Argumentative Essay on Strategic Planning
The following pages will present the strategy plan for the marketing activity of “Beauty Professionals”, a cosmetics producer. The company was established in 1995, and is the result of a successful partnership between a former chemistry researcher and a plastic surgeon, that dedicated their careers to the beauty industry.Given the fact that the cosmetics market is set by very strong players with sales worth $billions every year and decades of tradition behind them, like L’Oreal or Procter ; Gamble, the company had a hard time penetrating the market, over ten years ago, and the first couple of years were very difficult as the company was struggling for survival. After the first two years of activity, things started to work smoothly for “Beauty Professionals”. Due to the strong promotional campaign they launched when the company began its activity and the good quality and price of the cosmetics products they produce and sell, the company started growing year by year, expanding both its products range and the geographic area that the company is represented on.
Most of the strategic planning approaches start with a brief analysis of the company’s current situation and the factors that influenced it (Wikipedia, 2007). The situational analysis, both internal and external, should identify opportunities and threats of the new strategy. External analysis consists in analyzing customer related issues, and also in analyzing the competitive environment (Wikipedia, 2007). This analysis will provide several starting points for establishing goals, objectives, and targets.For “Beauty Professionals” the current situation is the following:The company produces cosmetic products like: makeup products, hair care products, wellness products, and deodorants. The company’s current organizational situation is the following: the company is run by a General Manager.
The General Manager coordinates the following departments: Production Department, Marketing Department, Financial Department, and the Personnel Department. The Marketing Department itself is consisted of the following subdivisions: Research-Development Division, Marketing Planning Division (that includes products planning, marketing strategy activity: promotional, distribution, and price strategy activities), and Sales Division.The target customers for “Beauty Professionals” products are women between 20-35 years of age, in urban areas, with medium incomes, fashion oriented, educated, quality oriented.The company’s products are of good quality, not the highest, but still good, at convenient prices. The products have a very equitable quality-price relation.
Regarding the company’s distribution system, once the company started to develop, it created its own distribution network. The company’s products are sold in specialized stores, pharmacies, supermarkets and hypermarkets.Regarding the company’s competitors in the cosmetic industry, things do not look very good. The cosmetics market is determined by giants like L’Oreal, that has a very respected tradition to base on, high quality products, very persuasive promotional campaign, and a great market share. Also, there are dozens of smaller competitors with the same target market as “Beauty Professionals”. One of them is Avon Cosmetics, whose most important advantages over “Beauty Professionals” are the lower prices and a very good distribution system. However, Avon’s products have a lower quality also. And thighs might get even worse, as a new competitor has announced its launch: “CarePro” is a company with a very similar profile to “Beauty Professionals” that is expected to inaugurate in about ten months. This new company will “attack” the same target market as “Beauty Professionals” does. The two company have a similar size also.
“CarePro”, the new company, will sell cosmetic products with the same quality as “Beauty Professionals”, at lower prices, at least in the beginning. Another advantage for the new company, and a threat to “Beauty Professionals”, is that the new company has a more expanded products care.Major activities included by any strategic planning should include a strategic analysis, strategic directions settings, and action planning (McNamara, 1997). In the strategic analysis some planners include a series of factors of influence, like “increasing competition, changing demographics (…) various strengths, weaknesses, opportunities and threats” that interfere in the company’s development (McNamara, 1997).A brief SWOT analysis conducted within the company has revealed the following:Ø Strengths: good quality products, medium prices, good geographical coverage, appreciation among the usersØ Weaknesses: the range of products is less expanded than those of other cosmetics producersØ Opportunities: expanding the range of products, expanding geographical coverage, implementing a new research laboratory, possible merger with another cosmetics company, similar in sizeØ Threats: “CarePro”, a new competitor, with a very similar profile to “Beauty Professionals”, expected to launch in about ten months, that will have a very aggressive promotional campaign.
