After reading Chapter 7 you should understand the following:
- How marketing planning works in practice.
- How a scientific approach can be used in developing a marketing plan.
- How theory can be a tool in marketing planning.
- The major steps in marketing planning and the information that is included in each.
The market analyst must fully understand general theories and principles of marketing and be able to link those with personal experience to efficiently create a marketing plan. Below we outline the process of marketing planning and provide a real-world example to illustrate how the process works in practice.
7.1 Planning Stages and Approaches
7.1.1 What, When, and How to Plan
When planning marketing strategies a company relates its resources (strengths and weaknesses) to the opportunities and threats of the market environment (especially demand and competition) and tries to seek customers (business partners) whose needs best fit the company offerings (products and services). The combination of marketing strategy components, results in marketing strategy. It is important to remember the logic of how strategy components are combined. The following steps include planning marketing structures and functions. Strategies, structures, and functions together form a strategic marketing plan. The next stage of planning, the marketing action plan, helps implement the strategic marketing plan on an annual basis. Marketing action plans are often called annual plans, operational plans, or simply budgets.
Full scale strategic marketing planning, in conjunction with investment planning, is necessary when new products, new customer, or new customers needs require starting from the very beginning. Alternatively, the prevailing marketing plan may need profound development because of changes within the company (e.g., acquisitions), changes in customer needs (special or custom-made products), or changes in technology (product innovations). It may also simply be that the present marketing plan does not work, and a strategic planning project must be started in order to determine what is wrong.
Although big changes in strategic marketing plans take place rather seldom, they are often reviewed annually in connection with annual planning. In annual marketing planning, quantitative market and customer targets are defined and marketing measures for the next planning period are specified. It must be emphasized that all the outlines for annual planning come from the strategic marketing plan.
7.1.2 Information Input
The Information Environment Model (Figure 7-1) implies that information is present and influences marketing and marketing planning all the time. The environment is changing and it must be monitored continuously. The information and intelligence systems of a company follow all aspects of the environment that could have an impact on strategies. Especially important is to monitor the weak (vague) signs of strategically important issues. This makes it possible for the company to operate proactively in situations where reactive responses would mean falling behind competitors.
7.1.3 Revealing the Planning Gap
For a marketing planner it may sometimes be difficult to recognize and justify when, how, or why marketing practices (structures or functions) should be developed. Marketing theory can help in this process. Identifying the need for further development of marketing strategies and practices can be done by using an “ideal model” of marketing as a benchmark. Marketing theories are the most typical form of ideal models of marketing. The Integrated Model of Marketing Planning (IMMP) is one example of an “ideal model” that can be used when identifying needs for further development. Figure 2 shows how the accuracy of marketing strategies, structures and functions is evaluated against marketing theory.
Analysis of market opportunities and threats and company strengths and weaknesses helps identify appropriate strategies for the company in its present situation. According to theory, marketing structures and functions should flow logically from the chosen strategies. Thus, when we know the strategies of a company, we should also know what sort of marketing structures and marketing functions it should utilize. Based on SWOT analysis and theoretical reasoning, we conclude which strategies, structures, and functions the company should have, in theory. Comparing the “should be” with the real marketing strategies, structures, and functions reveals the need for development in these areas.
An example could illustrate the use of the principles mentioned above. Based on competitor analysis, customer demands, and company capabilities, SWOT analysis might indicate the need for special or custom-made product strategies. Theory (regarding the relationships between strategy components) tells what sort of customer groups and market areas the company should serve and what sort of core competencies it should exploit. Also, according to theory, we might expect that a company moving from a commodity product strategy to a special or custom-made product strategy should change its marketing structures and functions accordingly. Customer contacts must be closer, marketing channels shorter, planning and information systems more sophisticated, product planning more active, etc. Identifying the research and development gap is based on a comparison between “should be” marketing (based on theory) and actual marketing practice. If a company’s marketing structures and functions don’t meet the theoretical requirements described above, they must be developed. This reasoning leads us to initial marketing planning.
