Establishing Strategic Goals, Objectives and Performance Targets

Dr. Brian Monger

Goals are the broad, primary results that management seeks to achieve in the plan.

Objectives are the specification and quantification of those goals.

The result of Objectives, Performance targets cannot be set on the basis of whatever management decides would be “nice.” If goals and objectives are to be something other than “pie-in-the-sky wishful thinking,” and if, at the same time, they are to serve as a tool for stretching the enterprise to achieve its full potential, then they must meet the criterion of being challenging but achievable.  Satisfying this criterion means setting objectives in the light of several important “inside-outside” considerations.

Criteria of Performance.

Achieving the Set Goals.  Obviously the primary criterion is to achieve the goals set by the organisation.  Profitability is usually the most important area of performance, however in Not for Profit organisations it is replaced by “positive margins”. Both guarantee the flow of capital necessary for new value offering development and expansion.

Effectiveness.  The degree to which our strategies are working.  Includes Competitiveness and Efficiency

Competitiveness.  Competitive strength is really a substitute measure of long-run success in achieving goals.

Efficiency.  To ensure long-term profitability, organisations must maintain certain kinds of short-term efficiencies -usually in terms of cost savings.

Flexibility.  Because organisations operate in a very uncertain environment, well-managed organisations should try to protect themselves from significant negative events by remaining flexible, both externally and internally.

Corporate objectives should be developed and performance evaluated in each of these areas.  Accordingly, assessing the organisation’s strengths and weaknesses for purposes of strategic planning should identify strengths and weaknesses in each of these areas.

 

Marketing Planning – “What will our business be?”

“What is our business?”

An organisation is not defined by its name, or articles of incorporation. Itis defined by the want the customer satisfies when he buys a value offering.  To satisfy the customer is the mission and purpose of every business.  The question “What is our business?” can, therefore, be answered only by looking at the business from the outside, from the point of view of customer and market.  What the customer sees, thinks, believes, and wants, at any given time, must be accepted by management as an objective fact.

Customers are not really interested in “products” and certainly not in the organisation itself. The customers only want to know what the organisation and its value offerings will do for him or her today.  They are interested in their own values, and the satisfaction of those values.  For this reason any serious attempt to state “what our business is” must start with the customer, their realities, situation, behaviours, expectations, and values.

“What will our business be?”

Eventually the answer to “What is our business?” changes.  Therefore, managers need to look to the future, beyond the present definition of the business, probing for answers to the additional question, “and what will it be?”‘ This forces managers to think ahead and act to position the firm in response to the impact of change.

The question, “What is our business and what will it be?” can be answered in number of different ways:

1.  In terms of its value offerings – its value offerings provided.

2.  In terms of the principal ingredient in its value offerings.

3.  In terms of the technology that spawns the value offering.

4.  In terms of the customer groups being served

5.  In terms of the customer needs and wants being met.

6.  In terms of the scope of activities within an industry.

The Key Factors of Strategic Planning

There are a number of key factors to consider with any planning. The areas are as follows:

Focus refers to concentrating limited resources in the areas that will reap the most rewards.

Goals are what we are aiming to achieve from our efforts and investment. All too often that is simply equated with money and does not consider other, more important factors.

Competitive Advantage refers to the fact that we are operating in a competitive environment. If we are not aware of the fact that there are other players competing with us for the same client’s money, then we are likely to lose.

Superior Performance.  What is important for the organisation, is to plan a position which takes into account all of the players.  Firstly the strategist must achieve superior performance to the competitor.  At the same time the strategy must be in line with the strengths and weaknesses of the organisation and must also meet the needs of the market.   A successful strategy is one which gives a stronger matching of organisational strengths with market needs than that provided by the competition.

Sustainable Competitive Advantage (SCA), which suggests that there are many possible good ideas, but which one will remain yours (that the competitors cannot take away) and work for the longest time?

Creativity and Innovation.  What gives a strategy its competitive impact is the creative element and the will of the mind that conceived it to make it work.

