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Chapter 1
Strategic Planning and Strategic Planning and
the Marketing Processthe Marketing Process
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The Strategic Planning Process
The EnvironmentCooperativeCompetitiveEconomic
SocialPolitical
Legal
The EnvironmentCooperativeCompetitiveEconomic
SocialPolitical
Legal
INFORMATION
IMPLEMENTATION
Organizational Mission
Organizational Mission
Organizational Objectives
Organizational Objectives
Organizational Portfolio Plan
Organizational Portfolio Plan
The organization’s strategic plan The organization’s strategic plan
Organizational Strategies
Organizational Strategies
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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SOURCE: Patricia Jones and Larry Kahaner, Say It and Live It: The 50 Corporate Mission Statements That Hit the Mark (New York: Doubleday, 1995).
Mission Statements
Organization Mission
• Goodyear Our mission is constant improvement in products and services to meet our customers’ needs. This is the only means to business success for Goodyear and prosperity for its investors and employees.
• Intel Corporation Do a great job for our customers, employees, and stockholders by being the preeminent building
block supplier to the computing industry.
(continued)
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Mission Statements
SOURCE: Patricia Jones and Larry Kahaner, Say It and Live It: The 50 Corporate Mission Statements That Hit the Mark (New York: Doubleday, 1995).
Organization Mission
• Levi Strauss & Co. The mission of Levi Strauss & Co. is to sustain responsible commercial success as a global
marketing company of branded casual apparel. We must balance goals of superior profitability and
return on investment, leadership market positions, and superior products and service. We will conduct our business ethically and demonstrate leadership in satisfying our responsibilities to our communities
and to society. Our work environment will be safe and productive and characterized by fair treatment, teamwork, open communications, personal
accountability, and opportunities for growth and development.
(continued)
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Mission Statements
Organization Mission
• Merck & Co., Inc. The mission of Merck & Co., Inc., is to provide society with superior products and services— innovations and solutions that satisfy customer needs and improve their quality of life—to provide employees with meaningful work and advancement opportunities and investors with a superior
rate of return.
• Marriott Grow a worldwide lodging business using total quality management (TQM) principles to continuously improve preference and profitability. Our commitment is that every guest leaves
satisfied.
SOURCE: Patricia Jones and Larry Kahaner, Say It and Live It: The 50 Corporate Mission Statements That Hit the Mark (New York: Doubleday, 1995).
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Sample Organizational Objectives (manufacturing firm)
Possible Objective
To make our brands number one in their field in terms of market share.
To be a leader in introducing new products by spending no less than 7 percent of sales for research and development.
To manufacture all products efficiently as measured by the productivity of the workforce.
To protect and maintain all resources- equipment, buildings, inventory, and funds.
Area of Performance
1. Market standing
2. Innovations
3. Productivity
4. Physical and financial resources
(continued)
Figure 1-2Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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Sample Organizational Objectives (manufacturing firm)
Possible Objective
To achieve an annual rate of return on investment of at least 15 percent.
To identify critical areas of management depth and succession.
To maintain levels of employee satisfaction consistent with our own and similar industries.
To respond appropriately whenever possible to societal expectations and environmental needs.
Area of Performance
5. Profitability
6. Manager performance and responsibility
7. Worker performance and attitude
8. Social responsibility
Figure 1-2Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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What They May What Marketers May Functions Want to Deliver Want Them to Deliver
Research and Basic research projects Products that deliver customer valuedevelopment Product features Customer benefits
Few projects Many new products
Production/ Long production runs Short production runsoperations Standardized products Customized products
No model changes Frequent model changesLong lead times Short lead timesStandard orders Customer ordersNo new products Many new products
Potential Sources of Cross-Functional Conflict for Marketers
(continued)
SOURCE: G. A. Churchill, Jr., and J. Paul Peter, Marketing: Creating Value for Customers (Burr Ridge, IL: Irwin/McGraw-Hill, 1998), p. 15.
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Potential Sources of Cross-Functional Conflict for Marketers
What They May What Marketers May Functions Want to Deliver Want Them to Deliver
Finance Rigid budgets Flexible budgetsBudgets based on return Budgets based on need to
on investment increase sales
Low sales commissions High sales commissions
Accounting Standardized billing Custom billingStrict payment terms Flexible payment termsStrict credit standards Flexible credit standards
Human resources Trainable employees Skilled employeesLow salaries High salaries
SOURCE: G. A. Churchill, Jr., and J. Paul Peter, Marketing: Creating Value for Customers (Burr Ridge, IL: Irwin/McGraw-Hill, 1998), p. 15.
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Organizational Growth Strategies
Products
MarketsPresent
ProductsNew
Products
Presentcustomers
Newcustomers
Marketpenetration
ProductDevelopment
MarketDevelopment Diversification
Figure 1-3Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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Strategic Planning and Marketing Planning
Implementation and controlImplementation and control
The strategic planOrganizational missionOrganizational objectiveOrganizational strategiesOrganizational portfolio
The strategic planOrganizational missionOrganizational objectiveOrganizational strategiesOrganizational portfolio
The marketing planSituation analysisMarketing objectivesTarget market selectionMarketing mix
Product strategyPromotion strategyPricing strategyDistribution strategy
The marketing planSituation analysisMarketing objectivesTarget market selectionMarketing mix
Product strategyPromotion strategyPricing strategyDistribution strategy
Marketing informationsystem and marketingresearch
Marketing informationsystem and marketingresearch
Figure 1-4Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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Criteria
Overall marketingobjectives are clearlystated.