7.1.4 Initial Marketing Planning
In industrial marketing, the various markets and end-use sectors are so vast, and the individual end-users so numerous, that it is nearly impossible (and far too expensive) to produce detailed information on all possible markets. Even if an attempt were made to study all possible markets and end-use sectors, it would probably provide a description that is too general for a detailed strategic marketing plan. On the other hand, a partial, more detailed analysis might omit some prospective customer groups. One solution to this problem is to analyze the markets in two phases. The first phase can be referred to as initial marketing planning and refers to using existing knowledge and secondary information to formulate initial or proposed marketing strategies.
The first step in the marketing planning process is the market analysis, which is carried out as desk research with secondary data. This can be done at a reasonable level of cost and effort. The market analysis is structured according to the Model of the Information Environment. Only secondary information is used to produce a marketing strategy. Marketing theory and planning experience provide ideas concerning which criteria are useful for evaluating the attractiveness of various industry sectors.
Results from an internal company (business unit) analysis are then combined with initial marketing strategies. Those strategies are chosen which fit the strengths and weaknesses of the company. Marketing theory and manager experience provides ideas about appropriate structures and functions for the chosen strategies. As a result of this phase, there are proposed marketing strategy-structure-function combinations.
The proposed strategy-structure-function combinations must be tested in markets among customers. This test is conducted via a survey among the customer sectors defined in the initial marketing plan. The test reveals if the planned products, marketing channels, and marketing communications fit with the needs and behaviors of the chosen customers or customer groups. The survey also produces detailed information needed to complete a strategic marketing plan. The necessary corrections are made and as a result, there is a strategic marketing plan for the business unit.
7.2 Strategic Marketing Plan
7.2.1 Planning Process of Strategic Marketing
Marketing planning means decision-making. The IMMP describes strategic marketing and acts as a blueprint for the market planning decisions that must be made. In strategic marketing it is essential that marketing strategies form a core for marketing and a basis for planning structures and functions. Structures form an “optimal” environment within which to execute strategies. Strategies and structures are followed by marketing functions, which define the practical actions needed to carry out the strategies. The strategic marketing plan is executed through an “annual marketing plan,” which defines the detailed annual marketing targets and the actions necessary to reach those targets.
While a strategic marketing plan for the market analyst means logical strategy-structure-function combinations, where the chosen structures and functions are used to execute the chosen strategies, a strategic marketing plan for the customer means a bundle of benefits. Strategies, structures and functions form a unified entity where each part contributes to a total package of benefits for the customer.
Decisions must be based on appropriate information. When strategic marketing planning is defined as information collection and decision making, the whole planning process can be understood as a research process where marketing decisions are conclusions based on analysis and interpretation of market data. The steps illustrate the planning and implementation of a scientific research process. They also illustrate how a strategic marketing planning process can be planned and executed. The core idea of this model is that planning is a sequential process: each step affects the following ones.
- Identifying the problem (Problem identification)
- Stating the purpose (Purpose statement)
- Designing the framework for analysis and measurement (Framework for analysis and measurement)
- Collecting and analyzing data (Data collection and analysis)
- Conclusions (Marketing strategies, structures, and functions)
The following text describes how the step-by-step process of scientific research can be used in strategic marketing planning. It also describes the general contents of a strategic marketing plan. The text does not provide the details of marketing research, but outlines the actions that must be taken to conduct it. “How” questions can be answered by referencing books which specialize in research or marketing research (especially research methods).
1. Problem Identification
The purpose of the planning process cannot be properly defined if the planner doesn’t fully understand the problem to be solved. The conditions out of which the need for new strategies emerges must be made explicit. Problem identification allows the marketing planner to become familiar with the problem, and is also important for those who will ultimately use the plan.
The content of problem identification depends on the situation:
- The marketing environment may have changed, and the company must adjust its marketing strategies to the new environment. In this case the problem analysis describes the environmental change and its drivers.
- There may be weaknesses or shortcomings in the present marketing strategies, structures, and functions of the company. These must be thoroughly analyzed and described before defining the purpose of the planning process. If the planner is not familiar with the shortcomings, he/she is not able to plan a project that will fix the situation.
- The strategic marketing plan may be part of an investment project launched by corporate management. In this case the problem analysis explains the background of the investment plan and its justification in the corporate context. Market knowledge has naturally been part of the investment decision, but in the beginning of a strategic marketing planning process, the corporate context must be made explicit.
