Relationship between marketing and strategic planning
Musibau, Oluyinka, and Long (2011) affirm that strategic planning is an essential factor in the success of both large and small and medium enterprises. Strategic planning enables organizations to ensure that they are progressing in the right direction (Kroon 2005). This assertion emanates from the fact that strategic planning enables organizations to be effective in the formulation and implementation of various decisions that affect the firm’s future (Kerzner 2009). Strategic planning is broad in nature and addresses diverse areas of business operation. Strategic planning focuses on areas like corporate level, business level, and functional level. Corporate level planning entails planning that is aimed at setting the intended organization while functional level planning entails ensuring effective resource allocation and utilization in undertaking various processes such as production, research and development, and personnel management. On the other hand, business-level planning entails developing a firm’s competitive advantage in its respective market or industry (Musibau, Oluyika & Long 2011).
According to Kerzner (2009), strategic planning contributes towards improvement in a firm’s ability to survive in an ever-changing environment. One of the areas in which planning has increasingly become very important relates to marketing (Stevens, Loudon & Wrenn 2006). Marketing planning has become a key element especially for marketing managers in their quest to ensure that their entities develop a high level of competitiveness.
There is a strong relationship between marketing and strategic planning. Musibau, Oluyika, and Long (2011) assert, “Strategic planning is the fundamental input to market planning” (p. 2). This assertion means that strategic planning is the primary step in the marketing planning process. Strategic planning enables an organization to assess its ability to exploit the opportunities presented in the market.
In a bid to create a clear understanding of the relationship between marketing and strategic planning, it is paramount to develop an understanding of the rationale of strategic planning. Strategic planning aims at providing the various business units, departments, and individual employees with a roadmap that will contribute towards the attainment of the predetermined business goals. Through strategic planning, an organization can evaluate the internal and external business environment, which provides an opportunity for firms to scan the environment for possible business opportunities. Identifying the threats and opportunities presented in the market is one of the major marketing goals.
Secondly, marketing and strategic planning are related to the planning process. The strategic planning process constitutes many steps amongst them being the strategic marketing planning process. Stevens, Loudon, and Wrenn (2006) define strategic marketing plan as “a long-term marketing plan the marketing area” (p. 78). The strategic marketing plan incorporates the overall marketing objectives that a firm intends to achieve in the course of its operation. The strategic planning process entails four main stages, which include assessing the organization, defining and identifying the organization’s vision and values, identifying the strategic agenda, and developing and monitoring the plan. Assessing the organization is a critical step in developing a strategic plan (Russell & Russell 2006). This stage entails gathering the necessary data through internal and external business environment analysis. Some of the aspects that are taken into account include evaluating the firm’s vulnerabilities, performance, and history and strengths, which is achievable by conducting a SWOT analysis. The second stage entails defining the firm’s values, mission and vision that the firm intends to accomplish. Additionally, strategic planning aids in identifying the key success factors that are essential in the firm’s effort to achieve its goals. The key success factors act as the strategic directives to be achieved in the firm’s operations. The core values and principles that will guide the firm in attaining the formulated objectives are also formulated. The final stage entails determining how performance accountability will be pushed (Russell & Russell 2006).
Planning without undertaking the necessary action is not sufficient to enable an organization to attain the desired level of competitive advantage. The marketing objective outlined in the strategic plan may be broad. However, the marketing plan aid in making the broad marketing objectives more specific (Russell & Russell 2006). Making the broad marketing objective more specific does not guarantee their attainment. Consequently, a specific method of measuring, monitoring, and reporting the accomplishment of the formulated marketing objectives is paramount. Through continuous measurement, marketing planning contributes towards the attainment of the goals of the strategic plan. Consequently, the overall strategic plan developed by an organization forms the basis of designing the strategic marketing plan (Kerzner 2009). The flow chart below illustrates the relationship between marketing and strategic planning.
