Chapter 2 Strategic Planning and the Marketing Process 2-1

chapter 2

strategic planning and the marketing process

Chapter Overview

Today’’s marketers face strategic questions every day. Planning strategy is a critical part of their jobs. The marketplace changes continually in response to shifts in consumer tastes and expectations, technological developments, competitors’’ actions, economic trends, and political and legal events, as well as product innovations and pressures from suppliers and distributors.

Although the causes of these changes often lie outside a marketer’’s control, effective planning can anticipate many of them. As profiled in this chapter, marketers for Westin Hotels & Resorts noticed a trend and quickly made changes to accommodate it. They realized that mattresses—and luxury bedding—mattered a lot to hotel customers, so long-range plans were refocused to put a Heavenly Bed in every hotel room, and eventually in many guests’’ homes.

This chapter talks about why marketers plan, what steps they take in developing strategies, and how these plans clarify direction in the entire marketing process. It lays a foundation for analyzing all aspects of marketing by demonstrating the importance of gathering reliable information to create an effective plan. These activities provide a structure for a firm to use its unique strengths. Marketing planning identifies the markets a company can best serve as well as the most appropriate mix of approaches to satisfy the customers in those markets. While this chapter focuses on planning, in later chapters the task of marketing research and decision making will be explored.

Changes in the 13th Edition

The chapter has been updated and revised, with new features in several areas:

  • The Opening Vignette and Evolution of a Brand explains how the upgrading of hotel-room bedding led to the sale of not only the bedding, but the beds, in ““Westin Starts the Bed Wars.”” Westin Hotels & Resorts recently took a hard look at itsthe softness of its mattresses. It rolled out the Heavenly Bed, a combination pillow-top Simmons mattress with 900 coils and luxury linens. When customers suddenly wanted to buy it, Westin began offering the Heavenly Bed for retail sale, then partnering with Nordstrom’’s to build sales. That one strategic move immediately made waves in the industry, forcing other hotel chains at all levels to upgrade their mattresses and bedding.
  • Solving an Ethical Controversy analyzes the issue of charitable organizations that reach out to consumers for support. When Target banned the Salvation Army’’s bell ringers from the front of its stores during a recent holiday season, consumers reacted strongly by protesting and staying away from Target’’s doors themselves. The Christian charity said the snub could cost $9 million in donations. The firm said it was merely enforcing company policy. The shoppers viewed it as corporate thinking gone wrong. The question remains: ““Should Retailers Ban the Salvation Army from Their Sidewalks?””
  • Marketing Success features ““Home Depot versus Lowe’’s”” in its discussion of these long-time rivals as the nation’’s two biggest hardware and appliance retailers. Lowe’’s picked up on survey results from Sears indicating a growing interest by women to doin doing home repair and renovation projects. So Lowe’’s began to target the female segment with wider aisles, brighter lighting, clearer displays, and seminars geared toward women’’s tastes and preferences. Home Depot didn’’t act quite as quickly, but later followed Lowe’’s lead with female-oriented classes and workshops, while other retailers joined in the fun.
  • Etiquette Tips for Marketing Professionals provides advice on ““How to Handle Interruptions”” with tips on office distractions including unexpected visitors, chatty coworkers, office gathering places, phone calls, and even those pesky bosses who interrupt.
  • Chapter Case 2.1 features a major shift in aircraft manufacturing as once-popular small regional jets carrying 50 passengers in a single class give way to larger planes. Not many years ago, with business travel booming, major carriers were ordering smaller jets. But low-priced competition along with the September 11th terrorist attacks led to major changes in the airlines industry. Those that had ordered planes returned or sold most of them, replacing them with larger and more fuel-efficient versions. But one manufacturer recently launched a new breed of smaller aircraft that carries up to 100 passengers and offers first-class sections. So the small jet may not be gone yet. See ““A Farewell to Regional Jets?””
  • Collaborative Learning Exercises are provided in several areas related to strategic planning and the marketing process—Planning Through the Organization, Defining the Organization’’s Mission and Objectives, Strategic Planning, Formulating a Marketing Strategy, Promotional Strategy and Marketing Strategy, The Marketing Environment, and BCG Matrix.
  • Video Case 2.2 Synopsis includes a detailed overview of the video featuring Timbuk2 and its bags and backpacks for urban living.

