Chapter 3: Strategic Market Planning
IV: END-OF-CHAPTER ANSWER GUIDE
CHAPTER QUESTIONS AND ACTIVITIES
UCONCEPTS: TEST YOUR KNOWLEDGE
3-1 What is a marketing plan, and how does it differ from a business plan?
The marketing plan is a document that identifies where the organization is now, where it wants
to go, how it plans to get there, and who will be responsible for carrying out each part of the
3-2 Describe the three levels of business planning: strategic, functional, and operational
planning.
3-3 What is a mission statement? What is a SWOT analysis? What role do these play in the
planning process?
A mission statement is a formal document that describes the organization’s overall purpose
and what it hopes to achieve in terms of its customers, products, and resources. The mission
When a company assesses its internal and external environments, it is performing a critical
step in the strategic planning process. Managers call this evaluation a SWOT analysis because
it tries to identify meaningful strengths (S) and weaknesses (W) in the organization’s internal
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Chapter 3: Strategic Market Planning
3-4 What is a strategic business unit (SBU)? How does strategic planning differ at the corporate
and the SBU levels?
Many firms realize that relying on only one product can be risky, so they have become
multi-product companies with self-contained divisions organized around products or brands.
3.5 Describe the five steps in the strategic planning process.
The first step in strategic planning is defining the mission—a formal document that describes
the organization’s overall purpose and what it hopes to achieve in terms of its customers,
products, and resources. Step 2 is to evaluate the internal and external environment through a
3-6 How do firms use the BCG model for portfolio analysis in planning for their SBUs?
The Boston Consulting Group model focuses on the potential of a firm’s existing successful
products to generate cash that the firm can then use to invest in new products. New products
are chosen for their potential to become future cash generators. In the BCG matrix, the
SBUs are categorized as stars, cash cows, question marks, and dogs:
Stars: are business units with products that have a dominant market share in
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Chapter 3: Strategic Market Planning
3-7 Describe the four business growth strategies: market penetration, product development,
market development, and diversification.
The four business growth strategies as exemplified by Figure 3.4 are:
Market penetration: these strategies seek to increase sales of existing products to
current customers, nonusers, and users of competing brands.
3.8 Explain the steps in the marketing planning process.
Perform a Situation Analysis—Marketing managers conduct an analysis of the marketing
environment by building on the company’s SWOT analysis by searching out information
about the environment that specifically affects the marketing plan.
Develop Marketing Strategies—Marketing managers must make decisions about what
3-9 What is return on marketing investment (ROMI)? How does considering marketing as an
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Chapter 3: Strategic Market Planning
3.10 Give several examples of marketing metrics. How might a marketer use each metric to track
progress of some important element of a marketing plan?
A couple of examples are cost of a prospect, referral rate, customer turnover and recognition
3-11 What is an action plan? Why are action plans such an important part of marketing planning?
Why is it so important for marketers to break the implementation of a marketing plan down
into individual elements through action plans?
An action plan assigns responsibilities, time lines, budgets, and measurement and control
processes for marketing planning. Action plans are also sometimes referred to as “marketing
3-12 How does operational planning support the marketing plan?
UACTIVITIES: PRACTICE: WHAT YOU’VE LEARNED
3-13 Creative Homework/Short Project As a marketing student, you know that large firms often
organize their operations into a number of strategic business units (SBUs). A university might
develop a similar structure in which different academic schools or departments are seen as
separate businesses. Consider how your university or college might divide its total academic
units into separate SBUs. What would be the problems with implementing such a plan? What
would be the advantages and disadvantages for students and for faculty? Be prepared to share
your analysis of university SBUs to your class.
3-14 In Class, 10–25 Minutes for Teams Pick a firm of your choice that operates on a global
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Chapter 3: Strategic Market Planning
level for which you have interest in its products or services. Use the matrix provided in
Figure 3.4 in the textbook and accompanying discussion to identify an example of a
strategy that the company offers or has offered that fits within each of the cells (Market
Penetration, Market Development, Product Development, Diversification). Provide your
rationale/justification for placing it in that particular category of strategy.
Students can work in teams and share their findings with the class.
3-15 Creative Homework/Short Project Pick your favorite restaurant. Identify two or three
activity metrics and two or three outcome metrics that you believe the restaurant could use
to better monitor and control its performance in the area of service. Explain why you
believe each metric selected is well suited for evaluating service performance (including
why it is well suited to serve as an activity metric as opposed to an outcome metric in this
context). Identify as well which of these metrics would most likely be easier to track, and
why.
3-16 In Class, 10–25 Minutes for Teams As an employee of a business consulting firm that
specializes in helping people who want to start small businesses, you have been assigned a
client who is interested in introducing a new concept in health clubs—one that offers its
customers both the usual exercise and weight-training opportunities and certain related
types of medical assistance, such as physical therapy, a weight-loss physician, and basic
diagnostic testing. As you begin thinking about the potential for success for this client,
you realize that developing a marketing plan is going to be essential. Take a role-playing
approach to present your argument to the client as to why he or she needs to spend the
money on your services to create a formal marketing plan.