Despite the importance of marketing, senior managers might not concur with the assertion that marketing makes a vital contribution to strategy formulation. On the contrary, it is the strategy that has an influence on marketing, which emanates from the fact that strategy formulation is dependent on several factors such as planning, sourcing for the necessary funds, implementation, and control. The strategy formulated is dependent on the prevailing business environment and the need to attain the organization’s goal.
In the course of executing their duties, marketers are reluctant to adopt their strategic role such as planning. One of the reasons explaining this reluctance emanates from the fact that most managers do not have a clear vision regarding their organization’s future. Other factors explaining the marketers’ failure to appreciate their strategic role include lack of expertise, inadequate knowledge regarding the planning process, internal implementation barriers and lack of support from internal stakeholders. As a result, they neglect planning (Wang, Walker & Redmond 2005, p. 2).
In a bid to overcome this challenge, marketers should understand that the marketing role is critical in an organization’s effort to attain the desired level of growth, performance and hence its survival. This aspect will enhance their level of appreciation about setting long-term goals (Wang, Walker & Redmond 2005, p. 2). Failure to appreciate marketing as a strategic role might result in the firm experiencing numerous risks.
Comparing and contrasting marketing mix for a product [car] and service [Insurance]
The choice of marketing mix varies across organizations depending on whether it deals with tangible or intangible products (Kotler 2000). Irrespective of their sector of operation and the characteristic of the product dealt with, firms have to institute a valuable marketing mix. The marketing mix should constitute the product strategy, pricing strategy, promotion strategy, and distribution strategy. Despite the comparability of the marketing mix for tangible and intangible products, a number of differences characterize tangible and intangible products. One of the key differences relates to the existence of the human element in the marketing of services (Epetimehin 2011). The human element parameter in services marketing mix depicts the personal nature of intangible products. Consequently, several variables that include people, physical evidence, and processes are included in services marketing mix in addition to the traditional marketing mix (Epetimehin 2011). Despite the incorporation of traditional marketing mix variables in marketing of products and services, their respective elements differ as illustrated herein.
Firms dealing with car manufacturing must ensure that they develop a product that is appealing to customers. In a bid to achieve this goal, effective designing and manufacturing technologies have to be incorporated. Additionally, effective branding has to be integrated into the product strategy for car manufacturing firms. Branding is a critical consideration in firms’ endeavors to attain an optimal market position (Kalaimani 2009). The production process is also subject to the varying consumer tastes and preferences. Consequently, car-manufacturing firms have to ensure that they incorporate the concept of product diversification. This aspect explains why there are different car models.
The policies sold by insurance companies are some of the products that insurance companies deal with. Other products include consulting and underwriting services (Kalaimani 2009). In the course of formulating the policies, insurance firms have to ensure that they develop a product that is in accordance with the consumer’s tastes and preferences. Unlike tangibles, the product strategies for services have to be motivational, which means that they have to be characterized by a number of motivational factors to appeal to potential customers. The motivational factors can be either financial or non-financial (Holland & Normand 2001). Comparable to tangible products, the concept of product diversification is also a key ingredient in insurance companies as illustrated by the numerous policy portfolios designed by insurance companies. Irrespective of the nature of the product, a high level of product innovation and creativity should be incorporated.
The price of a product or service determines the effectiveness with which it penetrates the market (Kotler 2000). There exist diverse pricing strategies that both car and insurance companies can adopt. The various pricing strategies include premium pricing, psychological pricing, and penetration pricing (Kalaimani 2009).However, the factors considered in setting the price difference between car and insurance companies. Car manufacturing companies adopt diverse pricing strategies depending on factors such as car model, the cost of production, and the intended purpose of the car. On the other hand, the pricing strategy of insurance companies hinges on premium rates. The factors considered in formulating the pricing strategy for policies in insurance firms also differ depending on whether it is a life or property policy. Some of the factors considered in setting the premium price include the cost of consultancy and underwriting (Kalaimani 2009).
