Transcript Chap 2 Slide Deck

Chapter 2 - Business Planning:
Composing the Big Picture
 Business Planning:
Ongoing process of making decisions
that guide the firm both in the short
term and for the long term
– Identifies/builds on a firm’s strengths
– Helps managers make informed decisions
– Develops objectives before action is taken
Ethics and Marketing Planning
 Unethical marketing decisions damage the
firm, society, and various stakeholders
 Business ethics:
– Rules of conduct for an organization
 Code of ethics (code of conduct):
– Written standards of behavior to which
everyone in the organization must
subscribe
Three Levels of Business Planning
Level 1- Strategic Planning
 Match firm’s resources and capabilities to
market opportunities for long-term growth
(5 – 10 years) and survival
– Top management defines firm’s purpose and
objectives
• Example: increase firm’s total revenues by
20% over next five years
– Strategic Business Units (SBUs)
• Self-contained divisions
• P&L (Profit-and-loss) responsibility
Level 2 - Functional Planning
 Accomplished by various functional areas of
a firm, such as marketing
 Typically includes:
– A broad 2 to 5-year plan to support the
strategic plan
– A detailed annual plan
• Example: marketing plan objective: to gain a 40% share
of a particular market with three new products during
coming year
• CWLC Example: increase enrollment by 5% (with
simultaneous 10% reduction in marketing budget)
Level 3 - Operational Planning
 First-line managers focus on day-to-day
execution of functional plans
 Such planning includes detailed annual,
semiannual, or quarterly plans
– Example: an objective may be set in terms of
units of a product a particular salesperson
needs to sell per month (sales quota)
– Example: an objective to drive inquiries up by
x% during key 6 week enrollment period
All Business Planning
Is an Integrated Activity
 Strategic, functional, and operational plans
must work together to benefit the whole firm
 Marketers must fully understand how they fit
with the organization’s overall direction and
resources
Level 1 - Strategic Planning:
Frame the Picture
 Very large multiproduct firms may have
divisions called strategic business units
(SBUs)
– SBUs operate like separate businesses with their
own mission, business objectives, resources,
managers, and competitors
– Example: ARAMARK –SBUs included Entertainment,
Food Services, Uniform Services, AER
 Strategic planning is done at both the corporate
and SBU levels
 For a small company/organization, strategic
planning is done for the company as a whole
Strategic Planning Step 1:
Define the Mission
 Answer three key questions:
– What business are we in?
– What customers should we serve?
– 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 hopes to achieve
in terms of its customers, products, and
resources
 Mission should not be too broad, too
narrow/ shortsighted
– “Marketing Myopia” : defining the mission too
narrowly in terms of a specific product
offering
• Better to define the mission in terms of what
customer needs are satisfied
• Example: Railroad vs. transportation
• Example: Childcare vs. Education - orChildcare vs. Family Care
Step 2: Evaluate the Internal
and External Environments
 Situational analysis (business review)
– An assessment of a firm’s internal and
external environments
– Internal environment: Controllable elements
inside of an organization
– External environment: Uncontrollable
elements outside of an organization that may
affect its performance either positively or
negatively
Internal Environment
 Controllable elements inside a firm that
influence how well the firm operates include:
–
–
–
–
–
–
–
people (human capital) – asset or liability?
physical facilities – sufficient, superior, inhibiting growth?
financial stability – supports or inhibits growth?
corporate reputation – good, neutral, poor? (why?)
quality products – are they truly of high quality?
strong brands – are they truly strong brands?
technologies – moving company forward or holding
company back?
 These elements represent key strengths and
weaknesses of the firm (working for or against you?)
External Environment
(See supporting detail in Ch. 3)
 Elements outside the firm that may affect it
either positively or negatively:
– Economic, competitive, technological, legal /
political / ethical, regulatory, and sociocultural
trends
– Trends manifest as opportunities or threats
– Firm cannot directly control external factors
but can respond to them via planning
Visit Trendwatching.com & Google.com/trends
External Environment Example:
Texas Lottery
 Effects of economy – sales up or down
 Competition – will adjacent state riverboat
gambling affect border sales of lottery tickets?
 Technology – effects on current/future games
 Legal/political/ethical – effects of revenues
directed to TX General Fund vs. Education
 Regulatory – what if lobbyists succeed in
introducing gaming machines into state?
