STRATEGIC PLANNING AND MARKETING PROCESS:Setting Company Objectives and Goals

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Principles of Marketing MGT301

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

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

Principles of Marketing MGT301

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.

Principles of Marketing MGT301

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.

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

20%-

S ta rs

Q u e s tio n m a rk s

opportunities

the

18%-

environment.

16%-

b. In order to design the

14%-

business

portfolio,

the

12%-

10%-

business must:

Dogs

C ash cow

8%-

1). Analyze its current

6%-

business portfolio and decide

4%-

which business should receive

2%-

more, less, or no investment.

10x

2x 1 .5 x

.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

Principles of Marketing MGT301

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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