MKTM028 Strategic Marketing Week 2 : Strategic Planning Dr Stephen Castle Dr Elizabeth Kim

I pictured a rainbow You held it in your hands I had flashes But you saw the plan I wandered out in the world for years While you just stayed in your room I saw the crescent You saw the whole of the moon   Waterboys "The Whole of the Moon", 1985 https://www.youtube.com/watch?v=8TON3PORRDQ

Learning Objectives Understand what is strategy Appreciate the importance of strategic planning Understand the planning process Appreciate the breakdown of planning activity: external/internal; macro/meso/micro environment

Strategic Marketing Planning “Strategy is the matching of the activities of an organisation to the environment in which it operates and to its own resource capabilities.” Johnson et al. 2008

Strategy: the art of conducting a campaign So what is “strategy”? Strategy: the art of conducting a campaign Tactics: manoeuvring in the face of the enemy

Issues for Strategy: What is the major purpose of the organisation - its raison d’etre? What are/should be our goals? What are our values/culture? What changes do we see in our external environment - with what impact? What markets should we be in? How should we compete? Is our structure effective? Are our resources (especially human resources) appropriate? How do we replenish them? Do we need to change to create/preserve effectiveness?

Strategic Planning Framework Where are we now? Review current strategic position and clarify mission, vision, and values Where do we want to get to? Establish competitive advantage and your vision. Clearly see the direction the organization is headed How will we get there? Lay out the road to connect where you are now to where you are going. Set strategic objectives, goals, and action items and how you will execute your plan, and control & evaluate it.

So - what’s marketing strategy all about?

Marketing Strategy is About: doing what matters most to the customer getting what we want through long-term customer satisfaction building new and better ways of looking at the market to get leverage to change what we do “delivering products and services which offer better value over rivals in the market” Doyle (1997)

The purpose of marketing planning “The overall purpose of marketing and its principal focus is the identification and creation of competitive advantage.” McDonald (2004)

What is marketing planning? “A logical sequence of activities leading to the setting of marketing objectives and the formulation of plans for achieving them.” (Mcdonald 2004)

Why is it necessary? Increasing turbulence, complexity & competitiveness Faster technological change The need for organisations to identify the sources of their competitive advantage And………??

The Strategic Triangle Company The Macro Environment Solution? Formula? Company Strategy - allocation of resources Customers Competitors Ohmae, K (1982) The Mind of the Strategist

Each of the 4C’s shows radical change: CUSTOMERS’ expectations have risen - and are no longer the passive people of marketing texts COMPETITORS are more vigorous, with radically innovative new entrants COMPANIES have changed structures – BPR*, outsourcing, downsizing, strategic alliances. New ways of doing business - direct, e-commerce, microsegmentation - have emerged CHANNELS have become stronger, more flexible and more assertive. * Business Process Reengineering

Planning? Planning is the dynamic force which...... ....helps to drive the organisation forward........... ............by co-ordinating resources..... ......and channelling them towards.... .........the achievement of predetermined goals

Deliberate and emergent strategies (Mintzberg and Quinn,1995) Intended strategy Realised strategy Deliberate strategy Emergent strategy Unrealised strategy

The Making of Success “Every successful business strategy is a mixture of accident and design, of planning and serendipity”. John Kay, FT, 21.2.01.

The advantages of planning reduces the risk from increasing size imbues a sense of purpose and direction ensures response, proactive not reactive provides a source of motivation, involvement and ownership establishes standards of performance to be met.

Benefits of planning Hooley et al, 2012

The elements of a plan What has to be done OBJECTIVES: what we want to achieve How and by when it has to be done STRATEGY: a broad statement of means Who should do what to get it done TACTICS: details, costed and allocated

Planning stages Hooley et al, 2012

The Mission Statement Based on answers to the following questions: what is our business? who is the customer? what is value to the customer? what will our business be? what should our business be?

Components of mission Hooley et al, 2012

Mission Statements Google – “organise the World’s information & make it universally accessible & useful.” Cobra – “to aspire & achieve against the odds.” …………………………..what do you think?

Born in India in 1961, Karan (Lord) Bilimoria is the son of a general in the Indian army

External audit: a detailed examination of the markets, social, business, and economic environments (etc) in which the organisation operates.

Internal audit: an evaluation of the firm’s entire value chain

forces at the national/global level Meso-environment Macro-environment forces at the national/global level Meso-environment forces at the market level Micro-environment forces at the Internal/individual level CAREFUL

PESTEL Political P E Economic S Social/cultural Technological T Environmental Legal factors More on this next week…..

More commonly people talk of Macro and Micro environments (no Meso): Macro-environment PESTEL Micro-environment Employees, customers, suppliers, competitors, other stakeholders

Creating a competitive positioning, which………… Is clearly grounded in the marketplace Assesses market attractiveness Evaluates the organisation’s potential to serve that market place.

Generating a competitive advantage Cost Leadership Differentiation Focus The 3 generic strategies (Porter, 1980) ……Relevance today?..... critical evaluation…. What do you think?

Effective product portfolio analysis Managing today & tomorrow Managing risk Managing cash flow More of this in week 9

SWOT A distillation of the findings of the internal and external audits which draws attention to the critical factors facing the company classified as: Strengths Weaknesses Opportunities Threats

Hooley et al, 2012

Hooley et al, 2012

Strengths Weaknesses Opportunities Threats Internal External

Strategic Focus

Objectives should ideally be SMART Specific Measurable Achievable Realistic Timebound

Marketing Strategies Build brand awareness by – sponsorship campaign? Grow market share by – increasing promotional spend ££ Reposition the brand by – developing new products in premium segments

Marketing programmes/tactics Product Price Promotion Place Physical Evidence Process People

Budgets How much is my marketing spend going to cost? How am I going to justify this spend to senior management? How will I evaluate the effectiveness of This spend? Did it achieve my objectives?

Typical objectives monitored are: Control & monitoring Typical objectives monitored are: Financial targets, e.g. sales/contribution/profit Market share Price level achieved Quality levels achieved Customer satisfaction

Evaluation? What if things are off plan? Maybe objectives are being missed Perhaps strategies are not working The balance of the ‘marketing mix’ is poorly aligned

Good marketing operators respond & react to any deviation from the marketing plan & amend the variables they can control to try & improve the business outcome………………..

So - is planning worthwhile? “It doesn’t really matter what business you’re in, planners outperform non-planners” Smith, Marketing Business, June 2003. “The evidence seems to be that most business successes come from careful strategic choices” Piercy (2009)

Strategic Planning Framework Where are we now? Review current strategic position and clarify mission, vision, and values. Where do we want to get to? Establish competitive advantage and your vision. Clearly see the direction the organization is headed. How will we get there? Lay out the road to connect where you are now to where you are going. Set strategic objectives, goals, and action items and how you will execute your plan, and control & evaluate it

Learning Objectives Understand what is strategy Appreciate the importance of strategic planning Understand the planning process Appreciate the breakdown of planning activity: external/internal; macro/meso/micro environment