2- 1

PRINCIPLES OF MARKETING
Philip Kotler and Gary
Armstrong
Chapter
2
Strategic Planning
and the
Marketing Process
© Copyright 1999 Prentice Hall
Strategic Planning 2- 2

Process
• Strategic Planning involves developing an
overall company strategy for long-run
survival and growth.

• This process involves:

– Defining a Mission: Statement of an organization’s
purpose; should be market oriented.
– Setting Company Objectives: Supporting goals and
objectives to guide the entire company.
– Designing a Business Portfolio: Collection of businesses
and products that make up the company.
– Planning Functional Strategies: Detailed planning for
each department designed to accomplish strategic
objectives.

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 2- 3

© Copyright 1999 Prentice Hall

Designing the Business 2- 4

Portfolio
• The best portfolio is the one that best fits
the company’s strengths and weaknesses
to the opportunities in the environment.

• The company must:

– analyze its current business portfolio or
Strategic Business Units (SBU’s)
– decide which SBU’s should receive more, less,
or no investment
– develop growth strategies for adding new
products or businesses to the portfolio

© Copyright 1999 Prentice Hall

Analyzing Current SBU’s: 2- 5

Boston Consulting Group

Approach
Relative Market Share
High Low
Stars Question Marks
Market Growth Rate
High

• High growth & share • High growth, low share

• Profit potential • Build into Stars/ phase
• May need heavy out
investment to grow • Requires cash to hold
market share
Cash Cows Dogs
• Low growth, high share• Low growth & share
Low

• Established, successful• Low profit potential

SBU’s
• Produces cash

© Copyright 1999 Prentice Hall

Analyzing Current SBU’s: 2- 6

GE Strategic Business-Planning
Grid
Business Strength
Stron Average Wea
Industry Attractiveness

g Ck
Hig
h A

Medium B D

Low

© Copyright 1999 Prentice Hall

Developing Growth 2- 7

Strategies
Product/ Market Expansion
Grid
Existing New
Product Product
Existin s
Penetration s
Development
g 1. Market 3. Product
Markets
New
Development
4. Diversification
Market 2. Market
s

© Copyright 1999 Prentice Hall

Product/ Market Expansion 2- 8

Grid
• Market Penetration: increase sales to present
customers with current products. How? Cut prices,
increase advertising, get products into more stores.

• Market Development: develop new markets with

current products. How? Identify new demographic
or geographic markets.

• Product Development: offering modified or new

products to current customers. How? New styles,
flavors, colors, or modified products.

• Diversification: new products for new markets.

How? Start up or buy new businesses.
© Copyright 1999 Prentice Hall
Marketing’s Role in Strategic 2- 9

Planning
• Process of Selecting Target Consumers
– Market Segmentation: determining distinct groups
of buyers (segments) with different needs.
– Market Targeting: evaluating and selecting which
target segments to enter.
– Market Positioning: products distinctive and
desirable place in the minds of target segments
compared to competing products.
• Marketing Strategies for Competitive Advantage
– Market-Leader
– Market Challenger
– Market-Follower
– Market-Nicher
© Copyright 1999 Prentice Hall
 2- 10
The Marketing
Process
Demographic Marketing Technological-
- Intermediarie Natural
Economic s Environment
Environment

M g nin
in

ar
A g ket

ke
Pl
s
Produc
ar

si

an

tin
M

ly
t
na

Target

g
Supplier Plac Consu Pric Public
s e mers e s

g
M

n
tin
Promotio

tio
ar g ol

ke
ke
Co

ta
n

ar

en
tin
nt

em
r

pl
Im
Political- Social-
Legal Competitor Cultural
Environmen s Environmen
t t
© Copyright 1999 Prentice Hall
Marketing Mix- The Four P’s 2- 11

Price
Product
“Goods-and- Amount of money
service” that consumers
combination that a have to pay to
company offers a obtain
target market the product

Target
Customers

Intended
Positioning

Activities that Company activities

persuade target that make the
customers to buy product available
the product
Promotion © Copyright 1999 Prentice Hall
Place
 © Copyright 1999 Prentice Hall
Action
e Marketing
Marketing Planning
Implementation
Correctiv
Take
Develop Marketing
Turn Marketing
Strategies to
Results
e Plans
Achieve Marketing
Evaluat into
Objectives
Results Action Plans
to Achieve
e Develop
Marketing
Marketing
Measur
l Objectives
Contro Plans & Budget
Marketing Analysis of Company’s Situation
2- 12
Managing the Marketing Effort
 © Copyright 1999 Prentice Hall
Controls
Budgets
Action Programs
Marketing Strategy
Objectives and Issues
Threats and Opportunities
Current Marketing Situation
Executive Summary
2- 13
Elements of a Marketing Plan
 © Copyright 1999 Prentice Hall
Marketing Performance
Implementat
ion
Climate and Action
Culture Programs
Structure
Resources nal
Human Organizatio
Decision
and
Reward
Marketing Strategy Implementation
Marketing
2- 14
 © Copyright 1999 Prentice Hall
Take Corrective
Action
Evaluate
Performance
Measure
Performance
Set Marketing Goals
Control
2- 15
Marketing
Marketing 2- 16

Audits
ent
Environm

Function Types Strategy

of Marketing
n
Productivity Organizatio
Audits

Systems

© Copyright 1999 Prentice Hall