It is from this latter point that we
can then start to plan strategically and tactically for marketing, as
can other major divisions of the organization which include: finance,
production, human resource management and distribution. The function
entrusted with bringing all of these separate planning functions
together is termed corporate planning, and it is up to the person
entrusted with corporate planning to ensure that one department’s
plans are in harmony with other departments’ plans, and that they all
work towards achieving the overall organizational objectives.
In forward thinking
organizations it
is the managing director or chief executive who is the corporate
planner and in such an event strategic planning is seen to be at the
core of managerial activity, for it is this activity that drives the
organization.
However, all too often it is the
case that as strategic planning concerns the longer term future, it
can be put to one side in the interests of dealing with everyday
tactical matters. To this extent, in larger organizations, corporate
planning is often set up as a separate function reporting directly to
top management, with the specific remit of bringing together and
synergizing all individual departmental plans into the final corporate
plan. It is placed directly under top management in what is called a
‘staff’ relationship, but is not a ‘line’ relationship that is in the
line of command of the company from the board of directors downwards (e.g..
it is not alongside marketing management in terms of the hierarchical
structure).
Figure 1 provides a more practical idea of how the corporate planning
process works out in reality:
PLANNING IMPLEMENTATION EVALUATION CONTROL
analysis of the operation of the plan; did we achieve the ensuring
that
environment - resourcing, staffing set goals through performance
forecasting and and tactical organization our tactical plans?
standards are
setting goals maintained to
carry out the plan
FEEDBACK IN AN EVER CHANGING
ENVIRONMENT - SO THAT CURRENT
PLANS CAN BE ADAPTED TO SUIT THE PRESENT MARKET SITUATION
Figure 1 An overview of corporate
planning
In terms of how planning works,
Figure 2 demonstrates how general strategic plans are formulated by
top management and these progress to more practical levels as they are
implemented throughout the management hierarchy.
CORPORATE
PLANNING
FUNCTIONAL PLANNING
(e.g. marketing)
SUB-FUNCTIONAL PLANNING
(e.g. sales or advertising)
Figure 2 Planning hierarchy
At top management levels, these
plans to be for the longer term that can be anything from one year to
five or ten or even more years, depending upon the planning horizons
in the particular industry. It is also at this level that strategic
business units (SBU) are created with a view to these SBUs carrying
out the general plans that have been decided by top management. An SBU
is a group or unit within an organization that comprises separately
identified products or market divisions with a specific market focus.
A manager in charge of an SBU has the responsibility for integrating
all of that SBU’s functions into a marketing program so it can then
be measured in terms of its success at the end of an accounting
period.
Plans thus become more practical,
and shorter term in nature, as they are translated into tactical
action plans further down the organizational hierarchy. Planning
horizons at a functional level tend to be for one year, and during
that year plans are spelt out on a periodic basis through that year -
usually on a month by month or quarter by quarter basis. Figure 2 has
shown how marketing plans stem from the more general corporate level
and as we move down so planning becomes more practical through the
marketing hierarchy to sales and advertising when plans become more
tangible.
2 An overview of marketing planning
Strategic marketing planning is the
application of a number of logical steps in the planning process.
There is no one clear formula that must always be applied, and indeed
one specific model would not suit every marketing planning situation.
Different textbooks also cite slightly different models that are a
variation on a similar general theme.
Figure 3, which is a relatively
comprehensive model, gives an overview of the strategic and tactical
marketing planning process. The early part of this model shows how it
fits into the corporate planning framework; from there, more detailed
activities take place that results in an practical marketing plan.
MISSION STATEMENT
MACRO-ENVIRONMENT SITUATIONAL ANALYSIS
COMPANY AUDIT
Political, Economic, Socio-cultural
Audits of all major company
and Technological (PEST) functions - Marketing, Finance,
HRM, Production, Distribution
STRENGTHS, WEAKNESSES,
OPPORTUNITIES, THREATS
ANALYSIS (SWOT)
MARKETING OBJECTIVES feedback
FORECAST MARKET POTENTIAL
GENERATE MARKETING STRATEGIES
ASSUMPTIONS AND CONTINGENCY PLANS
PREPARE DETAILED MARKETING MIX
PROGRAMS
BUDGET RESOURCES INCLUDING STAFFING
AGREE TIME-SCALES
IMPLEMENT THE PLAN
MEASURE AND CONTROL
Figure 3 Summary of the strategic
marketing planning process
2.1 Situational analysis
The mission statement has already
been explained, but the next stage that relates to an analysis of the
current situation is now explained for it has two inputs. The first
input relates to the organization's macro environment and these are
factors over which the company has little or no control. They are
listed under four separate headings: Political; Economic;
Socio-cultural and Technological and are known by the acronym ‘PEST’.
