Importance of Strategic Planning in the Marketing Process

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Importance of Strategic Planning in the Marketing Process

Background

Strategic planning is an important aspect of the process of marketing. It deals with the process of defining a strategy and making decisions regarding the allocation of resources for the particular strategy. Strategic planning can be defined as the determination of the steps required to reach an objective of achieving the optimum fit between the organization and the marketplace (Advertising terms, n.d.). The explanation to the definition can be given as setting the goals and steps to achieve them. Every organization will have its own desired position to be attained by the end of some specified period. The processes to be undergone to reach them are to be planned before the initiation of actions. According to the plan thus developed, the work is carried out in steps until the preferred output is attained. This explains the importance of planning various strategies.

A sound plan should:

Serve as a framework for decisions or for securing support/approval.
Provide a basis for more detailed planning.
Explain the business to others in order to inform, motivate & involve.
Assist benchmarking & performance monitoring.
Stimulate change and become building block for next plan. (Business planning papers: developing a strategic plan, 2009).

The strategic planning process can be viewed as a sequence of various activities in a specific order. The various steps can be seen as various strategies in line. The different strata can be named in a varied fashion. The overall planning is independent of any particular method. It is carried out based on the way, experience, and ideas of the manager who develops the plan. Here, the activities are divided into three major categories:

Strategic Analysis
Setting Strategic Direction
Action Planning

Strategic Analysis

The major thing in a planning process is keen analysis. The manager has to analyze the environmental factors at the enterprise. Various factors that influence or those are essential for the achievement of set goals are to be studied thoroughly for their effective exploitation. This is all about the analyzing the strength of businesses position and understanding the important external factors that may influence that position. (Strategy- what is strategy, n.d.). The technical, economical, social, manpower positional aspects are all to be analyzed to the depth to plan the various strategies. The advantages and disadvantages are to be drawn out for effective planning. The strategies are defined only after deep analysis.

Setting Strategic Direction

The analysis on various criteria may lead the manager to a position to determine the sources and resources available in the enterprise. Accordingly, the chances and available exploitable factors are considered for strategic planning. The direction in which the actions are taken is briefed as strategies of effective planning. Thus, the methods for achieving those are developed. Methods developed are merely the output of the strategic analysis.

These are usually (SMARTER):

specific clear, unambiguous, straightforward and understandable
measurable can be related to quantified or qualitative performance measures
attainable the objective should be realistic and within known resources
relevant linked to operational/service plan
timely building in target and review dates
extend capability stretching team performance
rewarding acknowledge team achievement, reflection, learning (Good practice guide on governance for Victorian public sector entities, 2009).

The strategic direction setting compels to determine the decision of three quantities of the enterprise:

Mission
Vision
Value

Mission describes the idea behind the introduction of the enterprise to reality. The ideas which lead to the formation of the enterprise are the actual implication of this statement.

The vision statement defines what the enterprise is expecting to do. The views on the actions to reach the clients in the real-time systematic manner are depicted in the vision statement in brief. This explains various steps to be taken care of while interacting with the work environment to achieve the desired results. Value statement defines on which basis the enterprise is working. The moral and social factors kept in reserve while performing the tasks are included in the value statement. No enterprise can exist in a successful circumstance devoid of values.

Action Planning

As the name indicates, it includes the planning of various actions in specific. The real actions based on the conceptual ideas are chartered in sequence. Strategic planning has various strategies mentioned. Each strategy may contain various sub-strategies. All of these are not materialistic but are mere visional views put forward to achieve the set goals.

The action plan defines all the methods made available to approach the goal set. It gives a very clear map of the work to be done by various individuals. Each individual will have a chart of his duties to be performed, the maximum permissible period for carrying out a specific task and the outcomes to be derived. Based on these charts, the work is carried out. Monitoring of their work is done continuously to evaluate the situation to keep track of the developments of the work being done. The effective setup of an action plan is an important factor when the overall performance of the enterprise is considered. The action plan depicts the entire individual work plan charts along with the budget and annual plans (McNamara, 2008).

Methodologies for strategic planning

Approach for strategic planning can be made stepwise to result in an optimized compact and effective plan. Today it is growing the use of the strategic planning (S.P.) in function of the uncertainties of the concourse environment. (Neto, & Botelho, n.d., p.1).

Almost all methodologies depend on the three steps process known as STP. The three steps involved in this are:

Situation
Target
Path

Situation

This means evaluation of the evolution of the current situation. Whether the situation is good or bad, this makes useful results on the development of knowledge about how to reach or how it reached the objectives.

