***Instructions: Please answer the following questions with a minimum of 200-word count for each question, total of 800-word count or more. A cover page/title page is not needed. Use scholarly articles to support your answer, include in-text citations and a reference page, APA format. Please use the reference that I provided in the attached file, here is the reference: Solomon, M. R., Marshall, G. W., & Stuart, E. W. (2012). Marketing: Real people, real choices. New Jersey: Prentice Hall. Also, 2 outside scholarly articles for in-text citation and references are required. Do not use Wikipedia, ask.com, online dictionaries, or etc. No PLAGIARISM and let me know if you have any questions or concerns!Read the Chapter 2 study: Jay Minkoff, a Decision Maker at First Flavor Inc. (first page of the attached file)Answer each question in 200 – 350 words.1. Summarize the company’s offerings, and identify its dilemmas.2. Read the detailed description of First Flavor, Inc. at http://www.bloomberg.com/research/stocks/private/s… Discuss their mission and marketing objectives, and the role of a situational analysis in the company’s success.3. Explain the importance of a solid but flexible business plan for First Flavor, Inc.4. As a marketing manager for Flavor Strips, Inc., what other strategies might the company choose to explore?Chapter
Strategic Market Planning:
Take the Big Picture
Real People Profiles
Jay Minkoff
A Decision Maker
at First Flavor, Inc.
Jay Minkoff is a serial entrepreneur
who specializes in creating innovative
marketing solutions. Currently, Jay is the
co-founder and president of First Flavor,
which provides the patent-pending
Peel ‘n Taste® flavor sampling platform
for marketing food, beverage, and flavored product industries using edible
film technology. Prior to this, he cofounded HomeBuilder.com, an online
marketing and listing site for the home
building industry, which was sold to
Homestore, Inc. (now Move.com) in
1999 and which he continued to manage until 2003. His prior business, Tri-State
Publishing & Communications, publisher of the Apartment Shoppers Guide and
New Homes Guide consumer real estate magazines, was sold to Primedia in 1996.
This company was recognized in 1990 as the 91st fasting growing company in the
country on Inc. Magazine’s Inc. 500 List. Prior to this, Jay was a successful commercial real estate broker, having sold or financed over a quarter billion dollars of institutional properties.
A graduate of Tufts University majoring in civil engineering, he holds an MBA
in entrepreneurial management and real estate finance from The Wharton School at
the University of Pennsylvania. Jay lives in Wynnewood, PA with his wife and two
Jay’s Info
What do I do when I’m not working?
A) Staying fit by cycling, playing golf, scuba diving, and skiing.
First job out of school?
A) Real estate investment banking.
Career high?
A) Getting offered a cash-out on selling my first company at 50
percent more than I felt the company was worth!
A job-related mistake I wish I hadn’t made?
A) Raising my voice to any employee when it was not appropriate.
Business book I’m reading now?
A) Buy-ology by Martin Lindstrom.
My hero?
A) William Jefferson Clinton, a brilliant man who has dedicated his
life to making a difference in the world for hundreds of millions of
people. A true global citizen.
My motto to live by?
A) Make a difference and enjoy what you do!
What drives me?
A) Doing what hasn’t been done before. My version of Star Trek’s
“exploring strange new worlds and civilizations.”
My management style?
A) Micro management meets delegation with accountability.
Don’t do this when interviewing with me?
A) Playing with a pen, tapping your fingers, any nervous habit.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
My pet peeve?
A) Not keeping your word. If you can’t do what you told me you’re
going to do, renegotiate your promise vs. dropping the ball.
Here’s my problem. . .
Real People, Real Choices
First Flavor had just completed product development of its marketing services product, the Peel ‘n
Taste® marketing system. This product provides marketers, for the first time,
with the ability to use the sense of taste to market a consumer product. The
company’s technology allows it to infuse virtually any taste onto an edible
flavor strip (à la popular breath strips). The consumer can “sample” the
product—whether it’s fruit juice, toothpaste,
frozen desserts, or any beverage—simply by
Things to remember
plucking a strip from a dispenser in a grocery
First Flavor’s new technology
aisle or peeling one off a magazine ad. The
allows it to duplicate virtually
strip completely dissolves on the tongue and
any taste in a plastic strip that
provides a realistic approximation of what
dissolves on a person’s
the item will taste like. This new taste samtongue. This provided several
pling vehicle had the potential to be for the
potential benefits, including
food and beverage industry what Scratch ‘n
novelty/entertainment, risk
Sniff® was for the fragrance industry; it’s a
reduction (people could taste
way to sample a sensory attribute without
a product before they bought
actually purchasing the product! Better yet, it
it), and a new way to promote
could be included in any printed marketing
a product in-store or even in
print media (by attaching a
flavor strip to a mailing or a
As First Flavor started to see its first
magazine ad). Jay has to
sales of Peel ‘n Taste® from consumer produnderstand which
uct manufacturers (Arm & Hammer toothapplication(s) hold the most
paste, Old Orchard fruit juice, Welch’s grape
promise and also to decide
juice, Sunny Delight Elations®, etc.), the
on a strategic focus so that
startup became aware of other uses for its
First Flavor can identify
capability to produce great-tasting edible
marketing objectives based
film strips. Several different applications preon what the company hopes
sented themselves. Here are a few examples:
to accomplish in the short
ISBN 1-256-36591-2
term and then farther into the

As entrepreneurs, Jay and his partners wanted to jump on all of these
new opportunities. But they were concerned with losing focus while in the
middle of launching First Flavor’s first product, Peel ‘n Taste®. Also, they didn’t
think they would be able to secure intellectual property protection (such as
patents) for any of these three new product ideas. In addition, as an undercapitalized company that Jay was primarily funding, First Flavor was also concerned with the cost of launching these other products. The decision
regarding whether to diversify into new product categories was a major
strategic crossroads for the young company.
Jay considered his options 1 2 3

When people saw samples of edible R
films that tasted like Krispy Kreme
glazed donuts, buttered popcorn, and Y
butter pecan ice cream, some of them asked, “How many calories do
they have?” and “Can I use these when I’m on a diet?” Jay realized
that providing dieters with no-calorie edible film strips in indulgent flavors could be a new market for First Flavor given the size of the $30 billion diet industry.
• Several people during those early years also contacted the company as
a result of online searches to provide convalescing relatives with flavor
strips. The intended recipients of the flavor strips had a medical condition that prevented them from swallowing (dysphagia) and thus they
could not taste food. Quite literally, one of their five senses was not being activated. First Flavor’s strips could improve the quality of life for
many people and possibly generate a new revenue stream.
• One of First Flavor’s clients had a line of herbal-flavored waters it
wanted to sell on QVC. Because the water weighed so much compared
to the cost, it was as expensive to ship the flavored water as it was to
buy it. The owner of the water company asked Jay if First Flavor could
create “flavor strips” that contained the flavoring used in these herbal
flavored waters. The consumer could simply drop a flavoring strip in a
bottle of water to create the herbal flavor at home.

Investigate all three new business ideas and start product
development even as Peel ‘n Taste was still a fledgling
product trying to gain market acceptance. This strategy
could create new revenue opportunities and give the company
G Option other options to fall back upon if Peel ‘n Taste took off slower
First Flavor hoped. And, since the new applications couldn’t
H be patented,than
the extra lead time would give First Flavor a first-to-market adT vantage. On the other hand, these other initiatives would drain the comlimited financial resources. And management needed to stay focused
, pany’s
on maximizing the market’s acceptance of Peel ‘n Taste at this crucial point
in its young life-cycle.
Continue to focus on introducing Peel ‘n Taste® into the
market until it gained market acceptance. This product
would provide the company with the cash flow to invest
in new product launches at a later point. A single approach
will keep management and staff focused on the company’s iniOption
tial mission. It will reduce costs and thus the initial investment
required to bring the company to profitability. Still, it’s not clear how long this
process will take. There may be missed market opportunities if another company picks up on one or more of these ideas and brings them to market first.
Pick just one or two of these new products and investigate
the opportunity of launching it with limited resources and
management attention while Peel ‘n Taste® remained the
company’s primary focus. This more selective approach would
minimize the cost of launching a new product. Management’s
time and attention would be diverted, but not on such a significant basis. And this strategy would force First Flavor to look at each of the opportunities more critically because it would have to pick only one to push
forward. Still, there was the problem of the “road not taken.” Two of the ideas
would not get implemented in the near future, and First Flavor faced a possible loss of first-mover advantage in the marketplace for these new products.
Now, put yourself in Jay’s shoes: Which option would you pick, and why?
You Choose
Which Option would you choose, and why?
No 2.
No 3.
