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Difference Between Planning and Strategy

planning vs strategy

In business, one might come across with the terms planning and strategy, end number of times. Planning is the basic function of management that tries to take a peep into the future. On the other hand, strategy is one of the components of planning and is also known as interpretative planning. The two terms have different meanings and usage in the business world. So, have a glance at the article that explains the difference between planning and strategy.

Content: Planning Vs Strategy

Comparison chart, definition of planning.

Planning is an organized process of thinking in advance about a future action. It means the preparation of the plan, i.e. the sequence of steps which will help in achieving organizational objectives. Planning is among the five management functions apart from organizing, controlling, motivating & leading and decision-making.

Planning is a future-oriented activity that takes place in routine decisions of a family, a friend group, a college, government and most importantly, in business management. It requires good judgment skills to choose which action is to be done earlier or later to avoid overlapping in actions.

Planning process

Planning process

Planning needs goal setting for which planning needs to be done. After that, alternative courses of action are found, and finally, deciding which plan will lead to your destination successfully. It doesn’t mean that everything will go according to your plan, or it may also happen that the plan may fail midway, so the second list of plans is also prepared, which act as a complementary plan to the original plan if it fails, for achieving the goals successfully in the limited time.

The creation of complementary plans is also a part of the planning procedure. Planning needs to be flexible in nature so that any change can be done if required by the organization. With the help of planning, an organization can exercise control over the action, i.e. whether everything is going as per plan or not.

Video: Planning

Definition of Strategy

The strategy is a master game plan designed to achieve the objectives of an organization. It is a mix of competitive moves and actions made by the top-level management for the accomplishment of goals successfully. They are dynamic and flexible in nature. Strategies are based on practical experiences, not on theoretical knowledge, i.e. they are realistic and action-oriented activities. It requires deep analysis of the managers on any move or action, implementation timing, the sequence of actions, outcome, competitors’ reactions, etc.

In the business world, corporate strategies are made for the expansion and growth of entities, which include mergers, diversification, divestment, acquisition and many others. Strategies are made according to the present situations and conditions prevalent in the business environment, but it can’t be said that they are perfect because of the changing needs and demands of the people; strategies may fail.

Moreover, the market scenario will take an unexpected turn any time in the blink of an eye, and nothing lasts forever. Therefore the organization has to be ready for such unpredictable changes and develop a strategy for overcoming these situations. So, the organisation’s corporate strategy combines proactive and reactive strategies.

Video: Business Strategy

Key Differences Between Planning and Strategy

The major differences between Planning and Strategy are as under:

  • Planning is anticipation and preparation in advance for uncertain future events. The strategy is the best plan chosen among the various alternatives for accomplishing objectives.
  • Planning is like a map for guidance, while strategy is the path which takes you to your destination.
  • Strategy leads to planning, and planning leads to programs.
  • Planning is future-oriented, whereas Strategy is action-oriented.
  • Planning takes assumptions, but Strategy is based on practical experiences.
  • Planning can be for short-term or long-term, depending upon the circumstances, unlike Strategy, which is for the long term.
  • Planning is a part of the managerial process. Conversely, Strategy is a part of decision-making.

Planning is a forethought of what is to be done in future, but Strategy is a blueprint of what you want to be and where you want to be. Both Planning and Strategy are made by the top-level managers as they know the mission and vision of the organization clearly, so they will make their plans and strategies to take a step forward towards their mission and vision. Planning is preventive in nature, whereas Strategy is quite competitive, but both aim at the optimum utilization of scarce resources.

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corporate vs business strategy

UCHENDU I. M. WOGU says

March 29, 2017 at 8:11 pm

Good explanation!!

Arun Kumar says

May 19, 2017 at 10:13 am

Thank you for sharing.

Dr. C. H. Rao says

December 21, 2017 at 7:03 pm

Very explicitly detailed and easily understood

Behailu says

March 27, 2019 at 1:20 pm

Good clarification!!

mikael ahmad says

May 25, 2019 at 4:19 pm

thanks for your effort.

Mohammad Halla says

June 14, 2019 at 5:42 pm

simply explained as insprational as any knowledge seeker requires to delve deeper. thank you so much

Kamaraj says

December 4, 2021 at 10:17 pm

Good comparison and examples

Denise says

June 12, 2022 at 9:56 pm

Great comparisons and examples. Simplified and made easy to understand

muhdin says

December 13, 2022 at 8:23 pm

really a good explanation

REYNALDO R CABILIN says

August 29, 2023 at 9:11 am

Thank you for your answer.

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Strategic Planning is a Venn Diagram, Not a Linear Process

The winds of change can blow harshly. And in today’s environment, change can come rapidly and unexpectedly. So, what’s the point of strategic planning?

First off, there is a difference between having a plan and having an effective planning process. Dwight Eisenhower said, “In preparing for battle I have always found that plans are useless, but planning is indispensable.” Mike Tyson was equally terse when he said, “Everybody has a plan until they get punched in the face.” As Tyson explained to Mike Berardino of the Sun Sentinel in November 2012, “People were asking me [before a fight], ‘What’s going to happen?,’ They were talking about his style. ‘He’s going to give you a lot of lateral movement. He’s going to move, he’s going to dance. He’s going to do this, do that.’ I said, ‘Everybody has a plan until they get hit. Then, like a rat, they stop in fear and freeze.’”

The purpose of an effective planning process is to deeply understand your organization, to develop sound strategy, and understand your purpose in the context of the community you serve. An effective planning process never leads you to a place where you have such narrow options that you freeze in a crisis. It’s just the opposite.

Strategic planning is not a linear process. It is more of a Venn diagram with each element in conversation with the other, and through this interactive process an overall understanding of the best strategy evolves and gains clarity.

So, what are those interacting elements?

  • Your noble cause: the values the organization anchors in the world, the beliefs, principles, philosophies that calls it to do a great work; the vision for a better world for those you serve; and the mission you pursue to get there
  • The environmental context: constituent needs and expectations, competitors and collaborators, trends in the field, critical issues in your immediate environment, and organizational realities (staff, budget, current programs, leadership)
  • Your value proposition and core competencies
  • Strategic imperatives and a plan of action with success metrics
Everybody has a plan until they get punched in the face. —Mike Tyson

Your Noble Cause

compare and differentiate strategic planning and marketing planning using the venn diagram

Core values throw into sharp contrast the gaps between what is and what should be.

Core values call an organization to do its work. They capture the beliefs in which it is rooted—what it embodies and anchors in the world. Core values throw into sharp contrast the gaps between what is and what should be. They are distinctive to the organization and differentiate it from its competitors and collaborators. When members of an organization’s leadership and management team understand its defining and distinctive values, they gain greater clarity about how to make decisions and how to consistently convert resources into the most appropriate actions. Core values must be authentic.

In the simplest terms, a vision describes how the world will be different for your constituents because your organization exists. It is the ideal state toward which the organization strives on their behalf. It is seeing something with the imagination that does not yet exist. It ignites passion and inspires people to act. Compelling visions are often a bit audacious, capturing a future state that is larger than current capabilities—opening up a range of possibilities that transcend short-term thinking.

By contrast, some organizations use vision statements to define how they will succeed in terms of organizational aspirations, using “to be the best” language. The result is just an organizational goal, not a transformative vision. A true vision articulates how the lives of those you serve will be transformed. It must be authentic, relevant, crisp, clear, and memorable.

An effective mission is focused on aim and impact. It describes what the organization does for its constituents, and to what end (i.e. impact on their best interests). An effective mission statement gives direction to the organization’s intentions, defines its work, and states what it will do in clear and compelling language that makes sense to anyone who reads it. And it’s memorable. The mission pursues the vision in the clearest, most fundamental language. Complex mission statements often confound people—or in the least, fail to resonate with them in a persuasive way. In a mission statement, less is often more.

These three elements of an organization’s noble cause—core values, vision, and mission—form the foundation of strategic planning. Because once you fully think them through, you know where you stand in any situation.

The Environmental Context

Every organization functions within a community of interacting entities and individuals. A well designed environmental scan provides a sound understanding of the expectations of those who interact with you, the trends that are emerging in your field, the critical issues in your immediate environment, and organizational realities and constraints you are facing as you interact with this community. The environmental scan must ask good questions and the right questions.

For example, some good questions might include:

  • Who are our constituents? Do we really know what they need and expect?
  • How about our donors? Have we involved them in our planning?
  • Who are our competitors and collaborators? In what distinctive ways are they serving our community? What are their strengths and advantages? What are the key reasons for their success? Do we have emerging competitors/collaborators that are using new or unique approaches?
  • How is our field evolving and changing? What are the trends in the field that are shaping the future? Are these trends changing the rules of success? What are the threats and opportunities?
  • What are the internal challenges and constraints that impact our ability to succeed? What are the impediments to change that need to be addressed? What are our strengths that we can leverage?
  • Finally, what is going on economically, socially, demographically, technologically, governmentally that impacts our ability to succeed?

Knowing this information gives an organization a sound footing—even when operating on shifting sands.

Your Value Proposition and Core Competencies

Your value proposition is your promise to those you serve. I often begin with the value proposition and build it into a case for financial support. In order to have a plan, you must know the space you own and the promises you can keep. My favorite definition of the value proposition comes from Willie Pietersen, Professor of the Practice of Management at Columbia School of Management: “What will we do differently or better than our competitors to provide greater value to our chosen customers and superior profits for our organization?” Though we don’t seek profit in the nonprofit sector, healthy reserves are important to sustain—and so is resource flow. You must think about the funding sources when planning. And while we encourage collaboration, we still must know what we do differently and better than anyone else to provide greater value to those we serve. If we cannot articulate and defend our value proposition, why are we in business? Why should people donate to our cause?

Core competencies are the capabilities needed to deliver the promise of our value proposition. Every organization must identify the competencies that are required to succeed. This entails an honest, objective look at the ones you possess and the ones you must develop or acquire.

Knowing your promise and being competent to deliver it positions your organization for success.

Strategic Imperatives and an Action Plan

compare and differentiate strategic planning and marketing planning using the venn diagram

When crafting strategic imperatives, one looks out to the horizon—whether 3, 5, 10 years… or more, and engages the imagination with courage.

Strategic imperatives are clearly defined outcomes essential for an organization to achieve its vision. They are “must-have” achievements that create a substantially different reality. All organizational goals, activities, and success measures must serve the strategic imperatives.

When crafting the imperatives, one looks out to the horizon—whether 3, 5, 10 years… or more, and engages the imagination with courage. The purpose is to craft three to five transformational outcomes that the whole organization pursues with vigor. When committing to a set of imperatives, it is important to use a process that engages everyone throughout the organization, so that all buy-in and pledge their support. As someone recently commented, “They should scare you a little and excite you a lot.”

I recommend action plans that allow flexibility because in our fast-paced, rapidly changing environment, organizations should remain adaptable while keeping their eyes on the prize: delivering their value proposition to their constituents. Goals should contain both outcomes (a measure of change that is verifiable) and actions (activities that hold the greatest leverage for bringing about preferred change). Every organization should create a process of accountability where teams regularly review their effectiveness: Did we do what we said we’d do? If not, why not? Did we get what we hoped? Do we need to adapt? What will we do now?

As Eisenhower said, “planning is indispensable.” Strategic planning is the process of delving deeply with probing questions so that you understand your organization’s purpose and how you are going to solve the problems for the people you serve. When we take the time to strategically plan, we create an ability to succeed whether or not we take a punch to the face.

compare and differentiate strategic planning and marketing planning using the venn diagram

AUTHOR - James Mueller

Jim Mueller is president of James Mueller & Associates LLC (JMA), a national consulting firm that provides services in the areas of organizational development, governance, and philanthropy. Follow Jim on LinkedIn .

compare and differentiate strategic planning and marketing planning using the venn diagram

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MindManager Blog

Venn diagrams: what they are and how to use them

August 24, 2021 by MindManager Blog

By: Leanne Armstrong

Information overload can be a big problem in today’s business world. Fortunately, whether you need to draw data comparisons or work through a decision or new concept rationally, you’ll find visual diagrams far more effective for organizing and evaluating information than verbal discussions alone.

In this article, we’ll show you how using a Venn diagram maker like MindManager can help tame your data demons and allow you to focus in on the information that’s most relevant to you.

What is a Venn diagram?

As a framework of overlapping circles (usually 2 or 3), Venn diagrams are designed to show the relationship between distinct sets of data. Popularized by mathematician John Venn way back in the late 1800s, these illustrations remain in wide use today but have expanded to cover a diverse range of contexts.

Venn diagrams are especially useful for:

  • Graphically arranging information so it’s easier to understand and assess
  • Presenting the impact of data clearly – especially to a non-technical audience
  • Examining similarities, differences, and dependencies in everything from individual ideas to the various areas of an organization

By creating a Venn diagram template, you and your team can have more valuable conversations around the way two or more sets of items compare or contrast.

How to use Venn diagrams

So, what does all that mean from a practical perspective? We’re glad you asked!

Venn diagrams are a great way to visualize and think through related ideas, proposals, or processes – like when you need to streamline workflow , compare outcomes, or make improvements to a particular business area.

You might use Venn diagrams to:

  • Visualize what all your best customers have in common
  • Determine where the responsibilities of your design and development teams – or sales and marketing teams – overlap
  • Discover areas in which shared work tasks can be automated
  • Choose the best product or vendor for your project or departmental needs
  • Compare the potential results of different strategies, decisions, or processes

In a nutshell, Venn diagrams let you see what two or more groups of things have in common, which elements are unique to one or more of those groups, and what characteristics none of the groups demonstrate.

If, for example, you were trying to choose between two different messaging apps for your team, you could simplify the decision-making process by using a Venn diagram to:

  • Lay out the various features offered by each app
  • See which features were common to both
  • Take into account potential features that neither app offered

Similarly, if you needed to cut costs by eliminating workflow redundancies, you might start by using a Venn diagram to locate tasks being managed by more than one person or department.

Then, if you discovered the same questions were being asked at multiple stages of your customer onboarding process for example, you could save valuable time by redesigning your intake forms or restructuring the various workflows involved.

We’ll look at more Venn diagram examples later. But first – let’s find out how to create one.

