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Planning: The Corporate, Marketing, and Communications Hierarchy Sunarto Prayitno 1 The Overall Strategic Planning Process Marketing Communications strategy cannot exist in isolation from marketing strategy which in turn is directly linked to corporate strategy. So, let us start with consider the simple strong relationships between the three levels of strategy, there are: Corporate Strategy, marketing strategy, and marketing communications strategy. 2 The Overall Strategic Planning Process 1 CORPORATE STRATEGY 2 MARKETING STRATEGY 3 MARKETING COMMUNICATIONS STRATEGY 3 The Overall Strategic Planning Process Planning can be carried out using a top-down or bottom-up approach, or preferably using a mixture of the processes at each of the three levels. This involvement of the different organizational levels implying a planning hierarchy immediately suggests that there is an effective sequence of planning, in which the development of marketing communications strategy proceeds after a proper consideration of both corporate and business strategy. 4 The Overall Strategic Planning Process Undoubtedly, however, there are situations where marketing managers and their agencies do undertake some bottom-up planning. They are often called on to develop marketing communications strategies to a different timescale from corporate planning. In some cases their knowledge of corporate strategy may be limited. They therefore have to do their best in a given situation. 5 The Overall Strategic Planning Process However, in all situations marketing communications must be developed with an awareness of its fit within the overall strategic planning framework. 6 The SOSTAC Planning Framework Whatever the level of the planning hierarchy, the SOSTAC planning model can be applied easily. It will immediately be obvious that it is possible to apply the SOSTAC model at each level of the planning hierarchy, that is SOSTAC applies equally at the corporate level, the marketing level, and the marketing communications level. 7 The SOSTAC Planning Framework The SOSTAC Planning System Stage: Strategic Question: 1. Situation Where are we now? 2. Objective Where do we want to be? 3. Strategy How do we get there? (Broad direction) 4. Tactics The detail of strategy. What communications tools should be used when? 5. Action The detail of tactics. What steps are required to put each tool into action? 6. Control How do we know when we have arrived? 8 The Planning Hierarchy The ‘Management by Objectives’ (MBO) system became extremely popular and its in use today since the 1960s. The principle of the system is that individual managers’ objectives have to be linked into corporate objectives in a direct and distinct way. 9 The Planning Hierarchy Each manager discusses and agrees with the next level of management above them over what action they will take in the following 1year in order to contribute to achievement of the overall corporate objectives. This linkage into a hierarchy of objectives ensures that an organization’s main resources, its staff, are involved, integrated, motivated and, hopefully, rewarded. 10 The Planning Hierarchy MISSION STATEMENT CORPORATE OBJECTIVES CORPORATE STRATEGIES MARKETING OBJECTIVES MARKETING STRATEGIES MARKETING COMMUNICATIONS OBJECTIVES MARKETING COMMUNICATIONS STRATEGIES MARKETING COMMUNICATIONS PROGRAMS AND BUDGETS 11 The Planning Hierarchy At each level it is possible to consider the two elements of objectives and strategy. Objectives are the end result, and strategies are the means of achieving the objectives. The whole process can also be seen as an end and means hierarchy. The means (strategies) at one level become the ends (objectives) at the next level down. Strategies cascade down to the next level of planning as an objective. 12 The Strategic Planning Stages of Marketing Communications The detail of the planning hierarchy have been redrawn in the form of a flowchart showing how the objectives at the three planning levels – corporate, marketing, and marketing communications – are directed and linked to each other. This flowchart has been extended to form a triad of objectives, strategy, and tactics. Tactics refers to a number of relatively short-term actions, but of course what is ‘short-term’ is relative to the level of the organization being considered. 13 The Strategic Planning Stages of Marketing Communications Corporate level planning could typically extend up to five years depending on the type of industry. Marketing planning would extend two or three years, and Marketing communications planning usually only looks at a one-year timescale. However, it should be noted that an organization’s branding strategy may be planned over a longer period of five years or more as this is of strategic importance. 14 The Strategic Planning Stages of Marketing Communications Corporate Planning Level Mission Statement Corporate Objectives Corporate Strategies Marketing Planning Level Marketing Objectives Operational Objectives Financial Objectives Product Objectives Pricing Objectives Place Objectives Marketing Strategies Marketing Comm. Objectives Marketing Comm. Planning Level H. R. Objectives Marketing Comm. Strategies MarCom Tactics MarCom Action Plans MarCom Control 15 The Operational Planning Stages of Marketing Communications At first sight in the operational planning may seem odd that marketing communications budget is estimated before detailed operational plans are drawn up. This, however, represents many real situations for both large and small companies. Small companies often budget to spend all they can afford, which is often too little. Large companies sometimes base their budgets on previous experience or use a formula such as the advertising to sales ratio. Whatever the situation, the budget level is indeed a broad starting point for making decisions on the most appropriate communications elements. After detailed planning it is then possible to submit a revised budget. 