How to Develop a Strategic Marketing Plan

A Step-By-Step Guide

Norton Paley

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351440325
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Operations

Two-thirds of rapid-growth firms use written business plans, according to Price, Waterhouse, Coopers 1998 Trendsetter Barometer. The survey also states that firms with written plans grow faster, achieve a higher proportion of revenues from new products and services, and enable CEOs to manage more critical business functions. How to Develop a Strategic Marketing Plan is both innovative and pragmatic in its approach. It explains how to combine the strategic vision of long-term business planning with the action-oriented thrust of a short-term marketing plan. Planning forms and guidelines for customizing your own Strategic Market Plan (SMP) are available for download from the CRC Press website. Just go to the download tab located with the book's description.Actual case histories - from companies such as Campbell Soup, Co., Texas Instruments, Inc., and Quaker State Corp. - illustrate how business-building opportunities translate into strategies and tactics. They demonstrate the compelling relationship between internal organizational functions and external market conditions, the long- and short-term strategic marketing issues and the advantages of developing an SMP.Strategic market planning shapes the future of business. In its broadest dimension it sets in motion actions that impact long term prosperity. How to Develop a Strategic Marketing Plan gives you the tools to generate a credible strategic marketing plan so your organization can survive in the 21st century.

I
Strategic
Section

1
The Strategic
Marketing Plan

Chapter Objectives

Given the information in this chapter, you will be able to:

1. Outline the strategic section of the Strategic Marketing Plan (SMP).
2. Interpret the SMP guidelines by examining the plan of an actual company.
3. Apply the guidelines to developing your own SMP.

Overview

Now that you understand the history of planning and the evolution of the SMP as outlined in the previous chapter, you are ready to develop your own plan.

You can obtain optimum results for a SMP by following a process, which is diagrammed in Figure 1.1. (Each section of the SMP diagram will be highlighted as the material is discussed in the text.) As you examine the flowchart, notice that the top row of boxes represents the strategic portion of the plan and covers a 3- to 5-year time frame.

The bottom row of boxes displays the tactical 1-year marketing plan. Although these sections — strategic and tactical — are discussed in separate chapters for ease of explanation, in actual form it is the merging of the strategic plan and the marketing plan into one unified SMP that makes it a complete format. (The previous introduction explained the justification for merging the two formerly separate plans.)

Figure 1.1 Strategic Marketing Plan

You will find that following the SMP process will add an organized and disciplined approach to your thinking, yet the process in no way confines your thinking or creativity. Instead, it enhances your inventiveness and extends a strategy vision that elevates the creative process. In turn, that strategy vision can pay off in abundant opportunities expressed through markets, products, and services.

This chapter and Chapter 2 address each section shown in Figure 1.1. To make the most comfortable learning experience for you, the following format is used for each section:

• Planning Guidelines: each section of the SMP is defined with point-by-point directions to help you master the process. Application: a sample plan of an actual company illustrates each part of the plan. Where appropriate, additional commentary is added to more fully explain the usage.
• Working Draft: as you go through each section, you can make notes and develop your own draft. When completed, you can transfer the draft and any subsequent updates to the SMP computer disk provided with the book.
• Help Topics: Chapter 5 provides you with comprehensive information on the more complex topics covered in this chapter and Chapter 2. Referring to it often will ease your decision making and enhance your planning expertise.

The Strategic Plan: Looking Forward 3 to 5 Years

The top row in Figure 1.1, consisting of four boxes, represents the strategic plan portion of the SMP. The strategic plan is defined as the managerial process for developing and maintaining a strategic fit between the organization and changing market opportunities. It relies on developing the following sections: (1) a strategic direction or mission statement, (2) objectives and goals, (3) a growth strategy, and (4) business portfolio plans.

Section 1: Strategic Direction

Let's begin with the first box, Section 1, Strategic Direction. This is where you create a strategic direction — also known as a mission or vision — for your company, division, product, or service.

Planning Guidelines

You can use the following questions to provide an organized approach to developing a strategic direction. Answering the questions will help you shape the ideal vision of what your company, business unit, or product/service will look like over the next 3 to 5 years. More precisely, it should echo your and your team's long-range philosophy, as long as it is consistent with overall corporate objectives and policy.

