CHAPTER 4.

PLANNING THE INDUSTRIAL MARKETING STRATEGY

4.1 INTRODUCTION

Success in the industrial market depends on recognizing the importance of strategic planning. If
industrial marketers are to meet the challenges of today’s rapidly changing markets and
increasing global competition, marketing decisions must be based on well-conceived strategies.
Clearly defined strategies and resulting plans as well as optimal utilization of limited resources
are vital to achieve the firms objectives
MEANING OF STRATEGY

The word “strategy” is of Greek derivation and originally was applied to military endeavors.
From business perspective, strategy is defined as “an organized statement of broad tasks and/or
areas of activities necessary to achieve an objective”. This definition implies action – the
definition of goals or objectives followed by activities being undertaken to achieve those goals or
objectives.

Strategic planning is the managerial process of developing and maintaining a relationship

between a total organization and those elements comprising its environment. In other words
strategic planning is a process that consist of developing a system of objectives and plans that
consist of developing a system of objectives and plans as well as the allocation of resource to
achieve objectives. It involves in recognizing, anticipating, and responding to changes in the
marketplace to ensure that resources are directed towards achieving those opportunities that are
consistent with the firm’s capabilities. It is a formal, long-range planning process that focuses on
an organization’s basic mission, objectives, and strategies needed to accomplish these objectives.
Strategic planning at the corporate level involves decision on which markets to compete in
determining corporate mission and objectives, acquiring needed resources, and allocating those
resources among the different markets to achieve corporate goals. It basically involves:
 Developing products that relate to the needs of target customers.
 Promoting products to expose product to customers.
 Distributing properly so that products are physically accessible to target consumers.
 Pricing them in a manner that will be reasonable to consumers.

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Strategic planning at the business level addresses how and on what bases the firm will compete
in a market and provides guidance as to how the various functional areas will be coordinated to
achieve corporate objectives.
THE STRATEGIC PLANNING PROCESS

Any industrial marketing managers should understand a number of steps involved and analyze
What is involved in each of these steps in designing an effective industrial marketing strategy.
These steps be discussed below:

1. Analysis of the Present Market Situation

This involves a through analysis of the present market situation both within and outside the
company through the use of marketing intelligence. At this stage the industrial marketing
manager should perform the following major activities.

A) Opportunity and Threat Analysis

Evaluation of the present and future marketing opportunities and threats are very essential in
order to determine what business we are in. Opportunity and threat assessment shapes
organizational efforts, determines how resources should be deployed and guides the organization
future. It answers questions such as the market to serve, which products to add or drop, how the
sales force should be deployed and what services should be offered. In effect, it guides the
organization to the development and revision of its objectives as well as the development of
profitable marketing strategies and plans. The purpose of having this assessment is to enable an
organization to capitalize on its ability to develop, maintain and defend a specific position in the
market.

According to Kotler an environmental opportunity is a relevant marketing action in which a

particular company is likely to enjoy a differential advantage so a marketing opportunity is a
favorable situation that depends not only on environmental factors but on the organization’s
actual and potential resources as well.

A threat, on the other hand, is a challenge posed by unfavorable trend or development in the
environment that would lead, in the absence of marketing action, to the erosion of the company’s
position.

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Finally, environmental monitoring or scanning is the analysis of past developments and current
situations as well as further projections should be carried out in order to identify likely
opportunities and threats of the external environment.
B) Internal Company Analysis
This is identifying the specific strengths and weaknesses upon which strategic planning should
be based. In order to take advantages of the external business opportunity and to minimize the
impacts of threats, an organization must develop its strength. It has to review the company’s past
and present performance with respect to its product and markets, industry trends and
characteristics.