Lecture OutlineThis chapter provides an important foundation for analyzing all aspects of marketing by demonstrating the importance of gathering reliable information to create an effective plan. These activities provide a structure for a firm to use its unique strengths. Marketing planning identifies the markets a company can best serve as well as the most appropriate mix of approaches to satisfy the customers in those markets. While this chapter focuses on planning, we will examine in greater detail the task of marketing research and decision making in Chapter 8.

Changes in the 12th edition

There are a number of changes in the 12th edition of Contemporary Marketing. Some of the most notable changes include:

The opening vignette describes the programming strategy used by cable sports giant ESPN. Faced with the constant need for new programming, as well as the escalating cost of broadcasting traditional sports such as basketball and football, the network decided to create a new category of sports: extreme sports. This decision led to the X Games and Winter X Games. ESPN doesn’’t have to worry about other networks and the cost of broadcast rights since the network owns the games.

Target’’s tepid move into the grocery business is discussed in the “Marketing Miss” box in Chapter 2. Unlike chief competitor, Target has moved much more slowly adding grocery sections to its stores. Many experts believe that Target’’s grocery business has failed to live up to expectations. The box summarizes the marketing problems and challenges facing Target.

Whether or not the proposed takeover of PeopleSoft by Oracle is anticompetitive is debated in the “Solving an Ethical Controversy” box. On the one hand, some argue that the takeover would eliminate competition between the largest suppliers of certain types of business software. On the other hand, others argue that Oracle needs the acquisition to remain competitive.

Chapter 2’’s box on etiquette tips for marketing professionals’’ outlines how to network. Working a room—socializing with customers, colleagues, and even competitors with ease—is an important skill for marketers to develop.

