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Where does marketing planning fit in with the overall strategic planning of a
business?
Strategic planning is concerned about the overall direction of the business. It is
concerned with marketing, of course. But it also involves decision-making about
small. Business, strategic and marketing plans are important to every for-profit and
nonprofit organization. Understanding the goals and components of each offers
businesses the tools to create effective plans using the most basic or sophisticated
techniques.
Business Plans
Typically used for starting up or financing a company, business plans are the
cornerstone of the planning function. Components of a business plan include an
executive summary, market analysis, product/service descriptions and
financial/operations projections for a minimum of three to five years. In start-up
situations that need initial financing, creators should paint a vivid, yet conservative,
picture of the founders and the rationale for believing the business will succeed.
When seeking growth-financing, management should highlight past company
performance and carefully project the impact of the new funding on improving net
income. Always include debt service, which is the amount needed to repay the new
loan, in income and expense projections.
Strategic Plan
Strategic plans should be created by business owners and/or senior management
only. Unlike business plans, which are based on historical data and future
projections, strategic plans are more conceptual. These plans should include defining
your organizational goals, identifying your available options to achieve your
objectives and considering new short-term opportunities you believe will exist to
improve your business's results. You may want to incorporate specific industry
trends into your planned strategy. Strategic plans are not long-term creations, but
should address taking advantage of available opportunities in the next 12 to 24
months.
Marketing Plans
All the fabulous business and strategic plans ever devised will fail if you don't market
and sell your product or service. A solid marketing plan will help you achieve gross
income and sales goals. A SWOT (strengths, weaknesses, opportunities, and threats)
analysis is an effective technique for creating a winning marketing plan. SWOT is
also useful in strategic plan creation as a foundation technique. You can also combine
a SWOT analysis with the four P's product, price, publicity, and place of effective
marketing. Even if you have invented the "better mousetrap", you need a superior
marketing plan to get results. These techniques will give you the ammunition you
need.
Internal
Explanation
Strategy Implications
Strengths
Reviews the business' current strengths such as a good brand or strong sales
performance
Can develop the strengths, perhaps in the way they promote the product, or wish to
develop new products (Tesco have used their strong brand name to launch several
products)
Weaknesses
Reviews the business' current weaknesses such poor response times to requests for
information or late deliveries
Can implement strategies to eradicate these weaknesses e.g. more resources put into
a better warehousing system for the dispatch of goods.
External
Opportunities
Reviews the business' future opportunities e.g. new technology making it easier to
manufacturer certain goods or new markets abroad
Can use strategies to take advantage of the potential opportunities e.g. developing
new products to meet the potential increased demand
Threats
Reviews the business' future threats, mostly from increased competition from other
firms or from changes in the economic situation.
Can employ strategies to ward off these problems, e.g. setting lower prices or
increasing promotion
Rational about the use of a SWOT analysis in measuring the influence of marketing
to a business strategy;
Universal Techniques
To make business planning come alive and succeed there are three simple practices
that must be always be employed. First, set realistic, measurable goals. Second,
understand and communicate with your customer base. Third, attract and retain the
best employees your company can afford. Without these three components, your
business planning, however sophisticated, risks failure on a massive scale. Using
these three simple techniques, your business plans should deliver the results you
want.
SPACE, PIMS.
PIMS data can be described as a guide to help management describe the business a
business situation and opportunity relative to the offerings of its competitors in twodimensional space.
TASK 2
BE ABLE TO FORMULATE A NEW STRATEGY
Company's profile:
Tesco runs more than 2300 supermarkets and convenience stores in the UK, Ireland,
Central Europe and Asia. It is operating in almost areas such as gasoline retail (Tesco
Express) small urban stores (Tesco Metro) hypermarkets (Tesco Extra) and Financial
service (Tesco Personal Finance). It covers up to 35% stake in US grocery. It is the
leading online grocery store and is now expanding its business with a TV channel and
a retail based education institution.
A) A PEST Analysis of the industry was then undertaken to examine the local,
national and global influence of political, economic, social and technological factors
to understand opportunities and threats well.
An assumption was made that most of these ( political, economic, social, legal and
environmental ) factors would, to some extent apply to the retail industry in Sweden:
Political: Following the European Integration and Free Trade Agreements, the
market has opened British Companies to invest in Eastern European. It has 60 stores
in Hungary. Lidl is fighting hard to maintain its market share with an aggressive
pricing strategy against Tesco.
Economic: Retail industry is fairly recession proof and also very sensitive to interest
rate. Because of September 11 events, the world economy have suffered heavily,
stocks were plummeting and prices are low all time. However the world economy is
up after the September 11th attack. Consumers are optimistic and retail industry is
once again boosting.
