The Strategic Planning Process

In the 1970's, many large firms adopted a formalized top-down strategic planning model.
Under this model, strategic planning became a deliberate process in which top executives
periodically would formulate the firm's strategy, then communicate it down the
organization for implementation. The following is a flowchart model of this process:

The Strategic Planning Process

Mission
|
V
Objectives
|
V
Situation Analysis
|
V
Strategy Formulation
|
V
Implementation
|
V
Control

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. For example, corporate level strategy involves
decisions about which business units to grow, resource allocation among the business
units, taking advantage of synergies among the business units, and mergers and
acquisitions. In the process outlined here, "company" or "firm" will be used to denote a
single-business firm or a single business unit of a diversified firm.
 Strategic Planning Process - SWOT
Analysis
What is SWOT Analysis? It is an abbreviation for Strengths-Weaknesses-Opportunities-
Threats. It is a tool widely used as an integral part of Strategic Planning Process.

There are many ways how a SWOT analysis is used. It is not my intention to compare
what are the differences but to share how I used it in my Strategic Planning workshops.

Strength

This is an internal factor deals with the strength in the operation. It is internal because it
takes into considerations of the level of competence for their internal capability. They are
many factors in an operation that can be considered as strength. It is normally highlighted
during brainstorming among management members. When the list of factors for Strength
is too many, then it should be grouped using Stratification method. Then reduce it further
to three to five items using appropriate tools such as , Multi-voting, Selection grids etc.
Once it is done, rank these items by comparing own company with better competitors.
Force ranking is sometime used an alternative to multi-voting.

Weaknesses

Similar to the above, it is an internal factor deals with the weaknesses of the operation
considering the level of competence as compared to their better competitors. With
weaknesses identified by way of brainstorming, the factors might be too many. When the
list of factors for weaknesses is too many, then it should be grouped using Stratification
method. Then reduce it further to three to five items using appropriate tools such as ,
Multi-voting, Selection grids etc. Once it is done, rank these items by comparing own
company with better competitors. Force ranking is sometime used an alternative to multi-
voting.

Opportunities

This is an important factor to identify opportunity as a result of external influence. It is

often leads to more business or investment as well as opportunity for innovation of
products and services. Due to the fact it is external, many assumptions is used. However,
given the constraints, one should try to quantify the assumptions so that the conclusion of
this factor is real. In real life application, there are cases where opportunities derived
from operation are park in this section. Rightfully, it can be rephrased such that it became
a Strength instead..

Threats
This is another important and critical factor to deal with. It has great influence to the
success or failure of an organization if not dealt with appropriately. This section look for
factors that can put an organization in a loss-loss situation where example may either
reduce the market share or its profitability. Once again, since it is an external factor, its
reality is assumed. However, in many cases, they can be verified by announcement,
publications etc. On the other hand, if organizations act on these factors, it may not
always mitigate the threat because the threat is not real. One example is the Y2K issue.

Consumer and Industrial Goods

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The classification of goods—physical products— is essential to business because it

provides a basis for determining the strategies needed to move them through the
marketing system. The two main forms of classifications are consumer goods and
industrial goods.

CONSUMER GOODS

Consumer goods are goods that are bought from retail stores for personal, family, or
household use. They are grouped into three subcategories on the basis of consumer
buying habits: convenience goods, shopping goods, and specialty goods.

Consumer goods can also be differentiated on the basis of durability. Durable goods are
products that have a long life, such as furniture and garden tools. Nondurable goods are
those that are quickly used up, or worn out, or that become outdated, such as food, school
supplies, and disposable cameras.

Convenience Goods Convenience goods are items that buyers want to buy with the least
amount of effort, that is, as conveniently as possible. Most are nondurable goods of low
value that are frequently purchased in small quantities. These goods can be further
divided into two subcategories: staple and impulse items.

Staple convenience goods are basic items that buyers plan to buy before they enter a
store, and include milk, bread, and toilet paper. Impulse items are other convenience
goods that are purchased without prior planning, such as candy bars, soft drinks, and
tabloid newspapers.

Since convenience goods are not actually sought out by consumers, producers attempt to
get as wide a distribution as possible through wholesalers. To extend the distribution,
these items are also frequently made available through vending machines in offices,
factories, schools, and other settings. Within stores, they are placed at checkout stands
and other high-traffic areas.

