CHAPTER 4

Strategic Planning at Corporate

Level and Marketing Planning at
Business Level
This chapter will help you understand
Scope of strategic planning and marketing planning
Formulation of marketing strategy, main purpose of marketing planning
Tasks involved in marketing planning
Competitive advantage (CA): The backup for strategy
Preparing detailed, function-wise marketing plans
Totake ITC revenue
toR1 lakh crore...
to take sunfeast
to a 75000 cr brand
Sunfeast
Corporate Level... Business Level...
Part-2
104 MARKETING MANAGEMENT
Planning We
Need to Start with
Marketing
To Grasp
Corporate-level Strategic Planning
first understand
ta nd
in perspective,
we
need to the stratey
planning corporate level. Marketing plannin
To place marketing o u t at the
leve
which firms carry s t a r t abruptly; it has. takes
planning task, firm does not
place at the
business unit level of the
whole. Therefore,
urr discussi onmate chord
discussions marketing
in o u
of the firm as a planning worke. -how a large.
with the strategic planning corporate-level strategic
will first see how job for the ent entire corporation. Then
planning, we undertakes the planning
task and see hoW a particular busi
multi-business corporation we
the planning unit of
the next tier in
shall move on to
job and develops its markeri plan
arketing
takes its marketing planning and
the corporation up
trom the firm's corporate
strategic plan.
broad directions
strategy, taking and strategy a r e spread over the four four chapters
Our discussions on marketing planning detailed picture of corporate-level strat
of this part. While the present
chapter gives a relationshin dtegic
business-unit-level marketing
planning, and clarifies the
planning and where we go into thoen
next chapter is
on marketing strategy, role of
the two processes, the tormulated. In the third chapter, we will
and examine how it is discuss
marketing strategy a Vital preparatory
task in formula:
analysis, which is
industry and competition will also deal with competitive advantage
(CA). whi
marketing strategy; that chapter the strategy. And the last chapter
in the part handlec
constitutes the backup for executing the market offering. These four
differentiating and positioning
the intricacies involved in lessons in marketing planning and
marketino
the important
chapters together amplify
strategy formulation.
and Strategy
Demystifying Strategic Planning
confusion in the minds
and strategy create some
Quite often, the terms strategic planning ideas-ideas that defy precision.
that these are nebulous
of students. They nurse a feeling
before we get into the lessons on strategy proper.
We have to remove these misconceptions from the situations
needed clarity about these terms
The students can easily get the
described in Exhibit 4.1. Future
their long-term growth requirements.
Both Mahindra and Flipkart are addressing
involved in both are examples of 'strategic decisions
is their concern here. The decisions Ihe
These decisions form the strategy.
and form part of the 'strategic planning process'.
direction and road map to the respective company
decisions in both cases provide the something
and strategies. "Strategy' is not
laying down the company's growth objectives of action to secure
a well-defined plan
nebulous nor something that defies precision. It is
that c a n be taken out of ones
specitic goals of the enterprise. And it is not something and planning. The jou
and pushed into the market. It is the outcome of careful analysis re.
involves bringing the corporation's present situation and its ambitions to tne
should stay, the business be
identifying its CAs, and deciding the businesses in which it
should quit and the ones it should enter anew. The strategies to be pursue leads
formulated only after such groundwork. 'Strategic planning' refers to the process t
to the formulation of strategies.
Strategic Planning Facilitates Value Delivery
deficih
We saw in Part One that most of marketing's problems can be traced to tne ncerning
conc
in the firm's offers and that if the problem has to be overcome, all decisios alue
issues in
value-have to be tackled right at the beginning. In fact, practically, all key takes care of
creation and delivery are the burden of strategic planning. Strategic planning
them right at the planning stage.
 Strategic Planning at Corporate Level and Marketing Planning at Business Level
105

Marketing Insight Exhibit 4.1

Strategic Planning at Work
Situation 1: Mahindra Setting Up Its Car Situation 2: Flipkart to Play Big with lts
Factory in Detroit
In-house Brands
Mahindra is sett1ng up a new car manufacturing Flipkart, India's largest online marketplace, is
facility in Detroit, the legendary Motor City which
gearing to become a bigger player in the country's
brought to music the Motown Sound and from
marketing scene through developing Flipkart's
where the trinity of Ford, General Motors and own brands in diferent product categories.
Chrysler ruled the global auto market for acentury, Flipkart elaborates,
but which remains abandoned now. A new manu-
facturing facility and corporate headquarters were We started selling our in-house brands just one
inaugurated in Detroit recently under the banner of year ago, as a trial. Now we are planning to have
Mahindra Automotive North America (MANA). our in house brands account for 20% of our over-
The USA welcomed the event with great fanfare; for all sales in the next 4-5 years... If we look at the
the country, it meant Detroit's 'comeback story'. various long-term initiatives we are taking in the
For India too, it is a retreshing story. At a time company and pick the top five, 'in-house brands
when India is exhorting world's producers to "Make IS in that list.
in India', Mahindra has taken to 'Make in the USA',
The company has already created a few umbrella
make car and make it in Detroit! And contributing
to project MAGA, "Making America Great
brands: SmartBuy for electronic accessories,
Again'! Perfect Homes for furniture, MarQ for large appli-
Mahindra says, "This is the world's most com-
ances and Supermart tor staples. According to
petitive market, we will be a part of the city's
resurgence. In the new tactory, Mahindra will Flipkart:
make off-roaders, that is, rugged vehicles, which
Building a private label business is vastly different
do not require paved roads to drive on. It is a niche
from running an online market place. We are
market and Mahindra wants to dominate it. The
entering into manutacturing-partnerships, the
plan is to create a vehicle for the future that will stakes and risks are high. We are diving into the
appeal to the emerging young generation. The Customer data we have as a market
place, study-
Mahindra group will be investing $2 billion in the ing the pain points of customers, analysing the
new project in the next five years. product-returns, and designing a product. Then
Now, what is the relevance of this episode to our we find the right partner manutacturer. It is a
lessons on strategic planning? Simple. Mahindra is resource intensive business.
carrying out strategic planning for the corporation
What is happening at Flipkart is also long-term
and putting in place long-term growth strategies for planning and strategy formulation for the growth
group. They are planning further expansion of of the enterprise. As an online platform, only the
their business. The decisions now being taken have
long-term impact on the future of the corporation; gross merchandise value (GMV) has been going up
for the company; profits
the company is led into a new-product situation, are not coming through.
The company is tapping business proposi-
a new
into new markets and geographies; the decisions/
tion where it can create sutticient margins and
investments are mostly irrevocable; there are big
prosper. Flipkart is actually diversifying into a new
risks. Mahindra's planning work has obviously
business area.
sized up all these dimensions and weighed them
Mahindrathe business rewards ofplannithe
against ng decision.
work and The Source for the quotes: [Link]
group's strategic for-
mulation of growth strategies are on. [Link] Features/ceo/flipkart/22 December 2017

Facilitates Value Delivery by Attending to Upstream' Marketing

Activities
We saw in Chapter 1 that all firms carry out some 'downstream' and some 'upstream'
marketing activities. Activities such as distribution, sales, retailing, advertising, sales
promotion and communication with customers are 'downstream' activities, which enhance
106 MARKETING MANAGEMENT

Exhibit 4.2
Marketing Insight
Flipkart: Value Selection and Value Creation During Strategic
Planning Stages
In Exhibit 4.1, we saw how Flipkart is pursuing aa competitors and their products, and price. Before
diversification into its own in-house brands with launching its furniture brand Perfect Homes,
the intent to becomea bigger player in the country's Flipkart's research team studied what types of fur-
marketing scene. It has already entered more than niture a family needs, the complaints against those
products categories under four umbrella brands: furniture types, whether the commonly available
SmartBuy tor electronic accessories, Perfect Homes dimensions were good enough and what more cus-
for furniture, MarQ for large
appliances and tomers wanted. The company says,
Supermart for staples.
In this venture, Flipkart is not This is a very unbranded, fragmented space. We
just outsourcing
the production of the chosen decided on which are the primary rooms in a
products
the brand labels onto them, as is the
and putting
commonly home, what are the primary verticals a family
seen practice with store brands. They are going for needs in a home. For example, a bed when . .

authentic, perceptible value creation in the chosen you are cleaning, you push the bed to clean
products, so that consumers consciously opt for (and) what happens is the headboard comes out.
their brands. We used a different
construction completely,
It is better to understand the working with our manufacturers in Malaysia to
horse's mouth; to quote the
project from the make it sturdier. We
company, actually the re-engineered
product... Our teams visited
manufacturing
First, we tried to understand what were the best fairs to find the right
partners. At the fairs, sup-
private label programmes in the world? Whom do ported with the specifications, we
funnelled
you benchmark yourself against? What partners until we found the right ones.
what didn't? What were the clicked,
were the various
benchmarks, how They have tied up with
manufacturers in India,
programmes organised? It was Malaysia and China for various
an
in-depth strategy project.. It began like that. products.
The strategy
project went on for months. We Custome data, the source for value creation: The
looked at global
brands-Macy's,
Costco and others. We also looked at Wal-Mart,
data that
Flipkart has will be the
Indian play- According to the company, differentiator.
ers
including Shoppers Stop, Croma, and our own
Myntra, the fashion unit. t is a
huge data play. If you look
That was the corporate data-what are customers at all that
thinking on value creation.
angle of price, quality, and preferences from the
Now, how do things work: To
quote Flipkart again,
to
design products based
service and are able
unmatchable. Perfect Homes will
on that, the value is
Beforelaunching anything we do research on what coffee tables, drawers... soon have sofa,
products we should launch. We look at the entire house. MarQ will every furniture in
go into your all large
Flipkart space and figure where exactly we should
machine, [Link]
home theatre,
play, and pick a couple of reference we
washing
will have 100 Very soon,
products from Whether categories.
the market. We sit with the category team and all the hopes of Flipkart
understand if we are moving in the is a dif erent question. As far
right direction marketing-are ork out
because they are the
encyclopaedia of that product.
of
concerned, asthis is we-thethe orstudentnot
s
porate route value creation. ideal
Benchmarking: The next step in launching an to cor-
umbrella brand like Perfect Homes
or SmartBuy
involves a product Source for the quotes:
deep-dive--research on features, [Link]> https:/[Link]-
Features/ceo/flipkart/22 December 2017
the acceptance of the
and take place much product. Upstream' activities are more substantive and
before the entry of the
and value creation are fundamental
product in the retail shelves. Value
upstream activities.
upstream activities. Exhibit 4.2 on
It is strategic planning that takes care selection
selection and value creation are Flipkart shows how upstream activities ofof these
taken care of at the value
strategic planning stages.
 Strategic Planning at Corporate Level and Marketing Planning at Business Level 107

of Strategic Planning
The Concerns
planning is
the management task concerned with the growth and future' of a
It can be viewed as a stream of decisions and actions that
otrategic
enterprise. guides the
business
and the eeded for
shapes them. It involves a
strategies achieving
long-term growth
firm's h appraisal of the external environment in which the corporation operates and an

of the corporation and its businesses.

internal appraisal

Turbulence in Environment, in Particular, Necessitates

Strategic Perspective

I is because the environment keeps changing that strategic planning becomes an

ienensable task for the business firm. It the environment is stable, and things more
aredictable, the firm can stay with its existing strategies, structures, products and markets.
However, the environment 1s never stable. In the present times, in particular, the
nvironment-all its constituents for that matter-is changing fast, resulting in disruption
and a discontinuity with the past. We saw this in detail in Chapters 2 and 3. Chapter 3, in
narticular, showed the opportunities and challenges the environment throws up for
husiness firms and marketers operating in India. The purpose of strategic planning is to
the opportunities challenges. and meet the
exploit
Let us see more precisely what the concerns of strategic planning are. Strategic planning
concerned with:
is mainly
Future: the long-term dynamics of the firm
. Growth: direction, extent, pace and timing of growth of the firm
.Environment: the fit between the firm and its environment
.The basket of businesses the firm should have
Strategy per se, not the nuts and bolts of routine tasks
Competitive advantages required to execute the strategies of the firm
Integration, not a particular function; the organisation in its totality
I n short, corporate strategy is its concern