See what option Jay chose on page 61
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
Chapter 2
Objective Outline
1. Explain business planning and its
three levels. (pp. 40–46)
PICTURE (p. 40)
2. Describe the steps in strategic
planning. (pp. 46–53)
3. Describe the steps in marketing
planning. (pp. 53–61)
SETTING (p. 53)
The great success Jay Minkoff and First Flavor have had with its innovative
product line didn’t just happen by luck. A great deal of planning went into
creating value with the innovative First Flavor Peel ‘n Taste® Marketing System. The company’s ongoing business planning at all levels of the firm—
strategic, marketing, and operational—drives the market success of its
patent-pending technology; this process replicates the flavor of a product in
quick-dissolving edible film strips that prospective customers can sample by
tasting individually packaged pouches. Implementation of these plans led to
First Flavor’s ability to pitch easy integration of Peel ‘n Taste® into a variety
of clients’ promotional marketing programs in order to drive consumer
trial—a powerful service. In this chapter, you will experience the power of effective business planning and lay the groundwork for your own capability to
do the kind of planning that has led to Jay’s success at First Flavor. We even
W foldout guide later in this chapter that shows you step-byinclude a handy
step how toR
build a plan and where to find the information throughout the
book to be able to do it.
For JayIMinkoff at First Flavor, or any marketer engaged in planning for
the future ofG
the business, the knowledge you gain from going through a formal planning process is worth its weight in gold! You see, without market
planning as an ongoing activity in a business, there’s no real way to know
T the firm to go, how it will get there, or even if it is on the right
where you want
or wrong track
, right now. There’s nothing like a clear map when you’re lost
in the wilderness.
As part of the planning process, firms like First Flavor must come to
S own resources and capabilities—or internal environment—as
grips with their
one part of H
the Situation Analysis section of their Marketing Plan. Jay has to
have a clear understanding of First Flavor’s mission and marketing objectives
before he can develop plans to invest in future products and markets for comR
pany growth.
Explain business
planning and 3
three levels. B
(pp. 40–46)
Jay Minkoff at First Flavor understands that planning is
everything—well, almost. Part of Jay’s role as a planner
is to define his offering’s distinctive identity and purpose. Careful planning enables a firm to speak in a clear
voice in the marketplace so that customers understand
what the firm is and what it has to offer that competitors don’t—especially
as it decides how to create value for customers, clients, partners, and society
at large.
We think this process is so important that we’re launching into our exploration of marketing by starting with a discussion about what planners do
and the questions they (both First Flavor and marketers in general) need to
ask to be sure they keep their companies and products on course. The foldout
marketing planning “road map” we mentioned earlier is useful to help you
make your way through the book, keeping the big picture in mind no matter
which chapter you’re reading. In many ways, developing great business
planning is like taking a great digital photo. The metaphor works because
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
Check out chapter 2 Study Map on page 62
Business Planning:
Compose the Big Picture
success in photography is built around capturing the right information in the lens of your
camera, positioning the image correctly, and snapping the picture you’ll need to set things
in motion. A business plan is a lot like that.
Whether a firm is a well-established company like General Mills (which we’ll feature in
a later chapter) or a relatively new firm like First Flavor, planning for the future is a key to
prosperity. Sure, it’s true that a firm can succeed even if it makes some mistakes in planning,
and there are times when even the best planning cannot anticipate the future accurately. It’s
also true that some seat-of-the-pants businesses are successful. But without good planning
for the future, firms will be less successful than they could be. In the worst-case scenario, a
lack of planning can be fatal for both large and small businesses. So, like a Boy Scout, it’s
always better to be prepared.
Business planning is an ongoing process of decision making that guides the firm both
in the short term and the long term. Planning identifies and builds on a firm’s strengths, and
Wbusiness environment.
it helps managers at all levels make informed decisions in a changing
Planning means that an organization develops objectives before it takes
R action. In large firms
like Microsoft and Honda, which operate in many markets, planning is a complex process
involving many people from different areas of the company’s operations.
At a very small
business like Mac’s Diner in your home town, however, planning
G is quite different. Mac
himself is chief cook, occasional dishwasher, and the sole company planner. With more enH
trepreneurial firms the planning process falls somewhere in between, depending on the size
of the firm and the complexity of its operations.
In this chapter, we’ll look at the different steps in an organization’s
, planning. First, we’ll
see how managers develop a business plan that includes the decisions that guide the entire
organization or its business units. Then we’ll examine the entire strategic planning process
S implementation of a
and the stages in that process that lead to the development and
marketing plan—a document that describes the marketing environment,
outlines the marH
keting objectives and strategies, and identifies how the company will implement and conE
trol the strategies embedded in the plan. But first, let’s consider one of the most important
overarching issues in planning—ethics.
ISBN 1-256-36591-2
Ethics Is Up Front in Marketing Planning
business planning
An ongoing process of making decisions that
guides the firm both in the short term and for
the long term.
business plan
A plan that includes the decisions that guide the
entire organization.
marketing plan
A document that describes the marketing
environment, outlines the marketing objectives
and strategy, and identifies who will be
responsible for carrying out each part of the
marketing strategy.
It’s hard to overemphasize the importance of ethical marketing decisions. Businesses touch
many stakeholders, and they need to do what’s best for all of them where possible. On a
more selfish level, unethical decisions usually come back to bite you later. The consequences
of low ethical standards become very visible when you consider a7
slew of highly publicized
corporate scandals that have made news headlines since the turn9of the century. These include the fall of Enron and WorldCom due to unsavory financial and management practices,
Martha Stewart’s stint as a jailbird for using insider information in stock trading, the subB other financial giants,
prime mortgage meltdown that contributed to the woes of AIG and
and Bernie Madoff’s infamous Ponzi scheme that robbed thousands
U of their retirement nest
eggs. And these are only a few especially high-profile examples!
The fallout from these and other cases raises the issue of how damaging unethical practices can be to society at large. The business press is filled with articles about accountability,
corporate accounting practices, and government regulation as the public and corporate
worlds rethink what we define as ethical behavior. When major companies defraud the public, everyone suffers. Thousands of people lose their jobs, and in many cases the pensions
they counted on to support them in retirement vanish overnight.
Other stakeholders are punished as well, including stockholders who lose their investments, and consumers who end up paying for worthless merchandise or services. Even confidence in our political system suffers, as was the case with the 2007–2008 government
bailouts of major financial institutions while some of these same firms continued to pay
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
Ripped from the Headlines
Ethical/Sustainable Decisions in the Real World
In late 2009 Anheuser-Busch rolled out a new marketing campaign that features Bud Light beer cans emblazoned with local college and university team
colors. Not surprisingly, many college administrators contend that the promotions near college campuses will contribute to underage and binge drinking
and give the impression—because of the color connection—that the colleges
are endorsing the brew and associated behaviors.The “Fan Cans” renewed the
debate over the role of beer makers in encouraging college drinking.
Bud Light’s school-colors campaign, also
called “Team Pride” in the marketing materials,
Find out what other students aims to use “color schemes to connect with fans
taking this course would
of legal drinking age in fun ways in select mardo and why on www
kets across a variety of sports,” says Carol Clark,
Anheuser-Busch’s vice president of corporate so.com
cial responsibility. She also says that the program
As a college
administrator, would
you ask Budweiser to
pull its Bud Light Fan
Can promotion if it
involved your
business ethics
Rules of conduct for an organization.
code of ethics
Written standards of behavior to which
everyone in the organization must subscribe.
is voluntary and that roughly half the brand’s wholesalers have chosen to participate.A number of schools asked Anheuser-Busch to drop the campaign near
their campuses.
“Show your true colors with Bud Light,” the company says, according to copies
of internal marketing materials obtained by colleges. “This year, only Bud Light is
delivering superior drinkability in 12-ounce cans that were made for game day.”
Ms. Clark says Anheuser-Busch values its relationships with college administrators
and has “a longstanding commitment to promoting responsible drinking.” Since
1982, the company and its U.S. wholesalers have spent more than $750 million to
fight alcohol abuse, including underage drinking and drunk driving, she says.
The National Institute on Alcohol Abuse and Alcoholism says 45 percent of
college students report engaging in binge drinking, which is defined as five or
Rmore alcoholic drinks in one sitting. Nearly 600,000 students between the
ages of 18 and 24 are injured annually because of alcohol, it says, and 97,000
I are the victims of alcohol-related sexual assault. What would you do?
managers healthy performance
T bonuses. All taxpayers will wind up paying for some of
these ethical transgressions for decades to come.1
Codes of Business Ethics
Ethics are rules of conduct—how
most people in a culture judge what is right and what is
wrong. Business ethics areH
basic values that guide a firm’s behavior. These values govern all
sorts of marketing planning decisions that managers make, including what goes into their
products, where they source raw materials, how they advertise, and what type of pricing
they establish. DevelopingR
sound business ethics is a major step toward creating a strong relationship with customersR
and others in the marketplace.
With many rules about doing business—written and unwritten—floating around, how
do marketers know what upper management, investors, and customers expect of them? In
order to answer this question definitively, many firms develop their own code of ethics—
written standards of behavior
2 to which everyone in the organization must subscribe—as part
of the planning process. These documents eliminate confusion about what the firm consid7
ers to be ethically acceptable behavior by its people, and also set standards for how the orga9
nization interacts with its stakeholders.
For example, the Dow Chemical Company’s Code of
Business Conduct, available
languages through its Web site at www.dow.com,
is based on Dow’s stated corporate values of integrity and respect for people. The code deals
with the following issues: diversity; the environment; financial integrity; accurate company
Uobligations to customers, competitors, and regulators; computer
records; conflicts of interest;
systems and telecommunications security; safeguarding important information; interactions
with the public; and corporate social responsibility.2
To help marketers adhere to ethical behavior in their endeavors, the American Marketing Association (AMA) developed the code of ethics that we reproduce in Table 2.1. Note
that this code spells out norms and expectations relating to all aspects of the marketing
process, from pricing to marketing research.
