Class Notes For A Preface to Marketing Management, 14th Edition
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Chapter 01 - Strategic Planning and the Marketing Management Process
1-1
Chapter 1
Strategic Planning and the Marketing
Management Process
High-Level Chapter Outline
I. Introduction
II. The Marketing Concept
III. What is Marketing?
IV. What is Strategic Planning?
A. Strategic Planning and Marketing Management
B. The Strategic Planning Process
Organizational Mission
Organizational Objectives
Organizational Strategies
Choosing an Appropriate Strategy
Organizational Portfolio Plan
C. The Complete Strategic Plan
V. The Marketing Management Process
A. Situation Analysis
B. Marketing Planning
C. Implementation and Control of the Marketing Plan
D. Marketing Information Systems and Marketing Research
VI. The Strategic Plan, the Marketing Plan, and Other Functional Area Plans
A. Marketing’s Role in Cross-Functional Strategic Planning
Detailed Chapter Outline
I. The Marketing Concept
• The marketing concept means that an organization should seek to make a profit by serving
the needs of customer groups.
• The purpose of the marketing concept is to rivet the attention of marketing managers on
serving broad classes of customer needs (customer orientation), rather than on the firm’s
current products (production orientation) or on devising methods to attract customers to
1-1
Chapter 1
Strategic Planning and the Marketing
Management Process
High-Level Chapter Outline
I. Introduction
II. The Marketing Concept
III. What is Marketing?
IV. What is Strategic Planning?
A. Strategic Planning and Marketing Management
B. The Strategic Planning Process
Organizational Mission
Organizational Objectives
Organizational Strategies
Choosing an Appropriate Strategy
Organizational Portfolio Plan
C. The Complete Strategic Plan
V. The Marketing Management Process
A. Situation Analysis
B. Marketing Planning
C. Implementation and Control of the Marketing Plan
D. Marketing Information Systems and Marketing Research
VI. The Strategic Plan, the Marketing Plan, and Other Functional Area Plans
A. Marketing’s Role in Cross-Functional Strategic Planning
Detailed Chapter Outline
I. The Marketing Concept
• The marketing concept means that an organization should seek to make a profit by serving
the needs of customer groups.
• The purpose of the marketing concept is to rivet the attention of marketing managers on
serving broad classes of customer needs (customer orientation), rather than on the firm’s
current products (production orientation) or on devising methods to attract customers to
Chapter 01 - Strategic Planning and the Marketing Management Process
1-1
Chapter 1
Strategic Planning and the Marketing
Management Process
High-Level Chapter Outline
I. Introduction
II. The Marketing Concept
III. What is Marketing?
IV. What is Strategic Planning?
A. Strategic Planning and Marketing Management
B. The Strategic Planning Process
Organizational Mission
Organizational Objectives
Organizational Strategies
Choosing an Appropriate Strategy
Organizational Portfolio Plan
C. The Complete Strategic Plan
V. The Marketing Management Process
A. Situation Analysis
B. Marketing Planning
C. Implementation and Control of the Marketing Plan
D. Marketing Information Systems and Marketing Research
VI. The Strategic Plan, the Marketing Plan, and Other Functional Area Plans
A. Marketing’s Role in Cross-Functional Strategic Planning
Detailed Chapter Outline
I. The Marketing Concept
• The marketing concept means that an organization should seek to make a profit by serving
the needs of customer groups.
• The purpose of the marketing concept is to rivet the attention of marketing managers on
serving broad classes of customer needs (customer orientation), rather than on the firm’s
current products (production orientation) or on devising methods to attract customers to
1-1
Chapter 1
Strategic Planning and the Marketing
Management Process
High-Level Chapter Outline
I. Introduction
II. The Marketing Concept
III. What is Marketing?
IV. What is Strategic Planning?
A. Strategic Planning and Marketing Management
B. The Strategic Planning Process
Organizational Mission
Organizational Objectives
Organizational Strategies
Choosing an Appropriate Strategy
Organizational Portfolio Plan
C. The Complete Strategic Plan
V. The Marketing Management Process
A. Situation Analysis
B. Marketing Planning
C. Implementation and Control of the Marketing Plan
D. Marketing Information Systems and Marketing Research
VI. The Strategic Plan, the Marketing Plan, and Other Functional Area Plans
A. Marketing’s Role in Cross-Functional Strategic Planning
Detailed Chapter Outline
I. The Marketing Concept
• The marketing concept means that an organization should seek to make a profit by serving
the needs of customer groups.
• The purpose of the marketing concept is to rivet the attention of marketing managers on
serving broad classes of customer needs (customer orientation), rather than on the firm’s
current products (production orientation) or on devising methods to attract customers to
Chapter 01 - Strategic Planning and the Marketing Management Process
1-2
current products (selling orientation).
• The principal task of the marketing function operating under the marketing concept is not
to manipulate customers to do what suits the interest of the firm, but rather to find effective
and efficient means of making the business do what suits the interest of the customer.
• Effective marketing requires that consumer needs come first in organizational decision
making.
• One qualification to this statement deals with the question of a conflict between consumer
wants and societal needs and wants.
II. What is Marketing?
• Everyone knows something about marketing because it has been a part of their lives since
they spent their first dollar.
• Since everyone is involved in marketing, it seems strange that one of the persistent
problems in the field has been its definition.
• The American Marketing Association defines marketing as, “the activity, set of
institutions, and processes for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, partners, and society at large.”
• This definition takes into account all parties involved in the marketing effort: members of
the producing organization, resellers of goods and services, and customers or clients.
