Marketing: Real People, Real Choices

Eleventh Edition

Chapter 3
Strategic Market Planning

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Learning Objectives
3.1 Explain business planning and its three levels.
3.2 Describe the steps in strategic planning.
3.3 Describe the steps in market planning.
3.4 Understand how to develop a strategic plan for a
successful career.

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Real People, Real Choices: A Decision
Maker at AdventHealth
• Which option should be pursued?
– Option 1: Do nothing.
– Option 2: Bob could get partially involved with the
crisis.
– Option 3: Bob could go all in.

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Business Planning: Compose the Big
Picture
• Planning is everything … almost!
• Business planning is an ongoing process of making
decisions that guides the firm in the short term and in the
long term.
– Identifies and builds on a firm’s strengths
– Helps managers make informed decisions in a
changing business environment
– Organization develops objectives and provides a
means of charting progress toward goals

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Are You a Planner?
• The business planning process is pretty complicated: you
develop (write) plans for the entire organization, for functional
areas, for five years, for one year, for shorter periods, and on
and on.
• In your every day life, are you a planner?
• Do you make short-term and long-term plans?
• Do you write your planning down in lists? By the day? Week?
Semester? Year?
• How does your planning improve your life?
• How is your planning like and different from business planning?

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Figure 3.1 Levels of Business Planning
Functional (Market)
Strategic Planning Operational Planning
Planning

Planning done by corporate Planning done by top Planning done by

and/or SBU-level management functional-level supervisory managers
management, such as the 1. Develop action
1. Define the mission firm’s chief marketing officer plans to implement
2. Evaluate the internal and (CMO) the marketing plan
external environment 1. Perform a situation 2. Use marketing
3. Set organizational or S BU analysis metrics to monitor
objectives 2. Set marketing objectives how the plan is
4. Establish the business 3. Develop marketing working
portfolio (if applicable) strategies
5. Develop growth strategies 4. Implement and control
the marketing plan

Source: Copyright © American Marketing Association.

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Strategic Planning
• Strategic planning is the managerial process that
matches firm’s resources and capabilities to market
opportunities for long-term growth.
– Top management defines firm’s purpose and specifies
what the firm hopes to achieve
– All organizations, large and small, need strategic
plans.
– Many large firms have separate strategic business
units (SBUs); each SBU also needs its own strategic
’

plan.

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Strategic Business Units (SBUs) ’

• Large, multiproduct firms may have separate divisions,

called strategic business units (SBUs). ’

– SBUs operate like a separate business.

’

– SBUs have their own missions, objectives, resources,

’

managers, and competitors

• Strategic planning is conducted at both the corporate and
SBU level.

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Functional Planning
• Functional—Planning done by top functional level
management
• Develop detailed plans for strategies and tactics for the
short term, supporting an organization’s long-term
strategic plan
• Market planning includes:
– Situation analysis
– Broad three-to-five-year plan to support the strategic
plan
– Detailed annual plan for the coming year

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Operational Planning
• In marketing, done by people such as sales managers,
marketing communication managers, brand managers,
market research managers.
• Focus on day-to-day execution of functional plan.
• For marketers, this typically includes annual, semi-
annual, or even quarterly action plans to guide marketing
plan implementation.
• Use of marketing metrics to monitor performance.

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All Business Planning Is an Integrated
Activity
• Strategic, functional, and operational plans must be in
harmony for firm to succeed.
– Planning at all levels flows from organizational
mission and objectives.
• Planners at all levels must keep the “big picture” in mind.

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Strategic Planning: Frame the Picture
• Strategic planning plays an important role in the modern
corporation.
– Optimize revenues across multiple lines of business.
– Minimize risk in a complex and changing global
environment.
• Includes a series of steps that results in development of
growth strategies.

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Figure 3.2 Steps in Strategic Planning

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Step 1: Define the Mission, Vision, and
Values
• Mission statements for both the corporation and each S BU
• Key questions in determining mission (or purpose)
– What business are we in?
– What do we believe in as an organization?
– What customers should we serve?
– How should we develop the firm’s capabilities and focus
its efforts?
• A mission statement is a formal statement in the strategic
plan that describes the firm’s overall purpose and what it
hopes to achieve in terms of its customers, products, and
resources.

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Mission Statements Are Important!
• P&G’s mission statement reads: “We will provide
branded products and services of superior quality
and value that improve the lives of the world’s
consumers, now and for generations to come.”
• The ideal mission statement is not too…
– Broad
– Narrow
– Shortsighted

What would you include as part of your personal

mission statement? Your values?

