Industrial/Business marketing by Jemal H.

@ STMU 2019

CHAPTER – 5
STRATEGIC MARKETING PLANNING PROCESS IN INDUSTRIAL MARKETING

This chapter should enable you to understand and explain: o Strategic planning
process o Industrial market segmentation, targeting and positioning o Marketing
intelligence (marketing information system and marketing research)

1. Strategic planning process

Strategy is an organized statement of broad tasks and/or areas of activities necessary to

achieve an objective/s (means to achieve objectives). Strategic planning is a process that
consists of developing a system of objectives and plans as well as the allocation of resources
to achieve objectives. Strategic planning process will include the following:

a) Mission and vision statement formulation: mission statement defines the company’s
business, its objectives and its approach to reach those objectives. A vision statement
describes the desired future position of the company. Elements of mission and vision
statements are often combined to provide a statement of the company’s purposes,
goals and values. The formal mission statement is a broadly stated definition of purpose
that distinguishes the organization from others of a similar type. A well-designed mission
statement can enhance employee motivation and organizational performance. The
content of a mission statement often focuses on the market and customers and
identifies desired fields of endeavor. Some mission statements describe company
characteristics such as corporate values (unique purpose), product quality, location of
facilities, and attitude toward employees. Mission statements include: customers,
products or services, location, technology, concern for public image/environment,
concern for employee etc.
b) Analysis of the environment (situational analysis)
c) Establishing objectives: objectives/goals are desired future results. It should be
Specific/clearly written/, Measurable, Attainable/achievable/ and Realistic (being
resourceful) and Time bounded (SMART). Specific marketing objectives must be
determined in such areas:
o Sale volume (by product line, market area, customer type, time
periods). o Market shares and sales growth rates.
o Gross margin, profit, or return on investment o Product mix o
Penetration of present and potential market targets o Company
images
d) Development of marketing mix strategies/marketing plan: marketing plan is the formal
written documentation of the marketing strategy. This includes:
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 Industrial/Business marketing by Jemal H. @ STMU 2019

 Market segmentation, targeting, and positioning

 Development of marketing mix program (product, price, place, promotion,
people, process, and physical evidence strategies)
e) Allocation of resources: a budget is a numerical plan for allocating resources to specific
activities. There are four different types of budgets:
 Revenue budget: budget that projects future sales
 Expense budget: budget that lists the primary activities undertaken by a unit and
allocates a dollar amount to each.
 Profit budget: budget used by separate units of an organization that combines
revenue and expense budgets to determine the unit’s profit contribution.
 Cash budget: budget that forecasts how much cash an organization will have on
hand and how much it will need to meet expenses.
f) Implementation and controlling the marketing strategy: a number of performance
standards for control must be established. This may include: o Sales and cost analysis
or the predetermined objectives o Reports and the company’s periodic information
systems o Historical trends in performance o Industry averages in performance
2. Industrial market segmentation, targeting and positioning
2.1. Market segmentation: market segmentation is dividing a market into smaller segments
of buyers with distinct needs, characteristics, or behaviors that might require separate
marketing strategies or mixes. Through market segmentation, companies divide large,
heterogeneous markets in to smaller segments that can be reached more efficiently and
effectively with products and services that much their unique needs. The following are
bases/variables to segment industrial/business market:
a) Emporographics (organizational demographics): business markets use SIC (Standard
Industrial Classification) codes (like numbers or letters) for agricultural, construction,
transport etc sectors. This includes:
 Industry
 Company size, and
 Location (local, regional, or global market)
b) Operational variables: this includes:
 Technology
 User or non-user status (heavy, medium, light, or non users)
 Customer capabilities: customers needing many or few services
c) Purchasing approaches: this includes
 Centralized or decentralized purchasing organization

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 Power structure: companies that are engineering dominated, financially

dominated, and so on.
 Nature of existing relationship: whether it is strong or not
 General purchasing policy: companies that prefer leasing, service
contracts, system purchases, sealed bidding etc.
 Purchasing criteria: com
 Companies seeking quality service, price etc.
d) Situational factors: this includes
 Urgency: quick and sudden delivery
 Specific application: certain application or all application to focus
 Size of order: large and small order
e) Personal characteristics: this includes
 Buyer-seller similarity: values
 Attitudes towards risk: risk taking or avoiding
 Loyalty: high or low
2.2. Market targeting: market targeting is evaluating each market segment’s attractiveness
and selecting one or more profitable market segments to enter. The following are
factors to evaluate market segments:
o Segment size and growth: current segment sales, growth rates, and the
expected profitability for various segments.
o Segment structural attractiveness: consider the effect of competitors,
availability of substitute products, and the power of buyers and
suppliers/sellers.
o Company objectives and resources: analyze company skills and resources
needed to succeed in the segment(s) to gain competitive advantages.

