Marketing Planning and Strategy Tutorial
Marketing Planning and Strategy
In this section of the Principles of Marketing Tutorials we take all that has been discussed to this point and see how marketers use this information to manage business decisions. In particular, in this tutorial we focus attention on the importance of marketing planning with special attention given to the role marketing strategy plays in the planning process. For marketers planning is an essential task that must be continually undertaken.
As we will see, shifting market conditions, including changing customer needs and competitive threats, almost always insure that what worked in the past will not work in the future, thus requiring revisions in how a product is marketed.
Marketing planning is also important since it is often a prerequisite for obtaining funding whether one is a marketer in a large corporation seeking additional money for his or her department or is part of a small startup company looking for initial funding.
To aid in our understanding of planning we introduce a key concept in marketing: the Product Life Cycle. We will see the Product Life Cycle offers valuable insight and guidance for marketing decisions. In this tutorial we also discuss different types of marketing strategy that can be followed to meet marketing objectives. Additionally, we look at how innovative products are adopted within a market and how this impacts marketing planning.
Importance of Planning
As we have seen throughout the Principles of Marketing Tutorials, marketers consider many factors when making decisions. Of course the main factors are those directly associated with how customers (including distribution partners) respond to an organization’s marketing efforts, such as how they may react to changes in a product, new advertisements, special pricing promotions, etc.
But when making decisions marketers face other concerns that are not directly customer related. For instance, we have discussed how marketing decisions (e.g., lowering price) may place pressure on other areas of the organization (e.g., production, shipping). Other examples include:
- As we noted in our definition of marketing back in the What is Marketing? tutorial, decisions must be made with an understanding of the value these provide not only to customers but to the marketing organization. Consequently, marketers must be well aware of how their decisions fit with the overall objectives of the company. For example, a company whose goal is to be the low-price leader may have concerns if the company’s marketing department wants to market a very high-end product, since this would go against the reputation and core strengths of the company.
- In the Managing External Forces tutorial, we showed that marketers’ decisions may affect peripheral stakeholders who are not directly connected to the marketing organization but have the potential to impact the organization if issues arise that draw their attention.
- Marketing decisions also directly affect an organization’s financial condition. Marketers’ efforts generate the funds (i.e., sales) needed for the company to survive, but do so while using company resources, in particular, expenditure of funds. Controls must be put in place to insure the results of what the organization spends through marketing (i.e., return on investment) meet expectations.
Because marketing decisions have both internal and external impact, marketers are wise to make their decisions only after engaging in a careful, disciplined planning process. Marketers who make hasty, off-the-cuff decisions without regard to the implications are taking risks that may lead to problems. Instead, marketing decisions should be made with consideration of how these affect others and the resources (e.g., funds) required to carry out the plan.
Components of the Marketing Plan
The Marketing Plan is often a complex and diverse document that examines many areas. For most plans the key components found in the document include:
- Organizational Mission – Represents the guiding force of an organization by identifying the long-run vision for what the organization hopes to achieve. The mission comes from the top leaders of the organization and often remains unchanged for many years.
- Objectives – Reflects what the organization expects to achieve with its marketing efforts. As with the mission, objectives also flow from the top of the organization down to the marketing department. Objectives can be in the form of financial goals (i.e., profits) or marketing goals (e.g., achieve certain level of market share).
- Marketing Strategy - Achieving objectives requires the marketer engage in marketing decision-making which indicates where resources (e.g., marketing funds) will be directed. However, before spending begins on individual marketing decisions (e.g., where to advertise) the marketer needs to establish a general plan of action that summarizes what will be done to reach the stated objectives.
- Tactical Programs – Marketing strategy sets the stage for specific actions that will take place. Marketing tactics are the day-to-day actions that marketers undertake and involve the major marketing decision areas. As would be expected, this is the key area of the Marketing Plan since it explains exactly what will be done to reach the organization’s objectives.
- Marketing Budget – Carrying out marketing tactics almost always means that money must be spent. The marketing budget lays out the spending requirements needed to carry out marketing tactics. While the marketing department may request a certain level of funding they feel is required, in the end it is upper-management that will have final say on how much financial support will be offered.
For more detailed discussion of each of these components see the tutorial How to Write a Marketing Plan.
The Marketing Plan
The central point in planning for marketing decisions is the Marketing Plan. As we note in the highly detailed How to Write a Marketing Plan tutorial, the plan serves several functions including:
- Forcing marketing personnel to look internally in order to fully understand the results of past marketing decisions.
- Forcing marketing personnel to look externally in order to fully understand the market in which they operate.
- Setting future goals and providing direction for future marketing efforts that everyone within the organization should understand and support.
- Serving as a key component in obtaining funding to pursue new initiatives.
The scope of the Marketing Plan depends on the company and industry. A small technology startup company may, for instance, have a less elaborate plan that is highly flexible (e.g., does not identify exactly where advertising money is spent) to meet the needs of a rapidly changing market. A more established marketing organization, such a large consumer products firm, may create a very structured plan that clearly identifies all activities that take place over a 12-month period.
Whether the marketer is creating a short plan intended to cover a narrow timeframe or a full-blown document laying out plans for a year or more, any plan requires undertaking significant market research to better understand the market. With knowledge of the market, the marketer can then begin to build the plan which will include the key components discussed in the next section.
Types of Marketing Strategy
One of the most important concepts of the marketing planning process is the need to develop a cohesive marketing strategy that guides tactical programs for the marketing decision areas. In marketing there are two levels to strategy formulation:
- General Marketing Strategies
- Decision Area Strategies
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