Strategic Planning Provides the Firm an Objective-Strategy Design

According to Igor Ansoff, wel-known author on corporate strategy, strategic planning
provides a firm with an easily discernible, clear-cut objective-strategy design which, in
turn, gives the required direction. It amounts to a blueprint for management action. It will
Contain:

1. Growth objectives of the firm: performance level and profitability which the firm
secks
2. Product market scope: the business/market the firm will pursue, enter or stay in
3. Growth vector: how to grow, through intensification or diversification?
4. CA of the firm: the attribute which will support the strategy
ynergy: the strength emanating from the linkages/joint effects between the firm's
current posture and its new product/market selection
Ihe
Objective-Strategy
daltne
Design Denotes the Firm's Corporate Strategy
end result of strategic planning. It is this corporate growth strategY that
Cornora w the firm proposes to grow and how the dif erent business units of the
cration will partake in this growth. And here lies the link between corporate-level
giCplan ing and busines -unit-level marketing plan ing/marketing stratey
formulation.
108 MARKETING MANAGEMENT

IN STRATEGIC PLANNING
INVOLVED
TASKS
CHART 4.1

mission of the corporation

Clarifying the
Defining the business
Surveying the environment
firm
Internal appraisal of the
objectives
Setting the corporate
strategy
Formulating the corporate

Exhibit 4.3
Marketing Insight
Statements
Examples of Mission
Unilever: The mission of Unilever, as William
life of each and every Indian. Because ultimately,
Hesketh Lever saw it, is to make cleanliness com-
HUL's future is closely linked to the future of every
them.
lessen work for women, to foster Indian home and the housewives who run
monplace, to

health and to contribute to personal attractiveness,

Facebook: Make the world more open and con-
so that life may be more enjoyable for the people nected by free flow of information.
who use their products.
Twitter: Share and discover what is happening
HUL: The Indian arm of Unilever, HUL, draws its right now, anywhere in the world.
mission from the parent company's mission. HUL
describes its mission as meeting the everyday needs Philips India: Transform Philips India from a pure
of people everywhere in India. HUL would stand consumer electronics firm to a 'health and well-
committed to continuously improving the quality of being company'.

Tasks Involved in Strategic Planning

Strategic planningis not a single task. It is an integrative assemblage of several tasks-tasks
that are distinct yet interrelated. These tasks cover a multitude of
issues differing in nature
and demanding different treatment. Together these tasks lead to
the formulation
corporate growth strategy of a firm. The component tasks of strategic planning are of the
listed
in Chart 4.1. Let us examine these tasks one one. by

Clarifying the Mission

The mission is an expression of the corporate
intent, the very purpose of the corporatioi.
It tells insiders and outsiders what the
corporation stands for and communicates what it
wants to be. It broadly indicates the businesses the firm
will pursue and the customer net
will seek to satisfy;
it it is essentially the
mission is shaped by
reference point for the growth plan of a firm. 1ne
corporation's founder/leaders. Mission is not a static,
the
change dictum. As a firm grows, its original mission may see fruition and then the never-to
firm may
enlarge/redefine its mission. Exhibit 4.5 gves examples of mission statements.
Defining the Business

Defining the business correctly Is the prerequisite for steering the firm on the correct patn.
Any firm that sets out to tap certain business opportunities must first find answers to
questions such as the following:
 Strategic Planning at Corporate Level and Marketing Planning at Business Level 109

are we in?
.What business need do we intend to serve?
. What customer business in the future?
be the nature of this
. What could
Definition Mean? How Does It Help the Firm?
What Does Business
definition is a pithy, ar-cut statement of the business/businesses the firm
business
A and del1miting the contours of its
planning to pursue. by setting
engaged in or is definition clarifies fora firm the opportunities it can pursue and the
a business
are to be looked tor. lt also helps to clarify the
business,

i n which these opportunities

from which threat and new competition can emanate. A business
ar
sources
various
misSSion of the company. The business definition of
dofinition draws its inputs from thebusiness of litestyle, healthcare, and lighting. We will
in the
Dhilins India is: "We are
mother & childcare and
Le on products built connection betweenhome-health,
around nutrition,
mission and business
fo the the company's
lighting'. From this,
definition is evident.

Surveying the Environment

the importance of surveying the marketing environment and its various

We have discussed
in Chapters 2 and 3. We also saw, at the beginning of the present
components in detail
can be traced largely to
chapter, that the very rationale for strategic planning
as well as the threats emanating from these
environmental changes. The opportunities Environment
concern to the firm. survey captures them. Several
changes are of equal
used for studying the different aspects
techniques-quantitative as well as qualitative-are to the
are mentioned in Chapter 2. A majority of them belong
of the environment. They environmental survey is
as the basic purpose of
category of forecasting techniques,
environment factors.
forecasting the likely impact ot

0-T Profile
The environmental analysis throws up an 0-T profile, which sums up the opportunities

and threats cropping up for the firm.

Internal Appraisal of the Firm

No firm can tap all the opportunities thrown up by an environmental survey. It has to find
out whether there is a good fit between the spotted opportunities and its own capabilities.
To facilitate this task, the firm attempts an 'internal appraisal'. This appraisal has four

distinct parts:
1. Strength-weakness (S-W) analysis of the firm in different functions/areas
2. Appraisal of the status/health of the individual businesses
3. Assessment of the firm's CAs
4. Value chain analysis
Strength-Weakness Analysis
While a small enterprise may be in a position to straightaway list out its strong points and
wecak areas, it is not easy for large, multi-business corporations to do so, especialy when
and
Strengths or weaknesses have to be reckoned against those of the competition
changes taking place in the environment. The firm has to assess carefully its capablities
oarous areas such as marketing, finance, human resources, operations, RC and
d m a n a g e m e n t . In each of these areas, several aspects have to be covered. And botn
110 MARKETING MANAGEMENT

The analysis brino

ings out
evaluations
are necessary. an S-w
that follows provides
qualitative and
quantitative
Marketing planning a detailed
firm. The section
on
profile of the
discussion on S-W analysis.
Businesses
Appraisal of Individual
of each business of the
firm is done to d .
and health
The assessment of the
status
Such an assessment reveals:
to each ot them.
future course of action with respect
overall?
Does the firm have a healthy business portfolio
I s it well balanced?
and profit potential?
Are there enough businesses with good growth
In what kind of industries are the
businesses placed-growth industries, matu
declining ones?
industries, emerging industries or

Are there too many dragging businesses?

Finding answers to such questions becomes essential because the final strategy choice with
regard to changes, additions and deletions to the firm's business porttolio heavily depends
on those answers.

The Concept of SBU

Students of marketing must have an idea of the concept of a strategic business unit (SBU),
as it
occupies an important place in strategic planning and strategic management of
business units.
A systematic grouping of the businesses of the firm: When a
several businesses and corporation is engaged in
large number of products, it is not practical to take up every
a

product/business separately and do the planning. Nor can it go to the other extreme and
bundle up all its varied businesses and
products into one lot and plan for them. It has to
opt for a practical as well as wise and viable
this concept, the firm solution. The SBU is one such solution;
groups its under
products/businesses
'strategically related groups' and then takes up each into a manageable number
or
strategic business units. An SBU is a group of relatedgroup for planning. They are called
unified entity for the purpose of businesses that can be treated asS a
strategic planning.
Example: P&G has a long list of products
ranging from medicines
products are organised into tour SBUs: (a) home, to diapers. All
baby care and (d) teminine health and beauty care, (b) oral these
functions the products serve.
care. The
grouping is based mainly on the market care,
and tne

Analytical Models Used in Appraising

Businesses
To facilitate strategic
developeda number otplanning in multi-business enterprises,
analytical experts/research groups have
models. Some of them are particularly
the business
follows:
portfolios/SBUs of the firm.
Three well-known useful in appraisin
models in this regard are as

1, BCG model (the

2 Boston Consulting Group's
GE model (the General growth-share matrix)
3. Ansoff Grid (Ansotf Electric-McKinsey
product-market multifactor portfolio planning
expansion grid) matrix
Exhib 4.4 gives the salient
current times, these and
features these models. It has to be
of
other
vastly changed business dynamics Similar models are not found to be highliehted that n t
the planner and the of the times. Yet, these analyticalsufficient to handle tn
limitations of differentstrategist. Although tools come handy fo
kinds, they certainlythey
are not
foolproof tools and do
various businesses.
lend a
methodical frame for evaluatingsufte
 Strategic Planning at Corporate Level and
Marketing Planning at Business I
eol
Level 111

Marketing Insight Exhibit 4.4

Analytical Models: BCG Model, GE Model and Ansoff Grid

The BCG Model strategies of these businesses, and to properly allo-

cate investments and resources to
classifies the businesses of a firm them.
The BCG model
categories on the basis of two parameters:
four The GE Model
into
growth
and the firm's relative market
industry
matrix). I he four categories The GE model also relies on two main
share (growth-share parameters
marks, cash cows and dogs. industry attractiveness and
are: stars, question company's business
marksare the company's busi- strength. But it takes into account many more
Stars and question
high-growth
in industries. details. For example, according to the GE
operate
nesses that model,
is a market leader, question mark
a industry attractiveness is the product of several
Whereas a star
Similarly, both cash cows and dogs factors such as industry potential, the size of the
is a follower.
businesses that operate in low-growth industry, its rate of growth, its structure and
are company
market share position that dis- profitability. Likewise, the company's business
industries. It is the
from a dog; a cash cow is a strength is made up of several factors such as
a cash cow
tinguishers
dog
while a is a poor follower. current market share, growth rate, differentiation
market leader,
net users of resources; they do
not strength, brand image and corporate image. The
Stars are
immediate profits but hold out great firm has to study these factors and arrive at the
bring in
uture. Question marks too are industry attractiveness and business strength of
potential tor the
net usersof resources, but their future is uncertain; each business. Figure 4.2 illustrates the GE model.
resources, bringing
of
cash cows are net generators
and profits to the company; their
a lot of cash FIRM'S BUSINESS STRENGTH
minimal as these are in a low-
investment needs are Strong Medium Weak
market. Dogs being businesses with weak
growth
market shares in low-growth markets are generally High
and its resources. Figure 4.1
a drag on a company
illustrates the BCG model.
Medium

Question Low
mark

High 2 Dog
Invest/Grow Selectivity/
Earnings
ww
Harve
Divest

Cash cow FIGURE 4.2 The GE Model

Low Ansoff Grid

The Ansoff model propounded by Igor Ansoff is

another useful tool for strategic planning. A busi-
High Low firm can seek growth through three routes:
ness

Relative market share Intensification

FIGURE 4.1 The BCG Model Integration

Diversification
Ihe BCG growth-share matrix helps the firm within its
Ocate the position of each of its businesses in the In intensification, the firm seeks growth
it moves back-
growth-share matrix: they get positioned as stars, existing businesses; in integration,
horizontal in its current
cash cows, question marks and dogs. This picture wards or forward or it
in diversification,
nelps a firm to correctly choose the objectives and business market process; and
112 MARKETING MANAGEMENT

Exhibit 4.4 (contd)

development strategy, the firm tries to chieve
out of the existing business frame and seeks products for the
moves
The Ansoff model growth through new/improved
new products in new markets. firm's existing markets. Intensification in effect
firm through intensi-
helps plan the growth of the the
means product-market expansIon. Figure 4.3 ilne.
us-
fication, that is, achieving growth through trates the Ansoff Grid.
company's existing businesses.

