CHAPTER 1: Marketing and the Concept of Planning and Strategy 157
Marketing and the Concept of Planning and Strategy
A. Concept of Planning
1. Definition of Planning (TM 1-1)
2. Importance of Business Planning (TM 1-2)
B. Concept of Strategy
1. Definition of Strategy (TM 1-3)
2. Importance of Strategy (TM 1-4)
C. Concepts of Strategic Planning
1. Definition of Strategic Plan (TM 1-5)
2. Steps to Make Strategic Planning Effective (TM 1-6)
3. Scorecard for Measuring Strategic Planning Effort (TM 1-7)
4. Strategic Planning: Emerging Perspectives (TM 1-8)
1. What is an SBU? (TM 1-9)
2. Creation of SBUs (TM 1-0)
3. Characteristics of a Viable SBU (TM 1-11)
158 CHAPTER 1: Marketing and the Concept of Planning and Strategy
DEFINITION OF PLANNING
A process directed toward making today’s
decisions with tomorrow in mind and a means of
preparing for future decisions so that they may be
made rapidly, economically, and with as little
disruption to the business as possible.
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IMPORTANCE OF BUSINESS PLANNING
• Leads to better standing for organization.
• Helps organization progress in ways management
• Helps manager think, decide, and act more
• Helps keep organization flexible.
• Stimulates cooperative, integrated, enthusiastic
approach to problems.
• Indicates how to evaluate progress toward planned
• Leads to socially and economically useful results.
160 CHAPTER 1: Marketing and the Concept of Planning and Strategy
DEFINITION OF STRATEGY
Strategy is a pattern of major objectives, purposes,
or goals and essential policies and plans for
achieving those goals, stated in such a way as to
define what business the company is in or is to be
in and the kind of company it is or is to be.
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IMPORTANCE OF STRATEGY
Any organization needs strategy when:
• Resources are finite.
• There is uncertainty about competitive strengths and
• Commitment of resources is irreversible.
• Decisions must be coordinated between far-flung
places and over time.
• There is uncertainty about control of initiative.
162 CHAPTER 1: Marketing and the Concept of Planning and Strategy
DEFINITION OF STRATEGIC PLAN
Strategic plan specifies the sequence and timing of
steps that alter competitive relationships.
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STEPS TO MAKE STRATEGIC
• Define goals clearly.
• Develop rational plans.
• Shape company into logical business units.
• Demonstrate willingness to compensate line
managers on long-term achievements.
• Develop at corporate level capacity to evaluate and
balance competing requests from business units for
• Match shorter-term business unit goals to a long-term
concept of the company’s evolution.
164 CHAPTER 1: Marketing and the Concept of Planning and Strategy
SCORECARD FOR MEASURING
STRATEGIC PLANNING EFFORT
Is our planning really strategic?
— Do we try to anticipate change or only project from the past?
Do our plans leave room to explore strategic alternatives?
— or do they confine us to conventional thinking?
Do we have time and incentive to investigate truly important
— or do we spend excessive planning time on trivia?
Have we ever seriously evaluated a new approach to an old
— or are we locked into the status quo?
Do our plans critically document and examine strategic
— or do we not really understand the implications of the plans
Do we consistently make an attempt to examine consumer,
competitor, and distributor responses to our programs?
— or do we assume that changes will not affect the
relationships we have seen in the past?
Thomas P. Hustad and Ted J. Mitchell, “Creative Market Planning in a Partisan Environment,” Business
Horizons, March–April, 1982, p. 64. Copyright, 1982, by the Foundation for the School of Business at
Indiana University. Reprinted by permission.
CHAPTER 1: Marketing and the Concept of Planning and Strategy 165
• Managing for competitive advantage.
• Viewing change as an opportunity.
• Managing through people.
• Shaping the strategically managed organization.
• Managing for focus and flexibility.
• Managing fit across all functions.
• Harnessing information.
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WHAT IS AN SBU?
An SBU is composed of a product or product lines
with identifiable independence from other products
or product lines in terms of competition, prices,
substitutability of product, style/quality, and impact
of product withdrawal. It is around this configuration
of products that a business strategy should be
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CREATION OF SBUs
Strategic business units may be created by applying
a set of criteria consisting of price, competitors,
customer groups, and shared experience:
a. Price—To the extent that price changes in a
product entail a review of the pricing policy of
other products, these products may have a
b. Competitors—If various products/markets
of a company share the same group of
competitors, they may be amalgamated into an
SBU for the purpose of strategic planning.
c. Customers—Products/markets sharing a
common set of customers belong together.
in different parts of the company having common R&D, manufacturing, and marketing
components may be included in the same SBU.
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CHARACTERISTICS OF A VIABLE SBU
• Have a unique business mission, independent of
• Have a clearly definable set of competitors.
• Be able to carry out integrative planning relatively
independent of other SBUs.
• Be able to manage resources in all areas.
• Be large enough to justify senior management
attention, but small enough to serve as a useful focus
for resource allocation.