Strategic Planning (and Strategic Marketing)

I thought that this general post might be useful for the two subsequent ones.

Strategic planning is about formulating goals and objectives and about accomplishing those objectives using one’s strengths, offsetting one’s weaknesses, identifying opportunities, making the best of allies, dealing with threats and eliminating enemies. It is an iterative process in which the goals and objectives are adapted to the resources available or made to be available, and the external environment as it exists or as it may be shaped. Strategic planning is relevant to anything from waging a war, or launching a new breakfast cereal product line.

Most corporate business plans deal with these issues. Corporations typically aim for markets, market shares, revenues and profits. They start with their fundamental competencies which may include technology and knowhow. They review the external environment (who else is out there to assist or hamper the process) and the internal environment (what initial resources are available or may be obtained, who will do what). External allies are important as they may provide synergies and allow for leveraging of shared resources. No process is without obstacles or «enemies», which may involve competing products or interests. Obstacles may be dealt with either head-on effort or by side-stepping, or unique positioning in the market, or with intelligent marketing.

A simple corporate business plan is centered on the three P’s: Product, Price, and Promotion. These have their own strategies and they are also iterative. You need a product, it needs a price, and the price is a function of cost and what the market can bear. Some products compete on price, but if a low price is not inherent or desired, premium pricing may be justified with premium market positioning. Sometimes premium pricing is established by quality or fashion, as may be the case with branded clothing; sometimes it is established by regulations or laws, as with automotive catalytic converters. You need to educate the market to promote the product or to make its price acceptable. You need a distribution channel and conditions that perpetuate demand. Generating demand for most products is sustained by marketing, which may be seen as establishing a need for that particular product.

It is not realistic to describe all aspects of strategic planning in a few short paragraphs, but there are a few additional notions that are interesting. It is always more efficient to embark on a venture that has market synergies. The best synergy is to ride on the marketing effort and success of a larger entity. The classic example is the marketing of personal computer software at the time when the largest computer company decided to sell personal computers. Few people may remember today that a large, worldwide PC software industry was created just by the decision of IBM to introduce its Personal Computer.

If synergies are helpful to a strategic plan, fads are extremely powerful marketing tools. A most interesting example is the introduction of health foods and vitamin supplements. These were driven by the demographics and lifestyle of the maturing and relatively affluent post WW2, western, baby-boom generation. If people in this population group became convinced that popping vitamin C pills could prevent cancer or the common cold, a huge and profitable vitamin supplement market would be developed.

Linus Pauling dealt with certain of his personal health problems through diet and vitamins in the 1950’s. Linus Pauling was a respected scientist who had received a Nobel Prize on his work on chemical bonds, totally unrelated to vitamins or health. Vitamin C has been known for many years and its possible role as a dietary supplement had been discussed by others, as early as the 1960’s. Linus Pauling’s work on Vitamin C in the 70’s and ’80’s has actually been deemed «controversial», but most people did not pay attention to the controversy. Vitamin C was and still is a relatively harmless and inexpensive supplement that may have some benefits and is part of a huge food supplement business.

Please note the leap of faith from a scientist with a well-intended opinion, who digressed into unrelated subjects more related to lifestyle than his science. The commercialization of opinions attributed to Linus Pauling is yet another matter, but his book has been on the NYT bestseller list. The vitamins industry did not create Linus Pauling, nor did it create human desire for longer life and better feelings. Linus Pauling was quite happy publishing his book, I own a copy, and this is Strategic Marketing based on a fad.

Regardless of your personal vitamin popping habits, please note that vitamins are NOT mandatory, nor are there taxes, tariffs, or UN rules that stipulate their consumption. Not yet, anyway.

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