Research into the efficacy of formalized marketing planning has shown that marketing planning can make a significant contribution to commer...
Research into the efficacy of formalized marketing planning has shown that marketing planning can make a significant contribution to commercial success. The main effects within organizations are:
● the systematic identification of emerging opportunities and threats;
● preparedness to meet change;
● the specification of sustainable competitive advantage;
● improved communication among executives;
● reduction of conflicts between individuals and departments;
● the involvement of all levels of management in the planning process;
● more appropriate allocation of scarce resources;
● consistency of approach across the organization;
● a more market-focused orientation across the organization.
However, although it can bring many benefits, a strategic marketing plan is mainly concerned with competitive advantage – that is to say, establishing, building, defending and maintaining it.
In order to be realistic, it must take into account the organization’s existing competitive position, where it wants to be in the future, its capabilities and the competitive environment it faces. This means that the marketing planner must learn to use the various available processes and techniques that help in making sense of external trends and in understanding the organization’s traditional ways of responding to these.
However, this poses the problem regarding which are the most relevant and useful tools and techniques, for each has strengths and weaknesses and no individual concept or technique can satisfactorily describe and illuminate the whole picture. As with a jigsaw puzzle, a sense of unity emerges only as the various pieces are connected together.
The links between strategy and performance have been the subject of detailed statistical analysis by the Strategic Planning Institute. The Profit Impact of Market Strategy – PIMS – (Buzzell and Gale, 1997) project identified, from 2,600 businesses, six major links. From this analysis, principles have been derived for the selection of different strategies according to industry type, market conditions and the competitive position of the company.
However, not all observers are prepared to take these conclusions at face value. Strategy consultants Lubatkin and Pitts (1985), believe that all businesses are unique, and are suspicious that something as critical as competitive advantage can be the outcome of a few specific formulae. For them, the PIMS perspective is too mechanistic and glosses over the complex managerial and organizational problems that beset most businesses.
What is agreed, however, is that strategic marketing planning presents a useful process by which an organization formulates its strategies, providing it is adapted to its environment.
● homogeneous market segment definition;
● segment-specific propositions;
● strategy uniqueness;
● strength leverage and weakness minimization;
● creation of internal and external synergies;
● provision of tactical guidance;
● alignment to objectives;
● alignment to market trends;
● appropriate resourcing;
● clear basis of competition.
Let us first position strategic marketing planning firmly within the context of marketing itself. Marketing is a process for: defining markets; quantifying the needs of the customer groups (segments) within these markets; determining the value propositions to meet these needs; communicating these value propositions to all those people in the organization responsible for delivering them and getting their buy-in to their role; playing an appropriate part in delivering these value propositions to the chosen market segments; and monitoring the value actually delivered. For this process to be effective, organizations need to be consumer/customer driven. A map of this process is shown in Figure 2.1. This process is clearly cyclical, in that monitoring the value delivered will update the organization’s understanding of the value that is required by its customers. The cycle is predominantly an annual one, with a marketing plan documenting the output from the ‘understand value’ and ‘Determine value proposition’ processes, but equally changes throughout the year may involve fast iterations around the cycle to respond to particular opportunities or problems.
It is well known that not all of the value-proposition-delivering processes will be under the control of the marketing department, whose role varies considerably between organizations. The marketing department is likely to be responsible for the first two processes, ‘Understand value’ and ‘Determine value proposition’, although even these need to involve numerous functions, albeit coordinated by specialist marketing personnel. The ‘Deliver value’ process is the role of the whole company, including product development, manufacturing, purchasing, sales promotion, direct mail, distribution, sales and customer service. The marketing department will also be responsible for monitoring the effectiveness of the value delivered. The various choices made during this marketing process are constrained and informed not just by the outside world but also by the organization’s asset base.
Whereas an efficient new factory with much spare capacity might underpin a growth strategy in a particular market, a factory running at full capacity would cause more reflection on whether price should be used to control demand, unless the potential demand warranted further capital investment. As well as being influenced by physical assets, choices may be influenced by financial, human resources, brand and information technology assets, to name just a few.
Thus, it can be seen that the first two boxes are concerned with strategic marketing planning processes (in other words, developing market strategies), while the third and fourth boxes are concerned with the actual delivery in the market of what was planned and then measuring the effect.
Input to this process will commonly include:
● the corporate mission and objectives, which will determine which particular markets are of interest;
● external data such as market research;
● internal data that flow from ongoing operations.
Also, it is necessary to define the markets the organization is in, or wishes to be in, and how these divide into segments of customers with similar needs. The choice of markets will be influenced by the corporate objectives as well as the asset base. Information will be collected about the markets, such as the market’s size and growth, with estimates for the future.
The map is inherently cross-functional. ‘Deliver value proposition’, for example, involves every aspect of the organization, from new product development through inbound logistics and production to outbound logistics and customer service. The map represents best practice, not common practice. Many aspects of the map are not explicitly addressed by well-embedded processes, even in sophisticated companies.
