Explain the strategic planning in marketing.

Business Planning

Often the project sales for a firm are less than what is achieved.  When project sales are less than actual sales, there is a Strategic Planning Gap.  A Strategic Planning Gap provides management with the opportunity to develop business strategies to fill the gap.  There are three options available to fill the gap:

1)      Intensive Growth:  Opportunities within present product and market scope (a) Market Penetration (b) market development (c) Product development

2)       Integrative Growth: Opportunities within it marketing systems (a) backward integration (b) forward integration (c) horizontal integration

3)      Diversification: Opportunities outside of its marketing system (a) concentric diversification – seek new products with technological and/or marketing synergies with existing product lines (b) Horizontal diversification – new products that appeal to existing customers through technologically unrelated to existing lines (c) Conglomerate – new businesses with new products and new markets.

Strategic Planning and Marketing

The business must define it overall mission.  The mission will determine what the firm will see as market opportunities (areas of buyer need in which the firm cam perform profitably).  To determine it an opportunity I viable, the firm conducts a SWOT (Strength Weaknesses, Opportunity, Threat) Analysis.  The internal (firm) environmental analysis yields the strengths and weaknesses.  The External Environmental Analysis provides the Opportunities and Threats.  Given the SWOT analysis, management can develop a strategic plan that will enable the firm to minimize the threats (unfavorable environmental conditions) and take advantage of opportunities (favorable environmental conditions).

The marketing Process

Businesses seek to deliver value to the market at a profit.  The Value-Delivery process could be viewed in terms of (1) The traditional view - firm making something and then selling it.  Here marketing is the second stage of the value-delivery process.  The firm knows what and how much to product in order to make a profit.   In the traditional view you first make the product (design, procure and manufacture) and then sell the product (price, sell, advertise, distribute and service).

(2) The Value-Delivery Sequence – marketing is at the beginning of the planning process.  Instead of stressing production and selling, firms are part of the value creation and delivery sequence.   According to this view the firm is involved in  (i) Strategic Marketing -  “Choose the Value” (segment the market, select the target market, conduct value positioning), and (ii) Tactical Marketing - provide the value (develop the product, service development, pricing, sourcing, manufacturing, distribute, service) and communicate the value to the target market (sales force, sales promotion, advertising).

The MISSION of the firm is shaped by five elements:

-          history (aims, policies, achievements)

-          current preferences (views of owners and managers)

-          environmental factors (threats and opportunities)

-          resources

-          organization’s distinctive competencies

The mission should:

-          provide a vision or direction

-          be motivating

-          focus on certain distinctive values

-          define competitive domain of the firm

-          stress major policies to be honored

Like people, products have a life cycle. Viewed in relation to strategic planning, the firm is able to assess market attractiveness and competitive position (the GE Approach) to determine strategy for the unit.

In general, strategic action is required when there is a Strategic Gap (discrepancy between actual sales and desired or projected sales).  If the Gap is large and negative the firm will act strategically to close the gap.  To close the gap the firm cam seek:

1.      Intensive Growth (market penetration, market development, product development),

2.      Integrative Growth (backward integration, forward integration, horizontal integration),

3.      Diversification (concentric or new but related product diversification, horizontal or new but unrelated technology diversification, conglomerate or unrelated diversification).