he Central Role of Strategic Planning
• Successful marketing thus requires companies to have capabilities such as understanding customer value, creating customer value, delivering customer value, capturing customer value, and sustaining customer value.
• . Only a handful of companies stand out as master marketers:
o Procter & Gamble, Southwest Airlines, Nike, Disney, Nordstrom, Wal-Mart, McDonald's, Marriott Hotels, and several Japanese (Sony, Toyota, Canon) and European (IKEA, Club Med, Bang &Olufsen, Electrolux, Nokia, Lego, Tesco) companies.
• These companies focus on the customer and are organized to respond effectively to changing customer needs. They all have well-staffed marketing departments, and all their other departments—manufacturing, finance, research and development, personnel, purchasing—also accept the concept that the customer is king.
McKinsey identified three main challenges as reflected by differences in opinion between chief executive officers (CEOs) and their most senior marketing executives or chief marketing officers (CMOs).
• Doing more with less- CEOs need and expect all areas of their organizations to be more efficient;
• Driving new business development- CEOs want marketing to play a more active role in driving new business development
• Becoming a full business partner- CEOs look for marketing to become a more central business partner that helps to drive profits;
Three recommendations to accommodate the pressure to simultaneously grow revenues while also reducing marketing costs as a percentage of sales;
• Link spending priorities to profit potential
• Focus spending on brand drivers
• Deepen insights on how customers get product information and make buying decisions.
McKinsey identifies three characteristics that help to position marketers as business development leaders:
• Force the widest view when defining their business, assets, and competencies;
• Combine multiple perspectives,
• Focus idea generation through a combination of marketing insight and business analysis
Finally, McKinsey offers two recommendations to overcome CEOs' concerns about the role and performance of marketing.
• Marketers must test and develop programs more quickly
• Marketers must more effectively evaluate the performance and profit impact of investments in the expanding marketing arena
The marketing plan is the central instrument for directing and coordinating the marketing effort. The marketing plan operates at two levels: strategic and tactical.
• The strategic marketing plan lays out the target markets and the value proposition that will be offered, based on an analysis of the best market opportunities.
• The tactical marketing plan specifies the marketing tactics, including product features, promotion, merchandising, pricing, sales channels, and service.
Today, teams develop the marketing plan with inputs and sign-offs from every important function. These plans are then implemented at the appropriate levels of the organization. We next consider planning at each of these four levels of the organization.
Corporate and Division Strategic Planning
• By preparing statements of mission, policy, strategy and goals, headquarters establishes the framework within which the divisions and business units prepare their plans.
There are four planning activities that all corporate headquarters undertake:
1. Defining the corporate’s mission
2. Establishing strategic business units
3. Assigning resources to each Strategic Business Units (SBU)
4. Assessing growth opportunities
Defining Corporate Mission
Peter Ferdinand Drucker was an Austrian-born American management consultant, educator, and author, whose writings contributed to the philosophical and practical foundations of the modern business corporation. He was also a leader in the development of management education, he invented the concept known as management by objectives and self-control,[1] and he has been described as "the founder of modern management".
To define a corporate's mission, they have to address Peter Drucker's classic questions:
• What is our business?
Making this difference is the mission—the organization’s purpose and very reason for being.
• Who is the customer?
Define your customer as one who values your service, who wants what you offers, who feels it’s important to them.
• What does your customer value?
Think about value in terms of what your organization does that fills a specific need, provides satisfaction, or offers a benefit to your primary customers that they do not receive from another source.
• What will our business be?
Aims at adaption to anticipated changes. It aims at modifying, extending, and developing the existing, ongoing business.
A company must redefine its mission if that mission has lost credibility or no longer defines an optimal course for growth.
Organizations develop mission statements to share with managers, employees and mostly to the customers.
A clear, thoughtful mission statement provides employees with a shared sense of purpose, direction, and opportunity. The statement guides geographically dispersed employees to work independently and yet collectively toward realizing the organization's goals.
Mission statements are at their best when they reflect a vision, an almost "impossible dream" that provides a direction for the company for the next 10 to 20 years.
3 Major Characteristics of Good Mission Statements
• Focus on limited number of goals
• Mission Statements stress the company's major policies and values
• Defines the major competitive spheres within which the company will operate:
• Industry- The range of industries in which a company will operate.
(Grab operates in the Transportation Industry)
• Products and Applications- The range of products and applications a company will supply.
(The Philippines Orthopaedic Center specializing in the treatment of musculoskeletal disorders and serves as a center for trauma and orthopaedics.)
• Competence- The range of technological and other core competencies that a company will master and leverage.
(Japan's NEC has built its core competencies in computing, communications, and components to support production of laptop computers, television receivers, and handheld telephones.)
• Market Segment- The type of market or customers a company will serve.
(Prada sells luxury products for men and women)
• Vertical- The number of channel levels from raw material to final product and distribution in which a company will participate.
(Apple is also one of the most significant vertical integration examples because the company has controlled the manufacturing and distribution of its products from the time it was founded. Apple not only sells computers, iPhones and iPads, but it also designs the software that powers these products. Rather than outsourcing its software development, Apple relies on its own designers to invent software that is perfectly compatible with the company’s brand.)
• Geographical- The range of regions, countries, or country groups in which a company will operate. At one extreme are companies that operate in a specific city or state.
