In last Lesson the focus of discussion was marketing challenges in
the 21st century. Today we will discuss strategic planning, describe
marketing management and planning process, identify sections of a
marketing plan and specify the contents of each section. So today we
will be covering following topics:
STRATEGIC PLANNING AND MARKETING PROCESS
1. Strategic planning
The process of developing and maintaining a strategic fit between the
organization’s goals and capabilities and its changing marketing
opportunities is called Strategic planning. Planning is basically
concerned with what are we going to do and how are we going to do it?
Organizations, which are not able to perform the effective planning, are
actually planning for failures. To meet changing conditions in their
industries, companies need to be farsighted and visionary, and must
develop long-term strategies. Strategic planning involves developing a
strategy to meet competition and ensure long-term survival and growth.
The marketing function plays an important role in this process in that
it provides information and other inputs to help in the preparation of
the organization’s strategic plan. Planning is performed to:
• Address changing environment and consumers
• Develop shared goals within organization
• Address competitive threat
• To anticipate the future
• Determine actions that are needed to achieve objectives
Strategic planning is mainly of three types:
(1) Strategic Planning:
Major activities in
strategic planning process include developing the company's goals and
plans. Typically strategic planning focus on long-term issues and
emphasize the survival, growth, and overall effectiveness of the
(2) Tactical Planning:
Tactical planning is
concerned with translating the general goals and plans developed by
strategic managers into objectives that are more specific and
activities. These decisions, or tactics, involve both a shorter
time horizon and the coordination of resources.
(3) Operational Planning:
Operational planning is
used to supervise the operations of the organization. It is directly
involved with non-management employees, implementing the specific plans
developed with tactical managers. This role is critical in the
organization, because operational managers are the link between
management and nonmanagement personnel. Your first management position
probably will fit into this category.
2. Characteristics of a Strategic Plan
Strategic planning consists of developing a company mission (to give
it direction), objectives and goals (to give it means and methods for
accomplishing its mission), business portfolio (to allow management to
utilize all facets of the organization), and functional plans (plans to
carry out daily operations from the different functional disciplines).
Since most companies are interested in growth, this chapter explores
several growth alternatives within the context of strategic planning and
portfolio analysis. The product/market expansion grid shows four avenues
for growth: market penetration, market development, product development,
and diversification. Many companies operate without formal plans.
However, formal planning can provide many benefits:
1). It encourages management to think ahead systematically.
2). It forces managers to clarify objectives and policies.
3). It leads to better coordination of company efforts.
4). It provides clearer performance standards for control.
5). It is useful for a fast-changing environment since sound planning
helps the company anticipate and respond quickly to environmental
changes and sudden developments.
3. Strategic planning Process:
It is defined as the process of developing and maintaining a
strategic fit between the organization’s goals and capabilities and its
changing marketing opportunities.
1). Strategic planning sets the stage for the rest of the planning in
2). There are four steps to the strategic planning process:
a). stating a clear company mission.
b). Setting supporting company objectives.
c). Designing a sound business portfolio.
d). Planning and coordinating marketing and other functional strategies.
a. Defining the Company’s Business and Mission
An organization exists to accomplish something. When management
senses that the organization is drifting, it is time to renew its search
for purpose by asking:
1). What is our business?
2). Who is our customer?
3). What do customers value?
4). What should our business be? The first step in the strategic
1). A mission statement is a statement of the
organization’s purpose—what it wants to accomplish in the larger
2). A clear mission statement acts as an “invisible hand” that guides
people in the organization.
3). Market definitions of a business are better than product or
technological definitions. Products and technologies can become
outdated, but basic market needs may last forever.
4). A market-oriented mission statement defines the business in terms
of satisfying basic customer needs. The mission statement must avoid
being too narrow or too broad. Mission statements must:
1). Be realistic.
2). Be specific.
3). Fit the market environment.
4). Indicate distinctive competencies.
5). Be motivating.
b. Setting Company Objectives and Goals
The company’s mission needs to be turned into detailed supporting
objectives for each level of management. This second step in the
strategic planning process requires the manager to set
company goals and objectives and be responsible for
1). The mission leads to a hierarchy of objectives including business
and marketing objectives.
2). Objectives should be as specific as possible.
c. Designing the Business Portfolio
The third step in the strategic planning process is designing
the business portfolio.
1). The business portfolio is a collection of
businesses and products that make up the company.
2). The best business portfolio is the one that best fits the
company’s strengths and weaknesses to opportunities in the environment.
b. In order to design the business portfolio, the business must:
1). Analyze its current business portfolio and decide which business
should receive more, less, or no investment.
2). Develop growth strategies for adding new products or businesses to
the portfolio. Analyzing the Current Business Portfolio In order to
analyze the current business portfolio, the company must conduct
portfolio analysis (a tool by which management
identifies and evaluates the various businesses that make up the
Two steps are important in this analysis:
1). The first step is to identify the key businesses (SBUs). The
strategic business unit(SBU) is a unit of the company
that has a separate mission and objectives and which can be planned
independently from other company businesses.
2). The SBU can be a company division, a product line within a division,
or even a single product or brand. 3). The second step is to assess the
attractiveness of its various SBUs and decide how much support each
deserves. The best-known portfolio planning method is the Boston
Consulting Group (BCG) matrix: 1). Using the BCG approach, where a
company classifies all its SBUs according to the
a). The vertical axis, market growth rate, provides a measure of
b). The horizontal axis, relative market share, serves as a measure of
company strength in the market.
2). Using the matrix, four types of SBUs can be identified:
b. Cash Cows
c. Question Marks
a). Stars are high-growth, high-share businesses or
products (they need heavy investment to finance their rapid growth
b). Cash Cows are low-growth, high-share businesses or
products (they are established, successful, and need less investment to
c). Question Marks are low-share business units in
high-growth markets (they require a lot of cash to hold their share).
d). Dogs are low-growth, low-share businesses and
products (they may generate enough cash to maintain themselves, but do
not have much future). Once it has classified its SBUs, a company must
determine what role each will play in the future. The four strategies
that can be pursued for each SBU are:
1). The company can invest more in the business unit in order to
build its share.
2). The company can invest enough just to hold at the
3). The company can harvest the SBU.
4). The company can divest the SBU.
As time passes, SBUs change their positions in the growth-share
matrix. Each has its own life cycle. The growth-share matrix has done
much to help strategic planning study; however, there are problems and
limitations with the method.
1). They can be difficult, time-consuming, and costly to implement.
2). Management may find it difficult to define SBUs and measure market
share and growth.
3). They focus on classifying current businesses but provide little
advice for future planning.
4). They can lead the company to placing too much emphasis on
market-share growth or growth through entry into attractive new markets.
This can cause unwise expansion into hot, new, risky ventures or giving
up on established units too quickly. In spite of the drawbacks, most
firms are still committed to strategic planning.