- In some cases technological improvements or inventions make it possible for the company to produce new, more developed products that can better satisfy customer needs. In this case the problem identification describes the technological possibilities with respect to customer needs.
After analyzing the problem, the planner is ready to determine how research and development/planning might help the company. Problem identification, which describes the context from which the need for the strategic marketing plan emerges, drives the whole planning process. After careful problem identification, the planner is ready to define the purpose of the project in the most appropriate way.
2. Purpose Statement
A prerequisite for a proper strategic marketing plan is that the planner knows precisely the sort of information that is needed and the types of decisions that must be made. It is good to list both the information that must be gathered and the decisions that must be made based on the gathered and analyzed information.
In various phases of the planning project, the planner must communicate with various project stakeholders. The purpose statement allows outsiders to quickly get the most precise picture of the project. The purpose statement is also the standard by which the results and conclusions of the project are assessed in several phases of the project.
The following example illustrates the purpose statement of a strategic marketing plan. A sawmilling company noticed that both the technological possibilities of its sawmill and the customer demands of the UK market had changed. The changes had invalidated the marketing methods formerly used by the sawmill. The sawmill started a strategic marketing development project with the purpose statement defined as follows:
The general objective of the project is to support the development of the company’s sawnwood marketing targeting the UK. The key decisions in marketing development concern strategies, structures, and functions. Through these decisions the company is aiming to adapt its technological possibilities and strengths to the market opportunities. The market study will produce the necessary information for a strategic marketing decision-making process. An important objective is to produce new information about the macro- and micro-environment of UK sawnwood markets. Further objectives of the study are to identify the needs and buying behavior of potential customers. Based on market information, company management will formulate marketing strategies, structures, and functions for the UK market. When making these decisions, market information and internal company information will be taken into consideration.
The purpose statement was followed by a more detailed set of study questions, which were proposed by the marketing planner and approved by company managers responsible for strategic plans. The first group of questions deals with the market environment and the second is connected to customers.
What are the present and future characteristics of UK sawnwood markets?
- softwood sawnwood demand and its development in the UK
- softwood sawnwood supply and its development in the UK
- current economic and technical environment conditions in the UK
- overview of the main competing producers of softwood sawnwood
- overview of products that compete with softwood sawnwood in the UK
- a description of the change in the structure of physical distribution and how it is currently functioning
- summary of the most promising customer segments and insights into future segments
What are the needs and buying behavior of potential customer companies?
- the present and future use of sawnwood
- the price paid for raw material
- who makes the buying decisions in a company
- how suppliers are chosen
- what attitudes are towards direct trade
- what preferences are held regarding the raw material
- what kind of attitudes are held toward special and custom-made sawnwood and their use
- which loading ports are favored and which are not
- which delivery terms are most favored
- what kind of information and service needs exist
- how well are shipping marks known
- what are the impressions of the sawmill’s shipping marks, provided that the (possible) customer has some experience with them
The data collected should provide answers to the following questions concerning development of strategies, structures, and functions of the sawmilling company.
1.) Marketing strategies in the UK
- which products should the company produce for the UK market
- which sectors or companies should be chosen as customers
- in what geographic region of the UK should marketing be concentrated
- which core competencies should be used
2.) Marketing structures in the UK market
- how should marketing be organized
- which marketing channels should be used
- which channels of physical distribution should be used
3.) Marketing functions in the UK
- how should personal selling be implemented
- how should marketing communication be implemented
- how should physical distribution be implemented
- how should other communication take place
In the example above, the objectives of the project are explained in a very detailed manner. The reader can easily see the kind of information that will be produced and the kind of decisions that will be made. It is easy for the reader to provide feedback on this sort of detailed purpose statement.
3) Framework(s) for analysis and measurement
To understand and conceptualize the operating environment and the strategic marketing planning decision-making situation, models can be useful. Models are used as frameworks for the planning process. As background for a marketing planning process, SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is often used. It is up to the analyst to determine how best to measure the various elements of the model utilized. For example, the Information Environment Model has a block titled “demand”. In the context of the marketing planning project, how should demand be measured?
