UNIT-3:STRATEGIC PLANNING

AND IMPLEMENTATION
Process of strategic planning; Micro and Macro Variables used to
Segment Industrial Marketing; Industrial Marketing Strategy in India;
Managing the Development of Strategic Planning and Mckinsey’s 7s-
Framework.Understanding Strategy Formulation and Strategy
Implementation; Industrial marketing strategy Components; Industrial
Marketing Research for New Product Development
PROCESS OF STRATEGIC PLANNING
B2B MARKET SEGMENTATION
 MACRO SEGMENTATION
ORGANIZATIONAL SIZE
 A large organization may buy the same product as a smaller one, but it would buy
differently. A large organization will buy in larger lots and will have a formal
buying process. It will have specialized departments like those of purchase and
quality control, with each one having an individual mandate. It is also likely to
demand more services and discounts.
 The company’s list price should take into account the volume discounts that large
clients will inevitably ask for and its salespeople should be good negotiators. A
company may have to design a unique marketing mix to serve each of its major
clients, and it may need to have dedicated salespeople to serve each one of them.
 It may happen that a company’s profitability in serving large clients is low, and
hence it is not wise to ignore smaller clients, who do not want extensive services
and deep discounts. A company may develop a business model for serving large
number of small clients, which may not necessarily be less profitable than another
company’s business model of serving few large clients.
 INDUSTRY
 The industry that an organization is part of largely determines what it
would buy. An industry has a unique requirement of products, buys in a
particular manner and requires certain level of quality in the product that it
buys.
 Therefore, a company may be selling a product like computers to clients in
different industries, but it cannot sell in the same way and sell the same
computer to its clients in different industries. Though companies in an
industry may buy slightly differently from each other, it is possible to
design a marketing mix for an industry, which a company can then tweak
for different buyers in the industry.
 Therefore, it is important that a company makes an in depth study of the
requirements of an industry, before it starts to woo companies of that
industry.
 GEOGRAPHICAL SEGMENTATION
 There are regional variations in purchasing practices and needs. Companies
operate within the constraints of their national cultures.
 In an American company, a purchase manager may have the full authority
to make a purchase decision, whereas in a Japanese company, a purchase
manager may have to build consensus among various stakeholders before
he can make a purchase decision.

https://www.yieldify.com/blog/geographic-segmentation-real-world-examples/
 MICRO SEGMENTATION
 Each company buys differently from other companies in its industry, and a
seller needs to develop a detailed understanding of how each company
buys.
 It is important that salespeople spend considerable time in understanding
the roles that different functions play in the buying process and their
individual mandate. It is also important to understand the buyer’s
philosophy in terms of its emphasis on quality, its view on price and its
intent of developing long term relationship with the sellers.
CHOICE CRITERIA:

 A company’s choice criteria will depend on how it has decided to compete

in its own market. Therefore, a buyer will not budge on quality because it
is making a premium product, and another will not budge on price because
it is making a value-for-money product.

 A seller needs to understand what each one of its buyers is trying to

achieve for its target market to know how it would buy—the buyer who is
buying premium products will be willing to pay a higher price if the seller
offers to increase quality of its products, and the buyer who is buying
value-for – money products will be willing to buy products of lower
quality if the seller offers to reduce its price.

 Therefore, a seller needs to have different marketing mix when its buyers
have different choice criteria, and salespeople will need to emphasize
different benefits with different clients.
Decision making unit structure (DMU)
 In an organization, a large number of people influence the purchase
decision. Though a Decision Making Unit or a DMU does not exist on a
formal organizational chart, its members exert tremendous influence on
how a buying process will proceed and who will finally be selected as a
supplier.
 Who the members of DMU are, depends on what product is being bought
and whether the product has been bought earlier. For example, if a buyer is
contemplating outsourcing manufacturing of a component of a new
product, the DMU may consist of product developers, process engineers,
quality engineers, manufacturing engineers, assembly engineers and
purchasers.
 But, if a buyer is contemplating buying grease for its machines, the DMU
may just consist of manufacturing engineers and purchasers. If the product
has been bought earlier, the DMU might just consist of quality engineers
and purchasers, because the supplier has already been evaluated on
parameters which are important to the buyer.
 Now, the task is to ensure that products of consistent quality are delivered
on time. It also depends on the industry the buyer is part of. In one
industry, top management may make the decision, in another, engineers
may play a role, and in yet another, purchasers may play a role. The selling
approach that a company will adopt will depend heavily on the priorities of
the members of the DMU.