Having put marketing planning into the context of marketing and other corporate functions, we can now turn specifically to the marketing planning process and how it should be done. We are, of course, referring specifically to the ‘Determine value proposition’ box in Figure 2.1.
● the systematic identification of emerging opportunities and threats;
● preparedness to meet change;
● the specification of sustainable competitive advantage;
● improved communication among executives;
● reduction of conflicts between individuals and departments;
● the involvement of all levels of management in the planning process;
● more appropriate allocation of scarce resources;
● consistency of approach across the organization;
● a more market-focused orientation across the organization.
However, although it can bring many benefits, a strategic marketing plan is mainly concerned with competitive advantage – that is to say, establishing, building, defending and maintaining it.
In order to be realistic, it must take into account the organization’s existing competitive position, where it wants to be in the future, its capabilities and the competitive environment it faces. This means that the marketing planner must learn to use the various available processes and techniques that help in making sense of external trends and in understanding the organization’s traditional ways of responding to these.
However, this poses the problem regarding which are the most relevant and useful tools and techniques, for each has strengths and weaknesses and no individual concept or technique can satisfactorily describe and illuminate the whole picture. As with a jigsaw puzzle, a sense of unity emerges only as the various pieces are connected together.
The links between strategy and performance have been the subject of detailed statistical analysis by the Strategic Planning Institute. The Profit Impact of Market Strategy – PIMS – (Buzzell and Gale, 1997) project identified, from 2,600 businesses, six major links. From this analysis, principles have been derived for the selection of different strategies according to industry type, market conditions and the competitive position of the company.
However, not all observers are prepared to take these conclusions at face value. Strategy consultants Lubatkin and Pitts (1985), believe that all businesses are unique, and are suspicious that something as critical as competitive advantage can be the outcome of a few specific formulae. For them, the PIMS perspective is too mechanistic and glosses over the complex managerial and organizational problems that beset most businesses.
What is agreed, however, is that strategic marketing planning presents a useful process by which an organization formulates its strategies, providing it is adapted to its environment.
Positioning marketing planning with marketing
In 2003, a Cranfield doctoral thesis (Smith, 2003) proved a direct link between organizational success and marketing strategies that conform to what previous scholars have agreed constitutes strategy quality, which was shown to be independent of variables such as size, sector, market conditions and so on. This thesis linked superior performance to strategies with the following qualities:● homogeneous market segment definition;
● segment-specific propositions;
● strategy uniqueness;
● strength leverage and weakness minimization;
● creation of internal and external synergies;
● provision of tactical guidance;
● alignment to objectives;
● alignment to market trends;
● appropriate resourcing;
● clear basis of competition.
Let us first position strategic marketing planning firmly within the context of marketing itself. Marketing is a process for: defining markets; quantifying the needs of the customer groups (segments) within these markets; determining the value propositions to meet these needs; communicating these value propositions to all those people in the organization responsible for delivering them and getting their buy-in to their role; playing an appropriate part in delivering these value propositions to the chosen market segments; and monitoring the value actually delivered. For this process to be effective, organizations need to be consumer/customer driven. A map of this process is shown in Figure 2.1. This process is clearly cyclical, in that monitoring the value delivered will update the organization’s understanding of the value that is required by its customers. The cycle is predominantly an annual one, with a marketing plan documenting the output from the ‘understand value’ and ‘Determine value proposition’ processes, but equally changes throughout the year may involve fast iterations around the cycle to respond to particular opportunities or problems.
Whereas an efficient new factory with much spare capacity might underpin a growth strategy in a particular market, a factory running at full capacity would cause more reflection on whether price should be used to control demand, unless the potential demand warranted further capital investment. As well as being influenced by physical assets, choices may be influenced by financial, human resources, brand and information technology assets, to name just a few.
Thus, it can be seen that the first two boxes are concerned with strategic marketing planning processes (in other words, developing market strategies), while the third and fourth boxes are concerned with the actual delivery in the market of what was planned and then measuring the effect.
Input to this process will commonly include:
● the corporate mission and objectives, which will determine which particular markets are of interest;
● external data such as market research;
● internal data that flow from ongoing operations.
Also, it is necessary to define the markets the organization is in, or wishes to be in, and how these divide into segments of customers with similar needs. The choice of markets will be influenced by the corporate objectives as well as the asset base. Information will be collected about the markets, such as the market’s size and growth, with estimates for the future.
The map is inherently cross-functional. ‘Deliver value proposition’, for example, involves every aspect of the organization, from new product development through inbound logistics and production to outbound logistics and customer service. The map represents best practice, not common practice. Many aspects of the map are not explicitly addressed by well-embedded processes, even in sophisticated companies.
Having put marketing planning into the context of marketing and other corporate functions, we can now turn specifically to the marketing planning process and how it should be done. We are, of course, referring specifically to the ‘Determine value proposition’ box in Figure 2.1.
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