02.

STRATEGIC MARKETING PLANNING

Strategy is a game plan for achieving the goals of the business. Every business must tailor a strategy
consisting of a marketing strategy, a compatible technology strategy and sourcing strategy.
Michael Porter has condensed marketing strategies into three generic types: Overall cost leadership,
Differentiation, Focus
Overall cost leadership: Business works hard to achieve the lowest production and distribution cost so
that it can price lower than its competitors and win a large market share. Firms pursuing this strategy
must be good at engineering, purchasing manufacturing and physical distribution. They need less skill in
marketing. The problem with this strategy is that other firms will usually emerge with still lower costs
and hurt the firm that rested its whole future on being low cost.
Differentiation: Business concentrates on achieving superior performance in an important customer
benefit area valued by a large part of the market. It can strive to be the service leader, the quality leader,
the style leader or the technology leader. The firm cultivates those strengths that will contribute to the
intended differentiation.
Focus: Business focuses on one or more narrow market segments. The firm gets to know these segments
intimately and pursues either cost leadership or differentiation within the target segment.
Designing Competitive Strategies
Based on the role the firms play in the target market they may be classified as Leader, Challenger,
Follower or Niche marketer. Firms design their strategies based upon their position in the market. A
market leader has a considerable market share, a significant presence in the industry and is acknowledged
as the leader by other firms in the industry. Market challengers are those firms which are close second or
third to the leader in the market. These firms have the potential to become leaders themselves. Market
followers prefer to follow the leader rather than attack it. Most follower firms manufacture products
leveraging on the product innovations of the market leaders. If the follower attacks a market leader with
the same quality offerings at the same price it may have to face severe counter attack from the market
leader. Niche marketers do not like to attack the market leader and therefore, operate in a small segment
of the market in which the leader may not be interested. A niche marketer usually focuses all his
resources to efficiently serve a small market segment and thus gain the loyalty of customers in this
segment. It increases its efforts with increased focus and attention.
Expanding the Total Market New Users, New Uses and More Usages
Position defence, Flank defence, Pre-emptive defence, Counteroffensive
Leader Defending Market Share Defence, Mobile defence, Contraction defence
Expanding the Market Share Relative market share, Total market share

Attack the market leader

Challengers Attack firms of their own size
Attack small local or regional firms

Counterfeiter Duplicates the leader’s product and sells it in the black market
Cloner Emulates the leader’s products, name and packaging, with slight variations
Follower Imitator Copies some things from the leader but maintains differentiation as well
Adapter Takes the leader’s products and adapts or improves them

Niche
Need to practice specialisation
Marketers

SWOT Analysis
SWOT Analysis is the overall evaluation of a company’s Strengths, Weaknesses, Opportunities and
Threats. It is the process of analysing the company and the environment in which it is operating and it
helps in formulating effective strategies for the company to deal with competition in the market.
SW of SWOT stands for strengths and weaknesses. Together they constitute the Internal Environment
Analysis. In general, a business unit has to monitor significant micro environmental actors (customers,
competitors, distributors and suppliers) that affect its ability to earn profits. Every organisation needs to
evaluate its internal strengths and weaknesses periodically and improve upon its strengths and reduce its
weaknesses in order to sustain in the market.
MB208 Marketing Management 02. Strategic Marketing Planning Page - 2 - of 4
The strength of an organisation can be anything that adds value to its business. Strength can be the
organisation’s infrastructure, its employees, its marketing team, its product innovation, its quality
standards or even its closeness to the market.
The weaknesses are the factors that may cause severe damage to the organisation and hamper its growth.
The weaknesses of an organisation can be incompetent management, untrained employees, unevenly
trained sales force, poor marketing strategies, low quality products or lack of proper financial capabilities.
OT of SWOT stands for opportunities and threats. Together they constitute the External Environment
Analysis. In general, a business unit has to monitor key macro environment forces (demographic,
economic, technological, political-leagal, and social-cultural) that affect its ability to earn profits. An
organisation should constantly keep a watchful eye on the market so that it can analyse the opportunities
or threats it is facing.
A major purpose of environmental scanning is to detect new marketing opportunities. A marketing
opportunity is an area of buyer need in which a company can perform profitably. The opportunities of an
organisation can be a new potential market with ample scope of growth, opportunities to have a
collaborative advantage through strategic alliances and partnerships, or opportunities to fulfil the
demands of a latent market.
Some developments in the external environment represent threats. An environmental threat is a challenge
posed by an unfavourable trend or development that would lead to deterioration in sales or profit.
Defensive marketing action is required to eliminate or minimise the effect of threats. The threats to an
organisation can be a new competitor in the market, price reduction in the competitor’s product or a new
product introduced in the market that will eat into the company’s market share.
Planning New Businesses
Companies have to deal with situations where there is a big gap between actual and projected sales. Often
projected sales and profits are less than what corporate management wants them to be. In such a situation
where there exists a strategic-planning gap, management will have to develop or acquire new businesses
to fill up the gap or, in other words, take steps to increase sales. There are three options of filling up the
strategic-planning gap:
Options and Strategies available to fill up the Strategic-Planning Gap
Options Strategies Possibilities
Encourage existing customers to buy more
Market Penetration Strategy Attract competitors customers
Convince non users to start using the product
Explore different markets
Intensive Growth Market Development Strategy Seek additional distribution channels in present locations
Consider selling in new locations at home and abroad
Consider new product possibilities
Product Development Strategy Develop different quality levels
Research alternate technology