According to the Ansoff model, intensification Markets

can be achieved through three distinct strategies:
Products Existing Markets New Markets
Market penetration
Market development Existing Products Market Penetration Market development
Product development
New Products Product development Diversification
Market penetration refers to achieving growth
through the company's current products in its cur-
FIGURE 4.3 Ansoff Product-Market
rent markets. In market development, new mar-
kets are sought for its current products. In product Expansion Grid

Assessing Competitive Advantages

Assessing CAs is the third component of internal appraisal. A thorough understanding of
the basics of CA, its creation and its role in the
successful play of the firm's marketing
strategy is essential. Therefore, a full-length discussion on various issues
provided in a separate section in this chapter. relating to CA is
Value Chain Analysis
Value chain concept
in its internal
propounded by Michael Porter will serve as a useful tool to the firm
appraisal. We will first see the basics of value chain.
Basics of Value Chain
Chart 4.2 explains the basics of the value chain concept.
representation of the value chain idea. Value creationFigure 4.4 presents a
for the diagrammatic
ultimate purpose of customer, which is the
marketing planning, is best achieved when the
business is put to best use and its 'value chain' of the
scope exploited
to the maximum.
Value Chain' ldea Can Be Used in
Identifying and Building CA
CA grows fundamentally, out of the
value which a firm is able to
value has to be superior to that create for its
buyers. This
idea, we can see that the crux is toprovided by competition. Drawing from
enhance value relative to the value chain
of value-creating activities competition in the vast matrix
to that of the
performed by the firm and develop a value
competitors. chain that
superior
is
Obviously, high-performing firms will put the value
chain idea to three
Assessing one's own value chain and key uses:
possible identifying areas where
improvement is needed/
Assessing competitors' value chains and
Assessing where it can build identifying areas
further CA where the firm enjoys CA

Using Value Chain' Idea in Industry

We will discuss this topic in detail
Competition Analysis
in Chapter 6.
These four tasks-S-W
analysis, appraisal of
and value chain
analysis-complete the process ofindividual businesses, assessment
internal appraisal of the firm.
or LAs
 Strategic Planning at Corporate Level and Marketing Planning at Business Level 113

4.2 BASIC OF VALUE CHAIN APPROACH

CHART
value chain approach are as follows:
ideas in
The basic
and can be disaggregated in terms of the activities
E v e r y firm
is a collection of activities
the firm creates some value. Some of them are especially
Euerv activity pertormed by
value-creating ones

chain
are linked as a
activities of all the
The Is a
vessel tor carrying value. The sum
Everv link in the chain (each activity) and service
in all the activities reflects in the firm's product
e inputs embedded
and four support activities that are major value creators
here are five primary activities
of course, create cost as well
they would,
in any firm; activities consist of:
The five primary
materials into the business)
Inbound logistics (bringing
manufacturing and so on)
DOperations (product design,
products out)
Outbound logistics (sending the
Marketing and sales

Service
activities consist of:
The four support

Firm's intrastructure
D Human resources

Technology development
DProcurement
activities, giving rise to 20
activities through all the tive primary
occur
The four support activities. kor example, technology development, a support
value
combinations of major of the tirm. Ultimately, all the primary and support
primary activity
activity, occurs in every a vast matrix of value-creating
activities in the firm
activities together generate with their
ettects constitutes the
interacting
activities along
This matrix of value-creating
firm
value chain of the and delivering value to the
customer

chain of activities is to be used for creating its

The unified
how well each department ofthe
firm performs
created depends on various depart-
The total value on how well the activities at the
activities. It also depends
value-creating
coordinated
levels are linked and buy- And
ment and value-delivering process.
Business (marketing)
is basically a value-creating
value
the highest delivered
ers patronise
the firm that ofters chain in which value can
be cre-
activities in the value
is to locate
The name ot the gameand in pos-
create max1mum
manner, and
a competitively superior
ated in good measure

them
sible value in each of and building CA
the value chain approach in diagnosing up to
Firms can use
focused value creation
activities that are one
They build CA through consistent,
those of the competitors
NY: Free Press, 1985).
Michael Porter, Competitive
Advantage (New York,
Source: Adapted from

FIRM INFRASTRUCTURE

HUMAN RESOURCE MANAGEMENT

TECHNOLOGY DEVEAOPMENT
MARGIN
PROCUREMENT

MARGI

MARKETING SERVICE
INBOUND | OPERATIONS OUTBOUN
LOGISTICS
& SALES
LOGISTICs

PRIMARY ACTIVITIES

FIGURE 4.4 The Value Chain

114 MARKETING MANAGEMENT

Setting Corporate Objectives

Once the firm has clarified its
mission, defined its business, scanned its
assessed
here is
itsinternal capabilities, it is ready to set its corporate [Link]
The main and
to decide the extent of business
ambition as well as its growth the firm should target. It is a function task
of:t its
environment. The firm firstcapabilities/resources
and the business
examines its 'present level of opportunities in
'aspirational level' and finally assesses its 'achievable performance, then probes the
level' over the its
three years. As a part of this planning period..say
exercise, firms set objectives in all key areas
profitability, such as: growth
competitive position, productivity, flexibility ot business
resources and corporate
image. portfolio, human
Setting Objectives, Not a Simple, Linear Task
Objectives cannot be arrived at in one shot. In setting
growth ambition with the findings it has made with itsobjectives,
environment
the firm
synthesises its
appraisal. Kenneth Andrews has explained this process survey and internal
nicely in the following words:
The firm makes the
synthesis in the following manner: the search for
environment gives list of possibilities for our
a opportunities in the
consideration. It indicates uwhat we
When we assess our internal
strengths, we narrow the list down to what we could do. might do.
we take into account
the basic posture and values of When
the organisation, we further
list to what we would do. In prune the
short, the objective setting process is not a
but a complex one,
involving a series of assessments, qualitative and simple, linear task,
quantitative.'

Formulating the Corporate Strategy

We now come to the of
firm. While strategic planning: formulating the
crux
objectives clarify
where the firm wants to corporate strategy of the
design for getting there. We have seen that reach, the strategy provides the
synergy are the constituents of
product market scope, growth vector, CA and
corporate strategy. Shaping these constituents is the
corporate strategy formulation. Corporate task in
and through what kind of strategy has to specify through which businesses
product market posture is the growth
achieved. And it is from this
specification that each business of objective going to be
the
and new ones-derives its growth targets, direction and priority.
corporation-existing
What Should Be Done with Each of
the Businesses?
Internal appraisal plays a vital role in formulating the
existing businesses, takes stock of the situation strategy. The firm reviews the
of each of them and
What should be done with each one of the businesses? their prospects.
assesses
To what extent? At what Build? Maintain? Harvest? Divest:
pace?
The firm decides which businesses are to be
cultivated through fresh investment
care, which ones are to be given mere and
maintenance, without
investment, and which businesses it should phase out. It committing much of further
also examines which new
businesses are to be taken up for meeting the growth
requirement. Business
the choice of strategy go hand
in hand. As already seen, analytical models suchappraisal and
as the BCG
model and the GE model can be of help in the matter of
bringing to the fore the current
position of the different businesses. Findings from the environment
the CAs/synergies enjoyed and the resources available for survey/the O-T protile,
in deciding the basket of businesses and the product market
growth are the other
parameters
posture. The strategy chosen
actually gets expressed in terms of what is to be done with each business. Assignings
priorities to the businesses-existing as well as new ones-and clarifying the contribution
expected of each of them are important parts of this process.
 Strategic Planning at Corporate Level and Marketing Planning at Business Level 115

R e s o u r c e Allocation

In any multi-b
-business corporation allocation of resources among businesses is a complex
What would be the optimum allocation to
evetcise. The firm has to weigh various issues.
h husiness? Can funds be withdrawn from one particular business and given to another?
ca
aat should be the allocation for launching a new business or the acquisition of an
What
enterprise from outside?

Besources will be given matching the opportunities the business brings: Pattern of resource
ocation shows the relative importance of different businesses to the corporation's overall
crowth. Resources given toa particular business determine, reflect and delimit the strategy
can pursue at its level. A corporation's approach with respect to risk-taking and its
artitude towards new businesses also get expressed through the scheme of resource
allocation.

Arriving at the Objective-Strategy Design Completes Corporate

Strategy Formulation

When all the tasks discussed earlier are completed, the objective-strategy design of the firm
ready; it means that the task of corporate strategy formulation is over.
is
Strategic Planning Relies on Both Logic and Intuition
Although several analytical models as shown in Exhibit 4.4 are available for facilitating
strategic planning, it has to be highlighted that strategic planning is not a matter of just
models and techniques. Companies seem to succeed in strategic planning when there is a
synthesis of analytical techniques and judgement arising from experience and intuition.
The observations made by Kenichi Ohmae, the well-known author on strategy, on the
mutually reinforcing roles of logical information and personal intuition in the successful
formulation of business strategy are worth quoting; he says, 'Great strategies, like great
works of art, or great scientific discoveries, call for technical mastery in working it out. But
they originate in insights that are beyond the reach of conscious analysis'.2

Marketing Planning
The corporate-level plan will serve as the overall strategic agenda from which each business
of the corporation will take its direction and proceed with its planning and strategy
formulation. This section and the remaining chapters in Part Two deal with this task
marketing planning and formulation of marketing strategy. It is because of the linkage of
this task to corporate-level strategic planning that we discussed that subject at such length
in the preceding sections. Business-level planning/marketing planning is a very important
task in the whole sequence of activities undertaken by a business firm because it is the
efficacy of the business-level planning that ultimately decides the success of corporate
plans. After all, revenue and growth materialise only at the business level and that is what
makes up the overall
corporate performance.

Concerns of Marketing Planning

Marketing planning has the responsibility to shape the fortune of an individual business
unit of the
corporation. Its major concerns are as tollows:
Delivering the results prescribed by the corporate plan ofthe firm
Planning the growth of each product line, each product and each brand
ormulation of marketing strategy for the unit-for each product and brand
ecuring targeted sales/share/profits for the product lines/products/brands
116 MARKETING MANAGEMENT

Monitoring the marketing environment of the business unit

Countering competition
In short,
'marketing success' of every product/brand of the unit is its
concern
ern
Difference Between Corporate-level Planing and
Marketing Planning Business-leval
In Marketing Planning, Emphasis Is on the Environment
Business Unit Specific to the

In
corporate-level planning, the environment appraisal lays greater
environment part, whereas in the case of emphasis on the mesa
marketing planning at business level, the
proximate environment is the main reference
busines point. The environment that is specific unit's
concerned-mainly customers and competition-is explored in detail here.
to the

Emphasis Is
the Products and Brands of
on
the Unit
In the
planning work carried at the two levels, there is also
difference in terms of
While
corporate-level
planning decides the businesses the scope.
marketing planning specifies the growth plans of each corporation will pursue,
and where and how
each and every product and brand of the company,
market-level fight has to product/brand
will be
commence, and the business unit competitively sold. Now, the
ground realities and finalise the marketing
has to come to
grip with the
competitors and meet the sales objectives strategy with which it will
set for the unit. fight various
Example of ITC
We will grasp the
difference in planning at the
example of ITC explained in Exhibit two levels
4.5.
more
thoroughly from the