We all know what planning is—we plan a vacation or a great Saturday night party. Some
of us even plan how we’re going to study and get our assignments completed without
stressing out at the last minute. When businesses plan, the process is more complex. As
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
The Three Levels of Business Planning
Table 2.1
Statement of Ethics
Ethical Norms and Values for Marketers
The American Marketing Association commits itself to promoting the highest standard of
professional ethical norms and values for its members (practitioners, academics, and
students). Norms are established standards of conduct that are expected and maintained by
society and/or professional organizations. Values represent the collective conception of
what communities find desirable, important and morally proper. Values also serve as the
criteria for evaluating our own personal actions and the actions of others. As marketers, we
recognize that we not only serve our organizations but also act as stewards of society in
creating, facilitating, and executing the transactions that are part of the greater economy. In
this role, marketers are expected to embrace the highest professional ethical norms and the
ethical values implied by our responsibility toward multiple stakeholders (e.g., customers,
employees, investors, peers, channel members, regulators, and the host community).
As Marketers, we must:
1. Do no harm. This means consciously avoiding harmful actionsG
or omissions by
embodying high ethical standards and adhering to all applicable laws and regulations
in the choices we make.
2. Foster trust in the marketing system. This means striving forTgood faith and fair
dealing so as to contribute toward the efficacy of the exchange process as well as
avoiding deception in product design, pricing, communication, and delivery of
3. Embrace ethical values. This means building relationships and enhancing consumer
confidence in the integrity of marketing by affirming these core values: honesty,
responsibility, fairness, respect, transparency, and citizenship. H
Honesty—to be forthright in dealings with customers and stakeholders.
R To this end,
we will:
Offer products of value that do what we claim in our communications.
• Strive to be truthful in all situations and at all times.

• Stand behind our products if they fail to deliver their claimed benefits.
• Honor our explicit and implicit commitments and promises.
Responsibility—to accept the consequences of our marketing decisions and strategies.
To this end, we will:
Acknowledge the social obligations to stakeholders that come with increased
marketing and economic power.
Recognize our special commitments to vulnerable market segments
U such as children,
• Strive to serve the needs of customers.
• Avoid using coercion with all stakeholders.

ISBN 1-256-36591-2
seniors, the economically impoverished, market illiterates, and others who may be
substantially disadvantaged.
• Consider environmental stewardship in our decision making.
Fairness—to balance justly the needs of the buyer with the interests of the seller. To this
end, we will:
• Represent products in a clear way in selling, advertising, and other forms of communication;
this includes the avoidance of false, misleading, and deceptive promotion.
• Reject manipulations and sales tactics that harm customer trust.
• Refuse to engage in price fixing, predatory pricing, price gouging, or “bait-and-switch” tactics.
• Avoid knowing participation in conflicts of interest.
• Seek to protect the private information of customers, employees, and partners.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
Table 2.1
Statement of Ethics (continued)
Ethical Norms and Values for Marketers
Respect—to acknowledge the basic human dignity of all stakeholders. To this end, we will:
• Value individual differences and avoid stereotyping customers or depicting demographic
groups (e.g., gender, race, sexual orientation) in a negative or dehumanizing way.
• Listen to the needs of customers and make all reasonable efforts to monitor and
improve their satisfaction on an ongoing basis.
• Make every effort to understand and respectfully treat buyers, suppliers, intermediaries,
and distributors from all cultures.
• Acknowledge the contributions of others, such as consultants, employees, and
coworkers, to marketing endeavors.
• Treat everyone, including our competitors, as we would wish to be treated.
Transparency—to create a spirit of openness in marketing operations. To this end, we will:
• Accept constructive criticism
from customers and other stakeholders.
• Explain and take appropriate
G action regarding significant product or service risks,
component substitutions or other foreseeable eventualities that could affect customers
or their perception of H
the purchase decision.
• Disclose list prices and T
terms of financing as well as available price deals and adjustments.
Citizenship—to fulfill the economic, legal, philanthropic, and societal responsibilities that
serve stakeholders. To this end, we will:
• Strive to communicate clearly with all constituencies.
• Strive to protect the ecological environment in the execution of marketing campaigns.
• Give back to the community
S through volunteerism and charitable donations.
• Contribute to the overall betterment of marketing and its reputation.
• Urge supply chain members to ensure that trade is fair for all participants, including
E countries.
producers in developing
We expect AMA members to be courageous and proactive in leading and/or aiding their
organizations in the fulfillment of the explicit and implicit promises made to those
stakeholders. We recognize
Y that every industry sector and marketing sub-discipline (e.g.,
marketing research, e-commerce, Internet selling, direct marketing, and advertising) has its
own specific ethical issues that require policies and commentary. An array of such codes
can be accessed through 2
links on the AMA Web site. Consistent with the principle of
subsidiarity (solving issues at the level where the expertise resides), we encourage all such
groups to develop and/or7refine their industry and discipline-specific codes of ethics to
supplement these guiding9ethical norms and values.
American Marketing Association.
The American Marketing Association helps its members adhere to ethical standards of business through
its Code of Ethics.
Source: Copyright ©
Figure 2.1 shows, planning occurs at three levels: strategic, functional, and operational. The top level is “big picture” stuff, while the bottom level specifies the “nuts-andbolts” actions the firm will need to take to achieve these lofty goals.
• Strategic planning is the managerial decision process that matches the firm’s resources
(such as its financial assets and workforce) and capabilities (the things it is able to do
well because of its expertise and experience) to its market opportunities for long-term
growth. In a strategic plan, top management—usually the chief executive officer (CEO),
president, and other top executives—define the firm’s purpose and specify what the
firm hopes to achieve over the next five years or so. For example, a firm’s strategic plan
may set an objective to increase total revenues by 20 percent in the next five years.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
strategic planning
A managerial decision process that matches an
organization’s resources and capabilities to its
market opportunities for long-term growth and
Figure 2.1
Snapshot | Levels of Planning
During planning, an organization determines its objectives and then develops courses of action to accomplish them. In larger firms,
planning takes place at the strategic, functional, and operational levels.
Functional Planning
Strategic Planning
(In Marketing Department,
called Marketing Planning)
Operational Planning
Planning done by top-level
corporate management
Planning done by top
functional-level management
such as the firm’s chief
marketing officer (CMO)
Planning done by
supervisory managers
1. Define the mission
2. Evaluate the internal and
external environment
3. Set organizational or
SBU objectives
4. Establish the business
portfolio (if applicable)
5. Develop growth
1. Perform a situation
2. Set marketing objectives
3. Develop marketing
4. Implement marketing
5. Monitor and control
marketing strategies
1. Develop action plans
to implement the
marketing plan
2. Use marketing
metrics to monitor
how the plan is
Source: Copyright © American Marketing Association
Large firms, such as the Walt Disney Company, have a number of self-contained
divisions we call strategic business units (SBUs)—individual units that represent different areas of business within a firm that are unique enough toS
each have their own mission, business objectives, resources, managers, and competitors. Disney’s SBUs include
its theme park, television network, and cruise line divisions, and strategic planning ocEplanning for the whole
curs both at the overall corporate level (Disney headquarters
corporation) and at the individual business unit level (at the theme
R park, television network, and cruise line level). We’ll discuss these two levels later in the chapter.
strategic business units (SBUs)
Individual units within the firm that operate like
separate businesses, with each having its own
mission, business objectives, resources,
managers, and competitors.
• The next level of planning is functional planning. This level gets its name because the
various functional areas of the firm, such as marketing, finance, and human resources,
are involved. Vice presidents or functional directors usually do this. We refer to what
the functional planning marketers do as marketing planning.2The person in charge of
such planning may have the title of Director of Marketing, Vice President of Marketing,
or Chief Marketing Officer. Marketers like Jay Minkoff at First Flavor might set an ob9 introducing three new
jective to gain 40 percent of a particular market by successfully
products during the coming year. This objective would be part
3 of a marketing plan.
Marketing planning typically includes both a broad 3–5-year plan to support the firm’s
strategic plan and a detailed annual plan for the coming year.
functional planning
A decision process that concentrates on
developing detailed plans for strategies and
tactics for the short term, supporting an
organization’s long-term strategic plan.
ISBN 1-256-36591-2
• Still farther down the planning ladder are the managers who are responsible for planning at a third level we call operational planning. In marketing, these include people
such as sales managers, marketing communications managers, brand managers, and
marketing research managers. This level of planning focuses on the day-to-day execution of the functional plans and includes detailed annual, semiannual, or quarterly
plans. Operational plans might show exactly how many units of a product a salesperson needs to sell per month, or how many television commercials the firm will place on
certain networks during a season. At the operational planning level, First Flavor, for example, may develop plans for a marketing campaign to promote the product by creating buzz via social networking outlets.
operational planning
A decision process that focuses on developing
detailed plans for day-to-day activities that carry
out an organization’s functional plans.
