The corporate business plan defines for an organisation, the objectives to be achieved and the resources available. Achieving those objectives invites the question, “what do we do now?
Commercial managers have the responsibility of producing and maximising profitable income for the long term future of the business, by anticipating and satisfying customer demands. The task of the commercial manager is usually derived from the business plan, in the form of financial targets that the business seeks to achieve in terms of revenue, costs investment and profit. On receiving these targets, the first question that comes to mind is “how are these targets to be achieved? What has to be done? What resources are needed?
Operational plans, which are generally called, marketing plans, should follow on directly from corporate business plans, as they are fundamental to show how investment and assets are to be used to produce income. Too often businesses make little or no detailed plans on how income is actually to be produced, and think that all that is required is to increase the sales targets, develop brands and social media presence, together with a vague mission statement to guide the way.
If the commercial manager is to achieve the requirements of the business plan, then all those business activities which directly or indirectly involve the customer need to be managed, so that all assets and investment are used effectively, in order to collectively produce income.
Before starting any journey it is important to know where you want to arrive, to have a map to show the way, and to know where you are on the map before you start. So it is with business. The corporate business plan shows where the organisation wants to be. The operational or marketing plan shows how to get there. But before commencing with the plan, the commercial manager needs to make a full appreciation of the business and market situation, in order to understand the current business and market position of the company.
The starting point for that appreciation is that of a SWOT analysis. Analysing the strengths, weaknesses of the organisation, as well as the opportunities available to it and threats which may affect it commercial success, provides an essential understanding of the current situation,
- What are the organisations strengths in terms of market share, market segment, specialisation, reputation, product or service, pricing etc.?
- What are the organisations weaknesses in terms of Market share, market segment, specialisation, reputation, product or service, pricing etc.?
- What opportunities are available to the organisation in terms of new markets, new products, economic situation, new technology, and legislation?
- What threats are likely effect the organisation in terms of competitors, rival products, economic situation, new technology and legislation?
Applying a SWOT analysis to the main competitors is also important in gaining a better understanding of the market in which the organisation operates, although gaining accurate information is more problematic. Never the less, some attempt should be made to answer:
- What are the competitor’s strengths in terms of market share, market segment, specialisation, reputation, product or service, pricing etc.?
- What are the competitor’s weaknesses in terms of market share, market segment, specialisation, reputation, product or service, pricing etc.?
- What opportunities are available to the competitor in terms of new markets, new products, economic situation, new technology, and legislation?
- What threats are likely to affect the competitor in terms of competitors, rival products, economic situation, new technology, and legislation?
Apart from undertaking regular SWOT analyses, perhaps annually, it is also good practice to undertake a business or “marketing” audit” on a regular basis. The reason for this is that many business and commercial decisions that are taken are based on assumptions, because “everybody knows that”, - but do they? How do you know? Is the assumption true – where is the evidence?
The business or marketing audit is a self-administered method for identifying and realising under-utilised commercial resources, comprising the analysis of the market, the business, the company's own organisational strengths and weaknesses, the economic environment, the business environment and the competition. Unlike commercial performance indicators, much of a business or marketing audit will provide qualitative rather than quantitative information. The information collected should seek to identify and confirm what needs to be known, what should be known, what is known and what is not known. Generally held “assumptions” should be identified and examined for factual content.
There is no “magic list” of questions, but they should cover as wide a field of enquiry as possible regarding the market and economic conditions in which a business works. The audit will also cover internal procedures and knowledge, which cannot be reported on through business performance measures. Typically a business or marketing audit can cover over 20 subjects including strategy, planning, market environment, competition, law and many others, with at least as many questions for each subject.
Once an appreciation of the current business situation is fully understood, developing an operational or marketing plan to use resources and investment efficiently to achieve the corporate plan objectives is the next step.
An operational or marketing plan needs to cover what to do, how to do it, what to measure, and contingency actions covering the following;
- What is the income objective - How has this been derived, is it feasible and achievable?
- From where will the income be derived – what is the market, where is it to be found?
- What sectors of the market are to be addressed – is the market understood, where does the product fit in the market?
- Who are the main potential or existing customers? - identify all those customers for whom the product or service would satisfy a need.
- What communications are to be used – Advertising, social media exhibitions etc.
- If a key customer is lost to competition, or buys less than expected, how is the shortfall to be made up?
- Which are the key customers who collectively will make up the bulk of the income target?
An accurate appreciation of the current trading and business position of the organisation in relation to its market and competitors is essential to making an effective operational plan. Without a clear appreciation of the situation, any subsequent operational or marketing plan will be floored from the outset.
Finally, to achieve the objectives of the operational or marketing plan, the commercial manager must demonstrate the necessary leadership and management skills that will motivate staff with strong leadership, good judgement and clear decision making, with clear direction and communication,