figure 2.1 The Strategic Planning, Implementation, and Control Processes

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Corporate and Division Strategic Planning• Some corporations give their business units a lot of Some corporations give their business units a lot of

freedom to set their own sales and profit goals and freedom to set their own sales and profit goals and strategies. Others set goals for their business units but strategies. Others set goals for their business units but let them develop their own strategies. Still others set let them develop their own strategies. Still others set the goals and participate in developing individual the goals and participate in developing individual business unit strategies.business unit strategies.

• All corporation headquarters undertake four planning All corporation headquarters undertake four planning activities:activities:

• 1. Defining the corporate mission1. Defining the corporate mission• 2.Establishing strategic business units2.Establishing strategic business units• 3. Assigning resources to each SBU3. Assigning resources to each SBU• 4.Assessing growth opportunities4.Assessing growth opportunities

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Strategic Planning• The hard task of selecting an overall The hard task of selecting an overall

company strategy for long-run survival company strategy for long-run survival and growth is called strategic planning.and growth is called strategic planning.

• Strategic planning is defined as:Strategic planning is defined as: ““The process of developing and The process of developing and

maintaining a strategic fit between maintaining a strategic fit between the organization’s goals and the organization’s goals and capabilities and its changing capabilities and its changing marketing opportunities.”marketing opportunities.”

01. Defining the Corporate Mission• An organization exists to accomplish something: to make cars, An organization exists to accomplish something: to make cars,

lend money, provide a night’s lodging, and so on. Its specific lend money, provide a night’s lodging, and so on. Its specific mission or purpose is usually clear when the business starts. mission or purpose is usually clear when the business starts. Over time the mission may change, to take advantage of new Over time the mission may change, to take advantage of new opportunities or respond to new market conditions lose its opportunities or respond to new market conditions lose its relevance because of changed market conditions or may become relevance because of changed market conditions or may become unclear as the corporation adds new products and markets.unclear as the corporation adds new products and markets.

• When management senses that the organization is drifting from When management senses that the organization is drifting from its mission, it must renew its search for purpose. According to its mission, it must renew its search for purpose. According to Peter Drucker, it is time to ask some fundamental questions. Peter Drucker, it is time to ask some fundamental questions. What is our business? Who is the customer? What is of value to What is our business? Who is the customer? What is of value to the customer? What will our business be? What should our the customer? What will our business be? What should our business be? Successful companies business be? Successful companies continuously raise these continuously raise these questions and answer them thoughtfully and thoroughly.questions and answer them thoughtfully and thoroughly.

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Mission Statement• Organizations develop mission statements to share with Organizations develop mission statements to share with

managers, employees, and customers. A clear, thoughtful managers, employees, and customers. A clear, thoughtful mission statements provides employees with a shared sense of mission statements provides employees with a shared sense of purpose, direction, and opportunities.purpose, direction, and opportunities.

• Mission statements should . . .Mission statements should . . . serve as a guide for what the organization wants to serve as a guide for what the organization wants to

accomplish.accomplish. be “market-oriented” rather than “product-oriented”.be “market-oriented” rather than “product-oriented”. be neither too narrow, nor too broad.be neither too narrow, nor too broad. fit with the market environment.fit with the market environment. be motivating.be motivating.

Characteristics Good mission statements

Good mission statements have five major characteristics.Good mission statements have five major characteristics. First- they focus on a limited number of goals.First- they focus on a limited number of goals. Second- mission statements stress the company’s Second- mission statements stress the company’s

major policies and values.major policies and values. Third- they define the major competitive spheres/areas Third- they define the major competitive spheres/areas

within which the company will operate.within which the company will operate. Fourth- characteristic of mission statements is that Fourth- characteristic of mission statements is that

they take a long-term view.they take a long-term view. Finally- a good mission statement is as short, Finally- a good mission statement is as short,

memorable, and meaningful as possible.memorable, and meaningful as possible.

