Ch. 03.doc

CHAPTER THREE STRATEGIC MARKETING PLANNING Key Points The purpose of this chapter is to explain strategic marketing planning, which consists of the systematic processes for actually doing marketing. It is important to note the book itself is organized around it. The chapter first describes the overall level or organizational marketing planning and then discusses the more specific level of campaign marketing planning. The Organizational Marketing Planning Process (OMPP) occurs in three stages, Analysis, Strategy and Implementation. The first is the analysis stage that involves examination of the internal environment in terms of its mission, objectives, goals, culture and strengths and weaknesses. Analysis also includes examination of the nonprofit’s external environment. Elements in the external environment focus on the organization’s publics or target audiences, its competitors, and the macroenvironment that consists of social, political, technological and economic factors. The information from the analysis state provides a basis for updating the organization’s mission, objectives and goals. Most nonprofits are involved in many offerings and many markets so they must organize these elements into a “portfolio,” which are organized in portfolio planning. This examines the big picture range of alternatives available for the organization to pursue. Offerings are organized as existing, modified or new. Markets are, likewise organized in three elements, existing, geographical, and new. This creates a nine-element grid where marketing managers can assess the organization’s portfolio of existing and future opportunities. Next, comes the most important stage of the OMPP, determining the core marketing strategy. The core marketing strategy consists of one or more specific target markets, a defined competitive position, and marketing mix which positions and differentiates the nonprofit against its competitors. It defines the substance and style of the organization and establishes the basic thrust an organization wishes to take over an extended period of time to achieve the marketing objectives it has set for itself. Campaign marketing planning (CMP) is then needed to translate the broad organizational marketing plan into action. This involves repeatedly getting input from the people who determine campaign success in a process comprised of (1) listening, (2) planning, (3) pre-testing, (4) implementation, (5) monitoring, and (6) recycling and revising. Finally, to ensure that strategic marketing at both the organizational and campaign levels achieves its goals in a timely and efficient manner, the nonprofit must develop and put in place effective evaluation and control mechanisms for the plans. Chapter Outline Doing Marketing Organizational Marketing Planning Analyzing Organizational Mission, Objectives and Goals Mission Objectives Goals Analyzing Organizational Culture Identifying Culture Conflict Resolving Culture Conflict SWOT Analysis Analyzing internal organizational strengths and weaknesses Analyzing External Threats and Opportunities Analyzing the Public Environment Threats and Opportunities Analyzing the Competitive Environment Threats and Opportunities Analyzing the Macroenvironment: demographic, economic, technological, political-legal, and social-cultural Portfolio Planning Core Marketing Strategy Selection of specific target markets or audiences Selecting a clearly defined competitive position Creating a marketing mix Campaign Marketing Planning Marketing Evaluation and Control Vignette: Let’s Get IBM to Cover Our Operating Costs A major challenge for nonprofit organizations is balancing the interests demanded by the various sources of their support. How do deal with the challenges created w hen one group’s needs and wants impacts another’s? The United Way of Central New Mexico came up with a creative solution to the conflicting and complementary needs o f individual and corporate donors. They designed a program which allowed corporations to cover the costs of operations so that individual donor’s could have 100% of their donation go to their charities of choice. The approach was a considerable success. Corporate gifts for the New Mexico United Way rose while donations were declining nationally. Side benefits included stronger corporate donor recognition programs, board training, strategic planning and a new management database, as well as stronger corporate involvement in the organization. Chapter Summary This chapter provides an overview of the strategic marketing planning process and examines the systematic processes for actually doing marketing. The process occurs at two levels, the organizational marketing planning process (OMPP) level, and the specific level of campaign marketing planning (CMP). Organizational marketing planning is organized into three components or stages: (1) analysis of the organization and its external environments; (2) strategy formulation, and; (3) implementation. Each component is described in some detail. The analysis sage begins with analysis of the organization’s internal realities that determine what is desired and what can be accomplished. These consist of its mission, objectives, goals, culture and an examination of internal strengths and weaknesses and external threats and opportunities. The mission of an organization is what