• Major types of marketing includes: product, service, person, place, cause, and organization
(see Figure 1.1 for descriptions and examples).
III. What is Strategic Planning?
• Before a production manager, marketing manager, and personnel manager can develop
plans for their individual departments, some larger plan or blueprint for the organization
should exist.
• Senior managers must look toward the future and evaluate the ability to shape their
organization’s destiny in the years and decades to come.
o The output of this process is objectives and strategies designed to give the
organization a chance to compete effectively in the future.
• The objectives and strategies established at the top level provide the context for planning in
each of the divisions and departments by divisional and departmental managers.
A. Strategic Planning and Marketing Management
• Some of the most successful business organizations are here today because many years
ago they offered the right product at the right time to a rapidly growing market.
• Over three-quarters of the 100 largest U.S. corporations of 70 years ago have fallen
1-2
current products (selling orientation).
• The principal task of the marketing function operating under the marketing concept is not
to manipulate customers to do what suits the interest of the firm, but rather to find effective
and efficient means of making the business do what suits the interest of the customer.
• Effective marketing requires that consumer needs come first in organizational decision
making.
• One qualification to this statement deals with the question of a conflict between consumer
wants and societal needs and wants.
II. What is Marketing?
• Everyone knows something about marketing because it has been a part of their lives since
they spent their first dollar.
• Since everyone is involved in marketing, it seems strange that one of the persistent
problems in the field has been its definition.
• The American Marketing Association defines marketing as, “the activity, set of
institutions, and processes for creating, communicating, delivering, and exchanging
offerings that have value for customers, clients, partners, and society at large.”
• This definition takes into account all parties involved in the marketing effort: members of
the producing organization, resellers of goods and services, and customers or clients.
• Major types of marketing includes: product, service, person, place, cause, and organization
(see Figure 1.1 for descriptions and examples).
III. What is Strategic Planning?
• Before a production manager, marketing manager, and personnel manager can develop
plans for their individual departments, some larger plan or blueprint for the organization
should exist.
• Senior managers must look toward the future and evaluate the ability to shape their
organization’s destiny in the years and decades to come.
o The output of this process is objectives and strategies designed to give the
organization a chance to compete effectively in the future.
• The objectives and strategies established at the top level provide the context for planning in
each of the divisions and departments by divisional and departmental managers.
A. Strategic Planning and Marketing Management
• Some of the most successful business organizations are here today because many years
ago they offered the right product at the right time to a rapidly growing market.
• Over three-quarters of the 100 largest U.S. corporations of 70 years ago have fallen
Chapter 01 - Strategic Planning and the Marketing Management Process
1-3
from the list.
o Their managements failed to recognize that business strategies need to reflect
changing environments and emphasis must be placed on developing business
systems that allow for continuous improvement.
• Present-day business managers realize that the true mission of the organization is to
provide value for three key constituencies: customers, employees, and investors.
• Strategic planning includes all the activities that lead to the development of a clear
organizational mission, organizational objectives, and appropriate strategies to achieve
the objective for the entire organization.
• Strategic planning, if performed successfully, plays a key role in achieving equilibrium
between the short and the long term by balancing acceptable financial performance
with preparation for inevitable changes in markets, technology, and competition as
well as in economic and political arenas.
• The strategic planning process is depicted in Figure 1.2.
• In the strategic planning process the organization gathers information about the
changing elements of its environment.
• This information is useful in aiding the organization to adapt better to these changes
through the process of strategic planning.
B. The Strategic Planning Process
• The output of strategic planning is the development of a strategic plan.
• Figure 1.2 indicates four components of a strategic plan: mission, objectives,
strategies, and portfolio plan.
Organizational Mission
• The organization’s environment provides the resources that sustain the
organization, whether it is a business, a college or university, or a government
agency.
• Every organization exists to accomplish something in the larger environment and
that purpose, vision, or mission usually is clear at the organization’s inception.
• As time passes, the organization expands, and the environment and managerial
personnel change. As a result, one or more things are likely to occur:
o The organization’s original purpose may become irrelevant as the
organization expands into new products, new markets, and even new
industries.
o The original mission may remain relevant, but managers begin to lose
interest in it.
o Changes in the environment may make the original mission inappropriate.
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from the list.
o Their managements failed to recognize that business strategies need to reflect
changing environments and emphasis must be placed on developing business
systems that allow for continuous improvement.
• Present-day business managers realize that the true mission of the organization is to
provide value for three key constituencies: customers, employees, and investors.
• Strategic planning includes all the activities that lead to the development of a clear
organizational mission, organizational objectives, and appropriate strategies to achieve
the objective for the entire organization.
• Strategic planning, if performed successfully, plays a key role in achieving equilibrium
between the short and the long term by balancing acceptable financial performance
with preparation for inevitable changes in markets, technology, and competition as
well as in economic and political arenas.
• The strategic planning process is depicted in Figure 1.2.
• In the strategic planning process the organization gathers information about the
changing elements of its environment.
• This information is useful in aiding the organization to adapt better to these changes
through the process of strategic planning.
B. The Strategic Planning Process
• The output of strategic planning is the development of a strategic plan.
• Figure 1.2 indicates four components of a strategic plan: mission, objectives,
strategies, and portfolio plan.
Organizational Mission
• The organization’s environment provides the resources that sustain the
organization, whether it is a business, a college or university, or a government
agency.
• Every organization exists to accomplish something in the larger environment and
that purpose, vision, or mission usually is clear at the organization’s inception.