How to create a Venn diagram

Creating a Venn diagram is easy with a visual mind mapping tool like MindManager . Whether you’re working alone or alongside a team, you can pull up the built-in Venn diagram template and customize it to your needs, or build one from scratch using MindManager’s background objects toolbar.

Here’s how to create a Venn diagram (involving 2 sets of data) in 4 easy steps.

Step #1 : Create and label a circle on the left side of your diagram. Enter brief text points or criteria representing your first set of data inside the left half of this circle.

Step #2 : Create and label a new circle on the right side of your diagram. Enter brief text points or criteria representing your second set of data inside the right half of this circle.

Step #3 : Move your two circles together until they share an empty area of overlap.

Step #4 : Highlight and drag the data points or criteria that are common to both circles into this intersection area.

And that’s it!

Now you can easily see where the two sets of information you’re evaluating are the same and where they’re different. You can even position new points outside both circles to represent details or ideas that neither set addresses.

Example of a Venn diagram

How you choose to use a Venn diagram is limited only by your team’s creativity.

If your marketing or sales department were looking for new ways to boost their results , for example, they could use a Venn diagram to visualize which traits your very best customers share and:

  • Fine-tune their marketing approach
  • Improve their sales techniques
  • Design a targeted advertising campaign

With that in mind, here’s an example of a simple Venn diagram in action.

Let’s say you’ve been struck by inspiration and want to roll out a new ad promotion aimed directly at prospects who resemble your most consistent and reliable buyers.

You’ve been in business long enough to know who the target audience is for your leased office equipment. But you’d like to drill deeper into that knowledge with the intention of bringing in new clients .

Using your sales and marketing data, you first determine what your 3 most frequently leased products are. Then, with the help of a Venn diagram maker, you create and label 3 circles accordingly:

  • Desktop all-in-one scan/copy printer
  • Standing floor model full-color scan/copy printer
  • Mobile wireless printer

Venn Diagrams 1 | MindManager Blog

Next, working with company metrics like ARR (annual recurring revenue) and CLV (customer lifetime value), you gather the traits, demographics, and characteristics associated with your biggest and longest running accounts .

Taking note of which account leases which product, you enter the criteria you’ve collected into your 3 product circles.

Circle #1 – Desktop all-in-one scan/copy printer:

  • < 10 employees
  • Single office or department use
  • In-office workers
  • Urban location
  • Finance & insurance sector
  • Single-unit lease
  • Top priority: power-save options

Circle #2 – Standing floor model full-color scan/copy printer:

  • > 10 employees
  • Multi-unit lease
  • Top priority: wireless reliability

Circle #3 – Mobile wireless printer:

  • Solopreneur/Contractor/Consultant
  • Remote workers

Venn Diagrams 2 | MindManager Blog

Finally, highlighting all the identical traits, you overlap the 3 circles in your Venn diagram and move these traits to the appropriate intersections where they’ll be clearly visible to your marketing team.

Intersection #1: Single-unit lease

Intersection #2 : In-office workers

Intersection #3 : Top priority: wireless reliability

Middle Intersection #4 :

Venn Diagrams 3 | MindManager Blog

Now that everyone can see what your most profitable and promising sales accounts have in common, you can design ads that will hold the greatest appeal for similar clients, and choose the marketing channels where your promotion is most likely to reach the right audience.

Venn diagram use cases

Not only are Venn diagrams a valuable tool for solving problems and guiding strategic direction, they can help clarify decisions by highlighting important differences in the various streams of information being evaluated.  

As promised, here are a few final Venn diagram examples presented as simple business use cases.

Company A wants to analyze the competition in a new location.

To expand their business presence, the company is considering opening a new branch in a different location. In addition to other risk management practices, they create a Venn diagram that will help compare similarities and differences between their services and those of the local competition. Ultimately, the company discovers that while they have several advantages, they’ll also need to make improvements in a couple of key areas.

The company decides to go ahead and lay the groundwork for opening their new branch.

Company B wants to compare three new product ideas.

The company’s design team has come up with three different versions of a new product that will complement their existing line of goods. By using a Venn diagram to visually compare the benefits of each, they’re better able to assess similarities and differences in the three designs and pinpoint the most favorable features.

The company reviews their team’s findings and approves the most promising design version for their new product.

Company C wants to update their market analysis.

It’s been some time since the company performed a market analysis to determine buying patterns, uncover industry trends, and evaluate the economic environment. Tasked with carrying out a thorough assessment, the marketing department puts together a Venn diagram to help visualize the information from these three research areas so they can reevaluate and redefine their target market.

Based on these research results, the company makes some important adjustments to their pricing and marketing strategy.

Creating colorful Venn diagrams with the help of MindManager makes it easier to think visually about the connections between different groups of information. Not only will you understand those relationships better, you’ll be more likely to recall their significance when it’s time to turn data into action.

Don’t have MindManager yet? No worries! Try it free for 30 days.

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compare and differentiate strategic planning and marketing planning using the venn diagram

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Chapter 4: Strategy and Strategic Planning

After reading chapter 4 you should understand the following:.

  • The meaning of strategy and how the approach to strategy has changed over time.
  • The relationships and differences among corporate, business, and marketing strategy.
  • The concept and process of corporate strategic planning.
  • The role of the product in a marketing strategy and the many aspects of the product that can be used to tailor the strategy.
  • The role of customer choice in marketing strategy and the logic of choosing customers.
  • The role of market area choice in marketing strategy and ways to choose market areas.
  • Core competencies as part of marketing strategy.
  • The interrelationship among product, customer, market area, and core competency decisions.
  • The logical connections among strategies, structures, and functions as outlined in the Integrated Model of Marketing Planning (IMMP).

The concept of strategy originates with the art of warfare. According to Webster’s Dictionary, strategy can be defined as, “the science or art of combining and employing the means of war in planning and directing large military movements and operations” or “a plan, method, or series of maneuvers or stratagems for obtaining a specific goal or result.” Companies use strategy and the process of strategic planning to reach their economic, social, and environmental goals.

4.1 The Concept of Strategy

4.1.1 historical development of strategic planning.

Strategic planning evolved from the process of annual budget planning in the 1950s. In the 1960s, fast-growing demand caused companies to extend their planning horizon beyond an annual basis, making long-range planning necessary. For example, when Rich [1] wrote his textbook on forest products marketing, he referred to long range planning and business strategy. In long range planning, the future is predicted through extrapolation of historical growth. [2]

Dramatic changes in the business environment, such as the oil shocks of the 70s, required more sophisticated approaches to systems of management. Next came strategic planning where predictions of the future were no longer primarily based on the past. [3] With this new approach, managers began looking for ”vague signs” or potentially important trends that might impact their operations. When one of these vague signs was identified, its development was followed and its impact was considered in the continual process of strategic planning.

Prior to the the 1980s, most planning was done at the corporation’s executive level. During the 80s, strategy development shifted to operating managers, and strategic management became the common term. [4] , [5] In the 1990s a common term was strategic thinking . Strategic thinking is discovering novel, imaginative strategies and envisioning potential futures very different from the present. In other words, strategic thinking is higher order thinking that should take place to explore potential directions for the company, and strategic planning is the operationalization of those ideas. These two concepts combine to form strategic management. [6] Scenario planning is a tool for enhancing strategic thinking. Like much of strategy, its roots are in military applications but have more recently been applied in business settings. Scion in New Zealand has used scenario planning to envision the future of the built environment in Australasia (Example 4-1).

Example 4-1: Scenario Planning in Australasia

Scion (formerly Forest Research) in New Zealand has used scenario planning in several projects to help its wood industry envision potential futures of housing in the region. One project created three visions for the future urban built environment in Australasia. The project team used existing literature, personal interviews, and group interviews to gather information about the social, economic, environmental, and technological aspects of society. With this information the team created and described three different scenarios of the future: Pining Away, The Industrial Revolution, and The Renaissance. Each scenario is described through the story of an older woman who was a city planner, her husband who was a master carpenter, and her son, a chemical engineer. Using these characters, each scenario is described via a short story of the situation with the family in about the year 2015. The team suggests that the scenarios are not exactly predictions of the future, but should be used as a set when making strategic decisions. In other words, the scenarios are a way of taking complex, and extensive information and combining it in a way that can be digested by strategic planners and effectively utilized in planning processes. An example of one scenario, in its original text, is provided below.

The Renaissance

Jessie stepped out of her apartment building and smiled up at the sun. Taking a deep breath, she smelled the cool air that always resulted from a brisk southerly storm. She enjoyed these refreshing interludes in the increasingly warm and muggy weather. Feeling a rare wave of youthful energy, she headed off to the local shops with a spring in her shuffle.

Taking a short detour through the new sculpture garden, Jessie sat for a while on a park bench and marveled at the transformation. She remembered when this area had been a car park; now it was a pleasant oasis among a cluster of townhouses. Jessie had seen a major turning point in industrial history during her lifetime, and as a town planner she had helped to shape many of the changes. At the turn of the twenty-first century, she and her colleagues had expected consumers to follow green market trends, but nothing had prepared them for the rate at which public consciousness had changed.

The Scenarios: Pining Away, The Industrial Revolution, The Rennaissance

In the past, consumers always had a remarkable ability to disregard most environmental problems. When Jessie was young, she remembered, there was concern about pollution, climate change, and resource depletion, but efforts to address these problems never seemed to get anywhere. Finally, a chain of events shifted public opinion to a critical mass and Government intervention was demanded. Hydro lakes slowly became depleted through drought, natural gas fields diminished, and oil prices fluctuated wildly due to supply difficulties. Climatic disasters became common and a crippling cyclone caused widespread blackouts to the city along with major disruptions to transportation. Graced with a mandate for radical change, Smart Growth planners such as Jessie seized the opportunity to rebuild a different type of community.

Other countries were experiencing similar events, but New Zealand and Australia were able to effect change more quickly due to relatively small populations. As a result, Australasia retained significant appeal as a “lifestyle frontier” to migrants and, although international tourism had declined due to rising oil prices, more people came here to live, making urban intensification had been achieved through strong local government leadership, including initiatives such as subsidised public transport systems and multi-unit development along transport corridors. Rural zoning limitations were also tightened to contain urban sprawl so that those wishing to live outside the major cities tended to favour satellite towns within the region. Jessie hadn’t forgotten all the difficulties and challenges they had faced, but tighter stronger communities eventually emerged.

Looking back, it was almost frightening to recall the economic risks they had taken. High transport costs, non-tariff barriers, and the implementation of carbon taxes gave rise to a major push towards self sufficiency, primary production, and a strong service industry. As the population had continued to grow, so did the need for more energy and this led to rapid advancement in sustainable energy technologies. Jessie’s son, Kevin, was currently working as a chemical engineer at the bio-fuel plant constructed near the city. As one of the largest and most productive of its type in the world, it had helped to set the standard for alternative energy supply.

The increased cost of transportation meant the price of imported consumer goods went up, so there was an upsurge in local processing. Manufacturers close to the market could suddenly compete with goods produced by large international producers, and this fostered the development of local businesses around a strong green economy. Within a relatively short time, certification and green branding had become compulsory, sustainable production was strictly enforced, and socially responsible businesses prospered.

While the mass media continued to entice consumers, it seemed to Jessie that people had become disillusioned by rampant materialism. As individuals sought to develop a sense of place and identity in the global context, there had been significant growth of religious, cultural, and community groups. Jessie thought this may have been a reaction to the dumbing-down effects of globalism. Or maybe, with ever-increasing numbers of elderly people in the population — like herself — society was just growing up.

As she stared across at a beautiful wooden sculpture, Jessie reflected on how the new society was built on a strong sense of tradition and creative expression. When it came to the crunch, people had turned to their roots for the answers and the economy found its strength in the land. The value of producing food and fibre in a world of increasingly scarce resources had been realised and primary producers capitalised on their comparative advantage by building a strong knowledge economy around agriculture and forestry.

Jessie had experienced this trend most keenly through the work of her late husband, Jim. As a master builder he witnessed many changes after building standards were tightened to ensure higher energy efficiency. Much to Jim’s approval, solid wood had provided the best solutions for construction. Not only did it have better thermal insulation properties than other materials, it was also more energy-efficient to produce. An oversupply of radiata pine resulted in timber being used in a variety of applications, and Jessie had been amazed at the range of ideas borne of necessity. One of Jim’s favourite projects had been the construction of concept homes demonstrating energy efficient and stylish use of wood-based construction systems.

Diminishing landfill space also prompted more use of wood and other organic materials as local bodies pushed for zero-waste. Laws had made the cost of demolition almost prohibitive and so building systems evolved around durable low-maintenance exteriors and easily modified interiors to suit individual tastes. Jim had also been heavily involved in the refurbishment of existing housing stock to meet new energy codes. Jessie smiled to herself as she recalled how former State-housing tracts had become trendy suburbs. Their construction from native timber, combined with clever refitting, had made them desirable to an extent that would never have been believed 50 years ago.

Still, changes like these had been par for the course. Looking back, it amazed Jessie how well people had adapted when circumstances dictated it. A bird caught her eye as it flitted around the sculptures and she smiled when she noticed a nest tucked among the artistic curves. Humans may have been slow to learn the art of compromise, but they were getting there. How could they not, when nature provided such good role- models? [7]

It is important to note that individual companies also evolve through the stages listed above. As a first step, companies develop budget plans on an annual basis. As they gain experience in the marketplace, they begin to forecast beyond an annual basis and move toward long range planning. As the expertise of company personnel grows, the tools for true strategic planning and strategic management are developed.

4.1.2 Defining Strategy and Strategic Planning

Strategy is a nebulous concept with multiple definitions and little consensus regarding its makeup. One reason for this difficulty is that the term ”strategy” often refers to different hierarchical levels, such as the corporation as a whole, the strategic business unit, and the product (note that for smaller companies, the corporate and strategic business unit levels may be the same). Strategy is also used in a variety of contexts such as marketing, distribution, or communication and ironically, marketing researchers often do not have a common understanding of strategy. [8] Although it is a critical part of strategy research, the strategy concept has no universally accepted definition. [9]

A major difficulty in implementing marketing strategies is that the current definitions are exceedingly vague and provide no guidance for the strategic planning process or the decisions that must be made. Our approach is to view strategy in the context of the decisions a manager must make as well as the information needed to make those decisions. In this way, we begin to illustrate the practical steps that occur in a successful strategic planning process. In this text we emphasize the principle that  the strategy concept must tell what should be done when making plans and decisions concerning  strategies.