3-17 For Further Research (Individual) All businesses—big and small—need to plan if they
want to be profitable and sustainable. Contact one of your favorite local businesses and
make an appointment with someone who has a hand in developing the firm’s business
plan. Find out how much time the planning process takes, how often the business plan is
updated, and what types of information the business plan contains. Summarize your
findings in a short report.
insights regarding business plans that offer competitive advantage with a product
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Chapter 3: Strategic Market Planning
3-18 For Further Research (Groups) Identify a large company, like Disney, that has several
SBUs. Using the BCG model, assign at least one SBU to each category in the model: star,
cash cow, question mark, and dog. Include at least two pieces of data for each to justify
your categorization. Prepare a short presentation to share with your class.
Students show begin be reviewing the Boston Consulting Group model which focuses on
the potential of a firm’s existing successful products to generate cash that the firm can then
use to invest in new products. New products are chosen for their potential to become future
cash generators. In the BCG matrix, the vertical axis represents the attractiveness of the
market, the market growth rate. The horizontal axis shows the company’s current strength
in the market through its relative market share. SBUs are categorized as stars, cash cows,
question marks, and dogs:
UAPPLY MARKETING METRICS
Most marketers today feel pressure to measure (quantify) their level of success in marketing
planning. You learned in the chapter that most marketers today feel pressure to measure
(quantify) their level of success in market planning. They do this by setting and then
measuring marketing objectives. One popular metric is market share, which in essence
represents the percentage of total product category sales your products represent versus
category competitors. For example, recent statistics indicate that Lenovo holds the
number-one market share in global PC sales with about 21 percent, topping HP with about 19
percent. ranked third through fifth are Dell, Apple, and Acer, respectively. But, despite its
common appearance in marketing objectives, market share has been heavily criticized as a
metric. Often it can become more of a “bragging right” for a firm than a profit enhancer. This
is because—especially in situations like the global PC market that is seeing heavy annual
declines in sales as tablets and other devices replace PCs—investing in being number one in
market share may deflect focus away from more lucrative new and growing product lines.
This could result in various answers, but one of the most effective means of knowing if a
marketing plan is successful in using marketing metrics. The ability to quantify success
allows business decisions to be made regarding changes or effectiveness. The students will
probably determine that the marketing measures are much harder to measure since some of
the measures are difficult to track and external to the organization. Finance and production
quality are controlled and counted within the firm.
3-19 Under what conditions do you believe market share as a metric is important to a firm? What
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Chapter 3: Strategic Market Planning
are the potential pitfalls of relying too much on market share as a key metric? What self-
defeating behaviors might this overreliance lead a firm to undertake?
MyMarketingLab for answers to Assisted Graded Questions.
3-20 Come up with some other product categories besides PCs that are declining and identify
the firms within those categories that have the highest market share. What does their profit
picture look like?
MyMarketingLab for answers to Assisted Graded Questions.
UCHOICES: WHAT DO YOU THINK?
3-21 Defining the mission is identified as the first major step in the strategic planning process.
Many companies display their mission statement on their website, making it readily
accessible to the public. Do you think a company should make it available for everyone to
see? Why or why not? Are there any specific situations or factors to consider that
lead you to recommend not doing so?
MyMarketingLab for answers to Assisted Graded Questions.
3-22 The Boston Consulting Group matrix identifies products as stars, cash cows, question
marks, and dogs. Do you think that this is a useful way for organizations to examine the
businesses? What are some examples of product lines that fit in each category?
MyMarketingLab for answers to Assisted Graded Questions.
3-23 Within the BCG matrix, products that earn the dog label have limited market potential for
the firm and also only hold a small relative market share. Products identified as dogs within
this framework are typically obvious candidates for divestment, but are there any cases
where doing so would not be wise for an organization? That is, why would a firm want to
hold onto a dog?
3-24. In this chapter, we talked about how firms do strategic, functional, and operational
planning. Yet some firms seem to be successful without formal planning. Do you think
planning is essential to a firm’s success? How might planning hurt an organization? Under
what circumstances do you believe that formal planning is and is not important to an
organization?
Planning is normally essential to the success of a firm. This is even more evident in the end.
Even though some firms may initially be successful (such as a dot.com startup in the late
1990s or a small retail establishment with a hot product), history has shown that failure to
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Chapter 3: Strategic Market Planning
information, etc. Be sure to ask for examples to illustrate statements.
3-25 Most planning involves strategies for growth. But is growth always the right direction to
pursue? Can you think of some organizations that should have contraction rather than
expansion as their objective? Do you know of any organizations that have actually planned
to get smaller rather than larger to increase their success?
Begin by asking students if growth is always the right direction. Have students consider the
specialty equipment. In an effort to maintain a high level of quality, service contraction is
often desired. Expansion might be the goal when demand for the good or service is not being
served by the firm or its competitors.
3-26 When most people think of successful marketing, internal firm culture doesn’t immediately
come to mind as a contributing factor. You may have learned about corporate culture in a
management course. What is a corporate culture? What are some reasons a firm’s culture is
important to the capability of doing good marketing? Give some examples of aspects that
you consider indicate a good corporate culture for marketing.
