STRATEGIC MARKETING MANAGEMENT - ES Newsletter

464 Pages·2008·2.43 MB·English

Business Management
Study Manuals
Advanced Diploma in
Business Management
STRATEGIC MARKETING
MANAGEMENT
The Association of Business Executives
5th Floor, CI Tower  St Georges Square  High Street  New Malden
Surrey KT3 4TE  United Kingdom
Tel: + 44(0)20 8329 2930  Fax: + 44(0)20 8329 2945
E-mail:
© Copyright, 2008
The Association of Business Executives (ABE) and RRC Business Training
All rights reserved
No part of this publication may be reproduced, stored in a retrieval system, or transmitted in
any form, or by any means, electronic, electrostatic, mechanical, photocopied or otherwise,
without the express permission in writing from The Association of Business Executives.
Advanced Diploma in Business Management
STRATEGIC MARKETING MANAGEMENT
Contents
Unit Title Page
1 Planning and Strategy 1
Introduction 2
The Planning Process 2
Developing Plans 6
Strategic Planning 19
2 The Marketing Function, Objectives and Strategy 29
Introduction 30
Marketing and Markets 30
Basic Concepts of Marketing 34
Marketing Objectives 38
Marketing Strategy 46
3 Marketing and Strategic Choice 53
Introduction 55
Organisational Stance and Positioning 56
Ansoff's Four Strategic Options 61
Porter's Generic Strategy Model 64
Profit Impact on Market Strategy (PIMS) 66
Boston Consultancy Group Matrix (BCG) 67
General Electric Business Screen (GE) 72
Other Portfolio Models 75
The Role of Marketing Models 77
Strategic Choice 78
Implementation of Strategies 86
4 Analysing the Marketing Environment 93
Introduction 94
Situational Analysis 94
SWOT Profile 100
The Internal Environment 102
The External Environment 107
5 Marketing Information 123
Introduction 124
Managing The Information Flow 124
Marketing Research 130
Unit Title Page
6 Auditing the Marketing Mix 139
Introduction 140
Approaching a Marketing Audit 140
Auditing the Product Portfolio 141
The Strategic Role of Price 149
Auditing Promotional Activity 151
Evaluating the Distribution Process 158
Marketing Strategy Revisited 159
7 Consumer Markets and Consumer Behaviour 165
Introduction 167
Market Segmentation 167
Segmentation of Consumer Markets 173
Targeting 177
Positioning 178
The Buying Process 183
Understanding Buying Behaviour 189
8 Marketing Planning 201
Introduction 202
The Marketing Plan 202
Promotional Plans 207
Product Planning 215
Pricing Plans 217
Distribution Planning 221
9 Marketing Implementation and Control 225
Introduction 226
Strategic Orientation of Business 227
Organisation for Marketing 231
Coordination of Marketing with other Management Functions 240
Elements of an Effective Marketing Organisation 245
Control 255
10 Product Management and Development 267
Introduction 269
The Concept of the Product 269
The Concept of the Product Offer 274
Product Management 276
The Product Life Cycle 281
New Product Development (NPD) 292
The Marketing of Services 301
Non-Profit Marketing 305
11 Branding and Brand Management 309
Introduction 310
Why Brand Products? 310
Building Brands 314
Own Product and Own Brands 316
Unit Title Page
12 The Promotional Mix 321
Introduction 323
Communications and the Organisation 323
Methods of Promotion 327
Communicating with the Market 340
Promotional Campaigns 345
13 Direct Marketing 363
Introduction 365
The Basic Principles of Direct Marketing 365
The Growth of Direct Marketing 368
Direct Marketing Strategies 370
Major Market Sectors 377
Direct Marketing Data 385
The Media of Direct Marketing 389
Fulfilment and Customer Care 397
14 Distribution Channel Management 405
Introduction 406
The Chain of Distribution 406
Characteristics of Different Channels 408
Distribution Management 416
Dealing with Intermediaries 422
Physical Distribution Management (PDM) 428
15 Pricing Policies and Price Setting 435
Introduction 436
What does a Price Represent? 436
The Pricing Decision 438
Price and Costs 449
Price and Demand 454
Price and Value for Money 457
1
Study Unit 1
Planning and Strategy
Contents Page
Introduction 2
A. The Planning Process 2
The Planning Gap 4
The Importance of Planning 5
B. Developing Plans 6
Policy 7
Objectives – What is Being Aimed For 7
Strategies – How to Achieve the Objective 9
Tactics/Programmes – The Operational Activities Involved 10
Controls – Measurements 10
From Planning to Plans 11
Criteria for Effectiveness 12
Types of Plans 13
Planning Structures 16
Alternative Approaches to Strategic Decision Making 18
Contemporary Planning Issues 18
C. Strategic Planning Error! Bookmark not defined.
Developing the Company's Mission Statement 19
Identifying the Company's Strategic Business Units 22
Establishing Corporate Objectives and Strategies 22
Individual Strategic Business Unit Planning 26
Answers to Review Questions 27
© ABE and RRC
2 Planning and Strategy
INTRODUCTION
In this first study unit we will consider the nature of the strategic planning process in general,
starting from the corporate level and cascading down through the functional levels. This will
form the basis of subsequent discussion of the processes in relation to marketing in the
following study units.
We start by examining the nature, purpose and importance of the planning process. In
particular, we shall concentrate on the contents of plans – including the criteria for objectives
and the nature of strategies and controls, together with the reasons why planning sometimes
fails – and the various types of plans which are to be found in any type of business planning.
