Role of Marketing in Strategic Planning

Q.
Explain the role of marketing in company's strategic planning to create and deliver customer value.

A.
The key words here are "Role of Marketing in Strategic Planning".

The approach would be "what are the roles of marketing in strategic planning?" If this can be answered, then naturally the values can be seen.

The 4 steps in strategic planning involve:

  1. Define the Mission (Why the company exists for?) 
  2. Setting the Company's Objectives (What can be achieved?) 
  3. Designing Business Portfolio (Where to focus?) 
  4. Planning other Marketing & Functional Strategies. (What are action plans?) 

If only all of the above can be answered, there would be value seen in the selected customer group(s). In-so-doing, how to deploy marketing approaches to answer these questions?

1. A market-oriented mission statement defines the business in terms of satisfying basic customer needs is able to provide clear headway for the business. For example, a developer company is directed at "High Tech Home" as its mission statement. This would steer the company toward achieving a market for differentiated product "High Tech Home" as its core business. The company would not be too interested in "Low cost housing" for example. Hence, the outcome of this marketing approach is to be pioneer in building "Smart Home" or "Fiber Optic Wired Home" rather than basic houses. Of course, there is need to perform marketing research  prior to embarking onto this specialized houses because it is going to cost more to build and the affordability of the population in the area, and there must be a readily demand for it.

2. Objectives and goals of the company. Marketing analysis should be performed to further understand the mindset of buyers in this market segment. A level of high speed fiber optic cables can be further detailed into UNIFI 20MB as a standard to achieve. Therefore, the company's objective is to link up all houses in the area with this high speed fiber optic cables and supplied with UNIFI services. This objective can be a challenge as there are other limitations to this endeavor as developer or construction companies are not Telecommunication Corporations. In long term, they may need to work together with these TELCOs. Thus, this brings us the need of companies to look beyond its own value chain and into the value chains of its suppliers, distributors, and ultimately, customers. More companies today are partnering with other members of the supply chain to improve the performance of the customer value-delivery network.

3. Designing Business Portfolio is done by dividing the business into segments called "SBUs" or Strategic Business Units. A business portfolio is a basket of different businesses, and it can be sometimes very diversified. Thus, it loses its focus. By using market segmentation as a method to direct focus is a marketing strategy many firms use to contain cost and monitor performance. The major activity in strategic planning is business portfolio analysis, whereby management evaluates the products and businesses making up the company. This part usually the Boston Matrix is used. The Cash Cow, Star, Dog and "?". In the above example of building "Smart Home", the management of the company should analyse the various existing businesses and focus on just building "Smart Home". When the matrix is drawn with respect to the existing company activities, the company understands which areas of business activities are high growth high market share (Star), high growth low market share ("?"), low growth high market share (Cash Cow) or low growth low market share (Dog).

The Boston Consulting Group (BCG) Growth-Share Matrix is shown below:

In so doing, other business activities like renovation works, land clearing, and sometimes even downstream activities like advertising, can be understood in their respective matrix. It is adamant for the management to consider those areas of "Dog" or even "Cash Cow" be dropped or outsourced. The high growth potential business activities should be focused in its SBUs. In such case, the management understands that "Smart Home" may have high growth but the company is in the "low market share" category. Thus, the objective is to focus in this business and concentrate in this "Smart Home" and nothing else.

The Strategic Business Units may then include "Smart Building Design ", "IT For Home", and "R&D Smart Build" where all efforts in the company is circled around specialized "e-HOME" or "i-HOME".

4. Planning other Marketing and Functional Strategies for the "Smart Home" would be like developing market analysis of competitors (positioning), pricing strategies, channel of promotion, and identifying product differentiation niche for the "Smart Home". This is rather the Marketing Mix of 4 Ps - Product, Promotion, Price and Placing.

In the above SBUs, Smart Building Design SBU would look into designing the "Smart Home". This can be further broken down into specific areas like WiFi spots for every room, or best of WiFi coverage with special designed walls. The marketing department for this SBU would work with the "IT For Home" SBU to incorporate that feature into the promotion of the "e-HOME" or "i-HOME" as the project is to be launched. This effort would consolidate the effort of company's strategic plan to position itself as the fore-runner in the design and delivery of quality "Smart Home" among available competitor in the area. This can crystallize the company's niche in gaining an competitive advantage in the market place, in order to capture market share and growth.

Ref:
Own account with reference to:
Abdul Hamid Mar Iman. 2002. An introduction to property marketing. Rangkaian Pelangi Sdn Bhd. Pg. 78-81.
Summary of Key Points for Chapter 2, notes by unknown lecturer, http://fac.ksu.edu.sa/sites/default/files/Summary_of_Key_Points_for_Chapter_2_v3.doc

BCG Matrix from http://cowanglobal.wordpress.com/tag/boston-matrix/