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Strategic Marketing
Planning and Control

The Chartered Institute of Marketing/Butterworth-Heinemann Market-

ing Series is the most comprehensive, widely used and important
collection of books in marketing and sales currently available
worldwide.

As the CIM’s official publisher, Butterworth-Heinemann develops,

produces and publishes the complete series in association with the CIM.
We aim to provide definitive marketing books for students and
practitioners that promote excellence in marketing education and
practice.

The series titles are written by CIM senior examiners and leading
marketing educators for professionals, students and those studying the
CIM’s Certificate, Advanced Certificate and Postgraduate Diploma
courses. Now firmly established, these titles provide practical study
support to CIM and other marketing students and to practitioners at all
levels.

Formed in 1911, The Chartered Institute of Marketing is now the largest

professional marketing management body in the world with over
60,000 members located worldwide. Its primary objectives are focused
on the development of awareness and understanding of marketing
throughout UK industry and commerce and in the raising of standards
of professionalism in the education, training and practice of this key
business discipline.
Books in the series

Below-the-line Promotion, John Wilmshurst

CIM Handbook of Export Marketing, Chris Noonan
CIM Handbook of Selling and Sales Strategy, David Jobber
CIM Handbook of Strategic Marketing, Colin Egan and
Michael J. Thomas
CIM Marketing Dictionary, Norman A. Hart
Copywriting, Moi Ali
Creating Powerful Brands, Leslie de Chernatony and
Malcolm McDonald
Creative Marketer, Simon Majaro
Customer Service Planner, Martin Christopher
Cybermarketing, Pauline Bickerton, Matthew Bickerton and
Upkar Pardesi
Effective Advertiser, Tom Brannan
From Brand Vision to Brand Evaluation, Leslie de Chernatony
Integrated Marketing Communications, Ian Linton and Kevin Morley
Key Customers: How to manage them profitably, Malcolm McDonald,
Beth Rogers and Diana Woodburn
Market-led Strategic Change, Nigel Piercy
Marketing Book, Michael J. Baker
Marketing Logistics, Martin Christopher
Marketing Research for Managers, Sunny Crouch and
Matthew Housden
Marketing Manual, Michael J. Baker
Marketing Planner, Malcolm McDonald
Marketing Planning for Services, Malcolm McDonald and Adrian Payne
Marketing Plans, Malcolm McDonald
Marketing Strategy, Paul Fifield
Practice of Advertising, Norman A. Hart
Practice of Public Relations, Sam Black
Profitable Product Management, Richard Collier
Relationship Marketing, Martin Christopher, Adrian Payne and
David Ballantyne
Relationship Marketing for Competitive Advantage, Adrian Payne,
Martin Christopher, Moira Clark and Helen Peck
Retail Marketing Plans, Malcolm McDonald and Christopher Tideman
Royal Mail Guide to Direct Mail for Small Businesses, Brian Thomas
Sales Management, Chris Noonan
Trade Marketing Strategies, Geoffrey Randall
Strategic Marketing
Planning and Control
Second edition

Graeme Drummond
Napier University Business School

John Ensor
Napier University Business School

Published in association with The Chartered Institute of Marketing

OXFORD AUCKLAND BOSTON JOHANNESBURG MELBOURNE NEW DELHI

 Dedication to
Diane and Ewan
Geraldine, Hannah, Brendan and Owen

Butterworth-Heinemann
Linacre House, Jordan Hill, Oxford OX2 8DP
225 Wildwood Avenue, Woburn, MA 01801-2041
A division of Reed Educational and Professional Publishing Ltd

A member of the Reed Elsevier plc group

First published 1999

Second edition 2001

© Graeme Drummond and John Ensor 2001

All rights reserved. No part of this publication may be reproduced in

any material form (including photocopying or storing in any medium by
electronic means and whether or not transiently or incidentally to some
other use of this publication) without the written permission of the
copyright holder except in accordance with the provisions of the Copyright,
Designs and Patents Act 1988 or under the terms of a licence issued by the
Copyright Licensing Agency Ltd, 90 Tottenham Court Road, London,
England W1P 0LP. Applications for the copyright holder’s written
permission to reproduce any part of this publication should be addressed
to the publishers.

