Planning: The Corporate, Marketing, and Communications Hierarchy

Sunarto Prayitno
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The Overall Strategic Planning Process

Marketing Communications strategy cannot exist in isolation from marketing strategy which in turn is directly linked to corporate strategy. So, let us start with consider the simple strong relationships between the three levels of Strategy, strategy, there are: Corporate Strategy, marketing strategy, and marketing strategy, communications strategy. strategy.
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The Overall Strategic Planning Process

1 CORPORATE STRATEGY 2 MARKETING STRATEGY 3 MARKETING COMMUNICATIONS STRATEGY
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The Overall Strategic Planning Process

Planning can be carried out using a top-down or topbottombottom-up approach, or preferably using a mixture of the processes at each of the three levels. This involvement of the different organizational levels implying a planning hierarchy immediately suggests that there is an effective sequence of planning, in which the development of marketing communications strategy proceeds after a proper consideration of both corporate and business strategy.
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The Overall Strategic Planning Process

Undoubtedly, however, there are situations where marketing managers and their agencies do undertake some bottom-up planning. bottomThey are often called on to develop marketing communications strategies to a different timescale from corporate planning. In some cases their knowledge of corporate strategy may be limited. They therefore have to do their best in a given situation.
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The Overall Strategic Planning Process

However, in all situations marketing communications must be developed with an awareness of its fit within the overall strategic planning framework.

The SOSTAC Planning Framework

Whatever the level of the planning hierarchy, the SOSTAC planning model can be applied easily. It will immediately be obvious that it is possible to apply the SOSTAC model at each level of the planning hierarchy, that is SOSTAC applies equally at the corporate level, the marketing level, and the marketing communications level.

The SOSTAC Planning Framework

The SOSTAC Planning System Stage: 1. Situation 2. Objective 3. Strategy 4. Tactics 5. Action 6. Control Strategic Question: Where are we now? Where do we want to be? How do we get there? (Broad direction) The detail of strategy. What communications tools should be used when? The detail of tactics. What steps are required to put each tool into action? How do we know when we have arrived?
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The Planning Hierarchy

The Management by Objectives (MBO) system became extremely popular and its in use today since the 1960s. The principle of the system is that individual managers objectives have to be linked into corporate objectives in a direct and distinct way.

The Planning Hierarchy

Each manager discusses and agrees with the next level of management above them over what action they will take in the following 1year in order to contribute to achievement of the overall corporate objectives. This linkage into a hierarchy of objectives ensures that an organizations main resources, its staff, are involved, integrated, motivated and, hopefully, rewarded.
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The Planning Hierarchy

MISSION STATEMENT CORPORATE OBJECTIVES CORPORATE STRATEGIES MARKETING OBJECTIVES MARKETING STRATEGIES MARKETING COMMUNICATIONS OBJECTIVES MARKETING COMMUNICATIONS STRATEGIES MARKETING COMMUNICATIONS PROGRAMS AND BUDGETS

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The Planning Hierarchy

At each level it is possible to consider the two elements of objectives and strategy. Objectives are the end result, and strategies are the means of achieving the objectives. The whole process can also be seen as an end and means hierarchy. The means (strategies) at one level become the ends (objectives) at the next level down. Strategies cascade down to the next level of planning as an objective.
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The Strategic Planning Stages of Marketing Communications

The detail of the planning hierarchy have been redrawn in the form of a flowchart showing how the objectives at the three planning levels corporate, marketing, and marketing communications are directed and linked to each other. This flowchart has been extended to form a objectives, strategy, tactics. triad of objectives, strategy, and tactics. Tactics refers to a number of relatively short-term shortactions, but of course what is short-term is relative to shortthe level of the organization being considered.

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The Strategic Planning Stages of Marketing Communications

Corporate level planning could typically extend up to five years depending on the type of industry. Marketing planning would extend two or three years, and Marketing communications planning usually only looks at a one-year timescale. oneHowever, it should be noted that an organizations branding strategy may be planned over a longer period of five years or more as this is of strategic importance.

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The Strategic Planning Stages of Marketing Communications

Corporate Planning Level Marketing Planning Level
Mission Statement Corporate Objectives Corporate Strategies Marketing Objectives Marketing Strategies Marketing Comm. Objectives Product Objectives Pricing Objectives Place Objectives H. R. Objectives Operational Objectives Financial Objectives

Marketing Comm. Planning Level

Marketing Comm. Strategies MarCom Tactics MarCom Action Plans MarCom Control
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The Operational Planning Stages of Marketing Communications

At first sight in the operational planning may seem odd that marketing communications budget is estimated before detailed operational plans are drawn up. This, however, represents many real situations for both large and small companies. Small companies often budget to spend all they can afford, which is often too little. Large companies sometimes base their budgets on previous experience or use a formula such as the advertising to sales ratio. Whatever the situation, the budget level is indeed a broad starting point for making decisions on the most appropriate communications elements. After detailed planning it is then possible to submit a revised budget.
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Linking Marketing and Communications Strategy

The previous sections have asserted that marketing communications strategy should derive directly from marketing strategy which in turn derives directly from corporate strategy. This suggests that there is a strong body of knowledge and practice which provides a framework for making these linked decisions. In reality, although marketing theories and concepts are well developed across specific planning levels, their vertical integration is rather less developed. This is perhaps understandable on two counts.

