Jay Minkoff, a Decision Maker at First Flavor Inc, marketing homework help

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***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?

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Chapter |2 Strategic Market Planning: Take the Big Picture + Real People Profiles Jay Minkoff Profile W R I G H T , A Decision Maker at First Flavor, Inc. S H E R R Y 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 daughters. 2 7 9 3 B U Info 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. 38 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 media. 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 future. • 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 • ® ® ® S H E R 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. • W Investigate all three new business ideas and start product R development even as Peel ‘n Taste was still a fledgling product trying to gain market acceptance. This strategy I 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 2 7 9 3 B U 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 Option 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? 1. Yes No 2. Yes No 3. Yes No See what option Jay chose on page 61 39 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. 40 PART ONE | MAKE MARKETING VALUE DECISIONS Chapter 2 Objective Outline 1. Explain business planning and its three levels. (pp. 40–46) BUSINESS PLANNING: COMPOSE THE BIG PICTURE (p. 40) 2. Describe the steps in strategic planning. (pp. 46–53) STRATEGIC PLANNING: FRAME THE PICTURE (p. 46) 3. Describe the steps in marketing planning. (pp. 53–61) MARKETING PLANNING: SELECT THE CAMERA 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 H 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 E before he can develop plans to invest in future products and markets for comR pany growth. R Y 1 2 7 OBJECTIVE 9 Explain business planning and 3 its three levels. B (pp. 40–46) U 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 CHAPTER 2 | STRATEGIC MARKET PLANNING: TAKE 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 I 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 T 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 R overarching issues in planning—ethics. ISBN 1-256-36591-2 Ethics Is Up Front in Marketing Planning R Y 41 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 2 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, 3 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. 42 PART ONE | MAKE MARKETING VALUE DECISIONS 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 ETHICS CHECK: 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, .mypearsonmarketinglab 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 institution? Yes No 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 W 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? G H 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 S 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 E 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 Y 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 in 20 different languages through its Web site at www.dow.com, 3 is based on Dow’s stated corporate values of integrity and respect for people. The code deals B 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 CHAPTER 2 Table 2.1 | | STRATEGIC MARKET PLANNING: TAKE THE BIG PICTURE Statement of Ethics Ethical Norms and Values for Marketers PREAMBLE 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, W employees, investors, peers, channel members, regulators, and the host community). R I 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 H 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 ETHICAL NORMS distribution. 3. Embrace ethical values. This means building relationships and enhancing consumer S confidence in the integrity of marketing by affirming these core values: honesty, responsibility, fairness, respect, transparency, and citizenship. H ETHICAL VALUES E Honesty—to be forthright in dealings with customers and stakeholders. R To this end, we will: R Y 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. 2 Responsibility—to accept the consequences of our marketing decisions and strategies. 7 To this end, we will: 9 3 Acknowledge the social obligations to stakeholders that come with increased B 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. (continued) 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. 43 44 PART ONE | MAKE MARKETING VALUE DECISIONS 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. W Transparency—to create a spirit of openness in marketing operations. To this end, we will: R I • 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. H • Urge supply chain members to ensure that trade is fair for all participants, including E countries. producers in developing IMPLEMENTATION R We expect AMA members to be courageous and proactive in leading and/or aiding their R 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. 3 B American Marketing Association. U 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 survival. CHAPTER 2 Figure 2.1 | STRATEGIC MARKET PLANNING: TAKE THE BIG PICTURE 45 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 strategies 1. Perform a situation analysis 2. Set marketing objectives 3. Develop marketing strategies 4. Implement marketing strategies 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 working W R I G H Source: Copyright © American Marketing Association T , 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 H 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. R • The next level of planning is functional planning. This level gets its name because the Y 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, 7 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 B 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 U • 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. 46 PART ONE | MAKE MARKETING VALUE DECISIONS 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. 2 Strategic Planning: Frame the Picture ManyW 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 I (pp. 46–53) that firms such as Disney operate several distinctly different businesses G theme parks, television networks, and cruise line, for example). (Disney’s 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 T 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 S planning steps in a bit more detail, guided by Figure 2.2. OBJECTIVE Describe the steps in JAY MINKOFF APPLYING 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.” H Step 1: Define the E Mission Theoretically, top management’s R first step in the strategic planning stage is to answer questions such as: R • What business are we in? Y • 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. 7 9 Step 1: Define the Mission 3 B Step 2: Evaluate the Internal U & External Environment 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 | STRATEGIC MARKET PLANNING: TAKE THE BIG PICTURE 47 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. R I G H 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 in, 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 threats. H By internal environment we mean all the controllable elements inside a people used the verb “xeroxing” to refer to many forms of print duplication E 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 Y 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. 2 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 7 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 B 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 U 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 resources. 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 environments. 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 CHAPTER 2 48 PART ONE | MAKE MARKETING VALUE DECISIONS JAY MINKOFF APPLYING 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 market. 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. W R 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 H 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— H weaknesses and the opportunities and threats in what’s the point of investing in attaining an objective for only a very short term? This often its external environment. E 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 2 measurability, marketers increasingly try to state objec7 tives in numerical terms. For example, a firm might have 9 as an objective a 10 percent increase in profitability. It could reach this objective by increasing productivity, by reducing 3 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. CHAPTER 2 Table 2.2 | | STRATEGIC MARKET PLANNING: TAKE THE BIG PICTURE 49 Example of a Partial SWOT Analysis for McDonald’s Strengths 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. Weaknesses Until recently, slow to react to changing consumer trends and preferences (organics, low-fat options). Opportunities 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 R customers postrecession. Threats 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. H 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. T , 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 5 focused on profitability for each brand. E R R For companies with several different SBUs, strategic planning includes making decisions Y 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 capabilities. 