Flexibility – The best strategies are flexible and allow for innovation.  They are based on information, which gives us a series of probabilities to work with.  Strategy is vulnerable to reality.  One cannot totally predict the future.  All business decisions are probabilistic.  There is always a chance of the plan failing.

Basic Conceptual Simplicity – Complicated, long range plans rarely work and require constant adaptation and change – usually into another detailed long range plan.  We must remember that any strategic plan is based partly on historic information and partly on future prediction.  Once written it also becomes part of history.

The Ability to be Implemented.  A wonderfully conceived and crafted strategy is meaningless unless it can be implemented to achieve the Mission and Goals of the organisatio

Guidelines for Effective Learning

Dr Brian Monger

I tell students – “I can “teach” you nothing.  But I can try and help you learn. My job is to try to provide you with an environment in which you can learn.  Ground Rules are part of that environment.  If established early they will surely help us avoid a lot of wasted energy later on.

Guidelines and Ground Rules

These guidelines, often referred to as “ground rules” or “community norms,” should provide the community within a workshop or class a framework to ensure open, respectful dialogue and maximum participation.

10 Commonly Used Ground Rules

Ground rules should be developed and adapted for every unique context. Appropriate ground rules may depend partially on age, region, and other contextual factors:

1. Practise politeness.
2. ‘Listen with an open mind’
3. Listen actively — respect others when they are talking.
4. Speak first from good research; next from your own experience.  Be aware of generalising.
5. Do not be afraid to respectfully challenge one another by asking questions, but refrain from personal attacks — focus on ideas.
6. Refrain from aggressive and disrespectful language
7. Participate to the fullest of your ability — community growth depends on the inclusion of every individual voice.
8. Instead of invalidating somebody else’s story with your own spin on her or his experience, add and share your own story and experience.
9. The goal is not to agree — it is to gain a deeper understanding.
10. Be conscious of body language and nonverbal responses — they can be as disrespectful as words.

Listening with an Open Mind

One of the things I do to establish the ground rule of ‘Listen with an open mind’ is that I ask someone to pour me a glass of water. But just when they are about to start pouring, I cover the glass with a coaster. This makes the water spill and irritates the other person. With some humour I manage to get them say ‘If you keep your glass covered, I can’t provide any water to you’. Then I move in with my ground rule that if you keep a closed mind, this is exactly how others feel. Once water is poured in the glass ,it is not mandatory for me to drink it, is it ? I can taste it and if I don’t like the taste or temperature, I can just leave there or even throw it away. Similarly all you need to do is to keep an open mind to let the information go in. After that you process it and decide what you want to do with it.

Determining Market Share

The Role of Market Share

Conventional marketing wisdom holds that the best strategy is the one that results in the highest market share, and that managers should therefore strive to maximise the market shares of their brands. Implicit in this “wisdom” is the assumption that higher market share leads to higher profits and return on investment (ROI). If this assumption is true, the process of strategy formation is relatively straightforward. If it is not true, however, or if it is true only under certain conditions, it becomes necessary to test alternative strategies against both market share and profitability criteria. What, then, is the effect of market share on short- and long-term profitability?

Share of What?

The first question is, how do you determine the size of the market?  Is it by current sales or do you have some concept of the market potential?

One of the most difficult challenges in implementing a strategy of increasing market share is to answer the question: Share of what? If we define the market widely, we will have a low share; if we define it narrowly (as a market segment), we will have a high share.

It is therefore critical to define the relevant market correctly when assessing a firm’s market share. The product-segmentation methodologies are useful in this process inasmuch as they group products that compete for consumer choices, and thus provide the manager with a hierarchical description of the competitive structure in which he or she is operating. Nevertheless, the manager must determine what level of the hierarchy represents the relevant market.

It is usually best to focus on a managerially relevant segment that is consistent with consumer definitions of alternative choices. What-ever the market definition, consistency in planning and implementation is critical. It is unsound, for example, to claim that one has a high share (of a small segment) when competing for corporate resources, and a small share (of the total market) when trying to motivate a sales force or distribution network.

Brands and Loyalty

Brand Loyalty Defined

What is brand loyalty? Brand loyalty implies that consumers bind themselves to products (both goods and service)s as a result of a  commitment.