Marketing Planning Has to Cover Each

Suppose had taken up ITC's foods
we
Product/Brand
over a hundred business as the
example. This business unit has got
products in its
foods to cooking masalas and fold-ranging from biscuits and
pastas. The unit will have to ready-to-eat processed
customer environment of each of
these study the competition and
strategies for each one of them. products and come up with marketing plan/targets/
In fact, marketing planning cannot stop even
the various
product here; it has to cover each of the brands
the
categories. For example, the food business in
out
marketing plan/strategy of ITC will have to
going to
for an individual
brand like Sunfeast biscuits: How it figure
compete
with Britannia's
Tiger, Parle 20-20, is
brands? ITC has to chalk out the details of the Horlicks and the dozens of
brand brings in the income and
smaller
marketing strategy of Sunfeast so that the
profits
This process has to be done for each expected of it.
of the
business so that this particular SBU product lines and brands of the ITC's
brings to the fooas
expected of it. And when all the other business units company the income and proits
of the
and paperboards, agribusiness, company-cigarettes, papc
work, formulate the marketing stationeries-complete their respective marketing
those strategies successtully in strategies
tor their
the market, TTC's
product lines and brands, andplanning
execut
profits are achieved. corporate obiectives and in income

Planning in Several Layers Is Inescapable

In handling the planning task,
planning at several layers is inescapable. It is so on account o
the multiplicity of businesses/product
lines/products/brands
big planning at corporate
Some authors deal the planning process at three levels-strategiccorporations normally hav
levcs
 Strategic Planning at Corporate Level and Marketing Planning at Business Level 117

Exhibit 4.5
Marketing Insight
Planning and Business-level Marketing Planning
ITC's Corporate-level

Corporate-level Planning
Business-level Marketing Planning

its corporate-level strategy Now, ITC's business units have to take up market
ITC is planning
Suppose
ITC would
the mega
first size up ing planning of their respective businesses. Suppose
for 2018-2023.
consisting of social,
political, the hotel business, which is one major business
environment
economic, demographic and other unit of ITC, takes up its marketing planning.
rechnological,
as well as the proximate environment Suppose as per ITC's corporate-level strategy,
components,
businesses. The emphasis would have by 2023, around 10 per cent of the proposed cor
of its various e n v i r o n m e n t . It would also

been more
on the mega porate target has to come from the hotel business.
internal appraisal; here too,
the That means the hotel business has a target of
an
take up on the corporate-level
would have been
emphasis F10,000 crore. Now, the hotels business has to
The environmental analysis plus the come out with its plans and strategies. Here, the
position.
would, for example, bring forth
internal appraisals analysis will be specifically focused on the hotel
inferences such as:
industry and the competition therein. The ques-
.There is political stability; government ot the tions addressed would be as follows:

out series of reforms in

day is bringing How is the hotels unit planning to achieve
industry/economic scene. Reforms like GST
are very healthy moves helping industry. the targeted income of F10,000 crore by
2023 from the current level of R2,000 crore?
Global economic scene can be worked
to
leaders like us. What are the latest trends in travel and
advantage by Indian industry
middle class in the country tourism?
The growing
serves as an assured consumption
base. What are the plans of the major domestic
All the ongoing businesses of our company, competitors such as Indian Hotels (Taj
growing at attractive
Group), the Leela Group and India Tourism
are
except cigarettes,
rates. Development Corporation (ITDC)?
national
Cigarettes continue to sutter from What about the dozens ot new smaller,
and international de-promotion of smoking.
domestic entrants creating new segments?
Hotel industry is facing problems due to
The new trend of room aggregators such as
global slowdown.
OYO and Airbnb, and travel portals like
Overall, the time is apt for the company to MakeMyTrip-how do they impact the
actively invest and promote all its non-

cigarette businesses, especially the relatively industry?

new FMCGs. How do ITC's hotel brands, Luxury
And based on such findings, ITC fixes a corporate
Collection, WelcomHotels, WelcomhHeritage
and Fortune, perform now?
target of, say, F100,000 crore by 2023, from the
Which are the new segments ITC Hotels will
2017 level of 755,000 crore. And the company
also prescribes the contribution of different busi- play?
nesses of the company to this corporate turnover, With what kind of offers will ITC Hotels
say, in the range of: cigarettes 40 per cent, non- fight and generate the expected level of
Cigarettes together 60 per cent. Non-cigarettes income and profits?
target will be broken up further, business-wise. And what are the weaknesses it should rectify?

raregic planning at business level and marketing planning at product/brand level. We are
eing with it at two levels: (a) strategic planning at corporate level and (b) business-level
Eeting planning. We are integrating the business-level plus product/brand-level discussions
cBecause ultimately the job at the business unit level is, in any case, cut out: it has
p with marketing planning/strategy in respect of each product/brand.
a s e 4.1 takes a look at how ITC has been carrying out strategic planning and
achieving growth over the years.
118 MARKETING MANAGEMENT

Mini Case 4.1

HOW ITC HAS BEEN PLANNING AND

ACHIEVING GROWTH
ITC Pioneered Marketing in India
From 1912, the year of its entry, until the
1970s, ITC was known as the
sometimes referred to as the 'Scissors cigarette company
become synonymous with the
Company. The company's
popular cigarette brand had
company. TTC not only brought a new
into India but also practically product-cigarette
pioneered marketing in India! "The marketing work carried
by the company in establishing a new product from the very idea out
to establish and build a stage, its later day strategies
brand, the subsequent competitive battles with newcomers and
concurrent growth of
cigarettes as a big industry and ITC as a big the
some of the best enterprise carry in its fold
marketing lessons. Mini Case 11.1 on PLC of Scissors', in Chapter11 deals
with this story
separately. Interestingly, in the very same path of
business, the company also faced some of its worst establishing its cigarette
market experiences.
Faced Survival Threats on Many Occasions
On more than one
occasion, its flagship brand (in its one and the only
extinction; none of its marketing strategies were business!) almost faced
efficient strategies or coming good. It was 'pull out some extra-
exit situation for the whole company. That ITC finally
the brand and the business were prevailed and
brought back was the litmus test of ITC's marketing
(In Mini Case 11.1 in Chapter 11, we are
discussing the marketing expertise.
the brand and the employed to save
company.) This episode is enough to understandstrategies
that it is
egies' that make or mar a business. 'marketing strat-
The Cornerstone of Subsequent Strategy: Build
Flexibility to the Business Portfolio
By the1970s, the world over cigarette
movement' and the product found itself in a
industry became the centre of attack from the 'health
in the history of de-marketing situation. This was a point
strategic planning by ITC. ITC took this call and transformed turning
a
into its present of the company
position serious player in diverse businesses
outside of cigarettes, busi-
nesses ranging from atta to
lifestyle products and luxury hotels.
ITC set a major
objective: Built enough flexibility to the business and reduced the
overdependence on cigarettes. The company studied various optionsportfolio and entered the follow-
ing industries, which met those criteria.
New Business Pursuits: The 1970s to the
1990s
Hotels and tourism: Launched the hotel chain
around 1975. Hotels business
picked up fast, underwent major expansions inWelcomgroup
the 1980s, received 200 crore
built new hotels and
expanded existing ones, and by 1995, the chain had 18 investment,
hotels with
2,200 rooms, earned a profit of R97 crore and
turnover of R250 crore. It was
foreign exchange valued at R30 crore on a
taking shape as a star business for ITC.
Paper and paperboards: Entered in 1976 with the
Paperboards Ltd (ITC-B) and Tribeni Tissues. The two subsidiary companies, Bhadrachalam
leadership position in the various segments of the paper
companies together gave ITC a strong
industry.
Invest and grow: This was the direction from
With this focus, Bhadrachalam underwent corporate strategy for the paper business.
massive in the early
1990s, at a capital cost of R675 crore, making it on modernisation/expansion
the world. par with the large mills in
paperboard
Packaging and printing: The business was related to paper, and the company found it
profitable.
 Marketing Planning at Business Level 119
at Corporate Level
and
Strategic Planning

( c o m d

4 7

another portfolio. he company saw

Case
financial services as
Mini sector.
of the financial
embra

ITC
liberalisation
services:
the
wake
e of the
in entered this growing
Financial
in it business. The company
ortunity potential
Studies
showed
ita high10 years saw
ettorts
big
ITC to almost transform ITC
by
Agribusiness: mid-1980s. The next in agribusiness. This
business too was shap-
presence
usinessi n t h e
vith a strong
with.
company

'farmer's

a and global trading. In

into
star.

years,.ITC was active in exports

(Over the
a
activity intoa
as

Business Division to convert the

up
trading:
ing
and global the
ional Internatior

ITC Global, was set up,

it set up a subsidiary company,
sequently,
Exports

1990s,
theearly
Subseq
billion was fixed for group
exports for 1997.
A target of $1
company.

the
for
in
he eq u a r t e r s i n S i n g a p o r e .
ad
major

by 2000
well established.
Portfolios

of
the Welcomgroup
chain was by now

Position
r i c m was
doing well; was doing well in every way,
wantedted to underplay,
company the 'health move-
of the corporation despite
Hotel and

business
the
the total turnover
ttes, cent of the financial services had ended up as a
igare

70 per Divers1tication into

busi-
uting regulations. bal ran into serious
contribu
m e n t a n dg o v e r n m e n t

too w a s a poor
show; ITC Globa
trading etforts at brand
debacle; exports and global was a chequered one;

c u m - l e g a l p r o b llems;
gribusiness pertormance business too was in trouble;
em
intended results. The paper
ITC-
had not
yielded. s t o m s tariffs rendering
reduction in
c u

elopment
too
since 1991
led to a rapid
iberalisation
Bhadrachalam non-competitive.

import

the Year 2000

ITC Took by
Decisions
The business
choices:
following
ITC made the the non-cigarette
businesses
of increasing and paper; and exit
the objective agribusiness
. Stay with non-cigarette
b u s i n e s s e s of hotels,

ongoing
. Cultivate
others areas such as
into new
Diversihy
o packaged foods
like garments
products
modern litestyle
o
c a r e products
o personal

ITC Becomes a Major FMcG Player

2000-2012, cigarettes,
Period down the dependence on
to bring
envisaged and entered
the kind of growth bus1nesses that were
new to it. ITC
To achieve FMCG
into s o m e
ITC needed to get
branded foods and
packaged
personal care products like beingpart of its
FMCG businesses (cigarettes and the
its 'new' needed investment in busi-
ITC reckons them ITC provided for the
as
In its planning, The brand-building
traditional FMCG portfolio). new businesses.
brand building in respect of the is to
ness development
and in 2012. The main strategy
c r o r e in
2002 to R5,500 c r o r e
investments grew from
R100 this segment is expected
'the top line from
take this effort forward.
The ITC chairman said, 2017-20.
R15,000 crore by
next S to 7 years-to
to triple over the

Foods
Be a Big Player in brands)
(not merely new
included developing new categories was to
the aim. The planning scale. The strategy
That was traditional foods and recipes
to commercial
brands were
of
n foods, converting and differentiation strength.
An array
strong brands compete on skill. Brands such
ould distinctive value inputs
and marketing
cveloped, committing time, money, led the show.
as
Sunfeast, Bingo and Kitchens of India
120 MARKETING MANAGEMENT

Mini Case 4.1

(contd)

Personal Care:
Aim Big
Be Aggressive in new litestyle were the route.
the emerging
personal care, products for shortcut availahl.
was the brief. In
was n o
initiated. Ihere
That were
strong players, MNCs and
measures
brand-building nd
And here too, strong of
well-entrenched

these businesses which were the forte

to ITC in
Indian companies.
Care Business
Personal
ITC as a Challenger to HUL in
such as soaps, shampoos5, gels, fairness
n a slew of products
ITC chose an aggressive strategy. Here was a case of a Goliarh
a new battle.
creams and perfumes,
Indian market witnessed
face to face.
on another Goliath.
HUL and ITC were coming
taking

ITC Builds Brands, Fights on Differentiation Strength

brands such as Vivel, Fiama, Essenza,
In diverseproducts in personal care, ITC started building for advertising the new brands in
committed
Superia and Mikkel Eau De Toilette. Big funds
were
extensions. For example, the company
print and outdoors. And each of these brands
saw
TV,
extended its Fiama Di Wills line of premium soaps to shampoos and shower gels in an attempt to
Padukone was the
develop it into mega brand in total personal care. Bollywood actor Deepika
a
face for this premium line, while Amrita Rao promoted Vivel, positioned for a different segment.
With an expanding portfolio of brands, ITC was now playing in several segments of the
market, both premium and mass. ITC was aware that it had to wait for the brands to deliver;
it cannot realise big sales immediately. And, ITC got ready for it.