The following are market coverage/market targeting/ strategies:

a) Undifferentiated/mass marketing: this is when the company ignores market segment

differences and goes after the whole market with one offer/brand. Such a strategy
focuses on what is common in the needs of the market rather than on what is different.
b) Differentiated (segmented) marketing: a firm decides to target several market
segments and designs separate offers/brands for each.
c) Concentrated (niche) marketing: a market coverage strategy in which a firm goes after a
large share of one or a few segments (subgroups/sub-segment of differentiated market)
or niches (differentiated products to subgroups within segment markets).

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d) Customization/individual marketing/: tailoring products and marketing programs to the

needs and preferences of individual customers-also called one-to-one marketing.
2.3. Positioning: positioning consists of arranging for a market offering to occupy a clear,
distinctive, and desirable place relative to competing products in the minds of target
buyers. The following are steps in choosing a differentiation and positioning strategies
(value proposition strategies):
a) Identifying a set of differentiating factors (competitive advantages) on which to
build a position. Differentiating factors include:
o Product differentiation by features, performances, styles, designs, and
quality.
o Technology o Price o Services differentiation: through speedy, convenient,
or carefully delivery, high quality customer care, installation, repair,
warranty, etc
o Channel/distribution differentiation: through channel’s coverage, expertise,
and performance
o People differentiation: through competent, courteous,
and friendly employee
o Company or brand image differentiation
b) Choosing the right competitive advantage: the marketer decides how many
differences to promote and which ones. A company should develop a Unique Selling
Proposition (USP) for each brand and stick to it (aggressively promote only one
benefit). Buyers tend to remember number one better, especially in this over
communicated society (e.g., Wal-Mart promotes its unbeatable low prices). USP
need to fulfill the following criteria’s:
o Important: highly valued benefit o Distinctive: competitors do not offer the
difference o Superior of competitors o Communicable: visible to buyers
(need to be proofed to buyers) o Preemptive: competitors cannot easily
copied the difference within a short period of time
o Affordable: the difference should be offered at minimum price o Profitable:
the difference should be introduced at a profit
c) Selecting an overall positioning/value proposition/strategies: this is equating total
benefit/product (product quality and customer services) and price. It includes the
following:
 More for more: this is providing the most upscale product or service and
charging a higher price to cover the higher costs.

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 More for the same: companies can attack a competitor’s more0for-more

positioning by introducing a brand offering comparable quality at a lower
price.
 The same for less: this is providing imitative or copied products at a very big
discount.
 Less for much less: involves meeting consumers’ lower performance or
quality requirements at a much lower price.
 More for less: companies that try to deliver both (e.g., the best service at
the lowest prices) may lose out to more focused competitors.
d) Communicating and delivering the chosen value
3. Industrial marketing intelligence

Industrial marketing intelligence refers to any useful information that could be used by
marketing manager to enhance their competitive positions. It is used in market segmentation
and overall marketing strategy formulation and market planning. Sources of industrial
marketing intelligence include:

o Internal sources: production department for sales forecast, production control,

purchasing, quality control, research and development, accounting, data processing,
personnel, legal department, and logistics and shipping.
o External sources: includes
 Company sales people in the field
 Feedback from manufacturers’ representative about customers
 Distributors if used
 Formal marketing research projects
 Customers both in terms of direct and derived demand
 Analysis of competitors
 Trade shows and trade publications
 Outside consultants employed by the company

Marketing Information System (MIS) is an attempt to collect, organizes, analyze, interpret, and
report to those who will use market data on a continuous basis whereas Industrial Marketing
Research is the systematic gathering, organizing, analyzing, interpreting, and reporting of data
pertaining to the marketing of industrial goods and services or in short to individual/specific
problems that are encountered either at a periodic or irregular intervals.