Chapter 4 Summary

Firms that are able to efficiently and effectively operate in today's marketplace pay particular attention to strategic planning. Included in strategic planning are the organizational mission, the organizational objectives, and strategies. Besides strategic planning, other types of planning encompass tactical and operational planning.

The mission statement is basically a company's raison-d'etre and as such, addresses why the firm exists, its purpose, and what its goals should be. Objectives, on the other hand, describe the intended outcomes of carrying out the mission. They should be in writing, measurable, clear, what is to be done and by whom, and achievable. Strategies involve plans focused on achieving the objectives.

Marketing managers can perform a SWOT analysis (strength, weakness, opportunities and threats) to determine which strategies appear most useful. The firm looks at its strengths (core competencies) and weaknesses. The firm also analyzes the opportunities and threats in the environment. The objective of SWOT is to match the firm's strengths with opportunities in the marketplace.

Because most firms are in more than one line of business, it is wise to set up an organizational portfolio plan by conducting a business portfolio analysis. One of the most famous analyses is using the Boston Consulting Group's growth/share matrix. This classifies strategic business units, products, or brands into one of four categories: stars, cash cows, dogs, or question marks. The firm then assigns objectives for each of these categories. General Electric and McKinsey & Company developed another matrix called the industry attractiveness/business strength matrix.

The role of planning, for the marketing manager, often depends on how the firm is organized. If a top-down planning structure, senior management sets the plans and the marketing manager simply follows these plans. On the hand, if a firm uses a bottom-up planning, the marketing manager develops plans that are approved by senior management. In some cases, senior management sets the plans and lets the marketing manager develop the strategies.

There are firms today that have moved away from the functional structure mentality and have established cross-functional teams. In this situation, the members of the team are responsible for strategic planning. This process truly integrates the strategies across all functional areas!

As marketing managers develop marketing plans, there is normally a set process they follow. They first review the firm's strategic plan, then conduct an environmental analysis (both internal and external), next they develop marketing's objectives and strategies, and finally determine the financial costs and benefits associated with the plan. The process sounds very straight-forward but is time-consuming and can be frustrating.

In the development of marketing plans, the marketing manager must be able to estimate demand for the products/services in question. This is normally referred to as demand which is defined as the number of units sold in a particular market over a period of time. To accomplish this, the marketing manager needs to forecast future revenues and/or costs, determine the market potential (total demand) for a product/service in a market, and establish a sale forecast estimating future sales.