LO1  Describe the three organizational levels of strategy.

Most large business firms and nonprofit organizations are divided into three levels of strategy: (a) the corporate level, where top management directs overall strategy for the entire organization; (b) the business unit level, where business unit managers set the direction for their products and markets to exploit value-creating opportunities; and (c) the functional level, where groups of specialists actually create value for the organization.

LO2  Describe why business, mission, culture, and goals are important in organizations.

Organizations exist to accomplish something for someone. To give organizations direction and focus, they continuously assess their business, mission, culture, and goals. First, an organization defines what its business is—the set of customer needs, such as transportation, it wants to satisfy. Next, an organization defines its mission, which is a statement that describes its customers, markets, and products and inspires loyalty from its stakeholders. An organization’s culture serves to connect it with its stakeholders based on a set of shared values, ideas, and attitudes. Finally, the organization’s goals measure how well it accomplishes its mission at each organizational level by providing specific targeted levels of performance to be achieved, such as sales and profits, by a specific time period.

LO3  Explain how organizations set strategic directions by assessing where they are now and seek to be in the future.

Managers of an organization ask two key questions to set a strategic direction. The first question, Where are we now?, requires an organization to (a) assess its customers to determine whether its direction must be modified based on changes in consumer trends; (b) reevaluate its competencies to ensure that its special capabilities still provide a competitive advantage; and (c) analyze its current and potential competitors from a global perspective to determine whether any business definition modifications are needed. The second question, Where do we want to go?, requires an organization to actually set a direction and allocate resources to move it in that direction. Business portfolio and market-product analyses are two useful techniques to do this.

LO4  Describe the strategic marketing process and its three key phases: planning, implementation, and evaluation.

An organization uses the strategic marketing process to allocate its marketing mix resources to reach its target markets. This process consists of three phases, which are usually formalized in a marketing plan. The planning phase consists of (a) a situation (SWOT) analysis of the organization’s strengths, weaknesses, opportunities, and threats; (b) a market-product focus through market segmentation, points of difference analysis, and goal setting; and (c) a marketing program that specifies the budget and activities (marketing strategies and tactics) for each marketing mix element. The implementation phase carries out the marketing plan that emerges from the planning phase. It has four key elements: obtaining resources, designing the marketing organization, developing schedules, and executing the marketing program. The evaluation phase compares the results from the implemented marketing program with the marketing plan’s goals to identify the “planning gaps” and take actions to exploit positive deviations or correct negative ones.

LO5>   Explain how the marketing mix elements are blended into a cohesive marketing program.

A marketing manager uses information obtained during the SWOT analysis, market-product focus, and goal-setting steps in the planning process to develop marketing strategies and marketing tactics for each marketing mix element for a given product, which are then implemented, as specified in the marketing plan, as a marketing program.