Topic 5 – Overview

Introducing Strategic Marketing

Topic’s Learning Objectives

• Discuss in depth the role of Marketing in Strategic Planning

• Comprehend marketing strategies
• Evaluate a company’s strategic marketing process.

Introduction

No company exist in a vacuum. On the contrary, all companies are subject to the wider
industry environment and struggle to succeed and overcome competition. Therefore, all
companies need strategies to meet changing needs, changing markets, wants, trends, and the

‘unexpected’. But no strategy is best for all companies. Each strategy is designed by taking
into consideration the particular conditions, circumstances, capabilities, strengths,
weaknesses, threats, and opportunities of each company, as well as the wider industry and
remote environment. In other words, each company must find the way that makes most sense,
given its situation, objectives and resources. Marketing plays an important role in strategic
planning as it provides information and other inputs to help prepare a strategic plan. The
strategic plan is expected to guide marketing activities, and should be working with other
departments in the organization towards achieving strategic objectives. This topic discusses
important elements of strategic planning, including important components of a Strategic
Marketing Plan. In the Appendix at the end you can find a sample Marketing Plan. This is a
good example of how you can develop your own marketing plan for your assignment task.
 Main Analysis

According to Roger et al (2007), no longer do marketing managers function solely to direct

day-to-day operations; they must make strategic decisions as well. This elevation of
marketing perspectives to a strategic position in organizations has resulted in expanded
responsibilities for marketing managers. Increasingly, they find themselves involved in
charting the direction of the organization and contributing to decisions that will create and
sustain a competitive advantage and affect long-term organizational performance. Part of
their duties is also the so called ‘Planning’.

Many companies operate without formal plans. But according to Kotler et al (2011), failing
to plan means planning to fail. In other words, a company without planning is like a sailing
boat without sails. On the other hand, planning is the light that will offer direction in the dark.

Planning encourages systematic thinking. It forces a company to sharpen its objectives and
policies, and lead to better coordination of company efforts. At the same time, it provides
better performance standards for control. Besides, a strategic plan is often compared to
planning a journey; you know where you want to go and from where you are starting. How
you choose to travel depends to your resources, time available to complete the journey.

Similarly, a strategic plan lays out where the business is heading for (targets/ goals), where in
currently is and what resources it intends to use, at what time, and with what expected results.
According to Kotler et al, companies usually prepare annual plans; long-range plans; and
strategic plans. Within an Organisation’s strategic Plan are marketing plans for each business,
product or brand. A series of separate plans is necessary because even within a well focused
company product classes can face different circumstances and conditions. So what are the
elements of marketing plan? This question is answered in the following analysis.
 Elements of the Strategic Marketing Plan

1. Executive summary

The marketing plan should open with a short summary of the main goals and
recommendations in the plan. The executive summary helps top management to find the
plan’s central points quickly.

2. Marketing Audit

The marketing audit is a comprehensive, systematic, independent, and periodic examination

of a company’s—or business unit’s—marketing environment, objectives, strategies and
activities with a view of determining problem areas and opportunities and recommending a
plan of action to improve the company’s marketing performance. According to Roger et al
(2007), the audit process directs the manager’s attention to both the strategic fit of the
organization with its environment and the operational aspects of the marketing program.
Strategic aspects of the marketing audit address the synoptic question, “Are we doing the
right things?” Operational aspects address an equally synoptic question— “Are we doing
things right?”

This section of the marketing plan describes that target market and the company’s position in
it. It includes a market description that defines the market, including chief market segments
(Kotler et al, 2011).

In the current marketing situation, the planer shows market size, in total and by segment,
for several past years, and then reviews customer needs together with factors in the marketing
environment that may affect customer purchasing.

Then, the product review shows sales, prices and gross margins of the principal products
and the product line. Also, a section on competition identifies big competitors and their
individual strategies for product quality, pricing, distribution and promotion. It also shows
that market shares held by each competitor.

Finally, distribution describes recent sales trends and developments in the primary
distribution channels.

3. SWOT Analysis

SWOT analysis is a formal framework for identifying and framing organizational growth
opportunities. SWOT is an acronym for an organization’s Strengths and Weaknesses and
external Opportunities and Threats. It is an easy-to-use framework for focusing attention on
the fact that an organizational growth opportunity results from a good fit between an
organization’s internal capabilities (apparent in its strengths and weaknesses) and its external
environment reflected in the presence of environmental opportunities and threats.

Before you proceed to the following analysis, please watch this video, explaining the use and
importance of SWOT analysis (to watch the video please copy and paste this link to your web
browser: http://www.youtube.com/watch?v=CDueS81iVG4).
A strength is something that an organization is good at doing or some characteristic that gives
the organization an important capability. Something an organization lacks or does poorly
relative to other organizations is a weakness. Opportunities represent external developments
or conditions in the environment that have favourable implications for the organization.
Threats, on the other hand, pose dangers to the welfare of the organization.