Shopping Goods Shopping goods are purchased only after the buyer compares the
products of more than one store or looks at more than one assortment of goods before
making a deliberate buying decision. These goods are usually of higher value than
convenience goods, bought infrequently, and are durable. Price, quality, style, and color
are typically factors in the buying decision. Televisions, computers, lawnmowers,
bedding, and camping equipment are all examples of shopping goods.

Because customers are going to shop for these goods, a fundamental strategy in
establishing stores that specialize in them is to locate near similar stores in active
shopping areas. Ongoing strategies for marketing shopping goods include the heavy use
of advertising in local media, including newspapers, radio, and television. Advertising for
shopping goods is often done cooperatively with the manufacturers of the goods.

Specialty Goods Specialty goods are items that are unique or unusual—at least in the
mind of the buyer. Buyers know exactly what they want and are willing to exert
considerable effort to obtain it. These goods are usually, but not necessarily, of high
value, and they may or may not be durable goods. They differ from shopping goods
primarily because price is not the chief consideration. Often the attributes that make them
unique are brand preference (e.g., a certain make of automobile) or personal preference
(e.g., a food dish prepared in a specific way). Other items that fall into this category are
wedding dresses, antiques, fine jewelry, and golf clubs.

Producers and distributors of specialty goods prefer to place their goods only in selected
retail outlets. These outlets are chosen on the basis of their willingness and ability to
provide a high level of advertising and personal selling for the product. Consistency of
image between the product and the store is also a factor in selecting outlets.

The distinction among convenience, shopping, and specialty goods is not always clear.
As noted earlier, these classifications are based on consumers' buying habits.
Consequently, a given item may be a convenience good for one person, a shopping good
for another, and a specialty good for a third. For example, for a person who does not want
to spend time shopping, buying a pair of shoes might be a convenience purchase. In
contrast, another person might buy shoes only after considerable thought and comparison:
in this instance, the shoes are a shopping good. Still another individual who perhaps
prefers a certain brand or has an unusual size will buy individual shoes only from a
specific retail location; for this buyer, the shoes are a specialty good.

INDUSTRIAL GOODS

Industrial goods are products that companies purchase to make other products, which
they then sell. Some are used directly in the production of the products for resale, and
some are used indirectly. Unlike consumer goods, industrial goods are classified on the
basis of their use rather than customer buying habits. These goods are divided into five
subcategories: installations, accessory equipment, raw materials, fabricated parts and
materials, and industrial supplies.

Industrial goods also carry designations related to their durability. Durable industrial
goods that cost large sums of money are referred to as capital items. Nondurable
industrial goods that are used up within a year are called expense items.

Installations Installations are major capital items that are typically used directly in the
production of goods. Some installations, such as conveyor systems, robotics equipment,
and machine tools, are designed and built for specialized situations. Other installations,
such as stamping machines, large commercial ovens, and computerized axial tomography
(CAT) scan machines, are built to a standard design but can be modified to meet
individual requirements.

The purchase of installations requires extensive research and careful decision making on
the part of the buyer. Manufacturers of installations can make their availability known
through advertising. However, actual sale of installations requires the technical
knowledge and assistance that can best be provided by personal selling.

Accessory Equipment Goods that fall into the subcategory of accessory equipment are
capital items that are less expensive and have shorter lives than installations. Examples
include hand tools, computers, desk calculators, and forklifts. While some types of
accessory equipment, such as hand tools, are involved directly in the production process,
most are only indirectly involved.

The relatively low unit value of accessory equipment, combined with a market made up
of buyers from several different types of businesses, dictates a broad marketing strategy.
Sellers rely heavily on advertisements in trade publications and mailings to purchasing
agents and other business buyers. When personal selling is needed, it is usually done by
intermediaries, such as wholesalers.

Raw Materials Raw materials are products that are purchased in their raw state for the
purpose of processing them into consumer or industrial goods. Examples are iron ore,
crude oil, diamonds, copper, timber, wheat, and leather. Some (e.g., wheat) may be
converted directly into another consumer product (cereal). Others (e.g., timber) may be
converted into an intermediate product (lumber) to be resold for use in another industry
(construction).

Most raw materials are graded according to quality so that there is some assurance of
consistency within each grade. There is, however, little difference between offerings
within a grade. Consequently, sales negotiations focus on price, delivery, and credit
terms. This negotiation plus the fact that raw materials are ordinarily sold in large
quantities make personal selling the principal marketing approach for these goods.
Fabricated Parts and Materials Fabricated parts are items that are purchased to be
placed in the final product without further processing. Fabricated materials, on the other
hand, require additional processing before being placed in the end product. Many
industries, including the auto industry, rely heavily on fabricated parts. Automakers use
such fabricated parts as batteries, sun roofs, windshields, and spark plugs. They also use
several fabricated materials, including steel and upholstery fabric. As a matter of fact,
many industries actually buy more fabricated items than raw materials.

