For companies that operate in a market-oriented manner – that is, align their activities with the conditions and needs of the markets they serve – strategic marketing planning represents the centrepiece of strategic marketing planning or strategic corporate planning.
The content of strategic marketing planning is the development of product- or market-related strategies for the long-term success of the company.
A rational strategic marketing plan presupposes that the long-term potential for success as well as any threats to the company are recognized in a timely manner and included in the planning process.
In addition to considering potential and current customers and competitors, global environmental factors such as technological development must be analyzed and forecasted.
What is the Basis of Strategic Marketing Planning?
Strategic marketing thinking involves not just reacting to changes in the environment, but actively involving them in the planning process in order to timely leverage or avoid the resulting opportunities and risks through the development of appropriate strategies.
A strategy in this sense refers to the way in which a company uses its current and potential strengths to meet changes in environmental conditions in a targeted manner.
A strategy in this sense includes not only the existing but also the potential competitive advantages, which means that a long-term, future-oriented perspective must dominate the analysis of internal competitive conditions.
Three hierarchical level can be distinguished in strategic planning:
- strategic planning at the corporate level,
- strategic planning at the business unit level, and
- strategic planning at the functional level. In the context of strategic planning at the corporate level, the business units in which the company is to be active are determined; the company’s mission, vision and values are also defined.
Strategic planning at the business unit level aims to develop a strategic orientation for each individual business unit, while strategic planning at the functional level focuses on the development of functional strategies such as marketing, finance, and production.
A framework planning as well as resource allocation for the individual business areas is carried out. The top management is responsible for the strategic planning at the company level.
The strategic planning at the business unit level refers to the determination of suitable strategies for the individual business areas; the main focus is on the markets or market segments being processed. The middle management is responsible for the strategic planning at the business unit level.
Finally, the strategic planning at the functional level mainly deals with the optimal use of resources to be used in the functional areas.
Obviously, strategic planning at the different levels must not be carried out in isolation, but must be integrated into a consistent strategic concept.
Level of Strategic Planning
Coordination of the planning activities at the individual levels is of central importance for the implementation of strategic planning. The following coordination procedures have been proposed:
- Top-Down procedure,
- Bottom-Up procedure,
- Down-Up procedure.
Top-Down procedure
The Top-Down procedure, also known as retrograde planning, involves the identification of long-term goals as well as strategies at the strategic planning level, which are then passed on to the subordinate planning levels in the form of overall and framework plans.
From this, measures for the tactical and operational level are derived.
The advantage of this procedure is that goal convergence is definitely achieved: this results from the fact that the planning specifications are determined by the management and are therefore initially aimed at the top company goals.
However, the Top-Down procedure is not very motivating for the subordinate levels.
In addition, a large central planning capacity is necessary at the highest management level, since the plans for the subordinate levels must already have a high degree of concretization.
The Down-Up procedure
The Bottom-Up procedure, also called progressive planning, is the exact opposite of Top-Down planning. The starting point is the concretized plans of the lower planning levels, which are gradually combined on the higher planning levels. The lower planning levels relieve the top management and are more motivated.
However, there is a risk that the sub-plans at different planning levels are not aligned with a common overarching goal. This may result in a high coordination effort, which ultimately falls on the leadership.
The coordination problems in the two methods presented so far are due to the fact that planning at one level is only feasible with knowledge of the planning activities of other levels.
Down-Up method
The Down-Up method, also known as counter-flow method, attempts to combine the two methods mentioned above. Essentially, the Down-Up method consists of a top-down approach and a bottom-up approach.
Initially, a central framework plan is created at the highest planning level, which is then broken down into sub-plans for the lower planning level.
The lower level then further elaborates on these sub-plans and passes them on to the next lower planning level, and so on, until the last level of the planning hierarchy.
Here, the bottom-up approach begins: the sub-plans are elaborated, checked for feasibility and corrected if necessary.
The sub-plans are then gradually integrated into the framework plan from bottom to top, with feedback loops usually occurring during this process.
This process ensures that the lower levels also participate in the planning process, which has a motivational effect, and allows for a common alignment with the overarching goals.
Strategic Business Units
Strategic business units (or strategic business fields) can be characterized as business units to which the development and implementation of specific strategies are delegated by the company management.
The formation of strategic business units is an important prerequisite for strategy development, as different business areas generally require different strategies. The formation of strategic business units should generally be independent of the existing organizational structure of a company.
However, the delimitation of strategic business units and their integration into the existing organizational structure is likely to be easier the more market-oriented the organization is the industrial sectors.
These are compared in the company analysis with the strengths and weaknesses of the company with respect to the main competitors.
The strategic starting situation of the company is defined through the environmental and company analysis; in the context of the subsequent environmental and company forecast, an attempt is made to predict the further development of the company and its markets.
Also read: Problems and Challenges of Communication in the Service Sector
In the portfolio analysis, the opportunities and risks are compared with the strengths and weaknesses of the individual business areas in matrix form. Depending on the position of the strategic business units within the portfolio, norm strategies can be determined for the individual business areas.
Such norm strategies are generally strategic directions that a company can take with respect to its individual strategic business units. They represent relatively broadly formulated strategy proposals that still need to be reviewed and specified.
The identified strategy proposals are carefully reviewed for feasibility and goal achievement in order to enable a strategy selection.
Once the optimal strategy is chosen, it must still be implemented in tactical and operational measures. The planning process is followed by the realization of the planned measures and their later control.