Uses Its Distribution Strength and Enlists the Support of Retail Trade
Through its cigarette business, ITC has developed huge strength in distribution, in both urban
and rural markets of India. ITC's products were already available in over six million retail
outlets in the country, and the company's distribution organisation has been directly servicing
more than two million of these outlets. This reach was fully tapped by ITC to establish its
new brands. While launching the new categories/brands, ITC offered higher margins to the
retail trade at the launch stages and got their support in stocking the new brands and intro-
ducing them to the customers.

ITC's CEO on Their Marketing Strategy for Personal Care Business

ITC's CEO, personal care products, observed:
Leveraging the opportunities in the FMCG markets, which is expected to
3,55,000 crore by 2018, means a tace-oft with entrenched incumbents.. triple in size to over
we don't opt for short
cuts. We have a mix of
objectives in distribution, as we are developing a
various segments. For a given brand too, our distribution portfolio of brands for
objectives change based on our market-
ing objectives. For example, on brands like Superia in the
was to ensure distribution in
personal care space, our initial objective
larger markets and towns of the country. As the brand
and matured, we are taking it deeper to smaller has bloomed
markets and towns. The
deeper into the market. So Superia may not be seen in trade channels objective is to go still
frequented by the
whereas in some other market itupwardly
mobile. In many outlets, it may not be stocked at all,
brand. That is the advantage of a porttolho is a
strategy, deploy your brands to meet the needs inkeya
differentiated manner and minimise overlap within your
porttolio. So you serve different consumn-
ers in the same with difterent
category brands. Fama serves one
serves another. We are into all these particular segment, Superia
segments
with the right Brands.
view the CEO had with the Economic Times in (Quote taken from inter
an
2011)
By 2012, 57 Per Cent of Corporate Income from
Non-cigarettes
By 2012, ITC's revenues from the non-cigarette businesses
had
cent of corporate income was now from this substantially gone up; 57 per
segment. And this crucial
by the timely divestments and the strategic choices IITC objective was achieved
made with regard to new businesses
and the way it executed them.
 Strategic Planning at Corporate Level and Marketing Planning at Business Level 121

(contd)
Case 4.1
Mini

The Current Times

with a corporate turnover of 737,00

crore (2017), has become a formidable
Today,ITC, in
in FMCG and hospitality businesses,
addition to its time-old leadership clout in
player brands are everywhere: in staples, snacks and meals; dairy, beve
verages and
cigarettes. Their
onfectionery; apparel, personal care, education and stationery; satety matches and agarbattis
con

and, of course, in luxury hospitality.

Now foods is the second largest business for ITC, after cigarettes. The company is investing
0 r o r e in the next two-three years (2018-2020) to set up eight factories to manufacture
will Indian food item from their 'menu'.
food products. The company says that they not spare any
Thev have already entered the dairy businesS with Suntresh, taking the battle to Nestlé and Amul.
that is going on at ITC.
It is non-stop planning
at Company AGMs from 1980 to 2017; Reports in the Press.
Source: ITC Chairman's speech

Tasks Involved in Marketing Planning

Like the strategic planner at corporate level, the marketing planner at the business unit
level also scans the relevant environment. He also does an internal appraisal of his unit and
and assesses to what extent his unit is equipped to pursue the
its strengths and weaknesses,
in the environment. And like the corporate planner, he also
various opportunities emerging
sets objectives
and formulates strategy. The ditterence is that his domain is limited to his
while the entire corporation/all the businesses form the
business unit/products and brands,
domain of the planner at the corporate level. The main tasks involved in marketing

planning are listed in Chart 4.3. We shall discuss them one by one.

Analysing the Environment Specific to the Business

The first step in marketing planning is survey of the marketing environment of the business
find out: (a) the favourable
unit/products concerned. The main purpose of this exercise is to
and unfavourable factors prevailing/emerging in the environment from the standpoint of
the business and (b) the specific opportunities available to the business along with their
relative attractiveness.
As in planning at the corporate level, in marketing planning too, one analyses the mega
environment; but here, the concentration is on the environment that is specitic/proximate
to the business/products concerned. This includes the market, the consumer, the industry
and the competition-essentially consumer and competition. In tact, it will be no

CHART 4.3 TASKS INVOLVED IN MARKETING

PLANNING

Analysing marketing environment specific to the business; spotting opportunities and

threats
nternal appraisal of the unit
Setting the marketing objectives of the unit
rormulating the marketing strategy of each product/brand of the unit unit
Developing detailed marketing plans and programmes for each product/brand of the
Formulating the marketing budget
122 MARKETING MANAGEMENT
accounts tor the greater part
c o n s u m e r and
competition
that study of
exaggeration to say
strategy formation. We are
discussing the issues in
of marketing planning and marketing b e h a v i o u r and Indian consumer
on consumer
c o n s u m e r in the chapters
understanding the i n d u s t r y / c o m p e t i t i o n analysis for a

respectively. And w e a r e taking up

Chapters 8 and 9, (Chapter 6).
a n exclusive chapter
detailed discussion in

Profile
Developing the O-T
a n O-T profile in
environmental analysis, marketing
planning develops
Based o n the summary of all the
O-T profile is basically
a
business/products. The
of the
respect a gist of the opportunities
environment survey. It gives
obtained from the the standpoint
diagnoses
environment
figuring there from
and the problems/threats
available in the information system of
research and marketing
businessMarketing
unit.
of the particular T hese support services are
the firm provide much
of the inputs needed in this regard.
detail in Chapter 23 MIS and Marketing
Research"'
discussed in

Internal Appraisal of the Unit

has already been
The basic purpose of internal appraisal
The next task is internal appraisal. level. We a r e not
process at the corporate
dealt with while discussing strategic planning
repeating it here. follows:
appraisal at the business unit level are as
The main tasks in internal
weaknesses of the business unit
1. Assessing the strengths and products and brands
status of the different product
lines,
2. Assessing the health and unit
available to the
3. Assessing the competitive advantages

Strengths-Weaknesses Analysis of the Unit

Aspects to Be Covered in S-W Analysis

unit have to be assessed in each of the functions/
The strengths and weaknesses of the r e s o u r c e s as
manufacturing/operations, R&D, human
areas such as marketing, finance, in the
of the unit and itS relative priority
well as the following general factors: image
corporation's overall scheme.
area, the
S-W in marketing: To assess the S-W of the business unit in the marketing
following issues have tobe covered encompassing each product line/product/brand.

1. Growth rate for the product/brand: Is the growth satisfactory? Is there any indication
are the
of a stagnation in? Or is it poised for a buoyant growth? What
setting
underlying causes in either case?
with that of
2. Market share: How does the market share of the brand compare
the firm find a place
competition? Is the relative market share satisfactory? Does
among the top three contenders?
3. Production capacity in relation to total market potential and competitors' capacities
Is an expansion in production capacity needed in the context of the contribution
expected of the unit to total corporate performance/growth?
4. The product life cycle (PLC) stage of the products/brands: What phase of life cycle
are the products placed in? Composite plotting of the life cycle positions of
the unit s
products can indicate emerging gaps. A business unit, which is currently very
profitable but has not provided for new products for the future, may show vrtuai
all of its products at the peak growth stage. Although in a way it is a comforta
"
position, there is an inherent weakness in the situation as the slide can begin soon.
 Strategic Planning at Corporate Level and Marketing Planning at Business Level 123

come of the products appear peak growth stage and show indications
to be in their

is the firm ready with strategies to extend their growth stages?

of impending decl1ne,
Or is it planning
for enough new products to substitute them?
This is dealt with in the succeeding
s Brand equity/product quality/sophistication:
and brands.
of product lines
section on assessment
satistaction level for its various offers: How do
6. Customer perception/customer
the products? How are the marketing practices received by the major
customers rate
the and the trade?
parties involved, that is,
consumers

various product lines compatible

7. Synergy in product mix/product lines: Are the
marketing-wise and manutacturing-wise? It not, then what is the extent of divergence

among product
lines? Is it manageable or does it put extra strain on various activities?
and margins vis-à-vis competition: How do the company's
8. Profitability, prices
with its competitors? How are the funds distributed among
pricing policies compare
channels and staff functions? What
the functions such as selling, promotion, service,
each major product line/brand?
is the profitability of
Marketing capability overall: Is the marketing organisation equipped to handle the
9. ideas and
expected tasks? Is there any notable expertise for exploiting new product
developing new markets?

Techniques for Analysing S-W in Marketing

The techniques that can be used here include the following:

Marketing audit
Market share analysis
Cost-volume-profit (CVP) analysis
Marketing cost analysis
Product line profit analysis
Sales force productivity analysis
Consumer satisfaction index
Brand monitoring surveys
Conjoint measurement and trade-off analysis
Perception mapping and multidimensional scaling (MDS)
A few of these techniques are taken up for discussion in Chapters 23 and 24.

S-W in Other Areas

Such detailed S-W appraisal has to be carried out in all other functions mentioned earlier-
finance, manufacturing, R&D and human resources.

Assessing the Status of Product Lines, Products and Brands

The business unit has to analyse and find out the present status and furure potential of each
of its product lines/products/brands.
First it explores the product lines.
What is the contribution of each line to the income and profit of the unit?
At what rate each line is growing?
What is its present market share?
What are the industry trends? Are they favourable?
Can the firm expect a higher contribution from a given line so that the unit can
shoulder a higher load of the corporation's overall growth needs?
What share of the projected targets of the corporation/business unit will each line
shoulder?
he same
analysis is done for every product/brand in the line.
124 MARKETING MANAGEMENT

Example of HUL
care, (b) home care. (c) food
HUL's businesses are grouped into four SBUs: (a) personal
care accounts tor
50 per cent of HUL's corporate
and (d) retreshments. At present. personal
What are the likely growth trends in the
income of T35,000 crore. The SBU investigates: What is the current market
can this industry grow?
personal care industry? At what rate better product mix and
it compete better with a
share of HUL in personal care line? Can
a higher share of
the growing market? And finallv,
more promotional support. and garner
and protit targets in
make to the company's income
what is the contribution this SBU can
the ensuing vear? SBU and to each brand in a
This analysis percolates down to each product line of the
clear picture ot the income/protit profile and
line, so that finally the business unit has a
fold. For example, the personal care SBU has
growth potential of each product/brand in its skincare and hair care. How much
several product lines such as bath soaps, face cream,
In the bath soaps line, HUL has several
should, say, the bath soaps line contribute?
Dove. How much should each of
brands such as Lifebuoy, Liril, Hamam, Lux, Pears and
contributes 60 per cent
these brands contribute to the bath soaps line? Lifebuoy at present
to the line's income and Dove 5 per cent. Can the premium brand Dove contribute more?
marketing cost
and future
Using techniques such as market share analysis, profitability analysis,health
analysis and demand/sales forecasting, the SBU figures out the current
potential of each of its product lines/brands. This information is a basic input for working
out the objectives/strategies of the SBU. To conclude the example of personal care SBU of
HUL cited at the beginning, the top management of HUL, after considering the various
inputs, may decide that the personal care SBU can take a higherload and contribute, say
35 per cent of the proposed income targets of the company, and all the brands in the line
will contribute a proportionally higher share.