• As time passes, the organization expands, and the environment and managerial
personnel change. As a result, one or more things are likely to occur:
o The organization’s original purpose may become irrelevant as the
organization expands into new products, new markets, and even new
industries.
o The original mission may remain relevant, but managers begin to lose
interest in it.
o Changes in the environment may make the original mission inappropriate.
Chapter 01 - Strategic Planning and the Marketing Management Process
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• The result of any or all three of these conditions is a “drifting” organization,
without a clear mission, vision, or purpose to guide critical decisions.
o When this occurs, management must search for a purpose or emphatically
restate and reinforce the original purpose.
• The mission statement, or purpose, of an organization is the description of its
reason for existence.
o In essence, the mission statement defines the direction in which the
organization is heading and how it will succeed in reaching its desired goal.
• The basic questions that must be answered when an organization decides to
examine and restate its mission are:
o What is the business?
o Who is are the customers?
o What do customers value?
o What will the business be?
• In developing a statement of mission, management must take into account three
key elements: the organization’s history, its distinctive competencies, and its
environment.
o The organization’s history—in formulating a mission, the critical
characteristics and events of the past must be considered.
o The organization’s distinctive competencies—these are things that an
organization does well.
o The organization’s environment—it dictates the opportunities, constraints,
and threats that must be identified before a mission statement is developed.
• When completed, an effective mission statement will be focused on markets
rather than products, achievable, motivating, and specific.
• Focused on Markets Rather than Products
o In recent years, a key feature of mission statements has been an external
rather than internal focus.
o In other words, the mission statement should focus on the broad class of
needs that the organization is seeking to satisfy (external focus), not on the
physical product or service that the organization is offering at present
(internal focus).
• Achievable
o The mission statement should open a vision of new opportunities but should
not lead the organization into unrealistic ventures far beyond its
competencies.
o It should open a vision of new opportunities but should not lead the
organization into unrealistic ventures far beyond its competencies.
• Motivational
o One of the side (but very important) benefits of a well-defined mission is the
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• The result of any or all three of these conditions is a “drifting” organization,
without a clear mission, vision, or purpose to guide critical decisions.
o When this occurs, management must search for a purpose or emphatically
restate and reinforce the original purpose.
• The mission statement, or purpose, of an organization is the description of its
reason for existence.
o In essence, the mission statement defines the direction in which the
organization is heading and how it will succeed in reaching its desired goal.
• The basic questions that must be answered when an organization decides to
examine and restate its mission are:
o What is the business?
o Who is are the customers?
o What do customers value?
o What will the business be?
• In developing a statement of mission, management must take into account three
key elements: the organization’s history, its distinctive competencies, and its
environment.
o The organization’s history—in formulating a mission, the critical
characteristics and events of the past must be considered.
o The organization’s distinctive competencies—these are things that an
organization does well.
o The organization’s environment—it dictates the opportunities, constraints,
and threats that must be identified before a mission statement is developed.
• When completed, an effective mission statement will be focused on markets
rather than products, achievable, motivating, and specific.
• Focused on Markets Rather than Products
o In recent years, a key feature of mission statements has been an external
rather than internal focus.
o In other words, the mission statement should focus on the broad class of
needs that the organization is seeking to satisfy (external focus), not on the
physical product or service that the organization is offering at present
(internal focus).
• Achievable
o The mission statement should open a vision of new opportunities but should
not lead the organization into unrealistic ventures far beyond its
competencies.
o It should open a vision of new opportunities but should not lead the
organization into unrealistic ventures far beyond its competencies.
• Motivational
o One of the side (but very important) benefits of a well-defined mission is the
Chapter 01 - Strategic Planning and the Marketing Management Process
1-5
guidance it provides employees and managers working in geographically
dispersed units and on independent tasks.
o It provides a shared sense of purpose outside the various activities taking
place within the organization.
• Specific
o The mission statement must be specific to provide direction and guidelines
to management when they are choosing between alternative courses of
action.
o However, it does not provide direction for management.
Organizational Objectives
• Organizational objectives are the end point of an organization’s mission and are
what it seeks through the on-going, long-run operations of the organization.
• The organizational mission is distilled into a finer set of specific and achievable
organizational objectives that must be specific, measurable, action commitments
by which the mission of the organization is to be achieved.
• If formulated properly, they can accomplish the following:
o
1-5
guidance it provides employees and managers working in geographically
dispersed units and on independent tasks.
o It provides a shared sense of purpose outside the various activities taking
place within the organization.
• Specific
o The mission statement must be specific to provide direction and guidelines
to management when they are choosing between alternative courses of
action.
o However, it does not provide direction for management.
Organizational Objectives
• Organizational objectives are the end point of an organization’s mission and are
what it seeks through the on-going, long-run operations of the organization.
• The organizational mission is distilled into a finer set of specific and achievable
organizational objectives that must be specific, measurable, action commitments
by which the mission of the organization is to be achieved.
• If formulated properly, they can accomplish the following:
o
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Chapter 01 - Strategic Planning and the Marketing Management Process
1-6
(Figure 1.4).
• Market Penetration Strategies
o These strategies focus primarily on increasing sales of present products to
present customers.
o Tactics used to implement a market penetration strategy might include price
reductions, advertising that stresses the many benefits of the product,
packaging the product in different-sized packages, or making it available at
more locations.
• Market Development Strategies
o An organization would seek to find new customers for its present products
through market development.
o Market development strategies involve much, much more than simply
getting the product to a new market.
1-6
(Figure 1.4).
• Market Penetration Strategies
o These strategies focus primarily on increasing sales of present products to
present customers.
o Tactics used to implement a market penetration strategy might include price
reductions, advertising that stresses the many benefits of the product,
packaging the product in different-sized packages, or making it available at
more locations.