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Step 2: Evaluate the Internal and
External Environment
• Process referred to as a situation analysis or an
environmental analysis.
– Internal environment: the controllable elements inside
a firm.
– External environment: elements outside the firm that
may affect it.

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Internal Environment
• Internal environment
• A firm’s strengths and
weaknesses
– Technologies/patents
– Physical facilities
– Financial stability
– Supplier relationships B Christopher/Alamy Stock Photo
– Reputation
– Strong brands
– Human capital

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External Environment
• External environment consists of factors outside the firm
that may positively or negatively impact operations.
• Largely beyond direct management control, so planning
is critical
– Economy
– Competition
– Changing customer needs
– Technology trends
– Sociocultural trends
– Legal/political/ethical trends

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SWOT Analysis
• Managers often synthesize environmental analysis into a
format known as SWOT analysis.
• SWOT analysis catalogs firms’
– internal strengths and weaknesses and
– external opportunities and threats.

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Step 3: Set Organizational or SBU
Objectives
• Organizational goals and objectives should be direct
outgrowth of the mission statement.
– Taking into account internal and external
environmental factors
• Objectives should be specific, measureable, attainable,
and sustainable over time.
• May relate to revenue/sales, profitability, market standing,
ROI, productivity, product development, customer
satisfaction, social responsibility, and other attributes.

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Step 4: Establish Business Portfolio
• Large firms often operate a range of different businesses
(SBUs) that are called its business portfolio.
– SBUs usually represent different product lines or
brands and is a separate profit center.
– Disney operates multiple lines of business, including
movie studios, theme parks, cruises, and so on.
• Portfolio analysis
– Assesses the growth potential for a firm’s S BUs ’

– Guides decisions on allocation of corporate resources

to different SBUs
– BCG Growth–Market Share Matrix is popular

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Figure 3.3 BCG Growth-Market Share Matrix

Source: Product Portfolio Matrix, © 1970, The Boston Consulting Group.

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Step 5: Develop Growth Strategies
• Small and medium-sized firms with only one business
and individual SBUs develop growth strategies.
• Product–market growth matrix
– Analyzes growth strategy potential for new and
existing markets and products.
▪ Market penetration
▪ Market development
▪ Product development
▪ Diversification

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Figure 3.4 Product–Market Growth Matrix

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Market Planning: Develop and Execute
Marketing Strategy
• Marketing and other functional managers develop
functional plans to achieve objectives.
• Effective implementation of the four Ps requires a great
deal of planning.
• Steps are similar to those in strategic planning
– Key difference relates to focus on issues relating to
marketing mix.

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Figure 3.5 Steps in Market Planning

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Step 1: Perform a Situation Analysis
• Analyze the marketing environment
• Key external environments for marketers: economic,
technological, political and legal, and sociocultural.
• Build on the company’s SWOT analysis with information
specific to the marketing plan.
– What media do customers connect with?
– What media are competitors using?
– Previous marketing communications successes.

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Step 2: Set Marketing Objectives
• Specific to the firm’s marketing mix-related elements
• Marketing objectives help achieve the overall business
objectives.

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Step 3: Develop Marketing Strategies
• Identify target market(s)
• Adjust marketing mix for each target market
– Product
– Price
– Promotion
– Place (Distribution)

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Product Strategies
• Product strategies essential to achieving marketing
objectives.
– Product design
– Packaging
– Branding
– Support services and maintenance
– Upgrades
– Product variations

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Pricing Strategies
• Pricing strategy determines how much a firm charges for
a product including sales to wholesalers, retailers, and
the MSRP (manufacturer’s suggested retail price)
charged to consumers.
– A firm may base its pricing strategy on costs, demand,
price of competing products.
– Debundling

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Promotional Strategies
• Promotional strategy is how marketers communicate a
product’s value proposition to the target market.
– Advertising
– Sales promotion
– Public relations
– Direct marketing
– Personal selling
– Social media and digital communications

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Distribution Strategies
• Distribution strategies (the place component) outline
when, how, and where the firm will make the product
available to targeted customers.
– Sell directly to the final customer or work through
wholesalers and/or retailers?
– Choosing the right distribution strategy depends on
product, pricing, and promotion decisions.