Social: There are changes in consumer taste and lifestyle present both opportunities
and threats for the retail industry. There are alternative Sweden national retailers
which poses additional threats to the Tesco while entering in the Sweden market
industry.
Technical: Introduction of online shopping via internet is now a common place in
retailing. IT system undertakes a paperless operation, the management and
administration of the company which are monitored by the secured severs, it
provides a flexible base for running the business. Sweden is at the forefront of
technologically developed with national companies like Ericsson, hence Tesco gets an
advantage of developed logistics and distribution channels already in place.
One other tool that will be used in these areas is Porter Five Forces. This model can
be used to good analytic effect alongside other models such as the SWOT and PEST
analysis tools.
Five Forces analyses five important in the determination of competitive power and
these are:
Buyer's power:
Suppliers' power:
Rivalry among competitors:
Threat of new entrants:
Threat of substitute product
Problems faced by Tesco can be explained by Porter's five forces including of the
threat of substitutes from other supermarkets, buyer power, supplier power and the
power of customer.
Buyer power also decides the prices in the market. If products are expensive in Tesco
then they will purchase from Sainsbury. This mean market is disciplined which make
the pricing is disciplined as well. This in turn stops them to destroy the market in a
profit war.
Supplier power is an important part of this model. Supplier power is wielded by
suppliers demanding that retailers should pay them certain price for their goods
supplied.
There is always a threat of substitution, although Tesco tries to ensure brand image
and quality by having the best value for the products.
Tesco acknowledges the fact that there have always been threats from the
competitors and new entrants into the markets and therefore always plan to improve
upon developments in its stores.
Carry out an environmental audit for a given organization:
PESTLE (Political, Economic, Social, Technological, Ecological, Legal and
Environment)
Among the above PESTLE analysis Political, Economic, social and Technological
factors are implemented as a technique for the auditing of the marketing
environment.
Political/ legal:An environment of marketing at any nation is affected due to the political reasons.
There should be the management of change once there is a change in the political
condition and situation. The system of nation keeps on changing if there is a lack of
stability in politics and the organization should change the marketing strategies as
per the changing environment so that the organization can exist in the changing
environment.
Economic:Economics plays a vital role in the marketing environment audit. A country with
weak economy cannot compete in the international market. To be successful in the
marketing there should be a sound financial transaction of an organization. Some of
the components of economic factors for environmental audit are: Interest rates,
Business cycles, Investment policies. There should be good investment policies for
the investment by the nation so that the interest of the investor in investment
increases which helps to raise financial stability in the nation.
Social and cultural:Social and cultural refer to the tradition and costumes or belief of people living in a
particular geographical region. Social value and norms sometimes becomes the
barrier to the marketing environment. There is vast different in the culture and
tradition of eastern and western societies as a result of it the culture of eastern may
not be suitable for western and vice versa. The marketing depends upon the culture
and tradition of any geographical area. S
Technological:In this competitive age technological changes plays a vital role in the marketing. All
the developed countries have been successful due to the drastic changes in the
technology and their capacity to cope with changing technology. Different
technologies can be used for the auditing of the marketing environment.
SWOT analysis:-
PORTER'S five forces model:It consists of five main points that are listed below: -
Bargaining power of the customers: It is found in the open or the competitive market where the customer has the
advantage over the suppliers or the sellers. A consumer has the choice of quality and
the rate and if the supplier fails to fulfil the satisfaction of the consumer there is the
chance of the customer to walk away from the suppliers. In this case the buyer has
every right to complain and the seller need to hear it and recover so that the buyer
did not leave the consumption of the commodity..
Bargaining power of the supplier: We normally find it in the monopoly market where there is the presence of only one
market. Here the supplier has the advantages over the customers. A seller can fix the
price of his own and sell low quality products as a result of it buyer couldn't get
enough facilities. As only one marker is available the customers are forced to buy
goods from the same shop and have no choice. For an illustration, if one city has only
one market the people living there have to purchase the commodities from the same
market no matter what the price and quality is because they don't have a second
option. In this case the supplier has their own choice of marking prices. Such type of
business brings profit motive rather than service motive.
Threat of new entrants: When there is the presence of new product or the new supplier the old products and
the old supplier gets affected. A customer of particular supermarket gets diverted to
next one, if the new supplier gives him new schemes ad facilities. Threat from the
substitute product: It provides the facilities to the consumers as the consumers have enough choices for
the commodities to use. The customers won't feel bored of using same product again
and again.