Buyers of fabricated parts and materials have well-defined specifications for their needs.
They may work closely with a company in designing the components or materials they
require, or they may invite bids from several companies. In either case, in order to be in a
position to get the business, personal contact must be maintained with the buyers over
time. Here again, personal selling is a key component in the marketing strategy.

Industrial Supplies Industrial supplies are frequently purchased expense items. They
contribute indirectly to the production of final products or to the administration of the
production process. Supplies include computer paper, light bulbs, lubrication oil, cleaning
supplies, and office supplies.

Buyers of industrial supplies do not spend a great deal of time on their purchasing
decisions unless they are ordering large quantities. As a result, companies marketing
supplies place their emphasis on advertising—particularly in the form of catalogues—to
business buyers. When large orders are at stake, sales representatives may be used.

It is not always clear whether a product is a consumer good or an industrial good. The
key to differentiating them is to identify the use the buyer intends to make of the good.
Goods that are in their final form, are ready to be consumed, and are bought to be resold
to the final consumer are classified as consumer goods. On the other hand, if they are
bought by a business for its own use, they are considered industrial goods. Some items,
such as flour and pick-up trucks, can fall into either classification, depending on how they
are used. Flour purchased by a supermarket for resale would be classified as a consumer
good, but flour purchased by a bakery to make pastries would be classified as an
industrial good. A pickup truck bought for personal use is a consumer good; if purchased
to transport lawnmowers for a lawn service, it is an industrial good.

Role of Promotion in Marketing

By Luke Arthur, eHow Contributor

updated: January 26, 2011

Marketing and promotion are used in conjunction with one another to attract targeted
customers and increase sales for a business. In the marketing mix, promotion is one of the
four main components. To be successful in business, you need to understand the basics of
promotion and how it plays a part in marketing.

Marketing Mix
o The marketing mix is a concept that deals with the essential components
of a marketing plan. The four main components of the marketing mix are
price, place, product and promotion. These four components work together
to help create a marketing plan for a business. Without any of the four
parts in place, your marketing plan can suffer and will not be as effective
as it could otherwise be. You could lean more heavily on one aspect than
the others, but they all play a role.

Importance of Promotion

o Promotion is very important for any business because it helps customers

find out about what the company has to offer. Promotion deals with
advertising, public relations and anything else that has to do with dealing
with the public. Without promotion, the general public would not know
about a company and sales would suffer. This aspect of the marketing mix
helps to bring new customers in the door and close sales for the business.

Aspects of Promotion

o The promotion component of the marketing mix is made up of several

other parts. A business can choose to use all of these components or it
could only use a few. The parts of the promotional mix include
advertising, personal selling, trade fairs, sales promotion, public relations,
direct mail and sponsorship. Some may be more effective than others
depending on what type of business you are in.

Perception

o The promotional mix is all about helping the perception of the company in
the minds of consumers. When you use promotion, you want consumers in
your market to think highly of your company. You use your individual
selling proposition to set yourself apart from the other businesses in your
market. Customers start to form a perception about you and this guides
them in their purchasing decisions in the future. For example, if you
promote a high-end image, customers will associate your business with
quality.
Marketing Strategies for Challenger
Firms
Marketing Article Series

Firms take the role of challengers when they make aggressive

efforts to further their market share.
Contents

• Introduction
• Frontal Attack
• Modified Frontal Attack
• Flank Attack
• Encirclement Attack
• Guerilla Attack
• Bypass Attack
• The Marketing Firepower
• References
• Knol Directory - Main Categories

more
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Introduction

Firms that are not market leaders in their industry or product category are trailing firms.
One or two of them could be close competitors to the market leader and they can be
termed as runner-up firms. These firms can take the role of challengers when they make
aggressive efforts to further their market share or they can be termed followers when they
keep quiet and maintain their market share.
There are successful trailing firms which challenged and became industry No. 1 firms.
Canon is one such example in copiers. Toyota is now the world No. 1 company in
automobiles; it displaced General Motors.

The challenger companies have to attack the leader, other comparable firms, and smaller
firms in their bid to gain market share.

