CHAPTER 12 STRATEGIC PLANNING, IMPLEMENTING AND ...

INDUSTRIAL MARKETING: Chapter 12 1

CHAPTER 12

STRATEGIC PLANNING, IMPLEMENTING

AND

CONTROLLING IN INDUSTRIAL MARKETING


Understand the characteristics of market – oriented

organization

Know the role of marketing in strategic planning

Examine the strategic planning process at business unit

level

Understand preparation implementation and control of

industrial (or business )marketing plan.


CHARACTERISTICS OF MARKET – ORIENTED ORGANISATIONS

Firms achieve market – orientation by

managing the following factors.

(i) Shared values

(ii) Organization structure, policies and culture

(iii) Strategic Planning

(iv) Needs or expectations of stakeholders


Hierarchy of Strategies

Before understanding the role of marketing in strategic planning, we

shall first examine hierarchy of strategies.

Organisational

Levels

Organisational

Structure

Strategy hierarchy

(Type of Management)

CorporateDivisional/

Business Strategy

(Strategic

Management)

Divisional /

Business Unit

/ SBU

Corporate

Office

SBU

II

SBU

III

SBU

I

Marketing FinanceProduction

Functional

Strategy

(Operations

Management)

Functional


The earlier figure shows hierarchy of strategies and organization

structure of a large company.

Strategic management gives a direction to the firm and focuses on

developing strategies to achieve long – term objectives & goals

A Strategic business unit (SBU) consists of an independent

business or related business that has its own competitors and

specific markets. In some large companies there are (product )

divisions and each division has a divisional plan. Each SBU is

headed by a manager who is responsible for strategic planning

and performance of the SBU.

Operational Management maintains the direction given by

strategic management, and concentrates on day-to-day issues of

costs, revenue and profits.


ROLE OF MARKETING IN STRATEGIC PLANNING IN A FIRM

CompanyLevel FormalName Role of Marketing

Corporte CorporteMarketing To give information on markets and to ensure customer orientation, forcorporate strategy development.

Divisional /BusinessUnit level StrategicMarketing

To carry out customer & competition analysis, for developing business strategy, including competitive advantage, segmenting, targeting, and positioning strategies.

Funcitonal Marketing Management To develope short - term marketing plan and strategy, coordination, and resource allocation.

Company

Level

Formal

NameRole of Marketing

CorporteCorporte

Marketing

To give information on markets and

to ensure customer orientation, for

corporate strategy development.

Divisional /

Business

Unit level

Strategic

Marketing

To carry out customer & competition

analysis, for developing business

strategy, including competitive

advantage, segmenting, targeting, and

positioning strategies.

FunctionalMarketing

Management

To develop short - term marketing

plan and strategy, coordination, and

resource allocation.


STRATEGIC PLANNING PROCESS AT CORPORATE LEVEL

The major steps involved are:

• Deciding corporate mission and objectives

• Establishing strategic business units ( SBUs)

• Allocation of resources to SBUs

• Developing corporate strategies

ALLOCATION OF RESOURCES TO SBUs

Two widely used models /tools are : (i) Boston Consulting

group (BCG) model, called Growth –share matrix, (ii)

General electric (GE) model, called Business Screen

matrix.


BCG Model : Growth – Share Matrix

Stars

Ma

rket

Gro

wt h

Ra

te

Large Small

Rap

idS

low

1

5

Question marks

6

8

4

Cash Cow

3

27

Dogs

Relative Market Share


GE Model : Business Screen Matrix

High Medium Low

Business Strength

High

Medium

Low

Selectivity / Earnings

1

1

5

Invest /

Grow

Harvest /

Divest


Major Business Strength factors: Market share, product

quality, unit costs, R&D performance, brand reputation,

share growth.

Major Market Attractiveness factors : Overall market size,

annual market growth rate, historic profit margin,

competitive intensity, technological requirements.


DEVELOPING CORPORATE STRATEGIES

Strategic planning gap. It is the gap between

future (5 years) desired sales and the projected

sales (of all SBUs ) of a company.

Sal

es

Time (Years)

A

0 5

B

C

Projected Sales

StrategicPlanning gap

Desired Sales


The strategic planning gap can be filled by three

alternative strategies : (A) Diversification growth, (B)

Integrative growth, (C) Intensive growth

(C) Intensive Growth Strategy. Corporate management

should first review existing business, using Ansoff’s

product-market expansion grid, shown hereafter :

Current Products

Market Penetration

Strategy

Product development

Strategy

Market development

Strategy

( Diversification

Strategy )

Current

Markets

New

Markets

New Products


(B) Integrative Growth Strategy includes increase

in a firm’s sales and profits by integrating

backward, forward, or horizontally within that

industry.

(A) Diversification growth strategy is considered

when (B) & (C) strategies are inadequate to

achieve desired growth and also good

opportunities are found outside the present

businesses.


STRATEGIC PLANNING PROCESS AT BUSINESS UNIT LEVEL

The following steps are followed by the business – unit head.

Defining the business unit’s mission

Scanning the external environment (O.T. Analysis)

Analyzing the internal environment (S.W. Analysis)

Developing objectives and goals

Formulating strategies (See hereafter)

Preparing programme or action – plan

Implementing strategies and action plan

Feedback and control


* PORTER’S Generic Strategies Framework for

Business unit

DifferentiationOverall cost

leadership

Focus

Industrywide

Particular

segment only

Low - cost positionUniqueness Perceived

by customer

Strategic Advantage


Marketing Planning Process

The head of marketing prepares the marketing plan (short-term

up to one year) after going through “Marketing Planning

Process”, which includes the following steps :

(i) Analyzing marketing opportunities

(ii) Segmenting and selecting target market segments

(iii) Developing marketing strategies

(iv) Implementing and controlling the marketing plan

The head of marketing now prepares the writhen document,

called marketing plan, with the following steps.


Business ( Industrial ) Marketing Plan

Situational analysis: Market, competitive, product, and macro –

environmental analysis.

SWOT and Issues analysis

Marketing Objectives and goals

Marketing Strategy: Selection of target market segments, positioning,

marketing mix, customer service and marketing research.

Action plans / Tactics

Marketing Budget

Implementation and control: Building marketing organization and

control process.

Contingency plan


IMPLEMENTATION OF MARKETING PLAN

It is a process that turns marketing plans into action plans and

ensures that the tasks or activities of action plan are executed in

as manner that achieves the marketing objectives and goals. For

this the necessary organization structure and people are selected.

Marketing resource management (MRM) software will help

marketers to improve their decisions, and also in implementation

and controls.

Control Process includes (a) setting goals, (b) measuring actual

performance, (c) comparing goals and actual performance, (d)

analyzing causes of deviations, if any (e) taking corrective actions,

if needed.

Types of controls : (i) Strategic control , (ii) annual plan control (iii)

efficiency control , (iv) profitability control.


SUMMARY OF CHAPTER 12

Marketing orientation is achieved by firms by managing shared

values, organization structure, policies and cultures, strategic

planning, needs and expectations of stakeholders.

Before understanding the role of marketing in strategic planning,

it is necessary to examine hierarchy of strategies.

Major role of marketing is at business unit and functional levels,

and less at corporate level.

Strategic planning process at corporate level includes corporate

mission & objectives, establishing and allocation of resources to

SBUs and developing corporate strategies.


Strategic planning process at SBUs level includes mission, SWOT

analysis, objectives and goals, strategies, action plan,

implementation and control.

The marketing head should go through marketing planning

process, before preparing the marketing plan.

Implementation and control of marketing plan are important for

achievement of marketing objectives and goals.

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