WHAT IS STRATEGY?

There is an inherent problem of defining strategy: strategy meansdifferent things to different people.

" There is no single, universally accepted definition". Mintzberg& Quinn (1991)

"...a pattern of decisions ... (which represent) ... the unity,coherence and internal constituency of a company's strategicdecisions that position a company in its environment and give thefirm its identity, its power to mobilise its strengths, and itslikelihood of success in the marketplace." Andrews (1987)

Ansoff and McDonnell (1990), define strategic management as: "asystematic approach for managing strategic change which consistsof the following:

1) Positioning of the firm through strategy and capabilityplanning;

2) Real-time strategic response through issue management;3) Systematic management of resistance during strategic

implementation."

Cole, (1997) proposes a working definition of strategicmanagement to be: "a process, directed by top management, todetermine the fundamental aims or goals of the organisation, andensure a range of decisions which will allow for the achievementof those aims or goals in the long-term, whilst providing foradaptive responses in the short term."

Strategy is essentially about being: Proactive vs. Reactive Strategic vs. Tactical

Definitions of strategy fall into five categories with differingareas of emphasis:

A plan: “a consciously intended course of action”. A ploy: “a maneuver intended to outwit a competitor”. A pattern: underpinning “a stream of actions”. A position: a deliberate stance taken in relation to the

environment. A perspective: an all-embracing way of thinking about the

organisation and its approach to the world.

Most ‘strategies’ mix elements of the five aspects at one and thesame time.

Towards a customer led orientationStrategy must address issues such as customers, competitors andmarket trends. It needs to be proactive as opposed to simplyreacting to events. In this way, strategy can detect andinfluence changes in the business environment. By its nature,marketing defines how the organization interacts with its marketplace. Consequently, all strategic planning, to a greater orlesser degree, requires an element of marketing. Only in this waycan organisations become strategically responsive to customerneed and commercial pressures.

Marketing can then be viewed as more than a functional activity.It can be adopted as a business philosophy. Here the organisationadopts a marketing orientation – success by a process ofunderstanding and meeting customer need. Basically, the company’sorientation defines it’s fundamental business philosophy,highlighting what is perceived as the primary route to success.Market orientations are now widely established within thebusiness world (and often seen as the ‘holy grail’ of marketers)but other business orientations are equally common.

Production orientation: Here business success is attributedto efficient production. The emphasis is on mass production,

economy of scale and cost control. Management’s key concernis with achieving volume and meeting production schedules.This philosophy has its place, but risks limiting operationsto low added-value assembly work.

Product orientation: The belief is that product innovationand design will have buyers beating a path to our door.Management’s perception is that our products are so goodthey will, in effect, sell themselves. Little, or no effect,is put into establishing what the customer actually wants –a dangerous route! Naturally, product innovation isimportant but it needs to appeal to the market place,otherwise it risks being innovation for the sake ofinnovation.

● Sales orientation: This views sales volume as the keydeterminant of success. The focus is on aggressive sellingthat persuades the customer to buy. Given that the processis driven by sales targets, a short-term perspectivedominates, with little regard to building longer-termrelationships. Often, this follows on from a productionorientation, as management tries to create a demand forunwanted products.

● Market orientation: Success is derived from understandingand meeting customer needs. This process starts with thecustomer and uses actual customer demand as a means to focusresources.The importance of building long-term relationshipswith customers is recognised. It seeks to build loyalty andconsistently offer superior value. An awareness ofcompetitors’ proficiency and strategy is required in orderto optimise this process.

Market-oriented firms are those that successfully generate,disseminate, and respond to market information. These firms focuson customer analysis, competitor analysis, and integrating thefirm’s resources to provide customer value and satisfaction, aswell as long-term profits. To be successful, the firm must be

able to focus its efforts and resources toward understandingtheir customers in ways that enhance the firm’s ability togenerate sustainable competitive advantages.