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02. Establishing Strategic Business Units• Companies often define their business in terms of products: Companies often define their business in terms of products:

They are in the “auto business” or the “clothing business”.They are in the “auto business” or the “clothing business”.• But But Harvard’s famed marketing professor Ted Levitt Harvard’s famed marketing professor Ted Levitt

argued that marketing definitions of a business are argued that marketing definitions of a business are superior to product definitions.superior to product definitions.

• These Five dimensions describe the business in terms of a These Five dimensions describe the business in terms of a customer-satisfying process, not a goods-producing customer-satisfying process, not a goods-producing process(Fig.2.3). Thus, Xerox’s product definition would be process(Fig.2.3). Thus, Xerox’s product definition would be “We make copying equipment,” while its market definition “We make copying equipment,” while its market definition would be “We help improve office productivity.” Similarly, would be “We help improve office productivity.” Similarly, Missouri-Pacific Railroad’s product definition would be “We Missouri-Pacific Railroad’s product definition would be “We run a railroad,” while its market definition would be “We are a run a railroad,” while its market definition would be “We are a people-and-goods mover.” people-and-goods mover.”

Table2.3 : Product Orientation vs. Market Orientation

• Company Product MarketCompany Product MarketMissouri-Pacific Railroad - We run a railroad-We are a people-Missouri-Pacific Railroad - We run a railroad-We are a people-

and-and-

goods movergoods mover• Xerox - We make copying equipment - We improve officeXerox - We make copying equipment - We improve office

productivityproductivity• Standard Oil - We sell gasoline -We supply energyStandard Oil - We sell gasoline -We supply energy• Columbia Pictures -We make movies - We entertain peopleColumbia Pictures -We make movies - We entertain people• Columbia Pictures -We make movies -We entertain peopleColumbia Pictures -We make movies -We entertain people

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Establishing Strategic Business Units (SBUs)• Large companies normally manage quite different Large companies normally manage quite different

businesses, each requiring its own strategy; General Electric, businesses, each requiring its own strategy; General Electric, as one example, has established 49 as one example, has established 49 strategic business units strategic business units (SBUs). An SBU has three characteristics: (SBUs). An SBU has three characteristics:

• (1) It is a single business or collection (1) It is a single business or collection of related businesses of related businesses that can be planned separately from the rest of the company;that can be planned separately from the rest of the company;

• (2) it has its own set of competitors; and (2) it has its own set of competitors; and • (3) it has a manager responsible for strategic planning and (3) it has a manager responsible for strategic planning and

profit performance who controls most of the factors profit performance who controls most of the factors affecting profit.affecting profit.

• The purpose of identifying the company’s SUBs is to The purpose of identifying the company’s SUBs is to develop separate strategies and assign appropriate funding.develop separate strategies and assign appropriate funding.

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03. Assigning Resources to Each SBUs• The purpose of identifying the company’s strategic business The purpose of identifying the company’s strategic business

units is to develop separate strategies and assign appropriate units is to develop separate strategies and assign appropriate funding to the entire business portfolio. Senior managers funding to the entire business portfolio. Senior managers generally apply analytical tools to classify all of their SBUs generally apply analytical tools to classify all of their SBUs according to profit potential. according to profit potential.

• Two of the best-known business portfolio evaluation models Two of the best-known business portfolio evaluation models are the are the Boston Consulting Group model and the General Boston Consulting Group model and the General Electric model.Electric model. The Boston Consulting Group (BCG), The Boston Consulting Group (BCG), a a leading management consulting firm, developed and leading management consulting firm, developed and popularized popularized the the growth-share matrix growth-share matrix shown in Figure 1-5. shown in Figure 1-5. The eight circles The eight circles represent the current sizes and positions of represent the current sizes and positions of eight business units in a hypothetical company.eight business units in a hypothetical company.

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The Boston Consulting Group (BCG)• The dollar-volume size of each business is proportional to the The dollar-volume size of each business is proportional to the

circle’s area. Thus, two largest businesses are 5 and 6. The circle’s area. Thus, two largest businesses are 5 and 6. The location of each business unit indicates its location of each business unit indicates its market growth market growth rate and relative market share.rate and relative market share.

