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Marketing strategies and objectives Marketing planning - setting marketing objectives Introduction Objectives set out what the business is trying to achieve. Objectives can be set at two levels: (1) Corporate level These are objectives that concern the business or organisation as a whole Examples of “corporate objectives might include: • We aim for a return on investment of at least 15% • We aim to achieve an operating profit of over £10 million on sales of at least £100 million • We aim to increase earnings per share by at least 10% every year for the foreseeable future (2) Functional level e.g. specific objectives for marketing activities Examples of functional marketing objectives” might include: • We aim to build customer database of at least 250,000 households within the next 12 months • We aim to achieve a market share of 10% • We aim to achieve 75% customer awareness of our brand in our target markets Both corporate and functional objectives need to conform to the commonly used SMART criteria. The SMART criteria (an important concept which you should try to remember and apply in exams) are summarised below: Specific - the objective should state exactly what is to be achieved. Measurable - an objective should be capable of measurement – so that it is possible to determine whether (or how far) it has been achieved. Achievable - the objective should be realistic given the circumstances in which it is set and the resources available to the business. Relevant - objectives should be relevant to the people responsible for achieving them. Time Bound - objectives should be set with a time-frame in mind. These deadlines also need to be realistic. Marketing strategies and objectives Marketing planning - the link with strategic planning Introduction Businesses that succeed do so by creating and keeping customers. They do this by providing better value for the customer than their competitors. Marketing management constantly have to assess which customers they are trying to reach and how they can design products and services that provide better value (“Competitive advantage”). The main problem with this process is that the “environment” in which businesses operate is constantly changing. So a business must adapt to reflect changes in the environment and make decisions about how to change the marketing mix in order to succeed. This process of adapting and decision-making is known as marketing planning. Where does marketing planning fit in with the overall strategic planning of a business? Strategic planning (which you will cover in “Using objectives and strategy” section 3.1, pages 1 to 7 of your textbook) is concerned with the overall direction of the business. It is concerned with marketing, of course. But it also involves decision-making about production and operations, finance, human resource management and other business issues. The objective of a strategic plan is to set the direction of a business and create its shape so that the products and services it provides meet the overall business objectives. Marketing has a key role to play in strategic planning, because it is the job of marketing to understand and manage the links between the business and the “environment”. Sometimes this is quite a straightforward task. For example, in many small businesses there is only one geographical market and a limited number of products (perhaps only one product!). However, consider the challenge faced by marketing management in a multinational business, with hundreds of business units located around the globe, producing a wide range of products. How can such management keep control of marketing decision-making in such a complex situation? This calls for well-organised marketing planning. Marketing strategies and objectives What are the key issues that should be addressed in a marketing strategy? The following questions lie at the heart of any marketing (or indeed strategic) planning process: • • • • • • Where are we now? How did we get there? Where are we heading? Where would we like to be? How do we get there? Are we on course? Why is a marketing strategy essential? Businesses operate in hostile and increasingly complex environments. The ability of a business to achieve profitable sales is impacted by many external factors, many of which are inter-connected. It makes sense to try to bring some order to this chaos by understanding the commercial environment and bringing some strategic sense to the process of marketing products and services. A marketing strategy is useful to many people in a business. It can help to: • Identify sources of competitive advantage • Gain commitment to a strategy • Get resources needed to invest in and build the business • Inform stakeholders in the business • Set objectives and strategies • Measure performance Marketing strategies and objectives Marketing objectives set out what a business wants to achieve from its marketing activities. They need to be consistent with overall aims and objectives of the business. They also provide an important focus for the marketing team. What makes a good marketing objective? It is often said that an effective marketing objective meets the SMART criteria: Some examples of marketing objectives which meet these criteria would be: • Increase company sales by 10% in 2011. • Achieve 25% market share within the smartphone market for I-phone 4 within 2 years of launch. • Increase the percentage of customers who rate service as “excellent” from 80% to 85% within 18 months at Premier Inn. Marketing strategies and objectives It is important that marketing objectives and marketing plans support the overall objectives of the business. Below is an example of how business objectives translate into marketing objectives and activities: It is also important to note that beyond internal factors influencing the marketing objectives external factors can also have an impact. The three key external factors are as follows: 1) Competitors’ actions. For example if Tesco’s launch a new sales promotion on their finest range how will its leading rivals respond? 2) Technological change. For example Apple launches a new I-pad with new features each year how will this affect the marketing objectives of rival tablet manufacturers? 3) Market factors. For example the economic climate (business cycle), social change (i.e Fair trade issues), legislation (when and where and how products can be promoted) and lastly changes in consumer lifestyles and buying habits.