The Benefit of a Strategic Marketing Plan - Assignment Example

Student Name: Instructor’s Name: Course: Institution: Date Strаgеtiс Маrkеting Рlаn II Introduction Behind any successful business is an effective and strategic marketing plan. Thus, business/firms are advised to do what is seen as strategically right than what is immediately profitable’’ (Kotler et al. 2005 p.49). Marketing planning has regained recognition and is seen as first priority of development within an organization. This is partly because it is generally the road map for the whole team and directs the employers towards the achievement of the firm’s objectives. It also gives the impetus to systematic thinking while enforcing the organization to shape up their strategies and policies as well as their goals (Kotler et al. 2005). This paper aims at discussing the various aspects of marketing plan. Specifically it seeks to answer the following questions: (i) what is the Relevance of a pioneer or a follower strategy and suitable strategic market programs for the business under consideration? (ii) What is the relevance of the growth-market strategies for market leaders and share-growth strategies for followers for your selected business? (iii). What are the possible strategic choices for the business for maintaining competitive advantage in shakeout, mature and declining markets?(iv), what is the relevance of various strategies to serve new economy markets in regards to selected business (Insurance Company)? (v) What is the appropriateness of designing organizational structures and marketing plans for the implementation of different competitive strategies for the business under consideration? And (VI), what is the critical role of marketing metrics and marketing audit in relevance to your business? Relevance of a pioneer or a follower strategy and suitable strategic market programs for the business under consideration. Business today is faced with a dilemma of being either a pioneer or a follower in the modern business environment full of complexities and Uncertainty (Heiens et al, 2003). The next section is a discussion of the relevance of pioneer strategy for an insurance company. Being a pioneer, the company can gain significantly from the ‘first-move advantage” giving it not only a First choice of market segments but also positions. According to Kerin, Varadarajan and Pertson (2001), there is a systematic direct relationship between order of entry for products, brands, or business. Some of the advantages of making the first move range from owning the positive image and reputation of being a pioneer which in this case is the insurance industry. Secondly, the business can gain from the reduction of total costs by controlling new technology, and supply as well as distribution channels. The other benefit associated with the first entry business or approach is the establishment loyalty among the clients and lastly, the business will be benefit from being able to make imitation by potential competitors impossible (Thompson & Strickland, 2003, p.193). However, there may or may not be sustained advantages due to a variety of constable and uncountable factors. Therefore, in order to maintaining a competitive edge over other companies especially the late entrants , there is need to embark on new advertising programs, implementing price changes, and by adopting innovative or approaches of products and services (Heiens et al, 2003). A pioneer in the insurance industry can adopt the defense mechanism through increasing entry barriers for late companies or other potential insurance firms. Entry barriers can be viewed as a cost of producing which must be borne by a company and which aims at entering a specified industry but not borne by the various businesses within the existing industry (Kerin, Varadarajan & Pertson, 2001). Barriers to entry tend to offer the pioneer company a period of monopoly. In other words, it gives firms a lead time while minimizing competitive rivalry within the industry which in the context of this paper is the insurance .This can be achieved by cutting the price of products and services. Apart from preventing new entrants, the insurance firm can attract new clients who would otherwise go other similar firms as a result of the expanding insurance market. The other way in which could be achieved is through coming up with innovative strategies for instance launching new products ­­ or by at least announcing the next generation of products, thus deterring the entry of competition. Pioneer approach also encourages a higher market share (Kerin, Varadarajan and Pertson, 2001). Empirical studies reveal that pioneer firms and market share. For instance, a study carried out by Parry and Bass (cited in Kerin, Varadarajan and Pertson, 2001, p37) revealed that pioneers tended to possess higher market share compared to their followers, but this largely depended on the type of industry and demand for goods and services. One of the strategies the business needs to consider is the correct market positioning. Failure to take the correct market position may result in competitive disadvantages in the relation to other firms and followers in the industry (Hill, 2000). Late entrants may gain competitive edge by taking a better positioning their brands as a result of learning the client’s presences from the pioneer’s miscalculation or incorrect positioning (Kerin, Varadarajan and Pertson, 2001). Pioneer approach is also beneficial from the perspective of economies of scale and experience in that the business can benefit from accumulated volume and experience thus thereby lowering per unit costs at a relatively higher rate than followers and potential business competitors. However, to achieve this, there is need for innovativeness in relation to the product/services. In addition, business pioneer has the benefit and the freedom to the rules of the game. This can be enhanced though such strategies as improvement of