Stratergic Marketing

University Degree Education and Teaching

Introduction

This assignment is to find strategies to fill the Strategic Gap identified by way of operational and new strategies in preparing the Marketing Plan for the following year.

Selection of an organization

Two hospitals have been considered as the examples, Nawaloka Hospital (NH) and Asiri Surgical (AS).

Background information

At present, NH is the market leader with AS in the second position, which is shown below. The industry growth for Nawaloka the coming year is expected to be 2% and Asiri is expected to be the market leader by identifying the strategic gap and developing a marketing plan to fill this gap by way of new strategies and operational strategies, which lies as the responsibility of the undersigned as the Marketing Manager of AS.

Marketing Strategy

When developing a marketing strategy, we need to understand the terms markets and marketing.

As we could see that a market consists of people ie- consumers and sellers and of its actual and potential customers. There could be consumer markets ie where the output is directly consumed by the general public (which is also known as B2C) or industrial markets ie- where the output is used by another business to produce their goods & services (also known as B2B).

Among the many definitions available to describe marketing. Eg. Philip Kotler defines it as “a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others” while The Chartered Institute of Marketing (UK) as “the management process responsible for identifying, satisfying and anticipating the valuable customer requirements at a profit”.

The reason for Marketing is with ousting Marketing people, businesses and advanced economies specialize cannot do their day to day life cycles. Therefore, the various goods and services supply need to be sold in the competitive environment in which they operate with competitive advantages. The roles of the marketing department, is to carry out marketing activities (such as personal selling/direct marketing /sales promotions / advertising etc.) which link the product to consumption and in doing so need to address the following issues such as what is the need and does that consumer need could be satisfied with our output and could it be sold to the target audience and how could we send as the output and how are we going to market it to the consumer and how to encourage them to consume ., whilst at the same time pursuing its organizational purposes, aims and objectives. These should be considered by the service providing companies specially Hospitals.

In order for it to be able to achieve both its organizational goals and marketing goals, there need to be goal similarity which shows the collective nature of management and complete co-ordination between different functional areas of the organization. This is known as the systematic approach to marketing which considers the following key points:

marketing is a philosophy that believes that the business and its decisions should be governed by its markets or customers rather than by its production or technical facilities
it is a systematic process of business planning, execution and control
requires an improved form of commercial organization
places a strong emphasis on innovation
it is a method for achieving dynamic business strategy and competitive advantage
it is a form of management by objectives
Employs improved methods and systems based on economics, statistics, finance and the behavioral sciences.
involves a system of commercial intelligence

The objective of meeting its customer needs efficiently which involves the implementation of the marketing mix, the investment of money and resources, the co-ordination of all departments is facilitated by the development of a marketing plan which is part of the marketing planning process, with the other dimension being the marketing audit.

Market to one organization is different to that of another and so will be its competition, structure, culture, management styles and strategies. Therefore, in order for a company to survive and overcome competition, it will need to draw up strategies suited to its company. This is known as the marketing plan of the company which should essentially be developed using a stage-based model, where the stages include the market audit ie identifying the current market situation, the strengths weakness opportunities and threats analysis (SWOT), the objectives, the marketing strategy and action programs.

Constraints that must be considered in developing a marketing plan would be the limitations faced by the company such as cost or finances, time and performance, because even the best of plans cannot be executed if the company does not have the above mentioned factors, for example, the finances which are necessary for it. Also it will be necessary to draw up a marketing plan overview document to track the execution of the planned tasks within its allocated, realistic time limits in order for it to be effective and serve to its defined purpose. It should also have a control mechanism also known as marketing control, to monitor the deviations from the plans since these are executed in constantly changing environmental conditions. This process will lead to the “gap analysis” and help it to take proper action to once again achieve its objectives. If not it might experience a drift in the strategy. The speed at which a company can modify its plans will depend on its flexibility which lead to its success.