Attack has a greater probability of success when there customer dissatisfaction with the
current leader. There is a gap in the market which the leader is not serving. Comparable
firms can be successfully attacked when they are underfinanced and are charging
excessive prices and customers are showing dissatisfaction. Similarly, underfinanced
smaller firms can be attacked to gain market share.

With each attack, the challenger may hope to gain a reasonable increase in its market
share.

The following attack strategies are possible.

Frontal Attack

An attack is called a frontal attack when the opponent’s strength is challenged head on. In
marketing, the fight is done all fronts in market segments and areas where the opponent is
currently strong. The general idea is that to win in a frontal attack, the challenger requires
three times the fire power of the opposite side. What is fire power in marketing? Price of
the product, quality of the product, sales effort, advertising effort, and service effort etc.
are the various types of fire power in marketing. The challenger must be able to deploy
superior fire power in the markets he is challenging.

Modified Frontal Attack

A modified frontal attack uses price as the challenging dimension. The challenger
matches the opponent in other dimensions but will charge a lower price over an extended
period.

Flank Attack

Attacking a weak position in the opponent’s force is flank attack. Challenger identifies
the weak areas in the offering as well as marketing territories of the opponent and attacks
those areas. A front attack may also be launched simultaneously, but the frontal attack is
only to engage the opponent. But the real victory is won in the flanks. Market share gain
in weak territories is the objective, but the opponent is forced to defend his share even in
his strong territories and products.

Encirclement Attack

In this attack both strong areas and weak areas attacked simultaneously. This type of
attack is more often done by a leader when challenged. When the leader makes an
aggressive attack to gain market share from the trailing firms, he can use this strategy.
Even other firms, can use this strategy when they are attacking a much smaller firm’s
market share.

Guerilla Attack

Guerilla attacks consist of waging small, intermittent attacks on different marketing

territories of the opposing firm. The aim is to harass and demoralize the opponent
initially before launching the main attack.

Bypass Attack
In a bypass attack to gain market share, a firm identifies segments not served by the
existing firms and makes efforts to gain market share.

The Marketing Firepower

Price discounts: The challenger can sell a comparable product at a lower price.

Cheaper goods: The challenger can come out with economy goods with lesser number of
features. The strategy will succeed when there is significant number of buyers in need of
lower priced product.

Prestige goods: A challenger can launch a higher quality product with more features.

Product proliferation: The challenger can offer a greater product variety.

Product innovation: the challenger can come out with an improve product.

Service innovation: Improvement in service offered to the buyers.

Distribution innovation: a new distribution outlet that offers additional convenience to

buyers.

Process innovations: The challenger may have done a process innovation that gives better
quality or lower cost and it is passed on to buyers.
Advertising innovation: The challenger may have innovative communications strategy
that reaches and motivates larger number of potential customers resulting in higher sales.

Challenger needs to have a product-service offer or marketing mix advantage that is of

value in the market place. Then he can use that advantage to gain market share by
employing a suitable attack strategy.

The factors affecting the competitiveness of companies

in a country.
National and Corporate competitiveness

In any economy all corporations operate within a macro economic, social, political and
cultural systems. These differ from country to country regarding the role of markets

even in the era of globalization. That is the role of market and government interventions
in the market differs from country to country. However, in the era of globalization and
trade liberalization most countries allow market forces to determine economic affairs to a
greater extent.

In the 21st century the technological developments became more rapid compared to the
previous centuries particularly in the information technology. This to some extent has an
impact on changes in business practices and business models and enabled companies to
embark business on a global scale. This also enabled the companies the ability to co-
ordinate activities and to share information on real time and plan international operations.
This also enabled the emergence of international capital flows. This gave rise to the
emergence of multinational corporations and transnational corporations operating in
many countries. In addition, the liberalization of trade and the dismantling of trade
barriers increased trade between countries. It also changed the nature of competition.
That is the competition became dynamic than static in nature. For example e-commerce,
business networks, alliances, joint ventures and changes in decision about inbound
logistics, outbound logistics, when where to produce at what scale, marketing and sales,
distribution channel strategies to gain cost leadership, differentiation and focus became
vital for sustainable profitability in the long-term by corporate entities of small, medium
and large enterprises.