The second step of any strategic planning consists in setting strategic direction. Basically, it consists in establishing strategic goals that must be achieved, and the strategies, methods, to achieve them. These goals should meet certain requirements: they must be as specific as possible, measurable, realistic, acceptable, extending the employees’ capabilities and rewarding them (McNamara, 1997). At this point of the strategic planning process the company must identify or update its mission, vision, and value statements.”Beauty Professionals” company’s mission is to be a respected producer in the line of cosmetic products in the United States, by continuously adapting its products, their quality, design, and presentation, in order to satisfy customers’ needs and to create optimal conditions for it employees.
The company’s values, since its establishment, are integrity, honesty, and respect.The goals for the company’s marketing activity established by the company’s managers are:Ø Increasing the market share up to 3%Ø Increasing sales volumeØ Producing high quality cosmetic productsØ Increasing the company’s notorietyThe company’s specific objectives, or strategies, regarding the marketing activity are:Ø Expanding the range of productsØ Expanding the geographical area covered by the companyØ Expanding the research and development activityØ Expanding the target customers segmentsØ Developing an aggressive promotional campaignThe next step in the company’s strategic planning is to establish the specific actions that will lead to achieving the established goals and objectives:Expanding the range of products – the company will start producing dental hygiene products, skincare-cosmetic products, products used in cosmetic salons, products that can be used in cosmetic medical centers. Also, the company will start the research activity for products addressed to women between 40-55 years of age, products that diminished the effects of ageing, and for products that prevent ageing for women between 30-40 years of age. Also, the company wants to develop a luxury makeup line, of higher quality and with higher prices.Expanding the geographical area coverage – the company will open sales units in all major cities in the United States.
Expanding the research and development activity – the company will open a new laboratory for cosmetic research, larger than the one it has at the present moment. For this activity of extreme importance, the company will employ top professional researchers that will work for developing new products: products for preventing ageing on the one hand, and products that diminish the effects of ageing.Expanding the target customers segments – given the development of the range of products, the company should gain at least three types of customer segments: educated women between 30-40 years of age, with medium incomes, health oriented, ageing-prevention-oriented, that need quality products to help them prevent the process of ageing; educated women between 40-55 years of age, with medium to high incomes; active women between 25-40 years age, educated, of high social status, with high incomes, fashion-oriented, for the new luxury makeup line.Developing an aggressive promotional campaign – the company’s future promotional campaign should meet the following requirements: the promotional message must reach the intended and targeted audience; the message must be clear so the audience understands it; the message must stimulate the recipients to take actions (Lake, 2007). The communication channels used by the company should be newspapers, magazines and television.Regarding the organizational structure of the Marketing Department, some changes are recommended.
At the present, the Marketing Department is consisted of the Research-Development Division, Marketing Planning Division (that includes products planning, marketing strategy activity: promotional, distribution, and price strategy activities), and Sales Division. Given the fact the research-development activity will go through some changes in the future as it will be significantly expanded, the Research-Development division should no longer be part of the Marketing Department, but it should be a single separate department itself. Otherwise, the Marketing Manager will not be able to handle the entire Marketing Department.Regarding recruiting strategies for the company’s marketing activity, it “needs to encompass the expertise from across a range of functions within the company” (Stoneman, 2002). It is very difficult to find skillful employees for the marketing activity, both for the strategic activity and the sales activity. The company does not necessarily need highly educated people for this activity, but skillful and highly trained people.
Therefore, it is recommended that the company starts using interns, trains them for the activity so that they will become the perfect employees for this activity. This is a long term process, but it has great results on a long term basis. Another recruitment strategy, for employing already trained people, is screening (Inc. Magazine, 1999).Regarding the company’s future competitor, “CarePro”, the company should use the Scenario Planning.
In this situation, the best case scenario is that “Beauty Professionals” will develop the above mentioned product lines, that, together with the aggressive promotional campaign and the appreciation and notoriety the company has, it will not be affected by the new competitor.The worst case scenario is that the new competitor, having similar products and attacking the same target customers, will “steal” some of “Beauty Professionals” company’s market share.The reasonable case scenario, which is most likely to happen, is that the new competitor will only “steal” an insignificant market share from “Beauty Professionals” in the beginning, but this will be counteracted on the middle term by the company’s future improvements and developments, discussed above.