• Market Development Strategies
o An organization would seek to find new customers for its present products
through market development.
o Market development strategies involve much, much more than simply
getting the product to a new market.
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Chapter 01 - Strategic Planning and the Marketing Management Process
1-7
Choosing an Appropriate Strategy
• Management should select those strategies consistent with its mission and
capitalizes on the organization's distinctive competencies that will lead to a
sustainable competitive advantage.
• A sustainable competitive advantage can be based on either the assets or skills of
the organization.
Organizational Portfolio Plan
• The final phase of strategic planning process is the formulation of the
organizational portfolio plan.
• Management must decide which businesses to build, maintain, or eliminate, or
which new businesses to add.
• The first step in this approach is to identify various divisions, product lines, etc.,
that can be considered a “business.”
• These are referred to as strategic business unit (SBUs) and they have the
following characteristics:
o They have a distinctive mission.
o They have their own competitors.
o They are a single business or collection of related businesses.
o They can be planned independently of the other businesses of the total
organization
• Thus, depending on the type of organization, an SBU could be a single product,
product line, or division; a college of business administration; or a state mental
health agency.
C. The Complete Strategic Plan
• Completion of the strategic plan (Figure 1.2) facilitates the development of marketing
plans for each product, product line, or division of the organization.
• The marketing plan serves as a subset of the strategic plan in that it allows for detailed
planning at a target market level.
IV. The Marketing Management Process
• Marketing management can be defined as “the process of planning and executing the
conception, pricing, promotion, and distribution of goods, services, and ideas to create
exchanges with target groups that satisfy customer and organizational objectives.”
1-7
Choosing an Appropriate Strategy
• Management should select those strategies consistent with its mission and
capitalizes on the organization's distinctive competencies that will lead to a
sustainable competitive advantage.
• A sustainable competitive advantage can be based on either the assets or skills of
the organization.
Organizational Portfolio Plan
• The final phase of strategic planning process is the formulation of the
organizational portfolio plan.
• Management must decide which businesses to build, maintain, or eliminate, or
which new businesses to add.
• The first step in this approach is to identify various divisions, product lines, etc.,
that can be considered a “business.”
• These are referred to as strategic business unit (SBUs) and they have the
following characteristics:
o They have a distinctive mission.
o They have their own competitors.
o They are a single business or collection of related businesses.
o They can be planned independently of the other businesses of the total
organization
• Thus, depending on the type of organization, an SBU could be a single product,
product line, or division; a college of business administration; or a state mental
health agency.
C. The Complete Strategic Plan
• Completion of the strategic plan (Figure 1.2) facilitates the development of marketing
plans for each product, product line, or division of the organization.
• The marketing plan serves as a subset of the strategic plan in that it allows for detailed
planning at a target market level.
IV. The Marketing Management Process
• Marketing management can be defined as “the process of planning and executing the
conception, pricing, promotion, and distribution of goods, services, and ideas to create
exchanges with target groups that satisfy customer and organizational objectives.”
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Chapter 01 - Strategic Planning and the Marketing Management Process
1-8
• This definition is consistent with the marketing concept.
• The marketing management process is illustrated in Figure 1.5.
A. Situation Analysis
• Situation analysis can be divided into six major areas of concern:
o The Cooperative Environment
▪ It includes all firms and individuals who have a vested interest in the
firm’s accomplishing its objectives.
▪ Parties of primary interest to the marketing executive in this environment
are:
❖ Suppliers
❖ Resellers
❖ Other departments in the firm
❖ Subdepartments and employees of the marketing department
▪ Opportunities in this environment are primarily related to methods of
increasing efficiency.
o The Competitive Environment
▪ It includes primarily other firms in the industry that rival the organization
for both resources and sales.
▪ Opportunities in this environment include such things as:
❖ Acquiring competing firms
❖ Offering demonstrably better value to consumers and attracting them
away from competitors
❖ In some cases, driving competitors out of the industry
o The Economic Environment
▪ It includes the state of the macroeconomy and changes in it which bring
about marketing opportunities and constraints.
▪ Changes in technology can provide significant threats and opportunities.
o The Social Environment
▪ It includes general cultural and social traditions, norms, and attitudes.
▪ While these values change slowly, such changes often bring about the need
for new products and services.
o The Political Environment
▪ It includes the attitudes and reactions of the general public, social and
business critics, and other organizations, such as the Better Business
Bureau.
▪ Dissatisfaction with such business and marketing practices as unsafe
products, products that waste resources and unethical sales procedures can
have adverse effects on corporation image and customer loyalty.
1-8
• This definition is consistent with the marketing concept.
• The marketing management process is illustrated in Figure 1.5.
A. Situation Analysis
• Situation analysis can be divided into six major areas of concern:
o The Cooperative Environment
▪ It includes all firms and individuals who have a vested interest in the
firm’s accomplishing its objectives.
▪ Parties of primary interest to the marketing executive in this environment
are:
❖ Suppliers
❖ Resellers
❖ Other departments in the firm
❖ Subdepartments and employees of the marketing department
▪ Opportunities in this environment are primarily related to methods of
increasing efficiency.
o The Competitive Environment
▪ It includes primarily other firms in the industry that rival the organization
for both resources and sales.
▪ Opportunities in this environment include such things as:
❖ Acquiring competing firms
❖ Offering demonstrably better value to consumers and attracting them
away from competitors
❖ In some cases, driving competitors out of the industry
o The Economic Environment
▪ It includes the state of the macroeconomy and changes in it which bring
about marketing opportunities and constraints.
