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Principles of Marketing

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Principles of Marketing ­ MGT301
VU
Lesson ­ 6
In last Lesson the focus of discussion was marketing challenges in the 21st century. Today we will
discuss strategic planning, describe marketing management and planning process, identify sections
of a marketing plan and specify the contents of each section. So today we will be covering
following topics:
STRATEGIC PLANNING AND MARKETING PROCESS
1. Strategic planning
The process of developing and maintaining a strategic fit between the organization's goals and
capabilities and its changing marketing opportunities is called Strategic planning. Planning is
basically concerned with what are we going to do and how are we going to do it? Organizations,
which are not able to perform the effective planning, are actually planning for failures. To meet
changing conditions in their industries, companies need to be farsighted and visionary, and must
develop long-term strategies. Strategic planning involves developing a strategy to meet competition
and ensure long-term survival and growth. The marketing function plays an important role in this
process in that it provides information and other inputs to help in the preparation of the
organization's strategic plan. Planning is performed to:
 Address changing environment and consumers
 Develop shared goals within organization
 Address competitive threat
 To anticipate the future
 Determine actions that are needed to achieve objectives
Strategic planning is mainly of three types:
(1) Strategic Planning: Major activities in strategic planning process include
developing the company's goals and
plans. Typically strategic planning
Strategic Planning
focus  on  long-term  issues  and
emphasize the survival, growth, and
Conducted by
overall
effectiveness
of
the
Board, CEO,
organization.
Division VPs
(2)  Tactical  Planning:  Tactical  planning  is
Sets Objectives
concerned with translating the general goals and
Fundamental
plans developed by strategic managers into
Strategies
objectives that are more specific and activities.
These decisions, or tactics, involve both a shorter
time horizon and the coordination of
O perational P lanning
resources.
(3) Operational  Planning:  Operational
planning is used to
supervise the
District Sales
operations of the organization. It is
Managers, Staff
directly involved with non-management
Marketing Supervisors
employees, implementing the specific
Daily and Weekly
plans developed with tactical managers.
Plans
This role is critical in the organization,
Departmental Rules &
because operational managers are the link
Procedures
between
management
and
non-
management  personnel.  Your  first
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Principles of Marketing ­ MGT301
VU
management position probably will fit into this category.
2. Characteristics of a Strategic Plan
Strategic planning consists of developing a company mission (to give it direction), objectives and
goals (to give it means and methods for accomplishing its mission), business portfolio (to allow
management to utilize all facets of the organization), and functional plans (plans to carry out daily
operations from the different functional disciplines). Since most companies are interested in
growth, this chapter explores several growth alternatives within the context of strategic planning
and portfolio analysis. The product/market expansion grid shows four avenues for growth: market
penetration, market development, product development, and diversification. Many companies
operate without formal plans. However, formal planning can provide many benefits:
1). It encourages management to think ahead systematically.
2). It forces managers to clarify objectives and policies.
3). It leads to better coordination of company efforts.
4). It provides clearer performance standards for control.
5). It is useful for a fast-changing environment since sound planning helps the company
anticipate and respond quickly to environmental changes and sudden developments.
3. Strategic planning Process:
It is defined as the process of developing and maintaining a strategic fit between the organization's
goals and capabilities and its changing marketing opportunities.
1). Strategic planning sets the stage for the rest of the planning in the firm.
2). There are four steps to the strategic planning process:
a). stating a clear company mission.
b).  Setting  supporting
company objectives.
c). Designing a sound
Business unit,
business portfolio.
Corporate Level
product,
d).
Planning
and
and market
coordinating marketing and other
level
functional strategies.
Planning,
Defining
Setting
Designing
marketing,
the
Company
the Business
and other
Company
Objectives
Portfolio
functional
Mission
and Goals
Strategies
a. Defining the Company's Business and Mission
An organization exists to accomplish something. When management senses that the organization is
drifting, it is time to renew its search for purpose by asking:
1). What is our business?
2). Who is our customer?
3). What do customers value?
4). What should our business be?
The first step in the strategic planning process is defining the company mission.
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Principles of Marketing ­ MGT301
VU
1). A mission statement is a statement of the organization's purpose--what it wants to
accomplish in the larger environment.
2). A clear mission statement acts as an "invisible hand" that guides people in the organization.
