Chapter 2

Question 1

State the main reasons for strategic planning

Answer 1

• Adapting to change
  Enables organisation to adapt to constantly evolving business environment. Organisations can identify changes in the business environment and how they impact the operations of the organisation.
• Resource allocation
  Assist in resource allocation to take advantage of opportunities and respond to threats.
• Consistency
  Directs all operational marketing activities and outlines how the sections should work together to achieve a common purpose. It also ensures common methods and formats are used, improving communication and coordination.
• Integration
  It ensures the integration and coordination of the mix elements leading to synergy of the individual marketing mix elements.
• Communication and motivation
  The consultative process of formulating the strategic marketing plan, creates a sense of ownership and motivation.
• Control
  It sets the criteria against which success can be measured.

Question 2

What are the approaches to strategic marketing planning?

Answer 2

• Top-down
  Senior managers develop the strategic marketing plan. Operational managers then follow and implement the plan. This encourages professionalism.
• Bottom-down
  Decentralised approach where operational managers and others set the objectives and marketing mix strategies and activities to achieve the objectives. Senior management approves and monitors progress towards objectives. This approach motivates employees and encourages ownership and commitment.
• Hybrid
  Senior management develops the strategic marketing objectives and operational-level managers formulate the marketing mix strategy and implement.

Question 3

What are the SITAR models for strategic planning?

Answer 3

• Synoptic model
  Total planning effort that is intellectually driven and underlined by comprehensive theory. Four steps: set goals, identify alternative strategies, evaluate means against ends, implement strategies. Criticism is its centralised approach, definition of problems, evaluation of alternatives, and implementation are dictated from the top. Strength is simplicity of implementation.
• Incremental planning model
  Model relies on a mixture of procedures and processes including the experience and intuition of decision-makers, rule of thumb and never-ending consultation. This is generally used for minor adjustments from previous plans.
• Transactive planning model
  People-centred approach to planning, plan must be done in consultation with those affected by decisions. Promotes interpersonal dialogue and mutual understanding between planners and affected.
• Advocacy planning model
  Focuses on defending the interests of the weak and disenfranchised against powerful groups in society. It seeks to promote social justice.
• Radical planning model
  Associated with spontaneous activism, guided by the vision for self-reliance and mutual assistance. Its main difference is that it seeks to outline specific substantive collective actions for achieving concrete results in the foreseeable future.

Question 4

Why are mission statements important, internally?

Answer 4

They:

• Provide direction to top management’s thinking on strategic issues
• Help to set performance standards
• Motivate employees to work effectively and efficiently by providing focus and common goals
• Assist in establishing a framework for ethical decision-making and behaviour
• Provide guidance to functional decision-making and strategy formulation

Question 5

Why are mission statements important, externally?

Answer 5

They help to:
- Solicit external support
- to build rapport and better communication with stakeholders
- by serving as a public relations tool

Question 6

What are the characteristics of a good mission statement?

Answer 6

They should:

• Have a limited number of goals to be achieved
• Emphasise the organisation’s policies and values
• Clearly define their competitive environment
• Assume a long-term view
• Be short, meaningful and memorable as possible

Question 7

In writing a good mission statement, an organisation must answer the following questions:

Answer 7

• What is our business?
• Who is the customer?
• What is the value of our business to the customer?
• What will our business be?
• What should our business be?

Question 8

What does market analysis comprise of?

Answer 8

• Market structure
  Refers to the characteristics of the market that influence the performance of firms in the market
• Market trends
  Analysing the general trends enables the organisation to identify changes that are taking place in the market, the reasons for the changes and identify drivers for emerging trends.
• Identification of key market segments
  In order to concentrate its marketing efforts on the market that has need for products/services.
• Gap analysis
  Used to ascertain an organisation’s potential and its current standing in the market. There would always be a difference between what an organisation intends to achieve and its actual performance.

Question 9

The key characteristics of the markets that need to be addressed in analysing market structure:

Answer 9

• The number of buyers and sellers in the market
• The level of concentration among them
• The relative strength of their negotiation power with regard to their ability to influence price
• The degree of differentiation among product/service offerings in the market
• The ease of entering or exiting the market

Question 10

A good market segment should be:

Answer 10

• Substantial, with enough customers in future
• Identifiable and measurable
• Accessible to the organisation’s marketing efforts
• Consistent with the organisation’s objectives and able to be reached with resources
• Respondent to marketing efforts in a different way from other segments

Question 11

Benefits of SWOT analysis

Answer 11

• Ease of use and understanding
  Simple diagram with no complex mathematical computations. So, it’s easy for any manager with any background to conduct or interpret.
• Wide applicability
  It’s applicable to many levels in an organisation
• Collaboration
  It promotes collaboration and open information sharing among managers of different functional units
• Integration
  It’s used to integrate and synthesize information coming from various sources
• Ease of communication
  It’s visual; therefore, easy to communicate its finding with investors and other stakeholders

Question 12

In SWOT analysis, what are three key sources of market opportunities?

Answer 12

1. Offering a product/service that is in short supply
2. Supplying an existing product in a new/superior way
3. Developing an entirely new product to satisfy an identified need

Question 13

Why is developing clear marketing objectives important to an organisation?

Answer 13

• Focus and organise its efforts
• Drive day-to-day activities and achieve consistency
• Motivate employees to go all out for excellence
• Provide a basis to measure performance and implement controls

Question 14

What are SMART objectives?

Answer 14

• Specific
  Defines what exactly it seeks to achieve
• Measurable
  Outlines the metric that would be used for the objective
• Achievable
  Objective is realistic, demanding and achievable
• Relevant
  The objective is under the control of the staff for whom it was formulated
• Time-specific
  Defines when the objective will be achieved and when it will be evaluated

Question 15

What are the pricing techniques?

Answer 15

• Tiered pricing
  Pricing of the product differs due to consumer characteristics. Enables the organisation to reach price-sensitive consumers at the lower end, without losing revenue at the upper end
• Bundling
  Putting all elements of the offer into a single price
• Unbundling
  Having different prices for different elements of the offer
• Volume discounts
• Options
• Use of rebates and allowances

Question 16

An effective positioning strategy should meet two criteria:

Answer 16

• It should uniquely distinguish an organisation from competitors
• It should lead customers to expecting slightly less service than a company can actually deliver

Question 17

Three options for drawing up a marketing budget

Answer 17

• The task method
  The estimated cost of each marketing activity in the plan is summed. The budget adequately supports the marketing activities to achieve goals and objectives.
• The percentage-of-sales method
  Setting the marketing budget as a percentage of estimated total sales. This is done using either historical sales revenue and marketing expenditure or an industry average percentage of sales
• The competitive method
  The organisation estimates the marketing budget of a leading competitor in the industry and compares it with their own. They can then match or beat the competitor’s budget, ensuring they remain competitive.