• The The market growth rate on the vertical axis indicates the market growth rate on the vertical axis indicates the annual growth rate of the annual growth rate of the market in which the business market in which the business operates. operates. Relative market shareRelative market share, , which is measured on the which is measured on the horizontal axis, refers to the SBU’s market share relative to horizontal axis, refers to the SBU’s market share relative to that of its largest competitor in the segment. It serves as a that of its largest competitor in the segment. It serves as a measure of the company’s strength in the relevant market measure of the company’s strength in the relevant market segment.segment.

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The Boston Consulting Group (BCG)• Question marks are businesses that operate in high-growth markets Question marks are businesses that operate in high-growth markets

but have low but have low relative market shares. relative market shares. Most businesses start off as Most businesses start off as question marks as the company tries to enter a high-growth market in question marks as the company tries to enter a high-growth market in which there is already a market leader. A question mark requires a lot which there is already a market leader. A question mark requires a lot of cash because the company is spending money on plant, equipment, of cash because the company is spending money on plant, equipment, and personnel. and personnel.

• ➤ ➤ StarsStars are market leaders in a high-growth marketare market leaders in a high-growth market. A star was once . A star was once a question mark, a question mark, but it does not necessarily produce positive cash but it does not necessarily produce positive cash flow; the company must still spend to keep up with the high market flow; the company must still spend to keep up with the high market growth and fight off competition.growth and fight off competition.

• ➤ ➤ Cash cows Cash cows are former stars with the largest relative market share are former stars with the largest relative market share in a slow-growth in a slow-growth marketmarket. A cash cow produces a lot of cash for the . A cash cow produces a lot of cash for the company (due to economies of scale and higher profit margins), company (due to economies of scale and higher profit margins), paying the company’s bills and supporting its other businesses.paying the company’s bills and supporting its other businesses.

• ➤ ➤ DogsDogs are businesses with weak market shares in low-growth are businesses with weak market shares in low-growth markets; typically, these markets; typically, these generate low profits or even losses.generate low profits or even losses.

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BCG Growth-Share MatrixBCG Growth-Share Matrix

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BCG Growth-Share MatrixBCG Growth-Share Matrix

Strategic Planning

High RelativeHigh RelativeMarket ShareMarket Share

High High Market Market GrowthGrowth

Low Low Market Market GrowthGrowth

StarsStars

Cash Cash CowsCows

Question Question MarksMarks

DogsDogs

Low RelativeLow RelativeMarket ShareMarket Share

The General Electric Model• An SBU’s appropriate objective cannot be determined solely by An SBU’s appropriate objective cannot be determined solely by

its position in the growth-share matrix. If additional factors are its position in the growth-share matrix. If additional factors are considered, the growth-share matrix can be seen as a special case considered, the growth-share matrix can be seen as a special case of a multifactor portfolio matrix that General Electric (GE) of a multifactor portfolio matrix that General Electric (GE) pioneered. In this model, each business is rated in terms of two pioneered. In this model, each business is rated in terms of two major dimensions—major dimensions—market attractiveness and business strengthmarket attractiveness and business strength..

• Using these two dimensions, the Using these two dimensions, the GE matrix is divided into nine GE matrix is divided into nine cellscells, as shown in Figure 1-6. The three cells in the upper-left , as shown in Figure 1-6. The three cells in the upper-left corner indicate strong SBUs suitable for investment or growth. corner indicate strong SBUs suitable for investment or growth. The diagonal cells stretching from the lower left to the upper right The diagonal cells stretching from the lower left to the upper right indicate SBUs of medium attractiveness; these should be pursued indicate SBUs of medium attractiveness; these should be pursued selectively and managed for earnings. The three cells in the selectively and managed for earnings. The three cells in the lower-right corner indicate SBUs low in overall attractiveness, lower-right corner indicate SBUs low in overall attractiveness, which the company may want to harvest or divest.which the company may want to harvest or divest.