Target

This means the setting of goals. The actual destiny is defined based on the concepts and ideas of the manager with the least materialistic and aesthetic facts. This is an ideal setting of what to do. The real outcome may be of a slight difference from the actual goal.

Path

This means the possible beat to be explored to reach the goals set. It is the direction in which one should work towards the accomplishment of the desired outcome. The schedule of work is determined so that effective utilization of sources and resources is achieved.

Draw-See-Think is an alternative approach in the methodologies of strategic planning. For this, there are four steps involved.

Draw
See
Think
Plan

Draw

An actual picture of the desired outcome is drawn specifically. The situation, position, and achievements to be attained are modeled with proper imagination and vision.

See

Understand the current position of the enterprise. This helps in effective comparison between the existing and intending situations.

Think

The steps required for the uplift of the position can be easily determined. The comparison done adds to the ease of this process. The actions thus deduced are given for the planning process.

Plan

The ideas received post-thinking are used for planning. The utilization of various sources and resources to be carried out is explained through various levels of action. The resulting plan is executed to reach the result (Strategic planning methodologies, 2006).

Situational analysis

Once the objectives of the organization are determined, then the next step is to formulate a strategic plan to achieve those goals or objectives. The situational analysis is designed to take a snapshot of where things stand at the time the plan is presented. (Part 2: Situational analysis, 2009, para.1).

The creation of the strategic plan should start with the current situation analysis. The situation analysis involves the overall study of the environment. The environment within the enterprise as well as outside the enterprise is observed. The company must first identify its strengths and capabilities and then try for new opportunities available in the market. The variations happening outside the enterprise will greatly help in developing new openings. The internal organizational analysis involves analysis of the prevailed situations inside the company such as company image, culture, resources, organizational structure, efficiency level, market share, etc.

Market analysis

Market analysis as used by investors involves looking at numerical data and attempting to discern patterns or determine probable future movement based on that data. (What is market analysis, 2009, para.1).

The external environmental analysis or the market analysis mainly consists of the macro-level analysis and micro-level analysis. The micro environmental analysis is done for the particular organization in the whole market, whereas the macro environmental analysis is done for all the firms in the whole market. The macro level market analysis can be done in the organizations by executing PEST analysis. PEST analysis takes into account all the aspects of the conditions available. Variations in the socio-economic circumstances are considered with importance. The new trends in technical fields and the governmental changes are also analyzed. These factors are uncontrollable by the firms.

In the political analysis, the political stability of the firm, the trade regulations and legal regulations of the country, pricing regulations, industrial safety regulations, wage legislations, trading partner decisions etc are included. Once this analysis is completed, the firms will find it easier to enter into the market. The economic analysis involves the identification and interpretation of the economic conditions of the country where the firm exists. The market status and the cost of employment and standard of living are also considered. The real life activities are also studied in this so that a clear picture on the economic status of the society can be achieved. Last, but not the least comes the technological factors which mainly involve new technological advancements, impact of technology on products, cost structure, value chains etc. Thus a PEST analysis can be conducted for an organization (PEST analysis, 2007).

Competitor analysis

Competitor analysis identifies the strengths and weaknesses of competing products or services before starting work on prototypes. (Competitor analysis, 2006, Summary, para.1). The micro level examination is generally made in various enterprises by implementing Porters five forces. Porters five forces are the:

Bargaining power of suppliers
Bargaining power of buyers
Threat of new entrants
Threat of substitutes
Rivalry among competitors (Ehmke, C., Fulton, J., Akridge, J., Erickson, K., & Linton, n.d.).

The suppliers are those sources for the input of producing products. The influence in the production department is highly dependent on suppliers ability and power. When a supplier is preferred over another there may be economic loss. This defines the power of the supplier in a case where too many suppliers are available leading the market. This also occurs when there is no substitute available for the inputs and when there is a convincing forward integration threat by the suppliers. This bargaining power is said to be low when the product is standardized and many suppliers are available.

The buyer or customer power implies how much a buyer can impose pressure on the margins and volumes, i.e. on the producing industry. When the number of buyers of a particular product increases and this influence the overall production f that product, it is can be said that power is entitled to the buyers. When the supplying industry operates with very high fixed costs and when the customers are price sensitive in nature, their power seems to be high.

The market is always undergoing change. More than one brand of same product may be available. It can become a risk to a product when the quality or any other factors of a parallel product affecting the marketing scenario changes. The continuous variation in price becomes essential in this situation. The open and clear interactions with the clients along with the fondness factor of buyers to the product and existing marketing situation contributing to the loss due to change in customers, all describes the threat posed.