How to achieve a market led orientation

1 Customer focusedUnderstand your customer base and be responsive to their needs.Treat loyal customers as assets and strive to build on-going andlong-term relationships. Regularly monitor levels of customersatisfaction and retention. Note, to achieve this we must:

(i) Define our markets,

(ii) Effectively segment/target customers and

(iii) Listen to customers.

2 Competitor focusedIn terms of competitors, be watchful and assess their objectives,strategies and capabilities. There is the need to ‘benchmark’their products, processes and operations against our own.

3 Integrate marketing into the businessMarketing should not be confined to the marketing department.Every function and person within the organisation has a role toplay in creating value and achieving the goal of being a market-led organisation. This may require fundamental changes in cultureand organisation structure.

4 Strategic visionDevelop a long-term, market-orientated strategic vision byviewing marketing as more than a series of promotional tools andtechniques. It must be on the agenda of senior management, whoshould develop and implement market-led strategy and define thefuture in terms of creating long-term value for stakeholders.

5. Realistic expectations

We cannot be all things to all people. Expectations have to berealistic and matched to capabilities, resources and externalconditions. We may well need to make ‘trade-offs’ to ensure wefocus on activities that add value.

Strategic Marketing ManagementStrategy = the art of the general, the art of the long view.Strategic Marketing Management is the managing the process ofmaking strategy & making strategy happen, to keep theorganisation in fit with its environment & to achieve its overallaims.

Underlying purpose of formulating marketing strategy is tomaintain fit or alignment between the organisation's activitiesand its operating environment. Staying in fit means managing theorganization so as to stay aligned with changes in thesurrounding world.Marketing strategy can by characterized by: (a) Analyzing the business environment and defining specificcustomer needs,(b) Matching actives/products to customers segments and(c) Implementing programmes that achieve a competitive position,superior to competitors. Therefore, marketing strategy addresses three elements –customers, competitors and internal corporate issues

Firstly, we consider customers. How is the market defined, whatsegments exist and who should we target? Secondly, how can webest establish a competitive position? A precursor to this is adetailed understanding of our competitors within targeted marketsegments. Finally, we need to match internal corporatecapabilities with customer need. The successful achievement ofthese factors should enable the organisation to develop, andmaintain, a strong market position.

Essentially, a marketing strategy aims to deliver the following:1 SegmentationThis process breaks the market down into groups displaying commoncharacteristics, behaviours and attitudes. Fundamentally, thisprocess aims to understand need and forecast reaction and/ordemand.

2 TargetingThis involves evaluating and selecting market segments. We aim tolook for opportunities which are sustainable, where we can buildlongterm relationships with customers.

3 PositioningAs previously stated, we establish a distinctive superiorposition, relative to competitors. The competitive positionadopted, should be based on matching product attributes tocustomer need.

As a process, strategic marketing has three distinct phases.

Strategic analysisThis stage entails a detailed examination of the businessenvironment, customers and an internal review of the organisationitself. Tools such as portfolio analysis and industry structuremodels help management to objectively assess the organisation’scurrent position. Equally, it is important to develop some viewregarding future trends. This is achieved through forecasting anddefining assumptions about the future market trends.

Formulating strategyFormulation involves defining strategic intent – what are ouroverall goals and objectives? Managers need to formulate amarketing strategy that generates competitive advantage and

positions the organisation’s products effectively. To besuccessful, this must be based on core competencies. During thisstage, product development and innovation are strategicactivities, offering the potential to enhance competitiveposition and further develop products and brands. Additionally,formulation emphasises the need to form relationships withcustomers and other businesses. Increasingly, we seeorganisations recognizing that they cannot do everythingthemselves and look to form joint ventures and partnerships.The formulation stage culminates with the development of astrategic marketing plan.

ImplementationConsideration needs to be given to implementing the strategy.Marketing managers will undertake programmes and action thatdeliver strategic objectives. Such actions, will often focus onindividual elements of the marketing mix. Additionally, a processof monitoring and control needs to be put in place. This ensurescompliance and aids decision making.