Assessing the Competitive Advantages Available

As the next step in internal appraisal, the business unit has to size up its CAs. As
mentioned earlier, the subject of CA is discussed elaborately in a separate section at the
end of this chapter.

swOT Profile: The Gombination of S-W Analysis

and 0-T Analysis
When a business unit of the corporation is through with its environment analysis and
internal appraisal, it has a SWOT profile on hand. We saw that the
environmental
gives rise to an O-T profile which sums up the impact of the environmental trendsanalysis
on the

to an
business unitits products. And the internal appraisal
gives rise S-W profile of the
business unit. S-W and O-T profiles together make the SWOT
profile.
Setting the Marketing Objectives
The business unit is now ready to set its marketing objectives.

Marketing Objectives of a Business Conditioned by

Overall Growth Targets Corporation's
The specific contributions each business will make
in terms of income and
other parameters of growth, are decided
by the corporate-level growth profits, and
example cited earlier, 35 per cent of the corporate income targets. In the HUL
of
marketing objective the personal care SBU. If the corporate targets become the basic
say, 40,000 crore in the ensuing year (from the 2017 level of targets are in the range
of,
R35,000 crore), the personal
 Strategic Planning at Corporate Level and Marketing Planning at Business Level 125

CHARACTERISTICS OF MARKETING
CHART 4.4
OBJECTIVES

Marketing objectives of an SBU originate from the firm's overall corporate growth
objective/strategy.
the growth/target to be achieved by the unit during the
Marketing objectives specity
plan term.
of growth and rate of growth.
I t specifies quantum mar
are fixed in all key areas such as sales volume, sales revenue,
Marketing objectives
innovation and customer loyalty/satisfaction level.
ket share, profit, productivity,
are set at three levels:
Marketing objectives
Product-line level
Product level
Brand level

and marketing strategy

carebusiness has to take a target of R14,000 crore. All its planning
from this direction. In addition to sales income, the corporation
formulation have to start
contribution expected from the business. So the
would have also specitied the profit and
care business's further planning work-marketing strategy formulation
personal
development of detailed marketing plans-commences on this prescription.
in Clear Termns
Marketing Objectives Must Be Specified
that decide the growth of the business.
Marketing objectives have to be set in all the key areas
market share, productivity and innovation.
They include: sales income, sales volume, profits,and
The objectives must be specified in clear-cut readily measurable terms. A unit must
make its intentions and desires clear and precise, definite and measurable. For example,
during the coming financial year,

previous year, in both volume and value.

Sales will be increased by 10 per cent over the
Profit will be increased by 15 per cent.
cent to 25 per cent.
Market share will be increased from 20 per
Chart 4.4 shows the characteristics of marketing objectives.

Companies Go by Varying Priorities while Setting

Marketing Objectives
In
different priorities. For
setting marketing objectives, different companies are guided by a
increase is major requirementt
Some, profit is the major objective; for some others, volume
and for yet others market share is the crucial thing. All these do constitute important
takes
is a
marketing objectives. It just that with
given firm, one particular parameter the
and
It will guide the marketing agenda
caence over others in a given time period. a few
ms serve that objective. Through
marketing effort will be tailored primarily to
their marketing objectives.
Cxamples, let us see how companies differ in choosing
Returns
Quality' to Volume/Market Share' and
yota Shifts the Objective from
Back to Quality'
in their
Japanese companies assign the pride of place to market share
T uccesstul the market
prefer to that the brand is well established in
ensure
fire 8Objectives. They as well. Through the
hard route of
was true of the Japanese carmaker Toyota
126 MARKETING MANAGEMENT

built custom and

competitive pricing, Toyota
car brand.
high standards of quality, technology and But in the
most prestigious
as the world's
market share and established itself to somehow overtaking GM and
focus got shifted This pursuit
latter part of the last decade, the did achieve this obJective.
automobiles. Toyota
becoming the World No. 1 in 2. The overemphasis on the
in Chapter
in Mini Case 2.1 had to recall 12 million
and the aftermath is discussed
had eroded quality; in 2009 and 2010, Toyota
volume objective now shifted
its prime marketing objective
continents. Toyota
of its vehicles from a c r o s s 5
back to quality and brand reputation.
and 'Brand Building'
in
'Quick
Entry' as the Objective in Foods,
ITC Keeps
Personal Care Products
objective w a s to make fast
business in a big way, its marketing
When ITC entered the foods the existing players. ITTC
sales and share from
become visible in the market and grab trade incentive scheme. The
entry, a very aggressive
used the trade in a big way and implemented care products, ITC
While entering the personal
needed extra trade patronage. it went for
objective the emphasis on quick entry/sales;
fixed a
different objective. It did not place
Its main tool here has been high budget advertising.
building strong brands in the category.

Formulating the Marketing Strategy

to be achieved? This is
the
How are the marketing objectives for a product/brand going
formulation is the c o r e of
burden of marketing strategy. In fact, marketing strategy
that brings home the income and profits
marketing planning. After all, it is strategy follows explains elaborately the
expected of the business. The chapter that immediately
and the process of formulating it.
scope and significance of marketing strategy

Developing the Marketing Plan

Once the marketing strategy is finalised, the marketing chief has to put together all the
inputs generated so far, and prepare a marketing plan for the product/brand. Chart 4.5
describes what constitute the contents of a marketing plan.
Exhibit 4.6 on Lifebuoy illustrates how a marketing plan for a brand would look like.

CHART 4.5 CONTENTS OF A MARKETING PLAN

Contents of a marketing plan for a product/brand will include, inter alia, the following:

Situation analysis: how it is faring in recent times

The objectives set for the product/brand
The SWOT (strengths, weaknesses, opportunities and threats)
The marketing strategy:
Product distinctions, value claims, proposition
Price range, price cushions, discount options
Channel models, distribution, trade promotions
D Communication package: media priorities
Financial projections:
Sales forecast: sales and income forecast, by month
Expense forecast: expected cost of marketing the brand, activity-wise such as
warehousing, transporting, channel margin and sales force compensations
DBreak-even analysis: at what point the brand will start earning profits
 Strategic Planning at Corporate Level and Marketing Planning at Business Level 127

Exhibit 4.6
Marketing Insight
Marketing Plan: An llustration-Lifebuoy
Year 2018-2019) (Figures are llustrative)
(For the

Summary of the Plan amount to a 2 percentage-point increase in

Lifebuoy's market share. The market may not per-
Lifebuoy's marketing plan for 2018-2019 aims at mit a price increase for Lifebuoy during the plan
crore and a profit of 240 crore
a sale of I,600 period. The planned increase in sales revenue has
the sale). In volume terms, the sales will
(15% on to come out of pure volume increase. The market-
amount to 1.2 lakh tonnes, at a proposed price of
ing strategy will provide for this.
T10 per 75 g. To attain this target, a marketing
of materials included)
budget of R1,360 crore (cost Marketing Strategy
is envisaged; the details of the budget are furnished

further in section titled "Marketing Budget for Target Market

Lifebuoy 2018-2019 (Income, Expenses, Profit The repositioning has changed the target market to
Projection)'. The basic thrust of the plan is to pro-
some extent. From predominantly rural, the focus
of Lifebuoy and to
tect the new repositioning now is on rural markets plus middle-class homes
ensure that the tightening competition
does not of semi-urban India.
new growth path.
upset the brand's
Geography-wise Sales Target
Situation Analysis and SWOT Analysis Of the projected sales, 65 per cent to come from
Competition in the popular segment is becoming rural segment and 35 per cent from semi-urban
stiffer by the day. Various brands of Godrej, markets. The zone-wise share of the total sales
brands such as Dettol and Chandrika with semi target will be as follows:
medical positioning and the entry of Dabur with South: 40 per cent
brands like Dabur Natural Neem, plus several West: 30 per cent
regional brands are giving strong fight to Lifebuoy. North: 20 per cent
The repositioning campaign of recent years to take East: 10 per cent
Lifebuoy away from its carbolic-base, rural posi-
tioning to a modern home need also has not taken Positioning
For Lifebuoy Total, which is the main brand, cur-
roots. Despite good promotion support, thebrand rent positioning on health, cleanlines and anti-
IS facing strain on volume, value and market share
germ properties will be continued. The family, as a
fronts. ITC's new launches are also adding to the
whole, will be targeted. In respect of the extensions/
competition. Patanjali adds to the strong competi- variants too, their respective specialised positioning
tion. Intense sales promotion effort by all players natural present be
such as and clinical as at will
IS resulting in a margin squeeze tor everyone. The
Current recessionary trends and the constraints on continued.

personal spending are having their own negative

impact on FMCGs in general. On the positive side, Marketing Mix
the company's traditional strength in distribution
Product: Main brand: Lifebuoy Total (soap bar)
reach into semi-urban and rural India is the biggest
Extensions/variants:
advantage Lifebuoy can leverage. In this scenario,
the expected level of Lifebuoy Nature, Lifebuoy Cool Fresh,
income/profits has to be gen-
erated through volume increase at the current price Lifebuoy Clini-care (all soap bars)
level. .Lifebuoy Handwash, Lifebuoy Sanitizer
(other product forms)
The Marketing Objectives Lifebuoy Total will constitute 95 per cent of
the product mix
AS pointed out already, during 2018-2019,
Lrebuoy targets a sale of T1,600 crore and a profit Price: For Lifebuoy Total, the ongoing price will be
or 240
crore. An analysis of the likely market maintained at R10 for 75gm. The brand cannot
pansion and the activities of the competitors take a price increase during the year. The targeted
Snowthat the sales have to come from volume increase. However,
targeted sales just mentioned should
128 MARKETING MANAGEMENT

Exhibit 4.6 (contd)

tor some extra push in cer-

remaining will be used
if the first two quarters perform as expected,
an
requirements/developments.
extensions/ tain months based on
increase of 50 paise is planned. The in the major ongoing campaigns for
No change
variants also will continue the ongoing prices; they They will continue with
market. the brand is planned.
have to first get established in the The brand has joined in a big way
m o r e intensity.

Distribution: Reach and market penetration wil of the government. The

the Swatch Bharat Mission
for with regional TV channels and
be strengthened, they being the major support existing media mix
the projected sales increase. Existing margin struc outdoors will con-
vernacular print media and
ture willl be maintained. However, dealer incen chunk of the ad budget.
tinue to get a major
are included in
tives are planned for the year; they However, the new repositioning objective will be
shown further in sec- mix and
through appropriate media
cam-
the budget for distribution, served
2018-
tion titled Marketing Budget for Lifebuoy paigns. The ongoing rural publicity programme
2019 (Income, Expenses, Profit Projection)'.
Lifebuoy Swasthya
Chetna-has joined the
continue
national health mission and will
as a
Promotion: R200 crore is allocated for promotion
80 per cent of it goes for advertising and
20 per major brand rebuilding effort.
cent for sales promotion.
2018-2019
Region-wise allocation: Marketing Budget for Lifebuoy
(income, Expenses, Profit Projection)
South: 40 per cent
West: 30 per cent Income from Sale of Lifebuoy
North: 20 per cent R1,600
1.2 lakh MT at 710 per 75 gm bar
= crore

East: 10 per cent

Expenses on Lifebuoy
Functional Plans (Action Plans) 7900 crore (including cost of
Product:
materials for product and pack)
Production Plan
Distribution: 200 crore
For the year: 125,000 MT
Promotion: R170 crore
Monthly: one-twelfth of the total each month
Sub Total: T1,270 crore
90 crore
Distribution Plan
Other marketing overheads on Lifebuoy:
Total expenses on Lifebuoy: R1,360 crore
forecasted sales plus 3 per cent stock for
Monthly Projected profit from Lifebuoy: 240 crore
each major stock point.

