Why marketing planning? (2 of 2)
Planning is everything. The plan is nothing. (D. Eisenhower)
The importance of strategic planning
In the previous post (https://nestplaninternational.com/why-marketing-planning-1-of-2/) it was suggested that an important and final point to address in the development of strategic choices is the definition of an action plan, i.e. which specific actions must be performed, by whom, within which deadlines, and at which costs, in order to reach the chosen objectives.
This definition is essential also for assessing the practical feasibility of the strategic choices.
An obvious prerequisite of the action plan is, therefore, a description of the reasoning behind these choices in the so-called strategic plan, that should explicitly address, more or less in-depth, depending on the complexity of the context in which the organization operates, and on its size and characteristics, the following major points:
- clear definition of the business(es) in which the organization operates or wants to operate: products and/or services addressed to specific target users, product/market segmentation;
- environmental and industry analysis (external environment, market, infrastructures, channels, competition, suppliers) within this or these businesses, in relation both to the past and to the estimated future trends: in particular, explicit projection of the market potentials in the businesses and segments of interest, opportunities that could be exploited and threats that should be faced;
- organization’s profile (organizational structure, resources, and skills), past behavior and strategic choices, and obtained results (if applicable), interpretation of the reasons for these results, identification of strengths and weaknesses in relation to the environmental and industry opportunities and threats;
- identification of specific objectives (market position, contribution, etc., overall and by segment) and definition of the most relevant strategic choices, i.e. type and amount of resources to be allocated to specific businesses and overall, in order to reach the objectives;
- definition of the organizational setting that will be needed for implementing the strategies: structure and major assets, human resources, roles and responsibilities, management systems;
- projection of the economic and financial results that will depend on the implementation of the above choices.
… and the critical role of marketing planning
We should re-emphasize that the heart of a good strategic plan is the marketing plan, that supports the major and most difficult part of any plan, i.e. the projection of revenues or the justification of any other type of funding, based on an assessment of the market potentials, and on estimates of the reachable market shares, depending on both the planned strategies and the expected competitive profiles and behavior.
In turn, the strategic marketing plan is the heart of the so-called business plan, that complements the strategic projections with additional details about the ownership, governance, financial, and organizational aspects.
The usefulness of planning and of an explicit and formalized description of the organization’s intentions and activities, over an appropriate period of time, looks even more obvious if we consider the following:
- the organization’s investments normally have an impact that is diluted over time: the outcomes of these investments do not happen instantly, and it’s therefore important to estimate their evolution in order to keep them under control;
- once a resource has been allocated, it is rarely easy to backtrack: it’s therefore better to estimate in advance and as explicitly as possible the impact of that allocation against possible alternatives, especially considering the significant opportunity costs that are intrinsic to any decision, systematically neglected in the business practice;
- the environmental and market system (including the organization of interest within it) evolves over time, and it therefore makes sense to prevent unexpected events: it is clear that not everything can be anticipated, but a serious forecasting effort can greatly reduce the level of uncertainty and risk;
- the users’ behavior is significantly affected by previous experiences, and the obtained market positions can represent an important strength for the future: it’s therefore critical to interpret the market scenario from a dynamic perspective, with the forward-looking view that can only be developed by a good planning practice.
All this is even more true in case of new ventures or significant changes in the organization’s life, and in the absence of appropriate information about the likely evolution of the industry, especially in less-known countries and environments.
It’s mostly a matter of mindset!
By the way: why the quote at the beginning of this post, that seems to contradict what we said about “a good marketing plan“?
Just to emphasize that what is important is the process of planning and the related mindset (i.e. thinking systematically and intelligently about why, where, how, and when we want what), and not necessarily its physical and written outputs, that could continuously change, based on new circumstances, insights, and information.
… and mainly for fun, but also for challenging the rather limited lists of benefits of planning found on the web, I will propose, in the coming posts, up to 30 specific benefits of planning!
In any case, I would greatly appreciate your contribution, opinions, and experiences about this often controversial issue.