THE MARKETING PLANNING PROCESSTo achieve this marketing plan, which is achieved at the end ofthe planning process, the organization will have to go through anumber of stages which take the form of questions, as follows:

Where are we now? - the analysis of the current marketingsituation.

Where do we want to be in the future? -setting theobjectives.

How are we going to get there? – creating the strategy How will we know when we get there? monitoring and

evaluation.

Development / Revision of marketing objectives relative to performance

Implementation of the marketing plan

Assessment of marketing opportunities and resources

Strategic Marketing Planning takes time, but is well worth theeffort the process can be split into four clearly defined areas,it is useful to think of the effective marketing process as atriangle. The more time spent at the beginning on the foundationsof the strategy, the analysis and planning stages, the strongerthe top of the triangle, the communications and action thatensue.

Stage 1: Analysis Mission statement andorganizational objectives

Marketing audit and SWOT analysisStage 2: Planning Marketing objectives and strategies

Marketing tactics and budgetsStage 3:Communication

Preparation of marketing plan

Stage 4: Action Implementation Monitoring and review

We can think about the marketing planning process is to pictureit as a funnel. At the top are important corporate decisionsdealing with the firm’s mission, vision, goals, and theallocation of resources among business units. Planning at this

Implementation of the marketing plan

Assessment of marketing opportunities and resources

Development or revision of the plan for implementation and control

Revolution or formulation of marketing strategy

level also involves decisions regarding the purchase ordivestment of the business units themselves.

These decisions trickle down the funnel to the business unitlevel, where planning focuses on meeting goals and objectiveswithin defined product markets. Planning at this level must takeinto account and be consistent with decisions made at thecorporate level. The most specific planning and decision makingoccurs at the bottom of the funnel. It is at this level whereorganizations make and implement tactical decisions regardingmarketing strategy (target markets and the marketing mix) as wellas marketing plans.

While the focus is on marketing planning and strategy, marketingdecisions must be made within the boundaries of theorganization’s overall mission, goals, and objectives. Strategyis formulated to achieve the mission and objectives of anorganisation.

Organizational visionA vision or vision statement seeks to answer the question ‘‘Whatdo we want to become?’’An organization’s vision tends to be future oriented, in that itrepresents where the organization is headed and where it wants togo.

“To fundamentally change markets and create entirely new ones.”(Texas instruments)

Organizational missionThe mission of the organisation is the unique purpose thatdistinguishes it from other companies and defines the boundariesof its operations. The mission statement is a proclamation of the

organisation’s primary objective that encapsulates its corevalues.A mission, or mission statement, seeks to answer the question‘‘What business are we in?’’ It is a clear and concise statement(a paragraph or two at most) that explains the organization’sreason for existence.

In essence the mission statement ought to characterise theorganisation’s principles and priorities and define the broadproduct, market and technologies that are core to the business. The mission statement identifies what the firm stands for and itsbasic operating philosophy.

The mission statement is the one portion of the strategic planthat should not be kept confidential and should tell everyone—customers, employees, investors, competitors, regulators, andsociety in general—what the firm stands for and why it exists.

Mission statements facilitate public relations activities andcommunicate to customers and others important information thatcan be used to build trust and long-term relationships.

The mission statement should be included in annual reports andmajor press releases, framed on the wall in every office, andpersonally owned by every employee of the organization. Amission statement kept secret, however, is of little value to theorganization.