The marketing planner should see the whole marketing environment as information structured in a certain way. Here we assume that information relevant to the planning process is structured according to the Information Environment Model (Figure 7-1). In marketing planning, the model guides information collection, and how the model is used, what type of information is emphasized, and so forth, will all depend on the planning situation. Measurement of elements of the model also depends upon the marketing planning situation.
Typically, a strategic marketing planning process includes both a market analysis and a detailed customer study. A deeper customer analysis requires a framework of its own. The framework illustrates the significant aspects of customer behavior that should be considered in the study.
4) Data collection and analysis
Secondary data is information that can be used in the study, but has not been collected for that specific purpose. Primary data is data collected specifically for the purpose of the study. The type and content of the data is based on the purpose of the study. The purpose directs data collection through the framework and measurement of its elements. Details regarding data collection and analysis can be found in books specializing in research or marketing research.
Besides “scientific” issues, practical things like timetables, budgets, and so forth must be considered.
The “conclusions” part contains the actual marketing plan. It can be structured according to the organization of the IMMP. The following example gives a general structure for a marketing-planning project report. It illustrates how easy forming a list of contents for the report can be if the planner has used models to guide the planning and execution of the project.
7.2.2 Real World Strategic Marketing Plan – Sawing Solutions Ltd.
Adapted from original text by: Heikki Juslin, Miikka Pesonen, and Jari Kärnä
Background – Problem Statement
Sawing Solutions Ltd. is one SBU in an integrated forest industry company having both paper and sawnwood production. From the corporate point of view, sawmilling is not the most attractive sector, but is important in the raw material procurement for the corporation. To get pulpwood, the company must also buy saw logs and these must be manufactured in the most profitable way. This raw material context and market success influence the profitability of the sawmilling SBU. There has been a change in the strategic thinking at the corporate level. Business success at the sawmilling SBU is now more important and the SBU is accordingly being given more independence.
Corporate management has decided to allocate more low-quality logs to pulping. This means that the sawmill will be getting higher quality logs than in the past. This new raw material base makes it possible to develop new strategies (products, customers, market areas, and core competencies). These changes may also mean a need for new production facilities.
Preliminary market analyses have been conducted for corporate strategic planning. Although these market analyses have been conducted mainly for corporate strategic planning, they have produced considerable background information for strategic marketing plans of the sawmilling SBU.
Based on the prospects of improved quality logs and market opportunities discovered during the preliminary market analysis, corporate management has initiated an investment project for a new sawmill. The new mill will specialize in only a few products targeted to specific customer groups. The production will be market driven and the raw material base may create a core competency for the company. Applying the concept would require new business models and a detailed strategic marketing plan.
The following sawmill concept was chosen for deeper analysis:
- A spruce sawmill focused on a few dimensions and special and custom-made products
- Production capacity of about 250,000 m3/year
The aim is to target market segments where the competitive advantages of the sawmill can best be utilized. The raw material base for the product strategies is high quality, sound-knotted spruce, suitable for special and custom-made products. Based on preliminary analyses the company chose manufacturers of edge-glued panels in Germany and Austria.
The strategic marketing plan shall answer the following questions:
1.) Marketing strategies of the planned sawmill:
- What products will be produced?
- Which customers or customer groups within the chosen segments will be targeted?
- Which geographical areas within Germany and Austria will be targeted?
- What competitive advantages will form the basis for marketing?
2.) Marketing structures of the planned spruce sawmill:
- How is marketing organized?
- What are the marketing channels?
- What are the channels of physical distribution?
3.) Marketing activities to be undertaken:
- How should personal selling be organized and implemented?
- How should marketing communication be organized and implemented?
- How should customer support be organized and implemented?
- How is the customer and market information continuously gathered and used?
- What are the requirements for marketing routines (functional communication)?
Market analysis of sawnwood, and edge-glued panels shall provide answers to the following questions:
- What is the situation with supply and demand and how will they develop within the chosen target market?
- How will the factors that influence demand (e.g., economy and building) develop in the respective regions?
- How will the technology, norms, and standards of the chosen segments develop?
- What is the competition like and how will it develop in the chosen target market in the chosen regions?
- How is the industry in the chosen target market structured and located (who, what kind, and where)
Customer analysis shall provide answers to the following questions:
- What are the future needs of the chosen target groups related to the product (sawnwood)?
