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Online marketing & communication 2 summary
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Chapter 2 strategy development and marketing planning:Introduction:
Managers are paid to make important, often difficult decisions. They must select a
lucrative target market and launch a range of attractive products and services using the
best distribution channels, while successfully communicating product and service
benefits to customers. And all this must be accomplished within the allocated marketing
budget, bearing in mind that resources are limited.
A systematic marketing approach greatly increases the chances of success. Successful
managers focus externally on their customer and competitors.
Developing a successful marketing strategy is of key importance to marketing
executives. Marketing strategy must be in line with overall corporate strategy and
therefor we must understand how an effective corporate strategy is designed. To get a
better grasp of this procedure we will look at a model that maps out the entire
marketing planning process. We will see that before we can draw up and implement
meaningful plans, we need to conduct an analysis of the situation. Not only an internet analysis but also external;
environment that it operates in. by combining the results of the internal and external analyses, we can plot an effective
marketing strategy. The development and systematic implementation of a
carefully considered marketing action plan is the key to success.
2.1 marketing planning:
Managers are basically concerned with 4 things: the analysis, planning,
implementation and control of the company’s activities. These tasks – essential for effective marketing management.
2.1.1 differences between strategic and tactical planning:
Planning should NOT be confined to the short-term. Rather than concentrating on the day-to-day business operation, which
is relatively easy to oversee, we need to anticipate significant future opportunities and challenges. Prepare for both the long
term and the short term with a well thought-out strategy that includes tactics. Strategy and tactics combined from the
company’s policy.
A strategic marketing plan defines the marketing goals (such as increased market share and revenue) for a period of 2/5
years and indicates HOW (in which markets and with what products) those can be realised. This long-term plan is based on
certain assumptions, estimates and scenarios. Connection between these strategic decisions that affect the company’s
survival and success. Of course the marketing strategy must also be carefully aligned with the corporate strategy. Only then
can the marketing strategy help the company to achieve its overall corporate objectives.
A short-term plan is more operational in that it describes the tactics the company will implement to achieve its short-term
objectives. An operational marketing plan for a period of one year is quite common. This kind of elaboration of the
marketing mix can relate to an individual product/brand/product line/company as a whole. If the operational marketing
plan is for the entire company, it will set out all of the marketing
objectives and the company’s full marketing strategy. Including the
budgets and action plan per product market combination.
Wrongly chosen or implemented strategies create problems!! A more
lucrative long-term strategy is to develop and exploit a competitive
advantage. Too many companies have similar offerings, this puts
pressure on prices and leads to narrow margins. To avoid this, a company should select the right target market and try to
market something better or different.
2.1.2. three levels of strategy development:
Business plan that determines how much room marketers have to manoeuvre. When making decisions, senior management
will take the plans and priorities of the marketing department into consideration. This interaction, many marketing, product
managers get involved in strategic planning at higher levels. This aligns their operational marketing or product plan with the
business plan, = sets out the business strategy. The marketing strategy described in the business plan must, in turn be
,optimally aligned with the overall corporate strategy. Marketers need to know HOW the strategy and objectives are
established at the top echelon of the organisation.
1. Corporate strategy:
Is developed at the uppermost levels of the
organisation. Mostly various STRATEGIC BUSINESS
UNITS (SBU). Each of these SBU’s is a division of the
organisation that operates more or less independently;
sells range of products to certain group of customers,
clearly defined competitors, is responsible for
development, implementation strategy. SBU vary from
single product line/facility to one or more
divisions/market. ‘’independent firms, own
management’. The CEO will assess each of the SBU’s
individually.
Organisation can be divided into strategic business units
in different ways. How the corporate activities
fundamentally differ. Sometimes these correspond to
the strategic variables that are already being used to
divide the market into segments, or target markets that
are each approached with a different strategy. E.g.
based location.
Strategic planning is at the highest organisational level
drawn by head office to assure a profitable future for the corporation. These broad outlines are also known as STRATEGIC
PROFILE; resources to which the SBU have access. Management also influences the SBU investment. Affects in which
markets the SBU competes and the activities it undertakes to bridge possible gaps between the stated objectives and the
anticipated results.