3). Market definitions of a business are
better than product or technological
A Mission Statement is a Statement of the
definitions. Products and technologies can
Organization's Purpose.
become outdated, but basic market needs
may last forever.
MarrketOrriented
Ma ket O iented
Characteristics
of a Good
4). A market-oriented mission statement
Reallistic
Reaistic
Mission
defines the business in terms of satisfying
Statement:
basic customer needs.
Specific
The mission statement must avoid being
FiitMarrketEnviironment
Ft Ma ket Envronment
too narrow or too broad. Mission
statements must:
DiistinctiveCompettencies
Dstinctive Compe encies
Mottivating
Mo ivating
1). Be realistic.
2). Be specific.
3). Fit the market environment.
4). Indicate distinctive competencies.
5). Be motivating.
b.
Setting Company Objectives and Goals
The company's mission needs to be turned into detailed supporting objectives for each level of
management. This second step in the strategic planning process requires the manager to set
company goals and objectives and be responsible for achieving them.
1). The mission leads to a hierarchy of objectives including business and marketing
objectives.
2). Objectives should be as specific as possible.
c.  Designing the Business Portfolio
The third step in the strategic planning process is designing the business portfolio.
1). The business portfolio is a collection of businesses and products that make up the
company.
2). The best business
portfolio is the one that best
fits the company's strengths
and
weaknesses
to
20%-
S ta rs
Q u e s tio n m a rk s
opportunities
in
the
4
?
?
18%-
1
environment.
3
?
16%-
b. In order to design the
14%-
5
2
business
portfolio,
the
12%-
10%-
business must:
Dogs
C ash cow
8%-
1). Analyze its current
8
6%-
business portfolio and decide
4%-
6
which business should receive
2%-
7
0
more, less, or no investment.
10x
4x
2x 1 .5 x
1x
.5 x .4 x .3 x .2 x .1x
R e la tiv e m a r k e t s h a r e
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Principles of Marketing ­ MGT301
VU
2). Develop growth strategies for adding new products or businesses to the
portfolio.
Analyzing the Current Business Portfolio
In order to analyze the current business portfolio, the company must conduct portfolio analysis (a
tool by which management identifies and evaluates the various businesses that make up the
company). Two steps are important in this analysis:
1). The first step is to identify the key businesses (SBUs). The strategic business unit
(SBU) is a unit of the company that has a separate mission and objectives and which can be
planned independently from other company businesses.
2). The SBU can be a company division, a product line within a division, or even a single
product or brand.
3). The second step is to assess the attractiveness of its various SBUs and decide how much
support each deserves. The best-known portfolio planning method is the Boston Consulting
Group (BCG) matrix:
1). Using the BCG approach, where a company classifies all its SBUs according to the
growth-share matrix.
a). The vertical axis, market growth rate, provides a measure of market attractiveness.
b). The horizontal axis, relative market share, serves as a measure of company strength
in the market.
2). Using the matrix, four types of SBUs can be identified:
a. Stars
b. Cash Cows
c. Question Marks
d. Dogs
a). Stars are high-growth, high-share businesses or products (they need heavy
investment to finance their rapid growth potential).
b). Cash Cows are low-growth, high-share businesses or products (they are established,
successful, and need less investment to hold share).
c). Question Marks are low-share business units in high-growth markets (they require
a lot of cash to hold their share).
d). Dogs are low-growth, low-share businesses and products (they may generate enough
cash to maintain themselves, but do not have much future). Once it has classified its SBUs, a
company must determine what role each will play in the future. The four strategies that can be
pursued for each SBU are:
1). The company can invest more in the business unit in order to build its share.
2). The company can invest enough just to hold at the current level.
3). The company can harvest the SBU.
4). The company can divest the SBU.
As time passes, SBUs change their positions in the growth-share matrix. Each has its own life
cycle. The growth-share matrix has done much to help strategic planning study; however, there are
problems and limitations with the method.
1). They can be difficult, time-consuming, and costly to implement.
2). Management may find it difficult to define SBUs and measure market share and growth.
3). They focus on classifying current businesses but provide little advice for future planning.
4). They can lead the company to placing too much emphasis on market-share growth or
growth through entry into attractive new markets. This can cause unwise expansion into hot, new,
risky ventures or giving up on established units too quickly. In spite of the drawbacks, most firms
are still committed to strategic planning.
