Archive for April, 2008

Drivers of Strategy: Vision. Mission. And Objectives

Posted by 5 April, 2008 (1) Comment

MARKETING AND STRATEGY
Using Tested Concepts and New Ideas for Marketing Strategy.

 

DRIVERS OF STRATEGY: VISION. MISSION. AND OBJECTIVES
Who are we and why are we here? Such questions may baffle philosophers for cen­turies, but businesses and their employees don’t have the luxury of debating them forever. In business, we must resolve the fundamental questions, establish their oper­ating values and principles and seize upon a mission. Otherwise we cannot get around to the urgent necessity to do something. As Will Rogers once said, “Even if you’re on the right track, you’ll get run over if you just sit there.”
The well-springs of marketing strategy are at the top of the organization, where the senior executives are expected to earn their bloated paychecks by establishing a bold, profitable vision and mission.
When Howard Schultz of Starbucks says, “We will dominate every place coffee is sold,” he is articulating a mission that his people can readily translate into market­ing strategies.’0 With this mission in mind, it is obvious, for example, that the Star-bucks brand of coffee must be marketed in grocery stores, not just through the Starbucks chain of stores.
From the corporate mission, the organization (in conventional planning) is sup­posed to develop a set of objectives that will direct it over a 3- to 5-year period. These objectives are generally stated in terms of sales growth, market share improve­ment, profits, innovation, acquisitions, and risk reduction. (In the new strategic plan­ning, however, the validity of long-term forecasts and plans is no longer taken for granted; the environment changes too rapidly. More on that in a moment.)
From general corporate objectives flow more specific marketing goals. These goals may focus on overall sales increases, but usually they are somewhat more de­tailed, calling for sales increases by product class, geographic region, or type of cus­tomer. It is generally assumed that market share improvement translates into higher sales volume, and higher volume means lower production costs and higher profits. Thus, marketing goals are often expressed in terms of improvement in market share, or the percentage of the total market served by the company. Market share is the chief measure of how well an organization is doing relative to its competitors.
Strategic market planning takes its direction from the overall organizational goals. Although we often think of an organization as simply setting targets for sales, profits, return on investment, and the like, organizations usually have broader, less measurable objectives. An organization is, or ought to be, guided by the invisible hand of its purpose or mission. In this sense, the mission of computer companies is to pro­vide information, and that of telephone companies is to facilitate communication. Rather than considering itself a copier company, Xerox sees itself as an “office of the future” company. Some organizations have even more abstract missions: Consulting firms can be seen as providing education, museums as preserving a cultural heritage, and so on. These missions guide the organization’s marketing efforts and shape its strategies and plans.
The corporate mission depends on how the organization defines its business. That definition is based on the answers to two questions: “What business are we in?” and “What business should we be in?”
Sometimes too broad a business definition can create problems for an organiza­tion. For example, Levi Strauss, a leader in the apparel industry, added many new lines throughout the 1970s, including sportswear, youth wear, and ski clothes. In a 1979 talk to securities analysts, the company’s president stated that Levi Strauss should be looked upon “as a consumer-products company that just happens to be in the garment business.” As one worried analyst told Fortune, “If they ever really start to believe that, it’s trouble.” Such a broad business definition would allow the com­pany to add a whole range of products with which it has no marketing experience- cereals, automobiles, detergents, watches, and so on.
Although it did not take such a wildly divergent approach, Levi Strauss did move into higher priced, more fashion-oriented lines. And the skeptical analyst ap­parently was correct. The period from 1980 to 1982 produced a 10 percent drop in sales for Levi Strauss and a 76 percent plunge in net income. In 1982, the company eliminated many of its upscale product lines and returned to its emphasis on mid-priced, middle-class-oriented apparel, especially its well-known jeans. Its president then told Business Week, “We’ve realized that just putting Levi’s name on something isn’t enough to gain instant marketing acceptance.” Now it sees itself as an “adapt­able” company, able to take advantage of opportunities to which its distinctive com­petencies are applicable. For example, with the apparent emergence of a global generation of teens with similar tastes and values, Levi Strauss has been quick to try its hand at global marketing. It sells a 1960s style across the planet, and it is even gaining popularity in the United States.
The company’s product mix is now somewhere between the narrow jeans-only strategy of its early years and the unfocused consumer-products focus of the early 1980s. New products generally have some tie-in with the jeans identity and market, meaning that it makes sense to consumers for Levi Strauss to sell them. The current star of its product line illustrates this point. Dockers is a line of casual slacks for men made from a cotton twill that is softer and more comfortable than denim. It is tar­geted at aging baby boomers, the same customers who made jeans a runaway success in the 1960s and 1970s. According to Alan Millstein, editor of Fashion Network Re­port, “Levi Strauss really understood the forty-something generation,” who “have been living off beer, pretzels, and microwave popcorn. Their waistlines have ex­panded… and they can’t fit into their jeans.”‘4 But they can fit into Dockers, and the success of this product fueled a surge in Levi Strauss’ income in 1991 and laid the foundations for Levi Strauss’ expansion into the growing market for casual office clothes during the mid-to-late 1990s.

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The Strategic Market Planning Process

Posted by 5 April, 2008 Comments Off on The Strategic Market Planning Process

MARKETING AND STRATEGY
Using Tested Concepts and New Ideas for Marketing Strategy.

THE STRATEGIC MARKET PLANNING PROCESS

The strategic planning process traditionally starts with the setting of objectives for the organization as a whole and continues with the development of marketing goals that reflect those objectives. Next, the strategic planner conducts the situation analy­sis, beginning with an in-depth look at the environmental trends that will affect the organization. The planner can be said to be looking outward through a “strategic win­dow,” viewing the present and predicting the future. Then the planner looks inward through the strategic window to analyze the organization’s strengths and weaknesses. A key purpose of this step is to assess the firm’s distinctive competencies, that is, what it can do better than other firms.These two steps, external and internal analysis, are the cornerstones of tradi­tional strategic market planning. They provide the information base from which the rest of the process follows-at least in a top-down approach to planning, which is what the traditional model entails. The situation analysis may also lead to adjustments to inappropriate corporate or marketing objectives. (This remains true today, al­though the nature of the analysis is changing rapidly.)
After completing these two fact-finding steps, the planner generates alternative plans or strategic options. The planner then chooses the option or set of options that best matches each market opportunity with the strengths of the organization. This is a crucial step because the organization’s distinctive competencies may be only occa­sionally and briefly aligned with those required by a dynamic external environment. Strategic planners must be ready to seize upon such opportunities as they arise. In the rest of this lesson, we will present information on how each of these steps in market planning is traditionally performed-along with ideas about how they are changing and how they need to continue to change in order to keep strategies relevant and vital.

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