Lecture 2: Strategic Marketing Planning

2.1. What is strategic planning? Know your enemy, know yourself, and your victory will not be threatened. Know the terrain, know the weather, and your victory will be complete.- Sun Tze on strategy Marketing Strategy is a series of integrated actions leading to a sustainable competitive advantage. John Scully

Changing Organizational environment Strategic fit objectives

Organization Resources

Strategic planning is the managerial process of developing and maintaining a strategic fit between the organization's objectives and resources and its changing market opportunities.

2.2. Why Strategic Planning? Strategic planning offers at least five compelling reasons for its use:
1.

Provides an opportunity to influence the future related issues and environment.

2. Provides better awareness of needs and of the facilities 3. Helps define the overall mission of the organization and focuses on the objectives. 4. Provides a sense of direction, continuity, and effective staffing and leadership. 5. Plugs everyone into the system and provides standards of accountability for people, programs, and allocated resources. In summary, strategic planning is the key to helping us collectively and cooperatively gain control of the future and the destiny of our organ 2.3. The Strategic Planning Process This process is most applicable to strategic management at the business unit level of the organization. For large corporations, strategy at the corporate level is more concerned with managing a portfolio of businesses.

Mission The mission often is expressed in the form of a mission statement, in the strategy formulation process; the mission statement sets the mood of where the company should go. Objectives Objectives are concrete goals that the organization seeks to reach, for example, an earnings growth target. The objectives should be challenging but achievable. They also should be measurable so that the company can monitor its progress and make corrections as needed. Situation Analysis An environmental (both Macro & Micro) scan is performed to identify the available opportunities. The internal analysis considers the situation within the firm itself, such as:

Access to natural resources Company culture Company image Exclusive contracts Financial resources Key staff Organizational structure Operational efficiency Operational capacity Brand awareness Market share Patents and trade secrets

Strategy Formulation Once a clear picture of the firm and its environment is in hand, specific strategic alternatives can be developed. While different firms have different alternatives depending on their situation, there also exist generic strategies that can be applied across a wide range of firms.

A. Implementation & control

The strategy should be translated into specific policies for functional areas such as:

Marketing Research and development Procurement Production Human resources Information systems

Once implemented, control systems should be developed and implemented to facilitate this monitoring. Standards of performance are set, the actual performance measured, and appropriate action taken to ensure success. 2.4. SWOT Analysis A situation analysis can generate a large amount of information, much of which is not particularly relevant to strategy formulation. To make the information more manageable, it sometimes is useful to categorize the internal factors of the firm as strengths and weaknesses, and the external environmental factors as opportunities and threats. Such an analysis often is referred to as a SWOT analysis. A widely used framework for organizing and using data and information gained from situation analysis Encompasses both internal and external environments One of the most effective tools in the analysis of environmental data and information A SWOT analysis generates information that is helpful in matching an organizations or a groups goals, programs, and capacities to the social environment in which they operate It is an instrument within strategic planning When combined with a dialogue, it is a participatory process

Strengths Those things that you do well, the high value or performance points Strengths can be tangible: Loyal customers, efficient distribution channels, very high quality products, excellent financial condition Strengths can be intangible: Good leadership, strategic insights, customer intelligence, solid reputation, high skilled workforce Weaknesses Those things that prevent you from doing what you really need to do Since weaknesses are internal, they are within your control Weaknesses include: Bad leadership, unskilled workforce, insufficient resources, poor product quality, slow distribution and delivery channels, outdated technologies, lack of planning etc. Opportunities Potential areas for growth and higher performance External in nature marketplace, unhappy customers with competitors, better economic conditions, more open trading policies etc. Internal opportunities should be classified as Strengths Threats Challenges external in nature confronting the organization,

Threats can take a wide range bad press coverage, shifts in consumer behavior, substitute products, new regulations etc. The more accurate you are in identifying threats, the better position you are for dealing with the sudden ripples of change

Preconditions of productive SWOT analysis Stay focused. Be specific and keep your swot short and simple. Avoid complexity and over analysis

2.5. Case study The Sweet Dreams Motel Far North Queensland The Sweet Dreams Motel is a 40-unit, no-frills operation in the less scenic part of a major Queensland resort town. The owner, Mr. Smith, firmly believes that there is a need for his style of low-cost family accommodation amid the luxury and beauty of the area. His rooms are large, family-style rooms (there is no television, for example). Although there is plenty of room for future expansion, the grounds are fairly bare with a bit of landscaping, but mostly grass. Mr. Smith can serve breakfast to the rooms and provides teamaking facilities. There are now a lot of good restaurants and take-aways in the area. Mr. Smiths prices are less than half of what similar motels charge and only a fraction of what the big five-star properties are charging. And, really, he isnt all that far away from the beach, shops and other attractions. The problem is occupancy. He has some regulars who come every holiday period (and have been doing so for the four years he has owned the property). Overall, occupancy is about 50% year round and he knows from the local tourist office that the other properties average around 68% occupancy year round. New developments could mean trouble. This lack of occupancy can be quite frustrating for Mr. Smith. Cars pull in, drive around the parking areas, and then drive away.

Currently Mr. Smith does very little advertising in local district guides and the holiday papers, mainly because he really thinks word-of-mouth is the best form of advertising. He is a member of the local tourist committee, but too busy to go to meetings. However, he does receive the local statistics and knows the average stay in the area is 3.8 nights, and that local families and couples and increasingly overseas visitors are his potential customers. Hes not desperate yet, but hes getting worried and disillusioned. He thought he would be overrun with guests, but that hasnt happened.

SWOT analysis of the Sweet Dreams Motel (Compare your analysis with the following points) Strengths: Located in a popular tourist region Big rooms Large grounds and open areas Breakfast service to rooms Good restaurants and takeaway nearby Low prices (but this is also a problem!) Regular customers (but not very many) Membership in the local tourist group Property large enough for coach groups Property is clean Access to information about the industry Mr. Smith acknowledges he has a problem the first step towards solving it! Opportunities: Install televisions immediately Landscape the grounds and Weaknesses: No television (crucial for the family market) Bare and unappealing grounds Initial interest by people who drive in and look but then leave (probably because of the bare grounds) Location poor in relation to other services, attractions, etc. No separate restaurant services Low occupancy compared to other motels Very little advertising Only local advertising Uninspiring motel name Low rates being charged could be perceived as unappealing

Threats: Potential failure if occupancy doesnt improve

make them more attractive Add more outdoor facilities playground, BBQ facilities, perhaps a pool or tennis courts depending on finances Increase the level of advertising Increase the rates being charged Work in with other attractions, restaurants, etc (charge-back facilities with nearby restaurants, for example) Attend tourist group meetings do more networking Add own restaurant or do-ityourself catering facilities for guests Investigate other markets (backpackers, etc.)

Potential failure if other properties begin cutting rates Potential problems if other properties begin big promotional campaigns Potential problems if more budget motels are built

Mr. Smiths most important action is to raise rates immediately. At less than half the price of other motels his price is too low which conveys a poor image. This combined with the bare grounds, may be driving potential customers away. His rates can still be low, but should be comparable to the rates of competitive properties.