Chapter 1: Introduction to Strategic Planning and
The Marketing Management Process
Key Words
Distinctive Competencies – Distinctive competencies are things that an organization does so well that
they give it an advantage over similar organizations. No matter how appealing an opportunity
may be, to gain advantage over competitors, the organization must formulate strategy based on
distinctive competencies.
Diversification – An organizational strategy that seeks growth through new products (often through
acquisitions) for customers not currently being served.
Market Development – An organizational strategy that seeks growth through seeking new customers for
present products.
Market Penetration – An organizational structure that seeks growth through increasing the sale of
present products to present customers.
Marketing – The activity, set of institutions, and processes for creating, communicating, delivering, and
exchanging offerings that have value for customers, clients, partners, and society at large.
Marketing Concept – The marketing concept means that an organization should seek to make a profit by
serving the needs of customer groups. Its purpose is to rivet the attention of marketing
managers on serving broad classes of customer needs (customer orientation), rather than on the
firm’s products (production orientation) or on devising methods to attract customers to current
products (selling orientation).
Marketing Information System – Throughout the marketing management process, current, reliable, and
valid information is needed to make effective marketing information system and marketing
research.
Marketing Management – Marketing management is the process of planning and executing the
conception, pricing, promotion, and distribution of goods, services, and ideas to create
exchanges with target groups that satisfy customer and organizational objectives.
Marketing Mix – The marketing mix is the set of controllable variables that must be managed to satisfy
the target market and achieve organizational objectives. The controllable variables are usually
classified according to four major decision areas: product, price, promotion, and place (or
channels of distribution.
Marketing Planning – The market planning process produces three outputs: (1) establishing marketing
objectives, (2) selecting the target market, and (3) developing the marketing mix.
Organizational Mission – The mission statement, or purpose, of an organization is the description of its
reason for existence. It is the long-run vision of what the organization strives to be, the unique
aim that differentiates the organization from similar ones and the means by which this
differentiation will take place. An effective mission statement will be focused on markets rather
than products, achievable, motivating, and specific.
Organizational Objectives – Organizational objectives are the end points of an organization’s mission
and are what it seeks through the ongoing, long-run operation of the organization. The
organizational mission is distilled into a finer set of specific, measurable, action commitments by
which the mission of the organization is to be achieved.
Organizational Portfolio Plan – The stage of the strategic plan involves the allocation of resources
across the organization’s product lines, divisions, or businesses. It involves deciding which ones
to build, maintain, or eliminate, or which to add.
Organizational Strategies – Organizational strategies are the choice of the major directions the
organization will take in pursuing its objectives. There are three major approaches: (1) strategies
based on products and markets, (2) strategies based on competitive advantage, and (3)
strategies based on value.
Organizational Strategies Based on Competitive Advantage – This approach to developing
organizational strategy would develop either a cost leadership strategy which focuses on being
the lower cost company in the industry or a differentiation strategy which focuses on being
unique in the industry or market segment along dimensions that customers value.
Organizational Strategies Based on Products and Markets – An approach to developing
organizational strategies that focuses on the four paths an organization can grow: market
penetration strategies, market development strategies, product development strategies, and
diversification strategies.
Organizational Strategies Based on Value – This approach to developing organizational strategy seeks
to succeed by choosing to deliver superior customer value using one of three value strategies –
best price, best product, or best service.
Product Development – An organizational strategy that seeks growth through developing new products
primarily for present customers.
Situation Analysis – This stage of the marketing planning process involves the analysis of the past,
present, and likely future in six major areas of concern: (1) the cooperative environment, (2) the
competitive environment, (3) the economic environment, (4) the social environment, (5) the
political environment, and (6) the legal environment. Opportunities for and constraints on
marketing activities arise from these environments.
Strategic Business Units (SBUs) – Strategic business units (SBUs) are product lines and divisions that
can be considered a “business” for the purpose of the organizational portfolio plan. An SBU must
have a distinct mission, have its own competitors, be a single business or collection of related
businesses, and be able to be planned independently of the other SBUs.
Strategic Planning – Strategic planning provides a blueprint for management actions for the entire
organization. It includes all the activities that lead to the development of a clear organizational
mission, organizational objectives, and appropriate strategies to achieve the objectives for the
entire organization.
Marketing Insights
What are the major types of marketing?
• Product
o Marketing designed to create exchange for tangible products.
o Example: Strategies to sell Gateway computers.
• Service
o Marketing designed to create exchanges for intangible products.
o Example: Strategies by Allstate to sell insurance.
• Person
o Marketing designed to create favorable actions toward persons.
o Example: Strategies to elect a political candidate.
• Place
o Marketing designed to attract people to places.
o Example: Strategies to get people to vacation in national or state parks.
• Cause
o Marketing designed to create support for ideas, causes, or issues or to get people to
change undesirable behaviors.
o Example: Strategies to get pregnant women not to drink alcohol.
• Organization
o Marketing designed to attract donors, members, participants, or volunteers.
o Example: Strategies designed to attract blood donors.
What are some examples of mission statements?
• Large Pharmaceutical Firm – We will become the world’s most valued company to patients,
customers, colleagues, investors, business partners, and the communities where we work and
live.
• Community Bank – To help citizens successfully achieve and celebrate important life events with
education, information, products, and services.
• Skin Care Products – We will provide luxury skin-care products with therapeutic qualities that
make them worth their premium price.
• Hotel Chain – Grow a worldwide lodging business using total-quality-management (TQM)
principles to continuously improve preference and profitability. Our commitment is that every
guest leaves satisfied.
• Mid-Size Bank – We will become the best bank in the state for medium-size businesses by 2017.
What are some guidelines for implementing the marketing concept?
1. Create customer focus throughout the business.
