Published in Philippine Daily Inquirer, December 19, 2003
Much has been written about the downside of hyper-competition. Little has been mentioned about its upside that has ushered a customer-driven mindset among manufacturers and service providers.
In the olden days of the industrial and post-industrial era, products and services were offered based on what the manufacturers believe they could sell and not entirely on what customers needed. The formula for selling products and services was regimented â€“ manufacturer chooses the product, pumps in millions of pesos to advertising, provides the salespeople and channel with incentives and voila â€“ goods and services turn into cash. This no longer holds true today as manufacturers and service providers face stiff competition and consumers have become a strong voice in shaping products and services offered to the market.
Today, the changes in the business environment and the emerging influence of consumers dictate a change in the way companies manage their business heading towards a stronger marketing-oriented philosophy that revolves around the customer. Even world-renowned management guru, Peter F. Drucker concedes the marketerâ€™s fundamental role in business when he says, â€œthere can be no company strategy that is not in some fundamental function a marketing strategy, where the sole business purpose is to create a satisfied customerâ€. Related to this, marketing practitioner Steve Harrell, formerly of General Electric, in a speech delivered before the American Marketing Associationâ€™s Educatorsâ€™ Meeting says, â€œThe marketing manager is the most significant functional contributor to the strategic planning process, with leadership roles in defining the business mission; analysis of the environmental, competitive and business situations; developing objectives, goals and strategies; and defining product, market, distribution and quality plans to implement the business strategiesâ€.
The importance of functional marketing in strategic planning and success in business has become a foregone conclusion. Renowned marketing guru, Philip Kotler succinctly describes the art of market oriented strategic planning as the process that helps shape the companyâ€™s business, products, services and communications so that they can achieve targeted profits and growthâ€.
Unfortunately, not too many understand what market-oriented strategic planning is all about. Here are some fallacies and facts behind strategic planning in marketing:
Fallacy One. Budgets or numbers drive market-oriented strategic planning.
Fact Two. Nothing is farther from the truth. There is nothing strategic in merely listing expense budgets and figures, especially when one does not understand where the numbers are coming from, except that it has been handed from the top or provided by the Chief Finance Officer. The more marketingoriented firms rationalize their customer markets, study the opportunities and threats, recognize their core competencies and define their company and brandsâ€™ directions. Sales volumes while an objective and expense budgets while requiring allocation are the result of a careful study of the environment, market opportunities and company direction.
Fallacy Two. Market oriented Strategic Planning is only for the big companies and not for SMEs (small to medium sized entrepreneurs).
Fact Two. Wrong. Marketing-oriented strategic planning does not choose industries, categories, or size of businesses. As the saying goes, who has no plan begins lost. What varies may be the extent and complexity of the process and the output, which includes the business strategies indicated in the business and marketing plan. Marketing-oriented strategic planning demands that the businessman, whether he is operating a small-scale carinderia or quick service restaurant or a large food manufacturing company for example, should understand the preferences of his customers, identify and determine the movement and products or services of his competitors, be aware of the changes in the macro-environment (e.g. Political legislations like new taxes) that may affect his business, etc. Without fully comprehending the nature of his business and his customer, the same businessman is likened to a horse with blinders.
Fallacy Three. Consumer market research is not material to marketingoriented strategic planning sessions.
Fact Three. Consumer market research is a most important tool for brand direction setting and therefore, is relevant to market-oriented strategic planning sessions. Consumer market research captures insights on how consumers behave towards a product or service category, perceptions towards different brands in the category, what consumers like or dislike about certain brands, etc. which information is likely to lead to a new marketing direction. Fact is – consumer research should not stop at being a documented evidence of what marketers may already know but should actually be used as a tool to dredge more consumer insights that can be the basis of a new campaign. Some businesses may have become successful despite a lack of consumer market research yet as these businesses grow their microenvironment changes and they are faced with fiercer competition. The only way to sustain their growth and even ride higher than their competitors is to remain knowledgeable about the consumer market, which can only be best served through sustained consumer market research.
Fallacy Four: Market-oriented strategic planning is only for the marketing team.
Fact Four: Market-oriented strategic planning is a team effort that encourages all functional departments to be part of the process. A marketingoriented strategic planning session implicitly encourages all functional departments to pull towards a single, unified direction that prioritizes customer needs and wants while achieving business objectives. This creates a winning situation for both the organizationâ€™s stakeholders and the companyâ€™s customers. The more forward-thinking companies capitalize on this opportunity by mounting a forum for a strategic thinking process designed to encourage businessplanning participants to think out of the box and explore other creative business strategies that may lead to brand success. An increasing number of organizations either open up their strategic planning meetings with an in-house strategic marketing seminar or schedule their strategic planning sessions following a strategic marketing training. Business planning meetings that are preceded by a strategic marketing seminar attended by marketers and nonmarketers including finance, production and other key representatives from other functional departments set the stage for strategic thinking. This is a welcome relief to marketers as non-marketers are provided an avenue to understand what marketing is all about.
Fallacy Five: A market-oriented strategic planning is just one of those conferences or meeting where everything is discussed but nothing materializes.
Fact Five: The market-oriented strategic planning is a most important session for marketers. In this most important business meeting, the marketerâ€™s strategic wisdom to drive the brand and consequently, the company to profitability is challenged. It is an opportune event for marketers who are brand and customer champions, to convince the entire management team to provide adequate support and resources to key brands and make them understand why the companyâ€™s brand portfolio is as it is or as it should be. It is also in this occasion that a leaderâ€™s mettle and the companyâ€™s philosophy become well defined. Is the company driven by customer needs that require support for business activities that may compromise short-term earnings yet lead to longterm, sustained profitability and customer loyalty. Or is the company shaped by a short-term orientation that make stockholders grin the first year but unexpectedly grunt the succeeding years.
Today, strategic planning sessions take a grounded approach as more time is devoted to processing the company and its brand portfolio, understanding how developments in the environment can affect the organization and its brands, defining how brands can help actualize the vision mission statement, identifying the organizationâ€™s key success factors and indicators not to mention, studying
competitor movements. In the end, a viable fit is established between the changing market opportunities and the companyâ€™s business objectives, strengths, skills and resources.
Clearly, to fully understand marketing is to know strategic planning. And this knowledge capital is what differentiates the true marketer from the pseudomarketer.