Kotler, Armstrong Principles of Marketing 4e

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Kotler, ArmstrongPrinciples of Marketing 4e
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• Chapter 2
• Strategic Marketing and Planning

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Chapter Objectives
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• Explain strategic planning.
• Describe the marketing management and planning
  process.
• Identify the sections of a marketing plan and
  specify the contents of each section.
• Discuss the development of marketing strategy and
  its implementation.
• Explain the ways in which marketing organisations
  control and evaluate their marketing performance.

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Marketing Process
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• The process of analysing marketing opportunities,
  researching and selecting target markets,
  designing market strategies, planning marketing
  programs, implementing (including organising) and
  controlling the marketing effort.

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Strategic Planning
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• Most organisations operate according to formal
  plans.
• Managers are often too busy and have no time for
  planning.
• Planning can help make sense of a changing
  environment.
• Organisations failing to plan are planning to
  fail.
• The need for flexibility has led to a resurgence
  in the process of scenario planning.

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Strategic Planning
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• The process of developing and maintaining a
  strategic fit between the organisations goals
  and capabilities in the light of changing
  marketing opportunities.
• It relies on developing a clear
• Company mission
• Objectives
• Sound Business Portfolio
• Coordinated Functional Strategies

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Strategy Hierarchy
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• Corporate Strategy level
• Strategic Business Unit (SBU) Level
• Functional Level of SBU (eg Marketing Strategy)

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Figure 2.1 The Strategy Hierarchy
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Marketing Management and Planning

• This involves four levels of decision making
• The corporate.
• The divisional.
• The business unit.
• Product levels.
• The organisations head office is responsible for
  a corporate strategic plan, each division
  develops a divisional plan that cover the
  allocation of funds to each SBU in the division.
• Marketing plans operate at two levels, the
  strategic and tactical.

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The company's overall mission and objectives are
defined by the

• functional plan
• strategic plan
• marketing plan
• customer analysis
• CEO

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Marketing or Business Plan?
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• Marketing planning procedures and content vary
  considerably among companies.
• The plan is variously called a business plan, a
  marketing plan and sometimes an operating
  plan.

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Marketing or Business Plan?
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• The business plan incorporates the plans of all
  functionsproduction, RD, finance, human
  resources, IT and marketing.
• The marketing plan has its focus on customer
  acquisition, retention and the resources
  required. It include the resources needed to
  implement specific marketing functions (such as
  selling, advertising, sales promotion and market
  research).
• Most marketing plans cover one year, but some
  cover a few years.
• Plans vary in their length from under ten pages
  to over 50.
• Frequently cited shortcomings of marketing plans,
  are lack of realism, insufficient market and
  competitive analysis and a short-run focus.

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Figure 2.2 Analysis, Planning, Implementation and
Control
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Table 2.1 Contents of a Marketing Plan
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The Nature and Contents of a Marketing Plan
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• Executive Summary
• The marketing plan should open with a brief
  summary of the plan.
• This executive summary is aimed at the senior
  management to enable them to grasp quickly the
  plans major thrust, its goals and
  recommendations.
• The summary should be no more than one page long.

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The Nature and Contents of a Marketing Plan
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• Current marketing situation
• This section presents relevant background data on
  the target market, product, competition,
  distribution and the macro-environment.
• The data are drawn from a product fact book or
  database maintained by the product manager.

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The Nature and Contents of a Marketing Plan

• Product Situation
• This states the sales, product prices,
  contribution margin and profits for past years.
• Competitive Situation
• Identify and describe the main competitors in
  terms of size, goals, market share, product
  quality, marketing strategies and other
  characteristics.
• Distribution Situation
• This presents data on the size and importance of
  each marketing (distribution) channel.
• Macro-environment Situation
• A brief summary of the broad macro
  trends-demographic, economic, technological,
  political/legal and sociocultural that affect the
  product lines future.

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The Nature and Contents of a Marketing Plan
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• Opportunity and issue analysis
• After summarising the current marketing
  situation, the product manager proceeds to
  identify the major
• Opportunities and threats,
• Strengths and weaknesses
• Issues analysis

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The Nature and Contents of a Marketing Plan
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• Objectives
• After the product manager has summarised the
  issues involved with the product line, he or she
  must decide on the plans objectives. Two types
  of objectives must be set
• Financial
• Marketing

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The Nature and Contents of a Marketing Plan
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• Marketing strategy
• The marketing logic by which the business unit
  hopes to achieve its marketing objectives.
  Marketing strategy consists of specific
  strategies for target markets, marketing mix and
  marketing expenditure level.
• The marketing strategy often comes after the
  positioning strategy statement.

