Strategic marketing management essay


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Strategic marketing management essay

  2. 2. The strategic planning process in marketing and its benefits have longbeen in the eye of business academics and professionals who havetrumpeted its benefits and importance in the business environment(Carson, 2007). The fundamental purpose of strategic marketing planningis create sustainable competitive advantage by analysing the internal andexternal environment of the organisation and identifying threats andopportunities (McDonald, M.H.B. 1992).Most academic papers on strategic marketing planning agree that thereare a number of levels concerned in the planning process (Wiles, 2007 ;Fifield, 1995; Drummond, 2000; Johnson, 2008; Guiltman, 1997).Drummond and Ensor (2000) suggest that there are three levels ofplanning, namely; corporate, functional and operational level planning.Smith et al. (2002) also identify similar levels of planning, but take amarketing perspective, identifying corporate strategy, marketing strategyand marketing communications strategy as levels of planning. Wiles(2007) on the other hand, suggests that there are five levels of planning,the top level of planning being the organisation‟s vision, with the mission,goals, objectives and operations following consecutively. Perhaps mostcommonly, levels of planning will be defined by corporate, strategicbusiness unit and functional level planning (Stevens, 2007 Gilbert, 1990;Wilson, 2005).
  3. 3. Using the strategic planning process diagram below (Ferrell and Hartline,2008), we can identify these levels of planning for each of the levels ofstrategy outlined. From this we can understand the relation between thedifferent suggestions from afore mentioned authors of planning literature.We can see clearly the corporate, business unit and functional levels ofplanning that were previously discussed, but also that the additional levelsproposed by Wiles (2007) can be found as subsets to corporate, businessunit and functional levels of planning.It must be noted, however, that not all organisations will be structured bydivision, but may choose to structure their company by function. This isquite common for single-product companies who have no need to createstrategic business units. As a result, the planning process may be differentin such an organisation will be different from the diversified company whois organized on the basis of division (Stevens, 2007; Leontiades, 1983)
  4. 4. Nonetheless, a single-product company will plan at all three levels but willusually incorporate all three simultaneously into their planning process(Stevens, 2007).Taking the format from the previous diagram, we can see that functionalplanning flows from strategic business unit strategy which in turn flowsfrom the corporate strategy. This could even be traced further to theinvestment strategy of the company‟s backers(Wilson, 2005).To understand how this translates into a process the diagram below,adapted from Malcolm McDonald‟s paper “Strategic marketing planning: Astate-of-the-art review” (1992), we can see that the stages of themarketing planning process belong to aspects of each level of planningprocess suggested by Ferrell and Hartline. Corporate Corporate Objectives level planning Corporate Strategy Strategic SBU Objectives business unit planning SBU Strategy Functional Marketing Objective level planning Overall Marketing Strategies Operating Marketing Operational Plan Objective level planning Operating Marketing Plan Stategy
  5. 5. At corporate level planning, top management will define the overallobjectives of the business which may be set out in a mission statement.This should be expressed in terms of product, market, and geographicalscope and also how the company is to remain competitive in relation to itscompetitors(Drummond, 2000; Fifield, 2007; Hax, 1984). At this stage,the very broad goals are set, and are generally qualitative in nature(Fifield, 2007).For example Tesco they have set a seven-part strategy as part of theirmission statement by which they have identified qualitative goals for thecompany, which are as follows; i. To grow the UK core ii. To be an outstanding international retailer in stores and online iii. To be as strong is everything as they are their food iv. To grow retail services in all their markets v. To put our responsibilities to the communities we serve at the heart of what we do vi. To be a creator of highly valued brands vii. To build our team so we can create more valueAt the corporate level strategy decisions will be driven by which industrywill create the greatest return on investment and how much risk will beinvolved in all the options available (Wilson, 2005).
  6. 6. No matter what level of planning occurs at, the steps of the process willremainrelatively similar; they are as follows(Guiltmn, 1997). i. Conducting a situational analysis. ii. Establishing objectivesiii. Developing strategies and programmesiv. Providing coordination and controlAt corporate level, the first step of the planning is conduct a situationalanalysis by identifying environmental threats and opportunities,organisational strengths and weaknesses and look to establish thecorporate mission and objectives.In order to achieve this, top management may opt to use the popularSWOT framework.They may also wish to use thePESTE framework,addingto this, the consumer environment and competitive environment,(PESTE+C+C) as suggested by Stone and Desmond (2007).Porter‟s 5forces of competition may also be useful to help managers understandthese elements and respond strategically (McKeown, 2012).
