Lushchykov V.V.

Donetsk National University of Economics and Trade after M. Tugan-Baranovsky

Features of marketing planning

Various authors have attributed the following benefits to marketing planning.

Consistency: the plan provides a focal point for decisions and actions. By reference to a common plan, decisions by the same manager over time, and by different managers, should be more consistent and actions co-ordinated more effectively.

Encourages the monitoring of change: the planning process forces managers to step away from day-to-day problems and review the - impact of change on the business from a strategic perspective.

Encourages organizational adaptation: the underlying premise of planning is that the organization should adapt to match its environment. Marketing planning therefore, promotes the necessity to accept the inevitability of change. This is an important of consideration since adaptive capability has been shown to be linked to superior performance.

Stimulates achievement: the planning process focuses on objectives, strategies and results. It encourages people to ask 'What can we achieve given our capabilities?' As such, it motivates people, who otherwise might be content to accept much lower standards of performance, to set new horizons for objectives.

Resource allocation: the planning process asks fundamental questions about resource allocation. For example, which products should receive high investment (build), which should be maintained (hold), which should have resources, withdrawn slowly (harvest), and which should have resources withdrawn immediately (divest).

Competitive advantage: planning promotes the search for sources of competitive advantage.

However, it should be borne in mind that this logical planning process, sometimes referred to as synoptic, may be at variance with the culture of the business, which may plan effectively using an incremental approach. The style of planning must match business culture. Saker and Speed argue that the considerable demands on managers in terms of time and effort implied by the synoptic marketing planning process may mean that alternative planning schemes are more appropriate, particularly for small companies.

An incremental planning approach is more focused on problems, in that the process begins with the realization of a problem (for example, a fall-off in orders) and continues with an attempt to identify a solution. As solutions to problems form, so strategy emerges. However, little attempt is made to integrate consciously the individual decisions that could possibly affect one another. Strategy is viewed as a loosely linked group of decisions that are handled individually. Nevertheless, its effect may be to attune the business to its environment through its problem-solving nature. Its drawback is that the lack of a broad situation analysis and strategy option generation renders the incremental approach less comprehensive. For some companies, however, its inherent practicality, rather than its rationality, may support its use.

Problems in making planning work

Research into the marketing planning approaches of commercial firms has discovered that most companies did not practise the kinds of systematic planning procedure and of those that did, many did not enjoy die rewards described above. However, others have shown that there is a relationship between planning and commercial success (e.g. Armstrong and McDonald). The problem is that the 'contex­tual difficulties' associated with the process of marketing planning are substantial and need to be understood. Inasmuch as forewarned is forearmed, the following paragraphs offer a checklist of potential problems that have to be faced by those charged with making marketing planning work.

Political

Marketing planning is a process of resource allocation. The outcome of the process is an allo­cation of more funds to some products and departments, and the same or less to others. Since power bases, career opportunities and salaries are often tied to whether an area is fast or slow growing, it is not surprising that managers view planning as a highly political activity. An example is a European bank, whose planning process resulted in the decision to insist that its retail branch managers divert certain types of loan application to the industrial/merchant banking arm of the group where the return was greater. This was required because the plan was designed to optimize the return to the group as a whole. However, the consequence of this was considerable friction between the divisions concerned because the decision lowered the performance of the retail branch.

Opportunity cost

Some busy managers take the view that marketing planning is a time-wasting process that interferes with the need to deal with day-to-day problems. They view the opportunity cost of spending two or three days away at a hotel thrashing out long-term plans as too high. This difficulty may be compounded by the fact that people who are attracted to the hectic pace of managerial life may be the type who prefer to live that way. Hence, they may be ill at ease with the thought of a long period of sedate contemplation.

Reward systems

In business, reward systems are increasingly being geared to the short term. More and more incentives and bonuses are linked, not just to annual but to quarterly results. Managers may thus overemphasize short-term issues and underemphasize medium- and long-term con­cerns if there is a conflict of time. Marketing planning, then, may be viewed as of secondary importance.

Information

A systematic marketing planning system needs informational inputs in order to function effectively. Market share, size and growth rates are basic inputs into the marketing audit, but may be unavailable. More perversely, information may wilfully be withheld by those with vested interests who, recognizing that knowledge is power, distort the true situation to protect their position in the planning process.

Culture

Efforts to establish a systematic marketing planning process may be at odds with the culture of an organization. As we have already seen, businesses may 'plan' by making incremental decisions. Hence, the strategic planning system may challenge the status quo and be seen as a threat. In other cases, the values and beliefs of some managers may be altogether hostile to a planning system.

How to handle marketing planning problems

Various authors have proposed the following recommendations for minimizing the impact of these problems.

•     Senior management support: top management must be committed to planning and be seen by middle management' to give it total support. This should be ongoing support, not a short-term fad.

•     Match the planning system to the culture of the business: how the marketing planning process is managed should be consistent with the culture of the organization. For example, in some organizations the top-down/bottom-up balance will move towards top-down; in other less directive cultures the balance will move towards a more bottom-up planning style.

•     The reward system: this should reward the achievement of longer-term objectives rather than focus exclusively on short-term results.

•     Depoliticize outcomes: less emphasis should be placed on rewarding managers associated with build (growth) strategies. Recognition of the skills involved in defending share and harvesting products should be made. At General Electric (www.ge.com) managers are classified as growers, caretakers and under­takers, and matched to products that are being built, defended or harvested in recognition of the fact that the skills involved differ according to the strategic objective. No stigma is attached to caretaking or undertaking; each is acknowledged as contributing to the success of-the organization.

•     Clear communication: plans should be communicated to those charged with implementation.

•     Training: marketing personnel should be trained in the necessary marketing knowledge and skills to perform the planning job. Ideally, the management team should attend the same training course so that they each share a common understanding of the concepts and tools involved, and can communicate using the same terminology.