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04. Assessing Growth Opportunities• Assessing growth opportunities includes planning new Assessing growth opportunities includes planning new

business, downsizing, and terminating older business. If there business, downsizing, and terminating older business. If there is a gap between future desire sales and projected sales, is a gap between future desire sales and projected sales, corporate management will need to develop or acquire new corporate management will need to develop or acquire new business to fill it.business to fill it.

• Fig.2.5 illustrates this strategic-planning gap for a major Fig.2.5 illustrates this strategic-planning gap for a major manufacturer of blank compact disks called Musicale(name manufacturer of blank compact disks called Musicale(name disguised).The lower curve projects the expected sales over disguised).The lower curve projects the expected sales over the next five years from the current business portfolio. The the next five years from the current business portfolio. The highest curve describe desired sales over the same period. highest curve describe desired sales over the same period. Evidently, the company wants to grow much faster than its Evidently, the company wants to grow much faster than its current business will permit. How can it fill the strategic-current business will permit. How can it fill the strategic-planning gap.planning gap.

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Fig 2.5 The Strategic-Planning Gap

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Intensive growth Intensive GrowthIntensive Growth: Corporate management’s first course of : Corporate management’s first course of

action should be a review of opportunities for improving action should be a review of opportunities for improving existing business. One useful framework for detecting new existing business. One useful framework for detecting new intensive growth opportunities is called a intensive growth opportunities is called a ‘product-market ‘product-market expansion grid” (expansion grid” (Fig.2.6). Ansoff has proposed the Fig.2.6). Ansoff has proposed the product–product–market expansion gridmarket expansion grid as a framework as a framework for detecting new for detecting new intensive growth opportunities. In this grid, the company first intensive growth opportunities. In this grid, the company first considers considers market-penetration strategy market-penetration strategy by encouraging current by encouraging current customers to buy customers to buy more, attracting competitors’ customers, or more, attracting competitors’ customers, or convincing nonusers to start buying its products. Next it convincing nonusers to start buying its products. Next it considers develop new markets for its current products considers develop new markets for its current products ((market-development strategy). market-development strategy). Then it considers whether it Then it considers whether it can develop new can develop new products for its current markets products for its current markets ((product-product-development strategy)development strategy). Later it will also review . Later it will also review opportunities opportunities to develop new products for new markets to develop new products for new markets ((diversification strategy).diversification strategy).

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Fig-2.6: Intensive Growth Strategies Ansoff’s Product-Market Expansion Grid

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• ➤ ➤ Integrative growthIntegrative growth: Sales and profits of a business can : Sales and profits of a business can be increased through backward integration (acquiring a be increased through backward integration (acquiring a supplier), forward integration (acquiring a supplier), forward integration (acquiring a distributor), distributor), or or horizontal integration (acquiring a competitor).horizontal integration (acquiring a competitor).

• ➤ ➤ Diversification growthDiversification growth. This makes sense when good . This makes sense when good opportunities exist outside the opportunities exist outside the present businesses. Three present businesses. Three types of diversification are possible. The company could types of diversification are possible. The company could seek new products that have technological or marketing seek new products that have technological or marketing synergies with existing product lines, even though the synergies with existing product lines, even though the new products themselves may appeal to a different group new products themselves may appeal to a different group of customers (of customers (concentric diversification strategy). concentric diversification strategy). Exam-Exam-Music India start a computer type(audio cassette).Music India start a computer type(audio cassette).

•

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• Second, the company might Second, the company might search for new search for new products that appeal to its current customers but products that appeal to its current customers but are technologically unrelated to the current are technologically unrelated to the current product line (product line (horizontal diversification strategy). horizontal diversification strategy). Exam-Music India might produce cassette Exam-Music India might produce cassette holding trays.holding trays.

