Strategic Checkpoints

The major question the planner must decide is whether sales and profit projections meet corporate objectives.

For this purpose MARFIN suggests two checkpoints during the planning process: the first, after the market forecast has been prepared, sales objectives have been set, and profit defined under current expenditure pattern; the second, after the marketing strategy has been developed and profit redefined. The thorough planner checks the product performance, of course, at every step of the strategy development. He should always consult the financial charts before a major strategic decision is made.

If our sales projections meet corporate objectives, then the planner may start to develop the marketing strategy. The marketing strategy is a function of the sales and brand share objectives. Each sales objective requires a different marketing strategy, and each marketing strategy has different cost consequences. Thus we have to check again the profit picture, after the marketing strategy has been developed.

During the planning process, the planner will develop several sales objectives with different marketing strategies. We will go back and forth until we can come up with sales objectives and a corresponding strategy about which we can feel confident.

MARFIN offers the advantages that these complicated calculations can be performed in minutes. In addition, the planner will see immediately if there are inconsistencies within the strategy.

MARFIN is an interactive program. The planner is free to move around the sections. We can start our strategy development, for example, per region and then sum up the projected numbers to constitute the total; or, we might develop objectives and an overall strategy for the broadest region and break down those objectives later for the individual regions. It is at the level of the individual region where the planner can check on how realistic the marketing objectives are because this is the level where the plan is going to be implemented.

Checkpoint 1

In the first two sections we analyze the two basic characteristics of a market: its overall growth, and sales/share growth potential. Then we examine the financial structure and set goals for cost containment.

When these analyses are complete, we have arrived at our first checkpoint. It is time to see how our sales and profit projections compare with corporate objectives. Whether we meet the profit objectives will depend on two factors: sales growth potential and ability to keep cost increases at bay.

Our sales growth potential will depend on the market growth and our share position. If the market is in the growth stages of its life cycle, then with the right marketing strategy we can probably guarantee the required sales growth.

However, it will be difficult to increase our sales substantially if the market is in its mature phases.

We still might reap high profits, however, if the market is substantial and the brand has a strong position. If the market is declining and we have a weak position, it is probably better to withdraw from the market, because it is almost impossible to increase market share profitably in a declining market.

The general rule is that we invest in the first two stages of the product life cycle and harvest our profits in the last two.

If corporate objectives are unattainable, then it is a clear sign either that the market is limited, or that our position is too weak to match our ambitions. Under either circumstance, the problem needs to be discussed with management. Management can decide whether the product is vital to the company and accept lower figures or it can decide to withdraw.

If sales objectives meet corporate objectives, then we can go ahead and develop our strategy. The marketing strategy is simply an explanation of how we are going to achieve those sales and profit figures.

Checkpoint 2

After we have developed our marketing strategy, we must check again whether the ultimate sales and profit projections meet corporate objectives. If they do, we can go ahead and implement the plan. If not, we have to start all over again with new sales and share objectives, and a new marketing strategy.

Attention! Each sales objective requires a different marketing strategy, and each marketing strategy has different cost consequences. If we change one, we must also change the other.

We need this second analysis because in the first one we used our old financial structure. The new marketing strategy means new expense pattern.

We will analyze several sets of objectives and the applicable marketing strategies before we will be able to decide which scenario looks the most realistic and develop a final strategy. MARFIN's real advantage is that it makes these calculations possible in seconds. In addition, the planner can also check on the consistency of each strategic step. This process can be reiterated several times.