As recognized by Ansoff, within each corporate strategy, there is a choice of specific marketing strategy which has been divided into four options via market retention, market expansion, market penetration and diversification. In general, marketing strategies comprises of three options as suggested by Michael Porter via provision of basic goods & services at low cost, incurring higher costs where differentiated or unique products are selling at premium prices and focusing on a small specialized niche in a market.

Current Products New Products

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Markets

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Current Products New Products

Current

Markets

New

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When deciding the best option, the company will need to concentrate on several factors such as whether its selling one product or has a portfolio of products, the stage at which the product and the company is in its life cycle and whether they are going to introduce new products or a product mix. Next the company will need to evaluate financial and non financial criteria such as profitability, return on investment, CSR projects availabilities, goodwill of the company by using mathematical modeling such as CVP analysis, BE analysis.

To arrive at the best strategy, a compromise will be made between several factors which need to be taken into account as the marketing mix, limiting factors, PEST factors, future trends.

The tools and techniques involved in producing a strategic marketing plan are The Five Forces model by Michael Porter, STEEPLE analysis, SWOT analysis

Five forces model is used for industry analysis and business strategy and identifies the five forces which determine the competitive intensity and attractiveness of the market. Mainly being qualitative assessment of the firm’s strategic position. Analyzing each of the five forces individually, organization can identify the strategies that it should implement taking into account the factors identified in the analysis and combing them with its core competencies to take advantage of same and be competitive.

STEEPLE analysis which is an acronym for Social, Technological, Economic, Environmental, Political, Legal and Ethical also known as PESTAL or PEST factors used to analyze the internal and external environment of the company. PEST Analysis is a useful tool for understanding the “big picture” of the environment, in which you are operating, and the opportunities along with threats that lie within it. These are first used to brainstorm the characteristics of a country or region and using this, draw conclusions as to the significant forces of change operating within it. By understanding your environment, you can take advantage of the opportunities and minimize the threats. This provides the context within which more detailed planning can take place to take full advantage of the opportunities that present themselves.

SWOT analysis which is also a similar tool that analyses the external and internal environment. The SWOT Matrix (Appendix 1) is a relatively simple tool for generating strategic options. Use of it enables to look intelligently at how you can take best advantage of the opportunities available to you, at the same time that you minimize the impact of weaknesses and protect yourself against threats. After analysis of your threats, opportunities, strength and weaknesses, it helps you consider how to use the external environment to your strategic advantage, and so identify some of the strategic options available.

Both these models taken in combination, helps the company to identify the position, the environment, the factors that have an influence over the organization such as technological, competitors, Economical etc., which in turn will affect the decisions to be taken by the company. eg, when the company search its environment, it will see the need to update its technology and delivery system, this will influence the decision making process.

To develop a strategic plan, four key concepts form the basis of the decision of the techniques to be used via segmentation, positioning, marketing mix and value chain.

As with any situation, a tool or technique cannot be analyzed and used in isolation. Other tools and factors will need to be looked at in finally arriving at the most optimal and best decision to have a strategic fit.

Comparing all tools and techniques, the company identifies where its position is in the market in order to evaluate the strategy option to adopt.

There are several options available to a company to implement marketing strategies.

Porter’s generic strategies model which deals with how to gain a competitive advantage using three factors via differentiation, cost leadership and focus which aims at choosing a different way of achieving competitive advantage in a crowded marketplace. Organizations that achieve Cost Leadership can benefit either by gaining market share through lowering prices (whilst maintaining profitability,) or by maintaining average prices and therefore increasing profits. All of this is achieved by reducing costs to a level below those of the organization's competitors. Companies that pursue a Differentiation strategy win market share by offering unique features that are valued by their customers. Focus strategies involve achieving Cost Leadership or Differentiation within niche markets in ways that are not available to more broadly-focused players. The greatest risk in pursuing a Cost Leadership strategy is that these sources of cost reduction are not unique to you, and that other competitors copy your cost reduction strategies. This is why it's important to continuously find ways of reducing every cost. One successful way of doing this is by adopting the Japanese Kaizen philosophy of "continuous improvement". This focuses on the company’s market position and performance.