In the context of nations, governments are to provide a stable economic and political
environment and prudent regulation of the financial system. As well, build social capital
by improving knowledge base and skill development. Government also must provide a
stable social climate so that market can work efficiently and attract capital and allocate
capital efficiently where the economy can reap the maximum benefit and continue to
upgrade its competitive potential by technological innovation and investment in research
and development. This addresses the ability to improve the efficiency and productivity
and quality of its products and service on a continuous basis. That is, the government can
encourage innovation in the private sector by private public partnership in research and
development and commercialization and provide incentives and fiscal measures for that
to happen.

In addition, it can encourage

entrepreneurship in the private sector so that the economy as whole encourages new
branch of industries to emerge and provide a dynamic business environment. In addition,
the nations can improve its competitive potential by investing in physical infrastructure
developments like roads and rail network. communication

Differences between Consumer and Industrial Goods

A good is something which is tangible or which can be seen which is different from
service which cannot be seen. Goods can be classified as either consumer goods or
Industrial Goods. Given below are some of the differences between consumer and
industrial goods –

1. The consumer goods are those which are meant for final consumption by the
consumer, or in simple words they are used by the consumers directly while
industrial goods are those which are not used by the consumers directly but these
goods are used for the production of consumer goods.
2. Bread, Soap, furniture are some of the examples of consumer goods, while
lubricants, copper, timber, tools etc…are some examples of industrial goods.
3. While the number of customers for consumer goods is very large but the quantity
purchased by them is less whereas the number of customers for industrial goods is
less but they purchase the quantities in bulk.
4. The demand for consumer goods is autonomous demand as these goods are
demanded for ultimate consumption while the demand for industrial goods is
 derived demand as these industrial goods are used for the production of consumer
goods.
5. While the market in which the companies can sell consumer goods is large
because of large number of customers whereas in case of Industrial goods the
market is small because of less number of buyers of such goods.

Role of Promotions in Marketing - June 15th, 2008

In today’s scenario of cutthroat competition, managing Integrated Marketing
Communications (IMC) optimally is highly imperative. IMC is a way of looking at the
whole gamut of the Marketing process from the viewpoint of the receiver, says Philip
Kotler.

Companies must allocate the promotion budget over the 5 promotional tools –
Advertising, Sales promotion, PR, Publicity, Sales Force and Direct Marketing. Within
the same industry, companies can differ considerably in their allocations. Avon
concentrates on Personal selling while Revlon spends heavily on Advertising. To each
one his own success formula.

The basic fundamentals of The Promotional concoction of that magical Marketing potion
have been dealt with at length. This theoretical knowledge has been supplemented with a
live Sales promotion activity description conducted for Nestle India Limited.

Beyond the obvious benefits that Promotion and particularly Sales promotions render
towards meeting marketing goals, I have endeavoured to ponder over certain pertinent
questions arising on the flipside too.
Do frequent sales promotions hurt the brand equity or do they enhance the value
delivered to the customers?
How can marketers plan their sales promotions so that they can increase and bolster the
brand equity at the same time?

Role of Promotion in Marketing

By Luke Arthur, eHow Contributor

updated: January 26, 2011

Marketing and promotion are used in conjunction with one another to attract targeted
customers and increase sales for a business. In the marketing mix, promotion is one of the
four main components. To be successful in business, you need to understand the basics of
promotion and how it plays a part in marketing.

Marketing Mix
o The marketing mix is a concept that deals with the essential components
of a marketing plan. The four main components of the marketing mix are
 price, place, product and promotion. These four components work together
to help create a marketing plan for a business. Without any of the four
parts in place, your marketing plan can suffer and will not be as effective
as it could otherwise be. You could lean more heavily on one aspect than
the others, but they all play a role.

Importance of Promotion

o Promotion is very important for any business because it helps customers

find out about what the company has to offer. Promotion deals with
advertising, public relations and anything else that has to do with dealing
with the public. Without promotion, the general public would not know
about a company and sales would suffer. This aspect of the marketing mix
helps to bring new customers in the door and close sales for the business.

Aspects of Promotion

o The promotion component of the marketing mix is made up of several

other parts. A business can choose to use all of these components or it
could only use a few. The parts of the promotional mix include
advertising, personal selling, trade fairs, sales promotion, public relations,
direct mail and sponsorship. Some may be more effective than others
depending on what type of business you are in.

Perception

o The promotional mix is all about helping the perception of the company in
the minds of consumers. When you use promotion, you want consumers in
your market to think highly of your company. You use your individual
selling proposition to set yourself apart from the other businesses in your
market. Customers start to form a perception about you and this guides
them in their purchasing decisions in the future. For example, if you
promote a high-end image, customers will associate your business with
quality.