In addition to the varying definitions of strategy, there are many schools of thought regarding how the process of strategic planning actually occurs. Academic research has developed along a dichotomy of rational versus incremental planning. [10] The rational school believes that a core group of company managers deliberately formulate strategy. The incremental school claims that strategy emerges within a company through its day-to-day activities. Much of the work from the rational school originates from Ansoff [11] , while Mintzberg [12] is commonly associated with the incremental school. Like Mintzberg, Ohmae [13] suggests that “effective strategies do not result from specific analyses but from a particular state of mind, a state in which insight and consequent drive for achievement, often amounting to a sense of mission, fuel a thought process that is basically creative and intuitive rather than rational.” In practice, strategic planning will be unsuccessful unless both of these aspects are incorporated. [14]

When viewing strategy from outside the company, the distinction between these two concepts is not so critical. Even if strategies have not been developed through a logical process as described in the rational school, they can nevertheless be seen in the activities of a company. In other words, even if strategies have not been defined, company activities and their results can be used to characterize strategies.

4.1.3 The General Nature of Strategy

Although there are differences in definitions for strategic planning and strategy, some general features of strategy can be outlined. There are many classifications or definitions of strategy. For example, Niemelä [15] identified the following approaches to strategy:

  • Strategy as an atmosphere or a framework
  • Strategy as a plan resulting from a formal planning process
  • Strategy as a position
  • Strategy as a pursuit of competitive advantage
  • Strategy as a pattern of decisions and actions

The following review separates approaches to strategy into three simple categories from general to specific. The categories parallel historical development of the strategy concept.

Strategy as a Framework or Atmosphere

Particularly in the 1950s and 1960s, it was very common for firms to view strategy as an atmosphere or framework that influences all the activities of the company. Strategy directs all the decisions made in the company, but it does not define what kind of decisions are strategic. This approach does not define what to do when planning strategies. Instead, it more generally describes norms, attitudes and “the way of thinking” in the company. Thus, the term “strategic” came to be almost synonymous with “important.”

The idea of strategy as a framework can be seen in Figure 4-1, where it is referred to as a tool of management. The functioning of a company is based on its business idea (mission), and is aimed towards specific goals within a framework formed by strategy. Strategies are defined by top management and are based on analysis of internal and external conditions.

Strategy as a Framework

For example, in small companies management may not recognize the necessity of defining specific strategies, and may instead form strategies spontaneously as a sum of the targets and principles of action. [16] On the other hand, when strategy develops over a long period, as if by itself, it forms a spirit or atmosphere. The existence of a spirit or atmosphere affects decisions and actions, developing into principles and guidelines by which the long-term goals of the company are to be achieved. The choices made in a company can be described by pairs of concepts like aggressive – defensive, active – passive, or innovator – follower. The atmosphere has also been described with expressions like “production-oriented strategy,” “business-minded strategy,” or “marketing-oriented strategy.”

Strategy can be described as laying the groundwork of general principles through which the company tries to secure its competitive advantage, customers, and fully utilize its resources. [17] This demonstrates three cornerstones of strategic thinking: customer attraction, competitor consideration, and company resources development. However, when using a framework concept of strategy, the actual contents of the strategy often remain undefined. The definitions describing strategy as a framework or atmosphere are not operational. Making inferences and decisions concerning strategies require strategy concepts with clear ways of measuring them.

Strategy as an Adjuster Between a Company and its Environment

Kotler defined market-oriented strategic planning as “the managerial process of developing and maintaining a viable fit between the organization’s objectives, skills, and resources and its changing market opportunities. The aim of strategic planning is to shape the company’s businesses and products so that they yield target profits and growth”. [18] Here he emphasizes a basic characteristic of strategy – as an adjuster between a company and its environment (Figure 4-2). This view of strategy has become common since the 1960s, but in most cases, how the adjustment takes place is left unspecified.

The pioneering work of Ansoff [19] has had great significance as the precursor of nearly all analyses of strategy. The “adjuster” idea was evident in his early work. The “ecological model” of strategic planning presented by Thorelli and Becker [20] demonstrates well the close connection of a company and its environment and strategy as an adjuster. Their basic idea is that every company, like all biological organisms, is dependent upon its environment. The satisfaction of people’s needs is the only reason this environment needs companies. Customers, therefore, have a specific emphasis in this model.

According to Thorelli and Becker [21] , goals give direction for setting strategies. The results of everyday activities are the measures of the effectiveness of those strategies. If the results are unsatisfactory, the strategy is not functioning correctly as an adjuster between the company and its environment, indicating that the strategy must be further developed. Although the authors define strategy as an instrument in the adjustment process, they do not define strategy thoroughly. Strategy is said to be the approach or position that a company takes in order to succeed in its actions. Again, this definition is somewhat insufficient because it is not operational, it does not specify what must be done when making plans and decisions concerning strategies.

Strategic position is closely related to the relationship between a company and its environment. A strategy directs a company into a certain relationship or “strategic position” within its environment. A change in the company’s environment forces management to pay attention to its strategic position. Management must then evaluate the product/market combinations with which the company operates.

Strategy as an Adjuster Between a Company and its Environment

Strategic positions and ways of change are often described using “Ansoff’s Window,” presented in Figure 4-3.

Ansoff's Window for Strategic Positioning

A company can develop its strategic positioning in four ways:

  • By developing current activities (market penetration) the company tries to strengthen the position that its products have in current markets.
  • Market expansion (market development) is a way to develop strategic positioning where new markets are sought for current products, either by finding new customer groups or by finding new market areas.
  • Product expansion (product development) is a way to develop strategic positioning by offering new products and/or significantly improved current products to current markets.
  • Diversification means moving into new business areas, usually by buying companies from areas or fields with better growth possibilities. [22]

Practical examples of these strategies are provided in Example 4-2. Typically, companies follow several at the same time. In fact, pursuing market penetration, market development, and product development at the same time is a sign of a progressive, well-run company. [23]

Example 4-2: Strategic Options as Outlined by Ansoff’s Window

Ansoff’s Window describes the following four methods for developing strategic positioning:

Market Penetration – essentially, market penetration is gaining market share for an existing market. I-joist manufacturers have heavily targeted the Southern California residential floor joist market. Through market penetration, they now hold the dominant market share over the traditional product, solid sawn lumber.

Market Development – In North America after the advent of OSB, structural plywood producers (especially in the West) found themselves at a huge cost disadvantage. Consequently, OSB was quickly taking market share from the major traditional market for plywood, home construction. Because of the cost disadvantage, market penetration was not a viable option. Instead, many companies relied heavily on Market Development. This meant they went after new markets to find customers for their products, such as industrial uses like truck trailer bodies, furniture frames, and pallet decks.

Product Development – it is natural for companies to change their products according to the evolving needs of the customer base. Those companies that do this more efficiently will recognize an advantage. Following the plywood example, the industry also developed new products for new markets. The Big Bin, developed by companies and APA – The Engineered Wood Association is a good example. The Big Bin is an engineered, plywood substitute for 55 gallon plastic and steel drums. These are often used by food processors to transport liquid concentrates such as tomato paste or ketchup. The liquid is contained in a disposable plastic bag. Since the Big Bin is made from panels, it can be dismantled and reused. An additional bonus is that when it is empty, it can be shipped flat, reducing transportation costs.

Diversification – Related diversifications means staying within the broad confines of the industry. This could be, for example, forward integration of a paper company into converting operations for products such as boxes or paper bags. Unrelated diversification is moving beyond the confines of an industry. Diversification was a popular trend in all industries in the 1960s, and forest industry companies invested in a wide array of unrelated businesses. Boise Cascade Corporation invested in a power plant in Cuba and retail lumber yards in the US south; Enso Gutzeit purchased a ferry and started a shipping line. Real estate and housing construction were popular diversification targets. Most of these businesses have since been divested as companies moved to concentrate on core businesses and core competencies. [24] , [25]

Ansoff’s concepts of strategic positioning have inspired many followers. For example, portfolio analysis in connection with strategic planning is clearly based on Ansoff’s preliminary work. How portfolio analysis can be used when choosing strategic business areas, products or markets will be described later in this chapter.

Precise and operational definitions of strategy were emphasized by Ansoff [26] when he defined it as a move or series of moves that a company makes. Thorelli and Becker [27] refer to the same idea when stating that the best strategies are those that are based on the use of relative advantage and aim at satisfying precisely defined customer needs. Efforts to precisely define strategy led to consideration of the components which constitute strategy. These components should be well-defined and measurable, as discussed in the next section.

Strategy as Strategic Decisions

Ansoff [28] provided a starting point for the analysis and development of strategy components and strategic decisions. In his opinion, the traditional definitions of the common thread of the company based on mission and the business concept of the firm are too loose and vague. As a replacement, he developed a strategy system composed of the following four components:

  • Product/market scope
  • Growth vector
  • Competitive advantage

Product/market scope is the starting point for the definition of strategy. It defines the product area of the company and the markets to which the products are offered. The growth vector defines the direction of company development. The competitive advantage utilizes the finding of product and market areas, and determines which markets best match the characteristics and strengths of the company, giving it a strong, competitive market position. Synergy is produced by the proper combination of various resources and actions. A successful combination can give the company more possibilities and resources than any of its resources or actions used separately.

The marketing strategy definition we use takes a modular approach. In other words, marketing strategies are made up of several key components, as Ansoff’s work suggests. Careful definition of the product/market area is an essential point of the modular approach. It is worth noting that three of Ansoff’s four strategy components are primarily marketing oriented; product/market scope, growth vector, and competitive advantage. Only synergy refers to the internal use of research and production resources.

According to the concepts of Shirley et al., [29] the five key decisions that make up a company’s marketing strategy are:

  • Customer mix
  • Product mix
  • Geographical limits of market area
  • Goals (evaluation criteria)

This approach stems from the same ideas that Ansoff puts forth, but adds aspects which make the strategic decisions more detailed and operational. When a company defines its strategy, it defines the products, customers, geographical limits of the markets, and competitive advantages on which the use of marketing tools will be planned. It also defines the goals which the company tries to achieve through its actions within these four parameters. All these decisions together put the company in a particular strategic position and define the company’s relationship with its environment. It must be emphasized that although this relationship is defined by strategies and goals, the method for obtaining this relationship is not yet established. All five decisions are closely interrelated. Depending on the marketing ideology, each decision is given a certain weight. For example, when the marketing ideology is  customer-oriented, the most important of these five decisions is the choice of customers.

The product can be tailored through its physical characteristics as well as through its service offerings which fit the requirements of the customer. According to Webster [30] , the product and customer decisions a company makes are influenced most heavily by the company’s competitive advantage and market area strategy. This suggests hierarchical differences between the strategy components mentioned above.

It is possible to show the meaning of Ansoff’s concepts like market penetration, market development, and product development, using the five strategic decisions mentioned above and the concept of strategic position discussed earlier. The strategic decisions (1-5) define strategic position. If the company plans to move from one strategic position to another, it requires, for example, market penetration, new market development, or new product development which Shirley et al. [31] regard as marketing strategies. Strictly speaking, those concepts define the scope, direction, or nature of behavior carried out under a given strategy, but the content of that behavior must consist of functional factors. Various marketing functions are thus planned to carry out the chosen marketing strategies.

Even when company executives have not defined a specific and explicit strategy, it is possible to infer what the strategy is. Inferences can be made by examining the products, customers, and market areas of the company, as well as the marketing measures it is executing. How this concept of strategy as strategic decisions (product, customer, market area and core competencies) can be used in practice will be discussed broadly later in this chapter.

4.2 Corporate Strategy

As mentioned earlier, confusion has been created because strategic decisions on various hierarchical/ organizational levels of the company have not been well differentiated. We speak of strategies at three levels: corporate, business unit, and marketing (functional). This is somewhat complicated because the number of organizational levels varies within companies, mainly dependent upon the size of the firm. Large forest industry companies consist of four levels – corporate, division, business unit, and functional. Small companies often consist of only corporate (business) and functional levels.

4.2.1 The Idea and Process of Corporate Strategic Planning

Large forest industry companies typically consist of several business units or several groups of business units (e.g., divisions) operating as one financial entity. Business units can be from the same or different branches. Economic and financial questions are generally handled by corporate management, and strategic planning is particularly important at this level.

To increase manageability, the corporation is often divided into divisions . For example, International Paper has the following structure:

  • Industrial Packaging
  • Cellulose Fibers

And, Canfor has:

  • Pulp and Paper

We describe corporate and division-level strategies together because the same principles can be applied in both cases. Instead of speaking of functional level strategy, we adopt a marketing-centric approach and speak only of marketing strategies. Later we will show how business strategies and marketing strategies are interrelated. As a result, we have two different situations for strategic planning: 1) planning corporate strategies and 2) planning marketing strategies. The most important reason for  separating the two is that, especially in large companies, corporate and marketing strategies are planned and implemented on totally different organizational levels. Corporate strategy is the responsibility of top corporate management. Marketing strategies are planned and implemented on a business unit and product level. Of course, division of management responsibilities is closely related to company size. In small companies, the corporate strategy planning resembles business unit and marketing strategy planning. In this case, instead of using the term “corporate strategy,” it is more appropriate to speak of “company strategy” or “business strategy.”

Corporate strategy defines the scope of the firm with respect to the businesses, industries, and markets in which a company will compete. Overall, corporate strategy answers the question “Which industries should we be in?” and, therefore, competition is an essential element of corporate strategy. Corporate strategy should be planned so that resources are used most efficiently to convert distinctive competencies into competitive advantage. [32] To define strategy on various organizational levels, strategic decisions on each level must be defined. This follows our leading principle that the definition of the strategy concept must tell us what we do when making plans and decisions concerning strategies.