 Socio cultural – how might green movement
affect the Lottery?
Trends Can Present Opportunities
Recent sociocultural trends influencing food marketing
stem from consumer desires for low fat, low carb, and
organic foods. What is the CURRENT food trend?
SWOT Analysis
 An analysis of an organization’s Strengths
(S) and Weaknesses (W) and the
Opportunities (O) and Threats (T) in the
external environment
 SWOT enables the firm to develop strategies
that maximize strengths and capitalize upon
opportunities
Step 3:Set Organizational
or SBU Objectives
 Organizational / SBU Objectives
– What the firm hopes to accomplish with a
long-range business plan
 Good objectives:
Must be specific, measurable,
attainable, and sustainable
– May relate to sales, profitability, product
development, market share, productivity,
ROI, customer satisfaction, or social
responsibility
Step 4: Establish the Business Portfolio
 Business portfolio:
– The group of different products or brands owned by a
firm and having different income-generating and
growth capabilities
 Portfolio analysis:
– Assessing the potential of a firm’s SBUs
– Helps make decisions regarding which SBUs should
receive more or less of the firm’s resources
– Example: ARAMARK
Example: AER
* Uniform services
* Food services
* Recreation management
* Educational services
* Stand-alone centers
* B&A programs
* Summer programs
* Private schools
Boston Consulting Group (BCG) Matrix
Do you build, hold, harvest, or divest?
iPhone &
Samsung
Smartphones
High $
Nokia Cell
Phones
Lower $
LG &
Motorola
Smartphones
??? $
Sony Ericsson
Cell Phones
??? $
Step 5: Develop Growth Strategies
Product-Market Growth Matrix
Orange Juice
Reeces
•
•
•
•
•
Breakfast
Snack Bev
PB Cups
Pieces
P Butter
Ice Cream
Baby Shampoo
Baking Soda
•
•
•
•
Babies
Oily Hair
Kitchen use
Other uses
for new mkts
Functional (Marketing) Planning
 Accomplished by various functional areas of
firm (operations, marketing, human
resources, etc.)
 Typically includes a broad 5-year plan to
support strategic plan and a detailed annual
plan
 In this class (Marketing), we will focus on the
marketing plan
 Step 1: Perform a situation analysis
– Builds on SWOT – identifies how environmental
trends/external environment (ch. 3) affect the
marketing plan
Marketing Planning: Step 1
 Perform a situation analysis
– Builds on SWOT – identifies how environmental
trends/external environment (ch. 3) affect the
marketing plan
Marketing Planning: Step 2
 Set marketing objectives
– Specific to the firm’s brands and other marketing
mix-related elements
– States what the marketing function must
accomplish if firm is to achieve its overall
business objectives
Marketing Planning: Step 3
 Develop marketing strategies to achieve
marketing objectives
– Select target market(s) where the firm’s offerings
are best suited
– Develop marketing mix strategies:
• Marketing mix strategies: how marketing will
accomplish its objectives in the firm’s target
market by using product, price, promotion, and
place (distribution)
Marketing Mix Strategies
 Product strategies:
– Include product design, packaging, branding,
support services, and product variations and
features
 Pricing strategies:
– Include setting prices for final consumers,
wholesalers, and retailers based on costs,
demand, or competitors’ prices
Marketing Mix Strategies
 Promotion strategies:
– Advertising, sales promotion, public relations,
direct marketing, personal selling
 Distribution (place) strategies:
– How, when, and where the product is
available to targeted customers
Marketing Planning Step 4:
Implement and Control
the Marketing Plan
 Control:
– Measuring actual performance, comparing
performance to the objectives, making
adjustments
 Marketing metrics:
– Return on marketing investment (ROMI)
Creating and Working
with a Marketing Plan
 Operational plans focus on the day-to-day
execution of the marketing plan
 Ex: TLC strategic planning process
– Semi-annual, 2 day retreat
– Involved key partners (ad agency, online game
provider, scratch ticket manufacturer)
– Determine objectives and options to accomplish
– Evaluate what needs to be done by who by when
and whether it is realistic to accomplish
– Assign deadline dates and accountability
SBUs and the Strategic Plan
Corporate Culture
 A firm’s corporate culture
determines much of its internal
environment—the values,
norms, and beliefs that
influence everyone in the firm
i.e. The way employees dress
reflects their organization’s
corporate culture.