Of course, marketing managers don’t just sit in their offices dreaming up plans without
any concern for the rest of the organization. Even though we’ve described each layer separately,
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
all business planning is an integrated activity. This means that the organization’s strategic, functional, and operational plans must work together for the benefit of the whole, always within
the context of the organization’s mission and objectives. So planners at all levels must consider
good principles of accounting, the value of the company to its stockholders, and the requirements for staffing and human resource management—that is, they must keep the “big picture”
in mind even as they plan for their corner of the organization’s world.
In the next sections, we’ll further explore planning at each of the three levels that we’ve
just introduced.
Strategic Planning:
Frame the Picture
large firms realize it’s risky to put all their eggs in one basket and rely
on only
Rone product, so they have become multiproduct companies with
strategic planning.
self-contained divisions organized around products or brands. You know
(pp. 46–53)
that firms such as Disney operate several distinctly different businesses
G theme parks, television networks, and cruise line, for example).
In firms with multipleHSBUs, the first step in strategic planning is for top management
to establish a mission for the entire corporation. Top managers then evaluate the internal
and external environments of the business and set corporate-level objectives that guide decision making within each, individual SBU. In small firms that are not large enough to have
separate SBUs, strategic planning simply takes place at the overall firm level. Whether or
not a firm has SBUs, the process of strategic planning is basically the same. Let’s look at the
planning steps in a bit more detail, guided by
Figure 2.2.
Describe the steps in
The Mission Statement
First Flavor’s mission statement is “to
facilitate the success of its clients through
the innovative technology of its Peel ‘n
Taste® Marketing System, creating
opportunities for firms to build brands by
effectively sampling and promoting their
products to consumers.”
Step 1: Define the
E Mission
Theoretically, top management’s
R first step in the strategic planning stage is to answer questions such as:
• What business are we in?
• What customers should we serve?
• How should we develop
2 the firm’s capabilities and focus its efforts?
Process | Steps in
Strategic Planning
Figure 2.2
The strategic planning process includes
a series of steps that result in the
development of growth strategies.
Step 1: Define the Mission
Step 2: Evaluate the Internal
U & External
Step 3: Set Organizational or
SBU Objectives
Step 5: Develop Growth Strategies
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
Step 4: Establish the Business Portfolio
In many firms, the answers to questions such as these become the lead
items in the organization’s strategic plan. The answers become part of a
mission statement—a formal document that describes the organization’s
overall purpose and what it hopes to achieve in terms of its customers, products, and resources. For example, the mission of Mothers Against Drunk
Driving (MADD) is “to stop drunk driving, support the victims of this violent crime, and prevent underage drinking.”3 The ideal mission statement is
not too broad, too narrow, or too shortsighted. A mission that is too broad
will not provide adequate focus for the organization. It doesn’t do much
good to claim, “We are in the business of making high-quality products” or
“Our business is keeping customers happy” as it is hard to find a firm that
doesn’t make these claims. It’s also important to remember that the need for
a clear mission statement applies to virtually any type of organization, even
W society
those like Mothers Against Drunk Driving, whose objective is to serve
rather than to sell goods or services.
The second step in strategic planning is to assess the firm’s internal and
external environments. We refer to this process as a situationTanalysis,
environmental analysis, or sometimes a business review. The analysis
ISBN 1-256-36591-2
Step 2: Evaluate the Internal
and External Environment
A mission statement that is too narrow may inhibit managers’ ability to
cludes a discussion of the firm’s internal environment, which can identify
visualize possible growth opportunities. If, for example, a firm sees itself
a firm’s strengths and weaknesses, as well as the external environment in in terms of its product only, consumer trends or technology can make that
S and product obsolete—and the firm is left with no future. Years ago, Xerox
which the firm does business so the firm can identify opportunities
was the undisputed king of the photocopier—to the point where many
By internal environment we mean all the controllable elements inside a people used the verb “xeroxing” to refer to many forms of print duplication
firm that influence how well the firm operates. Internal strengths may lie in (just as today in online search we all “google”). But in the digital age, if
R firms Xerox had continued to define its mission in terms of just producing
the firm’s technologies. What is the firm able to do well that other
copy machines instead of providing a broad array of “document
would find difficult to duplicate? What patents does it hold? A firm’s
R phys- solutions,” the shift to electronic documents would have left them in the
ical facilities can be an important strength or weakness, as can its level of dust the way the Model T Ford replaced the horse and buggy. Take a look
financial stability, its relationships with suppliers, its corporate reputation, at how today’s Xerox defines itself:
its ability to produce consistently high-quality products, and its ownership
Xerox is the world’s leading document management technology and services enterprise. A nearly $18 billion company, with steadily increasing
of strong brands in the marketplace.
revenue and strong profits even throughout the recent recession, Xerox
Internal strengths and weaknesses often reside in the firm’s employees—
provides the document industry’s broadest portfolio of offerings. Digital
the firm’s human and intellectual capital. What skills do the employees have?
systems include color and black-and-white printing and publishing sys9 they feel
tems, digital presses and “book factories,” multifunction devices, laser
What kind of training have they had? Are they loyal to the firm? Do
and solid ink network printers, copiers and fax machines. Xerox’s services
a sense of ownership? Has the firm been able to attract top researchers
3 and
expertise is unmatched and includes helping businesses develop online
good decision makers?
document archives, analyzing how employees can most efficiently share
documents and knowledge in the office, operating in-house print shops
The external environment consists of elements outside the firm that may
or mailrooms, and building Web-based processes for personalizing
affect it either positively or negatively. The external environment for today’s
direct mail, invoices, brochures, and more. Xerox also offers associated
businesses is global, so managers/marketers must consider elements such as
software, support, and supplies such as toner, paper, and ink.4
the economy, competition, technology, law, ethics, and sociocultural trends.
Unlike elements of the internal environment that management can controls to a large degree,
the firm can’t directly control these external factors, so management must respond to them
mission statement
through its planning process.
A formal statement in an organization’s
Chapter 3 develops in depth the various elements of the external environment in which
strategic plan that describes the overall purpose
marketing takes place, within the context of today’s global enterprise. For now, it is imporof the organization and what it intends to
tant for you to be aware that opportunities and threats can come from any part of the exterachieve in terms of its customers, products, and
nal environment. On the one hand, trends or currently unserved customer needs may
provide opportunities for growth. On the other hand, if changing customer needs or buying
situation analysis
patterns mean customers are turning away from a firm’s products, it’s a signal of possible
An assessment of a firm’s internal and external
danger or threats down the road. Even very successful firms have to change to keep up with
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
© 2010 Xerox Corporation. All rights reserved
The Internal Environment
Jay needs to have a realistic sense of the
goals his employees can achieve. This will
help to determine First Flavor’s strategic
direction as it takes its flavor strips to
external environmental pressures. First Flavor’s business, like that of most marketingrelated suppliers, is greatly impacted by the marketing budgets of its clients, which in turn
are driven by economic conditions and ultimately consumer demand.
What is the outcome of an analysis of a firm’s internal and external environments?
Managers often synthesize their findings from a situation analysis into a format we call a
SWOT analysis. This document summarizes the ideas from the situation analysis. It allows
managers to focus clearly on the meaningful strengths (S) and weaknesses (W) in the firm’s
internal environment and opportunities (O) and threats (T) coming from outside the firm
(the external environment). A SWOT analysis 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. Table 2.2 shows an example of a partial SWOT analysis for McDonald’s.
After they construct a mission statement, top management translates it into organizational or
I are a direct outgrowth of the mission statement and broadly
SBU objectives. These goals
identify what the firm hopes
G to accomplish within the general time frame of the firm’s longrange business plan. If the firm is big enough to have separate SBUs, each unit will have its
own objectives relevant to its operations.
T need to be specific, measurable (so firms can tell whether
To be effective, objectives
they’ve met them or not),,attainable, and sustainable. Attainability is especially important—
Step 3: Set Organizational or SBU Objectives
internal environment
The controllable elements inside an
organization, including its people, its facilities,
and how it does things that influence the
operations of the organization.
© B Christopher/Alamy
external environment
The uncontrollable elements outside an
organization that may affect its performance
either positively or negatively.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
firms that establish “pie in the sky” objectives they can’t realistically obtain can create frustration for their employees (who work hard but get no satisfaction of accomplishment) and
S such as vendors and shareholders who are affected when the
SWOT analysis
other stakeholders in the firm,
An analysis of an organization’s strengths and
firm doesn’t meet its objectives.
That a firm’s objectives are sustainable is also critical—
weaknesses and the opportunities and threats in
an objective for only a very short term? This often
its external environment.
happens when a firm underestimates the likelihood a competitor will come to market with
a better offering. WithoutR
some assurance that an objective is sustainable, the financial reR turn on an investment likely will not be positive.
Objectives may relate to revenue and sales, profitabilY ity, the
firm’s standing in the market, return on investment,
productivity, product development, customer satisfaction,
social responsibility, and many other attributes. To ensure
measurability, marketers increasingly try to state objec7
tives in numerical terms. For example, a firm might have
as an objective a 10 percent increase in profitability. It could
reach this objective by increasing productivity, by reducing
costs, or by selling off an unprofitable division. Or it might
B meet this 10 percent objective by developing new products,
U investing in new technologies, or entering a new market.