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The Nature and Contents of a Marketing Plan
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• Action programs
• The marketing plan must specify the broad
  marketing programs designed to achieve the
  business objectives. Each marketing strategy
  element must now be elaborated to answer
• What will be done?
• When will it be done?
• Who will do it?
• How much will be spent?

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The Nature and Contents of a Marketing Plan
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• Projected profit-and-loss statement
• Action plans allow the product manager to build
  a supporting budget.
• On the revenue side, this budget shows the
  forecast sales volume in units and the average
  price.
• On the expense side, it shows the cost of
  production, physical distribution and marketing
  broken down into finer categories. The difference
  between revenues and sales is the projected
  profit.

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Action programs outline

• what will be done
• when it will be done
• who will do it
• how much will be spent
• all of the above

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The Nature and Contents of a Marketing Plan
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• Controls
• This section outlines the controls for monitoring
  the plans progress. Typically, the goals and
  budget are spelled out for each month or quarter.
  
• Senior management can review the results of each
  period and identify businesses that are not
  attaining their goals.
• Managers of lagging businesses must explain what
  is happening and the actions they will take to
  improve plan fulfillment.
• A contingency plan outlines the steps that
  management would take in response to specific
  adverse developments. The purpose of contingency
  planning is to encourage managers to think about
  difficulties that might lie ahead.

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The Nature and Contents of a Marketing Plan
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• Analysing market opportunities
• Requires a reliable marketing information system.
• This is includes market research to gather
  information about the marketing environment
  (macro and micro).
• Requires understanding of consumer markets.
• Requires close attention to competitors.

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Evaluating the Marketing Plan
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• How does your marketing plan measure up? Before
  implementing the marketing plan it can be useful
  to evaluate it by answering the following
  questions
• Do your marketing objectives relate directly to
  the companys strategic initiatives?
• Do your marketing objectives relate directly to
  what you learned in your situational analysis?
• Do your marketing objectives relate directly to
  the capacity of your current marketing mix to
  handle them?
• Do your marketing objectives relate directly to
  your businesss strengths and to the
  opportunities available?
• Do your marketing objectives relate directly to
  your businesss weaknesses and to the threats
  that endanger it?

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Evaluating the Marketing Plan
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• Are your marketing objectives clear, measurable
  statements of what is to be achieved?
• Do your marketing objectives, strategies and
  tactics relate to each other?
• Does each strategy in your marketing plan contain
  a cost/benefit evaluation?
• Is every person involved in implementation
  included in the marketing planning process in
  some way?
• Is the plan clearly visible on your desk every
  day?
• Is your businesss vision truly a shared
  vision?
• If you can answer all these questions positively
  you have a powerful marketing plan ready for
  implementation.

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Implementing Marketing Plan
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• Marketing implementation is the process that
  turns marketing strategies and plans into
  marketing actions in order to accomplish
  strategic marketing objectives.
• Implementation involves day-to-day,
  month-to-month activities that effectively put
  the marketing plan to work.
• Whereas marketing planning addresses the
• what and why of marketing activities,
• implementation addresses the who, where, when and
  how

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Reasons For Poor Implementation of Marketing Plans
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• Isolated Planning
• Trade-offs Between Long and Short Term Objectives
• Natural Resistance To Change
• Lack of Financial and Marketing Integration
• Overemphasis on the Document

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Factors For Successful Implementation
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• Action program that pulls all the people and
  activities together.
• Formal organisation structure.
• A companys decision and reward systems
  (operating procedures that guide planning,
  budgeting, remuneration and other activities).
• Careful human resources planning.
• Marketing strategies must fit with its company
  culture. Company culture is a system of values
  and beliefs shared by people in an
  organisationthe companys collective identity
  and meaning.

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Figure 2.3 Functional Organisation
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Figure 2.4 Geographic Organisation
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Figure 2.5 Project Management Organisation
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Table 2.3 Possible Future Scenarios for Brand
Management
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Controlling and Evaluating Performance

• Marketing control is the process of measuring and
  evaluating the results of marketing strategies
  and plans, and taking corrective action to ensure
  that marketing objectives are attained.
• Operating control involves checking ongoing
  performance against the annual plan and taking
  corrective action when necessary.
• Strategic control involves looking at whether the
  companys basic strategies are well matched to
  its opportunities.

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Controlling and Evaluating Performance

• Marketing Audit is a comprehensive, systematic,
  independent and periodic examination of a
  companys strategies and activities to determine
  problem areas and opportunities and to recommend
  a plan of action to improve the companys
  marketing performance.

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Figure 2.6 The Control Process
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Which of the following is not part of a corporate
strategy?

• mission and vision
• objectives
• resource deployment
• tactics
• corporate values