▪ Changes in technology can provide significant threats and opportunities.
o The Social Environment
▪ It includes general cultural and social traditions, norms, and attitudes.
▪ While these values change slowly, such changes often bring about the need
for new products and services.
o The Political Environment
▪ It includes the attitudes and reactions of the general public, social and
business critics, and other organizations, such as the Better Business
Bureau.
▪ Dissatisfaction with such business and marketing practices as unsafe
products, products that waste resources and unethical sales procedures can
have adverse effects on corporation image and customer loyalty.
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Chapter 01 - Strategic Planning and the Marketing Management Process
1-9
o The Legal Environment
▪ It includes a host of federal, state, and local legislation directed at
protecting both business competition and consumer rights.
▪ In recent years, there has been less emphasis on creating new laws for
constraining business practices.
B. Marketing Planning
• Once an opportunity is recognized, the marketing executive must then plan an
appropriate strategy for taking advantage of the opportunity.
• This process can be viewed in terms of three interrelated tasks that include:
o Establishing marketing objectives
o Selecting the target market
o Developing the marketing mix
• Establishing Objectives
o Marketing objectives usually are derived from organizational objectives; in some
cases where the firm is totally marketing oriented, the two are identical.
o Marketing objectives are usually stated as standards of performance or as tasks
to be achieved by given dates.
• Selecting the Target Market
o The success of any marketing plan hinges on how well it can identify customer
needs and organize its resources to satisfy them profitably.
o Four important questions must be answered in selecting the groups of potential
customers:
▪ What do customers want or need?
▪ What must be done to satisfy those wants or needs?
▪ What is the size of the market?
▪ What is its growth profile?
o Present target markets and potential target markets are then ranked according to:
▪ Profitability
▪ Present and future sales volume
▪ The match between what it takes to appeal successfully to the segment and
the organization’s capabilities
• Developing the Marketing Mix
o The marketing mix is the set of controllable variables that must be managed to
satisfy the target market and achieve organizational objectives.
o These controllable variables are usually classified according to four major
decision areas:
▪ Product
▪ Price
1-9
o The Legal Environment
▪ It includes a host of federal, state, and local legislation directed at
protecting both business competition and consumer rights.
▪ In recent years, there has been less emphasis on creating new laws for
constraining business practices.
B. Marketing Planning
• Once an opportunity is recognized, the marketing executive must then plan an
appropriate strategy for taking advantage of the opportunity.
• This process can be viewed in terms of three interrelated tasks that include:
o Establishing marketing objectives
o Selecting the target market
o Developing the marketing mix
• Establishing Objectives
o Marketing objectives usually are derived from organizational objectives; in some
cases where the firm is totally marketing oriented, the two are identical.
o Marketing objectives are usually stated as standards of performance or as tasks
to be achieved by given dates.
• Selecting the Target Market
o The success of any marketing plan hinges on how well it can identify customer
needs and organize its resources to satisfy them profitably.
o Four important questions must be answered in selecting the groups of potential
customers:
▪ What do customers want or need?
▪ What must be done to satisfy those wants or needs?
▪ What is the size of the market?
▪ What is its growth profile?
o Present target markets and potential target markets are then ranked according to:
▪ Profitability
▪ Present and future sales volume
▪ The match between what it takes to appeal successfully to the segment and
the organization’s capabilities
• Developing the Marketing Mix
o The marketing mix is the set of controllable variables that must be managed to
satisfy the target market and achieve organizational objectives.
o These controllable variables are usually classified according to four major
decision areas:
▪ Product
▪ Price
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Chapter 01 - Strategic Planning and the Marketing Management Process
1-10
▪ Promotion
▪ Place
C. Implementation and Control of the Marketing Plan
• Implementing the marketing plan involves putting the plan into action and performing
marketing tasks according to the predefined schedule.
• Controlling the marketing plan involves three steps:
o The results of the implemented marketing plan are measured
o The results are compared with objectives
o Decisions are made on whether the plan is achieving objectives
D. Marketing Information Systems and Marketing Research
• Throughout the marketing management process, current, reliable, and valid
information is needed to make effective marketing decisions.
V. The Strategic Plan, the Marketing Plan, and Other Functional Area Plans
• Strategic planning is a top management responsibility.
• Marketing managers are increasingly involved in strategic analysis and planning.
• Nearly all strategic planning questions have marketing implications.
• Marketing executives are involved in the strategic planning process in at least two
important ways:
o They influence the process by providing important inputs in the form of information
and suggestions relating to customers, products, and middlemen.
o They must always be aware of what the process of strategic planning involves as well
as the results because everything they do—the marketing objectives and strategies
they develop—must be derived from the strategic plan.
A. Marketing’s Role in Cross-Functional Strategic Planning
• More and more organizations are bringing managers and employees together to
participate in cross-functional teams.
• Rather than making decisions independently, marketing managers work closely with
team members from production, finance, human resources, and other areas to devise
plans that address all concerns.
• The greatest advantage of strategic planning with a cross-functional team is the ability
of team members to consider a situation from a number of viewpoints.
• In well-managed organizations, a direct relationship exists between strategic planning
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▪ Promotion
▪ Place
C. Implementation and Control of the Marketing Plan
• Implementing the marketing plan involves putting the plan into action and performing
marketing tasks according to the predefined schedule.
• Controlling the marketing plan involves three steps:
o The results of the implemented marketing plan are measured
o The results are compared with objectives
o Decisions are made on whether the plan is achieving objectives
D. Marketing Information Systems and Marketing Research
• Throughout the marketing management process, current, reliable, and valid
information is needed to make effective marketing decisions.