The following summarizes the definition of corporate strategy and the differences between corporate and marketing strategy. According to Ansoff, careful definition of the product/market area is an essential component of strategic planning. He suggests that strategic decisions are those which define the business area in which the company chooses to operate. These two comments can be used to distinguish corporate from marketing strategies. At the corporate level, product/market decisions are made with respect to the business area or industry chosen. At the business unit level, product/market decisions are clearly made with respect to products to be produced and customers to be served. When the business unit or marketing manager is considering what kind of products to offer, the corporate CEO considers which divisions, industries, businesses, or strategic business units to invest in or divest.

This idea is illustrated in Figure 4-4. At the corporate level, the product is defined as structural panels and the customer as the construction sector. These definitions become much more precise at the marketing level.

Illustration of Differences Between Corporate and Marketing Strategies

With this background in mind, we can list the basic phases of corporate strategic planning:

  • Corporate mission definition (4.2.2)
  • Strategic business unit (SBU) or strategic business area (SBA) definition (4.2.3)
  • Evaluating the current business portfolio and making strategic conclusions/decisions (4.2.4)

4.2.2 Mission, Visions and Values

At the corporate level, strategy primarily consists of decisions regarding the businesses that the company should be in and what resources should be allocated to those businesses. These allocation decisions are guided by the company’s mission, vision, and values which provide overarching guidelines regarding the kind of organization the company wants to be and where it wants to go in the future. The concepts of mission, vision, and values are interrelated and their interaction should be the guiding light for the company’s strategy development.

Mission – In a basic sense, the company mission answers the question, “why does the company exist?” Only with a clear definition of the mission and purpose can a business begin to make clear and reasonable objectives. The mission is the foundation for all that follows. Answering the question “what is our business?” seems simple, but the answer is typically less obvious, and may include answering other questions like “who is our customer?” Often, various executives within a company will give very different answers to this question. This is one reason why it is so important—the process of developing the mission brings management together towards a common purpose. [33]

Companies within the forest industry often have very similar missions, but this actually violates one of the primary purposes of such mission statements. Companies should attempt to differentiate themselves from their competition. This differentiation is possible if each company considers its unique history, core competencies, and environment when developing its mission statement. Public relations should not be the primary purpose of a statement of mission. The mission should also be achievable, realistic, and motivating, so that it can provide guidance for both employees and managers. [34]

The mission should focus on markets rather than products, which means that it should concentrate on the broad class of needs that the company is seeking to satisfy (Example 4-3). General mission statements and the difference between a product orientation and marketing orientation can be shown as follows.

  • We make paper (product orientation)
  • We serve magazine printers (marketing orientation)
  • We make sawn timber (product orientation)
  • We make wood components for joinery companies (marketing orientation)

Manufacturer of prefabricated houses

  • We make wooden houses (product orientation)
  • We create comfortable living places (marketing orientation)

Example 4-3: Company Mission Statements

Based on an extensive review of the literature, Pietiläinen [35] developed a definition and breakdown of a mission statement. She suggests that a mission statement expresses the organization’s reason for existence and describes the nature of its business by answering the questions “what is our business?” and “what should it be?” Creating or updating a mission statement is an important part of corporate planning, as it motivates and inspires the members of the organization and guides resource allocation.

A mission statement can include the following issues:

  • distinctive competencies
  • purpose of the organization or philosophy
  • business aims
  • definitions of main stakeholders
  • target customers and markets
  • needs the organizations seeks to satisfy
  • principal products and services
  • geographical domain
  • core technologies

A mission statement should be:

  • inspirational
  • short & easy to remember
  • consistent with values
  • clear and concise
  • focused on markets rather than products
  • distinctive from mission statements of competitors
  • based on history, distinctive competencies, and the environment of the organization
  • achievable, realistic, motivating, and focused on a limited number of goals
  • same for all members of the organization [36]

Vision – When a company is founded, it is based on the vision of the owners. The vision statement helps maintain the original concept of the company and its future development. The vision is almost an “impossible dream,” yet it is simply a reality that has not yet come into being. [37] It provides a picture of what the future should look like, and guides the organization’s leaders toward that future. [38]

The vision statement must indicate a clear understanding of where a corporation is today and how it should proceed in the future. It should be seen as the primary corporate motivation, rather than profit. [39] Vision statements should be action-oriented, present- and future-based views of the dreams of executives. Unfortunately, these days vision statements are often no more than advertising slogans. [40]

An example of a forest industry company vision comes from ATS Timber in New Zealand: “To ensure all stakeholders needs are considered for generously with a culture of continuous improvement and profitability.” This shows the stakeholder focus of the company is balanced against the profit motive. A vision statement is a mental image or an assumption of the desirable future state of an organization. It is a motivating tool in founding the company and maintaining the development and framework that guides decision-making. It enables differentiation from other organizations and forms a point of comparison against which achievements, culture, and behavior can be evaluated [41] (Example 4-4).

Example 4-4: Company Vision Statements

Pietiläinen looked at vision statements and developed perspectives on what a vision statement can and should include. A vision can include the following issues:

  • competitive position
  • competitive advantages
  • operating environment of the organization
  • predicted economic trends
  • changes in demand
  • market focus
  • position in the supply chain

A vision should be:

  • action-oriented
  • concentrated on the future
  • versatile (considering various stakeholders)
  • interactive and dynamic
  • attractive and clear
  • harmonious with values
  • stimulating
  • concrete [42]

Value – a value is “a belief in action,” which means a decision is made about what is good or bad, important or unimportant. Every organization has values, realized or not, and values guide the operations of organizations. The values of an organization are usually based on those of top management. Values should be documented, consistent, practiced and honored; otherwise, the organization is in danger of managers following only their personal values. [43] Values can be said to reflect the sense of identity of an organization. [44] They should be clear, simple, direct and easy to understand. [45]

Values of an organization can be divided into three groups: ethical values, responsive values, and profit values. [46] Ethical values concern the environment, society and employees, while responsive values emphasize the benefit to customers. Profit values stress the economic point of view and the benefit to owners. Values might include providing opportunities for employee development, creating a safe working environment, or maintaining environmental friendliness. [47] Roseburg Forest Products operates using three basic values: 1) Sawdust in the Veins, 2) Handshake Integrity, and 3) Driven to Win.

Business values are statements that specify common rules and set boundaries for an organization by defining what is right and wrong and what is important. Business values reflect the organization’s sense of identity and define both internal and external behavior of the organization, making them vital to the organization’s culture [48] (Examples 4-5).

While the mission and vision may seem like grandiose statements with little meaning or practical use, how a company defines itself can have a dramatic impact on its success. These statements communicate the values and intentions to all stakeholders. Levitt [49] provides examples of how companies or industries have defined themselves too narrowly. For example, he discusses the challenges facing the railroad industry in the U.S. in the late 1950s.

The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because the need was filled by  others (cars, trucks, airplanes, and even telephones), but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than the transportation business. The reason they defined their industry wrong was because they were railroad-oriented instead of transportation oriented; they were product-oriented instead of customer-oriented. [50]

In the mid-90s, Louisiana-Pacific Corporation went through a series of difficulties and changes in top management. The results of these changes brought about a significant shift in its corporate strategy. A decision was made to divest the paper side of the company’s business and to concentrate on being a building products company. Similarly, Scandinavian companies that once produced magazine paper now produce “solutions” for their publisher customers. While this may seem like an insignificant issue, the difference in culture between these two world-views can have a dramatic impact on firm performance.

Example 4-5: Company Value Statements

Pietiläinen [51] analyzed company values and identified what values might include and what companies should include in their values. Values can include the following issues:

  • ethical aspects: human rights, equality
  • responsive aspects that emphasize the benefits to customers: service to others, humility, integrity, reli- ability, innovativeness
  • relationship to owners: profitability, productivity
  • relationship to employees: individual’s self-determination, social appreciation and acceptance, safety, employees’ development
  • social responsibility: environmental friendliness Values should be:
  • limited in number, not more than six statements
  • known, consistent, practiced, honored
  • purposely chosen & written down
  • continuously discussed & checked regularly
  • clear, simple, direct, and easy to understand
  • attractive and capable of being respected
  • suitable for different cultures
  • effective – they should have a real influence on the organization
  • consistent with each other
  • feasible [52]

4.2.3 Strategic Business Unit (SBU) or Strategic Business Area (SBA) Definition

A business unit is the basic unit for which business and marketing strategies are created. The term “profit unit” is used if independent responsibility for returns or profits is emphasized. In smaller companies there may be only one business unit, in which case the terms “company” and “business unit” are often used synonymously.

The terms SBU and SBA have been created for strategic planning purposes. A strategic business unit can be a single unit or collection of related businesses. The decisions in portfolio analysis are targeted to strategic business units. The SBA and SBU concepts are closely related. The strategic business unit is responsible for developing the strategic positioning on one or more SBAs. Abell [53] defines SBA in terms of three dimensions: (1) customer groups that will be served, (2) customer needs that will be met and (3) technology that will satisfy the needs. Ansoff [54] adds geographical location to the list.

The difference between an SBU and an SBA can be explained through the company philosophy: production- versus market-orientation. In corporate strategic planning, a production-oriented company emphasizes SBUs while a market-oriented company emphasizes SBAs.

SBU – wood component mill or wood industry division

SBA – wooden furniture material business or wood construction material business

Figure 4-6 shows that when an SBU defines its marketing strategy it defines its SBA at the same time. The business of a corporation is composed of the SBAs of its SBUs or groups of SBUs.

Example of a Strategic Business Area

Since the 1990s the general direction in the forest industries has been to concentrate on core businesses. Many multi-industry corporations have renewed their strategies and now concentrate only on forest-based industries. In the late 1980s, a Finnish multi-industry corporation Rauma-Repola started developing its corporate strategy by listing its strategic business units (also referred to as industry groups or business areas):

  • Forest machinery
  • Industry valves
  • Rock crushing equipment
  • Machinery for forest-based industries
  • Grain harvesting equipment
  • Offshore oil drilling products
  • Printing papers
  • Special papers
  • Special pulps
  • Sawn timber and value added
  • Trading of wood products
  • Plastic packaging and foils

By the year 2000, after a series of mergers, acquisitions, and divestitures, Rauma-Repola was part of UPM-Kymmene corporation which primarily consisted of the following three groups of business units called business areas:

UPM-Kymmene Printing Papers

Magazine papers, newsprint and fine papers.

Converting Materials

Label, packaging and envelope papers and converting units

Wood Products

Sawmilling and joinery, plywood, and building suppliers trade

A fourth group, called Resources, included operations such as chemical pulp, wood procurement and energy. Reflecting changing times in the market, today UPM refers to itself as “The Biofore Company” and its operations are organized around three areas:

Energy & Pulp

Energy, Biofuels, pulp, forest & timber

Publishers, printers, merchants, converters

Engineered Materials

Label stock & RFID, plywood, wood plastics

This structure is a result of corporate strategic planning, including the definition of SBUs and SBAs.

Strategic Accounts – Restructuring Corporate Strategy

Strategic accounts are normally connected to customer choices in strategic marketing planning. If a company’s customer choice is certain known end-users, these customers can be called strategic accounts or key customers. Strategic accounts are generally defined as those customers with the highest value to the company.

Strategic accounts are important at the corporate level of planning because of the size and power of the biggest customers. They might be global or multi-national companies using centralized and harmonized supply processes and preferring one-stop-shopping. Ongoing globalization and consolidation have increased the size of both forest industry companies and their major customers. Big paper users (printers and packagers) or big DIY chains can be larger than even the biggest paper or wood products producers. Very large customers are strategically valuable for the entire corporation and their needs should be taken into consideration in corporate planning.

An SBU Versus Strategic Account Approach to the Marketplace

Strategic account management is a method for dealing with very large customers. Because some mills or divisions may be too small to satisfy the multi-faceted demands of very large customers, the solution must be created at the corporate level. When a market-oriented corporation is making decisions concerning SBAs, the starting point could be a strategic account instead of a traditional end-use sector. In other words, a strategic account may mean that one key customer forms an SBA. Strategic account-based SBAs can actually impact the corporate organizational structure. This means that the whole corporate strategic planning must be market-oriented and more closely resembles strategic marketing planning.

Figure 4-7 depicts the difference between a traditional SBU-based SBA definition (left triangle) and a more modern SA-based SBA definition (right triangle).

In traditional production-oriented approaches, the SBU is the starting point and it serves several industrial end-users. SBU formation follows traditional production- or product-based borders. This kind of SBA definition means that one industrial end-user may belong to several SBAs of the supplying company. The customer may need to follow several business practices (of the various SBAs) even though it does business with only one supplier.

To simplify this situation for the customer (strategic account), the company can build the SBA around one (big) SA. Mills from various divisions serve the SA. The customer relationship is managed so that all the business procedures are harmonized and the concept of “one-stop” purchasing can be realized. In this way the company creates one “face” that is seen by the customer.

Strategic account-based corporate strategic planning limits the possibilities of marketing planning and coordination on lower company levels. Division level management must take accounts identified by corporate management into consideration in their marketing and production plans. Division level management may identify their own strategic accounts. At the mill or product level, planning the decisions of corporate and division managers must be taken into consideration before separate customer decisions can be made. Again at this level, managers may have their own strategic accounts.

Strategic account-based corporate strategy requires that the company and the customer share information and align many of their processes. Mutual trust and cooperation are needed to form a working, rewarding, and long-term partnership. The structures and functions of the company are planned so that they effectively implement the strategic account-based strategy.

4.2.4 Evaluation of the Current Business Portfolio and Making Strategic Conclusions/Decisions

Portfolio planning is the process of evaluating the current portfolio of business units. The results of the portfolio analysis give corporate managers the necessary information to appropriately allocate resources among the business units in the portfolio (Example 4-6). Two major portfolio tools discussed below are the Boston Consulting Group (BCG) Matrix and the General Electric (GE) Business Screen.