A properly conducted SWOT analysis goes beyond the simple preparation of lists. Attention
needs to be placed on evaluating strengths,weaknesses, opportunities, and threats and
drawing conclusions about how each might affect the organization. The following questions
might be asked once strengths, weaknesses, opportunities, and threats have been identified:

1. Which internal strengths represent distinctive competencies? Do these strengths

compare favorably with what are believed to be market or industry success
requirements? Looking at Exhibit 1.1, for example, does “proven innovation skill”
strength represent a distinctive competency and a market success requirement?

2. Which internal weaknesses disqualify the organization from pursuing certain

opportunities? Look again at Exhibit 1.1, and note that the organization acknowledges
that it has a “weak distribution network and a subpar saleforce.” How might this
organizational weakness affect the opportunity described as “new distribution
channels evolving that reach a broader customer population”?
3. Does a pattern emerge from the listing of strengths, weaknesses, opportunities, and

threats? Inspection of Exhibit 1.1 reveals that low-entry barriers into the
market/industry may contribute to the entry of lower-cost foreign competitors. This
does not bode well for domestic competitors labeled as “complacent” and the
organization’s acknowledged high production costs.
 4. Objective and Issues
Having the strengths, weaknesses, opportunities and threats, the company sets objectives and
considers issues that will affect them. The objectives are goals aiming to convert the
organization’s mission into tangible actions and results that are to be achieved, often within a
specific time frame. For example, the 3M Company emphasizes research and development
and innovation in its business mission. This view is made tangible in one of the company’s
goals: 30 percent of 3M’s annual revenues must come from company products that are less
than four years old.

Goals or objectives divide into three major categories: production, financial, and marketing.
Production goals or objectives apply to the use of manufacturing and service capacity and to
product and service quality. Financial goals or objectives focus on return on investment,
return on sales, profit, cash flow, and shareholder wealth. Marketing goals or objectives
emphasize market share, marketing productivity, sales volume, profit, customer satisfaction,
customer value creation, and customer lifetime value. When production, financial, and
marketing goals or objectives are combined, they represent a composite picture of
organizational purpose within a specific time frame; accordingly, they must complement one
another. Goal or objective setting should be problem-centered and future-oriented.

Because goals or objectives represent statements of what the organization wishes to achieve
in a specific time frame, they implicitly arise from an understanding of the current situation.
Therefore, managers need an appraisal of operations or a situation analysis to determine
reasons for the gap between what was or is expected and what has happened or will happen.
If performance has met expectations, the question arises as to future directions. If
performance has not met expectations, managers must diagnose the reasons for this
difference and enact a remedial program.
 5. Marketing Strategy

In this section of the marketing plan, the manager outlines the broad marketing strategy for
attaining the objectives. Marketing strategy is the marketing logic by which the business unit
hopes to achieve its marketing objectives. It should develop a marketing strategy for each
targeted market segment. For instance:

Market-Penetration Strategy
‘A market-penetration strategy dictates that an organization seeks to gain greater dominance
in a market in which it already has an offering. This strategy involves attempts to increase
present buyers’ usage or consumption rates of the offering, to attract buyers of competing
offerings, or to stimulate product trial among potential customers. The mix of marketing
activities might include lower prices for the offerings, expanded distribution to provide wider
coverage of an existing market, and heavier promotional efforts extolling the “unique”
advantages of an organization’s offering over competing offerings. For example, following
the acquisition of Gatorade from Quaker Oats, PepsiCo has announced that it expects to
increase Gatorade’s already dominant share of the sports drink market through broader
distribution, new flavors, and more aggressive advertising.

Market-Development Strategy
A market-development strategy dictates that an organization introduce its existing offerings to
markets other than those it is currently serving. Examples include introducing existing
products to different geographical areas (including international expansion) or different
buying publics. For example, Harley-Davidson engaged in a market-development strategy
when it entered Japan, Germany, Italy, and France. Lowe’s, the home improvement chain,
employed this strategy when it focused attention on attracting women shoppers to its stores.

The mix of marketing activities used must often be varied to reach different markets with
differing buying patterns and requirements. Reaching new markets often requires
modification of the basic offering, different distribution outlets, or a change in sales effort
and advertising. Like the market-penetration strategy, market development involves a careful
consideration of competitor strengths and weaknesses and competitor retaliation potential.
Moreover, because the firm seeks new buyers, it must understand their number, motivation,
and buying patterns in order to develop marketing activities successfully. Finally, the firm
must consider its strengths, in terms of adaptability to new markets, in order to evaluate the
potential success of the venture.