Poor Goal
To get people to buy ournew Betty CrockerMicrowave Bread Shopproducts.
Good Goal
To obtain 5 percent of the fresh-backed bread market in 12 months
Behavioral objectivesare clearly stated.
To have sales increase. To stimulate 30 percent of all U.S.households to try one loaf of BettyCrocker Microwave bread.
Expectations arerealistic.
To obtain half the fresh-baked bread market.
Given the strong name of BettyCrocker in the baked bread goodsmarket and that Americans consume50 lbs. of bread a year, we hope toachieve an 18 percent share of thefresh-baked bread market.
Criteria for Setting Marketing Objectives
SOURCE: Charles W. Lamb, Jr., Joseph F. Hair, Jr., and Carl McDaniel, Principles of Marketing, p. 27. Reproduced with the permission of the South- Western Publishing Co. © 1992, Cincinnati, by South-Western Publishing Co. All rights reserved.
(continued)
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Criteria for Setting Marketing Objectives
SOURCE: Charles W. Lamb, Jr., Joseph F. Hair, Jr., and Carl McDaniel, Principles of Marketing, p. 27. Reproduced with the permission of the South- Western Publishing Co. © 1992, Cincinnati, by South-Western Publishing Co. All rights reserved.
Criteria
Adequate supportexists for the program.
Poor Goal
No mention of budgetdollars in the programstatement. No check tomake sure the programmeshes with corporategoals.
Good Goal
Given the commitment by GeneralMills to grow in the baked goodsmarket, the budget for BettyCrocker’s Microwave Bread Shipover the next three years is $45million, $41 million, and $35million, respectively.
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The Cross-Functional Perspective in Planning
Functional area plans derived from strategic plan
The strategic plan
MissionObjectivesStrategiesPortfolio plan
ObjectivesForecastBudgetsStrategiesand programpolicies
ObjectivesForecastBudgetsStrategiesand programpolicies
ObjectivesForecastBudgetsStrategiesand programpolicies
ObjectivesForecastBudgetsStrategiesand programpolicies
Production plan Marketing planHuman
resource plan Finance plan Facilities plan
ObjectivesForecastBudgetsStrategiesand programpolicies
Figure 1-5Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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A Blueprint for Management Action: Relating the Market Plan to the Strategic Plan and the Production Plan
One organizational objective (the profitability objective) from Figure 1-2
Achieve an annual rate of return
on investment of at least 15 percent
Achieve an annual rate of return
on investment of at least 15 percent
1. Market penetrationImprove position of present products with present customers
1. Market penetrationImprove position of present products with present customers
2. Market developmentFind new customers for present products
2. Market developmentFind new customers for present products
Two possible organizational strategies from the product-market matrix, Figure 1-3
(continued)
Figure 1-6Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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A Blueprint for Management Action: Relating the Market Plan to the Strategic Plan and the Production Plan
Two possible marketing objectives and two possible production objectives derived from the strategic plan
1. Marketingdepartment
objectiveIncrease rate of purchase by existing customers by 10 percent by year end
1. Marketingdepartment
objectiveIncrease rate of purchase by existing customers by 10 percent by year end
1. Marketingdepartment
objectiveIncrease market share by 5 percent by attracting new market segments for existing use by year end.
1. Marketingdepartment
objectiveIncrease market share by 5 percent by attracting new market segments for existing use by year end.
2. Productiondepartment
objectiveDesign additional features into product that will induce new uses by existing buyers
2. Productiondepartment
objectiveDesign additional features into product that will induce new uses by existing buyers
2. Productiondepartment
objectiveDesign additional features into product that will open additional markets with new uses.
2. Productiondepartment
objectiveDesign additional features into product that will open additional markets with new uses.
Specific course of action of the marketing and production departments designed to achieve the objective
Marketingstrategy and
programs
Marketingstrategy and
programs
Productionstrategy and
programs
Productionstrategy and
programs
Marketingstrategy and
programs
Marketingstrategy and
programs
Productionstrategy and
programs
Productionstrategy and
programs
Figure 1-6Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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Experience Curve and Resulting Profit Curve
Figure A-1
Market share Market share
RIOCost
Experience curve Profit curve based on experience curve
Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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The Boston Consulting Group Portfolio Model
MarketGrowth Rate
MarketGrowth Rate
Relative Market ShareRelative Market Share
High
Low
Low
High Stars QuestionMarks
Cashcows
Dogs
Figure A-2Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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The General Electric Portfolio Model
IndustryAttractiveness
IndustryAttractiveness
Business StrengthBusiness Strength
Strong
Low
Weak
High
Medium
Average
A A
A B
B
B C C
C
Figure A-3Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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Components of Industry Attractiveness and Business Strength at GE
Industry AttractivenessMarket size
Market Growth
Profitability
Cyclicality
Ability to recover from inflation
World scope
Business StrengthMarket Position
Domestic market shareWorld market shareShare growthShare compared with leading competitor
Competitive strengthsQuality leadershipTechnologyMarketingRelative profitability
Figure A-4Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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