  7. 7. Diversified or conglomerate organisations will seek to use techniques ofportfolio analysis in order to determine how resources are to bedistributed (Wilson, 2005). Ansoff‟s growth grid, and The BostonConsulting Group (BCG) matrix, or The directional policy (GE-McKinsey)matrix maybe useful tools for doing so (Johnson, 2008). Ansoff‟s product matrix BCG‟s Product Portfolio MatrixThis should provide information as to which product line to cultivate orharvest, guiding management as to which SBUs to keep. With theseconstraints put in place at corporate level, planning at business unit levelshould proceed {{424 Wilson, R.M.S. 2005; }}.Strategic planning at the SBU level should be consistent with the goalsand plans set out by the corporate strategic plans {{421 Stevens, R. E.2007; }}. Planning at SBU level is not that different from at the corporatelevel as each SBU should then be able to develop their own strategic plan{{424 Wilson, R.M.S. 2005; }}.The parameters at this level will,naturally, be of narrower scope {{426 Leontiades, J. 1983;430 Andersen,T.A. 1965; }}.
  8. 8. SBU level should determines how the organisation will compete in theirparticular markets. This level of planning outlines the choices each singlebusiness should make to ensure that their selected strategy is going toprovide competitive advantage in the market place. (Johnson, 2008).Each SBU has its own products and markets, some which will beforecasted to yield better returns than others. Management will thereforeprioritise resources toward those that look to be a better investmentopportunities. This is essentially corporate resource allocation process buton a smaller scale (Doyle, 2006).Strategic planning occurs both at the SBU level and atand corporate level.According to Weitz and Wensley (1984) corporate level strategic planningis concerned with acquisitions, divestments and diversifications, while SBUstrategic planning will encompass on themes of market competition andproduct management.Richard Vancil (1984) suggests that strategic planning takes place at alllevels of planning and that formation oflayers of strategy is required, eachgetting more detailed the lower in the hierarchy it is. This would suggestthat even operational planning could be counted as strategic if it isworking within the realms set out by corporate headquarters(Weitz, B.A.1984).
  9. 9. However, in other literature, the consensus seems to be that for planningto be counted as strategic, it must deal with long-term prospects, but thatthey may influence decisions that are made on a short-term basis (Andersen, 1965;Greenlay, 1967; Greenlay, 1989; Ansoff, 1977; Carson,2007; Drummond, 2000). Strategist, Wayne Widdis, appears to agreewith this view, having stated “there are two kinds of important decisionsthat organisations make: strategic decisions and strategically drivendecisions” (Weitz, 1984).In a marketing context strategic planning takes place at both corporateand SBU level as long term strategic issues result in resources beingallocated to the appropriate programmes and actions (Assael, 1985).Issues at the SBU level will be similar to those at the corporate level, butthe latter would concern itself with the management of the total set of allproduct offerings over all business units, while at the former, wouldconcern itself only with individual products or market units (Gilbert,1990).Despite some similarity in terms of issues encountered at each level, thereis a significant difference with regard to time scale. While corporate levelis based on five- ten- and twenty-year trends, depending on the industry,planning at the SBU level will only extends at farthest, 5 years (Smith,2002).
  10. 10. With regard to marketing planning at SBU level, the process will beginwith a detailed analysis of the market place, quite similar to thesituational analysis made at corporate level(Fifield, 2007). The scope ofanalysis will be somewhat narrower, but strategic tools such as SWOT,PESTE and the Boston Consulting Group Matrix are stillapplicable(McDonald, 1992).Additional tools may also be used to help guide the marketing strategy theSBU level such as Porter‟s generic strategies, or Bowman‟s more detailedmodel of the strategy clock seen below (McKeown, 2012; Faulkner, 1995;Johnson, 2008).With reference to the strategy clock an excellent example of the „No frills‟strategic option is demonstrated by airline, Ryanair (Malighetti, 2009).