V. The Strategic Plan, the Marketing Plan, and Other Functional Area Plans
• Strategic planning is a top management responsibility.
• Marketing managers are increasingly involved in strategic analysis and planning.
• Nearly all strategic planning questions have marketing implications.
• Marketing executives are involved in the strategic planning process in at least two
important ways:
o They influence the process by providing important inputs in the form of information
and suggestions relating to customers, products, and middlemen.
o They must always be aware of what the process of strategic planning involves as well
as the results because everything they do—the marketing objectives and strategies
they develop—must be derived from the strategic plan.
A. Marketing’s Role in Cross-Functional Strategic Planning
• More and more organizations are bringing managers and employees together to
participate in cross-functional teams.
• Rather than making decisions independently, marketing managers work closely with
team members from production, finance, human resources, and other areas to devise
plans that address all concerns.
• The greatest advantage of strategic planning with a cross-functional team is the ability
of team members to consider a situation from a number of viewpoints.
• In well-managed organizations, a direct relationship exists between strategic planning
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Chapter 01 - Strategic Planning and the Marketing Management Process
1-11
and the planning done by managers at all levels.
• If done properly, strategic planning results in a clearly defined blueprint for
management action in all functional areas of the organization (Figure 1.7).
KEY TERMS
Distinctive competencies: Distinctive competencies are things that an organization does well—
so well in fact that they give it an advantage over similar organizations. No matter how appealing
an opportunity may be, to gain advantage over competitors, the organization must formulate
strategy based on distinctive competencies.
Diversification: An organizational strategy that seeks growth through new products (often
through acquisitions) for customers not currently being served.
Market development: An organizational strategy that seeks growth through seeking new
customers for present products.
Market penetration: An organizational strategy that seeks growth through increasing the sale of
present products to present customers.
Marketing: The activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and society
at large.
Marketing concept: The marketing concept means that an organization should seek to make a
profit by serving the needs of customer groups. Its purpose is to rivet the attention of marketing
managers on serving broad classes of customer needs (customer orientation), rather than on the
firm’s products (production orientation) or on devising methods to attract customers to current
products (selling orientation).
Marketing information systems: Throughout the marketing management process, current,
reliable, and valid information is needed to make effective marketing decisions. Providing this
information is the task of the marketing information system and marketing research.
Marketing management: Marketing management is the process of planning and executing the
conception, pricing, promotion, and distribution of goods, services, and ideas to create exchanges
with target groups that satisfy customer and organizational objectives.
Marketing mix: The marketing mix is the set of controllable variables that must be managed to
satisfy the target market and achieve organizational objectives. The controllable variables are
1-11
and the planning done by managers at all levels.
• If done properly, strategic planning results in a clearly defined blueprint for
management action in all functional areas of the organization (Figure 1.7).
KEY TERMS
Distinctive competencies: Distinctive competencies are things that an organization does well—
so well in fact that they give it an advantage over similar organizations. No matter how appealing
an opportunity may be, to gain advantage over competitors, the organization must formulate
strategy based on distinctive competencies.
Diversification: An organizational strategy that seeks growth through new products (often
through acquisitions) for customers not currently being served.
Market development: An organizational strategy that seeks growth through seeking new
customers for present products.
Market penetration: An organizational strategy that seeks growth through increasing the sale of
present products to present customers.
Marketing: The activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and society
at large.
Marketing concept: The marketing concept means that an organization should seek to make a
profit by serving the needs of customer groups. Its purpose is to rivet the attention of marketing
managers on serving broad classes of customer needs (customer orientation), rather than on the
firm’s products (production orientation) or on devising methods to attract customers to current
products (selling orientation).
Marketing information systems: Throughout the marketing management process, current,
reliable, and valid information is needed to make effective marketing decisions. Providing this
information is the task of the marketing information system and marketing research.
Marketing management: Marketing management is the process of planning and executing the
conception, pricing, promotion, and distribution of goods, services, and ideas to create exchanges
with target groups that satisfy customer and organizational objectives.
Marketing mix: The marketing mix is the set of controllable variables that must be managed to
satisfy the target market and achieve organizational objectives. The controllable variables are
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Chapter 01 - Strategic Planning and the Marketing Management Process
1-12
usually classified according to four major decision areas: product, price, promotion, and place (or
channels of distribution).
Marketing planning: The marketing planning process produces three outputs: (1) establishing
marketing objectives, (2) selecting the target market, and (3) developing the marketing mix.
Organizational mission: The mission statement, or purpose, of an organization is the
description of its reason for existence. It is the long-run vision of what the organization strives to
be, the unique aim that differentiates the organization from similar ones and the means by which
this differentiation will take place. An effective mission statement will be focused on markets
rather than products, achievable, motivating, and specific.
Organizational objectives: Organizational objectives are the end points of an organization’s
mission and are what it seeks through the ongoing, long-run operations of the organization. The
organizational mission is distilled into a finer set of specific, measurable, action commitments by
which the mission of the organization is to be achieved.
Organizational portfolio plan: This stage of the strategic plan involves the allocation of
resources across the organization’s product lines, divisions, or businesses. It involves deciding
which ones to build, maintain, or eliminate, or which to add.
Organizational strategies: Organizational strategies are the choice of the major directions the
organization will take in pursuing its objectives. There are three major approaches: (1) strategies
based on products and markets, (2) strategies based on competitive advantage, and (3) strategies
based on value.