defines its purpose and the specific set of needs or target audiences it serves. The mission must be feasible, motivating and distinctive. The mission suggests where an organization is coming from, whereas an organization’s objectives specify in what direction it is going. Goals, then, break objectives down into operational and measurable units so that its progress can be incrementally tracked and numerically measured. Goals also should specify who is accountable for their attainment. There can be a discrepancy between stated and actual goals and a manager has to understand when to go along with actual goals or strive to align the organization with stated ones. It is also important to understand an organization’s culture and its guiding values, because it affects w hat can be achieved and what is expected of managers. Successful organizations are often described as having clear, pervasive and customer-oriented cultures that help employees know what to do in most situations. Many organizations suffer from conflict between their original social service culture and an emerging corporate culture. That is, nonprofits are often founded to correct a societal ill and start off with a social service culture. As the organization evolves, marketers and business managers may be hired who bring the organization a corporate style culture wherein competitors are not viewed as benign and cooperative staff are expected to produce results. Strategic thinking replaces uncoordinated programs, resources are used more carefully, and ineffective programs are reviewed. Conflict between these two styles, or cultures, may ensue – usually involving the top management, which makes an organization schizophrenic and inhibits its effectiveness. Conflict resolution needs dedicated time, effort and professional attention. When managed well, cultural conflict can be a catalyst to determining shared core values and building more empathetic and productive working relationships. Internal analysis also includes examination of organizational strengths and weaknesses. Strengths derive from the organization’s capabilities and weaknesses are either correctable deficiencies in structure, strategy and tactics or else unchangeable constraints. Because managers tend to be blind to weaknesses, it is advisable to have externally conducted audits of the total organization, including the marketing function and covering the external as well as the internal environment. Finally, the analysis stage looks at the external environment to understand what is possible for the organization to achieve. Threats and opportunities facing it can be determined by analyzing the three components of the external environment: the public environment, the competitive environment, and the macroenvironment. A public is a distinct group of people, organizations or both whose actual or potential needs must in some sense be served by the organization. They include local publics, activist publics, the general public media publics and regulatory agencies whose actions can affect the welfare of the local organization. An increasingly significant characteristic of the nonprofit marketplace in the twenty-first century is the extent of competition. Competition is a reality at two levels. First there is competition at the organizational level for resources, target audiences and volunteers and in the behaviors desired or not desired. It is argued that a competitive marketplace for nonprofits will help deflect complacency and encourage improved service or products through evaluation of marketing elements, including changing offerings, price, volunteer incentives, partnerships, advertising or other elements. At the behavioral level, a marketer can face up to four major types of competitors in trying to serve a target market. These include: (1) desire competitors, which focuses on the immediate other desires of the target audience; (2) generic competitors, which looks at other basic ways in which the target audience can satisfy a basic desire; (3) service form competitors, which looks at other service forms which can satisfy the target audience, and (4) enterprise competitors, which are competitor enterprises offering the same service form that can satisfy the target audience’s particular desire. Managers must understand which competitor behaviors are interfering with establishing desired behaviors with target audiences in order to respond with appropriate strategies and tactics. External analysis should also consider the macroenvironment, which includes the broad forces creating the world in which the organization operates. They include: demographic, economic, technological, political-legal, and social-cultural forces. These forces vary by region and sector in which the nonprofit operates and their impact on the organization must be analyzed and understood. Upon completion of the analysis of the internal and external environments an on the basis of its findings the organization’s mission, objectives and goals should be updated. This, however, must be based on portfolio planning. Portfolio planning is a systematic big picture consideration of alternatives available to the organization. The Offer/Market matrix (page 81) offers a useful analytical framework for comparing offerings (existing, modified and new) with markets (existing, geographical and new). New