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Table of Contents:
  1. PRINCIPLES OF MARKETING:Introduction of Marketing, How is Marketing Done?
  2. ROAD MAP:UNDERSTANDING MARKETING AND MARKETING PROCESS
  3. MARKETING FUNCTIONS:CUSTOMER RELATIONSHIP MANAGEMENT
  4. MARKETING IN HISTORICAL PERSPECTIVE AND EVOLUTION OF MARKETING:End of the Mass Market
  5. MARKETING CHALLENGES IN THE 21st CENTURY:Connections with Customers
  6. STRATEGIC PLANNING AND MARKETING PROCESS:Setting Company Objectives and Goals
  7. PORTFOLIO ANALYSIS:MARKETING PROCESS,Marketing Strategy Planning Process
  8. MARKETING PROCESS:Analyzing marketing opportunities, Contents of Marketing Plan
  9. MARKETING ENVIRONMENT:The Companyís Microenvironment, Customers
  10. MARKETING MACRO ENVIRONMENT:Demographic Environment, Cultural Environment
  11. ANALYZING MARKETING OPPORTUNITIES AND DEVELOPING STRATEGIES:MIS, Marketing Research
  12. THE MARKETING RESEARCH PROCESS:Developing the Research Plan, Research Approaches
  13. THE MARKETING RESEARCH PROCESS (Continued):CONSUMER MARKET
  14. CONSUMER BUYING BEHAVIOR:Model of consumer behavior, Cultural Factors
  15. CONSUMER BUYING BEHAVIOR (CONTINUED):Personal Factors, Psychological Factors
  16. BUSINESS MARKETS AND BUYING BEHAVIOR:Market structure and demand
  17. MARKET SEGMENTATION:Steps in Target Marketing, Mass Marketing
  18. MARKET SEGMENTATION (CONTINUED):Market Targeting, How Many Differences to Promote
  19. Product:Marketing Mix, Levels of Product and Services, Consumer Products
  20. PRODUCT:Individual product decisions, Product Attributes, Branding
  21. PRODUCT:NEW PRODUCT DEVELOPMENT PROCESS, Idea generation, Test Marketing
  22. NEW PRODUCT DEVELOPMENT:PRODUCT LIFE- CYCLE STAGES AND STRATEGIES
  23. KEY TERMS:New-product development, Idea generation, Product development
  24. Price the 2nd P of Marketing Mix:Marketing Objectives, Costs, The Market and Demand
  25. PRICE THE 2ND P OF MARKETING MIX:General Pricing Approaches, Fixed Cost
  26. PRICE THE 2ND P OF MARKETING MIX:Discount and Allowance Pricing, Segmented Pricing
  27. PRICE THE 2ND P OF MARKETING MIX:Price Changes, Initiating Price Increases
  28. PLACE- THE 3RD P OF MARKETING MIX:Marketing Channel, Channel Behavior
  29. LOGISTIC MANAGEMENT:Push Versus Pull Strategy, Goals of the Logistics System
  30. RETAILING AND WHOLESALING:Customer Service, Product Line, Discount Stores
  31. KEY TERMS:Distribution channel, Franchise organization, Distribution center
  32. PROMOTION THE 4TH P OF MARKETING MIX:Integrated Marketing Communications
  33. ADVERTISING:The Five Mís of Advertising, Advertising decisions
  34. ADVERTISING:SALES PROMOTION, Evaluating Advertising, Sales Promotion
  35. PERSONAL SELLING:The Role of the Sales Force, Builds Relationships
  36. SALES FORCE MANAGEMENT:Managing the Sales Force, Compensating Salespeople
  37. SALES FORCE MANAGEMENT:DIRECT MARKETING, Forms of Direct Marketing
  38. DIRECT MARKETING:PUBLIC RELATIONS, Major Public Relations Decisions
  39. KEY TERMS:Public relations, Advertising, Catalog Marketing
  40. CREATING COMPETITIVE ADVANTAGE:Competitor Analysis, Competitive Strategies
  41. GLOBAL MARKETING:International Trade System, Economic Environment
  42. E-MARKETING:Internet Marketing, Electronic Commerce, Basic-Forms
  43. MARKETING AND SOCIETY:Social Criticisms of Marketing, Marketing Ethics
  44. MARKETING:BCG MATRIX, CONSUMER BEHAVIOR, PRODUCT AND SERVICES
  45. A NEW PRODUCT DEVELOPMENT:PRICING STRATEGIES, GLOBAL MARKET PLACE