Chapter 2 Strategic Market Planning Take the Big Picture 5 13 15 5 14 15 Objectives Explain business planning and its 3 levels Describe the steps in strategic planning Describe the steps in marketing planning Business Planning Compose the Big Picture Business Planning Ongoing process of making decisions that guides the firm both in the short term for the long term o Identifies builds on firm s strength o Helps managers make informed decisions o Develops objectives before action is taken Business Plan A plan that includes the decisions that guide the entire organization Marketing Plan A document that describes the marketing environment oulines the marketing objectives and strategy and identifies who will be responsible for carrying out each part of the marketing strategy Ethics is Up Front in Marketing Planning Business Ethics Basic values that guide a firm s behavior o Unethical decisions is damaging to the society at large i e Loss of jobs investments are lost worthless merchandise and services produced o Govern decisions like what goes into products where raw materials come from type of advertising type of pricing o Good business ethics help create a relationship with customers and others Code of Ethics Written standards of behavior to which everyone in the organization must subscribe o Eliminates confusion Three Levels of Business Planning 1 Strategic Planning CEOs a Planning done by top level corporate management a Define the mission b Evaluate the internal external environment c Set organizational or SBU objectives d Establish the business portfolio if applicable e Develop growth strategies 2 Functional Planning Middle Man b Planning done by functional level management such as the firm s chief marketing officer CMO a Perform a situation analysis b Set marketing objectives c Develop marketing strategies d Implement marketing strategies e Monitor and control marketing strategies 3 Operational Planning c Planning done by supervisory managers a Develop action plans to implement the marketing plan b Use marketing metrics to monitor how the plan is working Strategic Planning Managerial decision process that matches firm s resources and capabilities to its opportunities for long term growth and survival o Top management defines firm s purposes and objectives o Strategic business units SBUs Individual firm within a company that operate like separate businesses with each having its own mission business objectives resources managers and competitors Common in large firms Functional Planning Accomplished by various functional areas of firm such as marketing Marketing Planning is what the functional planning marketers do Typically includes o A broad 3 5 year plan to support the strategic plan o A detailed annual plan Operational Planning First line managers focus on day to day execution of functional plans Typically includes one or more of the following o Detailed annual plans o Semiannual plans o Quarterly plans All Business Planning is an Integrated Activity Strategic functional and operational plans must work together to benefit the whole firm o Plans are guided by firm s mission Planners at all levels must keep the big picture in mind when planning 1 Strategic Planning Strategic Planning Frame the Picture Very large multiproduct firms may have divisions called strategic business units SBUs o SBUs operate like separate businesses Strategic planning is done at both the corporate and SBU levels Step 1 Define the Mission Key questions in determining the mission o What business are we in o What customers should we serve o How do we develop firm s capabilities and focus its efforts Mission Statement A formal document that describes the firm s overall purpose and what it hope to achieve in terms of its customers products and resources o Ideal statement is not too broad too narrow or too shortsighted Step 2 Evaluate the Internal External Environments Situational Analysis An assessment of a firm s internal and external environments o Internal environmental assessment identifies the firm s strengths and weaknesses o External environmental assessment Identifies opportunities and threats Internal Environment Controllable elements inside a firm that influence how well the firm operates o Employees o Managers o Technology o Protocol o Facilities o Patents o Financial Stability o Human Intellectual Capital The firm s employees External Environment Elements outside the firm that may affect it either positively or negatively o The external environment is global and requires consideration of Legal political ethical trends Economic trends Competitive trends Technological trends Sociocultural trends o Can t directly control these factors so the management must responds to them through its planning process Trends Present Opportunities SWOT Analysis o Recent sociocultural trends influencing food marketing stem from an obesity epidemic in the U S and consumer desires for low fat and organic foods o Need for change to keep up with external environmental pressures o An analysis of an organization s strengths S and weaknesses W and the opportunities O and threats T in the external environment o SWOT enables the firm to develop strategies that maximize strengths and capitalize upon opportunities while avoiding external threats Step 3 Set Organizational or SBU Objectives Organizational SBU Objectives o What the firm hopes to accomplish with a long range business plan Need to be specific measurable attainable and sustainable o May be financially focused profitability product development customer satisfaction etc o Typically in numerical terms to ensure measurability Step 4 Establish the Business Portfolio Each SBU is a separate profit center within the larger corporation responsible for its own costs revenues and profits Business Portfolio The group of different products or brands owned by a firm and having different income generating and growth capabilities o Diversified business portfolio reduces the firm s dependence on one product line group of customers Portfolio Analysis o Assesses the potential of a firm s SBUs o BCG growth market share matrix Focuses on determining the potential of a firm s existing successful SBUs to generate cash that the firm can then use to invest in other businesses helps managers decide which SBUs they should invest in for growth Stars SBUs whose products have a dominant market share in high growth markets can be grown or acquired i e Wal Mart Disney Channel Apple Generate large