Strategic Planning and Marketing’s Role
Unit 2: Company and Marketing Strategy
1. Company-Wide Strategic Planning: Defining Marketing’s Role
Strategic planning is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing environment. Strategic planning sets the stage for all other planning in the firm. While annual and long-range plans deal with the company’s current businesses, the strategic plan involves adapting the firm to take advantage of opportunities in its constantly changing environment. The strategic planning process involves:
1.1. Defining a Market-Oriented Mission
It begins with the following questions: What is our business? Who is the customer? What do customers value? What should our business be? Many organizations develop formal mission statements to answer these questions. A mission statement is a statement of the organization’s purpose. A clear mission statement acts as an “invisible hand” that guides people in the organization. Mission statements should be market-oriented and defined in terms of satisfying basic customer needs. For example, Facebook doesn’t define itself as just a social network; its mission is to connect people around the world. Mission statements should be meaningful, specific, and motivating. They should emphasize the company’s strengths and clearly state how it intends to win in the marketplace. A company’s mission should not be stated as making more sales or profits. Instead, the mission should focus on customers and the customer experience the company seeks to create.
1.2. Setting Company Objectives and Goals
The company needs to turn its mission into detailed supporting objectives for each level of management. Each manager should have objectives and be responsible for reaching them. This broad mission leads to a hierarchy of objectives, including business objectives and marketing objectives. Research is expensive and must be funded through improved profits, so improving profits becomes another major objective for the company. Marketing strategies and programs must be developed to support these marketing objectives. To increase its market share, the company might broaden its product lines, increase product availability and promotion in existing markets, and expand into new markets.
1.3. Designing the Business Portfolio
The business portfolio is the collection of businesses and products that make up the company. The best business portfolio is the one that best fits the company’s strengths and weaknesses to opportunities in the environment. Most large companies have complex portfolios of businesses and brands. For example, Disney includes theme parks, TV channels, studio entertainment, and more. Business portfolio planning involves two steps. First, the company must analyze its current business portfolio and determine which businesses should receive more, less, or no investment. Second, it must shape the future portfolio by developing strategies for growth and downsizing.
1.3.1. Analyzing the Current Business Portfolio
Management evaluates the products and businesses that make up the company. The first step is to identify the key businesses that make up the company, called strategic business units (SBUs). An SBU can be a company division, a product line within a division, or sometimes a single product or brand. The company then assesses the attractiveness of its various SBUs and decides how much support each deserves. The purpose of strategic planning is to find ways in which the company can best use its strengths to take advantage of attractive opportunities in the environment. Most standard portfolio analysis methods evaluate SBUs on two important dimensions: the attractiveness of the SBU’s market or industry and the strength of the SBU’s position in that market or industry.