Strategic Marketing Planning Process Marketing Essay

Management Summery

This paper will discuss the Strategic Marketing Planning process and Marketing tools and techniques and its application in three different case scenarios.

Firstly it looks at a case of a supermarket for which ASDA, one of the leading retailers in UK is chosen. ASDA is well established name among UK households and in the market since its inception in 1920. In 1999 the major turnaround happened to the company when it was acquired by American giant Wal-Mart. The company’s marketing had been revitalised and invested many supper centres and ASDA livings. At present ASDA rank number two among retail chains in the country, employing 160,000 employees and having 365 stores across the globe.

Secondly, the assignment will analysed the current crisis at Ford and examine their marketing strategy which put them down. Also the range of marketing strategic options for the Ford Motor Company is recommended in order to revamp its business to among the top.

Thirdly, this paper explores the implications of changes in the marketing environment for organisations in the airline industry in UK economy in particular.

Finally, the challenges faced by brands in the presence of private label brands and what strategies are recommended to counter the situation.

Introduction

Marketing function is an integral part of whole business operations in ASDA. Marketing, when consider as a function it involves typically the task of creating, promoting, and delivering goods and services to consumers and businesses. The responsibilities of Marketing Manager’s include influence the level of timing composition and composition of demand to meet the organisation’s objective.

Marketing has been defined by Philip Kotler 2003 [1] in two perspectives one is as social and the other is managerial. The social definition of marketing says “Marketing is a social process by which individual and groups obtain what they need and want through creating, offering and freely exchanging product and services of value with others”. For managerial definition marketing is defined as “the art of selling products”.

American Marketing Association describe “Marketing is a process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational goals.

The marketing concept emerged in mid 1950s and challenged the preceding product and selling concepts. Thus “marketing concept holds the key to achieving its organisational goals consist of being more effective than competitors in creating, delivering and communicating superior customer value to chosen target markets”.

Analysis

Task 1

Marketing Planning Principals

A formal strategic planning is essential if organizations are to adapt a coordinated and focus approach. The strategic plan defines the total organizational mission and objectives. Marketing plays a crucial role in the execution of the strategic plan and, therefore, it is against the backdrop of the strategic plan that the marketing plan is derived.

Macdonald (1995) [2] suggests that several stages have to be completed in order to arrive at the strategic marketing plan. These are summarized in a figure 01 below. The overall marketing planning process can be divided into four stages; the overall corporate objectives therefore should feed into start point of the marketing planning process. The way the corporate objectives do can be seen through business definition.

Following an initial environmental and business analysis, the development of a mission statement is the starting point both for corporate and marketing planning since it represents the vision of what the organisation is or should attempt to become.

ASDA’s Mission;

“Is to be the best value retailer exceeding customer needs…. every day

Backed by their purpose of serving everyone’s money every day

[3] Some of the above information has been taken from asda.co.uk web site appeared on 03 Nov. 2009.

That is made possible by dedicated staffs and the commitment to ensure that customer always come first in everything they do.

What ASDA value;

• Respect for the individual
• Strive for excellence
• Service to the customers

Tools and Techniques involved in Marketing Strategy

Current Market analysis

In the process of formulation of a strategic marketing plan, the most important part is the analysis of the company’s current situation. This will include the analysis of both internal and external environments of the company. There are different techniques to analyze the internal and external environment of the company. SWOT and PEST are the two most common techniques that are being used very often. The following is the application of SWOT and PEST on ASDA;

SWOT Analysis

The overall evaluation of the company’s strengths, weaknesses, opportunities and threats are called SWOT Analysis.

Strengths

• ASDA is one of the powerful retail brand and among big 4 in UK. It holds the reputation for value for money and wide range of products under one roof.
• ASDA is a household name over the years and has developed substantially after the acquisitions by Wal-Mart in 1990. ( Wal-Mart is world’s biggest retailer)
• The technological leadership is the company’s core competence which supports its logistics system to monitor individual products performance country wide and store wise at a glance. It also supported by Wal-Mart efficient procurement.
• A good culture in organisation wide and focused HR management strategy in place. Investing on training and development and yield through efficient and trained staff and low employee turnover.

Weaknesses

• Due to magnitude of the business it could leave weak in some areas due to the huge span of its control.
• Due its product range is so big and across many sectors (such as foods, clothing and stationary) it may not be flexible enough of it’s more focused and specialised competitors.

Opportunities

• To use the Wal-Mart resources to capitalise local market where the major share is taken by Tesco.
• Use the current economic down-turn strategically for increase the share on low price strategy.
• New store types and locations to serve different segments especially convenience buyers.
• Continue with current strategy of large supper centres.

Threats

• Being among the big 4 retailers means it has threat of losing share its competitors and especially from Tesco’s who also compete on price as major strategic option.
• Competing on price is always threaten by the competitor as it is easy to duplicate thus if any technological or strategic integration or kind of move that helps to reduces the competitors prices will always threatening.

Porter’s five forces analysis

Porter identified five major areas from which competition might be posed for the company. Detailed and careful analysis of five forces reveals the standard of organisation in the light of competition which will intern influence the decision making process to formulate strategies.

