Strategic Marketing Planning: A Comprehensive Guide

Posted on Aug 31, 2024 in Economy

The Marketing Plan

The operational planning of the marketing department is specified in a comprehensive document called a marketing plan. This plan combines marketing mix policies to achieve objectives, outlines responsibilities, establishes control systems, and offers several benefits:

  1. Encourages reflection on the company
  2. Serves as a guide for other activities
  3. Highlights opportunities and external threats
  4. Facilitates the implementation of management by objectives
  5. Empowers all company members to understand their roles and responsibilities
  6. Implies lower costs in the long-term management
  7. Favors efficient resource allocation
  8. Allows for proactive problem-solving

Benchmarking

Benchmarking is a valuable tool for setting goals. It often involves comparing your company’s practices and performance against leading companies in your industry (that are not direct competitors). The goal is to exchange information on best practices and identify areas for improvement. Consulting firms can facilitate this process while ensuring confidentiality.

Strategy

A strategy is a response to external threats and opportunities, as well as internal strengths and weaknesses. It outlines the marketing mix actions that will be taken to achieve specific goals. Strategy development is arguably the most creative aspect of marketing planning. There are three key strategic levels:

  1. Corporate Strategy: Affects the entire organization.
  2. Functional Strategy: Implemented by strategic business units.
  3. Product Strategy: Focuses on specific products or product lines.

Competitive advantage is what sets a company apart from its competitors. According to Michael Porter, this advantage can be achieved through:

  • Product Differentiation: Creating products perceived as unique and preferable to competitive offerings.
  • Cost Leadership: Offering products similar to the competition at a lower production cost.
  • Market Segmentation: Focusing on and dominating a specific niche market.

The Product Life Cycle

Analyzing the product life cycle involves comparing a product’s evolution (based on sales and profits) to the stages of a living being. There are four distinct phases:

  1. Introduction: Profits are typically negative due to high investment and low sales. Competition is minimal, especially for entirely new products. The strategy should focus on encouraging consumer adoption. Pricing can be high if there is no competition and the product is highly anticipated or if it’s a replacement product intended for rapid market penetration.
  2. Growth: Sales increase rapidly, and profits begin to emerge. Competition intensifies, requiring investments to retain customers and encourage repeat purchases. This stage determines the product’s success. Prices may decrease to capitalize on sales volume.
  3. Maturity: Sales peak, stabilize, and may eventually decline. Competition remains high, often leading to lower prices and profits. The focus shifts to identifying underexploited market segments and introducing product improvements. Technological advancements and communication can significantly shorten the maturity phase, making it challenging to achieve and maintain a competitive advantage.
  4. Decline: Sales volume, profits, competition, and advertising costs decline significantly. New products emerge to replace existing ones. Remaining customers are often less informed and purchase out of habit. Strategies at this stage involve either relaunching the product or phasing it out.

Launching New Products

Launching new products can stem from internal or external factors. Internal reasons include filling market gaps, increasing market share, and enhancing brand prestige. External reasons often involve replacing declining products and adapting to market changes. The new product launch process typically involves several stages:

  1. Idea Selection
  2. Demand Verification
  3. Technical and Financial Viability Study
  4. Product Development
  5. Acceptance Testing
  6. Launch Guidelines

SWOT Analysis

A SWOT analysis is a detailed examination of a company’s internal strengths and weaknesses, as well as external opportunities and threats.

  • Strengths: Internal advantages a company possesses over its competitors.
  • Weaknesses: Internal disadvantages that put a company at a competitive disadvantage.
  • Opportunities: External factors that a company can capitalize on to gain a competitive advantage.
  • Threats: External factors that could negatively impact a company.

Effective strategic planning involves leveraging strengths and opportunities while addressing weaknesses and mitigating threats.

The Brand

A brand encompasses the name, term, symbol, and sound used to identify and distinguish a product or company. Branding is crucial in a consumer-driven market. A brand typically includes a text element (the brand name) and may also feature a logo or other graphic elements.

Types of Brands

  • Manufacturer Brands: Owned by producers, these brands establish a direct link between the manufacturer and the consumer.
  • Dealer Brands (Private Labels): Owned by retailers, these brands are often exclusive to a particular retailer.
  • Generic Products: These products are typically marketed without a distinct brand name, focusing solely on the product itself.
  • Vertical Brands: An evolution of the dealer brand, vertical brands often encompass a range of products sold under the retailer’s own name.

Single Branding

Single branding involves marketing all products under the same brand name. This strategy requires a strong, positive brand image and confidence that the failure of one product won’t negatively impact the entire range. Advantages include easier introduction of new products, reduced communication budgets, and increased brand recognition. However, the more products associated with a single brand, the weaker its individual meaning may become.

Multiple Brands

Companies using a multiple brand strategy market their product range under more than one brand name. This can be intentional or unintentional and serves various purposes, such as targeting different market segments, offering different price points, or adapting to global markets. For instance, a company might use one brand for a product line in one country and a different brand for the same product line in another country.

The Product and Market Strategies

Product strategies are often determined by a company’s market position and can be categorized as reactive or proactive:

Reactive or Anticipative Strategies

  • Copying existing products with minor modifications and marketing them as new.
  • Analyzing existing products and launching improved versions.

Proactive Strategies

These strategies are driven by research and development and focus on innovation and market leadership.

Market Expansion Strategies

Depending on the product range and target market, companies can choose from several expansion strategies:

  • Market Penetration: Increasing market share within the existing market without altering the product range.
  • Product Development: Launching new products within the existing market.
  • Market Development: Introducing the existing product range to new market segments.
  • Diversification: Expanding both the product range and the target market.

Classification of Costs

Costs can be classified based on various factors:

Accuracy of Allocation

  • Direct Costs: Directly attributable to a specific product or cost center.
  • Indirect Costs: Not directly related to a specific product and must be allocated using a predetermined criterion.

Production Volume

  • Total Cost: The monetary value of all inputs used to produce a certain quantity of product.
  • Average Cost: Total cost divided by the number of units produced.
  • Marginal Cost: The change in total cost resulting from producing one additional unit.
  • Incremental Cost: The average cost for a specific increase in output.

Relationship to Production Volume

  • Fixed Costs: Remain constant regardless of production volume.
  • Variable Costs: Fluctuate based on production volume. Variable costs can be proportional (varying at the same rate as production), progressive (increasing at a faster rate than production), or degressive (increasing at a slower rate than production).

Term Impact

  • Long-Term Costs: Costs that a company cannot alter in the short term.
  • Short-Term Costs: Costs that can be adjusted within a shorter timeframe.