Example 4-6: Portfolio Planning

AssiDomän was once one of the largest forest industry companies in Sweden (total sales of over $2.5 billion in 1999) and one of the largest private forestland owners in the world. In 1999 the company underwent a major change in management that brought with it a process of restructuring. The new CEO at the time stated that “My key task and that of Group management has been to increase the tempo of the work of improving efficiency and profitability after the rapid expansion of recent years. It has also been important to strengthen the work of defining the future structure and strategy of the Group and

its units in order to find a clear direction and focus for our business.” He went on to say, “We must make strategic choices. We must focus and invest in operations and businesses where we have the opportunity to assume a leading position. In the long term it is not possible to build up and defend a leading position in too many areas without diluting resources. To survive in the long run, we must be truly competitive, both geographically and within selected product segments.”

With this mentality, the company undertook a process of analyzing itself and the marketplace in an effort to identify the right portfolio for the Group and the right strategies and actions for those units maintained in the portfolio. A study of the market size and growth, return, structure and trends in the industry, capital intensity, and financial history was conducted. At the business unit level, relative market share was determined with respect to the three largest competitors, achieved customer value was measured, and competence and capital efficiency were evaluated. With this information, each business unit was placed in a portfolio matrix representing market attractiveness and strategic position.

Based on the assembled data and resulting analysis, the company chose to divest some of its business units. Plans were made to sell the cartonboard business unit. The company felt that the unit was not large enough to provide long-term satisfactory development. The industry was fairly concentrated, making it difficult for AssiDomän to grow in this area.

Strategic Position vs. Market Attractiveness

The company felt that the kraft products market was stagnating and suffered from overcapacity. Sack conversion operations were seeing downstream consolidation with more consolidation on the horizon. Two kraft mills were kept, but the other two mills, as well as the sack plants and barrier coating, were sold. Barrier coating was seen as too small to effectively develop.

These changes resulted in a company that had three major divisions: Industry, Timber, and Forestry. The Industry division contained corrugated and containerboard as well as the two kraft mills producing bleached paper and bleached market pulp. Timber primarily consisted of sawn timber where the company was the largest producer in Sweden. Forestry was made up of 2.4 million hectares of forest land owned by the company.

Assi Dom än. 1999. Annual Report.

Boston Consulting Group Matrix

One of the most famous portfolio matrices is the Boston Consulting Group Growth-Share Matrix. The matrix is made up of four quadrants based on market growth (a general measure of market attractiveness) and market share (company position). As can be seen in Figure 4-8, the quadrants are typically named Cash Cow, Dog, Question Mark, and Star, representing the potential of business units or product in that category. A “Star” is a business unit or product that demonstrates high growth and in which the company has a high market share – an ideal situation for the company. On the other hand, a “Dog” business unit or product is in a low growth market and the company has a low market share, a considerably less ideal situation for the company

BCG Matrix with Wood Products Components

Also in Figure 4-8 is an example of how this matrix might be used to evaluate a company’s portfolio of business units. Lumber is low growth and the company in this example has a low percent market share, so it can be considered a “Dog.” Oriented strandboard and I-joists are both “Question Marks” since the company does not have a very large market share as compared to the competition and market growth is high. The company has several business units it considers “Cash Cows.” This should mean the company is in a position to invest in the “Question Marks” to move them towards becoming “Stars.”

General Electric Business Screen

Instead of market growth and market share, the GE Business Screen uses market attractiveness versus SBU strength or position (Figure 4-9). The matrix can be divided into four or more cells depending on the level of detail deemed necessary. As shown in Figure 4-9, there are different recommendations for decisions regarding an SBU, depending on its position.

Placement of SBUs on the BCG Matrix or the GE Business Screen allows company planners to evaluate where to invest and divest. To learn how strategic choices are made, we follow a GE-type portfolio analysis in a specialty paper and converting division of a forest industry company. The top management of the division uses the following criteria to evaluate the general business attractiveness and company position.

GE Portfolio Planning Matrix

Criteria for evaluating general business attractiveness:

  • Market growth
  • Market size
  • Profitability
  • Indispensability of the products
  • Role of environmental issues
  • Entrance threshold
  • Degree of concentration of the competitors
  • Geographical scope
  • Negotiation power of the suppliers
  • Degree of innovativeness

Criteria for evaluating relative position:

  • Company’s market share
  • Company’s technological level
  • Quality of company’s R&D function
  • Company’s cost structure
  • Customer relationships
  • Marketing know-how
  • Organizational effectiveness
  • Degree of integration
  • Geographical location
  • Effectiveness of distribution

Using the above criteria, the current business units are located on the portfolio matrix and evaluated (Figure 4-10). The next step in the divisional strategic planning process is strategic conclusions or choices (Figure 4-11). In this case the following recommendations are made:

Divest (low market attractiveness and weak strategic position) – For products/businesses that clearly are losers or that the company has found it cannot effectively manage, divestment is the logical choice. This means selling the business unit. The company cannot make money with these products/businesses, and it is likely that the situation will not change in the future. These businesses deserve to be divested so that the company can concentrate on its core businesses. In this example the company chooses to divest the following SBUs:

  • Sack kraft (paper + sacks)

Maximize cash generation, limited investment to extend lifetime (low market attractiveness and strong strategic position) – The basic idea with this option is to milk the SBU for resources that can be invested elsewhere. The company decides that in the long term, this product/business does not show promise and therefore deserves little or no investment. However, there is enough market for the product/business that it makes sense to continue to produce it, gaining whatever volume of sales will naturally occur. This option creates the risk that customers who rely on that product/business will not be happy to learn that the company plans to eliminate it. In our example the company chooses this approach for the following SBUs:

  • Industrial wrapping paper
  • Consumer packaging

Organic growth, minor acquisition to round off position (high market attractiveness and strong  strategic position) – This option means maintaining the current position of the product/business. In our example, the following SBUs were seen to be in a maintenance or hold position.

  • PE paperboard
  • Self adhesives
  • Standard packaging

Major acquisition or minority joint venture (high market attractiveness and weak strategic  position) – For SBUs representing attractive markets but relatively weak position, the best decision may be to build a better position; that is, to increase market share and further improve the competitive position in that marketplace. In our example, the following two SBUs are considered to represent opportunities for building a better position.

  • Digital papers

Portfolio Planning in Specialty and Converting Papers

The forest industry recently underwent extensive consolidation and companies are carefully considering how consolidation will progress. If a company has a weak position in a sector where a large competitor is aggressively acquiring capacity, they have an additional reason to exit the business area. For those product areas in a strong position but where business attractiveness is weak, it is best to simply maintain the status quo and use the cash produced by these businesses to invest in others. For attractive business areas in which the company has a strong position, it should plan to maintain growth and watch for opportunities to add to the businesses to make a more complete package. In our example, digital papers and paperboard are attractive business areas in which the company has a weak position. In this case the company should look to jump-start its operations and production. This way the company aggressively builds markets for products that will be strong in the future.

It must be remembered that matrices such as these are only a generalization of reality, and the recommendations cannot always be implemented. For example, many companies would consider softwood lumber to have low attractiveness and since it is such a fragmented sector, few companies can claim to have a strong position. In this situation, placement on the matrix would suggest that the unit be divested. However, there are many reasons why a company may not want to exit the production of softwood lumber. Sawmills typically serve as an outlet for higher-grade logs purchased by the company and as a source of chips and other by-products for paper production. Limited resources may mean the company can only implement some of the recommendations. In the example in Figure 4-10, the company may not be able to deal effectively with building its paperboard and digital paper operations simultaneously. It may have to prioritize one or the other.

4.3 Business and Marketing Strategy

Business and marketing strategy are closely related. Business planning consists of two parts, marketing planning and production planning.

Marketing Planning:

Production Planning:

  • Raw material procurement

Because marketing is the link between a company and its customers and the company lives only through its customers, marketing planning dominates business planning. This means that in market oriented business planning, marketing strategies are directing the whole business planning process. Because of the dominating role of strategies, we can call it strategic business planning. In Figure 4-12 it can be seen how strategic business planning is composed of strategic marketing planning and (strategic) production planning. The same marketing strategies are directing both. In business planning of market oriented companies, marketing strategies are planned first and they are always a top management issue.

It is important to note that because the basic issues are very similar regardless of the hierarchical level of strategies, portfolio analysis is also applicable at the business and marketing strategy levels. Rather than evaluating an SBU, the tools are used to evaluate the situation with a specific product or product line.

4.3.1 Porter’s Generic Competitive Strategies

One way to define the basic approach to business strategy is using Porter’s [55] three generic strategies:

  • Cost Leadership – a company pursuing this strategy will concentrate on reducing costs wherever possible and will practice tight cost controls. Typically, the company must also have highly efficient facilities and strong pursuit of experience-based cost reductions. Little would be spent on research and development, service, or advertising.
  • Differentiation – a company pursuing this strategy strives to create a product that is perceived across the industry as being unique. Pursuing this strategy does not mean ignoring costs, but cost reduction is not the primary goal.
  • Focus – with a focus strategy, a company concentrates on a specific buyer group or geographical market. The first two strategies aim towards industry-wide advantage, while focus is concentrating on a specific segment or niche. In this way, a company pursuing a focus strategy is able to essentially develop a low cost or differentiation strategy specific to its target segment.

Business Versus Marketing Planning

A company that isn’t clearly pursuing one of these strategies is seen to be “stuck in the middle” and finds itself in a poor strategic situation. Implementing one of the generic strategies requires total commitment and appropriate organizational structures that become diluted if multiple targets are pursued. A number of researchers have looked at the forest industry from the perspective of these generic strategies (Example 4-7). A common finding is that many companies appear to be “stuck in the middle.” More recent research suggests that the Porter view of strategy may not adequately describe the strategic actions taken by forest industry companies.

Example 4-7: Strategy Research in the Forest Industries

A number of researchers have investigated the generic business-level strategies used in the forest industry. Results suggest that companies are moving away from an Overall Cost Leadership strategy to a Differentiation strategy. However, some of the research suggests that firms lack a coherent approach to strategy. This led to Swedish researchers questioning the use Porter’s generic business-level strategies in forest sector research. Their findings are shown at the end of this example and provide a contrast to some of the historical work.

Rich (1986) [56] looked at 36 of the top 50 forest industry companies in the U.S. during the 1976-79 period and in 1984. He found that there had been a significant shift away from Overall Cost Leadership as a strategy. In the period 1976-79, 50% of the companies were pursuing an Overall Cost Leadership strategy, 19% Differentiation, and 19% Focus with the remaining being mixed or no strategy. In 1984 he found many more mixed strategies (28%) with some more focus on differentiation and a clear move away from overall cost leadership (31%).

Bush (1989) [57] concentrated on the top 100 hardwood lumber producers in the U.S. Using cluster analysis, he divided respondents into five major groups. All the groups exhibited some characteristics of each generic business-level strategy. In this respect, interpretation of the orientation of each group was somewhat difficult. Generally, it can be said that two of the groups (the smallest firms) had no strong orientation along any of the generic business-level strategies. In other words, they were what Porter calls “stuck in the middle.” One group was oriented towards Differentiation and Overall Cost Leadership while the two remaining groups were oriented towards Overall Cost Leadership and Differentiation, respectively. None of the groups had a strong Focus strategy. Finally, the study found that companies intended to move in the direction of a Differentiation strategy in the future.

Niemelä (1993) [58] did his work in the softwood sawmilling sectors of Finland, British Columbia, Canada, and the western U.S. Managers at a total of 102 sawmills were interviewed and asked to identify their own strategy. Depending on country, between 21 and 23% of respondents selected a mix of the generic strategies. Finnish sawmills were least Overall Cost Leadership oriented with only 11% of companies claiming this strategy. In the U.S., 29% of companies selected Overall Cost Leadership and in Canada 23%. Differentiation was selected by 32%, 38%, and 26% by Finnish, U.S. and Canadian companies, respectively. Finnish companies were the most Focus oriented with 35% of respondents while U.S. companies were least with 12%. Twenty-nine percent of Canadian companies selected a Focus strategy. Generally he found that companies concentrating on Overall Cost Leadership were large, integrated companies with multiple mills. Differentiation and Focus oriented companies were smaller and more export oriented.

Hugosson and McCluskey (2009) [59] focus on the Swedish sawmilling sector. In their view, the previous Porter-based strategy research was insufficient and that more than three generic strategies are needed to describe changes taking place in the industry. Their work relies heavily on concepts from Ansoff to describe three strategy transformations that took place in the Swedish industry between 1990 and 2005: 1) market channel, 2) product value adding, and 3) service value adding. The market channel transformation refers to disintermediation and a tendency to deal directly with end-users. Product value adding means companies became more active in meeting the precise product specifications demanded by end-users. Finally, service value adding is primarily associated with distribution logistics services. Based on their findings, the authors argue that sawmilling companies clearly have developed new strategic behaviors, just not those described by Porter.

Hansen, Nybakk, and Panwar (2015) [60] looked at the effectiveness of pure versus hybrid strategies across US wood and paper manufacturers. As in previous research, they identified a tendency of companies to focus on overall cost leadership. Of their overall sample of 438 firms, they found 72 companies pursuing a pure differentiation strategy, 82 a pure cost leader strategy, 96 a hybrid strategy, and 188 were “strategically irresolute” or rated themselves low on both strategies. A differentiation strategy was most positively associated with firm financial performance.

Clear connections can be found between Porter’s strategy concept and the modular strategy concept applied in this book (Table 1). Empirical studies suggest that in many cases it is difficult for companies to separate between few, well-specified customer segments and known end-users. The basic issue is if the company is selective or not in its strategic choices. This is also connected to a company’s marketing philosophy. A commodity product strategy is associated with a production-orientation and marketing decisions are rarely selective. Special and custom-made strategies are expressions of a market-orientation and marketing strategy decisions are selective. This is similar to Porter’s thinking. Cost leadership clearly emphasizes a production-orientation, and marketing issues are of minor importance. Differentiation and Focus strategies require marketing expertise and reflect a market orientation and selectivity in marketing decisions.

Table 4-1: Relationship between Porter’s Strategy Concept and the Modular Strategy Concept

4.4 Strategic Product Decisions – Products to Produce

One of the most basic decisions facing a company is what product to produce. If a company decides that it will produce hardwood lumber, for example, there are still a huge number of decisions that must be made before it can determine exactly what the product will be and which services to offer.

4.4.1 The Concept of Product

The Total Product

Early in the evolution of marketing, the term “product” simply referred to the physical object a company manufactured. In today’s highly competitive environment, companies must have more than just a good physical product. They must also provide an array of services associated with it that combine to form what has become known as the total product.