product quality and price as well as promotional appeals or financing offers (David 2009, p.120) which subsequent competitors must beat or meet to succeed in the industry. By setting high standards, the business is able to increase the costs of entry and perhaps deter potential competitors. Pioneer strategy is also important in relation to preemption of scarce resources. The pioneer company may benefit through preempting rivals in the acquisition of scarce resources. This can be achieved by controlling resources such as existing assets instead of new set developed from new technology. Preemption of scarce resources can also be achieved through strategic positioning in “space,” in strategic geographical areas among others. According Main (cited in Lieberman and Montgomery, 1988, p5) the positioning in a single geographic area made it possible for the pioneer firm in the geographic area to access rights over virtually every supply, and thus dominating in the production industry for years. Pioneer strategy is also advantageous as a result of buyer switching costs. According to Switching costs contribute to poor choices when the market environment changes and consumers do not adjust appropriately (Handel, 2010). In many industries including insurance, the market power of incumbents or pioneer company is protected by the switching costs that consumers have to incur when they purchase from an entrant or a follower in the industry (Biglaiser, Crémer and Dobos, 2011).With switching costs, late entrants or followers require higher investment in extra resources to attract customers/clients from the pioneering firm. Switching costs can arise from initial transactions costs or investments that the customers/clients makes in adapting to the firm’s good. These include expenses in terms of the time and resources in qualifying a new supplier, the cost of supporting products such a new computer, as well as expenses in training staff (Handel, 2010). In the context of an insurance company, clients may prefer the price of existing policies but reluctant to switch. Clients may also not want to go through the challenges associated with canceling their old insurance policies. This implies that a pioneering company can gain an edge over late entrants. Pioneer strategy may also a disadvantage to the company in many ways. For instance pioneer strategies tend to be lower than those for followers (Biglaiser, Crémer and Dobos, 2011) this by extension increases the first entrant's cost advantage and profit potential. Again, the firm mover company has to bear most of the costs and risks of developing the product and the market for the product. The first entrant must also absorb the risk that imitators may copy the innovation in a short time and with less costs industry. 2. Relevance of the growth-market strategies for market leaders and share-growth strategies for followers for your selected business. Growth-market strategies play critical role for market leaders. Business growth is linked to economic expansion, a fact which can be attributed to all the processes taking place within the firm so that the business grow, the more chance of the firms in accessing resources (Alpine, 2009). The other view, the resource-based approach considers a business’ own set of resources and capabilities as the main drivers of growth. In so doing, the firm is in a position to predict its growth strategies based on the available resources and competencies (Otto & Low 1998). One of the roles of growth strategy is diversification which helps in diversifying the good/services line. In the context of this paper, the insurance company can venture in new business ventures by coming up with new products for new markets (Graham Walton, 2007). Again, apart from offering insurance policies, the firm can consider venturing in other services like underwriting and consultation. By doing this, the client not only buys an Insurance policy from the company but also benefit from assistance and advice of offered by the business. However, there for cognizance that diversification as a growth strategy can be risky as it may require development of both product and market which may be outsider the business’ core competencies. Growth strategies can also gives several economies in production, purchasing, marketing, finance, management among others. A firm which embarks on a growth strategy increases bargaining power and spread. This leads to low cost of production and higher margin of profit, thus, increasing the firm’s efficiency and profitability. Growth strategies such as internationalization help in the expansion of the business activities such as Research and development, production and expanding into the world markets (Hollensen, 2007). Such strategy also helps the firm to fulfill its growth and profit ambitions. It also encourages production of unique products or services in the industry. In addition, such growth strategies can encourage access to internal market opportunities or market information which distinguishes the insurance company from its potential competitors, like the NGOs. According to Deresky (2005, p. 223-225), growth strategies helps the firm in terms of economic of scale, and tax benefits. It may also encourage the selling of the firm’s products and services at a lower cost in international markets or accrue a higher profit. Like growth strategy important to market leaders so is the Share-growth strategies to followers in the insurance industry. However, this requires precise and clear positioning as well as strong marketing strategies for the market success of followers. 