Chapter 2: A Marketer's Perspective on Strategic Planning PDF

Chapter 2 A Marketer’s Perspective on Strategic Planning A Legal Definition How an organization legally defines itself is the starting point for how it will spend its profits. The ‘Business’ firm: profits are given to the owners. The most common tools are dividends or cash bonuses....

Chapter 2 A Marketer’s Perspective on Strategic Planning A Legal Definition How an organization legally defines itself is the starting point for how it will spend its profits. The ‘Business’ firm: profits are given to the owners. The most common tools are dividends or cash bonuses. The ‘Non-profit’ organization: profits are directed towards their declared ‘cause’. 2 D. Kernaghan 2024 Strategic Planning - Its Definition Varies Within a Hierarchy An individual’s definition of Strategic Planning will be a function of their position within an organization. 3 D. Kernaghan 2024 Strategic Planning - Its Definition Varies Within a Hierarchy (cont’d) Executive Level (Board of Directors, President, Vice- Presidents) – a Strategic Plan has: The Core Values and Mission Statement. A ‘general-direction’ statement. A long-term goal is provided (five years is typical), but not a path. No financial numbers. Example: “Our Revised Strategic Mission Statement declares that, five years from now, we will be the largest industrial pump manufacturer in North America”. D. Kernaghan 2024 4 Strategic Planning - Its Definition Varies Within a Hierarchy (cont’d) Business Unit Level (Divisional Managers) – a Strategic Plan: Based on the Executive’s Strategic Statement. A shorter-term goal (2-3 years), but usually without a declared path. Financial numbers are annual (lump-sum) allocations; no details. Often includes expected sales goals. Example: “Based on our revised Strategic Mission Statement, we will allocate $3M for the next three years to: (i) shut down the residential and commercial 5 Pump D. Kernaghan 2024 Strategic Planning - Its Definition Varies Within a Hierarchy (cont’d) Tactical Level (Department Managers, Front-Line Supervisors) – a Strategic Plan: Based on divisional management’s statements (which provides the goal in specific terms as well as an asset allocation). Includes detailed budgets; quarterly and annual. Includes details in regard to Human Resources, Production Management and Supply Chain Management activities. 6 D. Kernaghan 2024 Strategic Planning - Its Definition Varies Within a Hierarchy (cont’d) From the marketer’s perspective, was the strategic plan developed: ‘top-down’: without internal input, or ‘bottom-up’: with internal input? Top-down – an old model that relies on the Executive either hiring external consulting firms to develop a new strategic plan, or relies on their own knowledge of the current industry. Obvious disadvantage: no input from the staff who talk to customers/suppliers on a regular basis. Bottom-up – a newer model that collects the knowledge of front-line staff as one input into the planning process. 7 D. Kernaghan 2024 Strategic Planning - Its Definition Varies Within a Hierarchy (cont’d) To summarize, a Corporate Strategic Plan: (i) is generated and declared by Executive, (ii) which Divisional Management will use to set goals and establish asset allocations, (iii) which Functional (Department) Managers use to create operational (tactical) details. Organizational Organizational Foundation (why) Organizational Strategies (how) Core Values Direction (what) By Level By Offering Mission (vision) Long-term Corporate Product Organizational Short-term Divisional Service Culture Functional 8 D. Kernaghan 2024 The Business Goal (within the Strategic Plan) The Organization’s Goal (which reflects greatly on a Marketer’s activities) will contain some of the following expectations. (It cannot contain them all because some are ‘mutually exclusive’ to others). Profit and Sales. Market share and long-term relationships. Quality or price sensitive. Employee benefits. Customer satisfaction. Social responsibility. 9 D. Kernaghan 2024 Establishing a Strategic Direction The starting point is to declare the current situation in terms of, “Where are we now?”. Specifically: What is our ‘Competitive Advantage’? (What are we doing better than our competition?). What level of Quality will our target audience pay for? Benchmarking: How do we compare to our industry’s leading competitors? What are our Customers saying about our products/services? 10 D. Kernaghan 2024 Establishing a Strategic Direction (cont’d) After determining, “Where are we now”, the next step is to determine, “Where Do We Want to Go?”