For many years, one of Procter & Gamble (P&G)’s objectives was to have a number-one brand in every product
category in which it competed. This objective was specific
and clearly it was attainable, since P&G could boast of
market leaders such as Crest in the toothpaste category,
Folgers in coffee, Pampers in diapers, and Head & Shoulders
Southwest Airlines has always been very focused on hiring and developing employees who
in shampoo. It also was measurable in terms of the share
reflect the “Southwest Spirit” to customers. Anyone who has flown on Southwest can attest to the
of market of P&G’s products versus those competitors
fact that the atmosphere is lively and fun, and flight attendants are likely to do most any crazy
sold. However, in the long run this objective is very diffistunt—bowling in the aisle, or serenading the captain and first officer (and passengers) with a
cult to sustain because of competitive activity and everfavorite tune. One of our favorites is a guy who does galloping horse hooves and neighing
changing consumer tastes. Sure enough, over time some
sounds during takeoff and landing to promote a fun atmosphere. For Southwest, a real
P&G brands continued to hold a respectable market share,
strength—one that’s hard for the competition to crack—lies in this employee spirit.
Table 2.2
Example of a Partial SWOT Analysis for McDonald’s
World-class research and product development.
Global franchise system that is second to none.
Strong cash position.
Consistency of product and service quality across the globe.
Growing presence in the coffee/bistro market.
Until recently, slow to react to changing consumer trends and preferences (organics, low-fat options).
Changing consumer tastes and dining preferences signals opportunity to continue to remake locations into more
upscale bistro formats to compete directly with Starbucks in coffee.
Reconnecting with Baby Boomers and Gen X while cultivating Gen Y and Millennials provides opportunity for
product innovation and more flexibility by market area.
High cost of gasoline means more people are seeking
W dining experiences closer to home.
Greatly increased sales and profits during the recession due to high perceived value—opportunity to keep those
customers postrecession.
The image of McDonald’s is inextricably linked Ito the image of America globally.
obesity and unhealthy eating, especially among children and teens,
Strongly negative media coverage surroundingG
has tarnished the brand.
Burger King has emerged as an innovator, and they are currently aggressively reimaging their stores. The rival chain has
been hugely successful with offbeat advertising strategies
both off-line and online that appeal to younger consumers.
but they dropped from the number-one position. Should P&G withdraw from a product catS
egory simply because its brand is not number one? Management realized the answer to this
H leadership into one
question was clearly “no,” and the objective morphed from category
focused on profitability for each brand.
For companies with several different SBUs, strategic planning includes making decisions
about how to best allocate resources across these businesses to ensure growth for the total or-
business portfolio
The group of different products or brands owned
by an organization and characterized by
different income-generating and growth
ganization. Each SBU has its own focus within the firm’s overall strategic plan, and each has
its own target market and strategies for reaching its objectives. Just2
like an independent business, each SBU is a separate profit center within the larger corporation—that is, each SBU
within the firm is responsible for its own costs, revenues, and profits. These items can be acportfolio analysis
counted for separately for each SBU.
A management tool for evaluating a firm’s
Just as we call the collection of different stocks an investor owns
3 a portfolio, the range of business mix and assessing the potential of an
different businesses that a large firm operates is its business portfolio. These different busiorganization’s strategic business units.
nesses usually represent very different product lines,
each of which operates with its own budget and management. Having a diversified business portfolio reduces the firm’s dependence on one product line or one
group of customers. For example, if consumers don’t
travel as much and Disney has a bad year in theme park
attendance and cruises, its managers hope that the sales
will be made up by stay-at-homers who watch Disney’s
television networks and DVDs.
Portfolio analysis is a tool management uses to assess the potential of a firm’s business portfolio. It helps
management decide which of its current SBUs should
receive more—or less—of the firm’s resources, and
which of its SBUs are most consistent with the firm’s Jeep’s product development strategy offers vehicles for different needs.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
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Courtesy of Chrysler LLC
ISBN 1-256-36591-2
Step 4: Establish the Business Portfolio
Portfolio Analysis
First Flavor needs to evaluate the potential
of new markets in addition to its initial focus
on selling flavor strips to manufacturers for
use in in-store product sampling to determine
whether it should expand its portfolio to
other applications.
BCG growth–market share matrix
A portfolio analysis model developed by the
Boston Consulting Group that assesses the
potential of successful products to generate cash
that a firm can then use to invest in new products.
SBUs with products that have a dominant
market share in high-growth markets.
cash cows
SBUs with a dominant market share in a lowgrowth-potential market.
Figure 2.3
• Stars are SBUs with products
that have a dominant market share in high-growth marI
kets. Because the SBU has a dominant share of the market, stars generate large revG
enues, but they also require large amounts of funding to keep up with production and
promotion demands. H
Because the market has a large growth potential, managers design
strategies to maximizeTmarket share in the face of increasing competition. The firm aims
at getting the largest share of loyal customers so that the SBU will generate profits that
it can reallocate to other parts of the company. For example, in recent years, Disney has
viewed its television operations as a star, so it invested heavily in such franchise players
as Hannah Montana and
S Narnia. Likewise, at Disney/Pixar Toy Story 3 and the re-release
of Toy Story 1 and 2 in 3D continued the sensational success of that business unit as a conH
tributor to overall Disney profits.
• Cash cows have a dominant market share in a low-growth- potential market. Because
there’s not much opportunity
for new companies, competitors don’t often enter the
market. At the same time,
R the SBU is well established and enjoys a high market share
that the firm can sustain with minimal funding. Firms usually milk cash cows of their
profits to fund the growth of other SBUs. Of course, if the firm’s objective is to increase
Snapshot | BCG Matrix
The Boston Consulting Group’s (BCG)
growth–market share matrix is one way a
firm can examine its portfolio of different
products or SBUs. By categorizing SBUs as
stars, cash cows, question marks, or dogs,
the matrix helps managers make good
decisions about how the firm should grow.
Source: Product Portfolio Matrix, © 1970, The
Boston Consulting Group
overall mission. There are a host of portfolio models available for use. To illustrate how one
works, let’s examine the especially popular model the Boston Consulting Group (BCG) developed: the BCG growth–market share matrix.
The BCG model focuses on determining the potential of a firm’s existing successful
SBUs to generate cash that the firm can then use to invest in other businesses. The BCG matrix in
Figure 2.3 shows that the vertical axis represents the attractiveness of the market:
the market growth rate. Even though the figure shows “high” and “low” as measurements,
marketers might ask whether the total market for the SBU’s products is growing at a rate of
10, 50, 100, or 200 percent annually.
The horizontal axis in
Figure 2.3 shows the SBU’s current strength in the market
through its relative market share. Here, marketers might ask whether the SBU’s share is 5,
25, or perhaps 75 percent of the current market. Combining the two axes creates four quadrants representing four different types of SBUs. Each quadrant of the BCG grid uses a symbol to designate business W
units that fall within a certain range for market growth rate and
market share. Let’s take a R
closer look at each cell in the grid:
Market Growth Rate
Question Marks: SBUs
whose products have a
low market share
in high-growth markets
Cash Cows: SBUs
whose products have a
dominant market share
in a low-growth
Dogs: SBUs
nobody wants
Relative Market Share
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
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ISBN 1-256-36591-2
Stars: SBUs whose
products have a
9 market share
in high-growth markets
revenues, having too many cash cows with little or no growth potential
can become a liability. For Disney, its theme parks unit fits into the cash
cow category in that sales have been basically steady or only slightly
increasing/decreasing for an extended period of time.
• Question marks—sometimes called “problem children”— are SBUs with
low market shares in fast-growth markets. When a business unit is a
question mark, it suggests that the firm has failed to compete successfully. Perhaps the SBU’s products offer fewer benefits than competing
products. Or maybe its prices are too high, its distributors are ineffective, or its advertising is too weak. The firm could pump more money
into marketing the product and hope that market share will improve.
But the firm may find itself “throwing good money after bad” if it gains
nothing but a negative cash flow and disappointment. For Disney, its
brick and mortar Disney Stores are in the question-mark category, as
R has
their performance compared to the overall specialty retail market
lagged in recent years. The online version of the Disney Store,
I in contrast, performs much better.
• Dogs have a small share of a slow-growth market. They are businesses
that offer specialized products in limited markets that are not likely to
T dogs to
grow quickly. When possible, large firms may sell off their
smaller firms that may be able to nurture them—or they may
, take the
SBU’s products off the market. Disney, being a savvy strategic planner,
apparently identified its Miramax film studio as a long-term dog (to
Sthat they
Pluto and Goofy: no pun intended), as they announced in 2009
plan to shut it down.
The recent acquisition of Marvel Comics by Disney most likely will add
to the entertainment company’s stable of stars.
Like Disney, Jay Minkoff at First Flavor could use the BCGE
matrix to
evaluate his product lines in order to make important decisions about where
to invest for future growth. He would look across First Flavor’s various offerings to assess the market growth rate and relative market share, determineR
the degree to which each
is a cash generator or a cash user, and decide whether to invest further
Y in these or other business opportunities.