DECISION MAKING PROCESS:

 The size of the DMU depends on the type of the product which is being
bought, and whether the product has been bought earlier. The buying
process will be longer if the size of the DMU is large because the suppliers
will be evaluated on all the parameters that are important to all the
members of the DMU.
 For example, quality engineers will ensure that the supplier is capable of
meeting quality standards, and product developers will ensure that the
component serves the function for which it has been designed. Therefore, a
seller needs to be willing to expend resources and time to deal with a large
DMU. The buying process is short when the size of the DMU is small, and
also when the product has been bought earlier.
BUY CLASS:
 It is helpful to categorize organizational purchases into straight rebuy,
modified rebuy and new task. Whether a particular purchase is straight
rebuy, modified rebuy, or new task, will affect how long the buying
process will take, who the members of the DMU will be and what would
be their choice criteria.
 Once a seller has categorized a purchase into one of the buy class, he can
estimate the amount of time and resources he will have to expend to clinch
a deal.
 When a company is buying an item for the first time, it will prefer
suppliers who will have the patience to educate the buyer company. It will
also be suspicious of sellers as it does not really know the credibility of the
sellers.
 The sellers will have to demonstrate a lot of patience as the buyer will
evaluate lots of options and get into a lot of consultation before settling on
a supplier (new task). When the company is already buying the item but
only wants to alter the specifications of the product or the conditions of
purchase, it will expect the incumbent supplier to make the required
changes and retain the order.
 New suppliers can make a pitch but they have to compete hard against the
incumbent supplier because of its proximity to the buyer (modified rebuy).
The incumbent supplier should get the order when the buyer continues to
buy the same item in the same way. New suppliers can make a pitch but
they have to prove that they are decisively better than the incumbent
(straight rebuy).

PURCHASING ORGANIZATION:
 Decentralized versus centralized purchasing is an important variable due to
its influence on the purchase decision. Centralized purchasing is associated
with purchasing specialists who become experts in buying a product or
range of products. They are more familiar with cost factors, and strengths
and weaknesses of suppliers than decentralized generalists.
 The opportunity for volume buying means that their power to demand
price concessions from suppliers is enhanced. In centralized purchasing
systems, purchasing specialists have greater power within the DMU with
respect to technical people like engineers.
 In decentralized purchasing, users and technical personnel have a lot of
influence and it is important to understand their requirements. A purchaser
may ultimately negotiate the price and place the order, but the choice of the
user and technical person is respected by the purchaser.
 Centralized purchasing segment could be served by a national account
team whereas decentralized purchasing segment might be covered by
territory representatives.

ORGANIZATIONAL INNOVATIVENESS:
 Marketers need to identify the specific characteristics of the innovator
segment since these are companies that should be targeted first when new
products are launched. Follower firms buy the product but only after
innovators have approved it.
 STRATEGIC PLANNING
 Strategic marketing planning is one of the main functions of marketing
management. It is the process in which the company develops marketing
strategies to meet its strategic goals and objectives. The main steps include
identifying the company's current situation, analysing its opportunities and
threats, and mapping out marketing action plans for implementation.

 “Strategic marketing planning is the development of marketing strategies

based on the overall business strategy”
Sections Details

Brief summary of goals and

Executive summary
recommendations

Analysis of the company's current

SWOT analysis marketing situation along with
opportunities and threats it might face.

Specification of the marketing objectives

Marketing objectives
following the overall strategic objectives

Strategies for the target market,

Marketing strategies positioning, marketing mix, and
expenditures.

Specification of steps to implement the

Action program
marketing strategies.

Estimation of marketing costs and

Budgets
expected revenue.

Description of how the monitoring process

Controls
will be carried out.
 ACTIVITY
Derive the Mckinsey’s 7s Framework and relate it to the
strategy formulation and Implementation process of your own
product/Service/organization
 ACTIVITY
• Industrial marketing strategy in India with examples
 ACTIVITY
• Industrial marketing research for New Product Development