E.g. We shall build good ships here – at a profit if we can – ata loss if we must – but always good ships. (Newport NewsShipbuilding Mission statement – unchanged since the company wasfounded in 1886)

Texas Instruments Incorporated provides innovative semiconductortechnologies to help our customers create the world’s mostadvanced electronics.’’ (Texas Instruments)

To organize the world’s information and make it universallyaccessible and useful (Google)

Intel Corporation1995 Do a great job for our customers, employees, andstockholders by being the preeminent building block supplier tothe computing industry.2000 Intel’s mission is to be the preeminent building blocksupplier to the worldwide Internet economy.2009 Delight our customers, employees, and shareholders byrelentlessly delivering the platform and technology advancementsthat become essential to the way we work and live.

In our business, our aim is to give customers friendly, efficientservice and value for money second to none. We believe that bygiving excellent customer service we will earn their loyalty andword of mouth recommendation to others. This is the only way toensure our future success and so, looking after the customer mustbe an absolute priority at all times, and we really do expect ourcolleagues to give above average service.

We also believe that work should be fun. We believe that ifpeople enjoy what they do, they will do a better job. We alsobelieve at all times in aiming to be the best. This means that weexpect and demand superior performance from our people with bothquality of service, attention to detail in the presentation ofour stores and in everything we do. We believe that if customerservice is the top goal, this will create loyalty, and long termrevenue and profitability will naturally follow. (Missionstatement of Richer Sounds The Richer Way)

Elements of the mission statementA well-devised mission statement for any organization, unitwithin an organization, or single-owner business should answerthe same five basic questions. These questions should clarify forthe firm’s stakeholders (especially employees):1) Who are we?2) Who are our customers?3) What is our operating philosophy (basic beliefs, values,ethics, etc.)?4) What are our core competencies or competitive advantages?5) What are our responsibilities with respect to being a goodsteward of our human, financial, and environmental resources?

Successful mission statements have to demonstrate the followingcharacteristics:

Credibility: The mission statement has to set realisticambitions for the organisation. In particular they have tobe believable in the eyes of stakeholders’, in particularthe employees.

Uniqueness: The mission has to relate to the particularorganisation. It should not be a statement that could begenerically applied to a range of other organisations. Themission has to relate to the company and its stakeholders ina unique fashion.

Specific capabilities: The mission should also embrace thecore capabilities of the organisation and emphasise theircore role in the future of the organisation.

Aspirational: The mission needs to motivate individuals bygiving them a statement that has significance to the workthey undertake. A vision that is meaningful in terms of morethan just making profits. It should engender a vision towhich individuals feel they wish to contribute.

Other qualities of a good mission statement are: Specific, Brief, Emotive, Generates commitment from staff, stakeholders and funders.

A mission statement should also define the boundaries of thebusiness’s ambitions. What is the territory that the businesswishes to operate within? This is commonly referred to as thescope of the business or the competitive domain. There areseveral dimensions that have to be considered when defining theorganisation’s scope:

Product Scope: This is defined in terms of the goods and servicesthe enterprise supplies to customers.

Market Scope: Market scope should depict the consumers andcustomers who utilise the company’s products. There are a numberof criteria that are helpful in defining market scope such as:

Type of industry sector targeted Channels of distribution Demographics Salient features of the consumer

Geographical Scope: This should be defined at an appropriatelevel of aggregation. This may be defined in strictly localterms, for a small business, through to national andinternational regions for large organizations

Goals and ObjectivesMarketing and all other business functions must support theorganization’s mission and goals, translating these intoobjectives with specific quantitative measurements. While missionstatement acts as a guide and leads to the development of a

hierarchy of objectives. Objectives are the specific intendedoutcomes of strategy.

For example, a corporate or business unit goal to increase returnon investment might translate into a marketing objective toincrease sales, a production objective to reduce the cost of rawmaterials, a financial objective to rebalance the firm’sportfolio of investments, or a human resources objective toincrease employee training and productivity.

Strategic goals are general aspirations that the organisationneeds to achieve but are difficult to measure or put within aspecific time scale. Objectives therefore are more specific thangoals and state what is to be achieved; they are given aquantifiable measure and a specific time scale. These objectivesare seen as needing to be:

Specific: Objectives that are specific should be set so thatthere is clarity throughout the organisation as to what isto be achieved.

