978-0077861063 Chapter 1 Lecture Note 2

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

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.

ADDITIONAL RESOURCES

Austin, Robert D., Richard L. Nolan, and Shannon O’Donnell. Harder Than I Thought, Boston:

Harvard Business Review Press, 2013.

Charan, Ram. Leadership in The Era of Economic Uncertainty. NY: McGraw-Hill, 2009.

Christensen, Clayton, M., Scott Cook, and Tandy Hall. “Marketing Malpractice: The

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

Co., 2009.

Friedman, George. The Next Decade. NY: Doubleday, 2011.

Kaplan, Robert S. and David Norton. “How To Implement a New Strategy without

Disrupting Your Organization.” Harvard Business Review, March 2006, pp. 100-109.

Levitt, Ted. On Marketing. Boston: HBS Press, 2006.

Markower, Jack. Strategies For a Green Economy. NY: McGraw-Hill, 2009.

O'Sullivan, Don, and Andrew W. Abdela. “Marketing Performance Measurement

Ability and Performance.” Journal of Marketing, April 2007, pp. 79-93.

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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