- Volume of sawnwood consumption
- Special needs
- What are the needs of the chosen target group related to the availability of the product?
- Distribution channel
- Delivery time
- Lot sizes
- Prompt deliveries, etc.
- What is the buying behavior of the targeted companies? (where, who…)
- What are the information needs of the targeted companies?
- What are the customer support needs of the targeted companies?
Information from market or customer analysis is needed when testing or supplementing the initial marketing plan. This is based on the preliminary market analysis and the experience of company management. The purpose statement of the project is closely related to the way the planning process is implemented. Implementation of the project is described below.
Framework for Analysis and Measurement
The principles of creating an initial, proposed marketing plan are used when executing the project. According to those principles, the hypothetical (preliminary) marketing plan will be prepared first. In this case it is based on the preliminary market analysis conducted in connection with corporate strategic planning. This data can be considered as secondary material, since it has not been collected for this particular purpose (strategic marketing plan).
The initial marketing plan contains proposed strategy-structure-function-combinations. In other words, it includes decisions concerning strategies, structures, and functions based on the secondary material available to the planner. All the necessary decisions cannot be made because of missing information.
The proposed plan will be tested by empirical marketing research. As shown, close cooperation between the marketing planner and researcher is a precondition for implementation
Framework for Data Collection
The Model of the Information Environment is used to analyze the market environment. The elements of the macro environment – demand, supply, and other macro environment—can be specified (measured) as follows:
- Development in the short, medium, and long run
- Development by customer groups
- Development by end-use
- Development of prices
- Development in the short, medium, and long run
- Development by product categories
- Other macro environment
- Economic development of the markets
- Technical development of the target sectors
- Development of product norms and standards
Elements of the microenvironment – competitors, distribution channels, and customers – can be specified (measured) as follows:
- Present competitors
- Potential competitors
- Competing products
- Competitors strengths and weaknesses
- Distribution channels
- Structure of distribution channels in the respective region
- Functions of the distribution channels in the respective region
- Special features of the distribution channels
- Present and potential customers
- How many
- What kind
At this stage, the emphasis is on the structure of the customer groups. The frame of reference for the analysis of individual customers will be drawn in connection with the preparation of the questionnaire.
Framework for Marketing Decisions
The decisions of the strategic marketing plan are made according to the IMMP (Figure 7-3). The list of decisions follows the principles of a modeling approach to marketing planning.
Proposed (Preliminary) Strategy-Structure-Function Combinations
Based on preliminary market analysis, the following initial strategy-structure-function combinations are proposed. Information for initial marketing decisions is not available based on the preliminary market analysis (unkown).
|Edge-glued panel material with sound knots
-Not allowed: C-grade, wane, discoloration, rot, compression wood and dead knots
|10 +/-2 and 16 +/-2 %
|Producers of edge-glued panels
|Germany and Austria
|-good quality of wood: slow-growing, small/sound knots, color
-respect for the Scandinavian raw material
-grading stability and special seasoning
-other – (unknown)
|Frequency – (unknown)
|Contents – (unknown)
|Other Marketing Communication
|Market and Customer Information
For their part, the initial strategies-structures-functions direct the empirical analysis of markets and customers. The aim of information collection and analysis is to verify the initial ideas about strategy-structure-function combinations. On the other hand, data collection from markets and customers brings new detailed information which is needed to fill the missing information of the intial strategy-structure-function combinations.
Data for the Strategic Marketing Plan
Market analysis is based mainly on secondary material. The following lists describe the sources of secondary data used in market analysis.
