Chapter 2: Strategic Planning Flashcards
Strategic Planning
Strategic Planning is the process of setting objectives and figuring out the best course of action for meeting them.
Strategic Plan
A strategic plan is a marketing tool that highlights an organizations plans for specific areas of the firm.
Why should a strategic plan be implemented?
To help select and execute the right strategies to maximize success
What shapes a strategic plan?
An organizations mission
Mission Statement
A mission statement states a firms long-term purpose including what it provides and how it will compete.
When creating a mission statement what questions should be asked?
What is our business?
Who makes up our customer base?
How valuble are we to the customers?
What should our business be?
Mission Statements should be
Mission statements should be broad statements that are customer oriented, and emphasize a firms strengths.
Marketing plan
A marketing plan is a document that details strategy a firm plans on using in its marketing.
The five components of a marketing plan includes
Executive Summary, situation analysis, marketing strategy, financials section, and controls section.
Executive Summary
The executive summary is a quick synopsis of the marketing plans main points.
Situation Analysis
Collecting data to identify trends, conditions, and competition in markets.
Subsections of the Situational Analysis Include…
Market Summary, SWOT analysis, and Competition Analysis
Market Summary
Describes the markets current state
SWOT Analysis
Evaluates strengths, weaknesses, opportunities, and threats
Competition Analysis
Lists direct and indirect competitors
Strategy
Actions taken to reach objectives
Financial Projection
Estimates a firms profitability
Financial Projections include a
Sales Forecast, Expense Forecast, and Break-Even Analysis
Sales Forecast
Shows how many units of a product is expected to sell during a time period
Why should a sales forecast be accurate?
An inaccurate forecast could leave a firm with too much or too little product made / sold
Expense Forecast
Estimates how much money will need to create, advertise, and deliver the product to consumers
Break-even Analysis
Describes how much revenue might be needed to cover expenses
Controls
Controls are used to monitor performance and tweak plans
Controls include
Implementation, Organizational Structure, and Contingency Planning
Implementation Section
Details how plans are carried out, and who is responsible for them
Organizational Structure Section
Outlines who is responsible for specific tasks
Contingency Planning Section
Lists what actions will be taken if a strategy fails
Market Summary
These summaries show important trends in the market
BCG Matrix
A BCG Matrix is a tool that shows how enticing and strong a market is.
Stars (BCG)
Products that have a large market share with a high growth rate
Question Marks (BCG)
Products with a small market share in a high-growth industry.
Cash Cow (BCG)
Products with a huge share in its industrys market with low growth rates
Dogs (BCG)
Products that have a small market share and has a low growth rate. Products are usually discontinued
Internal Considerations (SWOT)
A firms strengths and weaknesses (limitations).
External Consideration (SWOT)
Opportunities (used to meet objectives), & Threats (challenges performance)
Competition Analysis
Analyzes how a firm compares to its competition metrics
Describe characteristics of marketing objectives
Marketing objectives are specific, measureable, and realistic.
Market Segmentation
Dividing a large market into smaller groups
Market Segments
Small groups of people with similar characteristics and product needs
Target Market
A specific demographic that a firm directs marketing towards
Positioning
Activities a firm that influences a consumers perspective of a product
Market Penetration
Continuing to sell existing goods and services to existing customers
Product Development
Creating new goods and services for existing markets
Market Development
Selling existing goods and services to new customers
Diversification
Offering new goods and services to attract new customers
Competitive Advantage
Occurs when consumers value one product over others in its category
Exporting
Selling domestic goods to foreign markets
Licensing
Paying a firm to distribute another’s resources including products, trademarks, patents, intellectual property, or knowledge.
Risks of licensing include
Creating a competitor, sharing exclusive information, trademark misuse
Franchising
An agreement where a franchisee gains the right to use the franchisors name, marketing, and support in return for a fee and a share of the profits.
Joint Venture
Occurs when a domestic firm partners with a foreign company to create a new company on foreign grounds.
When do joint ventures work?
Joint ventures work when the partners goals align, competitive goals diverge, and they are able to learn from each other.
Direct Ownership
Direct ownership occurs when a domestic firm manages an overseas company or facilities
Direct Ownership works when…..
There is little political risk, simularities exist between cultures, and sales are showing potential.
Marketing Analytics
Marketing analytics measure, manage, and analyze performance.
Return on marketing investment (ROMI)
ROMI measures the effectiveness of allocated resources
ROMI Formula
ROMI = (Sales x Gross Margin %) - Expenditures / Expenditures
Sales
Revenue generated by business activites
Gross Margin
The gross margin is the difference between price and cost.
Gross Margin Formula
Selling Price - Cost of goods sold / selling price
Marketing Expenditures
How much is spent on all marketing activities
Revenue Analysis
Revenue analysis measures and evaluates revenue from a specific product or region.
Market Share Analysis
Market share analysis is the percentage of the total market shares captured by a brand, product or firm.
Profitability Analysis
Measures how much profit is made
Customer Acquisition
How much is spend in order to gain new customers.
Advertising, public relations, and sales are examples of …..
Customer Acquisition
Individual Customer Profitability
Profit made from a customers during a specific time period