LECTURE OUtline

Opening Vignette and Evolution of a Brand— – Westin Starts the Bed Wars. How did a service business—Westin Hotels & Resorts—manage to also become a retail business? What steps did Westin take to make this happen? Can you think of other well-known businesses in various service industries that began marketing the goods that once were featured only on their premises? Expanded 1, 2, 3
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Chapter Objective 1: Distinguish between tactical strategic planning and strategic tactical planning.
Key Terms: p
Planning M, marketing planning S, strategic planning T, tactical planning
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PowerPoint Expanded: 1-3
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Marketing Hit— - Hit: Home Depot versus Lowe’s. Compare the marketing strategies of these two home improvement retailers in their attempts to attract more women to their stores.
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  1. Marketing planning: the basis for strategy and tactics
  2. A definition of A definition of plplaanning: : the The process of anticipating future events and conditions, and thenof determining the best way to achieve organizational objectives.
  3. Marketing planning
  4. Marketing planning refers to iImplementing planning activities devoted to achieving marketing objectives.
  5. An important trend in marketing planning centers on relationship marketing.
  6. Good relationships with customers can arm a firm with vital strategic weapons.
  7. Many companies now include relationship-building goals and strategies in their marketing plans, maintaining databases to track customer preferences..
  8. Strategic planning vs. tactical planning
  9. Strategic planning is dDefined as the process of determining an organization’’s primary objectives and then adopting courses of action that will eventually achieve these objectives.
  10. Strategic planning focuses more on the long-term.
c.IBM’s decision to focus more and more of its efforts on providing information services, and less on designing and building hardware, was the result of strategic planning.
3.Tactical planning
Tactical planning gGuides the implementation of activities specified in the strategic plan.
  1. It aTactical planning typically aAddresses shorter-term actions, focusing on that focus on current and near-future activities that need to be that a firm must completed so that to implement its larger strategies can be implemented
.
A
Assessment check questions
1. Define planning.
Planning is the process of anticipating future events and conditions and of determining the best way to achieve organizational objectives.
2. Give an example of strategic planning and tactical planning.
Eastman Kodak’s strategic plans include focusing on the company’s core strength in digital imaging. The company’s tactical plans include developing the first Wi-Fi camera and the first dual-lens digital camera, and partnering with Motorola to build better camera phones.IBM’s decision to exit the desktop PC business was the result of tactical planning, consistent with the firm’s overall strategic plan.
Mistakes in strategic decisions and tactical planning are often quite costly. (You may want to give another example or two to supplement the Gap example in the chapter. Or discuss how two companies approached a similar problem differently, with
different results. How Target and Kmart approached competing against Wal-Mart is one good example.)
Chapter Objective 2: Explain how marketing plans differ at various levels in an organization. n.
Key Terms: organizational levels
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PowerPoint Expanded: 4
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Etiquette Tips for Marketing Professionals— – How to Handle Interruptions. Think of office and business situations that might occur in various industries. How might these concrete suggestions apply?
Etiquette Tips: How to Handle Interruptions
Table 2.1 Planning at Different Managerial Levels. Which managers focus most on broad goals and long-term planning? Which managers focus most on planning for day-to-day tasks?
Note: Discuss how two companies approached a similar problem differently, with different results. How Target and Kmart approached competing against Wal-Mart is one good example. /
  1. Planning at different organizational levels
1.Planning is a major responsibility for every manager.
  1. Managers at all organizational levels devote some of their attention to planning activities.
  2. The amount of time spent on planning activities and the types of planning vary by organizational level.
  1. Top managers (CEO and functional vice-presidents)
  2. Spend more of their time on planning than do lower-level managers
  3. Usually focus more on strategic planning.
  4. Middle managers
  5. Tend to focus on operational planning, which includes creating and implementing tactical plans for their own departments.
b.Supervisors often engage in developing specific programs to meet goals in their areas of responsibility.
  1. To be most effective, the planning process includes input from a wide range of sources, including suppliers and customers.
Concept Assessment check questions
1. Define planning.
Planning is the process of anticipating future events and conditions and of determining the best way to achieve organizational goals.How do marketing plans differ at different levels of the organization?
Top managers usually focus their planning activities on long-0range strategic issues. In contrast, middle-level managers focus on operational planning, which includes creating and implementing tactical plans for their own units. Supervisors develop specific programs to meet goals in their areas of responsibility.
2.
Why is it important to get input from others when planning?
Input from a variety of sources—other employees, suppliers, or customers—helps insure that many ideas are considered. Involving those people in planning can also turn them into advocates for the plan.
Give an example of strategic planning and tactical planning.
IBM’s decision to focus more on business services was the result of strategic planning; its decision to exit the desktop PC business was a result of tactical planning.
Chapter Objective 3: Identify the steps in the marketing planning process.
Key Terms: m
Mission, mission statement, objectives, marketing strategy
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Figure 2.1 The Marketing Planning Process. Which step might be more difficult than it seems? Which step do you think can be easily overlooked?
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Note: Choose a couple of local organizations and use their mission statements as class examples.
