The Role of Marketing in Strategic Planning

1. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Chapter 3
The Role of
Marketing in
Strategic
Planning

2. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
“Would you tell me, please, which way
I ought to go from here?”
-Alice
(from Lewis Carroll’s Alice in Wonderland)
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

3. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Chapter Objectives
• Explain company-wide strategic planning
• Understand the concepts of stakeholders,
processes, resources, and organization as
they relate to a high-performing business
• Explain the four planning activities of
corporate strategic planning
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

4. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Chapter Objectives
• Understand the processes involved in
defining a company’s mission and setting
goals and objectives
• Discuss how to design business portfolios
and growth strategies
• Explain the steps involved in the business
strategy planning process
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

5. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Market-Oriented Strategic
Planning
Market-oriented strategic planning is the
managerial process of developing and
maintaining a feasible fit between the
organization’s objectives, skills and resources
and its changing market opportunities
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

6. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Key Ideas Defining Strategic
Planning
1. Manage companies businesses as an
investment portfolio
2. Assess future profit potential
3. Develop the strategy itself
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

7. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Nature of High-Performance
Business
• Stakeholders
• Processes
• Resources
• Organization
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

8. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
The Relationship Between
Analysis, Planning,
Implementation, and Control
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

9. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
The High Performance Business
(Excerpted from the first quarter 1992 issue of Prism, the quarterly journal for senior managers,
published by Arthur D. Little, Inc.)
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

10. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Dynamic Relationships Among Stakeholder
Groups in High Performance Businesses
(Excerpted from the fourth quarter 1992 issue of Prism, the quarterly journal for senior managers,
published by Arthur D. Little, Inc.)
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

11. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Corporate Strategic Planning
• Corporate headquarters sets planning
process into motion
• Greater need for empowerment of
employees
• Hospitality and tourism industries are
international and multi-cultural
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

12. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Defining the Corporate
Mission
• Mission is shaped by History
• Resources determine possibilities
• Mission should be based on distinctive
competencies
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

13. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Competitive Scopes
• Industry scope – range of industries that the
company will consider
• Products and applications scope – rang of
products and applications in which the
company will participate
• Competencies scope – range of
technological and other core competencies
the company will master and leverage
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

14. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Competitive Scopes
• Market-segment scope – the type of market
or customers the company will serve
• Vertical scope – the number of channel levels
from raw materials to final product and
distribution in which the company will engage
• Geographic scope – the range of regions,
countries or country groups where the
corporation will operate
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

15. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Establishing Strategic
Business Units
• A single business or a collection of related
businesses that can be planned for
separately from the rest of the company
• It has its own set of competencies
• It has a manager who is responsible for
strategic planning and profit performance
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

16. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Assigning Resources to
Each SBU
Analytical tools, such as the Boston
Consulting Group (BCG) model, are
used to classify businesses by profit
potential
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

17. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
BCG Growth-Share Matrix
Relative market share
Marketgrowthrate
LowHigh
LowHigh
Star Question mark
Cash cow Dog
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

18. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Developing Growth
Strategies
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

19. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Diversification Growth
• Concentric diversification strategy
• Horizontal diversification strategy
• Conglomerate diversification strategy
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

20. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Integrative Growth
• Backward integration (acquiring a supplier)
• Forward integration (acquiring distributor of
your product)
• Horizontal integration (acquiring a
competitor)
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

21. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Business Strategy Planning
• Business Mission
• SWOT Analysis
– Strengths, Weaknesses, Opportunities,
Threats
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

22. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Business Strategy Planning
• Internal Environment Analysis
– (Strengths and Weaknesses Analysis)
• External Environmental Analysis
– (Opportunities and Threats Analysis)
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

23. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Business Strategy Planning
• Goal Formulation
– Arrange from most to least important
– State quantitatively
– Measurable and realistic
– Consistent
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

24. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Business Strategy Planning
• Strategy Formulation
• Strategies are the paths to goals
• 3 generic types
• Overall cost leadership
• Differentiation
• Focus
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

25. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Business Strategy Planning
• Strategic Alliances – cooperative
agreements between organizations that
allow them to benefit from each other’s
strengths
• What are some strategic alliances in the
hospitality and tourism industry?
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

26. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Business Strategy Planning
• Program formulation
– Formulate programs that support the strategy
• Implementation
– To implement strategy, required resources
and employee buy-in are necessary
• Feedback and Control
– Track results and monitor new developments
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

27. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Business Strategy Planning
• Unique Challenges of the hotel industry
complicate the process of strategic planning
– Major chains commonly do not own all
properties that they manage
– Owners of hotel-resorts often show little
interest or knowledge of their property (ego-
capital concept)
– Professional managers often are not trained
in strategic planning
– Global strategic alliances may further
complicate the planning process
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

28. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Best Practices
• Howard Schultz brings the European
coffee experience to America via
Starbucks
• Focus on growth, new products, new
retail channels to stave off competition
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

29. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Best Practices in Strategic
Planning
• What did they do?
– The Inn on Biltmore Estates
– Tricon Global Restaurants (Yum Brands)
– Jack in the Box
– The Las Vegas Hilton
– Hyatt Hotels
– Boston Greater Convention and Visitors Bureau
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

30. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Key Terms
• Ansoff product–market expansion grid
• Backward integration
• Competencies scope
• Concentric diversification strategy
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

31. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Key Terms
• Conglomerate diversification strategy
• Corporate mission statement
• Forward integration
• Geographic scope
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

32. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Key Terms
• Growth–share matrix
• Horizontal diversification strategy
• Horizontal integration
• Industry scope
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

33. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Key Terms
• Macroenvironmental forces
• Microenvironmental forces
• Marketing opportunity
• Market-oriented strategic planning
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

34. ©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens
Key Terms
• Market-segment scope
• Products and applications
• Strategic alliances
• Strategic business units (SBUs)
• Vertical scope
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens