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What is strategic marketing planning?

Strategic marketing planning is the alignment of marketing practices and strategy to


achieve desired business outcomes. It is a part of market development strategy. This
process is a structured approach to formulating and executing plans that drive businesses
to success.
Market development strategy involves:
1. Market trends analysis
2. Product pricing
3. Product distribution
4. Promotional activities
These efforts maximise market impact and contribute to long-term business objectives.

What is the purpose of strategic marketing planning?


Strategic marketing planning provides organisations with a roadmap for achieving their
marketing objectives. It ensures that marketing efforts are aligned with the overall
business strategy, optimising resource utilisation. By creating a strategic marketing plan,
organisations can identify opportunities, anticipate business challenges, and develop
strategies to combat the odds.

Steps to create a strategic marketing plan


The following points are core concepts to keep in mind to streamline the strategic
marketing planning initiatives. Strategic marketing planning is a continuous process that
is subject to evolution according to the changing market dynamics. The steps mentioned
here are basic guidelines to follow when creating a strategic marketing plan.
Step 1: Define the marketing goals
The first step in the strategic marketing process is to clearly define the marketing goals.
These goals should be specific, measurable, achievable, relevant, and time-bound
(SMART). Marketing goals should be tailored to meet the overall business goals.
Step 2: Conduct market research
Market research is a vital component of the strategic marketing planning process. It
involves gathering and analysing relevant data on the market, industry trends, customer
preferences, and competitor activities. Through market research, one can gain valuable
insight that helps shape strategic decisions such as product development and competitive
pricing.
Step 3: Identify the target audience
Understanding the target audience is crucial in the strategic marketing planning process.
By identifying the ideal customers, one can tailor the marketing messages and tactics to
resonate with their pressing needs, preferences, and pain points.
Step 4: Develop a unique value proposition
A unique value proposition (UVP) sets the product or service apart from competitors and
communicates its authentic benefits to the target audience. It defines why customers
should choose the product advertised over others.
By developing a compelling UVP, one can cause the brand to stand out in the market and
attract customers who align with the unique value proposition.
Step 5: Choose the right marketing channels and tactics
Selecting the appropriate marketing channels and tactics helps a business reach its target
audience effectively. Social media, content marketing, email marketing, and traditional
advertising are some examples of marketing channels.
Choose the marketing channel one need to use based on the analysis of what works best
with the target audience. Then one can craft the marketing tactics to fit the chosen
channels and align them with the
overall business goals.
Step 6: Create a marketing budget
A thorough marketing budget helps businesses to effectively allocate resources. Consider
the potential return on investment (ROI) when allocating resources for different marketing
channels and endeavours.
Step 7: Develop the marketing messages
Marketing messages are what communicate a business’ unique value proposition to the
customer in a way that resonates with the buyer. This creates the possibility for high
conversion rates and customer retention. Marketing messages should be based on the
target consumers' pain points and validate their needs. This tactic helps the marketing
message create a lasting impression.
Step 8: Implement the strategy
The implementation of a marketing strategy requires close monitoring to ensure all factors
are employed correctly. Execution of marketing strategy is most effective once the plan
is aligned with the resources and initiatives.
Step 9: Measure and analyse the results
Measuring the success of the marketing efforts is crucial for understanding what works
for the business. Monitor key performance indicators (KPIs) such as website traffic,
conversion rates, sales revenue, and customer feedback.
Step 10: Evaluate and optimise
Continuous improvement and optimisation are essential for the success of any strategic
plan. One can ensure this by regularly assessing the performance. This practice helps
identify areas that need improvement.

What are the three major problems of marketing strategy implementation?


Strategic marketing planning is an eagle eye’s view of the industry and a predictive model
of the best practices and paths to follow. However, during the implementation of
marketing strategies, organisations may encounter three major challenges:
1. Interdependence: The marketing plan determines how a strategy is implemented
across various departments of a business. However, the inverse is also true, as
raw data from business insights, such as profit sharing, employee training etc., can
also shape the marketing strategy.
2. Evolution: Environmental factors, such as supply and demand, are always
subject to change. These variables can cause a significant shift in a marketing
strategy and implementation. Hence businesses should be flexible when designing
their marketing strategy and implementation practices, making enough room for
inevitable changes.
3. Separation: Strategic marketing planning can sometimes be misaligned with
business goals when crafted with a desire to impress clients and board members.
Professionals in this field can consider not going overboard with unrealistic
marketing goals, strategy and implementation that could harm the business
resources in the long run.
Why strategic marketing planning is essential in an organisation
Strategic marketing planning is essential for organisations as it provides a structured
marketing approach, ensuring that efforts are aligned with overall business objectives.
Secondly, it helps organisations identify and capitalise on market opportunities, stay
ahead of competitors, and adapt to changing market dynamics. Lastly, strategic
marketing planning streamlines resource allocation, helps in optimising marketing
investments, and can give better results.

