Chapter 01 - Strategic Planning and the Marketing Management Process
Choosing an Appropriate Strategy
Management should select those strategies consistent with its mission and capitalizes on
the organization's distinctive competencies that will lead to a sustainable competitive
advantage.
A sustainable competitive advantage can be based on either the assets or skills of the
organization.
Organizational Portfolio Plan
The final phase of strategic planning process is the formulation of the organizational
portfolio plan.
Management must decide which businesses to build, maintain, or eliminate, or which new
businesses to add.
The first step in this approach is to identify various divisions, product lines, etc., that can
be considered a “business.”
These are referred to as strategic business unit (SBUs) and they have the following
characteristics:
oThey have a distinctive mission.
oThey have their own competitors.
oThey are a single business or collection of related businesses.
oThey can be planned independently of the other businesses of the total organization
Thus, depending on the type of organization, an SBU could be a single product, product
line, or division; a college of business administration; or a state mental health agency.
C. The Complete Strategic Plan
Completion of the strategic plan (Figure 1.2) facilitates the development of marketing plans
for each product, product line, or division of the organization.
The marketing plan serves as a subset of the strategic plan in that it allows for detailed
planning at a target market level.
IV. The Marketing Management Process
Marketing management can be defined as “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.”
This definition is consistent with the marketing concept.
The marketing management process is illustrated in Figure 1.5.
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Chapter 01 - Strategic Planning and the Marketing Management Process
A. Situation Analysis
Situation analysis can be divided into six major areas of concern:
oThe Cooperative Environment
It includes all firms and individuals who have a vested interest in
the firm’s accomplishing its objectives.
Parties of primary interest to the marketing executive in this
environment are:
Suppliers
Resellers
Other departments in the firm
Subdepartments and employees of the marketing
department
Opportunities in this environment are primarily related to
methods of increasing e&ciency.
oThe Competitive Environment
It includes primarily other firms in the industry that rival the
organization for both resources and sales.
Opportunities in this environment include such things as:
Acquiring competing firms
offering demonstrably better value to consumers and
attracting them away from competitors
In some cases, driving competitors out of the industry
oThe Economic Environment
It includes the state of the macroeconomy and changes in it
which bring about marketing opportunities and constraints.
Changes in technology can provide significant threats and
opportunities.
oThe Social Environment
It includes general cultural and social traditions, norms, and
attitudes.
While these values change slowly, such changes often bring
about the need for new products and services.
oThe Political Environment
It includes the attitudes and reactions of the general public,
social and business critics, and other organizations, such as the
Better Business Bureau.
Dissatisfaction with such business and marketing practices as
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Chapter 01 - Strategic Planning and the Marketing Management Process
unsafe products, products that waste resources and unethical
sales procedures can have adverse effect on corporation image
and customer loyalty.
oThe Legal Environment
It includes a host of federal, state, and local legislation directed
at protecting both business competition and consumer rights.
In recent years, there has been less emphasis on creating new
laws for constraining business practices.
B. Marketing Planning
Once an opportunity is recognized, the marketing executive must then
plan an appropriate strategy for taking advantage of the opportunity.
This process can be viewed in terms of three interrelated tasks that
include:
oEstablishing marketing objectives
oSelecting the target market
oDeveloping the marketing mix
Establishing Objectives
oMarketing objectives usually are derived from organizational
objectives; in some cases where the firm is totally marketing oriented,
the two are identical.
oMarketing objectives are usually stated as standards of performance
or as tasks to be achieved by given dates.
Selecting the Target Market
oThe success of any marketing plan hinges on how well it can identify
customer needs and organize its resources to satisfy them profitably.
oFour important questions must be answered in selecting the groups of
potential customers:
What do customers want or need?
What must be done to satisfy those wants or needs?
What is the size of the market?
What is its growth profile?
oPresent target markets and potential target markets are then ranked
according to:
Profitability
Present and future sales volume
The match between what it takes to appeal successfully to the
segment and the organization’s capabilities
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Chapter 01 - Strategic Planning and the Marketing Management Process
Developing the Marketing Mix
oThe marketing mix is the set of controllable variables that must be
managed to satisfy the target market and achieve organizational
objectives.
oThese controllable variables are usually classified according to four
major decision areas:
Product
Price
Promotion
Place
C. Implementation and Control of the Marketing Plan
Implementing the marketing plan involves putting the plan into action and
performing marketing tasks according to the predefined schedule.
Controlling the marketing plan involves three steps:
oThe results of the implemented marketing plan are measured
oThe results are compared with objectives
oDecisions are made on whether the plan is achieving objectives
D. Marketing Information Systems and Marketing Research
Throughout the marketing management process, current, reliable, and
valid information is needed to make effective marketing decisions.
V. The Strategic Plan, the Marketing Plan, and Other Functional Area Plans
Strategic planning is a top management responsibility.
Marketing managers are increasingly involved in strategic analysis and
planning.
Nearly all strategic planning questions have marketing implications.
Marketing executives are involved in the strategic planning process in at least
two important ways:
oThey influence the process by providing important inputs in the form of
information and suggestions relating to customers, products, and
middlemen.
oThey must always be aware of what the process of strategic planning
involves as well as the results because everything they do—the
marketing objectives and strategies they develop—must be derived from
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Chapter 01 - Strategic Planning and the Marketing Management Process
the strategic plan.
A. Marketing’s Role in Cross-Functional Strategic Planning
More and more organizations are bringing managers and employees
together to participate in cross-functional teams.
Rather than making decisions independently, marketing managers work
closely with team members from production, finance, human resources,
and other areas to devise plans that address all concerns.
The greatest advantage of strategic planning with a cross-functional team
is the ability of team members to consider a situation from a number of
viewpoints.
In well-managed organizations, a direct relationship exists between
strategic planning and the planning done by managers at all levels.
If done properly, strategic planning results in a clearly defined blueprint for management
action in all functional areas of the organization (Figure 1.7).
KEY TERMS
Distinctive competencies: Distinctive competencies are things that an organization
does well—so well in fact 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 strategy 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 offering 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
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Chapter 01 - Strategic Planning and the Marketing Management Process
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 systems: Throughout the marketing management process,
current, reliable, and valid information is needed to make effective marketing
decisions. Providing this information is the task of the 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 marketing 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
operations 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: This stage of the strategic plan involves the allocation of
resources across the organization’s product lines, divisions, or businesses. It
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Chapter 01 - Strategic Planning and the Marketing Management Process
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
di*erentiation 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
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Chapter 01 - Strategic Planning and the Marketing Management Process
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.
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Cause and The Cure.” Harvard Business Review, December 2005, pp.74-75.
Dixit, Avinash, K., and Barry J. Noblebuff. The Art of Strategy. NY: W.W. Norton and
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Friedman, George. The Next Decade. NY: Doubleday, 2011.
Kaplan, Robert S. and David Norton. “How To Implement a New Strategy without
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O'Sullivan, Don, and Andrew W. Abdela. “Marketing Performance Measurement
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Silverstein, Michael J., Abheek Singhi, Carol Liao, and David Michael. The $10 Trillion Prize:
Captivating the Newly Affluent in China and India. Boston: Harvard Business Review Press, 2012.
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consent of McGraw-Hill Education.