British Library Cataloguing in Publication Data

Drummond, Graeme
Strategic marketing: planning and control. – 2nd ed.
1. Marketing – Management
I. Title II. Ensor, John III. Chartered Institute of Marketing
658.8'4

ISBN 0 7506 5236 5

Composition by Genesis Typesetting, Rochester, Kent

Printed and bound in Great Britain
Contents
Preface xi
Acknowledgements xv

1 The strategic perspective 1

About this chapter 1
Introduction 1
What is strategy? 2
Towards strategic management 4
Change – shaping strategy 7
Balanced scorecard approach 8
The role of marketing within strategy 9
What is marketing strategy? 10
Summary 14

Part 1 Strategic analysis 17

2 External analysis 19
About this chapter 19
Introduction 19
Scanning 19
Macro-environmental analysis 22
Industry analysis 24
Competitor analysis 27
The market analysis 33
Summary 33

3 Competitive intelligence 35
About this chapter 35
What is competitive intelligence? 35
The competitive intelligence cycle 37
Sources of competitive intelligence 40
Summary 41
vi Contents

4 Segmentation 43
About this chapter 43
Introduction 43
Why segment? 44
The segmentation process 45
Consumer buyer behaviour 45
Consumer segmentation criteria 52
Profile variables 53
Behavioural variables 63
Psychographic variables 65
Organizational/industrial segmentation techniques 69
Organizational buyer behaviour 69
The Webster–Wind framework 72
The Sheth framework 74
Approaches to organizational market segmentation 78
Summary 80

5 Internal analysis 83
About this chapter 83
Introduction 83
Organizational capabilities 84
Organizational assets 84
Organizational competencies 87
Initial corporate-wide internal audit 88
The internal marketing audit 89
The innovation audit 90
Auditing tools 96
Summary 103

6 Developing a future orientation 105

About this chapter 105
Introduction 105
Forecasting 106
Trend extrapolation 107
Modelling 108
Individual forecasting 109
Consensus forecasting 109
Scenario planning 115
Market sensing 120
Strategic questions 120
People involved 121
Summary 123
 Contents vii

Part 2 Formulation of strategy 125

7 Strategic intent 127

About this chapter 127
Introduction 127
Mission 127
Statement of strategic intent 133
Nature of support for the mission statement 133
Goals and objectives 135
Hierarchy of objectives 137
Long-term versus short-term goals 139
The balanced scorecard 139
Gap analysis 140
Summary 142

8 Strategy formulation 144

About this chapter 144
Strategy formulation – an overview 144
Competitive advantage 144
Identifying sources of competitive advantage 150
Experience and value effects 153
Industry position 155
Product and market strategies 161
Strategic wear-out 167
Difficult market conditions 167
Summary 169

9 Targeting, positioning and brand strategy 171

About this chapter 171
Introduction 171
Evaluating market segments 172
Establishing organizational capability 176
Strategic alignment of assets and competencies (targeting) 177
The strategic nature of making target segment choices 181
Positioning 182
Perceptual mapping 185
Positioning alternatives 186
Creating brand equity 188
Brand valuation 189
Strategic brand management 192
Brand name strategy 195
Combined brand strategies 198
viii Contents

Brand extension 199

Brand stretching 199
Brand revitalization 199
Brand repositioning 202
Brand extinction 204
Summary 205

10 Product development and innovation 207

About this chapter 207
The strategic agenda 207
The nature of products and product development 208
Why do products fail? 214
Managing innovation 215
Risk and the innovation dilemma 217
Summary 221

11 Alliances and relationships 223

About this chapter 223
Introduction 223
Alliances 224
Relationship marketing 228
Developing relationships 230
Summary 232

12 The strategic marketing plan 234

About this chapter 234
Corporate and marketing plans 234
Corporate planning 235
Marketing plans – strategy or tactics? 237
Why does planning matter? 238
Barriers to successful planning 239
The structure of a strategic marketing plan 242
Approaches to marketing planning 242
Summary 244

Part 3 Strategic implementation 247

13 Strategic implementation 249

About this chapter 249
Implementation – stressing the importance 249
Success vs failure 250
Fundamental principles 251
Assessing ease of implementation 256
 Contents ix

People, power and politics 258

Internal marketing 260
Applying project management techniques 261
Summary 265

14 Control 267
About this chapter 267
Introduction 267
Control – the basic principles 267
What makes an effective control system? 270
Management control 272
Financial control 273
Performance appraisal 279
Benchmarking 280
Controlling marketing performance 281
Summary 283

15 Mini cases 285

Introduction 285
15.1 The National Westminster Bank plc – brand strategy,
June 1999 288
15.2 easyJet 293
15.3 Green Space 296
15.4 Gillette 299