opportunities can be imagined and evaluated and better ones selected to be pursued. The most important aspect of the organizational marketing planning process can then be done. This is determining the core marketing strategy. It comprises the basic thrust an organization wishes to take over an extended period of time to achieve its marketing objectives. The core marketing strategy consists of one or more specific target markets or target audiences, a defined competitive position, and marketing mix that positions and differentiates the organization against competitors. Once the broader marketing plan has been developed, the organizational marketing strategies can be translated into specific campaigns to achieve defined behavioral goals. Campaign marketing planning (CMP) involves a process where managers get information repeatedly as it progresses from the people who will determine campaign success. The planning process The planning process involves (1) listening to the target audience, often through formative research; (2) planning concrete programs of action; (3) pre-testing key elements of the pan with the target audience; (3) implementation by putting in place the marketing mix; (5) monitoring program performance along its key dimensions, and: (6) recycling and revising by returning to the listening or planning states and starting the process over. Finally, both the organizational and campaign marketing planning processes must involve putting in place effective control processes which monitor, evaluate, measure and control the marketing strategies and tactics activities. Teaching Suggestions If focusing on the learning pyramid, it is better to assign chapter reading BEFORE the lecture. It is helpful to use slides (powerpoint or transparency), video or other visual support – even white board or chalk board to reinforce key points visually during lecture. Frequent class interaction with open-ended questions reinforces learning as form of demonstration. Here, it might be helpful to ask students to help summarize the key points from the previous class period’s lecture, or set up a “quiz contest” by diving the class into two groups, give each group 10 minutes to develop quiz questions from the chapter and then have each group “quiz” the other group. The team with the most correct answer receives some reward. Frequent discussion helps to illustrate key points – discussion of text points can lead to the next text point or key learning. Possible discussion points for this chapter include: Discuss the overall steps in the Strategic Marketing Plan Process. What are the steps? Where does portfolio planning fit in? Assign students to find three mission statements and be ready to explain in class how their architecture is similar to or varies from the book’s description of what components a mission statement should have. What could be added to each and what could be left out? Ask the students to pair up in class for five minutes, list all the publics of the public library or local hospital in town and then classify them into the groupings of categories of publics identified in the text. Which categories are the most important? What competition does the nonprofit face in each of the categories? Have the students distinguish between objectives and goals, strategies and tactics. Discuss the common nonprofit objective of growth as shown in the offer/market opportunity matrix outlined in the text. Relate this to a local nonprofit or to the nonprofit analyzed in class and ask them to suggest objectives and goals for growth options they generate in the matrix. “Practice by doing” is difficult from a single class perspective, but in the first few classes, activities can be defined to force this issue throughout the semester, and then discussed in future classes. One methodology is to develop a “living case” involving the development of a strategic marketing plan, or elements of a plan for an actual nonprofit organization. It motivates students to grapple with the material in the book and forces them to come to terms with both the theory and the application. Graduate level student’s plans may be more sophisticated than undergraduates, but this exercise is particularly meaningful when done as a group assignment. It enables students to learn from each other as well as learn firsthand within the group about interpersonal issues like cultural conflict. To be successful, a small size nonprofit organization should be enlisted that actually needs the help and understands that the caliber of output will not be at a professional level and may vary. In return, the organization gains a range of ideas on strategy and activities, is able to check its perceptions against those of outside observers, and learn more about it from the interactions with students. Students can be asked to give formal 10 – 15 summary presentations to the management in class, as well as hand in a text copy of the plan. It is most manageable if the assignment is for a campaign-marketing plan, although the organizational planning process would also have to be considered to achieve it. The percentage of the final course grade allocated to the living case assignment should be large enough to motivate the students to spend the time needed to create useful plans. A class representative can be appointed to coordinate the group’s contact