Core Competencies (CC) model that is where the company identifies what its CC and uses that to gain advantage. The idea of the “core competence” is one of the most important business ideas that has created our world and it is what lies behind the current wave of outsourcing, as businesses concentrate their efforts on things they do well, and outsource as much as they can of everything else. This is the reason that there is such an emphasis on selling “Unique Selling Points” in business: If you are able to offer something uniquely good, customers will be willing to pay more for them and will want to choose only your products. This may not necessarily take into account cost leadership but rather focus on value for money. Also you should take necessary steps where the competitor should not be able to imitate or else you would soon lose.

Critical Success Factors (CSF) deals with identifying those critical areas and helps create a common point of reference to direct and measure the success of your business or project. CSFs help everyone in the team to know exactly what is most important and makes people perform their own work in the right context and so pull together towards the same overall aims. Eg. Becoming the market leader is the critical factor. Therefore, all strategies will need to focus on this.

Nawloka Hospitals

Vision

Maintaining leadership and excellence in the healthcare industry

Mission

To provide the best healthcare to the needy in a cost effective, timely

and professional manner

Asiri Surgical Hospitals

Vision

Dynamic private health service provider

Mission

High quality health care service

The portfolio planning models such as BCG deals with portfolio management ie where the company has many Services at their head office and many regional outlets such as Nawaloka Channels /Asiri Channelling centers. This provides a useful way of looking at the opportunities open to you in the segmented target area, and helps you to analyze which segments of your business are in a good position – and which ones are not and how we have to face on those areas weather to continue the business or not on those areas. That way, you can decide on the most appropriate investment strategy for your business in the current & future, and where best to allocate your resources and focuses on market share and market growth which are interrelated and it will help to be the No 1 Hospitality service provider in Sri Lanka.

The importance of integration, as stated by Doyle, went onto confirm the Japanese astuteness in marketing. Their strategies were clearly defined, decisive and aggressive, not losing sight of new opportunities in the market, timing not only their opportunities but also their entry as well. Their products had significant advantages and their marketing efforts were more efficiently targeted at well-defined sectors of the market.

Thought that the development and implementation of marketing strategies are inseparable, where the ability of marketing managers to identify areas of strategic advantage and use it to build on the organization’s strengths lead it very own success.

Effect on the organization, depends on how the marketing environment changes especially in the long run

The environment in which organizations operate is increasingly unstable in an era of global, national and regional competitiveness. Therefore, yesterday’s strategies are not likely to work in tomorrow’s workplaces. Change becomes an inevitable process in an effective organization and that of the management. Organizational change therefore, should view all the available opportunity for improved profitability and to survive. Change can take on many forms such as a planned, emergent and opportunistic change. Planned change such as the introduction of a new healthcare scheme will generally be planned in advance and implemented over a period of time. Emergent change can be described as something that the company does in response, example, to its competitors like introducing a product to overcome the competition of the competitor. This is totally unexpected and not planned for in advance. Opportunistic change could be, for example the need for a well equipped surgical unit, the organization must penetrate in order to and obtain a greater market share. Some areas will effect will react instantly

An organization does not function in isolation, but rather it is a system with several sub-systems and interacting with its environment. System can be defined as an assembly of sub components connected together in an organized way, where the components are affected by being in the system and are changed if they leave it, the assembly of components does something and the assembly has been identified by someone as being of interest.

Further Social, Legal, Economical, Political and Technological factors will come into play during the implementation of a strategy. Therefore, whilst on one hand the organization is affected due to its interaction with the environmental sub systems, the organization in turn also has a bearing on the environment. When a new strategy is planned, the organization needs to identify the effect of the strategy on all the systems that function at present after conducting a stakeholder analysis, which will give us details as to who are the stakeholders, their attitude towards the proposed strategy, their commitment, the impact each group of stake holders have on agreeing to the strategy etc. If the response are positive, then the implementation of the strategy is easier, than if they are negative towards the proposal. It is like humans reaction to a change.