3.27 Many companies operate on the mentality that “marketing is an expense.” Do you agree
that marketing is expense, or should marketing be treated as an investment? Should there be
a business standard as to whether marketing is treated as an expense/investment, or should
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Chapter 3: Strategic Market Planning
individual organizations be given the freedom to choose which line item to assign it to?
Explain your reasoning.
3-28 A common saying among managers is “if we can’t measure it, we can’t manage it.” Is there
such a thing as an overreliance on marketing metrics? Are there cases or specific aspects of
marketing where a single- minded focus on metrics is inappropriate or detrimental to the
firm?
This is a good opportunity for students to divide into two teams and debate the pros and
cons of using marketing metrics.
UMARKETING MINIPROJECT: LEARN BY DOING
The purpose of this mini-project is to gain an understanding of the marketing planning through
actual experience.
3-29 a. Select one of the following for your marketing planning project:
b. Next, develop the following elements of the marketing planning process:
A mission statement
c. Prepare a brief outline of a marketing plan using the template provided at the end of this
chapter as a guide.
This project will help students start to think about marketing in a practical sense. They will
gain experience formulating a plan, learning how each part is dependent upon another.
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Chapter 3: Strategic Market Planning
V. MARKETING IN ACTION CASE: REAL CHOICES AT
AMAZON
Summary of Case
In the retail marketplace, it is becoming harder for companies to differentiate themselves from
the competition beyond simply price. Amazon is now faced with this challenge and must develop
offerings to protect and grow its customer base. One of its primary offerings has been the
creation of Amazon Prime. Prime Instant Video allows customers to stream movies and TV
shows to their web browsers or multiple Amazon video-compatible devices. The objective of the
add-on services is to attract new customers to Amazon Prime. One of Amazon’s latest additions
to its Prime service is the Prime Store Card. Prime Now is a service that allows customers to
receive their order within one hour for a fee of $7.99. Prime Pantry allows members to fill a
virtual box with groceries and household products and have them delivered for $5.99. Prime
Music offers ad-free access to playlists. Prime Photo provides unlimited photo storage on the
Amazon Cloud. This wide variety of associated services draws the attention of competitors, and
the key question as Amazon move forward is: how will the company successfully manage such a
large portfolio of offerings? For success to be sustained over time, Amazon must carefully
consider what long-term strategies are necessary to continue to make Amazon Prime a profitable
winner in a competitive marketplace.
Suggestions for Presentation
This case could be assigned for various online or in-class discussion activities.
Online Assignment Suggestions
Compare and contrast the strengths and weaknesses of Amazon.
Research the numerous companies that currently offer (or are developing) competitor television
technology and determine their position in the marketplace. Such competitors include Apple and
Google.
Have the students list what they perceive as strengths and weaknesses from a marketing
perspective that should be considered when adding capabilities to cellular phones.
In-Class Assignment Suggestions
In groups or as individuals, discuss the marketing strategy that Apple should consider as their
strategy for Amazon continuing forward, considering what the current competition might
include.
Develop a brainstorming exercise that would investigate additional future capabilities that might
be foreseen by the students that would add functionality to televisions.
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Chapter 3: Strategic Market Planning
Discuss the price implications of advances in television technology and if the advances are
desirable given the increase in prices for each functional advance.
You Make the Call
3-30 What is the decision facing Amazon?
3-31 What factors are important in understanding this decision situation?
Students could list many relevant factors important to Amazon’s efforts to revisit its
marketing plan. Central to this task would be a thorough SWOT analysis:
3-32 What are the alternatives?
3-33 What decision(s) do you recommend?
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Chapter 3: Strategic Market Planning
3-34 What are some ways to implement your recommendation?
U MYMARKETINGLAB
Go to mymktlab.com for Auto-graded writing questions as well as the following Assisted-
graded writing questions:
3-35 Creative Homework/Short Project. Assume that you are the marketing director for Mattel
Toys. Your boss, the company vice president for marketing, has decided that it’s time to
develop some new objectives for some of their product lines as the company begins market
planning. Your VP has asked you to help out by writing several initial objectives. Select any
product line at Mattel and develop several objectives that fulfill the criteria for objectives
discussed in the chapter.
3-36 Creative Homework/Short Project. An important part of planning is a SWOT analysis,
understanding an organization’s strengths, weaknesses, opportunities, and threats. Prepare a
SWOT analysis for Panera Bread that includes three or four items in each of the four SWOT
categories.
WEB RESOURCES
Pearson Education, Inc.: www.mymktlab.com
Oracle: www.oracle.com
Amazon.com: www.amazon.com
General Mills: www. generalmills .com
The American Marketing Association: www.marketingpower.com
McDonald’s: www.mcdonalds.com
Explore Procter & Gamble’s family of products: www.pg.com
Check out General Electric’s (GE) corporate culture: www.ge.com
Discover all of Walt Disney Company’s SBUs: www.disney.com
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