Rivalry among the competitors: Rivalry begins where there is the presence of competitive market or when two similar
types of goods are present in the market. It gives advantages to the customers. When
there is rivalry among competitors' consumers receives the benefits.
Political:Under political it uses the monopoly system, taxation policies, rules of employing the
staffs and government stability as a method of evaluating political environment.
Economic:Under the economic sector the interest rates, inflation and business cycles are
evaluated for the purpose of environmental marketing audit.
Social cultural:There are different cultures of the particular area. The marketing of Tesco has been
influenced due to the social cultural factors as well. The different elements under
socio cultural which can affect the marketing audit of the organization are
demography, distribution of income of the people and their lifestyle.
Technology:-
Technology plays a vital role during upgrade any organization. In this competitive
age no organization can ever think of improvement in the absence of technology. The
factors influencing technology in an organization can be the development of new
technologies, rate of technology transfer and investment on the research of
technology.
provides an idea of the impact of reform on political and social forces, illuminates the
divergent viewpoints towards proposed reforms and the potential power struggles
among groups and individuals, and helps identify potential strategies for negotiating
with opposing stakeholders.
Suppliers:
Always used UK based suppliers, ensuring consistent quality
Relationship to build reliance on suppliers
Lifelong relationship.
Social commitment:
Strong tradition of CSR
Sponsorship of Charities.
Community development efforts
Government social projects.
Environment friendly:
Removed artificial color and flavoring from its entire food and soft drinks rangeApril 2008
Launched school wears made from recycled plastic bottle
Despite tough economic conditions Mark and Spencer stick to Plan A, as it gives
them brand and differentiation.
AL Gore said "a sustainable business can be profitable one"
Business Continuity
Reviewed the tools and processes established to ensure we have the capability to
protect our people, the brand, property and profit at all times;
Received plans for all locations both nationally and internationally;
Discussed plans for the Olympics and the Queen's Diamond Jubilee;
Full medical and security package introduced for all business travelers;
Travel tracker system introduced both nationally and internationally;
A group training awareness program launched; and
Evacuation pack and welfare response.
Plan A
Focused on the risks to our international growth - each risk was highlighted and
discussed, alongside the relevant mitigating action which was either recently taken or
in progress;
Discussed the team and its integration - the presentation also covered the
performance of our partly-owned businesses, franchise operations, ethical reputation
and the importance of having an aligned approach across the business.
Data security
Apprises relating to our investment in IT security, structure of the new retail website
platform and the move from the current platform reinforced by Amazon.
International activities, user access and the controls around the protection of
individual data. Strategies were reviewed as was the staffing of resource and the skill
sets these individuals bring to M&S.
Stockholder influences on the organization: Sources: www.qualitydigest.com.
TASK 3
Analyze possible alternative strategies relating
to substantive growth, limited growth or
retrenchment:
Product market mix:
Hands-off product/market growth matrix suggests that a business' attempts to grow
depend on whether it markets new or existing products in new or existing markets
Sources:
www.oup.com/uk/orc/bin/9780198782292/ch14
.pdf
Market Penetration:
Here we market our existing products to our existing customers.
This means increasing our revenue by, for example, promoting the product,
repositioning the brand, and so on. However, the product is not altered and we do
not seek any new customers.
Market Development:
Here we market our existing product range in a new market. This means that the
product remains the same, but it is marketed to a new audience. Exporting the
product, or marketing it in a new region, are examples of market development.
Product Development:
This is a new product to be marketed to our existing customers. Here we develop and
innovate new product offerings to replace existing ones. Such products are then
marketed to our existing customers. This often happens with the auto markets where
existing models are updated or replaced and then marketed to existing customers.
Diversification:
This is where we market completely new products to new customers. There are two
types of diversification Related diversification means that we remain in a market or
industry with which we are familiar. For example, a soup manufacturer diversifies
into cake manufacture (i.e. the food industry). Unrelated diversification is where we
have no previous industry or market experience. For example a soup manufacturer
invests in the rail business.
Divestment strategy:
It is the selling off part of a firm's operation or pulling out of certain product market
areas. Reason for:
Company's business buy and sell businesses
Resource limitations
Insolvency
Merging with another company provides the opportunity to increase market share
and expand into new geographies and sectors. Suveen Sahib, Group COO and CEO,
Americas of EBS Worldwide, a marketing and technology company, merged his
company that had a premerger value of $7 million to create a company valued at $15
million. Sahib says, "EBS Worldwide started in India and now has a footprint in the
U.S., allowing for its global clients to benefit from our strong position in these
regions and our large suite of services."