• Finally, the Finally, the company might seek new businesses company might seek new businesses that have no relationship to the company’s that have no relationship to the company’s current technology, products, or markets current technology, products, or markets ((conglomerate diversification strategy).conglomerate diversification strategy). Exam- Exam-Music India may consider entering new business Music India may consider entering new business such as aapplication software.such as aapplication software.

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Business Unit Strategic Planning• The business unit strategic-planning process consists of The business unit strategic-planning process consists of

the eight steps shown in Figure 2-7. We examine each the eight steps shown in Figure 2-7. We examine each step in the sections that follow.step in the sections that follow.

01.The Business Mission:01.The Business Mission:• Each business unit needs to define its specific mission Each business unit needs to define its specific mission

within the broader company mission. Thus, a television within the broader company mission. Thus, a television studio-lighting-equipment company might define its studio-lighting-equipment company might define its mission as “The company aims to target major television mission as “The company aims to target major television studios and become their vendor of choice for lighting studios and become their vendor of choice for lighting technologies that represent the most advanced and technologies that represent the most advanced and reliable studio lighting arrangements.”reliable studio lighting arrangements.”

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2.7-The Business Unit Strategic-Planning Process

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SWOT Analysis• SWOT AnalysisSWOT Analysis: The overall evaluation of a business’s : The overall evaluation of a business’s

strengths, weaknesses, opportunities, and threats is called strengths, weaknesses, opportunities, and threats is called SWOT analysis. SWOT analysis consists of an analysis of SWOT analysis. SWOT analysis consists of an analysis of the external and the external and internal environments.internal environments.

• 02. External Environment Analysis: 02. External Environment Analysis: In general, a business In general, a business unit has to monitor key unit has to monitor key macro environment forces macro environment forces demographic, economic, demographic, economic, technological, political-legal, and technological, political-legal, and social-cultural) and social-cultural) and micro environment actors (customers, micro environment actors (customers, competitors, distributors, and suppliers) that affect its ability competitors, distributors, and suppliers) that affect its ability to earn to earn profits.profits.

• A A marketing opportunity marketing opportunity is an area of buyer need in which is an area of buyer need in which a company can perform profitably. Opportunities can be a company can perform profitably. Opportunities can be classified according to their classified according to their attractiveness and attractiveness and their their success success probability.probability.

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SWOT Analysis• An environmental threatAn environmental threat: : is a challenge posed by an unfavorable is a challenge posed by an unfavorable

external trend or development that would lead, in the absence of external trend or development that would lead, in the absence of defensive marketing action, to deterioration in sales or profit. defensive marketing action, to deterioration in sales or profit.

• Threats should be classified according to Threats should be classified according to seriousness and seriousness and probability of occurrence.probability of occurrence.

• Minor threats can be ignored; somewhat more serious threats Minor threats can be ignored; somewhat more serious threats must must be carefully monitored; and major threats require the development be carefully monitored; and major threats require the development of contingency plans that spell out changes the company can make of contingency plans that spell out changes the company can make if necessary.if necessary.

• 03.Internal Environment Analysis(Strengths & Weakness)03.Internal Environment Analysis(Strengths & Weakness): : It is It is one thing to find attractive opportunities and another to be able to one thing to find attractive opportunities and another to be able to take advantages of them. Each business needs to evaluate its take advantages of them. Each business needs to evaluate its internal strengths and weaknesses marketing, financial, internal strengths and weaknesses marketing, financial, manufacturing, and organizational competencies.manufacturing, and organizational competencies.

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Market Opportunities Analysis(MOA)

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• Can the benefits involved in the opportunity be Can the benefits involved in the opportunity be articulated convincingly to a defined target market?articulated convincingly to a defined target market?

• Can the target market be located and reached with cost-Can the target market be located and reached with cost-effective media and trade channels?effective media and trade channels?

• Does the company possess or have access to the critical Does the company possess or have access to the critical capabilities and resources needed to deliver the customer capabilities and resources needed to deliver the customer benefits?benefits?

• Can the company deliver the benefits better than any Can the company deliver the benefits better than any actual or potential competitors?actual or potential competitors?