To understand strategic product decisions (product differentiation) we can think of products ranging from the core product to the total product (Figure 4-13). This is similar in concept to the levels of product proposed by Levitt. [61] The following list corresponds to Levitt’s categories and is based on Kalafatis et al. [62]

  • Core product (the basic product, such as sawn wood)
  • Generic product (softwood sawn wood to be used for manufacturing moulding)
  • Expected product (minimum purchase condition, sawn wood of certain dimensions and species, packaged and delivered to meet specifications)
  • Augmented product (an enhanced product based on the addition of special services such as credit or special delivery).
  • Potential Product (everything that one might do to add value to the product)

The concept in Figure 4-13 is a way of looking at the product emphasizing that it is not only the physical piece resulting from the production process. In other words, we can consider a product to be a bundle of benefits satisfying customer needs. At the most basic level, the core product is the unimproved physical product. Through additions of either physical improvements or services and information, the product can move toward being a total product. The total product concept implies that a product is not ready until it is at the disposal of the customer accompanied by necessary information and service.

Traditionally, quality has been considered a critical element of the total product concept and an important differentiator among producers. However, it has been suggested that in today’s global business environment, where total quality management is virtually a given, product quality is also a given. This view suggests that product quality can no longer be used to differentiate among producers and ceases to be a source of competitive advantage. According to this notion, high product quality is simply a license to operate in the marketplace and provides no benefit to the producer.

While it is true that quality expectations are high in the modern marketplace, quality across the various aspects of a total product still present opportunities for competitive advantage. Achieving competitive advantage through quality requires an understanding of customer quality requirements, a method for measuring how well the company meets those requirements, and a strong commitment to do both.

The Total Product Continuum

Forest industry companies seldom systematically measure customer perceptions of product and service quality. Those that go the extra mile can put themselves in a position, through high product and service quality, to differentiate their product from the competition. In other words, a minimum standard may get you in the market, but superior quality is the only means of achieving competitive advantage.

The product concept above emphasizes the idea that product planning should be a shared responsibility between production and marketing. Naturally, customer needs and preferences and company  capabilities are the most important starting points in product planning.

The Product Life Cycle

The product life cycle phenomenon is important from both a market attractiveness perspective and from a company-strengths perspective. Products progress through a life cycle similar to biological organisms. A typical product life cycle would follow the pattern shown in Figure 4-14. At introduction, the profitability of a product is negative due to investment to bring the product to market. As growth in demand increases, early investments are covered and the product becomes profitable. During maturity, the product should be profitable enough to contribute to the development of new products. A company should have a balanced set of products with respect to their relative stages in the life cycle. If a company is loaded with mature products and none in the introduction or growth stage, it is not well positioned.

At each stage of the life cycle, certain competitive conditions can be expected. At Introduction, there are few or no competitors. As the market growth of the product begins, it attracts competitors into the  marketplace and the fight for market share begins. By the time the product reaches maturity and growth slows or stops, companies fight to maintain their market share and will tend to emphasize efficiencies and  maintaining low cost. During decline, some competitors will leave the marketplace and the  remaining ones will be selective in where they attempt to sell the product. [63] One incentive for  maintaining a product during the decline stage is the exit of competition and the potential to develop a small but dedicated market.

The Product Life Cycle

An example from the North American industry can illustrate where various products fit along the product lifecycle. Nanoscience is in its infancy but some products have been commercialized such as cellulose nano-crystals used as an additive to the paper-making process. These products are at the early introduction stage of the product life cycle. Thermally treated outdoor products and wood plastic composites are in the growth stage. Wood I-joists are nearing maturity in the US marketplace while OSB has fully entered maturity. Softwood plywood is generally in the decline stage of the life cycle.

The stage of the lifecycle of a product is one indication of market attractiveness. Generally a product in the growth stage would be more attractive than a product in decline. It must be noted that this evaluation must be kept in the context of the company in question and the specific market in question. A product might be declining when considered at a global or national level, but be in the growth stage in a specific country. A product in its decline stage may be very valuable to one company and not another, depending on each company’s product mix and marketing abilities. The product lifecycle can also be used as a means for measuring company position. A company with a balanced portfolio with products in each of the stages is better positioned than a company with products only in maturity and decline. The latter company may face a bleak future.

Product Differentiation

Branding, product quality, and superior service are all ways of differentiating a product. Making the product somehow different from the competition, in a way valued by the customer, can create an advantage. Figure 4-15 illustrates the Product Differentiation Spectrum. Any product can be placed along the spectrum, depending on the extent to which it is differentiated from other products. One end of the spectrum is occupied by true commodity products. True commodity products do not differ among manufacturers. They are standardized, so if you buy 10 from one company and 10 from another, they will all be essentially the same. Thus, competition for commodity products is based solely on price, with no other differentiation among manufacturers’ offerings.

At the other end of the Product Differentiation Spectrum reside specialty products. A true specialty product is unparalleled by any other manufacturer’s offering. In reality, few products can be classified as either true commodities or true specialties. Most products fall somewhere between the two extremes. Products that compete primarily on price are considered less differentiated and will generally be referred to as commodities (many primary wood products fall into this classification). Products that cater to a specific market segment are considered more differentiated and are called specialties.

Competing on price alone is extremely difficult. Large, integrated companies are best suited to this strategy, as they can access considerable resources and develop significant economies of scale. They prosper by building significant market shares rather than achieving high profit margins on each unit sold. Small companies generally cannot successfully compete in mature commodity markets, so they are left with either playing initiating roles in market development and then exiting when competition increases, or differentiating their product offering to make price less of an issue.

The Product Differentiation Spectrum

The product life cycle complicates product differentiation. Any truly new product introduced to the  market will, by its very nature, be a specialty product. It will meet the needs of a specific group of customers and the lack of competition will mean price plays a lesser role in influencing customer preferences. As the product matures, competitors will introduce similar products and price will begin to play an increasingly important role in guiding customer purchase decisions. Thus, the product life cycle forces products to become less differentiated. Without action, the product may eventually become a commodity. To ward off this effect, companies must use marketing tools to further differentiate their products and move them back toward the specialty end of the product differentiation spectrum. As a general rule, the more successful the product, the more quickly competitors will invade and force a product toward commodity status. Thus, product differentiation must be a continuous process.

An example from the Finnish plywood industry illustrates this process. When plywood with a polyethylene film was first introduced, it was used as concrete forms and was considered a specialty product. As competitors entered the market, the product eventually moved down the continuum towards being a commodity. At this point, companies began to look for the next specialty application and found that the same product with a few extra features could be used in special applications in the ship building industry. Although it meant entering a new market entirely, marketing to ship building companies was a successful way to move the product back to a specialty.

Product differentiation and market segmentation (discussed below) are related concepts. Products are differentiated because there are different needs among various markets and customers. Markets are segmented to find homogenous customer groups for a differentiated product.

Forest industry companies have become increasingly focused on differentiation through the creation of product brands. For example, the CEO of Stora Enso Timber explained that their goal is not to be like all the others, but to gain competitive advantage through differentiation. At the time, the company was increasing its value-added production and slowly eliminating bulk sawn wood. [64]

Differentiation through the physical product alone is becoming increasingly difficult. For example, in the paper industry large companies are often using the same paper machines and paper technologies. Because they are producing from a common base and strive to achieve very high physical product quality levels, it is rarely feasible to differentiate in this area. In this case, differentiation must be built on other features. Emphasis must be placed on various elements of the total product. The features of the total product must be combined under one coherent identity with an associated and identifiable name—a brand.

Traditionally, individual paper mills have named their products and in Europe, sawmills have used shipping marks. However, most of these product names or shipping marks have no value as brands. As the industry has consolidated, these names and marks have become more difficult to use since each company might have many to choose from. It can cause confusion for both the customers and the marketing personnel. Branding can be a solution to this problem. Thus far, forest industry brands are mostly regional and can’t be compared to well-known global brands like Coca-Cola, IBM, or Nokia. The largest forest industry brands are for consumer products such as diapers, tissues and feminine hygiene products (Pampers/Always).

The word brand comes from an old Norse word brandr , meaning “to burn.” Brands were, and still are, the means by which owners of cattle mark their animals as their own. The American Marketing Association defines a brand as follows:

“A name, term, design, symbol, or any other feature that identifies one seller’s good or service as distinct from those of other sellers. The legal term for brand is trademark. A brand may identify one item, a family of items, or all items of that seller. If used for the firm as a whole, the preferred term is trade name…”. http://www.marketingpower.com/.

A brand has multiple functions: to distinguish products from each other, to show the product origin, and to provide a guarantee of quality, value, and performance. [65] A brand represents a promise that the product will satisfy customer needs. Brands can provide value for the company as well as customers. Companies have realized that their real value lies outside the business itself, in the minds of present and potential customers. [66] For a modern, market oriented companies, it is more important to own markets than mills. Market ownership can be facilitated through brands.

4.4.2 Choosing the Product Strategy

Based on the concepts introduced above, there are several basic product strategies that a company can pursue. Companies can choose to emphasize commodity products, special products, or custom-made products (Example 4-8). Generally these can be defined in the following way.

Example 4-8: Strategy in Practice

Seppälä conducted a study of softwood sawmills on the west coast of North America. Data was collected via personal interviews from 52 softwood sawmills. Respondents provided information regarding their product, customer, and market area strategies. As outlined in the text, strategy theory suggests that companies should select logical combinations of the three strategy elements to develop an overall marketing strategy. In this case, Seppälä found that theory and practice are not well matched.

Companies in the study were quite often pursuing mixed strategies. For example, it was necessary to re-categorize companies into those pursuing a commodity product strategy, those pursuing a Special/Custom-Made strategy, and those with no clear emphasis. Similarly, with respect to customer strategies, companies were re-categorized into selective, unselective and no clear choices. Selective customer strategies are those that concentrate on a few end-user groups while unselective companies concentrate on as many customers as possible. With respect to market area strategies, it was necessary to add a “mixed” category.

Nearly 70% of companies claimed to be pursuing a commodity product strategy. Another 20% were pursuing a special/custom-made strategy with the remaining 8% having no clear emphasis. Just over 63% of the companies were selective in their customer strategy, with approximately 19% being unselective and 17% having no clear choices. Finally, only 13% of companies targeted as many regions as possible in their market area strategy. Most (69%) targeted few, well-defined regions and another 17% had a mixed market area strategy.

Contrary to theoretical logic, over half of those companies pursuing a commodity product strategy claimed to be selective in their customer strategy and were more likely to concentrate on few regions in their market area strategy. One would expect those companies with a commodity product strategy to target as many customers and market areas as possible. Of those companies pursuing a commodity product strategy and a selective customer strategy, on average, over half of their commodity production was marketed through wholesalers. This clearly does not correspond with the concept of selective customer strategy. Essentially, the wholesaler is not the customer but simply a member of the channel of distribution. It can be argued that utilizing a wholesaler is, in fact, just the opposite of customer selectivity, since the final destination of the product is typically unknown. Companies pursuing specialty and custom-made product strategies followed theory more closely by being highly selective in their customer strategy and concentrating on a few regions in their market area strategy. Results provide a clear indication that companies may benefit from more exact strategies and strategic decisions. [67]

Commodity Products – products that meet basic overall industry standards and are not adapted or specialized in any way. The customer can move from one producer to another without difficulty.

Special Products – products that have been adapted to fit the specific needs of an individual sector. This might mean softwood lumber of the quality and sizes specifically needed in the window industry.

Custom-made Products – products that have been specifically developed to meet the individual needs of a customer. In this strategy a manufacturer produces a product to the mutually agreed upon specifications of an individual end-user.

It should be noted that division among commodity, special, and custom-made products is marketing based. From the same technical product, various strategic options can be developed through technical or marketing modifications in the same way as the total product is developed from the core product.

Strategic Product Options/Classes of Paper Grades

The following is an example of product strategies in the paper industry. A paper grade can represent various product strategies as was found in a study by Kiskonen [68] (Figure 4-16). Light weight coated (LWC) paper is produced as a commodity, special and custom-made product. Super-calendered (SC) paper is a commodity product. Machine finished coated (MFC) paper is a special product and  medium weight coated (MWC) paper is produced both as a special and custom-made product.

The basis for the strategy classes can be explained in the following manner:

Light Weight Coated

  • Commodity product when the product is produced with standard characteristics.
  • Special product when the product has special grammage or special lightness with some grammages.
  • Custom-made products take customer wishes into account like bulk, shade, opacity or shine.

Super-calendered

  • Commodity product because the quality differences are small and the product is easily substituted by competitor products.

Machine Finished Coated

  • Special product because of the following characteristics: very low grammage, expensive, difficult to produce, very good shine contrast/lightness, few producers, different from competitors’ products.

Medium Weight Coated

  • Special product because of characteristics like grammage, lightness, shine and opacity.
  • Custom-made product because of tailor-made characteristics of the product, such as gloss and roughness.

The following is an example of product strategies in the sawmilling industry, where the emphasis of product strategy is gradually moving from commodity products to special and custom-made products. The prerequisites of this development are changes in production technologies and marketing philosophies and better knowledge of markets and customers. As a production philosophy, special and custom-made product strategies imply that the producer “gives up producing sawn timber.” Instead, the sawmill produces raw material, semi-finished goods and components for industrial end-users (e.g., window manufacturers and furniture manufacturers). We use as an example of a sawmill producing blanks.

A blank can be defined as a piece of sawn timber meeting the requirements of industrial end-users such as dimensions, quality, drying and deliveries. The blank can be manufactured to an end product or its component without sawing.

If the end-users are known and the product requirements are mutually agreed, we call the product custom-made. Natural partners for sawmills are joineries and furniture manufacturers. Quality requirements are exactly specified and the blanks are compatible with the products and production processes of the partners.

It is a clear strategic choice when a sawmill invests in a blank producing mill. Figure 4-17 illustrates connections between traditional Scandinavian sawn timber grades and types of blanks. Blanks produced for known window and door manufacturers, furniture manufacturers, and edge-glued panel manufacturers are custom-made products. They are produced according to the dimension and quality requirements of the known customers (partners).