Types and Sources of Information for the Macro Market Environment
|Demand and Supply of Sawnwood
|Economic Conditions and Forecasts
|Various economic journals and reviews published by banks, research institutes, and economic organizations
|Development and Forecasts of Construction
|-EUWID Holz (closely follows construction in Germany), Holz-Zentralblatt
-Baustatistisches Jahrbuch (contains basic information of construction in Germany)
-Euroconstruct (contains basic data and short-term forecasts of construction in Europe)
|Markets of Sawnwood
|-General demand and supply: FAO/UNECE Timber Committee, International Softwood Conference, trade press (e.g., EUWID Holz, Holz-Zentralblatt, Holz-Kurier)
-Competitors: trade press (e.g., EUWID Holz, Holz-Zentralblatt, Holz-Kurier)
-Imports and exports of sawnwood: EUWID Holz, Holz-Kurier, Finnish Customs Statistics, Svenska Trävarueksportförening
|Other Macro Environment
|Norms and Standards
|-Most central sources were professional newspapers Holz-Kurier and Holz-Zentralblatt; several articles in these papers dealt with standardization and norms
-Useful sources were also notices published by Informationdienst Holz
Types and Sources of Information for the Micro Market Environment
|-Company interviews produced the majority of customer information for the study
-Company profiles in trade press provided supplementary information
-A visit to the Leipzig Bau exhibition resulted in further company contacts.
|Interviews were the main source of competitor information. Some information concerning product and company competition was found in professional newspaper and magazine articles. Most popular theme was substitution between wood species
|Distribution Systems of the Markets
|Very little information was found from secondary sources
Primary Data – Companies Interviewed
The population of the study consists of producers of softwood edge-glued panels in Germany and Austria. The listings of the population was based on various sources:
- Previous market studies
- Company catalogues
- Trade press articles
The general criteria used in sampling were that the company be large enough to buy a truckload of sawnwood per order. In practice there was no need to use this limitation because the most significant (biggest) companies were targeted for interviews. This made it possible to cover as big a share of the production capacity of the sector as possible.
The following setting describes the number of interviewed companies and their share of the total production of the sector in the respective country.
|Share of production (%)
Results of the Market and Customer Analysis
The following “List of Contents” implies the type of information reported in connection with the strategic marketing plan. The information is based on the results of market and customer analyses.
1. Market Analysis
1.1. German Markets for Sawnwood
1.1.1. Economic Situation and Forecasts
1.1.2. Development of the Building Activities
1.1.3. Markets for Sawnwood
1.2. Austrian Markets for Sawnwood
1.2.1. Economic Situation and Forecasts
1.2.2. Development of the Building Activities
1.2.3. Markets for Sawnwood
1.3. Structure of Edge-Glued Panel Industry in Germany and Austria
1.3.1. Production Volume and Producers (including location)
1.3.2. Production, Products and Standards
1.3.3. Use of Edge-Glued Panels
1.3.4. Competition of Suppliers
2. Customer Analysis of Edge-Glued Panel Industry
2.1. Consumption, Specifications and Prices of Sawnwood
2.2. Needs Related to the Use of Sawnwood
2.2.4. Degree of Seasoning (Moisture Content)
2.2.5. General Product Preferences
2.3. Needs Related to Deliveries, Service and Information
2.3.1. Purchase Channels
2.3.2. Needs Related to Deliveries
2.3.3. Needs Related to Service
2.3.4. Needs Related to Information
Information reported as described above will be used in the final strategic marketing plan. The structure of the plan follows the IMMP.
The Strategic Marketing Plan for Producers of Spruce Edge-Glued Panels in Germany and Austria
The chosen marketing strategy is a special product strategy, specializing the offer (customer’s benefit package). It is specialized through product properties, availability, and service benefits.
|Quantitative Targets in Germany
|Quantitative Targets in Austria
|Proportion Nordic spruce
|Proportion Nordic Spruce
|130 000 m3
|appr. 50 %
|35 000 m3
|appr. 30 %
|Biggest in the Field
|105 000 m3
|appr. 40 %
|Biggest in the Field
|25 000 m3
|appr. 22 %
|Feet on the ground
|50-70 000 m3
|appr. 20-25 %
|Feet on the ground
|10 000 m3
|appr. 13 %
|U/S or U/S V (fifths or better)
-Sound, small knots (max 25 mm)
-Densely grained (max 2.5 mm)
Not allowed: Wane, blue stain, rot, resin wood, wood stored in water, insect damages, fissures (small drying checks allowed)
|50×100/115/125/150 mm, main emphasis on 50×100/115 mm
|Main length 5.1 m (for DIY panels also 4.1 and 4.6 m)
|Final moisture content 8-10 % (for part of producers shipping dry 16-18 content %)
Customers and Market Areas
|10 biggest producers of the field (wood consumption 10-30,000 m3/year) accustomed to direct contacts with suppliers of sawnwood. Interesting opportunities are also offered by the middle-sized producers of the field (wood consumption 5-10,000 m3/year) that have some interest in new suppliers. The main group of customers is in Southern Germany (Baden-Würtenberg, Bayern); some bigger customers are also in Nordrhein-Westfalen.
|7 biggest producers of the field (wood consumption 15-50,000 m3/a). Customers are not geographically concentrated.