Porter's Five Forces

Porter’s Five Forces framework was developed by Harvard's Michael Porter using
concepts from industrial organization economics to analyze five interacting factors critical
for an industry to become and remain competitive: industry competition, threat of new
entrants, threat of substitutes, bargaining power of buyers and bargaining power of
suppliers

This chart identifies Porter's 5 Forces for assessing the profitability of a value chain: threat
of substitutes, threat of new entrants, bargaining power of buyers, bargaining power of
suppliers, and rivalry among existing competitors.

Each of these forces has several determinants.

• The intensity of industry competition: number of competitors, rate of industry


growth, industry overcapacity , exit barriers, diversity of competitors, informational
complexity and asymmetry, brand equity, fixed cost allocation per value added,
protection against imports, government policies to support/hinder competition or
monopolices, coordination within the industry participants.

• The bargaining power of buyers: buyer volume , buyer switching costs relative
to firm switching costs, buyer information availability, availability of existing
substitute products, buyer price sensitivity, price of total purchase, consumer
protection laws.

• The bargaining power of suppliers: degree of differentiation of inputs, presence


of substitute inputs, supplier concentration to firm concentration ratio, cost of inputs
relative to selling price of the product, importance of volume to supplier, existing
laws and regulations to protect local suppliers.

• The threat of new entrants: the existence of barriers to entry, economies of


product differences, brand equity, capital requirements, access to distribution,
absolute cost advantages, learning curve advantages, government policies.

• The threat of substitute products: buyer propensity to substitute, relative price


performance of substitutes, buyer switching costs, perceived level of product
differentiation.

VALUE CHAIN ANALYSIS

Successful businesses create value with each transaction—for their customers in the
form of satisfaction and for themselves and their shareholders in the form of profit.
Companies that generate greater value with each sale are better positioned to profit than
those that produce less value.

UNDERSTANDING THE VALUE CHAIN

The term value chain refers to the various business activities and processes involved in
creating a product or performing a service. A value chain can consist of multiple stages
of a product or service’s lifecycle, including research and development, sales, and
everything in between. The concept was conceived by Harvard Business School
Professor Michael Porter in his book The Competitive Advantage: Creating and
Sustaining Superior Performance.

Taking stock of the processes that comprise the company’s value chain can help to gain
insight into what goes into each of its transactions. By maximizing the value created at
each point in the chain, the company can be better positioned to share more value with
customers while capturing a greater share for itself. Similarly, knowing how the firm
creates value can enable to develop a greater understanding of its competitive
advantage.
COMPONENTS OF A VALUE CHAIN

According to Porter’s definition, all of the activities that make up a firm's value chain can
be split into two categories that contribute to its margin: primary activities and support
activities.

Primary activities are those that go directly into the creation of a product or the execution
of a service, including:

• Inbound logistics: Activities related to receiving, warehousing, and inventory


management of source materials and components
• Operations: Activities related to turning raw materials and components into a finished
product
• Outbound logistics: Activities related to distribution, including packaging, sorting, and
shipping
• Marketing and sales: Activities related to the marketing and sale of a product or service,
including promotion, advertising, and pricing strategy
• After-sales services: Activities that take place after a sale has been finalized, including
installation, training, quality assurance, repair, and customer service

Secondary activities help primary activities become more efficient—effectively creating a


competitive advantage—and are broken down into:

• Procurement: Activities related to the sourcing of raw materials, components,


equipment, and services
• Technological development: Activities related to research and development, including
product design, market research, and process development
• Human resources management: Activities related to the recruitment, hiring, training,
development, retention, and compensation of employees
• Infrastructure: Activities related to the company’s overhead and management,
including financing and planning
WHAT IS VALUE CHAIN ANALYSIS?

Value chain analysis is a means of evaluating each of the activities in a company’s value
chain to understand where opportunities for improvement lie.

