Chapter Two

Building Relationships through

Strategic Planning
 Chapter Two
LEARNING OBJECTIVES

The importance of corporate strategy

How strategic planning differs from tactical, operational

planning.

The relationship between marketing and sales force strategies.

The role of personal selling in the firm's marketing

relationship efforts.
 2.1 Corporate Planning
▪ Strategic planning means planning for strategies and implementing
them to achieve organisational goals
▪ Strategic planning:- is the managerial process of developing and
maintaining a viable fit among the organization’s objectives, skills,
and resources and its changing market opportunities.
▪ The aim of strategic planning is to shape the company’s businesses
and products so that they yield target profits and growth and keep the
company healthy despite any unexpected threats that may arise.
▪ A strategy:- is a pattern of actions and resource allocations designed
to achieve the goals of the organization.
▪ The company’s strategic plan is the starting point for planning.
• Strategic planning is the process of determining a company’s long-term goals and
then identifying the best approach for achieving those goals.
 2.1 Corporate Planning
▪ The strategy an organization implements is an attempt to match
the skills and resources of the organization with the
opportunities found in the external environment;

▪ that is, every organization has certain strengths and weaknesses.

▪ The actions, or strategies, the organization implements should be

directed toward building strengths in areas that satisfy the wants
and needs of consumers & other..

▪ It allows organizations to be proactive rather than reactive.

 Tactical Planning
▪ Tactical planning:- translates broad strategic goals and plans
into specific goals and plans relevant to a definite portion of the
organization, often a functional area such as marketing or
human resources.
• E.g The corporation is importing the machine and selling it in
the market. Its long term objective is to manufacture every
component and assemble them into a machine to sell in the
market. One of the weaknesses of the corporation is that it
does not have the needed skill and competence.
• The corporation prepares a tactical plan. Under this plan, it
makes the supplier agree to train its people for the sake of
assembling the components and parts in the importing country
 Difference Between Tactical & Operational
▪ Tactical plans focus on the major actions a unit must take to fulfill its
part of the strategic plan.
▪ A tactic, then, is the operational means by which an organization
intends to reach its objectives.
▪ Operational planning identifies the specific procedures and processes
required at lower levels of the organization.
▪ Operational manager usually develops plans for very short periods of
time and focus on routine tasks such as sales, production runs,
delivery schedules, and human resource requirements.
▪ The tactical plan includes the action plans to achieve the strategic
goals / objectives. The operational plan includes the action plans to
achieve the tactical goals / objectives
 Steps in Strategic Planning
1. Environmental analysis of the internal & external
An environmental scan is conducted to collect data to answer questions about the
present and future of the service area. The environmental scan: develops a
common perception. identifies strengths, weaknesses, trends and conditions.
draws on internal and external information.
2. The second step in strategic planning is establishing a mission and vision for the
organization.
✓ The mission:- is the basic purpose and values of the organization, as well as its
scope of operations/the reason why the company exists
✓ The strategic vision:- moves beyond the mission statement to provide a perspective
on where the company is headed and what the organization can become.
✓ The vision statement ideally clarifies the long-term direction of the company and
its strategic intent.
 Steps in Strategic Planning
✓ Values:- represent the firm's mode of conduct toward others and
itself. Values represent the core priorities in the organization’s
culture

✓ Strategic goals:- evolve from the mission, vision, & values of the
organization. These influence everyone who has contact with the
organization.
 Steps in Strategic Planning
✓ The company's mission, vision, values, objectives, strategies,
and tactics are often referred to as a strategic plan. This is
achieved by answering four key questions:

1. Where are we?

2. Where do we want to be?

3. How should we get there?

4. Can we afford it?

3. Strategy formulation
To attain superior profitability, the firm seeks to
develop a competitive advantage over its
rivals. A competitive advantage can be based
on cost or differentiation
4. Strategy Implementation:
The selected strategy is implemented by means
of programs, budgets, and procedures.
Implementation involves organization of the
firm’s resources and motivation of the staff to
achieve objectives.
5. Evaluation and Control:
The strategy has to be monitored and
adjustments that become necessary have to
be brought. Essentially, the thing had to be
compatibility of the strategy with the
environment as well as internal realities.
 Process of strategic plan

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 Corporate Strategy
➢Corporate Strategy :- responsible for designing a corporate
strategic plan to guide the whole enterprise;
➢it makes decisions on the amount of resources allocated to each
division; and
➢ it makes decisions on which business to start or eliminate.
➢Corporate headquarters starts the strategic planning process by
preparing statements of mission, policy, strategy, and goals,
establishing the framework within which the divisions and business
units will prepare their plans
 Corporate Strategy Development Process
1. Analyze and identify opportunities and
threats/environmental scanning
2. goal setting/Determine corporate mission and objectives
➢ An organization exists to accomplish something: to make cars, lend
money, and so on.
➢ A well-worked-out mission statement provides employees with a
shared sense of purpose, direction, and opportunity
Good mission statements focus on:
➢ a limited number of goals,
➢ stress the company’s major policies and values, and
➢ define the company’s major competitive scopes.
These include:
• Geographical scope
• Market segment scope
• Competitive scope of an organization is defined as a function of the number of
value chains (distinct but interrelated) in which the organization is engaged. The
competitive scope can be broad scope and narrow scope.