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 7 within the firm is responsible for its own costs, revenues, and profits. These items can be acportfolio analysis 9 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. B nesses usually represent very different product lines, U 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. Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc. Courtesy of Chrysler LLC ISBN 1-256-36591-2 Step 4: Establish the Business Portfolio PART ONE | MAKE MARKETING VALUE DECISIONS JAY MINKOFF 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. stars 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. E • Cash cows have a dominant market share in a low-growth- potential market. Because R 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 Y profits to fund the growth of other SBUs. Of course, if the firm’s objective is to increase 2 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. Low Source: Product Portfolio Matrix, © 1970, The Boston Consulting Group High APPLYING 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 50 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 market Dogs: SBUs nobody wants High Low 3 B U 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. Copyright © 2012, 2009, 2008, 2006, 2003 Pearson Education, Inc. ISBN 1-256-36591-2 Stars: SBUs whose 7 products have a dominant 9 market share in high-growth markets CHAPTER 2 | STRATEGIC MARKET PLANNING: TAKE THE BIG PICTURE 51 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. COLUMBIA PICTURES/MARVEL ENTERTAINMENT/Newscom • 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 W 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. G • Dogs have a small share of a slow-growth market. They are businesses H 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. H 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 R 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. 2 7 Although the BCG matrix can help managers decide which SBUs they should invest in for 9 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. U 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 markets. dogs 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 diversification: • 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. 52 PART ONE Figure 2.4 | MAKE MARKETING VALUE DECISIONS 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 Market penetration strategy Product development strategy • Seek to increase sales of existing products to existing markets • Create growth by selling new products in existing markets Market development strategy Diversification strategy 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 within • Introduce existing • Emphasize both popular Wii home gaming system by Nintendo has also become I products to new new products and popular with older consumers because its active functionality markets new markets to G during the game provides an opportunity for a light and fun achieve growth H physical workout. Wii exercise sessions have become especially popular in retirement homes where the activity takes on a T 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. R • 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 7 a controlling interest in Chipotle Mexican Grills. Interest9 ingly, now that their core hamburger and fries business 3 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 E enhanced performance. CHAPTER 2 | STRATEGIC MARKET PLANNING: TAKE THE BIG PICTURE 53 3 OBJECTIVE Describe the steps in Marketing Planning: Select the Camera W Setting R Until now, we have focused on fairly broad strategic I 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 S 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 R 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 firm's 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, 9 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 Figure 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) U 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. 54 PART ONE | MAKE MARKETING VALUE DECISIONS 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 approaches. W R 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 products. , 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 E products—and decides if it is able to create a sustainable competitive advantage in theR marketplace among target consumers. R Y 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 mix—firms 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 design, Bpackaging, branding, support services (e.g., maintenance), if there will be variations of the product, and what product features will U 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. CHAPTER 2 | STRATEGIC MARKET PLANNING: TAKE THE BIG PICTURE 55 • 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™ W 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 S 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. 7 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 B 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. control 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. 56 PART ONE | MAKE MARKETING VALUE DECISIONS return on marketing investment (ROMI) 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, W but also attainable (and sustainable) in the sense that if an objective is not realistic, it can become very demotivating for everyone involved in the marketing plan. R 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 H 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 E (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. Y 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 7 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 B marketing success: U 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 result. 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- CHAPTER 2 | STRATEGIC MARKET PLANNING: TAKE THE BIG PICTURE 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 R sustainability).11 I 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. T , 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 S H E R R Y • 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 2 7 9 3 B U • 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. 57 58 PART ONE | MAKE MARKETING VALUE DECISIONS 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 programs.” 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: W R 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, S 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 R 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. 2 7 Table 2.4 | Template for an Action Plan 9 Title of Action Plan Give the action plan a relevant name. 3 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 U 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 them. 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 CHAPTER 2 | STRATEGIC MARKET PLANNING: TAKE THE BIG PICTURE 59 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 W 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. H 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 H timing of tasks in flowchart form so that it is easy to visualize when the pieces of the plan E 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 Y plan around the time line so they know when cash outlays are required. Set a Budget 2 ISBN 1-256-36591-2 Each action plan carries a budget item, assuming there are costs involved in carrying out the 7 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 B 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. 60 PART ONE | MAKE MARKETING VALUE DECISIONS 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 R 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 S 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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First Flavor, Inc Offerings
Jay Minkoff the co-founder and President of First Flavor, Inc, built the company to offer
brand marketers the ability to provide a sample of their products to the consumer promote its
flavor in promotions and print media through the Peel ‘n Taste marketing system (Solomon,
Marshall, & Stuart 2012). Using the Peel ‘n Taste technology, the flavor of a product is
replicated into dissolvable edible film strips that are distributed in packaged pouches to
prospective customers. The films are easily integrated into any promotional marketing methods
as a way of launching product trial.
The first technology of its kind, it appeals to firms looking to implement trailblazing
marketing campaigns that will resonate with consumers by providing a flavored experience of
the brand (Solomon, Marshall, & Stuart 2012). The film strips are flavored to taste like the food
or beverage on offer. They are packed in tamper-evident foil pouches that are easy to open and
safe to try. Peel ‘n Taste helps marketers t...


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