Monitoring, Evaluation and Review of

Promotion Plan
the Plan
The Brand Survey by Brand Equity finds
recent
The execution will be monitored bi-
Lifebuoy losing its rank 4 position to rank 10. closely on a

weekly basis and detailed evaluations on a quar

Although this study has its limitations, the market-
with course-correction strategies. The
terly basis,
ing team of Lifebuoy views it with concern. The metrics to be used include: brand's sales and share
plan provides to study latest consumer response to
Lifebuoy. analysis, industry and competitor performance,
Of promotion activities/funds, 80 per cent will marketing cost analysis and consumers' response
be evenly spread out over the four quarters; the to Lifebuoy's new campaigns.

The Marketing Budget

Marketing budget is the 'financialisation' of a marketing plan. It is the budgeting process
that removes any vagueness the marketing plan may carry; when all proposed activities a
quantified in terms of what they will cost and what they will yield, the effectiveness
the plan
becomes evident. The
very purpose of marketing budget is to capture all
the tne
revenues and costs involved in marketing a product into one comprehensive statemen
When the budgeting work is expertly done, it becomes an efficient marketing tool right a
 Strategic Planning at Corporate Level and Marketing Planning at Business Level 129

the beginning stage, since the financialisation process can legitimately question some of the
assumptions behind the strategy and help a reconsideration of some of those assumptions.

Allocation of Resources
One important task in preparing the marketing budget is the allocation of resources. The
basic difficulty here is in predicting how different marketing actions will affect consumer
behaviour and the effectiveness of the proposed activities. It is here that the research
expertise of the marketing department is required. In the present times, with the support
of information technology and its tools, it is possible to monitor behaviour of millions
of customers and track how the proposed marketing investments would affect customer
behaviour. In spite of such facilities, most often marketing budgets are prepared based
on past trends. Other yardsticks include: (a) affordability-what can you afford?
(b) percentage of expected growth in sales and (c) competitive party-based on what
competitors are doing. However, there are many companies that approach the resources
from a more objective standpoint. They opt for zero-based budgeting allocation of taking
the marketing objectives set out in the plan and the proposed marketing activities as the
starting point and prepare the budget. Exhibit 4.6 on Lifebuoy illustrates how resources
get allocated in a marketing plan.

Developing Detailed, Function-wise Plans and Programmes

For getting practical direction to the marketing effort, the marketing plan has to be
elaborated into detailed functional plans and programmes. They are the instruments
with which the firm translates a boardroom strategy into a marketplace reality. Even the
best marketing strategy may fail in the marketplace, if detailed functional plans are not
drawn up.
The functional plans for a product/brand are as follows:
Production plan
Sales forecast/sales plan
Physical distribution plan
Channel plan
Advertising and sales promotion plan
Sales force plan
Sales organisation plan
Detailed discussions on the formulation of functional plans of marketing and their
implementation are provided in various chapters in the text.
Exhibit 4.6 illustrates how a marketing plan for a brand would look like.

Competitive Advantage
We saw that as part of the strategic planning exercise, firms carry out S-W analysis,
business portfolio assessment and CA appraisal. We covered the first two. In this section,
we will take up CA. We shall discuss the topic under the following headings:
CA: its nature and significance
CA: a requisite for delivering value
CA: a requisite for implementing strategy
The linkage between CA and strategy
Any CA finally manifests as either a 'cost or a 'differentiation' advantage
130 MARKETING MANAGEMENT

Nature and Significance of CA

Chart 4.6 explains the attributes of CA in a nutshell.

DISTINCTIVE ATTRIBUTES OF CA
CHART 4.6 THE

relevant attribute
A superior position relative to competition in somne

Distinct from strength

Distinct from 'industry's best practices
of CA
Enabling delivery of superior value, test

Closely related to strategy

C a n come from several sources

Relevant Attribute
A Superior Position Relative to Competition in Some

CA is essentially a of superiority on the part of the firm in relation to its

position
functions/activities the firm performs. For example,
competition in any of the multitude of
some in R&cDD and s o m e others
some firms may be superior to competition in production,
a given function/activities
in marketing. Superiority can also m e a n that the firm performs
differently-distinct from the way other firms perform it. But a distinct ability can become
a CA only if it enables delivery of superior value to customers. In other words, positive
answers are required here for two test questions:
1. Do I perform some function in a superior/distinctive way, compared to competition?
value?
2. Does the superiority/distinction amount to significant customer

CA: A Requisite for Delivering Value, a Requisite for Implementing Strategy

It is by delivering superior value that a marketer satisfies the customer, beats the
competition and succeeds in marketing. CA bestows the capability for such superior
value delivery. For the superior value load to get packed in the offer, the firm has to have
superior strengths relative to competition in the relevant activities. Such a superior

strength of the firm relative to competition in any activity is a CA of the firm. And CA
bestows on the firm the capability for superior value delivery.

CA Creates the Ability for Value Delivery; CA Is Created by It as Well

Value delivery and CA are linked to each other two-way. On the one hand, CA confers the
ability for value delivery; on the other, it is out of the ability for value delivery that CA
grows. To quote Michael Porter,

Competitive advantage grows fundamentally out of the value a firm is able to create for
its buyers that exceeds the firm's cost of creating it. It may take the form of prices lower
than competitors' for equivalent benefits or the provision of unique benefits that more
than offset a premium price.

For value delivery, we require strategy. For executing strategy, we require CA. It functions
as the backup for strategy. Often, even the most imaginative and well-formulated
strategies fail at the ground level when the companies lack the CA needed for executing
them. It is not the strategy per se but the acquisition of CA and its utilisation through
 Level and Marketing Planning at Business Level 131
Strategic Planning at Corporate

CHART 4.7 THE LINKAGE BETWEEN CA AND

STRATEGY: CA-THE BACKUP FOR STRATEGY
in hand; firm cannot

a close linkage between strategy and CA; they go hand a

There is
without the other. it
have one
tor strategy or as the fit between the firm and the strategy
CA serves as the backup
employs. its chosen strategy.
a firm cannot execute
Without relevant CA, and it is by putting its CA to use that
that a firm creates CA,
I t is through strategy its strategy. Strategy, thus,
'creates and also uses
a firm actually operates/executes
CA. firm.
that is woven around the CA of the
Successtul strategy is one solid and
as well as defending against
competition, hinge on
over competition vulnerabil-
Scoring threats and
sustainable CA. In pursuingopportunities as well as in deflecting
on its CA.
ity, the firm banks

its objectives. In the absence

of relevant CA, objectives
takes the firm to
strategy that
strategies remain hollow
remain elusive and

for
CA and Strategy: CA-The Backup
The Linkage Between
Strategy
a firm makes these two
While formulating its strategy,
Strategy is toothless without CA.
assessments:

its disposal?
1. What all CAs it has at to succeed?
2. What all CAs it needs to acquire for its strategy
and
as well as defending against
comnpetition, hinge on a solid
Scoring competition,
over
threats and vulnerability,
as well as in deflecting
sustainable CA. In pursuing opportunities for strategy.
serves as the backup
Chart 4.7 sumns up how CA
the firm banks on its CA. creates CA. Strategic
actions
CA and strategy are linked rwo-way.
Strategy uses as well as
decisions on acquisitions,
corporate-level strategic
cumulatively lead to CA. For example, upgradation are all steps
that would
fresh investments and technology
mergers, alliances,
result in CA building.

Sources of CA (CA Factors)

that a firmm
of the several functions
We have seen that CA can emanate from any sources of CA (CA factors).
there is a multitude of
pertorms. It m e a n s that for any firm, listed as possible strengths or
weaknesses
It can be stated that practically all the factors,
can be sources of
CA. In identifying the CA,
under the section on S-W to be analysed, the test of a CA.
which of the strengths will pass
there is the additional task of examining

Either a 'Cost' or a
Any CA Finally Manifests as
Differentiation' Advantage
CA manifests itself as

the firm derives its CA, ultimately,

from which a
Whatever source
to the firm. To elaborate, whether a
differentiation advantage the
ctner a cost advantage or a factors or marketing
factors or some other factors,
A emanates from production
132 MARKETING MANAGEMENT
advantage. And
ora differentiation
advantage twO b r o a d categories
form of either a
cost
benefit shows up in the finally fall under
also
competitive strategies
that is precisely why
strategies.
differentiation-based

strategies and
COst (price)-based

How Firms Build

CA
CA.
how firms build
Chart 4.8 explains

CA
FIRMS BUILD
CHART 4.8 HOW
levels.
product/brand
SBU and
corporate,
C A is built at
versa.
and vice
business level,
over to
Corporate level
CA spills
and tools.
a variety of routes
Firms build CA using
Value chain analysis.
Firms build CA using
benchmarking.
Firms build CA using

CA.
firms take in building
Chart 4.9 lists the
routes

A VARIETY OF
BUILD CA USING
CHART 4.9 FIRMS

ROUTES
Lower cost
Superior resources
Technology and R&D
Excellence in design
Integration services and so on
Quality-in products, processes,
Product differentiation
Brand power
Supply chain expertise (lower input costs
Strength in distribution channels
Strength in human resources
Alliances
Creation of entry barriers
Innovation in various functions

Superior marketing capabilities

and response time
Speed in operations and compression ot cycle

Mini Case 4.2 explains how Maruti Suzuki built a host of CAs using a variety of routes.

Evaluation, Review and Control of Marketing Plans

Marketing men have to evaluate the results they have achieved: How effectively the plans
have been carried out? In fact, the monitoring and evaluation of the work have to take
place as the work is in progress; corrective measures have to be introduced and the new
 Strategic Planning at Corporate Level and Marketing Planning at Business Level 133

Mini Case 4.2

COMPETITIVE ADVANTAGES OF MARUTI SUZUKI

The Background: Maruti Attains Pre-eminent Position in the Passenger Cars

Maruti Suzuki closed 2017, crossing a new milestone in its annual domestic sales. It sold 1.6
million units in the year. The total output was about 1.75 million units. It grabbed 50 per
cent of the passenger car market in India All the top five bestselling vehicles in the country in
the year were Marutis. As many as 7 out of the top 10 bestsellers were Marutis. In the entry-
level segment, Maruti Alto continued to dominate with sales of over 2.5 lakh units.
The company, which had revolutionised personal transport in the mid-1980s, has consis-
three decades. In addition to high abso-
tently maintained its dominance throughout the next
lute growth, it has excelled in rate of growth and growth relative to the other players
cars in the country. Maruti
competing in the industry. Maruti is also the top exporter of passenger
carmakers market capitalisation. There are only a
Suzuki is also one of the world's top by
dominance Maruti Suzuki
few markets in the world where a carmaker enjoys the kind of
in India. The position of the country's largest carmaker is likely to continue,
enjoys pole
and its
thanks to its endeavour to be present across several car segments and price points,
strong CAs.

Competitive Advantages
How did Maruti become the country's largest carmaker and manage to maintain the position
dominance. What are the CAs
over the years without anyone anywhere near to challenge the
that took Maruti Suzuki to this pre-eminent position? Maruti Suzuki has built up a huge

bunch of CAs over the years. We will consider some of the main ones.

Cost Leadership: A Major CA

the when
From the word 'Go', Maruti paid attention to gaining cost advantage. During years
cost leadership in the
it was adopting a price-led marketing strategy in the 800 segment,
excel. Maruti Suzuki entered at a time when
industry was absolutely essential for Maruti to
item in India; the number of car buyers was limited. Maruti had
passenger car was a luxury
to make its small car affordable for the growing middle class of the country. On the strength
Maruti soon cornered than 70
of an affordable price, together with high fuel efficiency,
more

market of the country.

per cent share of the expanding passenger
car

is 'size advantage'. Maruti had considerable size

Sizeadvantage: Related to cost leadership
and it translated into a cost advantage. Its large
advantage by the standards of those days,
production capacity-225,000 to start with-gave it a relatively low unit cost and conferred
on it an enviable pricing cushion.

had 'cost advantage independent of size'.