Core Competencies/Competitive Advantages
Competitive advantage can be created for the entire benefit package (product, availability, service).
|Good quality of the raw material emphasized by grading (densely grained, sound knots) and good and stable quality of sawnwood form the basis for the competition of a Nordic sawmill against the Middle and East-European suppliers. In the competition among Nordic sawmills, these factors are, however, more or less prerequisites to keep up with the competition. Additional product value can be gained by:
-Special seasoning/drying 8-10% (good quality, no fissures, good package)
-Ability to supply 5.1 m lengths
-Closer consideration of customer quality specifications
-Development of customer grades (e.g., Leimholz GmbH Qualität)
|Reliable, prompt, and quick deliveries (2-5 days) are the main competitive advantages of Middle-European suppliers. Deliveries are the area where a Nordic sawmill can achieve proportionally the largest improvements in customer satisfaction. Competitive advantages can be developed in the following areas:
-Reliability and punctuality of deliveries (development of control, “automatic alarm systems,” immediate information of problems to customers)
-Also quick deliveries (5-10 days if allowed by the logistic system); however quickness is not an intrinsic value; reliability in keeping agreed times is more important
-Immediate responses to customer inquiries/claims
|“Softer” factors may have a big potential influence in customer satisfaction and loyalty. These are:
-Flexible service in own language
-Commitment to customer relationship:
-reasonable pricing policy
-understanding customer’s position in its own markets (end- use of customers products and its development)
-true interest in customer problems (Product Manager)
-Immediate reaction to customer contacts
-Proactivity instead of reactivity in information (“We tell them before they ask us.”)
It is the task of the marketing organization to secure the maximum benefit for the customer, in an economically profitable way.
|Direct contact to the end-user allows service, information flow
Marketing and influence. Serving big industrial end-users forms the basis for
Channel organizational design. Product manager organization would seem to offer the best opportunities.
-Total responsibility for the product from sawmill to customer
-Good knowledge of both the production possibilities and restrictions of the sawmill and customer production and buying needs
-Ability to be independent and quickly solve customer technical problems on-site
-Deciding the location (sawmill vs. market)
-Vulnerability of the organization (dependence on 1-2 key persons)
|On-line data connection to the production planning of the sawmill. Systems for continuous up-dating the database of customers (containing also qualitative records concerning customer operations, development, personnel and buying behavior). The database minimizes operating risks caused by the loss of key persons. Systems and database for following the operations of customers’ customers (demand development, market structure etc.)
|Direct deliveries from mill via trailer/wagon. Desired service level for deliveries is 14-21 days (8-14 days for supplementary lots). Terminal is possible and improves customer satisfaction if it does not cause any pressure on product prices. However quick deliveries do not bring any additional gains. Reliability of deliveries may be improved with smaller costs by other activities.
|Service and personal selling emphasize:
-Concentration of service on one person (one contact that gives all services)
-Quick reaction to customer inquiries
-Changing over from “mere” customer service to customer consulting
-Tightening requirements regarding flexibility of the sawmill (customer grades)
|Up-dated presentation material about sawmill production possibilities must be available at all times. It must also be prepared for the rise of environmental issues in this sector.
|Basic prerequisite for the competitiveness of a sawmill specializing in a certain end-use is continuously collecting and analyzing of information. This project can form a framework or a “check list” of those areas of information which the saw mill must update regularly. The field work is connected closely to the information systems and databases which were mentioned in connection with marketing structures.
The case example above shows that the research process analogy and development of initial strategies-structures-functions can be effective when applied to strategic marketing planning. They also show that the modeling approach works well in an industry context in strategic marketing planning. We also learned that information is critical in marketing planning. There is a lot of secondary material dealing with the macro market environment. However, it is difficult to find information describing the micro market environment. Information about customers is normally acquired through primary data collection.