Conducting a value chain analysis prompts to consider how each step adds or subtracts
value from the final product or service. This, in turn, can help realize some form of
competitive advantage, such as:

• Cost reduction, by making each activity in the value chain more efficient and, therefore,
less expensive
• Product differentiation, by investing more time and resources into activities like
research and development, design, or marketing that can help the product stand out

Typically, increasing the performance of one of the four secondary activities can benefit
at least one of the primary activities.

HOW TO CONDUCT A VALUE CHAIN ANALYSIS

1. Identify Value Chain Activities

The first step in conducting a value chain analysis is to understand all of the primary and
secondary activities that go into your product or service’s creation. If the company sells
multiple products or services, it’s important to perform this process for each one.
2. Determine Activities' Values and Costs

Once the primary and secondary activities have been identified, the next step is to
determine the value that each business activity adds to the process, along with the costs
involved.

When thinking about the value created by activities, ask: How does each increase the
end user’s satisfaction or enjoyment? How does it create value for the firm? For example,
does constructing the product out of certain materials make it more durable or luxurious
for the user? Does including a certain feature make it more likely to benefit from network
effects and increased business?

Similarly, it’s important to understand the costs associated with each step in the process.
Depending on the situation, it may find that lowering expenses is an easy way to improve
the value each transaction provides.

3. Identify Competitive Advantage Opportunities

Once value chain is compiled and it needs to understand the cost and value associated
with each step. One can analyze it through the lens of whatever competitive advantage
is being tried to achieve.

For example, if the primary goal is to reduce the firm’s costs, one should evaluate each
piece of the value chain through the lens of reducing expenses. Which steps could be
more efficient? Are there any that don’t create significant value and could be outsourced
or eliminated to substantially reduce costs?

Similarly, if the primary goal is to achieve product differentiation, which parts of the value
chain offer the best opportunity to realize that goal? Would the value created justify the
investment of additional resources?
Strategic Business Unit (SBU)

A Strategic Business Unit (SBU) is a separate, specialized subsystem in a large


organization that acts like an independent business. Management consultants developed
the concept in the late 1970s as a means to focus on product strategy and strategic
planning.

An SBU operates in the marketplace as an independent entity with its own vision, mission,
competitors, business model, and profit-and-loss responsibility. However, it remains part
of a larger corporation and, as such, must align its strategy with the corporate-level
strategy.

Typically, an SBU has the following characteristics:

1. It is a separate business entity with its own set of competitors.


2. It has control over its resources.
3. It is led by a manager who is responsible for strategic planning and profitability.
4. It operates in a distinct area of business, which could be defined by market segment,
product type, geographic location, or other factors.
5. It is large enough and sufficiently independent to be planned separately from the rest
of the company.
Types of Strategic Business Units
Strategic Business Units (SBUs) can be categorized differently depending on the parent
company’s organizational structure, strategic objectives, and industry. Here are a few
common types:

1. Product-Based SBUs: These units are centered around a specific product or


product line. Each SBU is responsible for its designated product’s production,
marketing, and profitability.
2. Market-Based SBUs: These are created to focus on a specific market or customer
segment. This allows the SBU to tailor its strategies to its designated market’s unique
needs, preferences, and competitive dynamics.
3. Geography-Based SBUs: These units are responsible for operating in a specific
geographic region. This type of SBU can be useful for multinational companies that
must adapt their operations and strategies to different national or regional markets.
4. Process-Based SBUs: These SBUs focus on a specific process or operational
area within the organization. For example, a company could have an SBU dedicated
to the research and development process.
5. Function-Based SBUs: These units are formed around a specific business
function, such as marketing or sales.
6. Hybrid SBUs: Many companies use a mix of the above categories to form their
SBUs. For example, a company might have product-based SBUs for its different
product lines, and within each of those, there might be geography-based SBUs for
different regions.
Remember that these types are not mutually exclusive. A company might categorize its
SBUs in one way and then further subdivide them in another way. The goal is to create
units that can operate effectively and efficiently, with a high degree of focus on their
specific strategic objectives.

What is the planning process of a strategic business unit?


