Concept

Marketing and the Concept of Planning and Strategy

Over the years marketers have been presented with a series of philosophical approaches to marketing decision making. One widely used approach is the marketing concept approach, which directs the marketer to develop the product offering, and indeed the entire marketing program, to meet the needs of the customer base. A key element in this approach is the need for information flow from the market to the decision maker. Another approach is the systems approach, which instructs the marketer to view the product not as an individual entity but as just one aspect of the customer’s total need-satisfaction system.

A third approach, the environmental approach, portrays the marketing decision maker as the focal point of numerous environments within which the firm operates and that affect the success of the firm’s marketing program. These environments frequently bear such labels as legal-political, economic, competitive, consumer, market structure, social, technological, and international.

Indeed, these and other philosophical approaches to marketing decision making are merely descriptive frameworks that stress certain aspects of the firm’s role vis-à-vis the strategic planning process. No matter what approach a firm follows, it needs a reference point for its decisions that is provided by the strategy and the planning process involved in designing the strategy. Thus, the strategic planning process is the guiding force behind decision making, regardless of the approach one adopts. This relationship between the strategic planning process
and approaches to marketing decision making is depicted in Exhibit 1-1.

Planning perspectives develop in response to needs that arise internally or that impinge on the organization from outside. During the 1950s and 1960s, growth was the dominant fact of the economic environment, and the planning processes developed during that time were typically geared to the discovery and exploitation of entrepreneurial opportunities. Decentralized planning was the order of the day. Top management focused on reviewing major investment proposals
and approving annual operating budgets. Long-range corporate plans were occasionally put together, but they were primarily extrapolations and were rarely used for strategic decision making.

Planning perspectives changed in the 1970s. With the quadrupling of energy costs and the emergence of competition from new quarters, followed by a recession and reports of an impending capital crisis, companies found themselves surrounded by new needs. Reflecting these new management needs and concerns, a process aimed at more centralized control over resources soon pervaded planning efforts. Sorting out winners and losers, setting priorities, and conserving capital became the name of the game. A new era of strategic planning dawned over corporate America. The value of effective strategic planning is virtually unchallenged in today’s business world. A majority of the Fortune 1000 firms in the United States, for instance, now have senior executives responsible for spearheading strategic planning efforts.

Strategic planning requires that company assets (i.e., resources) be managed to maximize financial return through the selection of a viable business in accordance with the changing environment. One very important component of strategic planning is the establishment of the product/market scope of a business. It is within this scope that strategic planning becomes relevant for marketers.1 Thus as companies adopted and made progress in their strategic planning capabilities, a new strategic role for marketing emerged. In this strategic role, marketing concentrates on the markets to serve, the competition to be tackled, and the timing of
market entry/exit.