Developing a Strategic Marketing Plan for Horticultural Firms

[Pages:28]January 2000

EB 2000-01

Developing a Strategic Marketing Plan for Horticultural Firms

Gerald B. White and

Wen-fei L. Uva

Department of Agricultural, Resource, and Managerial Economics College of Agriculture and Life Sciences Cornell University Ithaca, New York

TABLE OF CONTENTS

INTRODUCTION ................................................................................................................................ 1

AN OVERVIEW OF STRATEGIC PLANNING .................................................................................. 2

Characteristics of Strategic Planning ..................................................................................................... 2

The Purpose of Strategic Planning ......................................................................................................... 3

Contents of a Strategic Plan .................................................................................................................. 3

Steps of the Strategic Planning Process .................................................................................................. 4

DEVELOPING THE STRATEGIC MARKETING PLAN ..................................................................... 7

A Suggested Outline ............................................................................................................................. 7

I. EXECUTIVE SUMMARY ......................................................................................................... 8

II. FIRM'S MISSION STATEMENT ............................................................................................. 8

III. SITUATION ANALYSIS ........................................................................................................ 8

A. Analysis of the External Environment .................................................................................. 8

B. Analysis of the Firm's Strengths and Weaknesses ................................................................ 9

C. Description of Products/Services ......................................................................................... 9

D. Target Markets ................................................................................................................... 9

E. Market Potential ................................................................................................................. 10

IV. OBJECTIVES .......................................................................................................................... 11

V. STRATEGIES ........................................................................................................................... 11

A. Overall Strategy .................................................................................................................. 11

B. Competitive Strategies ........................................................................................................ 11

C. Pricing, Place(Distribution), and Promotion Strategies ....................................................... 13

D. Marketing and Advertising Budgets .................................................................................... 20

VI. FINANCIAL IMPACT EVALUATION ................................................................................... 20

A. Sales Forecast

21

B. Expense Forecast ................................................................................................................ 22

VII. POTENTIAL PROBLEMS IN ACHIEVING GOALS OR OBJECTIVES AND PROPOSED SOLUTIONS...................................................................................................... 23

VIII. IMPLEMENTATION OR TACTICAL PLANS ..................................................................... 23

IX. REVIEW AND EVALUATION SCHEDULE .......................................................................... 23

X. APPENDICES .......................................................................................................................... 23

REFERENCES ..................................................................................................................................... 24

APPENDIX A ...................................................................................................................................... 25

Developing a Strategic Marketing Plan for Horticultural Firms

Gerald B. White and Wen-fei L. Uva1

A marketing plan is essential for every horticultural business and for efficient and effective marketing of any horticultural product or service. A marketing plan serves as a road map. It establishes objectives, recommended actions, and timing for achieving the objectives. An understanding of the marketing planning process is also a valuable aid in helping managers organize their thinking about the marketing process and the various methods and procedures used. A strategic marketing plan takes into account the market environment facing the business (e.g. trends, competitive environment, regulatory issues, technological advancements, etc.) Thus, the emphasis is not only on projections but also on an in-depth understanding of the market environment, particularly competitors and customers. Its goals are to take maximum advantage of opportunities, solve problems and counter threats to the business.

Before discussing the details of a marketing plan, it is important to identify the three different levels of planning activities that a firm may conduct to determine marketing strategies. ? The company strategic plan defines the organization's mission, sets long-range goals

and formulates broad strategies to achieve these goals. ? The strategic marketing plan is the long-term plan for the marketing area and deals

with the overall marketing objectives of the organization. ? The operating marketing plan focuses on the tactical decisions needed to carry out the

strategic marketing plan. It is a detailed plan indicating the results of a situation analysis and offering a set of objectives and tactical statements to accomplish these objectives by the end of the year. Fundamentally, a tactical plan provides the answers to the questions ? WHO, DOES WHAT, and WHEN (timelines).

The firm's marketing strategy must support the overall business mission and be consistent with other components of the business strategic planning.

1 Professor and Senior Extension Associate, Department of Agricultural, Resource, and Managerial Economics, Cornell University, Ithaca, New York.

Special appreciation is expressed to our colleagues, Bruce Anderson and Meg Meloy, who provided helpful reviews for this manuscript.

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AN OVERVIEW OF STRATEGIC PLANNING Planning is deciding now what we are going to do later, including when and how we are going to do it. Strategic planning is the managerial process of matching an organization's resources with its opportunities over the long run. The intent is to seize changing opportunities and to counter the imminent threats.

Characteristics of Strategic Planning Strategic planning is more of an art than a science; it is more intuitive, systematic and analytical, rather than quantitative. Some characteristics of strategic planning are:

? Looks at the "Big Picture" Strategic planning should be coordinated with company-wide planning and coincide with the company's vision and mission.

? Leads to Substantial Changes Long-range planning deals with broad, company-wide issues. There will be discontinuities from past projections and new trends. Both will require strategic adjustments and often lead to substantial changes, e.g. additional capital investments, potential gain in market share, new or discontinuation of product lines, and formation of strategic alliances with other firms, etc.

? Considers Future Environmental Forces in the Industry Strategic planning will be influenced by external environmental forces such as new technology, government policy, economic conditions, industry structure, competition, and consumer trends.