3. Discuss the possible strategic choices for the business for maintaining competitive advantage in shakeout, mature and declining markets. Competitive advantage can be equated to the firm’s advantageous position relative to its rival businesses. It is the situation when a firm or organization is able to deliver the same benefits as its competitors but at a relatively low cost or to deliver benefits that exceed its competitors (Carpenter and Saunders, 2007). It also related to the firm’s ability to create value in unique way that cannot be copied by its competitors. One of the strategies which can be adopted in environment of shakeout, mature and declining markets is cost leadership approach which simply entails the use of lower production unit price to get larger market share or higher profits as the competition and perhaps forcing some potential competitors out of the market (Carpenter and Sanders 2007, p.128). In simple terms, a focus on cost leadership describes company’s ability to offer a product or services to a niche group of customers/clients in a given market at relatively lower price in the market. To achieve and maintain the cost leadership business often cut down costs by spreading fixed cost over a large product volume so that the business can gain maximum benefit from the economies of scale (Porter 2008). Additionally, business can embark on establishment of more and more standardized products and services as well as outsourcing of some of operations. In addition to the companies peruse a maximum integration of their value chain to sustain low costs. Generally, firms which pursue this approach, cost leadership strategy an edge over their competitors in sustaining the profitable cost gap and able to predict changes in clients behavior as well as predicting the impact of technology breakthroughs and establishment of value chain (Carpenter and Sanders 2007). A company can also adopt differentiation strategy with an aim of gaining market share and higher profits through the use of unique features of their product or services and/or company. According to Carpenter and Sanders (2007), ‘if the group of customers/clients is willing to pay for the unique products then the firm or business can be said to have a competitive edge based on differentiation’ (p.128). A successful differentiation strategy encourages customer /clients’ loyalty and as results, they will be reluctant to switch goods/services. However, this depends on whether the product/services exceed the customers/clients ‘expectations and offers additional value that accounts for the higher price. The other condition is that the product/services must be made difficult, expensive and resource intensive to imitate’ (David 2009, p.195). Features such as compulsory certified good/services standardization guide against establishment of superior brand. A successful differentiation strategy also depends on the closeness of the product/services and firm to its customers/clients and feasibility research which aims at establishing desired product features. Value chain strategy is yet another method which can sustain the survival of businesses in environment of shakeout, mature and declining markets. Value chain strategy entails the identification of the sequence of key generic activities or processes that the firm engages in with an aim of creating or generating value for customers/clients. Hollensen (2007) describes the value chain as that which displays and categorizes the company’s activities giving value for the customers/clients while accruing profit for the business. Clulow, Gerstman and Barry (2003) contend that a company or business can be described as having a competitive advantage if it implements a value chain strategy unique from competitors. Similar view is shared by Porter who explains that a company or business can position itself to have competitive advantage through the value chain at a relatively lower cost and more efficient than its other players in the industry. Porter argues that every step in the value chain, is associated with the opportunity for the business to compete with their potential competitors in order to gain competitive edge through engaging more efficiently the company’s activities (incurring low expenses), or performing activities in a unique or a distinguished manner that encourages greater buyer value as well as commanding differentiation (Porter 2008). An organization can enhance its competitive positioning by performing key internal activities in the value chain at a lower cost and better than its competitors (Porter 2008). The value chain approach is associated with two basic activities, primary and secondary. The primary activities encompass improvement in production, marketing, logistics and engagement in after-sale services. On the other hand, secondary activities include the various support processes to the primary ones such as technology, human resources, planning among others. 4. Relevance of various strategies to serve new economy markets in regards to your business (Insurance Company) Insurance companies need to embrace strategic responses that will give them an opportunity to gain market share so that they can improve their competitiveness. These strategies include acquisitions, mergers, market penetration, diversification and strategic alliances (Wanda, 2010). Again, an insurance company can apply the marketing mix defined as the combination of marketing activities that an organization engages in so as to best meet the needs of its targeted market. The Insurance business deals in selling services and therefore due weight age in the formation of marketing mix for the Insurance business is needed. The marketing mix includes sub-mixes of the 7 P‘s of marketing i.e. the product, its price, place, promotion, people, process & physical attraction. One of the strategies which is relevant is insurance of diversification. Insurance’s diversification can play an important role in improving the volume of revenues while offsetting the reduction of interest margins originated by financial disintermediation (Berger, Hancock and Humphrey, 1997). To survive the competition, the insurance company may also need to continuously bring new versions of basic products to achieve and sustain an edge over his competitors. 