• Competitive Scope Types

• Competitive scope types are the following:
• Segment Scope
• The variety in the products or services provided and the customers served. It can
target an entire segment in which all the products can be focused e.g. Colgate
• Vertical Scope
• This focuses on the extent to which the activities are done in-house without
outsourcing or partnership with other players for service. Vertical integration is an
example.
• Geographic Scope
• The geographic scope deals with the number of geographies served. Company can
focus on 2-3 geographies like US, UK, APAC for business
• Industry scope
• The range of distinct but related industries in which the organization operates
 Cont…
3. Define strategic business units

• An SBU is a single product or brand, a line of products, or a mix

of related products that meets a common market need or a group
of related needs, and the unit's management is responsible for all
(or most) of the basic business functions."

• A business can be defined in terms of three dimensions:

customer groups, customer needs, And technology.
 Cont…
i) Customer groups -are created according to the identity of the
customers.

ii) Customer functions -are based on provision of goods/services

to customers.

iii) Alternative Technologies- describe the manner in which a

particular function can be performed for a customer.

4.Set objectives for each strategic business unit

• The next task is to determine what objective, to assign to each

SBU
 SBU Objectives and the Sales Organization
A.

Sales Organization
Market Share Objectives Primary
Objectives Sales Tasks
Build
Prospective and new
Build sales accounts
volume; Provide high service
Secure levels particularly pre-
distribution sales service
Product/market
feedback
 Cont…
B.

Sales Organization
Primary
Market Share Objectives
Sales Tasks
Objectives

Reduce selling Service most

Harvest costs profitable accounts
Target profitable eliminate
accounts unprofitable
accounts
Reduce service
levels and/or
inventories levels
 Cont…

C.
Sales Organization
Market Share Objectives Primary
Objectives Sales Tasks
Minimize
Divest or selling costs Dump inventory
Liquidate and clear out Eliminate service
inventory
 Cont…
▪ Build/invest/ share:- the company can invest to increase market
share
▪ Hold/protect:- here the company just enough to keep the SBU
In its present position
▪ Harvest:- the company reduce the amount of investment in
order to maximize short term benefits
▪ Divest :- The company selling SBU
 2.2 Relationship Marketing and the Sale
• Organizations today are starting to target new and present
customers. The emphasis is shifting from selling to customers
today to creating customers for tomorrow. Thus businesses are
finally beginning to think more long term than short term.
• Relationship Marketing :- is the creation of customer loyalty using
combinations of products, prices, distribution, promotions, to
achieve this goal. RM is based on the idea that important customers
need continuous attention.
• An organization using relationship marketing does not seek a
simple sale or transaction. It targets a major customer it would like
to sell to now and in the future.
 Cont…
▪ Most companies, unfortunately, are not set up to meet all of
these requirements. The level of customer relationships
businesses form still varies.

▪ Many organizations continue to sell to customers and then

forget them. Other organizations develop a close relationship—
even a partnership—with their customers.
 The Three general levels of selling
relationships
➢ Transaction selling: Customers are buy and not contacted
again.

➢ Relationship selling: The seller contacts customers after the

purchases to determine if they are satisfied & have future ..

➢ Partnering: The seller works continually to improve its

customers' operations, sales, and profits
 Cont…
✓ When you go to hotel and buy a hamburger, that's it. You never
personally hear from them again unless you return for another
purchase.

✓ Each of these examples involves low priced, low-profit

products.

✓ Large numbers of geographically dispersed customers purchase

them. This makes it very difficult and quite costly to contact
customers. Such businesses often are forced to use transactional
marketing.
 Cont…
✓ Relationship marketing focuses on the transaction making with
follow-up & service after the sale.

✓ The seller contacts the customer to ensure satisfaction with the

purchase. The Cadillac Division of General Motors contacts
each new buyer to determine his or her satisfaction with the car.
If that person is not satisfied, GM works with the retailer to
make the customer happy ….
 Cont…
✓ Partnering is a phenomenon of the 1990s. Businesses' growing
concern over the competition internationally revitalized their
need to work closely with important customers.

✓ The 80/20 principle states that 80 percent of sales often come

from 20 percent of a company's customers….
 Characteristics of
Relationship Strategies
1.

Transaction Partnership
Goal Sell Products Add Value
Time
Frame Short
Long

Offering Standardized Customized

Number of
Customers Many Few
 Sales force interaction with marketing
Personal selling builds Relationships
Salespeople generate Revenue
Salespeople provide Service
Salespeople implement Relationship marketing
Thank you
• Goals are the outcomes you intend to
achieve, whereas objectives are the specific
actions and measurable steps that you need
to take to achieve a goal.
• A goal is a broad primary outcome. A strategy
is the approach you take to achieve a goal.
An objective is a measurable step you take to
achieve a strategy
• Business Goal: Goals are the broad primary outcomes
towards which effort and actions are directed in a
business. They are whats, not hows and a business
might have multiple goals to achieve
• Business Objective: Business objective differs from
business goal in the sense that they are measurable
and specific. .
• Business Strategy: Strategy is the organisation's
approach to persuade the customers to buy the
products or services. Strategy is how, not what
• . Tactic: Tactics are actions or tools an organisation
takes to achieve the objectives associated to a strategy.
 Cont…
• Thank You