The introduction of new brands to the market can affect the existing brands in a different manner for different types of products. This threat varies according to the barriers existing for the entry in the market. These barriers may be economies of scale, government regulations, patents and proprietary knowledge, brand loyalty of the buyers, lack of resources, and involvement of the existing players in distribution channels, raw materials access and cost advantages taken by them.

The aggressive jealousy in the industrial and marketing field results in a struggle for existence and consistence. The competition between the rivals of production, contributes to more effective attempts in production and marketing in order to attain victory over the others. Number of buyers is an important factor that defines the rivals in the field of marketing. The industry is measured to be closely controlled when the rivalry is low. The existence of many numbers of parallels in the marketing field makes the struggle for existence and consistency much stronger. Thus, by implementing Porters 5forces, one can measure the competition existing in the market and do the competitor analysis (Porters 5 forces, 2001).

SWOT analysis

SWOT analysis is a tool for auditing an organization and its environment. (Swot analysis, 2009, Lessons: Strength, weaknesses, opportunities and threats, para.1).SWOT stands for strengths, weaknesses, opportunities and threats. Before implementing a strategic plan, the organization should undertake the SWOT analysis for their betterment. SWOT Analysis is a strategic planning tool used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. (Bhagria, 2008).

A typical SWOT analysis matrix is as follows

Prior to all steps, the positive and negative points currently available for the firm in the marketing field are determined. While listing out these factors, one should be realistic and truthful in nature. Then, list out all the opportunities available for the future and the threats expected to arise while availing for these opportunities. The most essential in attaining the marketing consistency and expansion is the existence of many chances. Finally, after preparing the SWOT matrix, review it in order to create a strategic plan. From this matrix, it should be concluded that the strengths should be retained and controlled, the weaknesses must be remedied and avoided, the available opportunities must be listed out and prioritized and the threats need to be lowered and opposed. Thus, a SWOT matrix helps for the development of a strategic plan.

Example

Example of Wine Company strategic plan has been given below as an example for the strategic plan.

Silk Road wine company

Mission: to double the market share of Silk Road wine company by the year 2015 and to attain measurable sales on an international level.
Vision: to reach an excellent position among the co producers across the globe in the similar field of production.

Objectives of the plan

To improve the worth and exceptionality of the wines
To enhance the image and reputation of the firm
To raise the sales in domestic and international markets
To enhance the profitability of wine business in China
To assist the expansion of complementary supply and service industries for the firm
To increase the total market share of the firm.

This is a typical model of a strategic plan. Before creating this plan, the organization should take care of all the above mentioned factors, such as situational analysis, SWOT analysis etc. Once these factors are analyzed, the firm can formulate the strategic plan and implement it in the organization. It is very essential to evaluate the strategic plan for further improvement.

Conclusion

Once an obvious image of the organization and its environment is with us, strategic planning can be done. Instead of applying the generic strategies, firms apply alternative strategies according to their situations. The planned strategies must be translated into more detailed format for implementing it in a successful way. Once the implementation is completed, the plan has to be evaluated and revised, if necessary. In this project, the steps to be considered prior to formulation of the strategic plan are discussed and an example is given for illustrating the format of the strategic plan. Thus, a successful strategic planning can be done.

Reference List

Advertising terms: Strategic planning. (n.d.). Web.

Bhagria, A. (2008). Swot analysis!! A strategic planning tool. Web.

Business planning papers: developing a strategic plan: what is strategic plan. (2009).

Competitor analysis: Summary. (2006). Web.

Ehmke, C., Fulton, J., Akridge, J., Erickson, K., & Linton, S. (n.d.). Industry analysis: the five forces: Overview: Assessing your market place. Web.

Good practice guide on governance for Victorian public sector entities: Setting strategic directions: What are the components of strategic planning: Identify current aims, objectives and strategy of the organization. (2009). Web.

McNamara, C. (2008). Basic description of strategic planning (including key terms to know).

Neto, MS., & Botelho, C. (n.d.). Application of a methodology of strategic planning in company of technological base: Introduction.

Part 2: Situational analysis. (2009).

PEST analysis. (2007).

Porters 5 forces. (2001).

Strategic planning methodologies. (2006).

Strategy- what is strategy: strategic analysis. (n.d.).

Swinton, L. (n.d.). How to do a swot analysis: Strategic planning made easy: The swot matrix explained. Web.

Swot analysis: Lessons: Strength, weaknesses, opportunities and threats. (2009). Web.

What is market analysis? (2009).

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