16 Linking Marketing and Communications Strategy The previous sections have asserted that marketing communications strategy should derive directly from marketing strategy which in turn derives directly from corporate strategy. This suggests that there is a strong body of knowledge and practice which provides a framework for making these linked decisions. In reality, although marketing theories and concepts are well developed across specific planning levels, their vertical integration is rather less developed. This is perhaps understandable on two counts. 17 Linking Marketing and Communications Strategy Firstly, individuals tend to specialize in certain areas of marketing. For example, those who specialize in strategic marketing are not necessarily experts in marketing communications and this inhibits the vertical linkages. Secondly, the marketing communications strategy area is a complex one in which many factors play a part. This makes the development of the models more difficult. The communications models that are develop are either simple as the AIDA and ATR models, they considerably more complex such as the FCB Grid. 18 Linking Marketing and Communications Strategy At the simplest level marketing communications can be seen as one of the seven Ps: product, price, place, promotion, people, process, and physical, ie marketing communications is the promotional element. Each of these Ps should be considered when planning marketing communications strategy. The communications strategy is a complex and challenging task. Marketing communications strategy integrates all these Ps since every P communicates. 19 Linking Marketing and Communications Strategy PRODUCT ELEMENT: PRICING ELEMENT: CHANNEL ELEMENTS: •Product objectives •Pricing objectives •Channel objectives •Positioning Strategy •Determining demand •Channel level •Product Life Cycle •Estimating costs •Evaluating Alternatives •New product development •Pricing methods •Selecting channels •Marketing testing •Adapting the price •Motivating Channel Members •Organizational aspects •Responding to competition •Evaluating members PROMOTIONAL ELEMENTS: OTHER Ps IN THE MARKETING MIX: •Promotional objectives •People •STP strategy •Process •Advertising •Physical aspects MARKETING ELEMENTS •Sales promotion •Public relations •Personal selling 20 Linking Marketing and Communications Strategy ADVERTISING: PUBLIC RELATIONS: SALES PROMOTION: •Advertising objectives •Public Retains objectives •Sales promotion objectives •Target audiences •The role of public relations •Sales literature •Choosing the message •Corporate identity and image •Customer incentives •Deciding the media •Evaluating advertising efectiveness •Defining of public •Merchandising •Point of Purchase Advertising •Media relations •Internal marketing •Crisis management PERSONAL SELLING: •Personal selling objectives •Salesforce structure •Salesforce size •Motivating the salesforce •Compensating the salesforce •Training the salesforce •Evaluating and controllingb salesforce OTHER COMMUNICATIONS TOOLS: MARKETING COMMUNICATIONS ELEMENTS •Direct marketing •Packaging •Exhibitions •Corporate identity •The internet 21 Using the PLC Concept for Marketing and Communications Strategy Though criticized because of its simplistic nature and because real business situations are more complex, the product life cycle (PLC) concept is a useful tool in planning both marketing and communications strategy. 22 Using the PLC Concept for Marketing and Communications Strategy The PLC can also be used to link the other three concepts adopted in marketing planning, namely: The Diffusions of Innovation Curve, which indicate the speed at which potential buyers will accept new ideas. The Ansoff Growth Matrix, which sets out alternative strategies based on existing and new products and markets. The Boston Consulting Group Portfolio Matrix, which distinguishes a company’s product by market share and growth rate. 23 Using the PLC Concept for Marketing and Communications Strategy CONCEPTS PHASE 1 PHASE 2 PHASE 3 PHASE 4 Product Life Cycle Introduction Growth Maturity Decline Diffusion of Innovation Innovation Early adopters majority Late majority Laggards Ansoff Growth Matrix Product development Market development Market penetration Diversification and alliances Boston Consulting Group Portfolio Matrix Problem Child Stars Cash Cows Dogs 24 Product Life Cycle A graphic depiction of a product’s sales history from inception to withdrawal Brand reinforcement Brand revitalization Brand harvesting Brand establishment Introduction Growth Maturity Decline 25 BCG Product Portfolio Matrix HIGH Star Problem Child Market growth rate LOW Cash cow HIGH Dog LOW Relative market share 26 Growing Your Market – Ansoff Matrix M A R K E T Existing New Market Share growth P R O D U C T Existing Low Risk New Product development Medium risk Diversification New Higher risk Very High Risk 27 Using the Marketing Mix Customer Needs & Wants Customer Price sensitivity Convenience & control Communication & education Products & Services Pricing Placement Promotion Reliability & assurance Responsiveness & empathy Process Target Customers Positioning strategies People Physical evidence Credence qualities 28