New Entrants

“New entrants to the industry will increase the level of competition. The threat for the industry mostly depends on the entry barriers. In some industries it is easy to enter and whereas other industries it is hard to enter due to high entry barriers.” ASDA is facing a fears competition due to new entrants to the market. The retailing industry is such even small corner shop is a competitor to ASDA.

Threat of substitute

“Existence of substitute products could reduce the industry attractiveness because it will affect current product price as well as the profit of the organization. Buyer’s willingness to substitute and relative price and quality of substitute products also attributable to threat of substitute of the industry.” The other major problem that ASDA is facing is their strategic focus is very vulnerable to competitors due to fact that it is easy to replicate. Tesco price cuts are posing a considerable threat to ASDA and vice versa.

Bargaining power of Suppliers

According to Porter “If the suppliers have higher bargaining power then the industry can be less attractive. Bargaining power of suppliers depends on,

• The number of buyers and suppliers
• Product differentiation and value of the product
• The industry not key customer group for suppliers”

This is a one area that ASDA can have some power if they use the scale advantage by synchronising Wal-Mart to the buying process. ASDA has to use the Wal-Mart’s bargaining power to gain some scale advantages.

Bargaining power of Buyers

As Porter has described “Buyer’s power depends on,

• Number of the suppliers
• Degree of the standardization of products

This is the ASDA’s weakest area as the bargaining power of buyer is at its most in the retailing industry due to mainly the above two point mentioned by Porter.

ASDA has introduced “asda.com” which is a very smart strategically move by the company to counter the competition from Tesco.com. ASDA is developing a very solid customer base and it’s increasing in numbers day by day. ASDA has developed the online store very efficiently to attract customers from its competitors with a well organised delivery system to deliver the goods to customer’s doorstep.

Task 2

Range of Marketing strategy options

Boston Consulting Group’s (BCG) growth share matrix

In the mid-1960s, the Boston Consulting Group (BCG) was formed to provide market solution based on portfolio analysis. BCG is simple but useful strategic planning technique based on an analysis of company’s product portfolio. The technique entails assigning each individual product of an organization to one of four possible cells in a simple matrix according to the relative market share and rate of market growth associated with that particular product/business.

Current product portfolio analysis of Ford Motor Company

According to the BCG Matrix the following figure shows current position taken by Ford Motor Company’s brands. In the following matrix shows how imbalance is the Ford’s current product pipeline. Ford and Mazda are the two better doing brands out of the lot and generating cash flow to compensate the other problem children. Ford has lost its market share to its Far East competitors like Toyota, Nissan, Honda and even Hyundai. In order to establish the company’s brands, Ford has to come out with robust marketing strategy.

Due to this problem the Company have to either Divest or Invest on those problem children in order to survive the hyper competitive automobile industry.

Porters generic strategies

Michael Porter has proposed three generic strategies that provide a good starting point to Ford Motor Company’s strategic plan;

This is a strategic model where an organisation clearly identifies its strategy based on cost leadership and differentiation. But in today’s hypercompetitive business climate it is extremely difficult to maintain the competitive advantage since it may be lost to competitor in short period of time. Therefore Richard D’Aveni’s modified this strategy, gaining and regaining competitive advantage, is more suitable for the today’s business world. The means of gaining and regaining competitive advantage is more suitable for the today’s business world. The means of gaining and regaining competitive advantage are Focus, Differentiation and Cost Leadership. This is the strategy, Ford Motor Company should continuously adhere themselves to. Ford has to change their products continuously with changing customer demands.

The Ansoff’s Matrix

Ansoff [5] has proposed the idea of ‘product/market scope’ to aid in the formulation and selection of strategies, particularly for those companies with growth objectives. The basic framework of this approach is shown in the fig. 5.

Ford Motors have to adopt the above number 1 and 2 strategies if they are to turn around the company by saving the existing brands.

• Market Penetration strategy; Ford has to reorganise its marketing communication strategy by emphasising its core values which are quality, economy, eco friendliness and safety. Thus the company should shift the positions held by those problem children to star category.
• New Market Development; Ford has to look for new markets with their new value preposition. Those customers who have shifted from the company’s brands are to be regained. New geographical areas have to be covered.
• New Product Development; Ford have to identify new market development especially with this global economic downturn and credit restrictions. Company have to emphasis on more fuel efficient features in their products as to capitalise the market. Customers have to be introduces with some sort of easy payment scheme to sell and thus attract all segments of the market.
• Diversification Strategy; the company has to identify new segments in the market and offer a differentiated products and features to meet the requirements of those new segments. Thus Ford should balance their product range. Also they should be communicated by matching the different features with their customer requirements.

Above all, the most important thing that Ford required to do is to revamp its marketing communication mix strategy this is the area the company was not good at over the last five years. Though the company, was having a wider range they were not doing well due to poorly planned marketing. Therefore Ford has to capitalise on the core values of their products.