Although the BCG matrix can help managers decide which SBUs they should invest in for
growth, it doesn’t tell them much about how to make that growth happen. Should the
3 new variations of the
growth of an SBU come from finding new customers, from developing
product, or from some other growth strategy? Part of the strategicB
planning at the SBU level
entails evaluating growth strategies.
Marketers use the product-market growth matrix that
Figure 2.4 shows to ana-
ISBN 1-256-36591-2
Step 5: Develop Growth Strategies
question marks
SBUs with low market shares in fast-growth
SBUs with a small share of a slow-growth
market. They are businesses that offer
specialized products in limited markets that are
not likely to grow quickly.
lyze different growth strategies. The vertical axis in
Figure 2.4 represents opportunities for growth, either in existing markets or in new markets. The horizontal axis
considers whether the firm would be better off putting its resources into existing products or if it should acquire new products. The matrix provides four fundamental marketing strategies: market penetration, market development, product development, and
• Market penetration strategies seek to increase sales of existing products to existing
markets such as current users, nonusers, and users of competing brands within a market. For example, both Quaker Oatmeal and General Mills’ Cheerios (also an oats product) have been aggressively advertising a new use for their products as products that
can help lower total cholesterol and LDL (“bad”) cholesterol, and that can help keep
market penetration strategies
Growth strategies designed to increase sales of
existing products to current customers,
nonusers, and users of competitive brands in
served markets.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
Figure 2.4
Snapshot | Product-Market Growth Matrix
Marketers use the product-market growth matrix to analyze
different growth strategies.
Existing Markets
Market Emphasis
Product Emphasis
Existing Products
New Products
• Seek to increase
sales of existing
products to
existing markets
• Create growth
by selling new
products in
existing markets
arteries clean and healthy. General Mills advertises that a clinical
study showed that eating two half-cup servings daily of Cheerios
cereal for six weeks reduced bad cholesterol about 4 percent (when
eaten as part of a diet low in saturated fat and cholesterol). Quaker’s
Web site reads as much like a health provider’s as it does a food
manufacturer’s—main tabs include “Oats Do More,” which provides an impressive bank of information extolling the virtues of the
product on health, fitness, and even environmental issues, and “For
Healthcare Professionals,” which offers that industry a portal into
the “science of oats.” Both Cheerios’ and Quaker Oats’ approaches
aim to increase usage based on important new product claims.6
New Markets
• Market development strategies introduce existing products to
new markets. This strategy can mean expanding into a new geW
ographic area, or it may mean reaching new customer segments
R an existing geographic market. For example, the wildly
• Introduce existing • Emphasize both
Wii home gaming system by Nintendo has also become
products to new
new products and
with older consumers because its active functionality
new markets to
during the game provides an opportunity for a light and fun
achieve growth
workout. Wii exercise sessions have become especially
in retirement homes where the activity takes on a
strong social and community-building flavor. And because the technology part of
market development strategies
Wii is so straightforward and user-friendly, even the most technophobic of seniors
Growth strategies that introduce existing
are not reluctant to join in the Wii events.7
products to new markets.
product development strategies
Growth strategies that focus on selling new
products in existing markets.
• Diversification strategies emphasize both new products and new markets to achieve
R of sluggish performance in the fast-food market, McDonald’s
growth. After a long period
has reenergized itself Y
over the past several years through successful strategic planning.
For example, planners at McDonald’s in the late 1990s decided that the company was
starting to max out in the hamburger business. The company tried to attract different
2 new lines of business to diversify its portfolio of food offercustomers when it offered
ings. Among those are Donatos Pizza, Boston Market, and
a controlling interest in Chipotle Mexican Grills. Interest9
ingly, now that their core hamburger and fries business
has been back on track for several years, McDonald’s has
B divested these other brands and is shifting from a diversistrategy back to more of a product development
U fication
strategy around the core McDonald’s brand.8
For Jay Minkoff at First Flavor, the product-market
growth matrix can be a very important way to analyze
where his future opportunities lie. Consider these options
for future growth: Is he primarily focused on growing totally new customers for the First Flavor Peel ‘n Taste® Marketing System (market development)? Or will he eventually
also be moving current users into new product lines as the
company creates them (product development)? And to
what degree does the First Flavor Peel ‘n Taste® Marketing
System afford him the chance to grow current customers in
DIRECTV® hopes to penetrate new markets. This ad is from Ecuador.
usage of existing product lines (market penetration)? Jay has
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
© La Facultdad
diversification strategies
Growth strategies that emphasize both new
products and new markets.
• Product developmentS
strategies create growth by selling new products in existing markets. Product development
H may mean extending the firm’s product line by developing
new variations of the item, or it may mean altering or improving the product to provide
enhanced performance.
Describe the steps in
Marketing Planning:
Select the Camera
Until now, we have focused on fairly broad strategic
plans. This big-picture perspective, however, does not
G we set.
provide details about how to reach the objectives
Strategic plans “talk the talk” but put the pressure on lower-level functionalH
area managers, such as the marketing manager, production manager, and fiT
nance manager, to “walk the walk” by developing the functional plans—the
, this is a
nuts and bolts—to achieve organizational and SBU objectives. Since
marketing course and marketing book, our focus at the functional planning Lee jeans diversifies its product portfolio.
level is naturally on developing marketing plans, which is the next step in
planning as we showed back in
Figure 2.1.
H us that sucThe Four Ps of the marketing mix we discussed in Chapter 1 remind
cessful firms must have viable products at prices consumers are willing
E to pay, a way
to promote the products to the right consumers, and the means to get the products to
Figure 2.5
Process | Steps in
the place where consumers want to buy them.
R by the marketer. Marketing Planning
Making this happen requires a tremendous amount of planning
The steps in this marketing planning process are quite similar to theY
steps at the strate- The steps in marketing planning are quite similar to
those in strategic planning, with the important
gic planning level. An important distinction between strategic planning and marketdistinction that marketing professionals focus much
ing planning, however, is that marketing professionals focus much of their planning of their planning efforts on issues related to the
efforts on issues related to the marketing mix—the firm’s product,2its price, promo- marketing mix—the firms product, price,
tional approach, and distribution (place) methods. In the end, 7
as you learned in promotional approach, and distribution (place)
Chapter 1, marketing focuses on creating, communicating, delivering, and exchang- methods. Marketing planning facilitates creating,
communicating, delivering, and exchanging offerings
ing offerings that have value, and marketing planning plays a central role in making
3 2.5 as a guide that have value.
these critical components of marketing successful. Let’s use
to look at the steps involved in the marketing planning process in B
a bit more detail.
Step 1: Perform a Situation Analysis
marketing planning.
(pp. 53–61)
ISBN 1-256-36591-2
Step 1: Perform a Situation Analysis
The first step to develop a marketing plan is to conduct an analysis of the marketing
environment. To do this, managers build on the company’s SWOT analysis; they
search out information about the environment that specifically affects the marketing
plan. For example, for Jay Minkoff at First Flavor to develop an effective marketing
communication program, it’s not enough for him to have a general understanding of
the target market. He needs to know specifically what media potential customers like
to connect with, what messages about the product are most likely to make them buy,
and how they prefer to communicate with his firm about new services and customer
care issues. Jay also must know how his competitors are marketing to customers so
that he can plan effectively.
Step 2: Set Marketing Objectives
Step 3: Develop Marketing Strategies
Step 4: Implement and Control the
Marketing Plan
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
Lee Jeans, a division of VF Jeanswear Limited Partnership © 2010
to weigh these options for future product-market investment against the potential returns of each over both the short and long term.
To review what we’ve learned so far, strategic planning includes developing the mission statement, assessing the internal and external environment (resulting in a SWOT analysis), setting objectives, establishing the
business portfolio, and developing growth strategies. In the next section,
we’ll look at marketers’ functional plans as we examine the process of marketing planning.
Step 2: Set Marketing Objectives
Once marketing managers have a thorough understanding of the marketing environment,
the next step is to develop specific marketing objectives. How do marketing objectives differ from corporate objectives? Generally, marketing objectives are more specific to the
firm’s brands, sizes, product features, and other marketing mix–related elements. Think of
the connection between business objectives and marketing objectives this way: Business
objectives guide the entire firm’s operations, while marketing objectives state what the
marketing function must accomplish if the firm is ultimately to achieve these overall business objectives. So for Jay Minkoff at First Flavor, setting marketing objectives means deciding what he wants to accomplish in terms of First Flavor’s marketing mix–related
elements: product development, pricing strategies, or specific marketing communication
In the next stage of the marketing planning process, marketing managers develop their acI is, they make decisions about what activities they must actual marketing strategies—that
complish to achieve the G
marketing objectives. Usually this means they decide which
markets to target and actually develop the marketing mix strategies (product, price, promoH
tion, and place [supply chain]) to support how they want to position the product in the marT must figure out how they want consumers to think of their
ket. At this stage, marketers
product compared to competing
Step 3: Develop Marketing Strategies
Select a Target Market
S 1, the target market is the market segment(s) a firm selects beAs we mentioned in Chapter
cause it believes its offerings
H are most likely to win those customers. The firm assesses the
potential demand—the number of consumers it believes are willing and able to pay for its
products—and decides if it is able to create a sustainable competitive advantage in theR
marketplace among target consumers.