Indirect export
The organizations sell their product to a third party who then sells it on within the
foreign market.
Licensing
Less risky market entry methods. Licensor will grant an organization in the foreign
market a license to produce the product, use the brand name etc in return that they
will receive a royalty payment.
Franchising
The organization puts together a package of the 'successful' ingredients that made
them a success in their home market and then franchise this package to overseas
investors. The Franchise holder may help out by providing training and marketing
the services or product. McDonalds is a popular example of a Franchising option for
expanding in international markets.
Contracting:
The manufacturer of the product will contract out the production of the product to
another organization to produce the product on their behalf. Clearly contracting out
saves the organization exporting to the foreign market.
Manufacturing abroad:
To establish a manufacturing plant in the host country. There may be tax incentive as
the host government wish to attract inward investment to help create employment
for their economy.
Joint Venture
Two organizations may come together to form a company to operate in the host
country. The two companies may share knowledge and expertise to assist them in the
development of the company; of course profits will have to be shared.
The Company will return to selling only own brand products and brands exclusive to
M&S so it can guarantee customers the quality, value and service they have come to
expect. Central to the recovery plan is the delivery of significant improvements in
product appeal, availability and value thereby rebuilding the relationships with core
M&S customers.
The company also intends to dispose of its two profitable United States businesses,
Brooks Brothers and Kings Super Markets. These operations do not provide an
appropriate platform for future international expansion by Marks & Spencer.
The budgeted price of these sales are 550 million and 275 million respectively.
Cost cutting
To reduce the costs of goods sold using less suppliers and using foreign suppliers,
mainly from Asia. At present UK suppliers represent 70% of total purchases. This %
will be reduced till 25%. This measure will allow to reduce sales price and to increase
profits.
To reduce general and administrative costs at the headquarters, where 350 jobs will
be reduced.
With all this cost cutting measure, M&S plans to increase the operating profit by
100 per year.
Financial Impact
The benefits to trading profit from the closure of the European subsidiaries and the
changes to Direct will be about 50m in a full year. These measures will give rise to
exceptional charges in the current year of 250 m to 300 m, in addition to the
42m already announced at the company's Interim results for the cost of satellite
closures in the UK. Some two thirds of the 250 to 300 m will be cash items
covering closure costs and future trading losses.
SECTION 4
Build on Success in Foods- fast-growing sectors as ready meals and prepared foods
Accelerate Store Renewal Programmed- under a plan to refurbish more stores faster
and at lower cost.
Product Development:
Diversification, expanding and diversifying the Tesco's product mix
To implement internal development when new products are developed.
The nature and the extent of diversification
The changing needs of the customers Tesco can introduce new product lines
Require more attention to R&D, leading to additional spending.
Also develop different store types in Eastern European and Far Eastern markets
Value added by the uniqueness will eventually lead Tesco to command a premium
price
The management of technological innovation is increasingly involved in strategic
decision-making. Tesco has to exploit their internal strengths and minimize their
Stores:
The changes will extend to around two-thirds of our space, so most of our customers
will notice the difference.
More Intensive Use of Space
Develop the distribution channel
Nurture our brand names
People:
Recruit top talent to strengthen the team, by recruiting qualified individuals.
The values that the founder instilled into this Company.
Quality, value, service and innovation, drawing on strengths which still exist to
inspire trust in our customers
Leaders
Leadership and management synergy
Leaders focus on the ends; Managers focus on the means both together reach more.
The leader provides vision; Managers provide execution. Both together achieve more
by working together to achieve a single goal.
Capital:
The allocation should be efficient and effective by allocating more capital to the most
needed departments
Should be wisely invested and monitored to increase profit
Internal communication:
Communication of corporate vision tragedy, plans, corporate culture shared value
Guiding principles, employee motivation, and cross-pollination of ideas.
External communication:
Branding, marketing, advertising, selling, customer relations, public relations, media
relations, business negotiations. The main objective is to create business awareness,
identifying core competence and adding value to the business.
CONCLUSION
REFLECTIVE STATEMENT:
This assignment has helped me in developing and implementing strategic planning, I
have been able to understand that strategic planning controls where a business is
going over the next year or more, how it's successful to get there and in what way it'll
know if it got there or not. The emphasis of a strategic plan is usually on the entire
business, while the emphasis of a business plan is usually on a specific product,
service or program. There is a diversity of viewpoints, models and methods used in
strategic planning. The way that a strategic plan is developmentally depends on the
nature of the establishment's leadership, culture of the business, the difficulty of the
group environment, the size of the business and skills of the planners. These ideas
would contribute to my ability to undertake any strategic planning control in my
carrier.