Unit 1: Marketing and Strategic Planning
Marketing is a key function within organizations. Marketing a firm's goods and services is strategic and tactical. The strategic plan of a firm will incorporate a marketing plan.
Completing this unit should take you approximately 4 hours.
1.1: The Role of Marketing in the Firm
Marketing is about creating, communicating, delivering, and exchanging offerings (products and services) that benefit its customers, the organization (business, nonprofit, government), stakeholders, and society. A market consists of people, individuals, and organizations with the desire and the ability to buy a specific offering. A target market consists of one or more specific groups of potential customers who can respond to a marketing program.
The marketer uses the controllable factors of the marketing mix of product, price, promotion, and place (distribution), historically known as the 4 Ps of marketing, to the consumers in the target market amidst the uncontrollable environmental forces in society. The uncontrollable environmental forces are generally categorized as social, economic, competitive, technical, and regulatory.
1.2: The Strategic Planning Process
Modern businesses conduct their operations based on a strategic plan to function efficiently and profitably. The newly formed business will normally prepare a "business plan" to obtain capital from investors or lenders. Existing businesses generally write a "strategic plan", which is usually revised yearly. Although the terminology mentioned above differs, the fundamentals of the plan are essentially the same.
Strategic planning plays a vital role in the operation of the business in that it sets the direction for the use of the firm's resources and coordinates the activities among the employees such that they are all going in the same direction. Any organization that lacks a plan is likely headed for failure. As the expression goes, "if you don't know where you're going, any road will take you there".
1.2.1: Mission, Vision, and Objectives
Many, if not most, businesses have a written mission statement. A mission statement is usually written in a rather concise format and answers the question, "Who are we, and what do we do?" Mission statements can be seen posted on company websites, office hallways, annual reports, etc. They serve the purpose of stating to their stakeholders and the general public what the company stands for and what its general purpose is.
A vision statement is different in that it is future-oriented and answers the question, "Where do we want to be?" Fundamentally, the forward-thinking vision statement drives the strategic planning process and the crafting of the firm's strategic plan. Not all forms write both mission and vision statements, and the terms are sometimes incorrectly used interchangeably.
Not all companies use both mission and vision statements. However, well-organized companies are guided by their mission, vision, or both.
Objectives are written with specific goals in mind, and the goals must be written in specific language to be measured at the end of the year. Generally, objectives are either financial or strategic in their purpose. For example, a financial objective would be to earn a minimum of 5% return on stockholder equity. In contrast, a strategic objective would be to increase market share by 5%, both to be accomplished within a specific fiscal year.
We use the acronym SMART when we write objectives: Specific, Measurable, Attainable, Realistic, and Time-bound.
1.2.2: Crafting the Strategy
When we use the expression "crafting the strategy", we refer to the process of writing the strategic plan after completing the required analysis described in the reading of the Strategic Planning Process. You should research and review examples of strategic plans.
1.2.3: Executing the Plan
The execution of the strategic plan occurs throughout the organization, whereby all divisions, departments, and personnel direct their work and expend their energy and resources toward meeting the objectives outlined in the strategic plan.
How this is accomplished depends entirely on the type of business or organization and in what industry sector they function. A manufacturing company will undertake certain tactics towards achieving objectives, such as design, tooling, or quality control. In contrast, the retail organization would be concerned with customer in-store traffic, maintaining stock, or point-of-purchase operations.
The important commonality shared by different businesses in different industries is that the aggregation of activities must be communicated and coordinated throughout the organization. The organization must perform all activities toward meeting the organizational objectives.
1.2.4: Evaluating the Plan Execution
As strategic planning and crafting the strategic plan are normally done annually, the evaluation and monitoring of results are normally reviewed quarterly. Therefore, actual results are usually reviewed every three months. Decisions are made at this time depending on the data results, and the decisions can be strategic or tactical.
Strategic decisions address the current strategy and whether some modifications to the strategic plan may be necessary. Tactical decisions normally involve adjusting the implementation of the marketing mix. For example, a disruption to the supply chain or distribution channels caused by the natural environment, like a tsunami or pandemic, may require a strategic change in the marketing plan. On the other hand, a competitor's price reduction or enhanced promotional campaign may require a shift in resources towards more promotional efforts to counter the competitor's attack.
1.3: Marketing and the Strategic Plan
An organization's marketing plan plays a crucial role in the general strategic planning of the organization and is an essential part of the written strategic plan. As the marketing function is at the forefront of the organization, and its purpose is to develop and promote attractive offerings to its customers, the responsibility of this function cannot be understated. Marketing efforts convert to sales revenue coming in the company's front door. Therefore, the firm must assess and understand where its revenues are coming from.
Customer retention is at the top of the list. The important question to be answered is, "how many customers will we retain during the next fiscal year"? Most companies know well that retaining customers by keeping them satisfied produces a long-term benefit for future sales and the resulting income streams. Furthermore, maintaining satisfied customers is significantly less expensive and more cost-effective when compared to the cost of finding new customers. Therefore, a difference in customer retention rates between 80 to 90% can result in millions of dollars for the firm. Therefore, a firm's strategic planning is highly dependent upon the proper analysis of marketing management, and this is the foundation upon which the strategic plan is written".
1.3.1: The Marketing Environment
Marketers must be keenly aware of trends that may be developing in their designated target markets. We know that environmental forces are dynamic, not static. Consumer buying preferences change with changes in the economy and the natural environment. The company must therefore write the marketing plan after a proper review and analysis of changes and potential changes occurring within the macro environment and the competitive industry environment.
1.3.2: Creating the SWOT Analysis
The SWOT analysis reviews and assesses the marketing plan's strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal to the firm and generally refer to the firm's resources and capabilities. Opportunities and threats are external to the firm and are typically found in the macro-environment and the competitive industry environment.
1.3.3: Crafting the Marketing Plan
Crafting or writing the marketing plan is done after the previously mentioned analysis has been completed by the marketing personnel. Therefore, environmental scanning, the review of the firm's resources and capabilities, and the SWOT analysis are all tools used to write an informed marketing plan.
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Study Guide: Unit 1
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Unit 1 Assessment
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