Product-Development Strategy
A product-development strategy dictates that the organization create new offerings for
existing markets. The approach taken may be to develop totally new offerings (product
innovation) to enhance the value to customers of existing offerings (product augmentation),
or to broaden the existing line of offerings by adding different sizes, forms, flavors, and so
forth (product line extension). Apple Computer’s iPod is an example of product innovation.
Product augmentation can be achieved in numerous ways. One is to bundle complementary
items or services with an existing offering’ (Roger et al, 2007:9). For example, embedded
software, application aids, and training programs for buyers enhance the value of personal
computers. Another way is to improve the functional performance of the offering. Digital
camera manufacturers have done this by improving photo quality. Many types of product-line
extensions are possible. Personal-care companies market deodorants in powder, spray, and
gel forms; Gatorade is sold in more than 20 flavors; and Frito-Lay offers its Lay’s potato
chips in a number of package sizes.

Companies successful at developing and commercializing new offerings lead their industries
in sales growth and profitability. The likelihood of success is increased if the development
effort results in offerings that satisfy a clearly understood buyer need. In the toy industry, for
instance, these needs translate into products with three qualities: (1) lasting play value, (2) the
ability to be shared with other children, and (3) the ability to stimulate a child’s imagination.
Successful commercialization occurs when the offering can be communicated and delivered
to a well-defined buyer group at a price it is willing and able to pay.

Diversification
Diversification involves the development or acquisition of offerings new to the organization
and the introduction of those offerings to publics not previously served by the organization.

‘Many firms have adopted this strategy in recent years to take advantage of perceived growth
opportunities. Yet diversification is often a high-risk strategy because both the offerings (and
often their underlying technology) and the public or market served are new to the
organization’ (Roger et al, 2007:10).

6. Marketing Mix
Matching offerings and markets requires recognition of the other marketing activities
available to the marketing manager. Combined with the offering, these activities form the
marketing mix. A marketing mix typically encompasses activities controllable by the
organization. These include the kind of product, service, or idea offered (product strategy),
how it will be communicated to buyers (communication strategy), the method for distributing
he offering to buyers (channel strategy), and the amount buyers will pay for the offering
(price strategy). Here it is sufficient to note that each element of the marketing mix plays a
complementary role in stimulating a market’s (buyers’) willingness and ability to buy and
creating customer value (Roger et al, 2007). For example, communications—personal selling,
advertising, sales promotion, and public relations—inform and assure buyers that the offering
will meet their needs. Marketing channels satisfy buyers’ shopping patterns and purchase
requirements in terms of point-of-purchase information and offering availability. Price
represents the value or benefits provided by the offering to buyers.

7. Action Programmes
According to Kotler et al (2007), marketing strategies become specific action programmes
that answer the following questions: What will be done? When will it be done? Who is
responsible for doing it? How much will it cost? For example, the manager may want to
increase sales promotion as a key strategy for winning market share. A sales promotion
action plan should outline special offers and their dates, trade shows entered, new point of
purchase displays and other promotions.
 8. Budgets
A budget is a formal, quantitative expression of an organization’s planning and strategy
initiatives expressed in financial terms. A well-prepared budget meshes and balances an
organization’s financial, production, and marketing resources so that overall organizational
goals or objectives are attained.

9. Controls
The last section of the marketing plan put lines the controls that will monitor progress.
Typically, there are goals and budgets for each month or quarter. This practice allows higher
management to review the results of each period and to spot business or products that are not
meeting their goals. The managers of these business and products have to explain these
problems and the corrective actions they will take.

10. Implementation

Planning good strategies is one thing, and implementing strategies is another. When it comes
to planning VS implementation, a brilliant marketing strategy counts for little if the company
fails to implement it properly. According to Kotler et al (2005:72), ‘Marketing
Implementation is the process that turns marketing strategies and plans into marketing actions
to accomplish strategic marketing objectives.

Further Reading Section

• At this point, you are required to read the sample Marketing Plan that is posted in the
Appendix below. Please note, this is a good example of how you can develop a
marketing plan on your own.
• Then, you are advised to access our ebook and read chapter 7.
 Appendix: Sample Marketing Plan

What follows, is a sample Marketing Plan. This plan is suggestive to the one
you will have to develop for the purposes of your assignment assessment.
According to Roger et al (2007), to develop marketing plan is hard but
satisfying process as a whole. “When completed, a marketing plan serves as a
roadmap that details the context and scope of marketing activities including, but
not limited to, a mission statement, goals and objectives, a situation analysis,
growth opportunities, target market(s) and marketing (mix) program, a budget,
and an implementation schedule” (p. 1).

As a written document, moreover, a Marketing Plan should convey in its

analysis, ideas, and aspirations pertaining to a business, product, and/or brand
marketing effort. “How a marketing plan is written communicates not only the
substance of the marketing effort but also the professionalism of the author.

Writing style will not overcome limitations in substance” (p.17). On the other
hand, a poorly written marketing plan can detract from the perceived substance
of the plan.

The marketing plan that follows for Paradise Kitchens®, Inc. is based on an
actual plan developed by the company and is presented in Strategic Marketing
Problems: Cases and Comments by Roger et al (2007: 18 – 32). According to
the authors, to protect proprietary information about the company, a number
of details and certain data have been altered, but the basic logic of the plan
has been preserved.