Develop Marketing Mix Strategies
Marketing mix decisions identify how marketing will accomplish its objectives in the firm’s target markets by using product, price, promotion, and
place. To make
2 the point, we’ll compare several different airlines’ approaches.
California’s almond growers have a marketing strategy to increase
consumption by promoting the nut’s health benefits.
• The pricing strategy determines how much a firm charges for a product.
Of course, that price has to be one that customers are willing to pay. If
not, all the other marketing efforts are futile. In addition to setting prices
for the final consumer, pricing strategies usually establish prices the
company will charge to wholesalers and retailers. A firm may base its
pricing strategies on costs, demand, or the prices of competing prod-
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
© Almond Board, 2007
7 the product is the most fundamental part of the marketing
• Because
9 simply can’t make a profit without something to sell—
carefully developed product strategies are essential to achieving market3
ing objectives.
Product strategies include decisions such as product
Bpackaging, branding, support services (e.g., maintenance), if
there will be variations of the product, and what product features will
provide the unique benefits targeted customers want. For example,
product planners for JetBlue Airways decided to include in-seat video
games and television as a key product feature during the flight. Their
planes get you from point A to point B just as fast (or slow) as the other
airlines—that is, the basic product is the same—but the flight seems
shorter because there is more to do while you’re in the air.
• A promotional strategy is how marketers communicate a product’s value proposition to the target market. Marketers use promotion strategies to develop
the product’s message and the mix of advertising, sales promotion, public relations and publicity, direct marketing, and personal selling that will deliver
the message. Many firms use all these elements to communicate their message
to consumers. American Airlines strives to portray an image of quality and
luxury for the serious business traveler. To do so, it combines television ads
focused on that target with sales promotion in the form of the AAdvantage™
loyalty program, personal selling to companies and conventions to promote
Rdirect marketusage of American as the “official carrier” for the group events,
ing via mail and e-mail providing information to loyal users, and
I (its managers
hope) positive publicity through word-of-mouth about the airline’s good serG
vice and dependability. A panel of wine judges Global Traveler Magazine created
recently named American as the airline with the “Best WineH
Selections.” An
official wine consultant, a “sommieler” who is a classically trained
T winemaker
and viticulturist, personally selects the wines American offers. Cheers!9
© General Mills, Inc
ucts. Southwest Airlines uses a pricing strategy to successfully target customers who could not previously afford air travel. Southwest does not compete solely on price; however, consumers do perceive Southwest as a
low-priced airline compared with others, and the airline reinforces this theme
regularly in its ads targeting travelers on a tight budget.
Nature Valley’s target market includes people who look for other
benefits in addition to taste when they choose a snack.
• Distribution strategies outline how, when, and where the firm will make the product available to targeted customers (the place component). When they develop a
distribution strategy, marketers must decide whether to sell the product
directly to the final
customer or to sell through retailers and wholesalers. And theHchoice of which retailers
should be involved depends on the product, pricing, and promotion decisions. For examE
ple, if the firm produces a luxury good, it may wish to avoid being seen on the shelves of
R the airline industry
discount stores for fear that it will cheapen the brand image. Recently
has made major changes in its distribution strategy. For many
R years, most customers
bought their airline tickets through travel agencies or at the ticket counters of the major airY
lines. Today, most airlines actually penalize customers who don’t opt for online purchase of
“ticketless” flight reservations by charging them a “ticketing fee” of $5 or $10. This strategy
has molded the behavior of many consumers to go online 24/7 to
2save money as well as experience the convenience of personally scheduling the flight they want.
Step 4: Implement and Control the Marketing
9 Plan
Once the plan is developed, it’s time to get to work and make it 3
succeed. In practice, marketers spend much of their time managing the various elements involved in implementing
the marketing plan. Once Jay Minkoff and his team at First Flavor understand the marketing
U and get their ideas
environment, determine the most appropriate objectives and strategies,
ISBN 1-256-36591-2
organized and on paper in the formal plan, the rubber really hits the road. Like all firms,
how First Flavor implements its plan is what will make or break it in the marketplace.
During the implementation phase, marketers must have some means to determine to
what degree they actually meet their stated marketing objectives. Often called control, this
formal process of monitoring progress entails three steps:
1. Measure actual performance.
2. Compare this performance to the established marketing objectives or strategies.
A process that entails measuring actual
performance, comparing this performance to the
established marketing objectives, and then
making adjustments to the strategies or
objectives on the basis of this analysis.
3. Make adjustments to the objectives or strategies on the basis of this analysis. This issue
of making adjustments brings up one of the most important aspects of successful marketing planning: Marketing plans aren’t written in stone, and marketers must be flexible enough to make such changes when changes are warranted.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
return on marketing investment
Quantifying just how an investment in
marketing has an impact on the firm’s success,
financially and otherwise.
For effective control, Jay Minkoff at First Flavor has to establish appropriate metrics related to his marketing objectives and then track those metrics to know how successful his
marketing strategy is, as well as whether he needs to make changes in the strategy along the
way. For example, what happens if First Flavor sets an objective for the first quarter of a year
to increase the number of manufacturers that use its Peel ‘n Taste® flavor sampling platform
to promote their products by 20 percent, but after the first quarter sales are only even with
those of last year? The control process means that Jay would have to look carefully at why the
company isn’t meeting its objectives. Is it due to internal factors, external factors, or a combination of both? Depending on the cause, Jay would then have to either adjust the marketing plan’s strategies (such as to implement product alterations, modify the price, or increase
or change advertising). Alternatively, he could decide to adjust the marketing objective so
that it is more realistic and attainable. This scenario illustrates the important point we made
earlier in our discussion of strategic planning: Objectives must be specific and measurable,
but also attainable (and sustainable)
in the sense that if an objective is not realistic, it can become very demotivating for
involved in the marketing plan.
For First Flavor and all firms, effective control requires appropriate marketing metrics,
which, as we discussed inIChapter 1, are concrete measures of various aspects of marketing
performance. You will note
Gthroughout the book a strong emphasis on metrics. But marketing control and the measurement of marketing performance must be tempered with an eye
toward sustainability. Recall from Chapter 1 that sustainability has to do with firms doing
well by doing good—thatT
is, paying attention to important issues such as ethics, the environment, and social responsibility
as well as the bottom line. In marketing planning, we cer,
tainly don’t want to drive firms toward strategies that compromise sustainability by
focusing only on controlling relatively short-term aspects of performance.
Sto quantify just how an investment in marketing has an impact
Today’s CEOs are keen
on the firm’s success, financially
H and otherwise, over the long haul. You’ve heard of the term
return on investment (ROI)—think of this overall notion as return on marketing investment
(ROMI). In fact it’s critical to consider marketing as an investment rather than an expense—this distinction drives firms to useRmarketing more strategically to enhance the business. For many
firms nowadays, ROMI isR
the metric du jour to analyze how the marketing function contributes to the bottom line.
So, what exactly is ROMI? It is the revenue or profit margin (both are widely used) generated by investment in a specific marketing campaign or program divided by the cost of
that program (expenditure)
2 at a given risk level (the risk level is determined by management’s analysis of the particular program). Again, the key word is investment—that is, in the
planning process, thinking of marketing as an investment rather than an expense keeps
9 marketing dollars to achieve specific goals.10
managers focused on using
But is ROMI always appropriate
or sufficient to judge marketing’s effectiveness and ef3
ficiency? Here are six common objections to relying exclusively on ROMI for measuring
marketing success:
1. In a company’s accounting statements, marketing expenditures tend to appear as a cost,
not an investment. This perpetuates the “marketing is an expense” mentality in the firm.
2. ROMI requires the profit to be divided by expenditure, yet all other bottom-line perfor-
mance measures (like the ones you learned in your finance course) consider profit or
cash flow after deducting expenditures.
penditure in question had never taken place. Few marketers have those figures.
4. ROMI has become a fashionable term for marketing productivity in general, yet
much evidence exists that firms interpret how to calculate ROMI quite differently. When
executives discuss ROMI with different calculations of it in mind, only confusion can
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
3. Calculating ROMI requires knowing what would have happened if the marketing ex-
5. ROMI, by nature, ignores the effect of marketing assets of the firm (for example, its
brands) and tends to lead managers toward a more short-term decision perspective.
That is, it typically considers only short-term incremental profits and expenditures
without looking at longer-term effects or any change in brand equity.
6. And speaking of short-term versus long-term decisions, ROMI (like a number of other
metrics focused on snapshot information—in this case, a particular marketing campaign) often can lead to actions by management to shore up short-term performance to
the detriment of a firm’s sustainability commitment. Ethics in marketing should not be
an oxymoron—but often unethical behavior is driven by the demand for quick, shortterm marketing results.