The high quality clear pieces and the low quality knotty pieces are marketed as special products. A special product is not tied to a known customer but, for example, to certain end-use sector. Users of clear decorative blanks could be manufacturers of moldings and high quality decorative panels. Knotty versatile blanks could be used for packaging or fences. The profitability of special products can vary significantly according to the market situation and the skills of the seller.

In market oriented marketing planning, the attractiveness of product choices is analyzed in connection with customers. We suggested earlier that customers and products are the most important components of SBAs. However, profitability is closely connected to all marketing decisions. Profitability of various products must be calculated and followed regularly. Today modern information systems make this monitoring possible.

Development/Progress of Product Strategies

Recall that the more selective a company is regarding its product strategy, the more likely it is to be producing custom-made products. A highly selective company must also be highly sophisticated in its marketing abilities. Over time, as a company builds its knowledge base and looks for increased financial returns per unit of output, it will naturally become more selective or focused. A good example of this phenomenon has occurred in the Finnish sawn wood industry during the past two decades.

Scandinavian Lumber Grades and uses of Blanks

The shares of special and custom-made products in Finland increased dramatically during the 1980s and early 1990s. In the early 1980s, product strategies of softwood sawmills were nearly 90% commodity with the remainder being special products. By 1992, commodity products had dropped to 64% with special at 24% and custom-made at 13%. Product strategies and production respectively have developed steadily towards special and custom-made products, and this development continues today.

4.5 Strategic Customer Decisions – What Customers to Serve

Every company has a broad range of potential customers. It is important to identify those customers that fit well with the competencies of the company or, in other words, that the company can serve well. This means that there are clearly customers that for one reason or another the company should choose not to serve.

4.5.1 Basic Customer Decisions

At the most basic level, the choice regarding customers can be placed in the following three categories. Once again, selectivity is key.

As Many Customer Groups as Possible – an unselective customer strategy is logically matched with a commodity product strategy. An MDF mill that sells its products through several wholesalers would fit this category. Although one could view the wholesalers as a few customers, they are not the real end-users and are simply an intermediary on the way to the product’s final destination. In this example, the mill does not know the final users of its products.

Few, Well-specified Segments – a more selective customer strategy where a company has identified a few segments of the market that it will serve. For example, the MDF mill may choose to target the furniture, cabinet, or laminate industries.

Known End-users – the most selective strategy. In this case, the MDF mill knows the specific customers that it targets. It might have three key customers in each of the previously mentioned industry sectors. Logically, companies pursuing this customer strategy would also be producing custom-made products for those customers.

In production-oriented companies where marketing has been of minor importance and marketing skills are not well developed, an unselective customer strategy tends to be the natural choice. The marketer does not know the customers. However, increasing competition has forced companies to emphasize marketing and customers. Thus, market and customer knowledge has increased, the notion of total product has been strengthened, and genuine selective customer choices have been made. Companies have realized that the victor in competition is the one that best and most efficiently fulfills customer needs and requirements.

In some industry sectors conducting business-to-business marketing, known end-users has been a natural choice for a long time. However, the structural changes among industrial customers have made this customer strategy even more important. Through consolidation, the size and power of customers has increased and it has become more logical to choose individual companies as customers. If these known end-users are especially important to the company, they may be designated as key or strategic accounts.

The rationale of choosing known end-users is that concentrating on the most valuable customers makes good business sense. The customer interface and especially strategic accounts, which usually account for the majority of sales, are essential for the successful business in the long run. Building long-term customer relationships is the focus for market-oriented companies. Known end-users as a customer choice is also supported by the fact that retaining customers is less expensive than acquiring new ones. One of the main challenges companies face is retaining the chosen customers, creating loyalty, and assuring that the accounts are profitable. When identifying the most important customers, or strategic accounts, a number of criteria can be used:

  • Economic value such as revenue or profit
  • Future business potential
  • Learning value (the customer demands and facilitates product and process development)
  • Reference value (channel for new business)
  • Strategic value (access to new markets, building barriers to entry, etc.) [69]

It must be emphasized that strategic account management is not a separate part of strategic marketing. Strategic accounts are part of the strategic marketing plan and marketing structures and functions must be designed to implement this strategic option.

4.5.2 Basis and Methods for Choosing Customers

Segmentation

To choose which customers to serve, the marketer must be able to separate customers into appropriate groups. The basis for separation could be similar needs, similar behaviors, or other characteristics. Customers should be chosen so that the strengths and possibilities of the company fit the needs of the customer group as well as possible. In marketing planning, we call this kind of grouping market segmentation . Market segmentation means dividing heterogeneous total markets into homogeneous parts or segments.

The characteristics of the groups used in segmentation are called segmentation criteria. Segmentation criteria must have significance in the choice or use of products. They must be easily recognizable and observable/measurable so that the segments can be separated. For example, in marketing children’s playhouses, the segmentation criteria might distinguish families who live in detached houses from those in apartments; those with children ages 3-12 from those without children, and so forth.

In industrial marketing, segmentation is often done simply by following the lines of industry sectors. A softwood plywood producer might divide the markets into segments like concrete forms, transportation, and housing. For a hardwood plywood producer, those segments might be cabinets, furniture, store fixtures, and retail.

Segmentation can also occur within an industry sector. Furniture manufacturers, for example, have different product needs based on the type of furniture that they produce. This could be the type of products or components they buy or the species they use. By learning the differences among various manufacturers, a hardwood lumber producer can begin to specialize its product offerings to target various segments of furniture manufacturers.

Do-it-yourself home centers typically target two major segments, final consumers and contractors. They may offer special services and price discounts to contractors that are not available to final consumers. By offering a contractor desk and catering to the special needs of the contractor customer, they are able to increase the business they conduct with that segment while at the same time maintaining a separate set of services and benefits to the regular consumers entering their stores.

Profitability-Based Customer Analysis

Market segmentation often helps firms identify new customers. Historically, finding new customers has been the primary emphasis of marketers, but today the emphasis is often placed on keeping and growing current customers. This is easy to understand because the cost of attracting a new customer is much more than the cost of maintaining an existing one.

Often the customer base of a company is a result of historical development more or less by chance, and marketers are often reluctant to change that, especially if it means dropping some customers. This is understandable because of the personal relationships often developed with long-term customers. However, the customers must represent some level of profit to the company. A company should regularly follow the profitability of its customer base.

A clear motivation for following the customer base is the fact that all customers and customer segments are not bringing the same level of profit to the company. Management literature often cites the Pareto principle (80/20 rule) where 80% of profits come from 20% of the customer base. This implies that many of the 80% of companies in the customer base may actually represent losses to the supplier. For companies conducting customer profitability analyses, it has been a surprise to discover that as much as 80% of their customer base is actually unprofitable. [70] Companies must constantly monitor customer-based profitability. The customer base can be seen as a portfolio, which can be developed and optimized to increase its total value. In some cases, it may be necessary to drop a particular customer completely or begin a process to grow that customer to a profitable level. This process requires that the reasons for unprofitability can be identified and that, for example, reallocating marketing resources targeted toward that customer will be effective.

The essence of customer profitability analysis is the ability to describe the customers that are profitable and those that are not. This requires a significant amount of specific information. Advanced marketing-accounting information systems are needed that can assign costs in an appropriate fashion. With the right systems and database, the profit performance can be determined by market segment, customers, products, and territories. [71]

When developing the profitability-based sales steering system for Stora Enso Varkaus mill, Keinänen [72] analyzed the profitability of various basis weights, countries, customers and customer groups. She noticed that there were notable differences among the profitability of various basis weights. The target countries could be grouped into two segments with regard to their profitability. In addition, customer groups but especially individual customers varied remarkably as to their profitability.

An Example of Evaluating a Sawmill’s Customer Segments

The strategic planning of a sawmilling company connects the strengths and abilities of the company to the needs of the customer. The strengths and abilities can also be connected to the raw material base or production technology of the mill. The needs of the industrial customer can be derived from the requirements the end product or production process place on the raw material. When planning product and customer strategies, marketers must know precisely their own strengths and weaknesses, products and production processes, and the needs of potential customers. The sawmill attempts to choose that kind of industrial customer that provides a total fit between the customer’s products, production process and production philosophy and the sawmill’s products and operation philosophy.

Earlier we considered planning of corporate strategies using portfolio matrices. In principle, choosing customers is a similar planning situation. With respect to strategic business areas, we examine end-use sectors with corresponding products. The end-use-sectors could be window manufacturers, furniture manufacturers, edge-glued panel manufacturers or planing mills. The criteria for the attractiveness of these sectors must be developed. Correspondingly, instead of relative position we consider the strengths and weaknesses connected to the products, production, and marketing of the company.

Matrix for Assessing Attractiveness of Customer Sectors

A Finnish sawmill was developing its marketing to France. Based on pre-analysis, the following product/customer options were chosen for detailed analysis:

  • Special sawn timber for window shutter manufacturers
  • Special sawn timber for door manufacturers
  • Custom-made planed timber for certain timber merchants or importers
  • Special sawn timber for planing mills
  • Custom-made sawn timber for certain glulam beam manufacturers
  • Custom-made sawn timber for construction element manufacturers
  • Custom-made sawn timber for pre-fabricated housing manufacturers
  • Custom-made sawn timber for furniture manufacturers

Dimensions, lengths, quality and moisture content were the basis of development for special and custom-made products from commodity products. The attractiveness of the product/customer options as possible customer targets were analyzed as shown in Figure 4-18. In the matrix the scores vary between 1 and 5. If the total consumption of the product/customer option (e.g., special sawn timber for planing mills) was high, it received a rating of 5. If development of demand was moderate, it received a rating of 3. If it were not at all special/custom-made product oriented, it received a rating of 1. Every product/customer option was scored on each attractiveness criterion. By adding the scores, a total score for attractiveness was created. The abilities, strengths, and limitations of the company’s own production processes were taken into consideration, and each criterion was weighted accordingly. The information concerning French markets and possible target companies was acquired through market research. The research contained both analysis of secondary material (desk research) and analysis of primary material (interviews in France).

4.6 Strategic Market Area Decisions – Where Do We Operate?

As in customer decisions, there is a wide range of possible geographical markets that a company can choose to target. However, the competencies of the company as well as issues such as distance and available distribution methods will dictate which areas are most attractive and feasible.

4.6.1 Basic Market Area Decisions

A company can choose to target as many regions or countries as possible or a few, well-specified countries or regions.

As Many Countries or Regions as Possible – an unselective company simply manufacturers a product and sends it out to wherever there may be an interested buyer.

Few, Well-Specified Countries or Regions – a selective company concentrates on a few market areas where it can create an advantage.

Operating on a very broad market area is a questionable strategy even for companies applying a commodity product strategy. Successful marketing presupposes some kind of marketing efforts. If the resources are sprinkled over a broad market area, there is no possibility for effective marketing anywhere. The broadness of the market area is also connected to market information and market knowledge. Marketers must know their markets. If the marketer is operating in too many market areas, his or her knowledge will be insufficient in some and operations cannot be totally effective.

For example, a Nordic softwood lumber company could easily market its products in middle and southern Europe, Northern Africa, North America, and Japan. In fact, many companies have pursued all these markets at once. For most companies pursuing this sort of strategy, it means that about 80% of their production is going to two or three key countries and the rest is a mix of very small users. This is not a selective strategy. A company pursuing a selective strategy would see the investments made to market the 20% to multiple countries as inefficient. Instead, it would place its full concentration on a few specific market areas and work to develop its expertise there.

Globalization has had a major impact on market area choice. Global companies have a totally different situation when choosing market areas than local companies that only market domestically or even those that export. This is because the customer base has changed to also include global companies. This development has been fast among customers of the forest industry and will likely continue in the future. The business units of global corporations are not choosing their market areas independently and are not exporting in a traditional sense. They are part of the corporation’s international business in which market area selection has a different frame of reference than traditional in-country or export marketing.

4.6.2 Basis and Methods for Choosing Market Areas

It is not enough to define market area strategy as, for example, “a few, well-specified countries or regions.” The marketer must further define the specific countries or regions the company will target. Segmentation can be used in conjunction with market area selection, sometimes called macro-segmentation. When evaluating and choosing market areas, we can use similar methods to those used in choosing SBAs in corporate strategic planning. The method outlined in Figure 4-18 may be used also when evaluating and choosing market areas. The central criteria describing the attractiveness of a market area are based on the macro-environment of markets: demand and supply of markets, and other macro-environment (economic and technological development etc.). The microenvironment of markets (competition, distribution systems and customers) also affect the attractiveness of a country or a region.

When making strategic decisions we must keep in mind the basic situation of strategic marketing planning described in Chapter 3. The information environment is always the starting point, and we must consider what kind of information is needed.

Generally speaking, countries with a high level of technological development and strong purchasing power are attractive targets for advanced industry. The more developed the markets, the better a  company can apply advanced product and customer strategies, and the more likely it is that competitive advantages are based on knowledge, skills, and technology.

4.7 Core Competencies – Pursuing Competitive Advantage

Strategic strengths, core competencies, and the competitive advantages connected to them are central issues in strategic thinking. To operate profitably in the long term, a company must have competitive advantages based on its own unique characteristics and conditions. Operations are then based on these competitive advantages. A core competency is a characteristic of the company, production process, product, or features of marketing based upon which the company is able to beat the competition (Example 4-9). When a core competency is identified or created, it can be exploited with effective marketing.

Example 4-9: The Nordic Sawmilling Industry: Strengths & Weaknesses

When valuing strategic strengths or core competencies, products are in a central position. It is important for the producer to know how customers see her products in comparison with competitors. In a marketing research project, industrial customers in the UK and Germany were asked what kind of experience or perception they have concerning Nordic timber products performance compared to Middle European wood products. The following list shows the result of comparison.

Nordic timber outperforms Middle European timber with respect to: Consistent quality, Stability characteristics, Visual properties, Strength characteristics Nordic timber is better than Middle European timber with respect to: Performance in final end-use, Durability characteristics, Environmental friendliness, Processability/machining Nordic Timber is neither worse nor better than Middle European timber with respect to: Ease of designing with, Ease of working on-site.