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  1. SThe steps in the marketing planning process
  2. Define the mission.
  3. Determine objectives.
  4. Assess resources.
  5. Evaluate environmental risks and opportunities.
  6. Formulate a marketing strategy.
  7. Implement the strategy through marketing plans.
  8. Gather feedback to monitor and adapt strategies when necessary.
  9. Defining the organization’’s mission and objectives
  10. The organizational mission
  11. The The mission is the essential purpose that differentiates the organization from others.
  12. The The mission statement specifies the organization’’s overall goals and operational scope and provides general guidelines for future management actions
  13. The organizational objectives
  14. The basic objectives in a firm’’s mission statement guide the development of supporting marketing goals and plans
  15. Objectives should state specific intentions and specify a time period for specific achievements
b..Most organizations post their mission statements on their Web sites. You may want to choose a couple of local organizations and use their mission statements as class examples.
3.Organizational objectives
4.The basic objectives laid out in a firm’’s mission statement guide the development of supporting marketing objectives and plans.
a.Objectives should be state specific intentions and specify a time period for specific achievements.
  1. Assessing organizational resources and evaluating environmental risks and opportunities
  2. This consists of a back and forth n assessment of an organization’’s strengths, weaknesses, and available opportunities.
  3. Organizational resources also need to be considered in areas such as production, marketing, finance, technology, and employees.
  4. Formulating, iImplementing and mMonitoring a mMarketing sStrategy
  5. A marketing strategy is an overall, company-wide program for selecting a target market and satisfying customers in that market through the elements in the marketing mix—product, distribution, and price.
  1. The strategy must be monitored to ensure that objectives are being met.
Concept Assessment check questions
1. Distinguish between an organization’’s mission and its objectives. The
The firm’s mission is the essential purpose that differentiates one the company from anotherothers. Objectives, or goals, are stated in the company’s mission statementIts objectives guide the development of supporting marketing objectives and plans..
2. What is the importance of the final step in the marketing planning process? In the
Monitoring performance is important to ensure that objectives are being achieved. Sometimes strategies need to be modified if actual performance is not in line with expected results.In the final step of the marketing planning process, managers monitor performance to ensure that objectives are being achieved.
Chapter Objective 4: Describe successful planning tools and techniques, including Porter’’s Five Forces model, first and second mover strategies, SWOT analysis, and the strategic window. w.
Key Terms: sustainable competitive advantage, e. P
Porter’’s Five Forces F, first mover strategy strategy, second mover
strategy, SWOT analysis S, core competencies, strategic window
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Figure 2.2 Porter’s Five Forces Model. Choose one of the forces and think of the ways it relates to a real-world marketing situation.
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Figure 2.3 SWOT Analysis. Think of a well-known product and its possible weaknesses and threats. Then consider its strengths and opportunities.
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Note: An example of a strategic window: During the extended period when HP and Compaq struggled to complete their merger, Dell Computer aggressively courted Compaq’s large corporate customers trying to leverage Dell’s strengths and take advantage of the confusion caused by the pending HP/Compaq merger. /
  1. Successful strategies: tools and techniques
  2. Four tools for marketing planning include Porter’’s Five Forces model, first and second mover strategies, SWOT analysis, and the strategic window
  3. All of these All planning strategies have the goal of creating a sustainable competitive advantage for a firm, meaning that other companies cannot provide the same value .
  4. Porter’’s Five Forces
  5. Porter’’s Five Forces is a mModel which identifies five competitive forces that influence planning strategies.
  6. They are:
  7. The threat of new entrants.
  8. The threat of substitute products.
  9. Rivalry among competitors.
  10. Bargaining power of buyers.
  11. Bargaining power of suppliers.
  12. First mover and second mover strategies
  13. A fFirst mover strategy advocates that a company thatwho is first to offer a product will be the long-term market winner.
  14. A sSecond mover strategy advocates close observation of the innovations of first movers and then improving on them to gain market advantage.
  15. SWOT analysis
  16. SWOT analysis hHelps planners compare internal organizational strengths and weaknesses with external opportunities and threats
  17. ““SWOT”” stands for strengths, weaknesses, opportunities, and threats.
  18. This is Is an important strategic planning tool.
  19. SWOT – sStrengths
  20. A set of A set of core competencies—what the organization does well
  21. Often .Often consist of capabilities that customers value and competitors find difficult to duplicate.
  22. Matching Matching an internal strength with an extternal opportunity produces a situation known as leverage.
  23. SWOT – wWeaknesses
  24. Environmental Environmental threats can attack an organization’’s internal weaknesses.
  25. PlannersPlanners must anticipate constraints when internal weaknesses or limitations prevent their organization from taking advantage of opportunities.
  26. Strategic window
  27. A strategic window is Definition:a A limited period whenduring which the key requirements of a market and the particular competencies of a firm best fit together.
  28. The view through a strategic window shows planners a way to relate opportunities to a firm’’s capabilities
  29. It requires a thorough analysis of three elements:
  30. Current and projected external environmental conditions
  31. Current and projected internal company capabilities
  32. Whether, how, and when the firm can reconcile conditions and capabilities in order to implement one of the strategies
An example: During the extended period when HP and Compaq struggled to complete their merger, Dell Computer aggressively courted Compaq’s large corporate customers trying to leverage Dell’s strengths and take advantage of the confusion caused by the pending HP/Compaq merger.