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Linking Marketing and Communications Strategy

Firstly, individuals tend to specialize in certain areas of marketing. For example, those who specialize in strategic marketing are not necessarily experts in marketing communications and this inhibits the vertical linkages. Secondly, the marketing communications strategy area is a complex one in which many factors play a part. This makes the development of the models more difficult. The communications models that are develop are either simple as the AIDA models, they considerably more complex such as the FCB Grid.
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Model of the Response Process

Stage AIDA Model Hierarchy of Effects Model
Awareness

Innovation Adoption Model

Awareness

Information Processing Model

Presentation Attention

Attention Cognitive Stage

Knowledge Interest Affective Stage Desire Behavioral Stage Action Liking Preference Conviction Purchase Adoption Evaluation Trial Interest

Comprehension Yielding

Retention Behavior

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The Foote, Cone & Belding (FCB) Grid

Thinking High Involvement
1. Informative (thinker) Car-house-furnishingsCar-house-furnishingsnew products Model: Learn-feel-do Learn-feel(Economic?)

Feeling
2. Affective (feeler) Jewelry-cosmeticsJewelry-cosmeticsfashion apparelapparelmotorcycles Model: Feel-learn-do Feel-learn(Psychological?) 4. Self-satisfaction Self(reactor) Cigarettes-liquorCigarettes-liquor-candy Do-feelModel: Do-feel-learn (Social?)
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Low Involvement

3. Habit formation (doer) FoodFood-household items Model: Do-learn-feel Do-learn(Responsive?)

Linking Marketing and Communications Strategy

At the simplest level marketing communications can be seen as one of the seven Ps: product, price, place, promotion, people, process, and physical, ie marketing communications is the promotional element. Each of these Ps should be considered when planning marketing communications strategy. The communications strategy is a complex and challenging task. Marketing communications strategy integrates all these Ps since every P communicates.

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Linking Marketing and Communications Strategy

PRODUCT ELEMENT:
Product objectives Positioning Strategy Product Life Cycle New product development Marketing testing Organizational aspects

PRICING ELEMENT:
Pricing objectives Determining demand Estimating costs Pricing methods Adapting the price Responding to competition

CHANNEL ELEMENTS:
Channel objectives Channel level Evaluating Alternatives Selecting channels Motivating Channel Members Evaluating members

PROMOTIONAL ELEMENTS:
Promotional objectives STP strategy Advertising Sales promotion Public relations Personal selling

OTHER Ps IN THE MARKETING MIX:

People Process Physical aspects

MARKETING ELEMENTS

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Linking Marketing and Communications Strategy

ADVERTISING:
Advertising objectives Target audiences Choosing the message Deciding the media Evaluating advertising efectiveness

PUBLIC RELATIONS:
Public Retains objectives The role of public relations Corporate identity and image Defining of public Media relations Internal marketing Crisis management

SALES PROMOTION:
Sales promotion objectives Sales literature Customer incentives Merchandising Point of Purchase Advertising

PERSONAL SELLING:
Personal selling objectives Salesforce structure Salesforce size Motivating the salesforce Compensating the salesforce Training the salesforce Evaluating and controllingb salesforce

OTHER COMMUNICATIONS TOOLS:

Direct marketing Packaging Exhibitions Corporate identity The internet

MARKETING COMMUNICATIONS ELEMENTS

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Using the PLC Concept for Marketing and Communications Strategy

Though criticized because of its simplistic nature and because real business situations are more complex, the product life cycle (PLC) concept is a useful tool in planning both marketing and communications strategy.

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Using the PLC Concept for Marketing and Communications Strategy

The PLC can also be used to link the other three concepts adopted in marketing planning, namely: The Diffusions of Innovation Curve, which indicate the Curve, speed at which potential buyers will accept new ideas. The Ansoff Growth Matrix, which sets out alternative Matrix, strategies based on existing and new products and markets. The Boston Consulting Group Portfolio Matrix, which Matrix, distinguishes a companys product by market share and growth rate.
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Using the PLC Concept for Marketing and Communications Strategy

CONCEPTS
Product Life Cycle Diffusion of Innovation

PHASE 1
Introduction Innovation

PHASE 2
Growth Early adopters majority

PHASE 3
Maturity Late majority

PHASE 4
Decline Laggards

Ansoff Growth Matrix

Product development

Market development

Market penetration

Diversification and alliances

Boston Consulting Group Portfolio Matrix

Problem Child

Stars

Cash Cows

Dogs

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Product Life Cycle

A graphic depiction of a products sales history from inception to withdrawal

Brand reinforcement

Brand revitalization

Brand harvesting

Brand establishment

Introduction

Growth

Maturity

Decline
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BCG Product Portfolio Matrix

HIGH

Star

Problem Child

Market growth rate

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LOW

Cash cow
HIGH

Dog
LOW

Relative market share

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Growing Your Market Ansoff Matrix

M A R K E T Existing
Market Share growth

New

P R O D U C T

Existing
New Product development

Low Risk

Medium risk

Diversification

New Higher risk

Very High Risk

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Using the Marketing Mix

Customer Needs & Wants Customer Price sensitivity Convenience & control Communication & education

Products & Services

Pricing

Placement

Promotion

Reliability & assurance

Process

Target Customers Positioning strategies

Physical evidence
Credence qualities

Responsiveness & empathy

People

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