with the organization. The instructor can use the living case to illustrate the marketing topics in class, bringing the text more alive. To get students to “teach others” – use frequent student presentations such as “marketing briefs”, topic reports, group work and group presentations, and volunteer or nonprofit activity experience reporting. As a class assignment for this chapter, you could create a fictitious nonprofit and ask students, either in groups or individually, to write a mission statement and create a number of organizational goals and objectives. Short Answer Questions What are the elements of the Organizational Strategic Marketing Planning Process? Analysis of the internal environment (goals, objectives, culture, strengths and weaknesses) and external environment (key publics, competition, the macroenvironment) Development of broad strategy, goals and objectives, specifying market strategy Implementation of specific tactics to be measured by performance evaluation criteria In the organization’s external environment, what key target audiences must be served? Potential clients Potential donors Potential volunteers Local publics Activist publics The general public Media publics Regulatory agencies What are the levels of competition in the organization’s external environment Desire competitors (immediate desires a consumer might want to satisfy) Generic competitors (other ways a consumer can satisfy a particular desire) Service form competitors (other service forms that can satisfy an audience’s desire) Enterprise competitors (other enterprises offering the same service form) What are the forces in the macroenvironent that affect the organization> Demographic Economic Technologic Political – Legal Social-Cultural What are key components of the marketing strategy Specific target audiences Defined competitive position An appropriate marketing mix Multiple Choice Questions Strategic marketers in nonprofit organizations typically need to influence which of the following constituencies? a. clients or customers b, target audiences c, funding sources (individual donors and corporate sponsors) d, volunteers e, all of the above (Easy; p 62 ) Which of the following is NOT true about the mission of an organization? a. It should not be too ambitious b. It ensures the organization conforms to the norms of its field (Moderate; P 67) c. It should not demotivate those working for the organization d. It should be feasible e. It should be distinctive Which of the following is a reason that a social service culture can go on unchanged for years a. The organization is undertaking something the public truly needs, with high demand and little competition (Moderate; p 72) b. They have changes at the top, and are reluctant to change the previous regime’s way of doing things for fear of offending donors and volunteers c. funding sources insist on correcting misdirected and wasted approaches d. Outside consultants are brought in as a catalyst e. Competition from both enterprise and service form are aggressive Which of the following statements reflects a corporate culture? a. Competitors are viewed as benign and cooperative b. Staff are not expected to produce results, because they are “doing good!” c. Strategic thinking replaces uncoordinated programs (Challenging; p 72) d. Management’s way of thinking is not communicated to line employees e. all of the above If the art museum is experiencing poor attendance because it has targeted senior citizens who are going to the area’s natural history museum, the cause may be poor marketing competitive assessment at the level of a. desire competition b. service form competitors c. generic competition d. enterprise competition (Moderate: p 79) (AACSB – Reflective Thinking) e. all of the above St. Francis hospital can evaluate its competition by a. identifying the physicians who are referring patients to St. Francis b. consulting St. Francis’s internal client marketing research data c. examining other organizations that are trying to achieve the same social goals (Moderate; pp 79-80) (AACSB – Reflective Thinking) d. analyzing its own weaknesses in meeting patient satisfaction goals e. increasing its advertising and seeing how other hospitals respond In the macroenvironment, the aging of the population is an example of a. Technological change b. Demographic change (Moderate; p 80) (AACSB – Reflective Thinking) c. Political – Legal change d. Economic change e. Social – cultural change The organization’s effort to update the organization’s mission, objectives and goals and a systematic big picture consideration of organizational alternatives is called a. Organizational Marketing Plan Process b. Campaign Marketing Plan Process c. Portfolio Planning (Moderate; p 81) d. Internal Environmental assessment e. The Strategic Plan According to the authors, objectives should specify a. why the direction has been chosen b. target audience behavior or set of behaviors (Moderate; P 70) c. the purpose of the organization in taking certain actions d. specific numerical benchmarks e. responsibility for specific proposed actions According to the authors, A 15% increase in the monthly number of senior citizens using services of the senior citizen’s center each month is a an objective b a goal (Easy; p 70) (AACSB – Reflective Thinking) c a strategy d a tactic e an activity 31