In sum, the industrial marketing manager would be analyzing such factors as:
1. The performance of the firm’s industry relative to the growth and fluctuations in the
general economy.
2. The firm’s sales volume and market share.
3. The company’s product or service mix.
4. The composition of present and potential markets.
5. The buying practices of firms in those defined markets.
6. The production technologies and distribution patterns affecting the company.
7. Pricing trends and the emphasis on pricing competition.
8. The capabilities of the company’s production engineering, financial, and sales facilities.
9. Competition from external firms in other industry and within the same industry
10. The social, legal, and political environment in which the company operates.
11. The firm’s promotional strategy
12. The company’s distribution capabilities

2. Identification of Target Markets Through Market Segmentation

Market segmentation is the process of dividing a larger market into sub-markets, each having
different demand patterns, needs, buying styles, and responses to various supplier’s marketing
strategies market segments must be assessed in terms of their market potential, competition,
customers profiles and the company’s capability in serving them.

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Identification of the target market involves the careful definition of markets in terms of the
standard industrial classification system and then clearly locating customers within this SIC
system. Once this is done, the marketing manager must objectively appraise what resistance will
be encountered and what difficulties will have to be overcome in marketing to these customers.
The fact that potential market targets exists is not enough: the manager must realize that
competitors will also be looking at these markets and that penetrating these markets will not be
easy. Thus, it is important that the manager attempt to define the areas of difficulty that will be
encountered in the attempt to penetrate those markets.

3. Establishing Company Objectives

Situational analysis reveals a firm to take advantage of an environmental opportunity or to avoid
a threat. It helps the organization to redefine its business domain and adopt a more effective
marketing strategy. Corporate objectives identify the overall business directions to the company.
They are the specific results desired by the company while mission statement is the underlying
aim or thrust of a company.

Objectives are important in the strategic planning process because they provide people with a
specific role in their organization, lead to consistency in decision making among the various
functional managers, stimulate exertion and accomplishment, and provide the basis for specific
planning and control.

The marketing manager then, must set SMART objectives i.e., the objectives must be specific,
measurable, attainable, realistic and should be time bound.

Given the assessment of the current and future market situations, specific marketing objectives
must be determined in such areas as:
- Sales volume (by product line, market area, customer type, time periods)
- Market shares and sales growth rates
- Gross margin, profit, or return on investment
- Product mix
- Penetration of present and potential market targets
- Company image

4. Selection and Implementation of the Appropriate Marketing Mix

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Once marketing objectives and target market(s) have been identified, alternative-marketing
strategies must be analyzed. The industrial marketing manager must carryout both intensive
analysis (which identifies possible strategic alternatives within the company’s current areas) and
diversification analysis (which identifies strategic alternatives outside the firms current business
areas) to determine strategic marketing alternatives. They should develop the right combination
of marketing mixes (product, promotion, channels and price) on the basis of good use of
marketing information and personal judgment.

Decision with respect to the product line, features, quality levels, services, and new product
development used to satisfy customer needs must be clearly formulated and integrated with
manufacturing, R & D, and technical services.

Since the product or service must be delivered to customers when and where they are wanted,
distribution strategy is primary concerned with developing the right combination of factors to
ensure consistency with the total marketing strategy. Promotion strategy defines the manner in
which the firm will communicate with its target market and provides the basis for formulating
personal selling, advertising, sales promotion, and media selection plans. promotional strategy
must be consistent with other strategy components and be closely integrated with financial
strategy due to cost considerations.

Because of its influences on demand and supply, profitability, customer perception and
regulatory response, price strategy must be carefully developed together with internal factors
such as cost, return on investment, and profitability.

Marketing mix strategy is tactical scheduling of activities within each sub-strategy that constitute
the overall marketing strategy.

5. Implementing and Controlling the Marketing Strategy

Once marketing strategies and plans have been determined, they must be implemented and
carried out. This steps helps to determine if the strategy is succeeding or not, or helps to apply
elsewhere or not, capitalized the correct moves, make corrections and evaluate objectives that
dictate product changes, price alternation, switching channels and reversing promotional efforts.

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To evaluate and control the performance of each strategy, a number of performance standards for
control must be established. This may include
- Sales and cost analysis or the predetermined objectives.
- Reports and the company’s periodic information systems.
- Historical trends in performance.
- Budgets.
- Industry averages in performance.

In order to control the marketing strategy one can also consider the following questions.
- Who is responsible for each area of the strategy?
- What routing control reports should be required and from whom?
- How much deviation from the standard will be permitted?
- Who is responsible for the overall control of the marketing strategy?

