Chapter 2: Company and Marketing Strategy
Please provide several examples of marketing metrics. How might a marketer use each metric to track progress of some important element of a marketing plan?
A couple of examples are cost of a prospect, referral rate, customer turnover and recognition and recall of the message. Table 3.3 lists examples of marketing metrics. These metrics allow determination if that action is obtaining the desired outcome. It could be that a lot of money is being spent in one area and if there is no activity in that area, it should be evaluated if that activity should be continued.
How does operational planning support the marketing plan?
Operational plans focus on the day-to-day execution of the functional plans and include detailed annual, semiannual, or quarterly plans.
What is a mission statement? What is a SWOT analysis? What role do these play in the planning process?
A mission statement is a formal document that describes the organization's overall purpose and what it hopes to achieve in terms of its customers, products, and resources. The mission statement is important to an organization because it defines the scope of the firm's activities and identifies its strategic focus. When the mission statement is constructed correctly, it not only spells out the organization's scope and focus, but it sets the direction for everyone's efforts. When a company assesses its internal and external environments, it is performing a critical step in the strategic planning process. Managers call this evaluation a SWOT analysis because it tries to identify meaningful strengths (S) and weaknesses (W) in the organization's internal environment, and opportunities (O) and threats (T) coming from outside the organization— the external environment. A SWOT enables a firm to develop strategies that make use of what the firm does best in seizing opportunities for growth, while at the same time avoiding external threats that might hurt the firm's sales and profits.
What is an action plan? Why are action plans such an important part of marketing planning? Why is it so important for marketers to break the implementation of a marketing plan down into individual elements through action plans?
An action plan assigns responsibilities, time lines, budgets, and measurement and control processes for marketing planning. Action plans are also sometimes referred to as "marketing programs." The best way to use action plans is by including a separate action plan for each important element involved in implementing the marketing plan. Table 3.4 provides a template for an action plan. This allows for tracking all activities in the action plan and account for investments of time and materials. Action plans are important because they explain what is to be accomplished—that is, what specific marketing objective and strategy within the marketing plan does the action plan support.
What is a strategic business unit (SBU)? How does strategic planning differ at the corporate and the SBU levels?
Many firms realize that relying on only one product can be risky, so they have become multi-product companies with self-contained divisions organized around products or brands. These self-contained divisions are called strategic business units (SBUs)—individual units within the firm, each having its own mission, business objectives, resources, managers, and competitors. Top managers at the corporate level establish a mission for the entire corporation. Top managers then evaluate the internal and external environment of the business and set corporate-level objectives that guide decision-making within each individual SBU. If the firm is big enough to have separate SBUs, each SBU will have its own objectives that are relevant to its operation but directly connected to the corporate-level objectives.
Explain the steps in the marketing planning process.
Perform a Situation Analysis— Marketing managers conduct an analysis of the marketing environment by building on the company's SWOT analysis by searching out information about the environment that specifically affects the marketing plan. Set Marketing Objectives— Marketing managers set objectives specific to the firm's brands, sizes, product features, and other marketing-mix-related elements. The marketing objectives state what the marketing function must accomplish if the firm is to achieve its overall objectives. Develop Marketing Strategies— Marketing managers must make decisions about what activities they must accomplish to achieve the marketing objectives. For example, this means deciding what markets to target and actually developing the marketing-mix strategies. Implement and Control the Marketing Plan— Marketing managers now spend time managing the various elements of the marketing plan. Marketing control requires appropriate marketing metrics, concrete measures of marketing performance. Return on marketing investment (ROMI) refers to a measure of how the investment in marketing has an impact on the firm's success, financially and otherwise. Action plans provide guidance for the implementation and control of the various marketing strategies within a marketing plan.
What is return on marketing investment (ROMI)? How does considering marketing as an investment instead of an expense affect a firm?
ROMI is quantifying just how an investment in marketing has an impact on the firm's success, financially and otherwise. This activity brings in revenue and therefore can be an investment in future business which has a return on investment unlike an expense that might not have a revenue stream.
Describe the three levels of business planning: strategic, functional, and operational planning.
Strategic planning is the managerial-decision process that matches the organization's resources and capabilities to its market opportunities for long-term growth. Functional planning typically includes both a broad three- to five-year plan to support the firm's strategic plan and a detailed annual plan for the coming year. Operational planning is a decision process that focuses on developing detailed plans for day-to-day activities that carry out an organization's tactical plans.
How do firms use the BCG model for portfolio analysis in planning for their SBUs?
The Boston Consulting Group (BCG) model focuses on the potential of a firm's existing successful products to generate cash that the firm can then use to invest in new products. New products are chosen for their potential to become future cash generators. In the BCG matrix, the vertical axis represents the attractiveness of the market, the market growth rate. The horizontal axis shows the company's current strength in the market through its relative market share. SBUs are categorized as stars, cash cows, question marks, and dogs: * Stars: are business units with products that have a dominant market share in high-growth markets. * Cash Cows: have a dominant market share in a low-growth potential market. * Question Marks: (sometimes called problem children) are products with low market shares in fast-growing markets. * Dogs: are products that nobody wants. They have a small share of a slow-growth market.
Describe the five (5) steps in the strategic planning process
The first step in strategic planning is defining the mission— a formal document that describes the organization's overall purpose and what it hopes to achieve in terms of its customers, products, and resources. Step 2 is to evaluate the internal and external environment through a process known as situational analysis, which is later formatted as a SWOT analysis that identifies the organization's strengths, weaknesses, opportunities, and threats. Step 3 is to set organizational or SBU objectives that are specific, measurable, attainable, and sustainable. Step 4 is to establish the business portfolio, which is the range of different businesses that a large firm operates. To determine how best to allocate resources to the various businesses, or units, managers use the Boston Consulting Group (BCG) growth- market share matrix to classify SBUs as stars, cash cows, question marks, or dogs. The final step, Step 5, in strategic planning is to develop growth strategies. Marketers use the product- market growth matrix to analyze four fundamental marketing strategies: market penetration, market development, product development, and diversification.
Describe the four (4) business growth strategies: market penetration, product development, market development, and diversification.
The four business growth strategies as exemplified by Figure 3.4 are: (1) Market penetration: these strategies seek to increase sales of existing products to current customers, nonusers, and users of competing brands. (2) Market development: these strategies introduce existing products to new markets. This can mean reaching new customer segments within an existing geographic market or it may mean expanding into new geographic areas. (3) Product development: these strategies create growth by selling new products in existing markets. Product development may mean that the firm improves a product's performance, or it may mean extending the firm's product line by developing new variations of the item. (4) Diversification: these strategies emphasize both new products and new markets to achieve growth.
What is a marketing plan, and how does it differ from a business plan?
The marketing plan is a document that identifies where the organization is now, where it wants to go, how it plans to get there, and who will be responsible for carrying out each part of the marketing strategy. Therefore, the plan outlines the activities included in the planning process. Elements of the plan include a situation analysis (a business review that includes a SWOT analysis), specific strategies and action plans or tactics, selection of target markets, and the elements of the marketing mix: product, price, place, and promotion. Finally, the plan outlines how and by whom it is to be implemented and controlled—including budgets and schedules. Sometimes firms require that marketing plans include contingency plans that should monitor marketing activities to determine which marketing objectives are not being met and what to do about this. A business plan is a plan that includes the decisions that guide the entire organization.