Strategic Planning in the Industrial Market

While the basic principles of marketing planning apply in both markets, many organizations have found that what works well in the consumer market fails to do so in the industrial market. Two significant differences between these markets appear to account for this phenomenon. First, unlike the consumer market where products are normally’ marketed through one or two channels, most industrial marketers face diverse markets that must be reached through a multiplicity of channels-each requiring a different marketing approach. A producer of communication equipment, for instance, may market to such diverse segments as the commercial, institutional, and governmental market, each of which will require a unique marketing plan. Second, in contrast to consumer marketing, successful industrial marketing strategy depends more on other functional areas. Where the elements of planning in consumer marketing can often be contained within specific areas of marketing, such as advertising, selling, and product management, planning in the industrial market is largely dependent on, or constrained by, the activities of other functional areas-for example, engineering, manufacturing, and technical services. When marketing emphasizes tailor-made products and fast deliveries, for instance, manufacturing must be prepared to follow through with product output. Planning, then, in the industrial marketing arena requires a higher degree of integrated effort across functional areas and a closer relationship with overall corporate strategy than in the consumer market.

Functional Isolation

While planning in the industrial market is as sophisticated as it is in the consumer arena, too often industrial firms concentrate planning efforts in the marketing department, failing to recognize the inter-dependency between marketing and other functional areas. Perhaps this is due to what may be referred to as functional isolation. That is, not only does marketing tend to ignore its interface with other areas such as finance, manufacturing, and R&D, but marketing concepts, methods and inputs are frequently ignored in the decision perspectives of other business function. While marketing should take the lead in defining market segments, needs, and opportunities and in determining what it will take to satisfy the various markets and, segments, planning in the industrial arena must be a collaborative effort between all key functional areas. Unfortunately the isolation between marketing and other functional areas may continue until we find solutions to the inherent conflict between marketing and other functional areas. Develop organizational structures that explicitly incorporate marketing and non-marketing considerations. Begin using marketing decision models that are based on relevant input from other functional areas besides marketing.

Functional Conflict

While successful planning depends on cooperation between the different functional areas, whenever tasks and objectives are different or unclear between two or more departments a strong tendency for disharmony exists. Potentials conflict also exists between marketing and manufacturing in such areas as sales casting and production planning, and between marketing and R&D in the new product development. We’re limited in what we can design because we have to keep it simple for marketing either the customer nor our marketing department understand the product and how it is supposed to work.

Alleviating conflict begins with developing an understanding of the basic causes of interdepartmental conflict. Conflicts arises due to the fact that each area is evaluated and rewarded on the different criteria, the inherent complexities of the different functional areas and the different perceptions of the individuals involved. Conflict can also arise differences in how departmental individuals perceive their prestige, power and knowledge. Budget constraints, rapid company growth, and the rapid peace of technological change can also yield potential areas of conflict.

Some degree of conflict is necessary and can be very constructive in that it promotes more efficient and effective use of the company’s resources. However, when conflict begins to diminish the ability of the organization to coordinate the efforts of its various’ functional areas, it becomes counterproductive and impedes the organization’s effectiveness in achieving its primary goals. Alleviating conflict, however, is top management’s responsibility. Conflict can only be alleviated when an atmosphere of cooperation is created through (1) promotion of clear and straightforward corporate policies, (2) evaluation and reward systems that stress inter functional cooperation and responsiveness, and (3) formal and informal inter functional contacts (e.g., including manufacturing people in sales meetings and marketing people in product design decision meetings or establishing squash courts for noon-hour use by all company members).

Marketing executives, however, can assist in alleviating conflict by building their marketing plans around each functional area’s ability to service the firm’s markets and customers and by analyzing the strengths, weaknesses, and competitiveness of each respective area, similar to analyzing customers and competitors.

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