Measurable: Objectives that are stated clearly, withtangible targets, what is to be achieved. Objectives canthen be measured overtime.

Aspirational: Objectives that are set at a level thatprovides a high enough challenge to motivate individualsalthough not so high that it demoralises them. Differentgroups or functions will have various perceptions of thelevel of challenge set by the objectives. One way to addressthis problem is to set distinct objectives for each specificgroup.

Realistic: Objectives that are achievable based on athorough strategic analysis. Companies can fall into thetrap of developing objectives that reflect an unrealistic,

but desired for, position that does not reflect the currentreality of their situation.

Time scaled: A time scale should be put on the achievementof an objective. This allows the organisation to measuretheir performance against a set deadline.

They also need to display the following characteristics Acceptability: Internal managers are more likely to

wholeheartedly support objectives that are in line withtheir own inclinations. As with the mission statement someof the organisations long-term objectives are drawn up to beacceptable to groups external to the organisation.

Flexibility: Objectives have to be flexible enough to beadaptable when discontinuities in the external environmentoccur. Here again is the issue of a trade-off betweenflexible and SMART objectives.

Comprehensibility: Managers and staff at all levels have tounderstand what is to be achieved and know

The areas where objectives need to be developed include:

Market standing: This relates to the organisation’s successin the market. Objectives can be a statement of the totalsales or the market share the organisation seeks.

Innovation: Targets can be set for innovation in: productand service development, cost reduction, financing,operational performance, human resources and managementinformation.

Productivity: Objectives can be set for of the productiveuse of resources.

Physical and financial resources: An organisation can stateobjectives about the acquisition and use of resources.

Profitability: A range of targets can be established forfinancial returns including earnings per share or return onequity.

Manager performance and development: Objectives can beframed to set performance criteria for managers.

Employee performance and attitude: Specific performancecriteria can be set against which actual achievements can bemeasured. Objectives relating to aspects of employeerelations are seen as beneficial in gaining employee’sloyalty.

Public responsibility: They may establish objectives forcontributions to charities, community action, urban renewalor other forms of public and political activity.

The marketing plan

A marketing plan is a written document that provides theblueprint or outline of the organization’s marketing activities,including the implementation, evaluation, and control of thoseactivities.

The marketing plan provides a detailed formulation of the actionsnecessary to carry out the marketing program. The marketing planis an action document—it is the handbook for marketingimplementation, evaluation, and control.

The marketing plan serves a number of purposes.

1. It explains both the present and future situations of theorganization. This includes the situation and SWOT analyses andthe firm’s past performance.

2. It specifies the expected outcomes (goals and objectives) sothat the organization can anticipate its situation at the end ofthe planning period.

3. It describes the specific actions that are to take place sothat the responsibility for each action can be assigned andimplemented. It provides a roadmap for the implementation ofstrategy

4. It identifies the resources that will be needed to carry outthe planned actions.

5. It permits the monitoring of each action and its results sothat controls may be implemented. Feedback from monitoring andcontrol provides information to start the planning cycle again inthe next time frame.

Features of a good marketing plan

Comprehensive: Having a comprehensive outline is essentialto ensure that there are no omissions of importantinformation.

Flexible: Any chosen plan must be flexible enough to bemodified to fit the unique needs of your situation. Becauseall situations and organizations are different, using anoverly rigid outline is detrimental to the planning process.

Consistent: Consistency between the marketing plan outlineand the outline of other functional area plans is animportant consideration. Consistency may also include theconnection of the marketing plan outline to the planningprocess used at the corporate- or business-unit levels.Maintaining consistency ensures that executives andemployees outside of marketing will understand the marketingplan and the planning process.

Logical: Since the marketing plan must ultimately sellitself to top managers, the plan’s outline must flow in alogical manner. An illogical outline could force topmanagers to reject or underfund the marketing plan.