Task 3

Implications of changes in Marketing Environment for Airlines industry

Airlines industry is the most sensitive industry to the changes of Marketing Environment. Any change in marketing environment like general economic conditions, the seasonal nature of the air travel, as well as trends in airlines, costs, and fuel cost will have a big impact of industry. During the general economic downturn the airline’s marketing environment experience adverse consequences because a substantial portion of airline travel (both business and personal) is discretionary. When assessing the impact of marketing environment changes in the UK economy in particular and world business environment in general on airline industry, the following analysis can be made.

Before going deep into the discussion the author likes to quote a caption from British Airway’s annual report 08/09 [6] which says “Our revenue is highly sensitive to economic conditions in the markets in which we operate”.

Next quote is from a budget airline called Ryanair and it was published in their annual report 09′ “Ryanair Has Decided to Freeze its Development in the U.K. Market and Curtail Certain U.K. operations. Ryanair informed its U.K.-based pilots on June 16, 2009 that it had completed a review of its U.K. growth plans. The review was prompted by the recessionary environment in the U.K.” [7]

Above two quotes simply says the entire answer to the question in a nut shell but for the academic purpose this paper will further elaborate on the problem. Firstly it will look at;

Fuel prices and currency fluctuations

Changes in the air fuel costs and availability will have a direct effect on airlines industry. Unfortunately the jet fuel costs and currency fluctuations are subject to wide fluctuations as a result of various economic and political factors and events occurring around the world where companies in the industry have no control at all and it is highly unpredictable as well.

As the jet fuel prices are denominated in U.S. dollars, fuel costs are subjected to certain exchange rate risk mainly to non U.S. airlines. The possible worst case scenarios include adverse exchange rates, unavailability of adequate supplies, without any limitation, and any such events that ignites the hostilities in Middle East and other fuel producing nations and so on.

Government regulations and trade unions demands

Different governments and different airport accessibility, slot allocation and ground handling charges are subject to frequent changes and always increase which will adversely affect the bottom-line of airlines. For an example £10 of Air Passenger Duty “APD” per departing passenger is said to be increased to £11 by end of November 09 which was just £5 before 2007. Similarly many governments have increased the travel taxes. But airlines believe that increase in government taxes will have the negative impact in passenger volumes. Another such example would be liberalisation of EU air transportation market which allowed US carriers to operate in intra EU markets.

Green issues are the other obstacles facing the entire industry. For a example EU regulation on emissions trading could increase the future cost of air travelling which come to effect from 2012.

This is a very complex and complicated phenomena that is happening in airline industry. In many countries have their own flag carriers, government own carriers etc., and sometimes they are getting government concessions and subsidies especially for airport access and ground handling. Such state aids will give strategic edge to that particular airline and that will adversely affect the other players in the industry.

British Airlines Pilot Association (BALPA) is carrying out a campaign for union recognition had caused Ryanair to reconsider its position in U.K. British Airways is always having union problems demanding pay hikes and so on and when not agreed by employer they are protesting without working putting whole company at risk.

Terrorism

Terrorism is one of the major risk factor in airline industry have to deal with. Grater security measures are expensive as well as a hassle to air travellers which exerts a negative affects on passenger volumes too.

Pandemics

There have been number of diseases like swine-flu, SARS, foot and mouth disease and so on. All these have a negative impact on air travel industry worldwide. Some national authorities had imposed restrictions on air travelling.

Other Factors

Unfavourable economic conditions due to recessionary economy, increased unemployment rate, constrained credit markets and increasing business operating cost are among the factors that affect the consumers both leisure and business.

Competition from other mode of transportation likes sea and trains mainly. Travellers looking for alternative transportation at times high speed rail systems such as TGV in France exemplify this situation.

Brands vs. privet label brands

Over nearly two decades, private label branding has become a popular strategy among some main supermarkets in Europe as well as U.S. Privet Label branding has been using by main retailers as a differentiation technique their product from other rather established brands and thus commanding customer loyalty to their products.

Above figures published by Cornell University in 2001 [8] and according to the above data United Kingdom is the leading country to have very loyal customer base for private label brands. However the current figures should be much higher than this. It was revealed that the major shares of privet label brands are of frozen and refrigerated products.

Recommendation

As a branded product manufacture, to counter this situation there has been various strategies used. One of mostly recognisable one is giving high discounts to the retailers to get there preferential shelf space and to the customer end sales promotions.

By considering all these strategies the best solution would be to introduce more value added brands and to establish the value in their brands by proper marketing communicational mix.

References and Bibliography

1. Kotler.P, “Marketing Management 2003”,London.
2. Malcolm H. B. McDonald, 2005,”British Journal of Management”, Volume 1 Issue 3,Pages159—170.
3. www.asda.co.uk web site appeared on 03 Nov. 2009.
4. Porter M.E, “Competitive Strategy”, Free Press, 1990.
5. Ansoff Matrix adopted from Philip Kotler, Marketing Management 2003, p 100
6. British Airway’s annual report 08/09 appeared on britisairway.co.uk web site on 05th Nov 2009.
7. Some of these information taken from ryanair.com web site on 07th Nov 2009
8. Cornell University web site under a research conducted on behalf of Privet Lable Manufactures Association, appeared on 08th Nov 2009