Index 301
This Page Intentionally Left Blank
Preface

The aim of this text is to enable the reader to develop a sound

theoretical and practical understanding of marketing planning and
control. Although primarily written for those studying for the Char-
tered Institute of Marketing’s postgraduate diploma examinations, this
text is equally useful for industry practitioners. This is not an
introductory text to the subject of marketing, but builds on the existing
knowledge that students and practitioners already hold about the
principles of the subject. The aim has been to provide a clear, concise
guide to the tools, techniques and concepts necessary to undertake
strategic marketing decisions.
The text also covers contemporary issues by exploring current
developments in marketing theory and practice including:

䊉 The concept of a market-led orientation

䊉 A resource/asset-based approach to internal analysis and planning

Innovation is a theme throughout the text, reflecting the growing

importance of this issue, both in terms of its academic profile and
current business practice. There is also an emphasis on developing a
view of the future through various forecasting techniques.
This new edition also includes a new chapter on competitive
intelligence. Chapter 9 has been revised with new material on strategic
brand management. There is also a new chapter at the end of the text
which consists of four mini case studies. Throughout the new edition
new illustrative examples have been included to reinforce the material
covered in each chapter.
An instructor’s manual is available to academic staff adopting this
text. This contains expanded versions of selected illustrative examples
featured in the main text, new mini cases and a pack of lecture
material.
xii Preface

Information for students studying for the CIM diploma

The text covers the CIM’s Planning and Control syllabus, which is
divided into five major areas:

䊉 Market-led approach to planning

䊉 Analysis
䊉 Techniques for analysis and strategy development
䊉 Strategy formulation and selection
䊉 Implementation and control

Links with other papers

The Planning and Control syllabus acts as the central base for the other
subjects to build upon at diploma level. This text will provide students
with an understanding of the nature of strategic marketing decisions
and the strategic marketing decision process. This is a necessary
foundation for students before they progress to the other diploma
papers, International Marketing Strategy, Marketing Communications
Strategy and Analysis and Decision. In particular, this text acts as the
underpinning of the Analysis and Decision paper. When studying this
subject students should ensure that they are aware of these linkages and
understand the inherent integration between these subjects.

The examination paper

The examination paper will be in two parts. Part A is a mini case study
with two questions worth 20 marks each. Part B of the paper is made up
of six questions, of which candidates are required to answer three.
Again, each question in part B is worth 20 marks.

Part A is normally a mini case study, although it may be the abstract of

an article. In either case it will not normally be longer than a side of A4.
Students will be asked to analyse the material, make comments upon it
and propose further actions. Normally the answers will be required in
report format.

Part B will contain six questions from across the syllabus. These will
require candidates to understand marketing theories and concepts and
show that they can apply them to a given situation. Students will also
need to demonstrate that they have an ability to critically appraise these
models and concepts.
 Preface xiii

In the examination the examiners are looking for candidates to

demonstrate interpretative skills, insight and originality in answering
the questions. At the same time, it is expected that candidates will show
a critical awareness and understanding of the relevant theoretical
framework surrounding the issues being discussed.
To perform well on this paper candidates have to illustrate the
following characteristics:

䊉 Candidates need to concentrate on the strategic aspects of marketing

and not make the mistake of drifting into tactical answers.
䊉 Candidates have to demonstrate that they have the knowledge and
skills required to critically appraise and apply models and concepts,
not merely describe them.
䊉 Candidates have to illustrate their answers, wherever possible, with
relevant examples and provide the examiner with evidence that they
have undertaken wider reading about the subject.
䊉 Candidates need to ensure that they concentrate on the specifics of
the question set, rather than answering in a generalized way, and that
they answer all elements of the question.
䊉 Lastly, candidates should ensure that they answer the question in the
format requested. If the question asks for report format they need to
ensure that this is provided. Generally candidates should try to give
well-presented answers. Where possible candidates should use
diagrams as this helps them to use their time more efficiently.

In order for candidates to do well on this paper they need to be fully

prepared. The best preparation would include:

䊉 Practice on selected questions from past examination papers.

䊉 Reading the examiners’ reports and specimen answers that are
available for each past paper.
䊉 Reading as widely as possible, not only textbooks but also the
marketing and business press on a regular basis. Note: suggestions for
further reading will be found at the end of each chapter in this text.

Candidates should also ensure that:

䊉 They focus upon the application of models in a variety of market and

industry sectors, e.g. the service sector, small business sector,
business to business sector.
䊉 Wherever possible, they make use of their own business experience
and other illustrative sources to provide relevant examples. Regular
reading of the business press is useful in order to identify illustrative
examples.
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