. There are several business-growth models in use today that will assist to define a strategic direction. Two popular models are: BCG (Boston Consulting Group) Analysis. Market-Product Analysis. 11 D. Kernaghan 2024 Establishing a Strategic Direction (cont’d) Boston Consulting Group (BCG) business portfolio analysis 12 D. Kernaghan 2024 Establishing a Strategic Direction (cont’d) Product-Market Strategic Grid PRODUCTS Current New Current Market Penetration: Product Market Selling more products in Development: existing markets; a low-risk Selling new products in option. the existing markets. New Market Market Development: Diversification: Selling existing products in Selling a new product new markets (either in new markets; a high- geographic or a new risk option. segment). 13 D. Kernaghan 2024 Establishing a Strategic Direction - The Marketer’s Perspective Step 1: Situation (SWOT) Analysis. Internal Strengths (product, technology, staff loyalty). Internal Weaknesses (limited research, lack of specific knowledge or skills that limit expansion opportunities). External Opportunities (open market, competitive weakness, skills/knowledge that can be leveraged). External Threats (your exposed 14 D. Kernaghan 2024 Establishing a Strategic Direction - The Marketer’s Perspective (cont’d) Step 1: Situation (SWOT) Analysis. Step 2: Using the Product-Market Strategic Grid, the BCG Analysis (or a similar Strategic Planning model). Identify the target market that best matches up to your ‘Strengths’ and ‘Opportunities’. Identify minor changes required to your product, pricing, promotions (advertising) or store placement that will open up ‘secondary’ target markets (defined as those markets that would buy your product if minor changes were made). 15 D. Kernaghan 2024 Establishing a Strategic Direction - The Marketer’s Perspective (cont’d) Step 1: Situation (SWOT) Analysis. Step 2: Using the Product-Market Strategic Grid, the BCG Analysis (or a similar Strategic Planning model). Step 3: Based on the previous steps, determine the Marketing Program’s details in terms of adjustment to Product, Price, Promotion & Place (distribution). 16 D. Kernaghan 2024 Establishing a Strategic Direction - The Marketer’s Perspective (cont’d) Step 1: Situation (SWOT) Analysis. Step 2: Using the Product-Market Strategic Grid, the BCG Analysis (or a similar Strategic Planning model). Step 3: Determine the Marketing Program’s details (in terms of adjustment to Product, Price, Promotion & Place (distribution)). Step 4: Position the product – ‘Positioning’ is the overall statement; it is your advertisement’s key message. Ideally, it is designed to ensure it says exactly what your target audience wants to hear. D. Kernaghan 2024 17 A SWOT Example Ben & Jerry’s Ice Cream Location of TYPE OF FACTOR Factor Favourable Unfavourable Internal Strengths Weaknesses Prestigious brand name. Need for experienced Major share of premium market. managers. Flat sales in recent years. Ethical clause in Franchise Agreement. External Opportunities Threats Increasing demand for frozen Consumer concerns about fat yogurt and other low-fat content. desserts. Downturn in Canadian Success in extending a economy. successful brand image to other D. Kernaghan 2024 18 products.  lu e N lt The Strategic Marketer’s a r s o w l m e Package e o n a n t Pa s A properly c al C e designed c s h program has kS a ae Cn only the gl rn elements il Cohesive ee that are ni Marketing dl gn Program is important to t g C the target S eP o audience. ru T v e vb e r il r m ci a s ec 19 D. Kernaghan 2024 g Pe Implementation 1. Obtain Resources – confirm the budget and human resources. 2. Design the Marketing Organization – ranging from a single-person (for a small business) to a national launch that requires coordination across several cities. 3. Develop Schedules – realistic, not optimistic. 4. Execute the Marketing Program: Marketing Strategy – long-term format. Marketing Tactics – specific detailing. 20 D. Kernaghan 2024 The Strategic Marketing Process: The Evaluation Phase 1. Comparing Results with Plans to Identify Deviations 2. Acting on Deviations: Correcting a negative deviation Exploiting a positive deviation 21 D. Kernaghan 2024 To Summarize We have: Defined Strategic Planning as a function of an organization’s hierarchy. Presented two common business-growth models. Discussed the SWOT analysis. Discussed the Implementation phase of a marketing plan. Discussed the Evaluation (deviation) phase of a marketing plan. 22 D. Kernaghan 2024