The management of a company can be divided into corporate, middle and operations management with the responsibility of developing management strategy resting with the corporate or top management of the company. They will need to draw up the vision and mission and come up with objectives and develop strategies to achieve them. Thereafter, these strategies should be broken down into tactical and operational plans to be used by middle and operations management respectively. Known as a top-down approach, where all the business objectives are interlinked and aimed at achieving its mission and vision. After having identified the strategies, only then can its resources be deployed and effectively used to achieve its mission.

Asiri Surgical Hospitals

New Vision

To be a compassionate, efficient and dynamic private health service provider

thereby achieving the highest standards of customer satisfaction

New Mission

To provide a comprehensive, ethical and high quality health care service at a

reasonable cost.

Objective

To be the best private hospital

To be the best high tech hospital along with all new features.

To have the best surgical units

To be in every local’s heart especially with issues related to heart (Asiri Heart)

To supply the best doctors and nursing for patients

In developing a vision, mission and objectives several criteria need to be met. Developing of strategies will need to be consistent with the organization’s mission and vision if not contradiction would take over and conflicts arise in its implementation.

Why we change this is to be the market leader in hospital sector, in the current Sri Lankan service sector. In order to achieve a goal should be an “objective”, the following criteria that should be met. This is also known by the acronym: SMART(ER) ie. it should be Specific, Measurable, Acceptable, Realistic, Time bound, Extending and Rewarding.

A company adhering to the above, should also consider the other implications of adopting a strategy on the society or social implications because today companies are looked upon as a corporate citizen with a responsibility to the society. Before taking a decision alternate strategies and opportunity cost should be taken into account, along with the cost benefit analysis.

The changes in the marketing environment as discussed above can be ascertained using the various tools and techniques available. The changes that take place in the environment are changes in customer demand, globalization, technology, organizational accountability and CSR (we do have CSR projects such as free medical checkups for outstation people along with our mobile service, we do have cancer day, heart day and diabetic day where patients can come and get them checked for a very low cost) which the company need to take into account in conducting its day-to-day business activities.

Hospitals are faced with greater demands from the consumers due to the increased knowledge, technology etc. available to them. Today expect more for less with value additions, and are able to compare the different service providers available in the hospital field, especially with the development of the internet within a relatively short period of time and it has made the customer to channel the doctor through internet. Therefore, it will be of paramount importance to the company to be able to meet their needs and expectations effectively or even face reputation damage through media from dissatisfied customers. Customer service is now fast developing, becoming the need in order to maintain customer loyalty and retention.

In order to provide the customer with better accessibility, internet systems together with customer relationship marketing (CRM) are now emerging with customer data base management to help their potential customers on their requirement. With access to the database of the hospitals and being able to access the relevant information they need, the customer is able to get there requirements done without even the intervention of any personnel, this proves the speed and efficiency. CRM which helps the customer identify with a specialized person from the organization helps to build relationships that facilitate business dealings to get the service in a higher value. Knowledge of having a specialized contact person, makes all the difference to the transaction process, which is catered to the customer’s needs, liking, timing and most prominently the significance, because the CRM concept is extended only to the cream of the company’s customers, based on the 80/20 rule that 20% of the customers bring in 80% of the profit. Therefore, having dedicated CRM officers proves to be beneficial and cost effective. TQM (Total quality management) another area that companies needs to address with regard to the continuous improvement in quality. The hospital could also use benchmarking to measure its customer service through regular customer service surveys to be alert and responsive.

Due to the changes, the traditional concept of the marketing mix of 4 P’s seems to be changing with new meaning rather than the traditional product, price, place and promotion for the P’s such as Participation, Peer-to-Peer communities, predictive modeling and Personalization.

The traditional concept of the company producing and pushing its products to the customer is now fast dying. Companies now need to focus on producing products which the customer needs at the right time in order to meet their demands. In doing so, timing or being able to provide the product at the right time without taking too long will definitely play a key role in the decision making of the customer, because if the product comes out too late, it will be of no value to him. Therefore, the shift from a supply to demand environment has now emerged and here to stay with businesses needing to fall in line.

