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PAPER No. 7: MARKETING MANAGEMENT

MODULE No.4 : STRATEGIC MARKETING PLANNING- AN OVERVIEW

Subject COMMERCE

Paper No and Title Paper No 7: Marketing Management

Module No and Title Module No 4: Strategic Marketing Planning- An overview

Module Tag COM_P7_M4

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PAPER No. 7: MARKETING MANAGEMENT

MODULE No.4 : STRATEGIC MARKETING PLANNING- AN OVERVIEW

TABLE OF CONTENTS

1. Learning Outcome 2. Meaning of Strategic Marketing Planning 3. Developing the Strategic Marketing Plan 3.1 Environmental Analysis 3.2 Identify Customers 3.3 Competitor/ Value Creation 3.4 Marketing Mix – The 4 Ps 3.5 Financial Analysis and Budget 3.6 Implementation and Control Plan 4. Advantage of Developing a Strategic Marketing Plan

5. Summary

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PAPER No. 7: MARKETING MANAGEMENT

MODULE No.4 : STRATEGIC MARKETING PLANNING- AN OVERVIEW

1. Learning Outcomes

After studying this module, you shall be able to

Describe the need of strategic marketing plan

Explain the meaning of strategic marketing planning

Discuss how to develop a strategic marketing plan

2. Meaning of Strategic Marketing Planning

A strategic marketing plan is a blue print that elaborates a systematic, inter connected,

logical step by step processes for achieving marketing goals. It analyses internal and

external environment, markets, competitors, mentions the essential resource allocations,

schedules, budgets and tasks and embeds the control and other activities needed in

relation with attaining marketing goals in an efficient and effective manner.

It lays down what should be done in present to attain marketing goals ahead. It is the

marketers’ road map for intended destination.

It's significant for a strategic marketing planning process to focus at the company from

the customer's point of view by asking questions that have a long time horizon, such as:

What needs or problems cause customers to

consider buying from our company?

What improvements in the customer's personal or business life can we

enable or improve?

Which customer market segments are attracted to

our company or products?

Which customer motivations or values

lead people to decide to purchase our products?

What changes or trends in our customer base are

affecting their general interest or attraction to

products like ours?

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MODULE No.4 : STRATEGIC MARKETING PLANNING- AN OVERVIEW

3. Developing the Strategic Marketing Plan

The strategic marketing plan process typically has six stages:

1. Environmental Analysis (SWOT)

2. Identifying customer

3. Competitor/Value Creation Analysis

4. Marketing Mix –The 4 Ps

5. Financial Analysis and Budget

6. Implementation and Control Plan

3.1 Environmental Analysis – An analysis of both internal and external environment is

the initial step to strategic marketing planning. Internal environment refers to the

environment that lies within the scope of an organization. It includes machinery,

manpower, policies, culture, and structure in an organization. External environment refers

to the environment outside the organization. It includes political, social, economic,

technological environment. For example, these days both male and female are employed.

As a result, a females are no longer considered to only look after the house and males to

look after earning a livelihood for the family. Both husband and wife reach home after 8-

10 hours of work there is no time left for cooking. Thus new concepts like ITC’s Ready

to eat food, home delivery services, hotel chains have got increased acceptability. As both

husband wife work throughout the week, they like to enjoy weekends and hence places

like Jurassic Park, Walls of Wonder have costly tickets on weekends.

Internal environment analysis leads to strengths and weaknesses of an organization

while external environment leads to opportunities and threats. Like DIGs pose as

opportunities for ready to eat products.

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MODULE No.4 : STRATEGIC MARKETING PLANNING- AN OVERVIEW

3.2 Identifying Customer

It’s significant to first comprehend the difference between customer and consumer. A

customer is a firm or person who buys a product while a consumer is a firm or person that

eventually uses the product. For example, a person buying a McDonalds’ Burger for his

child, the person is a customer and the child, a consumer.

Developing a strategic marketing plan is not possible without knowing who your

customers are. Thus, in this stage we identify our customers like Mercedes sells its cars to

the elite class as it is a luxury brand, I Phone also sells its phone to the rich. If Mercedes

without identifying its customer base starts promotion of its cars to the lower income

group, it will be a sure shot failure.

Hence, this stage concentrates on market segmentation. Market segmentation is a

process in which market can be classified into various categories/ classes which have

same needs and desires. Segmentation can be done on the following basis:

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MODULE No.4 : STRATEGIC MARKETING PLANNING- AN OVERVIEW

It is important to understand your customers by knowing their need and desires.

3.3 Competitor/Value Creation Analysis

A company should always analyze how it stands in comparison to its competitors. Thus

targeting and positioning are two important components of competitor analysis.

Targeting

After segmenting the market based on the different groups and classes, there is a need to

choose the targets. Single strategy will not be applicable to all consumer groups, so being

able to develop specific strategies for your target markets is very significant.

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In general there are three strategies for selecting the target

markets:

Undifferentiated Targeting: This approach views the market as one group with no

individual segments, therefore employing a single marketing strategy. This strategy

may be fruitful for a business or product with little competition where you may not

require to customize strategies for different preferences.

Concentrated Targeting: This approach lays prominence on selecting a particular

market niche on which marketing efforts are directed. The firm emphasis on a single

segment so you can concentrate on comprehending the needs and wants of that

particular market intimately. Small firms often derive benefit from this strategy as it

emphasized on one segment enables them to compete efficaciously against larger firms.

