978-0077861063 Chapter 1 Lecture Note 1

Type

Quiz

Book Title

A Preface to Marketing Management 14th Edition

ISBN 13

978-0077861063

April 8, 2019

Chapter 01 - Strategic Planning and the Marketing Management Process

Chapter 1

Strategic Planning and the Marketing

Management Process

High-Level Chapter Outline

I. Introduction

II. The Marketing Concept

III. What is Marketing?

IV. What is Strategic Planning?

A. Strategic Planning and Marketing Management

B. The Strategic Planning Process

Organizational Mission

Organizational Objectives

Organizational Strategies

Choosing an Appropriate Strategy

Organizational Portfolio Plan

C. The Complete Strategic Plan

V. The Marketing Management Process

A. Situation Analysis

B. Marketing Planning

C. Implementation and Control of the Marketing Plan

D. Marketing Information Systems and Marketing Research

VI. The Strategic Plan, the Marketing Plan, and Other Functional Area Plans

A. Marketing’s Role in Cross-Functional Strategic Planning

Detailed Chapter Outline

I. The Marketing Concept

The marketing concept means that an organization should seek to make a profit by serving the

needs of customer groups.

The purpose of the marketing concept is to rivet the attention of marketing managers on serving

broad classes of customer needs (customer orientation), rather than on the firm’s current products

(production orientation) or on devising methods to attract customers to current products (selling

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Chapter 01 - Strategic Planning and the Marketing Management Process

orientation).



The principal task of the marketing function operating under the marketing concept is not to

manipulate customers to do what suits the interest of the firm, but rather to find effective and

efficient means of making the business do what suits the interest of the customer.



Effective marketing requires that consumer needs come first in organizational decision making.



One qualification to this statement deals with the question of a conflict between consumer wants

and societal needs and wants.

II. What is Marketing?

Everyone knows something about marketing because it has been a part of their lives since they

spent their first dollar.



Since everyone is involved in marketing, it seems strange that one of the persistent problems in the

field has been its definition.



The American Marketing Association defines marketing as, “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.”

This definition takes into account all parties involved in the marketing effort: members of the

producing organization, resellers of goods and services, and customers or clients.

Major types of marketing includes: product, service, person, place, cause, and organization (see

Figure 1.1 for descriptions and examples).

III. What is Strategic Planning?



Before a production manager, marketing manager, and personnel manager can develop plans for

their individual departments, some larger plan or blueprint for the organization should exist.



Senior managers must look toward the future and evaluate the ability to shape their organization’s

destiny in the years and decades to come.

oThe output of this process is objectives and strategies designed to give the organization a

chance to compete effectively in the future.

The objectives and strategies established at the top level provide the context for planning in each

of the divisions and departments by divisional and departmental managers.

A. Strategic Planning and Marketing Management



Some of the most successful business organizations are here today because many years ago

they offered the right product at the right time to a rapidly growing market.



Over three-quarters of the 100 largest U.S. corporations of 70 years ago have fallen from the

list.

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Chapter 01 - Strategic Planning and the Marketing Management Process

oTheir managements failed to recognize that business strategies need to reflect changing

environments and emphasis must be placed on developing business systems that allow

for continuous improvement.



Present-day business managers realize that the true mission of the organization is to provide

value for three key constituencies: customers, employees, and investors.

Strategic planning includes all the activities that lead to the development of a clear

organizational mission, organizational objectives, and appropriate strategies to achieve the

objective for the entire organization.



Strategic planning, if performed successfully, plays a key role in achieving equilibrium

between the short and the long term by balancing acceptable financial performance with

preparation for inevitable changes in markets, technology, and competition as well as in

economic and political arenas.

The strategic planning process is depicted in Figure 1.2.

In the strategic planning process the organization gathers information about the changing

elements of its environment.

This information is useful in aiding the organization to adapt better to these changes through

the process of strategic planning.

B. The Strategic Planning Process

The output of strategic planning is the development of a strategic plan.

Figure 1.2 indicates four components of a strategic plan: mission, objectives, strategies, and

portfolio plan.

Organizational Mission

The organization’s environment provides the resources that sustain the organization,

whether it is a business, a college or university, or a government agency.

Every organization exists to accomplish something in the larger environment and that

purpose, vision, or mission usually is clear at the organization’s inception.

As time passes, the organization expands, and the environment and managerial personnel

change. As a result, one or more things are likely to occur:

oThe organization’s original purpose may become irrelevant as the organization

expands into new products, new markets, and even new industries.

oThe original mission may remain relevant, but managers begin to lose interest in it.

oChanges in the environment may make the original mission inappropriate.