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Step 4: Implement and Control the
Marketing Plan
• During the implementation process, firms follow a formal
process to determine progress toward meeting their
marketing objectives.
– Measure actual performance
▪ Activity metrics
▪ Outcome metrics
– Compare performance to established objectives or
strategies while balancing against sustainability and
corporate social responsibility.
– ROMI is critical

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Return on Marketing Investment (ROMI)
• Return on marketing investment
– Revenue (or profit) generated by investment in a
given marketing program divided by the cost of the
program at a given level of risk
– For instance, if:
▪ Revenue from Marketing Investment = $150,000
▪ Cost of Marketing Program = $30,000
▪ ROMI = 5.0

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Action Plans
• Individual support plans included in a marketing plan that
provide guidance for implementation and control of the
various marketing strategies within the plan.
– Sometimes referred to as marketing programs
– Managers create separate actions plans for each
important element involved in implementing the
marketing strategy.

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Table 3.1 Action Plan Template
Title of action plan Give the action plan a relevant name.

Purpose of action plan What do you hope to accomplish by the action plan—that is, what specific marketing
objective and strategy within the marketing plan does it support?

Description of action plan Be succinct—but still thorough—when you explain the action plan. What are the steps
involved? This is the core of the action plan. It describes what must be done in order to
accomplish the intended purpose of the action plan.

Responsibility for the What person(s) or organizational unit(s) are responsible for carrying out the action plan?
action plan What external parties are needed to make it happen? Most importantly, who specifically
has final “ownership” of the action plan—that is, who within the organization is
accountable for it?

Timeline for the action plan Provide a specific timetable of events leading to the completion of the plan. If different
people are responsible for different elements of the time line, provide that information.

Budget for the action plan How much will implementation of the action plan cost? This may be direct costs only or
may also include indirect costs, depending on the situation. The sum of all the individual
action plan budget items will ultimately be aggregated by category to create the overall
budget for the marketing plan.

Measurement and control Indicate the appropriate metrics, how and when they will be measured, and who will
of the action plan measure them.

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Assigning Responsibility in the
Action Plan
• Who will be responsible for carrying out each part of the
marketing plan?
• Not everybody involved will be marketers
– Sales
– Production
– Quality control
– Shipping
– Customer service
– Finance
– IT

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Creating Action Plan Timelines
• Marketers often create Gantt charts showing the timeline
of the activities.

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Setting a Budget
• Each cost element of the action plan should link to a
budget item.
– Increases accountability for all parties involved with
implementing the marketing plan.
– Accuracy in estimating individual action plan
expenditures helps overall marketing budget
forecasting.

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Deciding on Measurements and Controls
• Marketing control is a formal process for:
– Measuring performance
– Comparing performance to established marketing
and strategy objectives
– Making adjustments to the objectives or strategies
based on this analysis
• Selecting the right metrics should account for short-term
objectives balanced against firm’s long-term
sustainability.
• Metrics can serve as leading indicators or lagging
indicators.

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Operational Planning for Marketing
• Operational plans focus on day-to-day execution of the
marketing plan.
– Cover a shorter period of time than strategic and
functional plans
– By first-line managers, for example, sales, digital
marketing, marketing research, and so on.
– Include detailed instructions for activities, specifies
responsibilities, and provides timelines
– Many key marketing metrics actually are used at the
operational level of planning.

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Agile Marketing and the Strategic Market
Planning Process
• Many assume the market planning process is neat,
orderly and predictable—Not so!
• Neat orderly planning could mean the opportunity passes
by.
• For competitive success, agility, being nimble and able to
move quickly and easily, is essential.
• Sprint planning (not the phone service)
• Daily Scrum

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Digital Disruption and Strategic Market
Planning
• Digital disruption: the effect of digital technologies and
digital business models on an organization’s value
proposition and its position within the market in which it
operates.
• Digital vortex: the movement of industries toward a digital
center in which business models, offerings, and value
chains are digitized to the maximum extent possible.

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Brand You: Understand How to Develop a
Strategic Plan for a Successful Career

• Great brands don’t just happen; it takes time, research

and planning.
• Begin a personal five-year strategic plan for your career
now!
– Define your mission—What’s important to you.
– Your internal analysis—skills, talents, and
characteristics
– Your external analysis—new opportunities and threats
you face.
– Your Career SWOT
– Career Objectives
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From Strategic Planning to Success
• Essential for a successful career
• Caring about the job, the company, the people and the
results you achieve
• Identify what you like to do and don’t like to do

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Make Your Life Easier! Use the Market
Planning Template
• At the end of this chapter, you will find the Market
Planning Template.
• The template gives you an outline of a marketing plan to
guide you through creating your own marketing plan and
through the course by providing
– The basic marketing plan outline
– Questions you must answer in each of the marketing
plan sections
– Where to go to find the right answers

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Copyright

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