THE MARKETING PLAN

Marketing is a systematic anticipation and analysis of future changes coupled with the
methodology for adapting to such changes. Thus, the marketing plan is future oriented and can
relate to the immediate intermediate, or long-run futures. In short, the marketing plan is the
formal written documentation of the marketing strategy – it is composed of a series of sub plans
in the functional areas of marketing that allow the company to adapt to anticipated and even
unanticipated changes in accordance with carefully defined objectives over a specified period of
time in the future.

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 The Industrial Marketing Process


Analyze the present market situation

Describe control producers and Determine the marketing objectives to be
evaluations policies to identify achieved
needed corrections in current 
operations Project the future of the organization if the
 present market situation is left unchanged.
Develop standards by which the 
success of the integrated marketing Establish coordinated marketing strategies
operations can be judged of the 4p’s that will achieve the previously
 determined objectives
Establish the tactical procedures and
methods for implementing the
previously determined marketing
strategies 

What Makes a Good Marketing Plan?

As was stated earlier in this unit, there is no single marketing plan that is correct for all
companies. There are, however, certain characteristics that the best marketing plans have in
common. These characteristics are:
1. The plan must be specific – the details of the plan must be precise enough for
implementation and control.
2. The plan must be measurable the result of the plan must be measurable
3. The plan must include a specific tenie frame.
4. The plan must be flexible enough to be adapted to unforeseen changes.
5. The plan should identify the responsible person with equivalent authority for each
activity.

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Advantages Gained from Market Planning
The marketing plan is not a luxury item for the industrial marketing manager. Indeed, it is an
absolute necessity with any degree of effectiveness. Some of the major advantages are as
follows:
- It facilitates organized thinking both within and outside the marketing department.
- It gives the manager some degree of control over the future.
- It provides continuity in the marketing function – since planning is not a one-shot effort
but rather a continuous process.
- The marketing plan provides a working document for the implementation of marketing
strategy.
- It forces the manager to establish objectives for marketing direction.
- It prioritizes activities is the proper manner – it forces all marketing activities to be
coordinated and integrated.

Market Coverage Strategies

Market segmentation allow the marketer to determine where opportunities exist, how marketing
strategy may be developed and which segments are profitable. Once this activity is
accomplished, decision must be made as to which segments will be served or targeted. This
involves the matching of those plans and programs designed to develop product mixes of the
organization with target markets. However, there is no single type of marketing strategy
appropriate for all marketing situations. Basically, there are three alternative market selection
strategies.

1. An undifferentiated marketing strategy: this strategy occurs when the marketing

manager develops broad marketing effort to appeal to all potential customers. It is
appropriate when the company markets relatively standardized products or services into a
horizontal market. Undifferentiated refers to the fact that the firm ignores segment
differences and develops a single marketing program that will focus on what is common
to all buyers.
2. A differentiated marketing strategy: this is when a company markets its products or
service to a number of market segments whose needs, products usage, market response or

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 buying behavior differs appreciably. Here the marketing manager should determine
specific marketing efforts towards each market or segment.

Industrial marketers do sell different types of products to a number of customers and each
customer defines its own product specifications.
3. Concentrated marketing strategy: this is choosing to focus on only one of those
segments from the various segments for various reasons when a company's resources are
limited, the firm may choose to go after a larger share of one or a few markets. It occurs
in a vertical marketing and in almost any type of industrial products with its own inherent
problems.

Within each basic types of strategy, industrial marketing manager can see other options such as:
- A strategy to retain a present market share
- A strategy to increase present market share
- A strategy to develop a new market for existing products
- A strategy to develop a new market for new products, etc.

4.2 : INDUSTRIAL MARKETING INTELLIGENCE

6.2 DEFINITION OF MARKETING INTELLIGENCE

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.

Such information could vary all the way from complaints by distributors about packaging to date
provided by the company's own accounting department regarding increasing cost of raw
materials, and so forth.

Sources of industrial marketing intelligence

The sources of marketing intelligence are as numerous as the type of information sought by
marketing managers in the industrial market. But, they are categorized into two basic sources.