Importance of Marketing Strategic Planning process
It emphasizes that a marketing required decisions about the specific costumers the firm will target and the marketing mix will develop to appeal to that target marketers. We can organize the many marketing mix decisions in terms of 4p's (Product , Place, Promotion ,Price). Thus the "FINAL" Strategy decision represented by the target market surrounded by the 4p's
1. Process narrows down from broad opportunities to specific strategy
-- This helps to identify new and unique opportunities that might be overlooked if the focus is narrowed too quickly.
2. Screening criteria make it clear why you select a strategy
--There are usually more opportunities—and strategy possibilities—than a firm can pursue. However, developing a set of specific qualitative and quantitative screening criteria can help a manager define what business and markets the firm wants to compete in. For now, you should realize that the criteria you select in a specific situation grow out of an analysis of the company’s objectives and resources.
3. S.W.O.T. analysis highlights advantages and disadvantages
--With a S.W.O.T. analysis, a marketing manager can begin to identify strategies that take advantage of the firm’s strength and opportunities while avoiding weaknesses and treats.
4. Segmentation helps pinpoint the target
- In other words, segmentation helps a manager decide to serve some segment(s)—subgroup(s) of customers—and not others.
5. Customers want something different
--A marketing mix won’t get a competitive advantage if it just meets needs in the same way as some other firm. Marketing managers want to identify customer needs that are not being addressed or might be met better than the competition.
6. Narrowing down to a superior marketing mix
--Target customers are more likely to recognize differentiation when there is a consistent theme integrated across the Four Ps decision areas. The theme should emphasize the differences so target customers will think of the firm as being in a unique position to meet their needs.
Unit 10: Assess Strengths and Weaknesses, Threats and Opportunities
SWOT ANALYSIS
• Swot analysis highlights both the disadvantages and advantages of the company in the market.
• a situation analysis assesses both the internal environment with regard to its Strengths and Weaknesses and the external environment in terms of its Opportunities and Threats.
• This method was created in the 1960s by Albert Humphrey of the Stanford Research Institute, during a study conducted to identify why corporate planning consistently failed.
• The primary objective is to help organizations develop a full awareness of all the factors involved in making a business decision.
• Use your SWOT analysis to discover recommendations and strategies, with a focus on leveraging strengths and opportunities to overcome weaknesses and threats.
External Factors
External forces are factors that influence and affect every company, organization and individual, typically things that cannot be controlled by the organization.
-A business unit has to monitor key macroenvironmental forces (demographic-economic, natural, technological, political-legal, and social-cultural) and significant microenvironment actors (customers, competitors, suppliers, distributors, dealers) that affect its ability to earn profits.
Opportunities
As the main purpose of environment scanning is to discern opportunities, good marketing is the art of finding, developing, and profiting from opportunities.
• A marketing opportunity is an area of buyer need and interest in which there is a high probability that a company can profitably satisfy that need.
There are three main sources of market opportunities.
1. To supply something that is in short supply.
2. To supply an existing product or service in a new or superior way.
3. Leads to a totally new product or service.
-Opportunities are openings or chances for something positive to happen
Market Opportunity Analysis (MOA)- To evaluate opportunities, to determine the attractiveness and probability of success:
• Is your market growing and are there trends that will encourage people to buy more of what you are selling?
• Are there upcoming events that your company may be able to take advantage of to grow the business?
• Are there upcoming changes to regulations that might impact your company positively?
• If your business is up and running, do customers think highly of you?
Threats
- challenge posed by an unfavorable trend or development that would lead to lower sales or profit.
-It's vital to anticipate threats and to take action against them before you become a victim of them and your growth stalls.
-should be classified according to seriousness and probability of occurrence.
• Do you have potential competitors who may enter your market?
• Will suppliers always be able to supply the raw materials you need at the prices you need?
• Could future developments in technology change how you do business?
• Is consumer behavior changing in a way that could negatively impact your business?
• Are there market trends that could become a threat?
Internal Environment
-Internal Environment is factors within an organization that has the ability to influence the decisions of the organization.
-It includes the strengths and weakness of the company.
Strengths
- internal, positive attributes of your company.
- within your control.
- things that your organization does particularly well, or in a way that distinguishes you from your competitors.
-Think about the advantages your organization has over other organizations.
• What assets do you have in your team, such as knowledge, education, network, skills, and reputation?
• What physical assets do you have, such as customers, equipment, technology, cash, and patents?
• What competitive advantages do you have over your competition (Unique Selling Proposition (USP)?
Remember: any aspect of your organization is only strength if it brings you a clear advantage.
Weaknesses
- negative factors that detract from your strengths.
- things that you might need to improve on to be competitive.
-It usually answers the questions such as :
• What could you improve?
• What should you avoid?
• What factors lose your sales?
These are the examples of internal factors:
• Financial resources (funding, sources of income and investment opportunities)
• Physical resources (location, facilities and equipment)
• Human resources (employees, volunteers and target audiences)
• Access to natural resources, trademarks, patents and copyrights
• Current processes (employee programs, department hierarchies and software systems)
Clearly, the business does not have to correct all its weaknesses, nor should it gloat about all its strengths. The big question is whether the business should limit itself to those opportunities where it possesses the required strengths or whether it should consider opportunities that mean it might have to acquire or develop certain strengths.
Once management has identified the major threats and opportunities facing a specific business unit; it can characterize that business's overall attractiveness. After you create your SWOT framework and fill out your SWOT analysis, you will need to come up with some recommendations and strategies based on the results. These strategies should focus on leveraging strengths and opportunities to overcome weaknesses and threats.