Organizational strategies based on competitive advantage: This approach to developing
organizational strategy would develop either a cost leadership strategy which focuses on being
the lower cost company in the industry or a differentiation strategy which focuses on being
unique in the industry or market segment along dimensions that customers value.
Organizational strategies based on products and markets: An approach to developing
organizational strategies that focuses on the four paths an organization can grow: market
penetration strategies, market development strategies, product development strategies, and
diversification strategies.
Organizational strategies based on value: This approach to developing organizational strategy
seeks to succeed by choosing to deliver superior customer value using one of three value
strategies—best price, best product, or best service.
1-12
usually classified according to four major decision areas: product, price, promotion, and place (or
channels of distribution).
Marketing planning: The marketing planning process produces three outputs: (1) establishing
marketing objectives, (2) selecting the target market, and (3) developing the marketing mix.
Organizational mission: The mission statement, or purpose, of an organization is the
description of its reason for existence. It is the long-run vision of what the organization strives to
be, the unique aim that differentiates the organization from similar ones and the means by which
this differentiation will take place. An effective mission statement will be focused on markets
rather than products, achievable, motivating, and specific.
Organizational objectives: Organizational objectives are the end points of an organization’s
mission and are what it seeks through the ongoing, long-run operations of the organization. The
organizational mission is distilled into a finer set of specific, measurable, action commitments by
which the mission of the organization is to be achieved.
Organizational portfolio plan: This stage of the strategic plan involves the allocation of
resources across the organization’s product lines, divisions, or businesses. It involves deciding
which ones to build, maintain, or eliminate, or which to add.
Organizational strategies: Organizational strategies are the choice of the major directions the
organization will take in pursuing its objectives. There are three major approaches: (1) strategies
based on products and markets, (2) strategies based on competitive advantage, and (3) strategies
based on value.
Organizational strategies based on competitive advantage: This approach to developing
organizational strategy would develop either a cost leadership strategy which focuses on being
the lower cost company in the industry or a differentiation strategy which focuses on being
unique in the industry or market segment along dimensions that customers value.
Organizational strategies based on products and markets: An approach to developing
organizational strategies that focuses on the four paths an organization can grow: market
penetration strategies, market development strategies, product development strategies, and
diversification strategies.
Organizational strategies based on value: This approach to developing organizational strategy
seeks to succeed by choosing to deliver superior customer value using one of three value
strategies—best price, best product, or best service.
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Chapter 01 - Strategic Planning and the Marketing Management Process
1-13
Product development: An organizational strategy that seeks growth through developing new
products primarily for present customers.
Situation analysis: This stage of the marketing planning process involves the analysis of the
past, present, and likely future in six major areas of concern: (1) the cooperative environment;
(2) the competitive environment; (3) the economic environment; (4) the social environment; (5)
the political environment; and (6) the legal environment. Opportunities for and constraints on
marketing activities arise from these environments.
Strategic business units (SBUs): Strategic business units (SBUs) are product lines and divisions
that can be considered a “business” for the purpose of the organizational portfolio plan. An SBU
must have a distinct mission, have its own competitors, be a single business or collection of
related businesses, and be able to be planned independently of the other SBUs.
Strategic planning: Strategic planning provides a blueprint for management actions for the
entire organization. It includes all the activities that lead to the development of a clear
organizational mission, organizational objectives, and appropriate strategies to achieve the
objectives for the entire organization.
ADDITIONAL RESOURCES
Austin, Robert D., Richard L. Nolan, and Shannon O’Donnell. Harder Than I Thought, Boston:
Harvard Business Review Press, 2013.
Charan, Ram. Leadership in The Era of Economic
1-13
Product development: An organizational strategy that seeks growth through developing new
products primarily for present customers.
Situation analysis: This stage of the marketing planning process involves the analysis of the
past, present, and likely future in six major areas of concern: (1) the cooperative environment;
(2) the competitive environment; (3) the economic environment; (4) the social environment; (5)
the political environment; and (6) the legal environment. Opportunities for and constraints on
marketing activities arise from these environments.
Strategic business units (SBUs): Strategic business units (SBUs) are product lines and divisions
that can be considered a “business” for the purpose of the organizational portfolio plan. An SBU
must have a distinct mission, have its own competitors, be a single business or collection of
related businesses, and be able to be planned independently of the other SBUs.
Strategic planning: Strategic planning provides a blueprint for management actions for the
entire organization. It includes all the activities that lead to the development of a clear
organizational mission, organizational objectives, and appropriate strategies to achieve the
objectives for the entire organization.
ADDITIONAL RESOURCES
Austin, Robert D., Richard L. Nolan, and Shannon O’Donnell. Harder Than I Thought, Boston:
Harvard Business Review Press, 2013.
Charan, Ram. Leadership in The Era of Economic
Loading page 14...
Chapter 01 - Strategic Planning and the Marketing Management Process
1-14
O'Sullivan, Don, and Andrew W. Abdela. “Marketing Performance Measurement
Ability and Performance.” Journal of Marketing, April 2007, pp. 79-93.
Silverstein, Michael J., Abheek Singhi, Carol Liao, and David Michael. The $10 Trillion Prize:
Captivating the Newly Affluent in China and India. Boston: Harvard Business Review Press,
2012.
1-14
O'Sullivan, Don, and Andrew W. Abdela. “Marketing Performance Measurement
Ability and Performance.” Journal of Marketing, April 2007, pp. 79-93.
Silverstein, Michael J., Abheek Singhi, Carol Liao, and David Michael. The $10 Trillion Prize:
Captivating the Newly Affluent in China and India. Boston: Harvard Business Review Press,
2012.