Added to these factors, some marketing planners also add ‘Legal’ (the
acronym then being SLEPT) and some add ‘Competition’ if these are felt
to be specific issues.
This is the external audit part of what is
called the company audit. From this external audit a number of very
short statements are made in respect of each of the P.E.S.T. + C + L
sub-divisions. The statements do not have to be justified, as they are
mere observations that will help formulate more detailed plans at a
later stage. Even more recently, some analysts have added both ‘Legal’
and ‘Environmental’ (making the acronym PESTLE).
The next part concerns what is
called the company audit, or in corporate planning terms, the internal
audit. This looks at the individual capabilities of the company, SBU
by SBU, and again short statements or observations are made that do
not have to be justified.
These two actions are what is called the corporate auditing process
and they go up to form the situational analysis. Marketing’s part of
this total corporate auditing procedure is termed the ‘marketing
audit’ and it is included here as part of marketing planning because
it forms the beginning of the marketing planning process.
2.2 SWOT analysis
The SWOT analysis (strengths,
weaknesses, opportunities, threats) is an attempt to translate company
specific factors from the company audit into company strengths and
weaknesses plus external environmental factors (from the PEST
analysis) into external opportunities and threats. As was the case
with the PEST analysis, no attempt should be made to justify the
points being placed in each of the categories as it is meant as a
statement which will assist marketing planning in the later stages.
In terms of its presentation the
SWOT analysis is normally put into a four box matrix with internal
strengths and weaknesses being listed in the top two boxes and
external opportunities and threats being listed in the lower two
boxes. Experience has shown that for most companies, ranging from the
very large to the very small, the number of strengths and weaknesses
is around 10 - 15 each and the number of opportunities and threats is
about 5 - 12 each. Any less normally indicates that the SWOT is
incomplete and more indicates that a number of points are being
repeated in different words.
2.3 Marketing objectives
These are concerned with what is to
be achieved, unlike strategies that are the means of achieving
objectives. These objectives are obtained from corporate level
strategies and should be very specific. An acronym used in this
context is that marketing objectives should be ‘SMART’ - which stands
for: specific; measurable; achievable; realistic and timely. An
objective must, therefore, have some kind of measurable characteristic
which might relate to a standard of performance like a percentage
level of profit or a situation that has to be achieved like
penetrating a specific market.
2.4 Forecast market potential
This is a stage that a lot of
marketing planning texts seem to miss. It is illogical really, for
without a forecast of the market potential, a company does not really
know for what it should be making its plans. Forecasting is at the
very base of company planning, and it is for medium and long term
planning horizons that medium and long term sales forecasts are
needed.
2.5 Generate marketing strategies
Strategies are of course the means
through which marketing objectives can be achieved. They are meant to
detail selected approaches that the company will use to achieve its
objectives. Determining strategies leads to a series of action
statements that are clear sets of steps to be followed to achieve the
objectives. Operational decisions then spill out of these marketing
strategies and these form the tactical foundations of the detailed
marketing mix programs.
2.6 Assumptions and contingency plans
Assumptions relate to external
factors over which the company has little control. These should be
stated as a series of points that relate to, and which preface, the
make-up of the detailed marketing mix plans in the next stage.
Assumptions should be as few as possible and if they are not needed
then they should not be introduced. For each assumption, a contingency
plan should be formulated, so in the case of an assumption being
wrong, the appropriate contingency plan can be brought in. At this
stage, contingency plans should not be detailed. They will only
consist of a sentence or two that are merely directional plans to be
implemented if assumptions are incorrect in practice.
2.7 Detailed marketing mix
programs
This part of the plan enables the
organization to satisfy the needs of its target markets and to achieve
its marketing objectives. This indeed is what comprises the bulk of an
organization's marketing efforts. The first part of this program is to
determine the marketing mix, and here detailed consideration must be
give to each of the areas of the ‘four Ps’ plus customer
considerations in terms of segmentation, targeting and positioning.
All ingredients of the marketing mix must be combined in an optimum
way so that they work together to achieve company objectives. This
part of the plan is concerned with whom will do what and how it will
be done. In this way responsibility, accountability and action over a
specific time period can be planned, scheduled, implemented and
reviewed.
As this is an action plan, the time
period must be realistic. Most plans are for a period of one year that
is the conventional planning period horizon. A plan must also contain
time scales which detail marketing activities normally on a month by
month, or a quarter by quarter, basis and indeed timing is addressed
in the plan after the resourcing section.
This is not to say that marketing
planning should not be for longer than one year; it is normally the
case that long-term issues are also addressed in the marketing plan.