Both insurance and car manufacturing companies adopt both personal and impersonal promotional methods in their endeavor to create sufficient market awareness. However, the promotion method used by car firms differs from that of insurance products in several ways. Advertising using various tools such as traditional and non-traditional methods is most prevalent in the car industry compared to the insurance industry. On the other hand, direct marketing for example use of agents is mostly applicable in the insurance industry.
In a bid to increase their sales revenue, insurance and car manufacturing companies have to ensure that their products are easily accessible. Consequently, concrete distribution strategies have to be instituted. The strategies have to incorporate both direct and indirect distribution strategies to maximize the outcome. One of most prevalent direct distribution methods used by car manufacturing firms entails establishment of the motor show outlets in different regions. The indirect distribution method used includes entering into a contract with renowned automobile distribution firms. The direct distribution methods employed by insurance companies include establishing branches in different parts of the market and the use of insurance personnel. On the other hand, the indirect distribution methods entail use of agents. The digital nature of the product in the insurance industry has made it possible for insurance firms to undertake online selling and distribution.
In their promotion mix, insurance companies have to ensure that a sufficient level of interaction with other people is created. The process of marketing also has to be very friendly. Insurance firms also have to ensure that their physical presence is evident across their target market, which is attainable via using reports, signage, employee dress codes, and punch lines (Kalaimani 2009).
Internet selling is one of the most effective methods of marketing used by insurance companies, which arises from the fact that the firm’s products can be transformed into digital products. By incorporating Internet selling, a firm can market its products to a large number of customers by creating a sufficient level of market awareness (Kotler 2000). Internet selling can enable insurance companies to conduct adequate online advertising of the policies being offered to the target customer group. According to Riaz and Tanveer (2008), creating brand awareness is the first step towards organizations’ pursuit to maximize their sales revenue. Therefore, Internet selling can enable insurance companies to increase their client base hence their revenue.
Moreover, the incorporation of Internet selling can aid insurance companies to lower the cost of their operations. One of the ways through which this element is achievable is through disintermediation, which entails the process of eliminating intermediaries such as agents who might be used in marketing insurance policies. Consequently, insurance firms can minimize the cost of their operations (Garven 2002). Internet selling also allows insurers to shift from product-oriented approach to a consumer-oriented approach to develop a strong customer relationship. One of the ways through which insurance companies can achieve this goal is by formulating optimal pricing strategies and improving the level of transparency in their online Internet selling processes (Garven 2002).
Marketing plan for a new product
The non-alcoholic beverages market segment with specific reference to energy drink market has undergone a significant growth over the past few decades (Deichert et al. 2006). This element is well illustrated by the increment in the number of industry players. One of the factors that have contributed to this growth relates to the high rate at which consumers are embracing sophistication in their consumption of soft drinks as depicted by the emerging trend whereby consumers are becoming more health-conscious about soft drink consumption. The change in consumer tastes and preferences about energy drinks presents a unique market opportunity. In a bid to take advantage of the presented market opportunity, a new entity by the name ‘The Buzz’ will be established. The objective of establishing the new entity is to launch a new energy drink product with its brand name being ‘The Buzz’.
Marketing objectives
Marketing the new energy drink will focus on attaining the following objectives:
- To enhance the customers’ level of satisfaction with regard to consumption of energy drink
- To attain a market share of 25 percent within the first 5 years
- To develop a strong brand name of the energy drink through continuous product innovation and creating market awareness
- To attain an annual sales revenue of $ 5.5 million within the first year
- To attain a gross profit margin of more than 80 percent within 2 years
Target markets
Marketers cannot satisfy the entire market, which underscores the importance of target marketing and segmentation. According to Kotler (2000), market targeting and segmentation entails identifying distinct groups of potential buyers who might purchase a firm’s products. Marketing targeting and segmentation are achievable by evaluating the consumers’ psychographic, behavioral, and demographic differences. In the course of its operation, The Buzz will target both institutional and individual customers. Some of the market segmentation variables that will be taken into account include, the consumer’s age, occupation, and level of income. Kotler (2000) asserts that consumers’ purchasing behavior varies in the course of their lifetime. For example, during their formative years, they eat most foods. However, in their later years, they consume special diets. The core target groups for the energy drink include young adults, students, the elderly and sportsmen and women.