Marketing Plan Structure

I. Executive Summarya. Synopsisb. Major aspects of the marketing plan

II. Situation Analysisa. Analysis of the internal environmentb. Analysis of the customer environmentc. Analysis of the external environment

III. SWOT Analysis (Strengths, Weaknesses, Opportunities, andThreats)a. Strengthsb. Weaknessesc. Opportunitiesd. Threatse. Analysis of the SWOT matrixf. Developing competitive advantagesg. Developing a strategic focus

IV. Marketing Goals and Objectivesa. Marketing goalsb. Marketing objectives

V. Marketing Strategya. Primary (and secondary) target marketb. Product strategyc. Pricing strategyd. Distribution/supply chain strategye. Integrated marketing communication (promotion) strategy

VI. Marketing Implementationa. Structural issuesb. Tactical marketing activities

VII. Evaluation and Controla. Formal controlsb. Informal controlsc. Implementation schedule and timelined. Marketing audits

Executive Summary The executive summary is a synopsis of theoverall marketing plan, with an outline that conveys the mainthrust of the marketing strategy and its execution.

The purpose of the executive summary is to provide an overview ofthe plan so the reader can quickly identify key issues orconcerns related to his or her role in implementing the marketingstrategy. Synopsis introduces the major aspects of the marketing plan,including objectives, sales projections, costs, and performanceevaluation measures. Along with the overall thrust of themarketing strategy, the executive summary should also identifythe scope and time frame for the plan. The idea is to give thereader a quick understanding of the breadth of the plan and itstime frame for execution.

Situation Analysis: This section summarizes all pertinentinformation obtained about three key environments: the internalenvironment, the customer environment, and the firm’s externalenvironment.

SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis: SWOTanalysis focuses on the internal factors (strengths andweaknesses) and external factors (opportunities and threats) thatgive the firm certain advantages and disadvantages in satisfyingthe needs of its target market(s). These strengths, weaknesses,opportunities, and threats should be analyzed relative to marketneeds and competition. This analysis helps the company determinewhat it does well and where it needs to make improvements.

Marketing Goals and Objectives Marketing goals and objectives areformal statements of the desired and expected outcomes resultingfrom the marketing plan.

Goals are broad, simple statements of what will be accomplishedthrough the marketing strategy. The major function of goals is toguide the development of objectives and to provide direction forresource allocation decisions. Marketing objectives are morespecific and are essential to planning.

Marketing objectives should be stated in quantitative terms topermit reasonably precise measurement. The quantitative nature ofmarketing objectives makes them easier to implement afterdevelopment of the strategy.This section of the marketing plan has two important purposes. i. It sets the performance targets that the firm seeks to

achieve (i.e., what the firm hopes to achieve).ii. It defines the parameters by which the performance will

actually be measured). NB: Neither goals nor objectives can be developed without aclearly defined mission statement. Marketing goals must beconsistent with the firm’s mission, while marketing objectivesmust flow naturally from the marketing goals.

Marketing Strategy This section of the marketing plan outlines howthe firm will achieve its marketing objectives. Marketingstrategies involve selecting and analyzing target markets andcreating and maintaining an appropriate marketing program(product, distribution, promotion, and price) to satisfy theneeds of those target markets. It is at this level where the firmwill detail how it will gain a competitive advantage by doingsomething better than the competition: Marketing strategy refers to how the firm will manage itsrelationships with customers in a manner that gives it anadvantage over the competition.

Marketing Implementation The implementation section of themarketing plan describes how the marketing program will beexecuted. It answers the following questions

1) What specific marketing activities will be undertaken?2) How will these activities be performed?3) When will these activities be performed?4) Who is responsible for the completion of these activities?5) How will the completion of planned activities be monitored?6) How much will these activities cost?

Evaluation and Control: The final section of the marketing plandetails how theresults of the marketing program will be evaluated andcontrolled.