Multi-Segment Targeting: This approach is employed if there is a need to focus on

two or more well defined market segments and want to frame different strategies for

them. It offers various advantages but can be expensive as it engulfs greater input from

management, increased market research and increased promotional efforts.

Before selecting a specific targeting strategy, there is a need to perform a cost benefit

analysis between all available strategies and determine which suits your goals best.

Positioning Positioning is developing a product and brand image in the minds of consumers. It also

engulfs enhancing a customer's perception about the experience they will have if they

choose to purchase the product or service. The business can positively influence the

perceptions of its chosen customer base through strategic promotional activities and by

carefully defining your business' marketing mix.

Effective positioning involves a good comprehension of rival products and the benefits

that are sought by the target market. It also requires to identify a differential advantage

with which it will deliver the required benefits to the market effectively against the

competition. Business should aim to define themselves in the eyes of customers with

regards to the competition.

3.4 Marketing Mix – The 4 Ps

The 4 P stands for Product, Price, Place and Promotion.

Product: In marketing, a product is anything that can be offered to a market that might

satisfy a want or need.

Product Mix (Product Portfolio or Product Assortment)

The Product mix is the total variety of products a firm sells. Some firms will sell just one

product, while others will sell a large number of different products. For example

Samsung's product mix engulfs mobile phones, netbooks, tablets, televisions, fridges,

microwaves, printers and memory cards. Firms should opt their product mix wisely as

they will require to generate a profit from each of the products in the product mix.

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Product Line

Product line refers to number of products grouped together based on similar

characteristics such as product price, product quality, who the product is aimed at (target

group), and product specification/features. For example Samsung's mobile phones are

classified into product lines based on the attributes such as touch screens, slider/folders,

QWERTY keyboards and bar phones. Product lines help firms manage their products

effectively as product strategy can be crafted around product lines.

Product Line Length

The product line length shows the number of different products in a product line. A long

product line comprise of large number differentiated products in it whereas in a short

product line has a small number of products. The product manager's job is to work out

how many products to include in the product line. With the inclusion of many products in

a product line, there is a possibility that will begin to compete with each other, increase

costs unnecessarily and might create confusion among the buyers. Shorter product lines

will limit customer choice and send customers to competitors with a greater selection of

products.

Price

Pricing is the process of determining what a company will receive in exchange for its

product or service. Pricing factors include manufacturing cost, market place, competition,

market condition, brand, and quality of product.

Pricing involves asking many questions. These include the following:

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How much to charge for a product or service? This question is a typical starting point for discussions about pricing. However, ais - How much do customers value the products, services, and other intangibles that the vendor provides.

What are the pricing objectives?

Do we use profit maximization pricing?

How to set the price?: (fixed pricing, cost-plus pricing, demand-based or value-based pricing, rate of return pricing, or

Should there be a single price or multiple pricing?

Should prices change in various geographical areas, referred to as zone pricing?

Should there be quantity discounts?

What prices are competitors charging?

Do you use a price skimming strategy or a penetration pricing strategy?

What image do you want the price to convey?

Do you use psychological pricing?

How flexible can we be in pricing?: The more competitive the industry, the less flexibility we have.

•The price floor is determined by production factors like costs (often only variable costs are taken into account), economies of degree of operating leverage

•The price ceiling is determined by demand factors like price elasticity and price points

Are there transfer pricing considerations?

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Place

This means distribution network. The distribution network can be indirect where we use

intermediaries like wholesalers and retails are used or direct where the product is directly

distributed to the customer.

Three distribution strategies are:

1. Intensive Distribution : A marketing strategy under which

a company sells through as many outlets as possible, so that

the consumers encounter the product virtually everywhere they

go: supermarkets, drug stores, gas stations, and the like. Soft drinks are generally

made available through intensive distribution.

2. Exclusive Distribution: engulfs limiting distribution through a selective outlet.

The product that are sold through this kind of distribution are usually highly

priced, and requires the intermediary to place much detail in its sell. Selling cars

through exclusive dealers is an example of exclusive distribution.

3. Selective Distribution: it lies between intensive distribution and exclusive

distribution, and in which only a few retail outlets cover a specific geographical

area. Considered more suitable for high-end items such as 'designer' or

prestige goods.

Promotion

It is significant to promote the products so that customers are made aware about it

and influenced to purchase the same.

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Advertising is a non-personal way of promoting

products, while personal selling is a personal way of promoting the product like

Sales promotion includes short term techniques to increase the sale of products

like free sachets of coffee with newspapers. Public relations refers to events

sponsored to promote company’s product like a concert etc. or a news article or

social marketing.

3.5 Financial Analysis and Budget

Keeping in mind all the above factors a financial analysis can be done to

formulate a budget.

3.6 Implementation and Control Plan

This is the final stage where we implement whatever we have planned. It’s

important to keep an eye on how it is going in order to control any issue which

might later create a big problem.

4. Advantages of Developing a Strategic Marketing Plan

The top-down process of developing a strategic marketing plan helps ensure that all

tactical marketing programs support the company's goals and objectives, as well as

convey a consistent message to customers.

This approach enhances the company’s efficiency in all areas, which helps generate

revenue and capture market share, and minimizes expenses -- all of which lead to

higher profitability.

5. Summary

Strategic marketing plan is an integrated process of achieving marketing goals with

the help of a plan which focuses on six steps. These steps are environmental analysis,

identifying customers, competitor analysis, value creation, the 4 Ps, financial analysis and

budget and lastly implementation and control plan.