• Will the financial rate of return meet or exceed the Will the financial rate of return meet or exceed the company’s required threshold for investment?company’s required threshold for investment?

Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 2-38

Figure 2.8: Opportunity and Threat Matrices

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04. Goal Formulation: 04. Goal Formulation: Once the company has Once the company has performed a SWOT analysis of the internal and performed a SWOT analysis of the internal and external environments, it can proceed to develop external environments, it can proceed to develop specific goals for the planning period in a process specific goals for the planning period in a process called called goal goal formulationformulation. Managers use the term goals . Managers use the term goals to describe objectives that are specific to describe objectives that are specific with respect with respect to magnitude and time. Turning objectives into to magnitude and time. Turning objectives into measurable goals facilitates management planning, measurable goals facilitates management planning, implementation, and control.implementation, and control.

• To be effective, goals must (1) be arranged To be effective, goals must (1) be arranged hierarchically to hierarchically to guide the businesses in guide the businesses in moving from broad to specific moving from broad to specific objectives for departments and individuals; (2) be stated objectives for departments and individuals; (2) be stated quantitatively whenever possible; (3) be realistic; and (4) be quantitatively whenever possible; (3) be realistic; and (4) be consistent.consistent.

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05.Strategy Formulation:05.Strategy Formulation:• Goals indicate what a business unit wants to achieve; Goals indicate what a business unit wants to achieve;

strategy describes the game plan strategy describes the game plan for achieving those goals. for achieving those goals. Every business strategy consists of a marketing strategy plus Every business strategy consists of a marketing strategy plus a compatible technology strategy and sourcing strategy.a compatible technology strategy and sourcing strategy.

• Michael Porter Generic StrategiesMichael Porter Generic StrategiesAlthough many types of marketing strategies are available, Although many types of marketing strategies are available,

Michael Porter has proposed three generic strategies that Michael Porter has proposed three generic strategies that provide a good starting point for strategic thinking: provide a good starting point for strategic thinking:

1.Overall cost leadership, 1.Overall cost leadership,

2.Differentiation, 2.Differentiation,

3.Focus.3.Focus.

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06&07. Program Formulation and Implementation:06&07. Program Formulation and Implementation:• Even a great marketing strategy can be sabotaged by poor Even a great marketing strategy can be sabotaged by poor

implementation. If the business has decided to attain technological implementation. If the business has decided to attain technological leadership, it must plan programs to strengthen its R&D department, leadership, it must plan programs to strengthen its R&D department, gather technological intelligence, develop leading-edge products, train gather technological intelligence, develop leading-edge products, train the technical sales force, and develop ads to communicate its the technical sales force, and develop ads to communicate its technological leadership.technological leadership.

• 7(seven) Elements7(seven) Elements: : According to McKinsey & Company, strategy is According to McKinsey & Company, strategy is only one of 7(seven) elements-all of which start with the letter “s”-in only one of 7(seven) elements-all of which start with the letter “s”-in successful business practice. The first- three successful business practice. The first- three strategy, structure, and strategy, structure, and systemssystems-are considered the “hardware” of success. The next four--are considered the “hardware” of success. The next four-stylestyle, , skills, staff, and shared skills, staff, and shared values-are the “software”.values-are the “software”.

• 08.Feedback and Control: 08.Feedback and Control: As it implements its strategy, the firm As it implements its strategy, the firm needs to track the results and monitor new developments in the internal needs to track the results and monitor new developments in the internal and external environments. Peter Drucker pointed out that it is more and external environments. Peter Drucker pointed out that it is more important to “do the right thing” (effectiveness) than “to do things important to “do the right thing” (effectiveness) than “to do things right” (efficiency).The most successful companies excel at both.right” (efficiency).The most successful companies excel at both.

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Marketing Plan Contents

Executive summaryExecutive summary Table of contentsTable of contents Situation analysisSituation analysis Marketing strategyMarketing strategy Financial projectionsFinancial projections Implementation controlsImplementation controls

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