Cost advantage independent of size: Maruti also
Investment costs steeply went up for those
Low initial investment was one such advantage.
concessions trom the government were one
entering the industry in subsequent years. Unique and as a public sector firm (at that
As the early bird,
key source of cost advantage for Maruti.
the which were not available to
concessions from government,
time), Maruti received several Maruti?'s first set of plants had
nurtured it well. Moreover,
later-day players. And Maruti
been fully depreciated by 1998. Maruti also indigenised its manufacturing rapidly and
expansions completed on schedule further
achieved cost competitiveness. Consistent capacity
supported the cost advantage and pricing freedom. New players found it difficult to compete
against Maruti (in the entry-level segment), with its large production capacity, depreciated
low-cost plant and highly indigenised sourcing
of components.
134 MARKETING MANAGEMENT

Mini Case 4.2 (contd)

Product Strength: Another Key CA new products helped Maruti

introduction of
products: The
of new with the company.
Even in recent
Constant introduction continuous process
It remained a Dzire enhanced its
c u s t o m e r base. Baleno and the
new
expand its Vitara Brezza,
such as
new modeis
at various price
times, popular new productsbeen at the forefront in launching leader. The prod-
Maruti has unchallenged
road presence. it become the
intervals. This CA has helped enter n e w segments.
It success-
points at regular but also helped it
it better visibility launched 8 products in the past
uct pipeline not only gave segment. It
several vehicles in the premium
fully introduced vehicles by 2020.
launch another 15 new
3 years and plans to
Maruti hit gold with
the latest model of its suc-
in record time:
Dzire achieves 1 lakh mark before the close of 2017. It
the 1 lakh sales mark
cessful compact sedan Dzire. It crossed
2017.
had been launched only in May
as a CA
Investment Level and Production
Capacity also Served
its investment and production
Maruti Suzuki has been constantly and consistently enhancing
has been the latest to go operational
(in 2017). In the same year,
capacity. The Gujarat plant crore to add a

Maruti announced fresh investments

of about $0.6 billion or almost 3,900
the Gujarat
Once all three are operational,
third production plant at the Hansalpur facility. total investment in the
lakh units. This will take Maruti's
facility will have a capacity of 7.5
facility to about 13,400 crore.
Showroom/Channel
dealer-cum-service network spread across the
Maruti Suzuki has a very extensive and strong
state-of-the-art showrooms. In all of them, trained sales personnel
country. Many of them are
are available to guide customers in finding
the right car. In 2015, the dealer network had a
strength of over 1,800.

Nexa-the New Niche Channel for Premium Models Added to the CA

Maruti established its additional network of showrooms/channel, Nexa, a premium channel
network to serve premium customers and to take care of its premium vehicles/models. Nexa
became another CA of Maruti. We saw this in Chapter 1.

Maruti's Service Infrastructure

From the beginning, it had concentrated on developing service centres across the country.
This is one of the CAs that has helped the company to reach a huge market share in the
Indian passenger car market and then hold on to it for many years. Maruti has been con-
tinuously beefing up its service infrastructure. It has 50 per cent more service centres than
all the other car companies put together. Apart from the superiority in the extent of service
network, Maruti also created an edge for itself in the quality of after-sales service. The
combination helped Maruti in holding on to its distinctive lead position in the small car
segment in particular.

Other Factors Too Served as CAs for Maruti

Being close to the customers, understanding their needs: The ability to understand the cus-
tomers' needs has helped Maruti sustain volume growth and market share over the years.
Brand perception, ease ot maintenance, spare parts cost, distribution and sales network, all
played a big part in Maruti getting close to the customers.

Loyalty of existing customers: Maruti enjoys the loyalty among its existing customers. This
will be evident from the fact that a good part of buyers of higher-grade Maruti vehicles are
existing owners of Maruti's entry-level cars. Many customers automatically go for a Maruti
vehicle when they decide to have an upgraded car. In most independent consumer
satisfaction
surveys, Maruti secures a high satisfaction index.
 Strategic Planning at Corporate Level and Marketing Planning at Business Level 135
Mini Case 4.2 (contd)

The shrewd move of concentrating on petrol segment: Maruti

petrol car segment, even when the trend in the industry was to steadfastly banked on the
on
bring in
because of the government policy diesel. Maruti has always maintained diesel
many vehicles
60 per cent a
plus market share the petrol car
in
segment. With the government
norms to curb spiralling pollution, consumer preference for tightening emission
increasing. The fact that most of Maruti's petrol vehicles has been
company in this context.
cars are
petrol-driven works as a CA for the

Close to the knitting, staying

focused on auto industry: The
company has chosen to focus
on auto industry
without getting deviated to different
kinds of diversification plans. Its
policy not to divert its attention from its core strength to some unknown areas also
it in the competitive game. Maruti believes that there is a helped
significant further growth poten-
tial for the automotive sector, and as a leader it has more to gain by staying focused within
the sector.

Wins Company of the Year award for corporate excellence: The multiple CAs of the com-
pany have helped it to hold on to its leadership in the industry. In 2017, Maruti Suzuki was
recognised as the "Company of the Year by the Economic Times. The award recognised the
longevity of its high performance. Maruti had market share of 50 per cent in 2003.
Fourteen years later, it has not only defended this high market share very ably, but while
doing so, it also achieved a strong growth in profitability. It outpaced its rivals in profitabil-
ity. It was winning in a tough and open market.

course chartered. Chart 4.10 explains the scope of this work. These issues are discussed in
Chapter 24 on marketing control.

CHART 4.10 EVALUATING AND REVIEWING

CORPORATE PLANS, MARKETING PLANS AND
STRATEGIES

If They Had Failed, Analyse Why They Had Failed

The underlying assumptions might not have held true

The environment had drastically changed in between
There was a disconnect between the strategy and the execution plan
There had been a failure to shift resources between businesses, as required
The marketing objectives were unrealistic
There was no proper fit between marketing objectives and marketing strategies
There was implementation deficiency
Review and Rectify
Challenge, revisit and update all assumptions
Determine where you should be playing, actually
Tailor the strategies to consumer behaviours
Improve the execution part and align all your teams behind the strategy

Chart 4.11 presents a detailed description of the marketing planning process.

136 MARKETING MANAGEMENT

MARKETING PLANNING
PROCESS
CHART 4.11 THE

Environment Appraisal
and threats. Pinpointing and
spotting the opportunities
environment and
Analysing the available to a unit and which can be tapped by
actually
shortlisting the opportunities
the unit
Analysing t h e market/customer

and competition
Analysing industry

Internal Appraisal of the

Unit
unit
Analysing the strengths
and weaknesses of the
health and status
different
of the product lines/products/brandsto the unit
Assessing the that are useful
and examining the ones
Assessing the CAs and CCs of the firm
and Brand Levels
Marketing Objectives at the Unit, Product
Setting the the corporate plan
set for the business by
Starting with the growth targets should be pursued considering
the unit's
which of the spotted opportunities
Deciding
capabilities and limitations
have to be set (e.g., sales volume,
which marketing objectives
Pinpointing the areas in level and marketing innovation)
customer satistaction
market share, service,
profits,
in the key areas
Assessing the current performance
explicit objectives in each key
area

Setting measurable, clear-cut and product/brand/market

mentioned earlier for each
Setting the objectives as
For Every P r o d u c t / B r a n d / M a r k e t Segment
Developing the Marketing Strategy:
and Targeting)
Selecting the Target Market (Segmentation
motives and buying behaviour
Studying the customer, his buying
relevant bases
Segmentation of the market using
Evaluating each of the segments
the target market
Selecting the appropriate segments as

Deciding the Positioning Strategy

Analysing the position of competing brands
Locating positioning gaps in the product category
Deciding the locus for the brand
Deciding the positive theme
For whom is this offer and why this particular offer?

Developing the Marketing Mix

Deciding the approach in respect of each of the 4 Ps
Deciding the relative weightage to be assigned to each of them
Allocating the budget over the 4 Ps and its constituents

Developing the Detailed Functional Plans of Marketing: For Every Product

and Brand
Product plan/production plan
Sales forecast/sales plan
Physical distribution plan
Channel plan
Advertising and sales promotion plan
Sales force plan
Sales organisation plan
 Strategic Planning at Corporate Level and Marketing Planning at Business Level 137

Summary
appraisal gives rise to the S-W profile. S-W and
is the main topic of study in
Marketing planning in O-T profiles together provide the SWOT profile
this chapter.
But to place marketing planning
understand the stra
of the business unit. Now the marketing objec-
one has to first
perspective, tives are set. They specify the growth target to
which business firms carry
tegic planning task, level.
be achieved during the plan term. Objectives
out at the corporate
concerned
have to be set in all the key areas: sales income,
is
Corporate strategiC planning sales volume, profits, market share, productivity
future of a busi-
with the ng-term growth and
The tasks involved include clari- and innovation. They are set at three levels:
ness enterprise. level.
ot the corporation, defining its product line level, product level and brand
fying the mission the external environment,
Formulation of marketing strategy for each
business, surveying
product and brand is the next step; it is the
core

carrying out the

internal appraisal of the firm,
the of marketing planning. It is marketing strategy
setting corporate objectives and formulating
strategy. When these tasks in that does the selling. Marketing strategy is dis-
corporate growth cussed in the succeeding chapter. The marketer
the firm
the planning process are carried out,
design, which delin- has to put together all the inputs generated so
gets an objective-strategy far and prepare a marketing plan and a market-
how the firm proposes to grow and how
eates
the different business units of the corporation ing budget for each product/brand. For getting
will partake in this growth. And here lies the practical direction, the marketing plan is further
elaborated into detailed 'functional plans' and
link between corporate-level strategic planning
programmes: production plans, sales torecasts,
and business-unit-level marketing planning.
Marketing planning has to shape the fortune physical distribution and channel plan, advertis-
of individual business units of the corporation. ing and sales promotion plan, and sales force
Formulation of marketing strategy for each and sales organisation plan.
In both corporate-level planning and market-
productline, product and brand of the unit is its
main responsibility. ing planning, 'competitive advantage' and 'value
The first step in marketing planning is a sur- chain' are important factors. CA is essentially a

vey of the marketing

environment. This includes position of superiority in any of the functions the
the market, consumer, industry and competi- firm performs. Being the backup for strategy, CA
tion, mainly the consumer and competition. enables the delivery of superior value. The chap-
Based on the environmental analysis, marketing ter explains the various sources of CA and the
various methods of building CA. Value chain
planning develops an 0-T profile of the unit.
Next is internal appraisal. The strengths and concept is a usetul tool in locating and building
weaknesses of the business unit, the status of CA. Value creation is best achieved when the
different products/brands and the CAs/value value chain' of the business is put to best use and
chain scope are investigated. The internal its scope exploited to the maximum.

Exercise

Review Questions
1. How do corporate strategic planning and marketing planning facilitate value delivery
to customers?
2. What are the tasks involved in marketing planning?
3. Into how many SBUs HUL has grouped its businesses? Please specify the businesses
in each SBU. What is HUL's logic for this grouping? Do you have any suggestions
that will make the grouping even more appropriate?
4. Explain the linkage between CA and strategy, taking an example.

Application Questions
1. Using Exhibit 4.2 on Flipkart, discuss how the company can proceed with the
in-house brands strategy.
138 MARKETING MANAGEMENT

2. the mini Maruti, explain in what all ways CA be developed and

Using case on can
utilised for strategy success.

Group Projects
1.
Gather relevant
today. Comment
facts the marketing mix elements
on
the relative
HUL uses for Lifebuoy as of
on
emphasis the company is placing on each of the 4 Ps.
In recent times, HUL has been
juggling its marketing mix elements for Litebuoy
frequently. Do you justify that strategy?
2. Pick up a large firm of your choice
operating in a competitive market and explain
how it uses its CAs for delivering
superior value to its customers.