Bloemer and Kasper further delineate brand loyalty into “spurious” and “true” loyalty. Spurious loyalty exhibits the following attributes:

• Biased
• Behavioral response
• Expressed over time
• By some decision-making unit, with respect to one or more alternate brands
• A function of inertia

True brand loyalty includes the above, but replaces inertia with a psychological process resulting in brand commitment (Ref: Journal of Economic Psychology, Volume 16, Issue 2, July 1995).

What drives brand loyalty?

To better understand the process of preference, let’s first look at a basic communications model. The five components of this model are sender, medium, filter, receiver, and feedback. All messages are coded patterns and sensations – colors, sounds, odors, shapes, etc. Those messages deemed recognisable, or a basis for a relationship, are decoded and stored in our memory. A successful convergence between sender and receiver will result in some type of response to a brand’s compelling message (feedback).

Stored experiences in our long-term memory are connected through a series of nodes and networks. This node and connection process, called spreading activation, makes every person different” Since we all have different experiences, connections, and relationships, this supports a theory that the consumer, not the organisation, owns the brand.

Brand Positioning

Organisations seek to develop and project brand perceptions based on internally driven needs and goals.  Although these concepts seem self-evident on the surface, organisations tend to ignore these laws in their daily branding activities.

• Perceptions are selective
• Memory is highly selective
• There is a physiological limitation to processing stimuli
• A dramatic difference is needed in crowded category
• How much of your message gets through the clutter depends
• Minds are both emotional and rational
• Purchasing decisions are really not known
• Recall—mind’s remember things that no longer exist

Elements in Building Brand Equity

Brand knowledge structures depend on:

–The initial choices for the brand elements

–The supporting marketing program and the manner by which the brand is integrated into it

–Other associations indirectly transferred to the brand by linking it to some other entities

There are a number of elements that marketers can use to identify and differentiate a brand. Names, logos, symbols, characters, slogans, URLs, jingles and packages all influence a company’s ability to build awareness and image for a brand and, consequently, have a direct impact on the degree of positive brand equity that can be established. Brand elements can be judged on the merits of their brand-building ability by isolating the element in a consumer survey and measuring consumers’ response to the brand based solely on the isolated element. If the consumers infer or assume a certain valued association or response, the element is said to contribute positively to brand equity.

Six general criteria should govern the choice of brand elements.

First, an element should be memorable, or easy to recognize and recall.

Second, an element should be meaningful, or descriptive, persuasive, inherently fun and interesting, and rich in visual and verbal imagery.

Third, an element should be likeable to consumers, in an aesthetic sense and in an emotional sense.

Fourth, an element should be transferable within and across product categories, and across geographical and cultural boundaries.

Fifth, an element should be adaptable, or flexible and capable of being updated over time.

Sixth, an element should be protectable, both legally and competitively.

There are benefits and drawbacks in the choice of each type of brand element. For example, selecting a familiar-sounding name for a brand would likely lead to high recallability, but recognition often requires brand names to be different, distinct, or unusual. Fictitious or coined names are often used to satisfy this criteria. Brand characters are beneficial because they typically aid awareness, reinforce key brand strengths, add elements of fun, excitement, humor, etc., and can be transferred across product categories. Consumer associations with a brand character can be so strong, however, that they actually dampen awareness by dominating other brand elements. Also, brand characters must be updated over time.

Brand elements can be “mixed and matched” for maximum equity building. Brand elements must be mixed to achieve different positioning objectives, for instance. It is also important to match brand elements by ensuring that they harbor similarities that reinforce some shared meaning. Taken together, the entire set of brand elements makes up the brand identity, which reflects the contribution of all the elements to awareness and image.

Understanding Culture and Subculture in Buyer Behaviour

Culture and Subculture

As the internet is showing us, culture is more than a geographic, ethnic or national thing

Culture is the thinking, feeling, and believing that binds people together. It is not limited to the arts a geographic area or nationality, but embraces all the interactions involved with human activity. However, we are interested in buyers, so our definition of culture is:

the shared attitude and behavioural characteristics, such as values, customs, beliefs, morality, and ethics which strongly influences a groups buyer behaviour.

