Reading: Strategy and Objectives
The Need for Objectives
As we discussed before, a business strategy must take into account the changing environment and identify a plan that will use the company’s resources most effectively to achieve its mission and goals. Businesses define and and communicate their goals using objectives.
Objectives specify measurable outcomes that will be achieved within a particular time frame. Objectives help individuals across the team to understand the goals and to determine whether the strategy is effective and the tactics are being well executed. Objectives are used to align expectations and plans, to coordinate efforts, to measure progress, and to hold teams accountable for achieving results.
Companies often have long-term strategies but create objectives based on a quarterly or annual plan. Clear, measurable objectives enable the company to track progress and adjust tactics (and, sometimes, strategies) to improve the chance of success.
Creating Effective Objectives
In general, effective objectives meet the following criteria:
- They are specific. They identify what must be accomplished in language that is clear and easy for the whole company to understand.
- They are measurable. They help managers ascertain whether the objectives have been achieved in very concrete terms.
- They have a time frame. The objectives specify when they are to be met so that others can count on the results being available at a certain time.
Below are some examples of good objectives:
- Implement a new customer loyalty plan in 20XX
- Increase market share for the product by 2 percent during 20XX
- Execute marketing campaigns that result in 2,000 qualified leads for a new product by June 1
Using Objectives to Align Company Activities
Companies do not have a single strategy. At any time they are executing a range of different strategies. A company might simultaneously execute on strategies to enter a new market, grow market share in an existing market, and improve organizational efficiency. Moreover, strategy at the corporate level will guide the development of strategies for each function, including marketing. Remember, a business strategy must identify a plan that will use the company’s resources most effectively to achieve its mission and goals. Likewise, the marketing strategy must identify a plan that will use the marketing function’s resources and expertise most effectively to achieve its mission and goals.
We will discuss the process for developing and executing the marketing strategy further, but first let’s focus on the alignment of the marketing strategy. How can the marketing function make sure that its strategy and tactics support the corporate-level objectives? How does it know if it is on track to achieve results? During the marketing planning process, the organization creates its own marketing objectives that support the company objectives. These marketing objectives must also specify measurable outcomes that will be achieved within a particular time frame.
Let’s take a look at some examples of typical corporate and marketing objectives. At the corporate level, objectives include profitability, cost savings, growth, market-share improvement, risk containment, reputation, and so on. All of these corporate objectives can imply specific marketing objectives. Below are two common corporate-level objectives and the marketing objectives that would support them effectively.
Example: Annual Objectives
- Company Objective: Increase profitability by 6% over prior year
- Marketing Objective: Increase the average selling price of the product from $186 to $198
- Marketing Objective: Complete end-of-life process for three products with profit margins below 3%
- Marketing Objective: Increase sales of start product by 30% over prior year
- Company Objective: Increase market share in one key market by 4%
- Marketing Objective: Implement a competitive-positioning campaign relative to a key competitor
- Marketing Objective: Introduce two new products to market
- Marketing Objective: Introduce major enhancements in two product lines
- Marketing Objective: Bring two new distribution partners on board to expand coverage to new major markets
As you can see, if the marketing organization achieves its objective to introduce new products to market, then it will support the company objective to grow market share. If the marketing organization does not introduce new products, then the other objectives will need to be adjusted or the company is unlikely to show the market share growth that is part of its strategy.