Market analysis
In their quest to attain a high level of competitiveness, it is paramount for organizations to conduct a comprehensive market analysis (Burgemeister 2008). The analysis aids in understanding the prevailing market trend. Due to the lucrative nature of the energy drink industry, the degree of industry rivalry has increased significantly. The degree of industry rivalry is also enhanced by the existence of large players in the global soft drink industry such as The Coca-Cola Company, Redbull, and PepsiCo. The large industry players present a major challenge to new entrants in their quest to achieve high levels of profitability because they have established a strong network.
The Buzz will require a relatively high amount of capital to establish its distribution network. Consequently, the industry harbors many barriers to entry.
The high rate of industry growth has led to an increment in the number of substitutes. Examples of such substitutes include bottled water, teas, and coffee (Deichert et al. 2006). Despite the number of substitutes, there is a high probability of this market experiencing a high growth. The sector’s growth is enhanced by changes in consumer tastes and preferences about the consumption of healthy energy drinks. Exiting the industry is relatively difficult due to the huge capital investment required to establish the firm. The supplier power the in the soft drink industry is relatively low due to a large number of firms in the industry. Consequently, the consumers switching cost (Needle 2004). The industry is characterized by a relatively high buyer bargaining power due to the existence of a large number of substitutes (Deichert et al. 2006, p.6).
Marketing Mix
Product strategy
The product strategy will start by producing a product that meets the target markets’ energy needs, which is realizable by incorporating a high level of expertise in developing the product. Product strategy also entails creating a unique brand name that will influence the consumers’ in their decision-making process and effective packaging such as using mixed colors. The firm will adopt the brand name ‘Buzz’ for its energy drink. Effective packaging and quality control will be incorporated to ensure that the energy drink meets the consumers’ safety and health needs. In a bid to deal with the constant change in consumer tastes and preferences that might result in the firm losing its market, effective value addition will be mandatory through product innovation.
Pricing strategy
Firms design pricing strategies by the cost of production and demand for their product (Gitman & McDaniel 2009). Before establishing the pricing point for the energy drink, the firm will use the findings of consumer and competitor market research in establishing a pricing strategy. Considering the fact that the energy drink is a new product in the market, the firm will use a penetration-pricing strategy, which will aid in attracting potential customers by taking into account their price-sensitive characteristics.
Promotion strategy
The firm appreciates the importance of creating a promotion blend in its quest to establish sufficient market awareness for its products and services (Gitman & McDaniel 2009). Therefore, the firm will incorporate integrated marketing communication. The promotion method selected will vary depending on the stage of the energy drink in its lifecycle. Some of the promotional methods that will be incorporated include advertising, sales promotion, public relations, and direct marketing. These methods will be used in creating awareness of individual and institutional customer groups. Traditional and emerging market communication tools such as television, print media, radio, and billboards will be of use in creating awareness. Emerging marketing communication methods that will be applicable include the Internet such as the firm’s website and the various social networking tools for example Facebook and YouTube.
Distribution strategy
Improving product accessibility is critical in firms’ effort to deal with the threat of substitutes (Harvard Business Review 2011). In a bid to improve product accessibility, the firm will adopt both direct and indirect distribution methods. Direct distribution will be conducted by establishing deports and retail stores whereby consumers can access the product. On the other hand, indirect distribution method will be attained by entering into contracts with convenience stores and wholesalers. The contract will ensure that they carry the energy drink in their stores.
Marketing budget
In a bid to launch the new product successfully, a substantial amount of finance will be required. The actual cost of market research and promotion will be determined by seeking the advice of a renowned marketing research firm. The chart below illustrates an estimation of the expected cost of conducting market research and promotion for one year.
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