2. Business strategy:
The divisions, subsidiaries or SBU’s of the corporation conduct the second level of planning. The CEO of this operational
unit develops an business strategy. This involves more than the marketing strategy. The CEO also distributes the resources;
money, production capacity. Made available to the SBU among its various activities (production line) in a way that will
achieve best results. The steps in this planning process are about the same as those at the corporate level (deal different
issues). Strategy development starts with the strategic profile. Established in brief description of the
company/products/market in which they operate. The financial viability of the ideas is assessed at the SBU level.
3. Marketing strategy:
3rd level at which strategy development occurs; level of a product/brand/product line. This is usually called marketing
planning. Marketing planning is the marketing managers/product managers responsibility. They develop a
product/price/promotion and distribution in order to achieve the objective of their product-market combination. Analyse
the info. About the size of the markets, their target markets and the profit contribution per product. Marketing, production
managers are concerned with both strategic and operational management tasks. Many organisations = middle
management. The info they include in the individual marketing plan is integrated into the corporate marketing plan.
2.1.3 Building blocks of success:
Several components of a marketing strategy contribute to an effective business strategy.
The more the various business units or divisions succeed in achieving their marketing
objectives, the greater the chance that the corporation/organisation as a whole; will be
able to compete successfully. The four cornerstones of a marketing strategy are:
1. Brand image, make products, services recognisable, attractive for the eye.
2. Quality, must meet customer expectations about product performance.
3. Innovation, to create new, unique benefits in using the product
4. Ongoing customer relationship, meet customer needs as well as possible.
Important challenge for an organisation is finding the right balance in setting priorities
with regard to these key factors for success.
,2.1.4 A marketing planning and management model:
Strategy development is usually considered at business unit level (corporate strategy as a logical point of departure). The
cornerstone of this business unit strategy is the marketing strategy, which in turn often serves as the basis for the strategies
of other departments/functional areas. The combination/integration of all functional strategies constitutes the strategy of
the business unit. The company’s chief executive officer sets guidelines for the planning procedure and the values that
should dominate each plan.
Marketing is a mindset for these managers. They focus on customers and other stakeholders rather than on the company’s
products and services. In a marketing-oriented company marketing planning begins with the customers. Their needs, wants
– within the firm’s business definition – should be carefully analysed in order to satisfy them successfully.
-> shows the importance of the customers. They are positioned at
the top of the model that maps out the process of marketing
planning and marketing management. This model is divided up into
three phases: analysis, marketing strategizing (strategy
development, planning and marketing control) & implementation of
the strategy (execution & control).
The marketing planning, management process involves activities
related to each of the four basic tasks of management mentioned
earlier: analysis, planning, implementation and control.
Analysis: a company striving to satisfy its customers has to make
choices. Focus = certain target market. Most effective strategy is
largely dependent on main step In the analysis part of the marketing
planning process; SWOT analysis STRENGHTS, WEAKNESSES,
OPPORTUNITES, THREATS. A feasible plan is based on an analysis of
the company’s strengths and weaknesses (internal analysis), the
opportunities and threats likely to encounter in the environment
(external analysis).
Planning and implementation: in the marketing planning process the strategy development phase begins with the
formulation of marketing objectives in light of the results of the analysis. The next step in developing an effective strategy is
to define and evaluate strategic options. A feasible strategy to achieve the stated objective might be to sell more of existing
product range to current customers, increasing sales by offering. Another strategic option is to find new customers within
target market. Whether it is for the short/long term it is important to pay attention to planning for next year.
Control: the chosen marketing strategy results in a marketing action plan for the year ahead. The plan explains how
company will use the available resources and marketing mix instruments to approach the market as effectively as possible
and to achieve its objectives in the short-term. Implementation of the plan requires continuous control, which involves
monitoring results to determine if any adjustments in the strategy need to be made. If changes are necessary, the measures
taken should not conflict with the strategy of the company.