5. Description of the appropriateness of designing organizational structures and marketing plans for the implementation of different competitive strategies for the business under consideration (Insurance Company). Organizational structures and marketing plans are essential aspects of businesses. Organizational structures revolve around the organization’s human resource needs to achieve specified goals of the organization and helps in the facilitation of the flow of information within the organization. In addition, is assist in the integration of organizational behavior across different departments of the organizations so that organization behavior can be coordinated (Stanford, 2007). Organizational structure can also be viewed core components of the organizational design process (Weingarden, 2011). Designing an organization structure and marketing plans can assist identifying the various talents that are essential to the growth of the company hence needs to be added . A good organization structure helps or ensures that the firm is composed of the right people and in the right positions/places. With a good organization structures, it is possible to know the points of weakness or deficiencies in the firms’ top management. Planning the structure ensures there are enough human resources within the company to accomplish the goals set forth in the company’s annual plan. It is also important that responsibilities are clearly defined. At a fundamental level, planning is concerned with the adaptation process of a given organization to its market environment. Particularly, planning is all about the manner in which the firms cope with its uncertainties and future. From this definition, it can be concluded that planning activities often lead to ultimate discovery of cause and effect relationships between organizational activities and results or outcomes. The critical role of marketing plan is the determination of an organizational response repertoire. On the basis of Kotler's definition of marketing as ". . . programs designed for establishing, creating, building and maintaining mutually advantageous exchanges and relationships with target markets..." (1980, p. 22), marketing plan clearly would encompass such areas “sales," "advertisement "customer care or service," "management of product or services, among others. 6. Critical roles of marketing metrics and marketing audit in relevance to your business. Role of marketing metrics Marketing metrics especially that connects marketing activities to business performance can play a critical role such as integrating marketing management in line with the business’s decision-making and functional process. Evidence abound confirming the role of marketing metric with business performance. For instance a study by Ambler et al (2004) revealed that a link between management orientation and the type of metrics used being moderated by the business sector. Marketing metric is able to measures marketing outcomes and by extension impacts on the overall business performance especially in relation to profitability and stock returns as well as marketing’s stature within the firm (O’Sullivan & Abela 2007) hence seen as a vital component of modern marketing practice (Markus and Mairead, 2010). Marketing metric is also important in checking the existing turbulence particularly external business environment which possesses significant amount of explanatory power and therefore could be used as useful benchmarks for companies with specific features .Turbulence in the context of this paper refer to either market or technological turbulence, new product development strategy planning (Calantone, Garcia and Droge 2003). Since the competitive environment has a profound influence on the nature of marketing productivity, it is therefore crucial to use impacts metric for assessing marketing (Clark 2000). Role of marketing Audit Marketing audit in this context may be seen as a systematic, documentation, periodic and objective evaluation of how well, marketing strategies are performing in company (Markus and Mairead, 2010). Marketing audit can also be seen as a “ type of independent review of marketing business performance, with an aim of identifying gaps or problem areas as well as marketing opportunities while recommending plan to enhance or adjust the marketing performance of the firm” (Solcansky and Simberova, 2010, p755). Marketing audit plays critical role of praising the company as it is able to check both internal and external influences on marketing planning, as analyzing or reviewing the existing plan. By praising the company, management is able to identify both opportunities and threats and then adjusts the company’s position accordingly based on the results (Morgan, Clarkand Gooner, 2002). Through the marketing audit gives, the company can be informed about the marketing of the various products in market marketplace. It helps in explaining the what, why, how and when. It also gives information on whether sales and revenue forecasting are accurate and whether they have brought about sufficient growth to cover the company’s costs while generating suitable incomes (Morgan, Clark and Gooner, 2002). Marketing Audit when carried out effectively can help improve marketing engagements of the firm while at the same time improving internal company communications and higher interest of marketing staff along the business vision and objectives (Solcansky and Simberova, 2010). Marketing audit also equips the company with a good understanding of the needs customers/clients while also projecting and identifying future needs. This can also help is establishing an approximate marketing mix for the company (Solcansky and Simberova, 2010). References Calantone, R. Garcia, R and Dröge, C. (2003) The Effects of Environmental Turbulence on New Product Development Strategy Planning. Journal of Product Innovation Management. 20(2): 90-103. Clark, B.H. 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