1. Internal Marketing Intelligence – this includes useful information obtained from such
sources within the company as:

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 - production department for sales forecast
- production control
- purchasing
- quantity control
- research and development
- accounting
- date processing
- personnel
- legal department
- logistics and shipping

2. External marketing Intelligence – these could be any type of useful information obtained
from sources outside the company such as:
- 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

These lists are not intended to be complete, but only to illustrate the sources of intelligence in the
industrial market. As can be seen, the sources are just about as varied as the types of information
sought. There are many sources of marketing intelligence open to the industrial marketing
manager. Yet, the collection of marketing intelligence must be selective and must be colleted by
design if it is to be used to the advantage. It should be selective in terms of the specific objectives
in the marketing plan, and it should be selecting interms of choosing those sources of intelligence
most likely to produce valid information. This helps to develop the flow of desired information,
which is called Marketing Information System (MIS).
(MIS).

MIS is an attempt to collect, analyze, and distribute to those who will use market data on a
continuous basis where as industrial marketing research is (normally defined as) the systematic

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gathering, recording and analyzing of data pertaining to the marketing of industrial goods and
services or in short to individual problems that are encountered either at periodic or irregular
intervals.

MIS is the basis of all sound marketing strategies and marketing plans. It clearly show the
producers to be followed in collecting information. Without this procedure the result will be
collecting all kinds of bits and pieces of information that have little value in the decision making
process.
INDUSTRIAL MARKETING RESEARCH PROCESS

Industrial marketing research is undertaken to gather reliable marketing information to facilitate

planning and control. It intends to provide benefits to the firm by indicating environmental
opportunities and threats. Research can also indicate lesser contingencies or unforeseen chances,
constraints or restrictions, and how the firm can best operate or react to them. Therefore, the
value of the result will depend on the design and implementation of research methods. Marketing
research then is viewed as a process that follows the following basic steps.

1) Defining the problem and research objectives. This is establishing the nature of
the opportunity to be sought or the threat to be overcome.
2) Developing the source of information
3) Collecting/gathering the information
4) Analyzing the information
5) Presenting the findings

DIFFERENCES BETWEEN MARKETING INTELLIGENCE AND MARKETING

RESEARCH

The two concepts differ appreciably from each other although marketing research is part of
marketing intelligence.

1. Marketing Research is more confined in scope and generally considered as part of the
overall marketing intelligence.
2. Marketing research normally involves projects of a single or non-repetitive nature where
as marketing intelligence is gathering information in a more continuous process. In other

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 words to collect data through marketing research on a continuous basis requires a
tremendous costs in terms of time, money, and manpower even if continuous information
is essential in making sound marketing decisions.
3. Marketing research is conducted to build a data base for individual marketing problems
such as in the product, promotion, pricing or channel areas, whereas marketing
intelligence is broader and may encompass many problems at the same time.

With this concept, marketing research whether it is the consumer or the industrial market has
more similarities than differences with marketing research.
DIFFERENCES BETWEEN INDUSTRIAL AND CONSUMER MARKETING
RESEARCH

Differences in the amount of technical knowledge required in researching the industrial market.
The industrial marketing researcher must be more technically oriented than his consumer-
marketing counterpart.

In industrial marketing, knowledge of buying influences and organizational behavior is necessary

to perform the job effectively. The researcher must understand the formal, informal and key
buying influences, purchasing processes, purchasing policies, etc of the organizations.

While the consumer-marketing research is concerned often only with the direct consumer
demand, in industrial marketing research both direct and derived demand must be understood.

Market structure differences exist in the two markets. In the consumer market, there are often
many customers and a single interview may be sufficient to collect the required data for such
customers. But in the industrial market, there are few customer firms, and in most cases each of
them must be interviewed in-depth. This implies that there are sampling differences in
researching the two markets.

The consumer marketing research moving in to the industrial marketing will have to turn to
entirely different sources of data and until these sources are learned, effectiveness will be
impaired. However, in the industrial market, due to the smaller concentration of industrial
buyers, information sources tend to be concentrated and there is great reliance on secondary
source of data and experts judgment.

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