The result of any or all three of these conditions is a “drifting” organization, without a

clear mission, vision, or purpose to guide critical decisions.

oWhen this occurs, management must search for a purpose or emphatically restate

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and reinforce the original purpose.

The mission statement, or purpose, of an organization is the description of its reason for

existence.

oIn essence, the mission statement defines the direction in which the organization is

heading and how it will succeed in reaching its desired goal.



The basic questions that must be answered when an organization decides to examine and

restate its mission are:

oWhat is the business?

oWho is are the customers?

oWhat do customers value?

oWhat will the business be?

In developing a statement of mission, management must take into account three key

elements: the organization’s history, its distinctive competencies, and its environment.

oThe organization’s history—in formulating a mission, the critical characteristics and

events of the past must be considered.

oThe organization’s distinctive competencies—these are things that an organization

does well.

oThe organization’s environment—it dictates the opportunities, constraints, and

threats that must be identified before a mission statement is developed.



When completed, an effective mission statement will be focused on markets rather than

products, achievable, motivating, and specific.

Focused on Markets Rather than Products

oIn recent years, a key feature of mission statements has been an external rather than

internal focus.

oIn other words, the mission statement should focus on the broad class of needs that

the organization is seeking to satisfy (external focus), not on the physical product or

service that the organization is offering at present (internal focus).

Achievable

oThe mission statement should open a vision of new opportunities but should not

lead the organization into unrealistic ventures far beyond its competencies.

oIt should open a vision of new opportunities but should not lead the organization

into unrealistic ventures far beyond its competencies.

Motivational

oOne of the side (but very important) benefits of a well-defined mission is the

guidance it provides employees and managers working in geographically dispersed

units and on independent tasks.

oIt provides a shared sense of purpose outside the various activities taking place

within the organization.

Specific

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Chapter 01 - Strategic Planning and the Marketing Management Process

oThe mission statement must be specific to provide direction and guidelines to

management when they are choosing between alternative courses of action.

oHowever, it does not provide direction for management.

Organizational Objectives

Organizational objectives are the end point of an organization’s mission and are what it

seeks through the on-going, long-run operations of the organization.

The organizational mission is distilled into a finer set of specific and achievable

organizational objectives that must be specific, measurable, action commitments by which

the mission of the organization is to be achieved.

If formulated properly, they can accomplish the following:

oThey can be converted into specific action.

oThey will provide direction.

oThey can establish long-run priorities for the organization.

oThey can facilitate management control.

Organizational objectives are necessary in all areas that may influence the performance

and long-run survival of the organization.

Obviously, during the strategic planning process conflicts are likely to occur between

various functional departments in the organization.

The important point is that management must translate the organizational mission into

specific objectives that support the realization of the mission.

Organizational Strategies

Strategy involves the choice of major directions the organization will take in pursuing its

objectives.

As many as 70 percent of strategic plans fail because the strategies are not well defined

and, thus, could not to be implemented effectively.

Organizational Strategies Based on Products and Markets

oOne means to developing organizational strategies is to focus on the directions the

organization can take in order to grow.

oThe four paths an organization can take in order to grow are market penetration,

market development, product development, and diversification (Figure 1.4).

Market Penetration Strategies

oThese strategies focus primarily on increasing sales of present products to present

customers.

oTactics used to implement a market penetration strategy might include price

reductions, advertising that stresses the many benefits of the product, packaging the

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Chapter 01 - Strategic Planning and the Marketing Management Process

product in different-sized packages, or making it available at more locations.

Market Development Strategies

oAn organization would seek to find new customers for its present products through

market development.

oMarket development strategies involve much, much more than simply getting the

product to a new market.

Product Development Strategies

oThe new products developed would be directed primarily to present customers.

Diversification

oThis strategy can lead the organization into entirely new and even unrelated

businesses.

oIt involves seeking new products (often through acquisitions) for customers not

currently being served.

Organizational Strategies Based on Competitive Advantage

oMichael Porter developed this model for formulating organizational strategy that is

applicable across a wide variety of industries.

oPorter suggests that firms should first analyze their industry and then develop either

a cost leadership or a strategy based on differentiation.

oUsing a cost leadership strategy, a firm would focus on being the low-cost company

in its industry.

oUsing a strategy based on differentiation, a firm seeks to be unique in its industry or

market segment along particular dimensions that the customers value.

Organizational Strategies Based on Value

oAs competition increases, the concept of “customer value” has become critical for

marketers.

oIt focuses not only on customer needs, but also on the question, How can an

organization create value for their customers and still achieve their objectives?

oIt is unlikely that a firm will succeed by trying to be all things to all people.

oMany firms have succeeded by choosing to deliver superior customer value using

one of three value strategies-best price, best product, or best service.

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