Long-term will have different meanings for different industries. In
the case of modern electronics long term is probably not longer than
three years, whereas in steel production long term can mean 10 years
or more.
When long term planning is addressed as part of a marketing plan, then
all that can be realistically put forward is a directional marketing
plan. To plan in terms of month by month expectations for say five
years hence would cause the plan to be spuriously unrealistic, and
when reality proved the plan to be hopelessly incorrect then
confidence might well be lost in the planning process.
Many companies do have rolling plans that are modified in the light of
what actually happened. As one planning period finishes (one month,
one quarter, one year) the rolling plan will be modified in the light
of what has happened, and a further planning period will be added on
to the end of the plan.
An area of marketing planning that deserves specific attention here is
that of attaining the sales revenues that have been forecasted as part
of the planning process. Put in practical terms, the sales forecast
has predicted the amount of sales that are possible, and budgeting
(dealt with in the next section) will determine the expenditure
available towards achieving this forecast. It does not, therefore,
follow that the forecasted sales are intended to be exactly achieved
in practice.
Individual members of the field sales force will each have been given
sales targets or quotas to reach, and the summation of all of these
targets or quotas should equate to the budgeted for sales that each
sales person must achieve towards reaching the planned for sales. This
is why many sales personnel refer to their sales target or quota as
their sales budget, which is not an expenditure limit. It is in fact a
reference to the amount they must sell in order to satisfy the sales
volume requirements of the marketing plan.
We have, of course, only considered
‘product’, so similar considerations need to be made in relation to
other parts of the marketing mix. This part of the marketing plan is
the largest section, and often this section, plus its various
marketing mix sub-sections, is bigger than the rest of the plan put
together.
2.8 Budget resources and staffing
Now that detailed decisions have
been made in relation to the different elements of the marketing mix,
the next stage of the program is to budget. Organizations have many
demands on their limited resources, and it is this final balancing act
that is the responsibility of corporate planning. Budgeting covers not
only general marketing expenditure, but also salaries and expenses for
staffing. If the plan calls for an increase in sales and market share,
then this will normally have resource implications for the marketing
department, perhaps in terms of more representation or increased
advertising costs.
It is at this budgeting stage that
plans are sometimes modified in the light of reality, and the initial
marketing objectives might well have to be modified as a result.
Practical financial considerations might well cause the organization
to tone down its original marketing objectives.
2.9 Time scales
This normally takes the form of a
Gantt chart which places time along the top and activities down the
side as illustrated in Figure 4:
JAN FEB MAR APR MAY JUN JUL AUG
SEP OCT NOV DEC
advertising
PR
sales promotion
demonstrations
stocks in place
with customers
leaflets in place
Figure 4 Gantt chart showing time
scales in a marketing plan
3.10 Implement the plan
This is precisely what the heading
says. The plan is now put into action within the predetermined budget
and resource parameters, and along the time scale that has been
agreed. More importantly, those who will carry out the plan should be
informed of its details and know the part they must play within its
implementation to ensure its success. In fact this section would not
really be addressed in a planning document as it is self-evident, but
it is shown as the ‘doing’ part of the planning process.
3.11 Measure and control
A marketing plan cannot be operated
without some measure to monitor, measure and control its progress. A
system of controls should be established whereby the plan is reviewed
on a regular and controlled basis and then updated as circumstances
change. Such controls can address the tactics in terms of sales
analyses that will commence with a comparison of budgeted sales
revenue against actual sales revenue. Variations might be due to
volume or price variances - perhaps an unfavorable variance being due
to having to cut prices to match the tactical actions of competitors.
The marketing information system
provides key inputs to the marketing planning. This information comes
from market intelligence, marketing research and the organization's
own internal accounting system. This information then inputs into the
marketing plan. It is also control mechanism, because customer
reactions are also fed into this MkIS from market intelligence through
the field sales force or from marketing research studies. Information
on sales analyses is also fed into the system so assessments can be
made as to whether forecasted sales are being achieved or not.
As the planning horizon unfolds and
plans do not go exactly as anticipated, action can be then taken as
required, and this is the reason for the feedback loop in Figure 3.
These measures of performance allow planners an opportunity to adjust
and fine tune plans as necessary during the planning period.
4 Summary
In any well-ordered modern company,
managers have a duty to plan, organize, direct and control the
activities of those for whom they have taken responsibility. The
meaning and relevance of strategic and tactical marketing planning in
an ordered framework of structures has been investigated. This has
shown that planning is a practical activity that should be approached
in a professional manner, as such plans will give guidance not only to
top management, but also to those whose task it is to carry out such
plans. More to the point, an ordered planning system will give more
security to an organization in terms of its vision and the image it
presents to both its internal employees and to the outside world.