? Anticipates the Reactions of Competitors A proactive strategy attempts to influence rather than simply react as competitors change their policies or strategies.

? Looks at a Longer Time Horizon Strategic planning is usually long-range planning. The planning process typically involves projecting sales, costs, and technology into the future using data and experience from the past. The time frame can cover three, five, or ten years, depending on the context. Given today's fast changing markets and economy, any time frame over five years is probably unrealistic.

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The Purpose of Strategic Planning Strategic planning attempts to identify and isolate present actions and forecast how results can be expected to influence the future. Reasons a firm can gain a competitive advantage from the strategic planning process include:

? Establishing goals, objectives, priorities and strategies to be completed within specified time period; hence, a clear direction for management and employees to follow

? Defining in measurable terms what is most important for the firm ? Establishing a basis for evaluating the performance of management and key

employees ? Providing a management framework which can be used to facilitate timely

response to changed conditions, unplanned events, and deviations from plans ? Anticipating problems and taking steps to eliminate them ? Allocating resources more efficiently to meet changes including labor, machinery

and equipment, buildings, and capital

Contents of A Strategic Plan The contents of strategic plans can vary considerable; however, such plans will usually contain the following common elements:

? Mission Statement A firm's mission statement defines what the firm will be, not necessary what the firm is now. It describes what product and/or services the firm will produce; to whom it will sell; and what are its primary goals, values, policies and procedures.

? Objectives These are a set of measurable statements of what the business wishes to accomplish in areas such as growth, profitability, market share, volume of production and cost control. These objectives will guide the organization in accomplishing its mission and serves as principles for planning at lower functional levels in a company.

? Alternative Strategies These are broad, basic plans of action by which an organization intends to achieve its goals and fulfill its mission.

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Steps of the Strategic Planning Process Step 1. Define the firm's mission The mission statement defines the purpose of the firm and answers the question, "What business are we in?" Defining the firm's mission requires the manager to carefully identify the firm's orientation regarding customer groups to be served and the needs to be satisfied. The firm's mission statement provides employees, customers, and other organization stakeholders with a business definition to establish a sense of purpose, identity, and commitment. It answers questions such as:

? What type of agricultural products and services will be produced? ? What are the markets?

? Who are the consumer groups to be served? ? What are the needs that will be satisfied? ? What, if any, other activities are we involved in and what are the priorities of these activities? ? Why are we in business? What are the goals, beliefs and values of the company? ? For profits? ? To provide employment/security for other family members and/or

stakeholders? ? To increase wealth? ? Gain community status?

Step 2. Assess the external environment The external environment analysis involves an examination of the relevant elements external to an organization. It should include competition, technological environment, economic environment, political environment, legal and regulatory environment, and social and cultural environment. It focuses on identifying and understanding the present and potential opportunities and threats facing the organization.

Step 3. Identify major opportunities and threats for the firm Challenges in the external environment for one sector can present opportunities in another segment of agriculture. Health concern about cholesterol intake created new markets for poultry, fish and produce. Concern about carcinogens in the environment, including some pesticides, has brought new opportunities for organic-, IPM-, and other eco-labeled products.

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Step 4. Assess the firm's strengths and weakness A self-analysis aims to provide every business operator an understanding of the aspects that every firm is constrained by the internal environment to some extent. Future strategies are often developed by building on the firm's strengths and neutralizing weaknesses.

Candid answers should be provided to the following questions: ? What are the quantity and quality of resources? ? What are the abilities and limitations of management? ? What are the skills and abilities of labor force? ? What is the financial position of the firm? ? What is the condition of the physical plant?

Steps 2, 3, and 4 constitute a "SWOT" analysis. "SWOT" stands for "Strengths, Weaknesses, Opportunities, and Threats."

Step 5. Establish "SMART" objectives The next step in strategic planning is for management to decide on a set of objectives that will guide the organization in accomplishing its mission. Specific objectives should flow from the goals and core values expressed in the mission statement. Objectives should stimulate actions. They should possess "SMART" attributes:

? S = Specific ? M = Measurable ? A = Attainable ? R = Rewarding ? T = Timeline

Step 6. Develop and evaluate alternative strategies Considering the three elements:

? Product-market investment strategies: product-market scope, growth directions and investment strategies.

? Functional area strategies: product lines, price and distribution. ? Bases of the firm's competitive advantage: assets, skills and synergies.

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Step 7. Select the best strategy or strategies A strategy must be supported by assets and skills and must be employed in a suitable environment. The following are possible criteria for strategy selection:

? Be responsive to the external environment and reflect opportunities and threats. ? Be consistent with organization's vision/mission/objectives. ? Be feasible. ? Fit with the other strategies of the firm. ? Result in reasonable changes.

Step 8. Implement strategy (Tactical plans ? who, what, when, and how much will it cost?)

The implementation stage involves converting a strategic alternative into an operating plan. The operating plan may span more than one year. It might be useful to provide a detailed plan for the upcoming year that contains specific short-term objectives.

Step 9. Evaluation and/or control phase One of the key questions in a strategic market management system is to determine when a strategy requires review and change. It is usually necessary to monitor a limited number of key measures of strategic performance, i.e. sales, market share, margins, profit and ROA.

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