Chapter 2 Strategic Planning in Contemporary Marketing Flashcards
Define Planning
Anticipating future events and conditions and determining the best way to achieve organizational objectives
Define Marketing Planning
Implementing planning activities devoted to achieving marketing objectives
Define Strategy
The integrated set of choices that positions the business in its industry as to generate superior financial returns over the long run
Strategic Planning
- Determining organizations primary objectives
- Adopting courses of action that will achieve these objectives
- Provides long term direction for its decision makers
Tactical Planning
- Guides the implementation
List the Managerial Levels
- Top Management
- Middle Management
- Supervisory Management
Describe Top Management and provide an example
Top Management: Chief Executive Officer (CEO)
Type of planning: Strategic Planning
Examples: Fundamental strategies, total budget
Describe Middle Management and provide an example
Middle Management: General Sales Manager
Type of planning: Tactical Planning
Examples: Divisional policies and procedures, business unit budgets
Describe Supervisory Management and provide an example
Supervisory Management: Supervisor
Type of Planning: Operational Planning
Examples: Daily and weekly plans, department rules and procedures
Forms of aspirations
- Mission: Why we exist
- Vision: What future we want to create
- Values: What is important to us
Define Mission
Essential mission that differentiated one company from another
- Short statement that describes the nature of the business
Characteristics of a mission statement
- Broad in scope
- Does not include monetary amounts, numbers or objectives
- Fewer than 150 words
Components of Mission Statement
- Customers
- Markets
- Concern for employees
- Concern for growth/profits/survival
- Technology
- Products/services
- Inspiring and enduring
- Concern for public image
- Philosophy
Define Values
What we believe in and how we will behave
Define Vision
What we want to be
Define Strategy
Competitive game plan
Define Balanced Scorecard
How we will monitor and implement the plan
Define Objectives
Guide the development of marketing objectives and plans
Define Marketing Strategy
Selecting and satisfying target consumers through the marketing mix elements
Purpose of Porter’s Five Forces Model
- Competitive analysis
- Determine market attractiveness
- Focuses on external factors that determine the shape of the competition
Components of Porter’s Five Forces Model
- Threats to new entrants
- Bargaining power of buyers
- Bargaining power of suppliers
- Threat of substitute products
- Rivalry among competitors
Define First Mover Strategy
The company first to offer a product in a marketplace will be the long term market winner
Define Second Mover Strategy
Observing innovation to first movers and then improving on them to gain competitive advantage in the marketplace
SWOT Analysis
- Compares the organizations strengths and weaknesses with its opportunities and threats
- Internal environment vs external environment
Strengths
- Cost advantages
- Financial resources
- Customer loyaly
Weaknesses
- Too narrow a product line
- Inadequate financing capabilities
- High costs of operation
Opportunities
- Add to product line
- Enter new markets
Threats
- Changing buyer tastes
- Likely entry of new competitors
- Adverse government policies
Strategic Window
Limited periods when key requirements of a market and a firms particular competencies best fit together
Define Target Market
The group of people toward whom the firm directs its marketing
Marketing Mix Variables
- Product
- Promotion
- Price
- Distribution
Product Strategy
Deciding what goods or services the firm should offer to a group of consumers
Promotion Strategy
Communication link between sellers and buyers directly through sales people or indirectly through advertising and promotions
Pricing Strategy
Methods of setting profitable and justifiable prices
A good pricing strategy:
- Creates value for customers
- Builds and strengthens customer relationships with a firm and its products
Distribution Strategy
Involves modes of transportation, warehousing, inventory control, order processing and selection of marketing channels
External Factors Affecting the Marketing Mix
- Competitive
- Political/legal
- Economic
- Technological
- Social/cultural
Rule of Three
The 3 strongest, most efficient companies dominate between 70 to 90 percent of a market
Example: Cereal manufacturers (General Mills, Kellogs, Post)
Methods for Marketing Planning
- Business Portfolio Analysis
- BCG Matrix (different business divisions)
- Ansoff Matrix (business in 1 or 2 sectors)
Define the Ansoff Matrix (Strategic Growth Opportunity)
An analysis of potential growth opportunities based on existing or new customers and existing or new products
Components of the Ansoff Matrix
- Market Penetration
- Product Development
- Market Development
- Diversification
Define Market Penetration
Company wants to increase market share and increase product
- Could be done through marketing promotion (buy one, get one)
Define Product Development
Company wants to improve product or extend the product line
- Brings more customers (Coke introduces Diet Coke)
Define Market Development
International markets
- Product expands into another country
New market segments
- Product brands may use different market segments
Define Diversification
Related diversification (Wholefoods market) Unrelated diversification
Define Business Portfolio Analysis
An evaluation of a company’s products and divisions to determine the strongest and weakest
Define Strategic Units
Key business units with diversified firms
- Each has its own managers, resources, objectives and competitors
- Each pursue its own distinct mission and develops its own marketing plans
BCG Market Share/Market Growth Matrix
BCG Analysis - A market share/market growth matrix that plots market share against market growth potential
High Market Share/High Industry Growth Rate
Stars: Generate considerable income
- Strategy: Invest more funds for future growth
Low Market Share/High Industry Growth Rate
Question Marks: Have potential to become stars or cash cows
- Strategy: Either invest more funds for growth or consider disinvesting
Low Market Share/Low Industry Growth Rate
Dogs: Generate little profits
- Strategy: Consider withdrawing
Steps in the Planning Process (Corporate Level)
- Determine the mission of the organization
- Determine organizational objectives
- Assess organizational resources and environmental risks and opportunities
Steps in the Planning Process (Business Unit Level)
- Formulate strategy
- Implement strategy through operating plans
- Monitor and adapt strategies based on feedback