Companies today look for ways of reducing cost and progressing through to cost leadership in the industry in order to maximize on profitability by keeping unit costs low. Strategic alliances also joint ventures are becoming household names with many businesses joining together to function its operations. This not only helps in reducing cost but also helps in utilizing resources.

Innovate or die makes companies that are flexible to adapt to changes quickly are the survivors of the day and are also being able to grab the cream of the customers. New technology plays a major role in the change process, helping to alter its direction very quickly. With this new trend, flatter organizations, learning organization, athletic organization, responsive organizations, creative organizations are all names given for this strategic strength of being fast on your feet and being able to learn fast enabling change at a faster pace. In this process, de-layering, business process re-engineering, networking are also taking place.

Companies needs to address issues as intellectual property, patents etc which will influence the technological changes of the future.

Marketing strategy focuses at the target market to create the right marketing mix and how best it can incorporate changes to the marketing mix achieve its goal.

Functional such as finance, production, sales and others need to be integrated within the organization. A strategy could be defined to achieve its objective. This is generally long term in nature and we can differentiate strategies into corporate strategies and functional strategies (strategic business units) such as human resources, finance, marketing strategy etc. The functional strategies should be taken from and lead to achieve the corporate strategy. Planning is short-term, and details how the strategy is should be achieved together with the required allocation of resources.

SBU will contribute to the overall achievement of the corporate goals, by achieving its individual goals which have been cascaded from the mission. Functional objectives and strategies are for shorter durations, usually 1-3 years, with this being broken down further to operational plans with a maximum of one year duration. These plan that support to achieve the long term strategic objectives. Therefore, if an organization needs to effect changes to its objectives, it needs the co-operation and contribution of all other functional areas as well. Let us take the example of a health care program launch. It will need the finance division to provide for the finances, the HR division to provide for the adequate sales force and necessary expertise and/or training, the IT division to implement the process, the supply and production to make available the product, the R & D team to conduct market research etc. These cannot happen overnight and needs much careful attention and analysis. Therefore, these can be affected only in the medium term, and as such, takes time, usually one to three years to fully integrate into the marketing plan.

Once strategies are identified they should be broken down into smaller measurable components like monthly, quarterly, half-yearly budgets so that they can be compared and evaluated to see direction of the company and to check whether it is on track or if there is a variance, to take corrective action to bring it back on course. If not, it is only after one year or at the tail end of the project that the company will realize that it has deviated from its target or objective. The company will need to plot graphs that depict the intended strategy and the realized strategy in order to identify the new strategies that are needed to fill the gap.

Alongside each other the changes that are constantly taking place as well, within the turbulent environment in which the company operates, and to gain advantage of opportunities that might otherwise be missed and taken over by their competitors.

The organization needs pulling together as well as pulling in the same direction helps them to achieve the goals.

Conclusion

In keeping with the vision of AS to be the acknowledged leader and chosen partner in providing health care solutions through inspired people, and with its mission of combining entrepreneurial spirit with empowered people and leading edge technology to constantly exceed stakeholder expectations, the implementation of operational plans of cost reduction and new plans of market diversification taking all the above into account will lead us to achieve this through the marketing plan.

References

Menon, A. et al. (1999). "Antecedents and Consequences of Marketing Strategy Making". Journal of Marketing 63: 18–40. :.
See for instance: Mehta, S. (2000) Marketing Strategy
Hill, T. & R. Westbrook (1997). "SWOT Analysis: It’s Time for a Product Recall". Long Range Planning 30 (1): 46–52. :
Dibb S et al Marketing : Concepts and Strategies, Forth Edition (Houghton Mifflin, 2000) ISBN 0395962447
Doyle P Marketing Management and Strategy (FT Printice Hall,2000) ISBN 027365501
Baker, Michael The Strategic Marketing Plan Audit 2008. ISBN 1902433998. p.3