  11. 11. Once the SBU strategy has been defined, it is possible for the functionallevel of planning to go ahead. Planning at this level, must be aligned withboth the SBU strategy that has already been devised which should nestlewithin the corporate strategy (Wilson, 2005).Functional level planning is concerned with setting more specific,measurable objectives and milestones which can be reached by specificfunctions of the organisation such as human resources, logistics ormarketing (Goodstein, 1993).These objectives should be SMART (Specific,measurable, attainable, relevant, time-bound) and should have filtereddown from the overall corporate goal (Ferrell, 2008). So for example, inmy previous role as part of the inventory management function at Shell, aspecific target for automated orders was set at 10% within the firstquarter of the year in order to try and achieve a more streamlined, leanordering system.At this level of planning, expanding market share becomes an objective.All functional areas will individually develop an overall functional strategyto support the business unit objective. So for the marketing function thiswould mean plans around which products/services should be sold to whichmarkets (Drummond, 2000).All of the functional plans in any given SBU should then be integrated withone another, allowing for budgeting to take place. For the marketingdepartment, this means the formulation of a marketing plan which can beseen as an action document for the function (Ferrell, O.C. 2008).
  12. 12. Operational planning is the lowest level of the planning hierarchy. Here,decisions are tactical and short-term in nature (Baker, 2000). This iswhere the major resource constraint of money (budget) is introduced.Marketing communications budgets are already estimated before theoperational plans are formulated. This will mean that marketing planningat both functional and operational level will have to be dealt withprudently (Smith, P.R. 2002). As with all previous levels of planning,operational marketing plans should be consistent with those before it(Stevens, R. E. 2007).The operational planning process is similar to that of all other levels,following the same steps to the process (Stevens, 2007)But differencesare still apparent between the operational level and the higher levels ofplanning. Operational planning is concerned with day-to-dayperformance and short-term results, adjusting production, marketing andfinancial capacity. Issues at this level are normally immediate, concreteand familiar. This is a contrast with strategic planning, which is concernedwith the long-term overall direction of the organisation, have an enduringeffect and issues may be abstract and unfamiliar (Greenlay,1967;Greenlay, 1989).At operational level, often the focus is to increaseefficiency, rather than the strategic implications of actions (Andersen,1965).
  13. 13. The issue that most organisations have is to integrate the different levelsof planning effectively, especially when the time-frame for each planninglevel is so different. To overcome such issues, McDonald (1989) suggeststhat all levels of management should be involved with the process andthat instead of the separation of marketing from operations, thatmarketing planning should be as close as possible to the customer inorder to be effective (McDonald, 1992). This approach to planning hasbeen taken up by companies such as IBM and Honda (Filev, A. 2008).Regardless of which level of planning has taken place, the results shouldbe monitored and evaluated, and where necessary, corrective action taken(Wilson, 2005). However, techniques vary due to varying types ofobjective setting, i.e. whether quantitative or qualitative in nature.It is quite clear there are some characteristics are common at all levels ofplanning. At every level of planning, the planner will or should carry out asituational analysis, establish objectives, develop strategies andprogrammes, and provide some level of coordination and control.Each level planning also requires some level of resource allocation,although this is of greater significance at corporate level, and is thendiluted down at each level as the resources are split up to achieve morespecific objectives.
  14. 14. The integration of different levels of planning and lateral integrationbetween functions is also an area of common ground which for planners atall levels. Every sub-corporate plan should be aligned with the level aboveit, all of which should be aligned to the corporate plans.However, differences are apparent, especially in terms of time scale. Withlong range planning at the corporate level, and short range planning atoperational level, it is very easy to see why some companies may lose thecoordination between the levels of planning (McDonald, 1992). To avoidextra complication, operational plans should be made on an annual basis,as to allow for simple coordination of all levels of planning and avoidingmismatched plan timings (Greenlay, 1967).The other notable difference between levels is scope, as corporate, SBU orstrategic planning can be said to have a broad scope, whereas functionalwould most likely fall into mid-range and operational as very narrow scope(Drummond, 2000).It is apparent that „synergy‟ or „communication‟ is a word that is probablyon the lips of most planning staff, and it is the management of people‟spriorities that can cause issues. Having a good corporate strategy is a keypart of business success, but this alone is not sufficient (Johnson, G.2008). It is synergy and working as a coherent whole will bring thecompany victory. In the words of Sun Tzu “There are not more than fiveprimary colours, yet in combination they produce more hues than canever been seen.”
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