We will also examine some of the contemporary issues that impinge on business planning.
We shall also consider the beginning of the strategic planning process, incorporating the
mission statement, corporate level objectives and strategies, and see how these objectives
and strategies cascade down through the organisation to the functional, or SBU, levels. We
shall examine how the lines of communication throughout the organisation ensure that, as
information is passed down the chain, objectives and strategies can be converted to suit
each relevant section but they will still be governed, and guided, by the corporate level
decisions.
At the end of this unit, and all subsequent units, there are a series of revision questions that
you should answer to test your knowledge and understanding. Please compare your
answers with those provided at the end of this study guide. There is also a past examination
question which will show you the type of question you might expect in the examination.
A. THE PLANNING PROCESS
Planning is simply the process of deciding in the present what to do in the future. It involves
laying down courses of action for a specified time period which will utilise resources in the
most effective manner and which will work towards the achievement of a specified goal.
We can consider the process as being split into five stages:
 Where are we now?
 Where do we want to be?
 How can we get there?
 Which way is best?
 How can we ensure arrival?
These five stages sum up the entire planning process that a manager should go through. To
demonstrate the logic of the planning process and just how easy it can be, consider the
imaginary scenario below.
(a) Where are we now?
Imagine you are a student living in London and you have four months' break from
University. You don't want to stay in London and want to go somewhere else for your
holiday.
(b) Where do we want to be?
Where? You've always wanted to go to New York, so New York it is.
(c) How can we get there?
How many different ways can you get there? By air or sea.
© ABE and RRC
Planning and Strategy 3
(d) Which way is best?
Which would be the best option for you in your circumstances?
Air is quicker but more expensive. You decide on sea and think about the different
methods of going by sea – Queen Mary 2, a passenger liner from another company, a
berth on a cargo liner.
 Do you have the resources to cope with this? Your cash is limited and you are
sure that you cannot afford to travel on the Queen Mary 2 so you check the
prices for other options but find that they are still too expensive for you.
 At this stage you have to reconsider your target. Is New York realistic? You
consider Paris, Brussels, Berlin – all of which would be within your price range
but still you want to go to New York as that has been a long-term ambition or
goal.
 So you have to look again at the alternatives for travel. You know air is quicker
than sea. You know air is out of your price range, but then so is sea travel by the
options you've looked at.
What other options are there?
 A friend suggests you get a job on a ship that is going to New York. You make
enquiries and find that it is possible, but you will have to sign on for both outward
and inward journeys so you would not be able to stay in New York. The situation
seems impossible. The next day you are reading a newspaper and see an advert
recruiting airline couriers.
 You apply and are offered a job carrying documents around the world from one
airport to another. The job entails picking up documents in one place and
delivering them to another. You can stay as long as you like at each delivery
point until you are ready to carry on to another place. Unfortunately, you can only
go where you are sent and have no choice in your destination. You are told that
eventually you are bound to be sent to New York.
 You decide to take a risk and accept the job setting a maximum period of three
months to achieve your goal of New York. This gives you a month to get yourself
back to London in time for University.
(e) How can we ensure arrival?
At the end of a month you still haven't got to New York, but you have been to several
other big cities in the world and have enjoyed the experience. You are keeping an eye
on the time going by.
After two months you are finally given an assignment which will take you to New York.
This is a bonus for you as you are reaching your target ahead of the time you had
allowed but you still can't believe you are finally going there.
(f) How do we know we have arrived?
The day you are standing on the balcony at the top of the Empire State Building looking
down on New York, you know that you have arrived – your objective has been
achieved!
(Note that this stage is not normally shown separately in the process – it is assumed to
be part of the "how do we ensure arrival?" stage.)
© ABE and RRC
4 Planning and Strategy
This is a nice little story of individual aims being reached but it actually demonstrates
the entire planning process:
Where are we now? London Current situation
Where do we want to be? New York Objective
How can we get there? Air or sea Strategies available
Which way is best? Air Strategy assessment
Can we do it? No Resource assessment
Can we go by sea? No Outcome of research
Do we still want to go? Yes Objective still valid
Are there other methods? Yes Outcome of research
Is the method acceptable? Possibly Risk assessed/accepted
Are we on target for time? Yes Monitoring progress
Have we arrived? Yes Objective achieved
We have expanded the list a little to show more of the processes involved but you can see
that the made up story reflects the five questions which cover the stages in the process of
planning.
Now consider a slightly different scenario to the outcome of our New York story.
Suppose that you would have liked to reach New York, but hadn't done anything about it?
What is likely to have happened?
It is possible that you would have been in London for the whole of the four months. There
would have been a big difference between what you would have liked to achieve before you
went back to University, and what you actually achieved. This difference would have been
quite easy for you to work out if you had thought about it, and it might have made you do
something to change things. We refer to this difference as the planning gap and the
activities we undertake to identify the gap is known as gap analysis.
The Planning Gap
You will often find this term in text books and it describes, in organisational terms, the
difference between the desired future and the likely future. Figure 1.1 demonstrates the
concept.
Figure 1.1: The Planning Gap
SALES (£m)
New strategies
10 gap Objectives
8 Revised THE
forecast PLANNING
GAP
6
Initial
4 forecast
2 Operations gap
1 2 3 4 5 6 7 8 9 10 TIME (Years)
© ABE and RRC