As you think about your strategic direction, consider the following six questions:

1. What are your firm's distinctive areas of expertise?
2. What business should your firm be in over the next 3 to 5 years? How will it differ from what exists today?
3. What segments or categories of customers will you serve?
4. What additional functions are you likely to fulfill for customers as you see the market evolve?
5. What new technologies will you require to satisfy future customer/market needs?
6. What changes are taking place in markets, consumer behavior, competition, environment, culture, and the economy that will impact your company?

The point of this exercise is that first, the responsibility for defining a strategic direction no longer belongs exclusively to upper management; second, there are a host of internal and external issues that can affect your SMP.

For best results, managers from various departments — marketing, product development, manufacturing, finance, and sales — should contribute to defining the strategic direction of the business or individual product.

Let's examine each of the above questions:

1 What are your firm's distinctive areas of expertise?

This question refers to your organization's (or business unit's) competencies. You can answer by evaluating the following:

• Relative competitive strengths of your product or service based on customer satisfaction, profitability, and market share
• Relationships with distributors and/or end-use customers
• Existing production capabilities
• Size of your sales force
• Financial strength
• R&D expenditures
• Amount of customer or technical service provided

Further, where time and resources permit, you can delve into the question by conducting a strength/weakness analysis that serves as a marketing audit. (You will find a practical format for conducting a marketing audit in Chapter 4.)

2 What business should your firm be in over the next 3 to 5 years? How will it differ from what exists today?

The major work in this area of strategic thinking is attributed to Theodore Levitt,¹ of the Harvard Business School, in his classic article, "Marketing

Table 1.1 Company Identity as Reflected by Orientation Concepts

Myopia." Using the railroads as a prime example, Levitt shows how the railway system declined in use as technology advanced, because executives defined the business too narrowly. He explains that to continue growing, companies must determine customers' needs and wants and not rely simply on the longevity of their products.

According to Levitt, a myopic view is grounded on the following four beliefs that begin in a manager's mind and permeate an organization: (1) growth is guaranteed by an expanding and affluent population, (2) there is no competitive substitute for the industry's major product, (3) excessive belief in mass production and rapidly declining unit costs as output rises, and (4) preoccupation with a product that lends itself to experimentation and manufacturing cost improvement.

The key point: looking out the window toward inevitable change, not into a mirror that reflects existing patterns, characterizes the market-driven vs. a product-driven organization.

Table 1.1 illustrates how organizations in a variety of industries express their identity between those two orientations of product driven vs. market driven. Note, too, how the differing perceptions would change the character of an organization and, in turn, become the underpinnings of a company's (or business unit's) strategic direction.

Thus, to continue growing, managers must create a viable strategic direction that looks critically at marketable trends and connects them with customers' needs and wants. Doing so avoids relying on the longevity of existing products to sustain company growth.

The implications of how you strategically position your business for the future determines the breadth of existing and new product lines and the range of existing and new markets served. If you are too narrow (myopic in Levitt's terms) in defining your business, the resulting product and market mix will be generally narrow, and possibly too confining for growth.

Conversely, defining your business too broadly can result in spreading capital, people, and other resources beyond the capabilities of the organization. You can create a balance by defining the scope of your business on two dimensions:

First, examine the culture, skills, and resources of your organization. Second, consider such factors as customer needs, business functions to be enhanced or added, and types of new technologies you need to compete successfully. The answers will emerge through the question and answer process suggested in this section.

3 What segments or categories of customers will you serve?

Customers exist at various levels in the distribution channel and in different segments of the market. At the end of the channel are end-use consumers with whom you may or may not come within direct contact.

Other customers in the distribution chain serve as intermediaries and typically perform several functions. Intermediaries include distributors who take possession of the products and often serve as a warehousing facility. Still other intermediaries repackage products and maintain inventory control systems to serve the next level of distribution. And there are value-added resellers that provide customer service, technical advice, computer software, or educational programs to differentiate their products from those of competitors.

Examining the existing and future needs at each level of distribution helps you project the types of customers you want to target for the 3- to 5-year period covered by the strategic portion of your SMP. Similarly, you will want to review various segments and target those that will provide the best opportunities over the planning period.

4 What additional functions are you likely to fulfill f...