Forward Integration Strategy Start its own distribution network

Integrative Growth Backward Integration Strategy Start producing its own raw materials
Horizontal Integration Strategy May acquire the business of one of its competitors

Concentric Diversification Strategy A Biscuit company starts selling milk

Diversification Growth Horizontal Diversification Strategy A Biscuit company starts selling Ice creams
Conglomerate Diversification Strategy A Biscuit company starts selling bicycles

Intensive growth: The firm focuses on identifying opportunities to increase the market share of existing
businesses.
Integrative growth: The firm focuses on identifying business opportunities in related business areas. Most
firms try to adopt integration strategies for growth. These strategies include forward integration,
backward integration or horizontal integration.
Diversification growth: The firm identifies opportunities that have high potential but are unrelated to the
present business activity. Diversification strategy is adopted by a company when it has the necessary
resources to tap the potential. These strategies include concentric diversification strategy, horizontal
diversification strategy and conglomerate diversification strategy. In concentric diversification strategy, a
company tries to diversify by serving a new customer base with products that are related to the existing
product category. If the company tries to attract current customers with new products even if the
company has to acquire a new manufacturing capability, it is known as horizontal diversification strategy.
In the conglomerate diversification strategy, the company tries to perform unrelated business activities.
Product-Market Expansion Grid
Current Intensive growth for any business activity involves identifying
Products New Products the growth opportunities in the existing area of business. The
1. Market 3. Product product-market expansion grid is a useful model proposed by
Current
Markets
Penetration Development Ansoff in 1957 that points out three intensive growth
Strategy Strategy strategies. In this grid, one can analyse marketing
2. Market
New (Diversification opportunities through a four quadrant matrix.
Development
Markets Strategy)
Strategy The first quadrant of the matrix denotes the strategy for
Ansoff’s Product-Market Extension
Grid
growth in the existing market for the existing product. The
company first considers whether it could gain more market share with its current products in their current
markets. The third quadrant denotes the strategy for growth in the new markets for existing products. The
company considers whether it can find or develop new markets for its current products. The second
quadrant denotes the strategy for growth in the existing markets for new products. The company
considers whether it can develop new products of potential interest to its current markets. These three
major approaches to increasing current products’ market share in their current market are:
1. Market Penetration Strategy, 2. Market Development Strategy, and 3. Product Development Strategy.
Later it would also review opportunities to develop new products for new markets and those efforts
would fall under diversification growth strategies. The fourth quadrant denotes the strategy for growth in
the new market for new products.
The BCG Matrix product portfolio method
The BCG matrix method is based on the product life cycle theory that can be used to determine what priorities
should be given in the product portfolio of a business unit. To ensure long-term value creation, a company should
have a portfolio of products that contains both high-growth products in need of cash inputs and low-growth products
that generate a lot of cash. It has 2 dimensions: market share and market growth. The basic idea behind it is that
the bigger the market share a product has or the faster the product's market grows the better it is for the company.

Placing products in the BCG matrix results in 4 categories in a portfolio of a company:

1. Stars (=high growth, high market share)
- use large amounts of cash and are leaders in the business so they should also generate large amounts of cash.
- frequently roughly in balance on net cash flow. However if needed, any attempt should be made to hold share,
because the rewards will be a cash cow if market share is kept.
2. Cash Cows (=low growth, high market share)
- profits and cash generation should be high , and because of the low growth, investments needed should be
low. Keep profits high
- Foundation of a company
3. Dogs (=low growth, low market share)
- avoid and minimize the number of dogs in a company.
- beware of expensive ‘turn around plans’.
- deliver cash, otherwise liquidate
4. Question Marks (= high growth, low market share)
- have the worst cash characteristics of all, because high demands and low returns due to low market share
- if nothing is done to change the market share, question marks will simply absorb great amounts of cash and
later, as the growth stops, a dog.
- either invest heavily or sell off or invest nothing and generate whatever cash it can. Increase market share or deliver
cash

Marketing Plan
A marketing plan involves aligning marketing goals with the organisation’s mission and overall goals and
serves as basis for all marketing strategies. Marketing planning is the implementation of planning
activities as they relate to the achievement of marketing objectives. A marketing plan generally contains
the following sections:
Executive Summary:
It is a summary of the extensive marketing plan. It briefly mentions facts about the company, features
about the product(s), planning of the 4-Ps of marketing, and ends with the sales forecast along with the
estimated cost of selling for a certain number of years.
Situation Analysis:
It gives the market summary, including the market potential and market growth potential as per results
obtained through market research. It lists the target markets, details of the target group(s) of customers,
and the demographic, geographic, and behavioural profile(s) of the typical customer(s). It matches the
features of the product with the needs and wants of the target group(s) of customers.
SWOT Analysis:
SWOT analysis captures the key strengths and weaknesses within the company and tries to describe and
understand the external opportunities and threats facing the company.
Goals and Issues:
This section includes keys to success, and the most critical issues that need to be addressed by the
company. It also includes details analysis of the existing competition in the market.
Objectives:
This section includes the company mission, marketing objectives, and financial objectives of the
company.
Marketing Strategies:
This section lists the product features, marketing mix details, customer service goals, and market research
goals.
Budgets:
This section has the break-even analysis, sales forecast and the budgeted expenses over a given period of
time.
Controls:
This section lists the control measures like the areas that will be monitored to gauge performance, as well
as the detailed implementation plan that has certain milestones identifying the key marketing programs
that need to be accomplished on time and on budget. This section also includes the contingency plans and
worst scenario risks involved and how to overcome them.