Culture varies from group to group- even within the same nation or geopgraphy. Culture is the foundation upon which all social interactions rest. It consists of the historical rules by which present interaction takes place.

The term subculture is used to recognise group variations that exist within a culture. We define subculture to mean:

any group that uses the principal characteristics of a dominant culture but provides values and beliefs distinguishable as its own.

It follows that a culture may have any number of subcultures.’ However, a culture is more than simply a summation of all the subcultures of which it is composed. Some of the more common bases for identifying subcultures are regions, nationality, ethnic origin, religion, age and sex. Within any particular culture, we can identify relatively homogeneous subcultures based on each of these classes.

Sources of Culture

Culture is acquired from almost any source of social contact. It is not necessarily passed down from senior to junior citizens. However, in every society there are certain institutions that become the focal points of cultural accumulation. In primitive tribes, this function was often handled by the village elders; but as societies advanced, more complex institutions had to be developed to deal with cultural knowledge. Today, the primary sources of cultural knowledge are family, school, church, political institutions, and other institutions.

It is difficult to pinpoint which institutions are responsible for which cultural values, because they all interact. However, some institutions do tend to take the lead where certain values are concerned. It can be helpful to identify some of these tendencies.

Read more about Culture and Buyer Behaviour at Smartamarketing.wordpress.com  – http://wp.me/p1d2cw-hq  And visit http://www.marketing.org.au for notes and short courses on buyer behaviour

Managing Brand Extensions

Extension evaluations will depend on what kind of information comes to mind about the core brand in the extension context, whether this information is seen as suggestive of the type of product that the brand extension would be, and whether this information is viewed as good or bad in the extension context in comparison with competitors.

The salience or accessibility of the core brand associations depends on their strength in memory, as well as the retrieval cues provided by the extension context. Some associations may be salient when consumers evaluate some extensions but not others. The relevance of the salient core brand associations depends, in part, on their perceived similarity to the proposed extension product. When overall similarity is high, consumers are more likely to base their extension evaluations on their attitude toward the core brand

When multiple product extensions are associated with the brand, the congruence among their associations becomes an important determinant of the consistency and cohesiveness of the brand image. It is often argued that an extension can help the core brand image by improving the favourability and strength of associations and clarifying the business definition and core benefits for the brand.

It can be said that in some circumstances brand extensions can help to fortify the brand image.

It can also been argued that successful brand extensions may potentially harm the core brand image if they weaken existing associations in some way. If a brand becomes associated with a disparate set of products (goods and service)s, product category identification and the corresponding product associations may become less strong.

Dilution effects, with potentially adverse profit implications, may be especially likely when the existing associations for the core brand are already fairly weak.

Managing Brand Equity

Managing Brand Equity

According to the definition of customer-based brand equity, no single number or measure captures brand equity. Rather, brand equity should be thought of as a multidimensional concept that depends on (1) what knowledge structures are present in the minds of consumers and (2) what actions a firm can take to capitalise on the potential offered by these knowledge structures. Different firms may be more or less able to maximise the potential value of brand according to the type and nature of marketing activities that they are able to undertake.

Six general guidelines may help marketers better manage brand equity.

First, marketers should adopt a broad view of marketing decisions.

Second, marketers should define the knowledge structures that they would like to create in the minds of consumers.

Third, marketers should evaluate the increasingly large number of tactical options available to create these knowledge structures, especially in terms of various marketing communication alternatives.

Fourth, marketers should take a long-term view of marketing decisions.

Fifth, marketers should employ tracking studies to measure consumer knowledge structures over time to

(1) detect any changes in the different dimensions of brand knowledge and

(2) suggest how these changes might be related to the effectiveness of different marketing mix actions.

Finally, marketers should evaluate potential extension candidates for their viability and possible feedback effects on core brand image.

Read the whole article – Finally, marketers should evaluate potential extension candidates for their viability and possible feedback effects on core brand image.

Managing Brand Equity (2)