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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