For an organization to use ROMI properly it must: (a) identify the most appropriate and
consistent measure to apply; (b) combine review of ROMI with other critical marketing metrics (one example is marketing payback—how quickly marketingW
costs are recovered); and
(c) fully consider the potential long-term impact of the actions ROMI drives (that is, their
Fortunately for the marketer, there are many other potential marketing
metrics beyond
ROMI that measure specific aspects of marketing performance. Just
Gto give you a sense of a
few of them, Table 2.3 provides some examples of metrics that managers apply across an arH
ray of marketing planning situations, including all the marketing mix variables.
Table 2.3
Examples of Marketing Metrics
• Cost of a prospect
• Value of a prospect
• ROI of a campaign
• Value of telesales
• Conversion rates of users of competitor products
• Long-term value of a customer
• Customer commitment to relationship/partnership
• Referral rate
• Response rates to direct marketing
• Perceived product quality
• Perceived service quality
• Customer loyalty/retention
• Customer turnover
• Customer/segment profitability
• Customer mind set/customer orientation
• Customer satisfaction
• Company/product reputation
• Customer word-of-mouth (buzz) activity
• Salesperson’s self-ratings of effectiveness
• Timeliness and accuracy of competitive intelligence
ISBN 1-256-36591-2
• Usage rates of technology in customer initiatives
• Reach and frequency of advertising
• Recognition and recall of message
• Sales calls per day/week/month
• Order fulfillment efficiency/stock-outs
• Timeliness of sales promotion support
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
Action Plans
action plans
Individual support plans included in a marketing
plan that provide the guidance for
implementation and control of the various
marketing strategies within the plan. Action
plans are sometimes referred to as “marketing
How does the implementation and control step actually manifest itself within a marketing
plan? One very convenient way is through the inclusion of a series of action plans that support the various marketing objectives and strategies within the plan. We sometimes refer to
action plans as “marketing programs.” The best way to use action plans is to include a separate action plan for each important element involved in implementing the marketing plan.
Table 2.4 provides a template for an action plan.
For example, let’s consider the use of action plans in the context of supporting Jay’s objective at First Flavor to increase the number of manufacturers that use its Peel ‘n Taste® flavor sampling platform to promote their products by 20 percent in the first quarter of the
year. To accomplish this, the marketing plan would likely include a variety of strategies related to how he will use the marketing mix elements to reach this objective. Important questions will include:
How will the productI be positioned in relation to this market?
What will be his product
G and branding strategies?
What will be his pricing
H strategy for this group?
How will the productTbe promoted to them?
What is the best distribution
strategy to access the market?
• What are the important needs and wants of this target market?

Any one of these important strategic issues may require several action plans to implement.
Action plans also help managers when they need to assign responsibilities, time lines,
budgets, and measurement and control processes for marketing planning. Notice in Table 2.4
Hthe final items an action plan documents. Sometimes when we
that these four elements are
view a marketing plan in E
total, it can seem daunting and nearly impossible to actually implement. Like most big projects, implementation of a marketing plan is best done one step
at a time, paying attention to maximizing the quality of executing that step. In practice, what
happens is that marketersR
combine the input from these last four elements of each action
plan to form the overall implementation
and control portion of the marketing plan. Let’s exY
amine each element a bit further.
Table 2.4 | Template for an Action Plan
Title of Action Plan
Give the action plan a relevant name.
Purpose of Action Plan
What do you hope to accomplish by the action plan—that is, what specific marketing objective and
strategy within the marketing plan B
does it support?
Description of Action Plan
Be succinct, but still thorough, in explaining
the action plan. What are the steps involved? This is the
core of the action plan. It describes what must be done in order to accomplish the intended purpose
of the action plan.
What person(s) or organizational unit(s) are responsible for carrying out the action plan? What
external parties are needed to make it happen? Most importantly, who specifically has final
“ownership” of the action plan—that is, who is accountable for it?
Time Line for the
Action Plan
Provide a specific timetable of events leading to the completion of the plan. If different people are
responsible for different elements of the time line, provide that information.
Budget for the Action Plan
How much will implementation of the action plan cost? This may be direct costs only, or may also
include indirect costs, depending on the situation. The sum of all the individual action plan budget
items will ultimately be aggregated by category to create the overall budget for the marketing plan.
Measurement and Control
of the Action Plan
Indicate the appropriate metrics, how and when they will be measured, and who will measure
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
ISBN 1-256-36591-2
Responsibility for the
Action Plan
The Cutting Edge
results in the top right-hand corner. Copy the URL of this link.Then you can add
a subscription button in Google Reader (you can easily sign up if you don’t
have an account). Paste in the URL of the Twitter RSS feed, then click “Show
Details” in the top right corner, where you will see a blank graph. After a few
days this will show some fantastic data on what day of the week, month, and
time people were talking about “hotels in Dublin.” From this information you
can determine when will be the very best time to send the e-mail.12 Faith and
Begorrah! That’s how you lure visitors to your little piece of Ireland.
Social Networks and Marketing Planning
Many companies have begun to incorporate social networks into their larger
marketing plans and strategies—typically either to promote brands or to be on
the lookout for complaints about services and products. But there are other
ways marketers can mine the wealth of data that are available on social media platforms like Facebook or Yelp! Let’s say, for example, that a marketing
manager of a hotel wants to send a targeted e-mail to people looking for “hotels in Dublin.” A search pulls up all the people on Twitter talking about and
looking for hotels in Dublin. Twitter very nicely gives you an RSS feed of these
Assign Responsibility
A marketing plan can’t be implemented without people. And not everybody
who will be inR
volved in implementing a marketing plan is a marketer. The truth is, marketing plans touch
I resources department
most areas of an organization. Upper management and the human
will need to deploy the necessary employees to accomplish the
G plan’s objectives. You
learned in Chapter 1 that marketing isn’t the responsibility only of a marketing department.
Nowhere is that idea more apparent than in marketing plan implementation. Sales, producT technology—the list
tion, quality control, shipping, customer service, finance, information
goes on—all will likely have a part in making the plan successful.,
Create a Time Line
Notice that each action plan requires a time line to accomplish theSvarious tasks it requires.
This is essential to include in the overall marketing plan. Most marketing
plans portray the
timing of tasks in flowchart form so that it is easy to visualize when the pieces of the plan
will come together. Marketers often use Gantt charts or PERT charts, popular in operations
R of tools that a general
management, to portray a plan’s time line. These are the same types
contractor might use to map out the different elements of buildingR
a house from the ground
up. Ultimately, managers develop budgets and the financial management of the marketing
plan around the time line so they know when cash outlays are required.
Set a Budget
ISBN 1-256-36591-2
Each action plan carries a budget item, assuming there are costs involved in carrying out the
plan. Forecasting the needed expenditures related to a marketing plan is difficult, but one
9 estimates for expenway to improve accuracy in the budgeting process overall is to ensure
ditures for the individual action plans that are as accurate as3possible. At the overall
marketing plan level, managers create a master budget and track it throughout the market
planning process. They report variances from the budget to the parties responsible for each
U a weekly or monthly
budget item. For example, a firm’s vice president of sales might receive
report that shows each sales area’s performance against its budget allocation. The VP would
note patterns of budget overage and contact affected sales managers to determine what, if
any, action they need to take to get the budget back on track. The same approach would be
repeated across all the different functional areas of the firm on which the budget has an impact. In such a manner, the budget itself becomes a critical element of control.
Decide on Measurements and Controls
Earlier we described the concept of control as a formal process of monitoring progress to measure actual performance, compare the performance to the established marketing objectives or
strategies, and make adjustments to the objectives or strategies on the basis of this analysis.
The metric(s) a marketer uses to monitor and control individual action plans ultimately forms
the overall control process for the marketing plan. It is an unfortunate fact that many marketers
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. Solomon, Greg W. Marshall, and Elnora W. Stuart. Published by Prentice Hall.
Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc.
do not consistently do a good job of measurement and control, which, of course, compromises
their marketing planning. And remember that selection of good metrics needs to take into account short-term objectives balanced against the firm’s focus on long-term sustainability.
Make Your Life Easier!
Use the Marketing Planning Template
Ultimately, the planning process we’ve described in this section is documented in a formal,
written marketing plan. You’ll find a tear-out template for a marketing plan in the foldout
located in this chapter. The template will come in handy as you make your way through the
book, as each chapter will give you information you can use to “fill in the blanks” of a marketing plan. You will note that the template is cross-referenced with the questions you must
answer in each section of the plan and that it also provides you with a general road map of
the topics covered in each W
chapter that need to flow into building the marketing plan. By the
time you’re done, we hope that all these pieces will come together and you’ll understand
how real marketers make real choices.
As we noted earlier, a Imarketing plan should provide the best possible guide for the firm
to successfully market its products.
In large firms, top management often requires such a writG
ten plan because putting the ideas on paper encourages marketing managers to formulate conH In small entrepreneurial firms, a well-thought-out marketing
crete objectives and strategies.
plan is often the key to attracting
T investors who will help turn the firm’s dreams into reality.
Operational Planning: Day-to-Day
Execution of Marketing Plans
operational plans
Plans that focus on the day-to-day execution of
the marketing plan. Operational plans include
detailed directions for the specific activities to
be carried out, who will be responsible for them,
and time lines for accomplishing the tasks.
Marketing: Real People, Real Choices, Seventh Edition, by Michael R. S…
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