The planning process of a Strategic Business Unit (SBU) typically involves several key
steps. While the specific process can vary depending on the organization and the nature
of the SBU, here is a generalized version of the process:

1. Situational Analysis: This involves understanding the current state of the SBU,
including its strengths, weaknesses, opportunities, and threats (SWOT analysis). This
step might also include analyzing the competitive landscape, understanding customer
needs and behaviors, and evaluating the SBU’s current performance.
2. Setting Objectives: The SBU sets strategic objectives based on situational
analysis. These objectives should be aligned with the overall corporate strategy and
should be Specific, Measurable, Achievable, Relevant, and Time-bound (SMART).
3. Developing Strategies: Once objectives are set, the SBU develops strategies to
achieve them. This might involve choosing target markets, deciding on a competitive
position, developing a value proposition, etc. Strategy development should consider
both internal capabilities and external market conditions.
4. Implementing the Strategy: This involves translating the strategy into action. It
might involve developing new products, launching marketing campaigns, changing
operational processes, hiring new staff, etc.
5. Monitoring and Control: Once the strategy is implemented, the SBU must track its
performance against its objectives. This involves collecting data on key performance
indicators (KPIs), reviewing progress, and making necessary adjustments.
6. Evaluation and Adjustments: The SBU evaluates its strategy based on the
monitoring. If the strategy is not working as expected, the SBU may need to adjust its
objectives, strategies, or implementation plans.
Remember that strategic planning is not a one-time event but an ongoing process
requiring regular review and adjustment. The goal is to ensure that the SBU continues to
adapt to changing market conditions and aligns with the overall corporate strategy.

Example of a strategic business unit


A classic example of Strategic Business Units can be found in large multinational
companies like Procter & Gamble (P&G).

P&G, a multinational consumer goods corporation, has several SBUs, each focusing on
a different category of products. For instance, they have an SBU for Beauty, one for
Grooming, one for Health Care, one for Fabric & Home Care, and one for Baby, Feminine
& Family Care.
Each SBU operates like its own company, with its own brand management, product
development, marketing resources, and more. However, these units are all part of the
larger P&G corporation and contribute to the overall corporate strategy.

This structure allows each SBU to focus deeply on its own market segment and set of
competitors while still benefitting from the resources and capabilities of the larger
organization. It also helps P&G manage the complexity and diversity of its product
portfolio.

Business unit strategy decisions

Business unit strategy decisions are critical for the success and growth of a company.
These decisions involve determining how a specific business unit within a larger
organization will achieve its objectives and contribute to the overall success of the
company. Here are some key elements and considerations when making business unit
strategy decisions:

1. Alignment with Corporate Strategy:


• Ensure that the business unit's strategy aligns with the overall corporate strategy.
There should be a clear understanding of how the business unit contributes to the
company's overarching goals and objectives.
2. Market Analysis:
• Conduct a thorough analysis of the market in which the business unit operates.
Understand the industry trends, customer needs, competitive landscape, and
potential opportunities and threats.
3. SWOT Analysis:
• Evaluate the business unit's strengths, weaknesses, opportunities, and threats
(SWOT analysis). This helps in identifying internal capabilities as well as external
factors that can impact the unit's performance.
4. Clear Objectives:
• Define clear and measurable objectives for the business unit. These objectives
should be aligned with the company's overall goals and provide a roadmap for
success.
5. Customer Focus:
• Understand the needs and preferences of the target customers. Tailor the
business unit strategy to meet customer demands and expectations, ensuring a
focus on customer satisfaction.
6. Competitive Advantage:
• Identify and leverage the business unit's competitive advantages. This could be
through innovation, cost leadership, differentiation, or other strategic elements that
set the unit apart from competitors.
7. Resource Allocation:
• Allocate resources effectively to support the implementation of the business unit
strategy. This includes financial resources, human resources, technology, and
other necessary assets.
8. Risk Management:
• Assess and manage risks associated with the business unit's operations. This
includes market risks, regulatory risks, operational risks, and any other factors that
could impact performance.
9. Innovation and Adaptability:
• Foster a culture of innovation within the business unit. Be prepared to adapt the
strategy in response to changes in the market, technology, or other external
factors.
10. Performance Metrics:
• Establish key performance indicators (KPIs) to measure the success of the
business unit strategy. Regularly monitor and evaluate performance against these
metrics to make informed decisions and adjustments.
11. Communication and Collaboration:
• Ensure effective communication and collaboration between the business unit and
other parts of the organization. This promotes synergy and a unified approach
toward achieving overall company objectives.
12. Talent Management:
• Develop and retain talent within the business unit. Having the right people with the
right skills is essential for executing the strategy successfully.

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