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: info@abeuk.com © 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. 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.