Course Title Introduction to Marketing Exam 1 Study Guide Chapters 2 3 4 5 Chapter 2 Business Planning Compose the Big Picture Business planning o Ongoing process of making decisions that guides the firm both in the short term and for the long term o Organization develops objectives before it takes action Includes the decisions that guide the entire organization o Document that describes the marketing environment outlines the marketing objectives strategy and identifies who will be responsible for carrying out each part of the strategy o Basic values that guide a firm s behavior rules of conduct for an organization o Written standards of behavior to which everyone must subscribe o Eliminate confusion about what is ethically acceptable o American Marketing Association Business plan o Marketing plan Business ethics Code of ethics Honesty Responsibility Fairness Respect Transparency Citizenship The 3 Levels of Business Planning 1 Strategic Planning o Managerial decision proves o Matches the firm s resources capabilities to its market opportunities for long term o Top management defines the firm s purpose and specifies what they hope to achieve growth over the next 5 years Ex Increases total revenues by 20 in the next 5 years o Strategic business units SBUs Individual units within a firm that operate like separate businesses Each has its own mission objectives resources managers competitors 2 Functional Planning Page 1 of 15 o Vice presidents functional directors Marketing finance human resources o Marketing planning o Develops detailed plan for strategies tactics for the short term Support the long term strategic plan 3 Operational Planning o Day to day execution of the functional plans Includes detailed annual semi annual quarterly plans Ex How many units of a product a salesperson needs to sell per month o Sales managers brand managers marketing research managers Strategic Planning Frame the Picture Step 1 define the mission o What business are we in o What customers should we serve o How should we develop the firm s capabilities focus its efforts o Mission statement A formal document that describes the organization s overall purpose and what it hopes to achieve customers products resources Step 2 Evaluate the internal external environment o Situational analysis Internal strengths weaknesses vs External opportunities threats SWOT analysis to develop strategy to seize opportunities and avoid threats o Internal environment Human and intellectual capital employees facilities Controllable elements How it does things that influence the operations of the organization o External environment Elements outside the firm that affect it positively or negatively Economy competition technology laws ethics sociocultural trends Step 3 Set organizational or SBU objectives o Direct outgrowth of the mission statement o Need to be specific measurable attainable sustainable o Try to state objectives in numerical terms Step 4 Establish the business portfolio o Range of different business that a large firm operates o Each SBU is a separate profit center within the larger corporation Responsible for its own costs revenues profits Page 2 of 15 o Diverse portfolio reduces the firm s dependence on one product line or group of customers o Portfolio analysis business units Tool management uses to asses the potential of an organization s strategic Helps decide which of the SBU s should receive more or less resources o Ex BCG Growth market share mix Assesses the potential of successful products to generate cash that a firm can then use to invest in new products Stars Cash Cows SBUs with products that have a high dominant market share in high growth markets SBUs with a high dominant market share in a low growth potential market Question Marks SBUs with low market shares in high fast growth markets Dogs SBUs nobody wants low market shares and low growth rate Step 5 Develop growth strategies o Use the product market growth matrix to analyze different growth strategies Market penetration strategy Seek to increase sales of existing products to existing markets Market development strategy Introduce existing products to new markets Product development strategy Create growth by selling new products in existing markets Diversification strategy Emphasize both new products and new markets to achieve growth Marketing Planning Select the Camera Setting Step 1 Perform a situation analysis o Search out information about the environment that specifically affects the marketing o What are the competitors doing plan Step 2 Set marketing objectives o What do you want to accomplish in terms of the marketing mix Page 3 of 15 Product development pricing strategies or specific marketing communication approaches Step 3 Develop marketing strategies o Make decisions about what activities they must accomplish to achieve the marketing objectives Decide what markets to target Asses potential demand Develop the marketing mix strategies Product price promotion place supply chain Step 4 Implement and Control the marketing plan 1 Measure actual performance 2 Compare this performance to the established marketing objectives strategy 3 Make adjustments to the objectives strategy on the basis of this analysis o CONTROL Marketing Metrics on pg 55 o Return on Marketing Investment ROMI How marketing contributes to the bottom line Revenue profit margin generated by investment in a specific marketing campaign divided by the cost of that program expenditure at a given risk level Pg 54 for the 6 common objectives of ROMI Marketing Mix Strategies o Product strategies o Pricing strategy o Promotional strategy o Distribution strategy Product design packaging branding support services variations How much a firm charges for a product How markets communicate a product s value proposition to the target Outline when how and where the firm will make the product available The place component Page 4 of 15 Chapter 3 Analyzing the Marketing Environment To develop effective marketing strategies you must first understand the environment in which marketing operates Marketing environment o Actors forces outside marketing that affects marketing management s ability to build and maintain successful relationships with target customers Marketing research and marketing intelligence o Microenvironment Actors close to the company that affect its ability to serve its customers Positively or negatively its ability to create value for customers Ex The company suppliers customer