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Chapter 02 - Marketing Research: Process and Systems for Decision Making
2-1
Chapter 2
Marketing Research: Process and Systems
for Decision Making
High-Level Chapter Outline
I. The Role of Marketing Research
II. The Marketing Research Process
A. Purpose of the Research
B. Plan of the Research
Primary versus Secondary Data
Qualitative versus Quantitative Research
Company versus Contract Research
C. Performance of the Research
D.
2-1
Chapter 2
Marketing Research: Process and Systems
for Decision Making
High-Level Chapter Outline
I. The Role of Marketing Research
II. The Marketing Research Process
A. Purpose of the Research
B. Plan of the Research
Primary versus Secondary Data
Qualitative versus Quantitative Research
Company versus Contract Research
C. Performance of the Research
D.
Loading page 16...
Chapter 02 - Marketing Research: Process and Systems for Decision Making
2-2
• It is vital for investigating the effects of various marketing strategies after they have been
implemented.
• Today, many marketing researchers work hand-in-hand with marketing managers
throughout the research process and have responsibility for making strategic
recommendations based on the research.
II. The Marketing Research Process
• Marketing research can be viewed as the systematic process for obtaining information to
aid in decision-making.
• There are many types of marketing research.
• The five Ps of the research process are (Figure 2.1):
o Purpose of the research
o Plan of the research
2-2
• It is vital for investigating the effects of various marketing strategies after they have been
implemented.
• Today, many marketing researchers work hand-in-hand with marketing managers
throughout the research process and have responsibility for making strategic
recommendations based on the research.
II. The Marketing Research Process
• Marketing research can be viewed as the systematic process for obtaining information to
aid in decision-making.
• There are many types of marketing research.
• The five Ps of the research process are (Figure 2.1):
o Purpose of the research
o Plan of the research
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Chapter 02 - Marketing Research: Process and Systems for Decision Making
2-3
o Whether qualitative or quantitative research is needed
o Whether the company will do its own research or contract with a marketing
research specialist
Primary versus Secondary Data
• Primary data are the data collected specifically for the research problem under
investigation.
• Secondary data are the data that have previously been collected for other purposes
but can be used for the problem at hand.
• Secondary information has the advantage of usually being cheaper than primary
data, although it is not always available for strategy- specific research questions.
• There are many types of secondary data that could be useful for understanding a
market and for answering a particular research question.
2-3
o Whether qualitative or quantitative research is needed
o Whether the company will do its own research or contract with a marketing
research specialist
Primary versus Secondary Data
• Primary data are the data collected specifically for the research problem under
investigation.
• Secondary data are the data that have previously been collected for other purposes
but can be used for the problem at hand.
• Secondary information has the advantage of usually being cheaper than primary
data, although it is not always available for strategy- specific research questions.
• There are many types of secondary data that could be useful for understanding a
market and for answering a particular research question.
Loading page 18...
Chapter 02 - Marketing Research: Process and Systems for Decision Making
2-4
facts and behaviors.
o Survey research involves the collection of data by means of a questionnaire
either by mail, phone, online or in person.
o Experimental research involves manipulating one variable and examining
its impact on other variables.
o Mathematical modeling research often involves secondary data. It is useful
because it provides an efficient way to study problems with extremely large
secondary data sets.
Company versus Contract Research
• Most large consumer goods companies have marketing research departments that
can perform a variety of types of research.
• In addition many marketing research firms, advertising agencies, and consulting
companies do marketing research on a contract basis.
C.
2-4
facts and behaviors.
o Survey research involves the collection of data by means of a questionnaire
either by mail, phone, online or in person.
o Experimental research involves manipulating one variable and examining
its impact on other variables.
o Mathematical modeling research often involves secondary data. It is useful
because it provides an efficient way to study problems with extremely large
secondary data sets.
Company versus Contract Research
• Most large consumer goods companies have marketing research departments that
can perform a variety of types of research.
• In addition many marketing research firms, advertising agencies, and consulting
companies do marketing research on a contract basis.
C.
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Chapter 02 - Marketing Research: Process and Systems for Decision Making
2-5
overstating the strength of their findings.
E. Preparation of the Research Report
• The research report is a complete statement of everything in a research project and
includes a write-up of each of the previous stages as well as the strategic
recommendations from the research.
• Figure 2.4 lists the types of questions marketing researchers and managers should
discuss prior to submitting the final research report.
• Research reports should be clear and unambiguous with respect to what was done and
what recommendations are made.
• Researchers should work closely with managers to ensure that the study and its
limitations are fully understood.
F. Limitations of the Research Process
• Many problems and difficulties must be overcome if a research study is to provide
2-5
overstating the strength of their findings.
E. Preparation of the Research Report
• The research report is a complete statement of everything in a research project and
includes a write-up of each of the previous stages as well as the strategic
recommendations from the research.
• Figure 2.4 lists the types of questions marketing researchers and managers should
discuss prior to submitting the final research report.
• Research reports should be clear and unambiguous with respect to what was done and
what recommendations are made.
• Researchers should work closely with managers to ensure that the study and its
limitations are fully understood.
F. Limitations of the Research Process
• Many problems and difficulties must be overcome if a research study is to provide
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Chapter 02 - Marketing Research: Process and Systems for Decision Making
2-8
Zikmund William G., and Barry J. Babin. Essentials of Marketing Research. 5th ed. Mason, OH:
Thomson South-Western, 2013.
2-8
Zikmund William G., and Barry J. Babin. Essentials of Marketing Research. 5th ed. Mason, OH:
Thomson South-Western, 2013.
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