2.2 Business definition and mission statement:
A strategic plan outlines in broad terms the direction for the company. It specifies among other things, the company’s
intended market and new product development. This is the essence of strategic planning; the development of a long term
plan to use the resources of an organisation in an optimal way, within the constraints of the business definition and the
mission of the organisation.
Should always describe the markets in which we are currently competing + results we achieved. Before developing a new
plan for the future. Only when we define the market correctly can we calculate our market share conduct the right market
analysis and plot out a course that will lead to further growth.
2.2.1 Formulating the business definition:
Companies tend to define what they do in relation to a target market (usually focussing on needs of these customers). That
is because products and technologies have a limited lifespan (may become obsolete), needs therefor markets are constant.
The Abell model:
, The business definition specifies the company’s (potential) activities. It indicates the sphere of limits of the organisations
Field of activity, leaving enough room to develop new, additional products and services. At the core of the business
definition is the business domain/scope. The extent of the firms current activities. To describe a company’s broader
business definition. The 3 basics that form the Abbel model:
Customers; what type of customer?
Needs; what customer functions should we fulfil?
Technologies; with which products and services?
The market consist of the first factor (the customers we focus on), product is largely
determined by the last two factors (customers needs and technologies). Refer to
business units defined in this way as product-market-technology combinations.
Analysis based on these dimensions is not only useful for describing the business
definition, but also for developing the company’s strategy. It not only provides insight
into the market in which the firm operates, nut also clarifies the firms (potential)
position on that market, relative to the competition.
We can now identify any business by referencing to the intersection of the three
dimensions. The organisation can expand its business domain or scope by entering
other cells. The strategic decision to do so will often be made on the basis of the SWOT.
2.2.2. Defining the company’s mission
The mission is usually defined once top management in its strategy developing efforts – has considered what kind of
company it is or should be running, what markets it should focus on, and how it can profitably beat the competition.
Mission statement:
The mission statement spells out the company’s strategic vision, including its corporate philosophy, the overall goals, top
management values, priorities and the strategies it pursues. A good mission statement addresses questions such as; what
are our core activities/words, what business are we? What kind of company would we like to become?
Mission statement is the formal description of an organisations mission. It should not simply list the company’s products,
services and (target markets), but rather describe the company’s strengths (core competences) and the technologies it
should master in order to successfully compete in meeting customer needs, in fact a company’s strengths reflect its core
competences. Core competences are capabilities that customers value and competitors find hard to duplicate.
The mission statement is often expressed in terms of the customers needs. Also outlines the organisations strategic
ambitions (must be achievable) & its vision of how it can be achieved. Sometimes companies describe their mission to
vague. You have to add supporting facts or specific guidelines for a strategy.
Functions of the mission statement:
A missions statement has both an external function and an internal function. External functions of the mission statement
when published in the annual report is the emphasise the distinctive features of the company. It may outline the
organisations (attitude towards society, its employees, shareholders). The mission statement describes the nature of the
company, what is does and what it stands for. It is often supplemented with several shorter vision statements about what
the company wants to achieve in the future. These reflect the ambitions of its management.
The mission statement often describes how the company perceives itself. Importance of growth or profit for its continuity,
the needs of its customers. Internally the mission statement function is to motivate the employees and to get them -
particularly managers- to reflect on the strategy. Helps to create a positive mindset (what business are we in, and what do
we really want?). The mission statements key feature is to direct the growth of the company or SBU using the corporate
mission statement as a point of departure. The mission should NOT be formulated too broadly or too narrowly. It its too
broad, vague it will not serve as a compass. You have to find the right balance.
2.3 SWOT analysis:
A company that wants to grow sets out ambitious objectives and creates a plan to achieve them. In doing so it should not to
lose sight of reality. A feasible plan must be based both on an analysis of the company’s strengths and weaknesses (internal
analysis) and of the opportunities and treats in the environment (external analysis). Together these two analyses are known
as the situation analysis. Together they can evaluate the company’s fulfilment of its basic mission and systematically come
up with guidelines for strategy development and future management actions.
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