There are no big differences in the opinions of UK and German respondents except in case of environmental friendliness. The UK market has a more positive perception of Nordic timber’s environmental performance while in environmentally conscious German markets energy issues are perceived to be problematic because of the long transportation chain.

Nordic timber outperforms Middle European timber in characteristics which are mainly connected to the origin of raw material (Boreal zone). As to end-use characteristics, Nordic timber is only a bit better. When speaking about intangible product characteristics there are no differences. The more demanding the end- users are concerning the quality of wood the more positively they perceive Nordic timber. Joineries have more positive perceptions than timber frame manufacturers and the construction industry.

Based on these results it can be said that Middle European timber is currently not a substitute for Nordic timber as to performance. Nordic producers have a clear competitive advantage. However if the Nordic producers wanted to improve their value proposition they should pay attention to the intangible product characteristics.

Respondents’ impressions of the innovativeness of Nordic sawmilling industry form an interesting background for the results above. Respondents were asked about the extent to which Nordic wood products industry suppliers have provided innovations that the respondent perceived as new solutions in the company’s applications. The degree of innovativeness of Nordic wood products industry suppliers in all areas of marketing can be considered unsatisfactory. This means that the industry clearly lacks one of the most important success factors (innovativeness) and a source of the value proposition. If the German market found the degree of innovativeness somewhat below average, the UK respondents were even more skeptical asking sarcastically “What innovativeness?”. So there is room for improved value propositions and core competencies (capabilities) which make advanced value propositions possible. [73]

Customer needs and their satisfaction is the most important factor influencing strategic product decisions. When the demand for products is increasing quickly, marketers pay most attention to products and customers. When the increase of demand slows, the competition for market share tightens. Under these conditions, the importance of core competencies and competitive advantages increases. Core competencies have a special role among strategy components. Other strategy components combined with company resources are ingredients of sustainable competitive advantage. According to Ansoff’s work, total fit between company resources, products, and customers create a sustainable competitive advantage (Figure 4-19).

A company must be better than competitors in some unique way that is relevant to marketing, particularly in customer decision-making and customer relationships to possess a competitive advantage. If the unique expertise of the firm is not important to the customer, it does not constitute a competitive advantage. The reality of competitive advantage is that it must fit the context of customer needs.

Figure 4-19 implies how company resources (mainly personnel) are important both in creating excellent products and in creation of strong customer relationships. The fit between products and customer relationships means sustainable competitive advantage through creating customer satisfaction—the main goal of marketing efforts. Because customer relationships are more difficult to copy than products, marketers place high importance on customer relationships.

Recent forest sector research has focused on the Resource-based View of the Firm (RBV). According to the RBV, firms are heterogeneous with respect to resources under their control and a competitive advantage results when a firm possesses a tangible or intangible resource that is rare, valuable, cannot be imitated, and is difficult to substitute. Example 4-10 outlines examples of tangible and intangible resources found in the forest industry.

4.8 Strategic Marketing Planning – Making the Pieces Fit

4.8.1 interrelationships of strategy components.

The relationships among strategy components must follow a certain internal logic. The first component of Ansoff’s [74] strategy concept is product/market scope. The component implies the vital link between product and customer decisions. Figure 4-20 demonstrates the principles of relationships between product and customer strategies.

Example 4-10: Resource-based View, Tangible and Intangible Resources

As mentioned in the text, the Resource-based View of the firm has grown in importance in the strategy literature. According to this theory, firms are heterogeneous with respect to resources under their control and a competitive advantage results when a firm possesses a tangible or intangible resource that is rare, valuable, cannot be imitated, and is difficult to substitute. Lähtinen et al. outline a broad suite of tangible and intangible resources held by the Finnish sawmilling industry. The most important resources according to sawmill manager respondents were as follows:

The most highly rated resource was the experience of personnel, a resource that clearly differs among firms, is rare, and is difficult to imitate or substitute. Therefore, the experience of personnel can be considered a competitive advantage. It is somewhat surprising that issues such as service offering and organization culture were seen as rather unimportant to respondents in the study. Results might be very different if data were to come from the customers of the sawmills since customers would have a very different perspective on what resources possessed by a sawmilling firm make a difference to them. [75]

Ingredients of Sustainable Competitive Advantage

Clearly, it isn’t logical to produce special products and market them to all possible customer groups. Special products are marketed to those customer groups for which they are planned (e.g., window components to window manufacturers). By definition, custom-made products are made for known customers.

Figure 4-21 describes how strategic market area decisions are connected to product strategies.  Commodity products are marketed to as many countries as possible. Special and custom-made products are marketed to few, specified countries or regions. However, it could be that a company marketing  custom-made or special products to known end-users or specified sectors could operate worldwide. An example of that kind of company might be a plywood mill producing special plywood for the shipbuilding industry. Customers might be all shipyards building a specific type of vessel.

Core competencies must be compatible with other strategy components. Applying certain product, customer or market area strategies may require certain strengths or core competencies. The combination of strategy components creates a synergistic effect. Figure 4-22 describes the kind of strengths required when a company is choosing among strategy options. Though it’s a simple view, the principles illustrated here can be analyzed. A commodity product strategy requires strengths connected to products and production, in which case cost and price are the basis of competition. A special product strategy requires strengths connected to the products but also in marketing capability. Custom-made product strategies require special in-depth knowledge of individual customers but technical know-how is also important.

4.8.2 Connections Between Strategies, Structures and Functions

The Integrated Model of Marketing Planning introduced in Chapter 2 emphasizes that strategy is the basis of all business functions, particularly marketing. Structures and functions are tools to implement strategies. The logic of the model emphasizes that strategies drive the structures and functions of an organization, and that if there are changes in strategies, there must be corresponding changes in structures and functions.

Connection Between Product and Customer Strategies

The following list describes empirically observed relationships between strategies, structures and functions:

Marketing organization

  • The more advanced the strategy, the more decentralized the organization.
  • Companies applying custom-made product strategy tend to organize their marketing based on customer groups.

In a market-oriented company, decision-making must be nearer the customer. Those responsible for customer relationships must be able to make fast and locally applied marketing decisions.

Marketing channels

  • Marketing channels for custom-made product strategies contain few intermediaries and aim at direct contact with customers.
  • Companies applying a commodity product strategy have more intermediaries in their marketing channels.
  • The more advanced the marketing strategy, the simpler the structure of marketing channels (shorter channel).

In a market-oriented company, connections to the customer must be close to enable a continuous flow of information and influence between supplier and customer. An intermediary may hinder this flow. A commodity product strategy often means wider market areas and lighter organizations, requiring the use of intermediaries.

Personal contacts

  • The more advanced the marketing strategy the more systematic and frequent are personal contacts.
  • Marketing of special products requires direct contact with customers.
  • In connection with a more advanced strategy, personal contacts are with industrial end-users. In connection with less advanced strategy (commodity product strategy), personal contacts are with channel intermediaries.

A market orientation emphasizes customer relationships and customer relationship management. This ultimately means relationships between people. In a production-oriented, commodity product strategy, marketers very often do not know the ultimate end-user and see channel intermediaries as their customers.

Marketing communication

  • The more advanced the marketing strategy, the more direct and customer oriented is marketing communication. Accordingly, marketing communication is conducted by the company itself and the target in most cases is the industrial end-user. Communication is connected to product characteristics and use.
  • When an unselective strategy is applied, communication is often conducted by channel intermediaries and targeted to other intermediaries. “Making products known” is the dominant objective of communication.

This can again be explained by the principles of market-orientation. A supplier with a market-orientation takes more responsibility for marketing and customer satisfaction. The market-oriented company concentrates on solving customer problems. A production-oriented company concentrates on solving its own production or marketing problems.

Product development

  • The more advanced the marketing strategy, the more customer-oriented is product development.
  • The more advanced the marketing strategy, the more systematic and regular is product development.
  • The more unselective the marketing strategy, the more unsystematic, irregular and raw material oriented is product development.

Specializing and customizing products requires product development.

  • The more advanced the marketing strategy, the more flexible and customer oriented is pricing.

A differentiated product provides more freedom in pricing decisions, and price can be more dependent on the customer’s idea of value.

Physical distribution

  • Advanced marketing strategies are accompanied by terms of delivery emphasizing responsibility of the seller. Terms of delivery emphasizing buyer’s responsibility are connected to unselective marketing strategies.
  • The more advanced and customer oriented the marketing strategy, the greater the role of the producer in physical distribution.
  • Transportation by trucks is connected to custom-made product strategies. Transporting large volumes (rail, ship) is more typical in unselective marketing strategies.

A market orientation means more supplier responsibility, more emphasis on customer support, more concerns of customer need satisfaction, and more flexibility. This means that the supplier often provides products directly to the production facilities of the industrial end-user.

4.9 Chapter Questions

  • What is the meaning of strategy, and how has the approach to strategy changed over time?
  • What are the relationships and differences among corporate, business, and marketing strategies?
  • What is the concept and process of corporate strategic planning?
  • What is the role of the product in a marketing strategy and what are the aspects of the product that can be used to tailor the strategy?
  • What is the role of customer choice in marketing strategy and the logic of choosing customers?
  • What is the role of market area choice in marketing strategy, and what are the ways to choose market areas?
  • How are core competencies a part of marketing strategy?
  • What are the interrelationship among product, customer, market area, and core competency decisions?
  • What are the logical connections among strategies, structures, and functions as outlined in the Integrated Model of Marketing Planning (IMMP)?
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  • Seppälä, J. 2000. Marketing of Lumber in Western North America – Impact of Environmental Issues. Unpublished Pro Graduate thesis, Dept. of Forest Economics, University of Helsinki, Finland. ↵
  • Kiskonen, Marja. 1995. Aikakauslehtipaperin markkinointikanavan valinta. Master’s Thesis. Department of Forest Products Marketing. University of Helsinki. ↵
  • Storbacka, K., Sivula, P., and Kario, K. 1999. Create Value with Strategic Accounts. Multiprint, Helsinki. 175 p. ISBN 952-14-0232-6. ↵
  • Keinänen, H. 2001. Development of Profitability-Based Sales Steering. Master’s Thesis. Department of Forest Economics.University of Helsinki. ↵
  • Virtanen, A., E. Ranta, P. Paldanius, R. Naylor and H. Juslin. 2007. The UK and German construction industry foresight and respective value proposition ingredients to the industrial customers. Reports 45. Department of Forest Economics. University of Helsinki. ISSN 1236-6218. ISBN 978-952-10-3880-8. ↵
  • Lähtinen, K., A. Haara, P. Leskinen, and A. Toppinen. 2008. Assessing the relative importance of tangible and intangible resources: Empirical results from the forest industry. Forest Science 54(6):607–616. ↵

Strategic Marketing in the Global Forest Industries Copyright © 2018 by Eric Hansen & Heikki Juslin is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License , except where otherwise noted.

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Marketing Strategy vs. Marketing Plan: What’s the Difference?

Is there really a difference between a marketing strategy and a marketing plan? Are they two sides of the same marketing program coin?

While the terms are commonly used interchangeably, they’re two very different concepts in the real world. It may seem like splitting semantic hairs, but understanding the difference between marketing strategy vs. marketing plan is crucial to the success of your campaigns and your progress toward overarching business goals.

Let’s compare and contrast the concepts in greater depth so you’re prepared when it comes time to take your marketing to the next level .

What Is a Marketing Strategy?

A digital marketing strategy is the “why” behind your marketing. Every piece of marketing collateral you create will be informed by this documentation, which means it works hand-in-hand with your content strategy .

Basically, a marketing strategy is a reflection of your short-term and long-term business approach. This strategy should also be a distillation of your brand values, voice, mission and messaging. For example, if your business aims to scale up quickly, the strategic marketing vision you develop needs to support that objective, perhaps by focusing on consumer acquisition or ramping up your online presence.

A good marketing strategy will encompass your unique selling proposition, all that your business hopes to achieve and its brand identity.

What Is a Marketing Plan?

Your marketing plan is the “how” to your strategy’s “why.” Ideally, a marketing plan should be just that — a plan of action for how you will execute your strategy to accomplish each marketing goal.

The process of creating a tactical marketing plan is about addressing the real-world steps you will take to create, promote, track and measure your campaign, programs and assets. The workflows and procedures you develop will provide a roadmap for making your strategy actionable.

How a Marketing Strategy and Plan Work Together

To use a not-at-all-complicated metaphor, let’s say your business needs a ship to sail through your marketing campaign. That ship needs a direction in which to travel (i.e., a strategy) and the sails to power it (i.e., a plan).

Marketing strategy and plan work hand in hand, with the latter taking cues from the former. Everything laid out by your strategy should be addressed with a plan — one that defines the processes for tactical marketing.

However, the lines can be a bit blurred. Strategic planning is one oft-used phrase that can create confusion. In reality, strategic planning is just high-quality planning informed by a thorough marketing strategy.

Needless to say, a strategy without planning is like a winning idea without a way to realize it; and planning without a strategy will lead to a rudderless ship.

the ship (your business) needs not only a direction (i.e., a strategy) but also the sails to power it (i.e., a plan).

How to Create a Marketing Strategy

Strategy is not an amorphous concept. It takes real work and thinking to establish a good marketing strategy that ultimately facilitates business success.

Here are some basic steps to crafting a comprehensive strategy:

  • Identify each marketing objective: Strategy begins with your goals, both now and in the future. For example, if your business plan is to expand into new markets, the strategic marketing approach may be to make inroads with new customer segments. Brainstorm how your marketing can reflect other short-term goals and long-term ambitions, like becoming an authority in your industry.
  • Refine your audience: Defining your audience enables you to resonate with buyers and push customers through the marketing funnel. A strategic marketing priority is to develop buyer personas. These personas will be central to deciding on the angle and value prop of the marketing you create.
  • Establish your brand guidelines: Your brand needs to be codified in a way that ensures every piece of marketing content will be identifiable and conforms to your standards. This means outlining editorial voice, graphic design preferences and all other critical brand elements. Having a unified presence leads to a better customer experience. Without a single source of truth for how the brand should be represented, your actual marketing may devolve into disparate shots in the dark.
  • Assess opportunities and threats: Your level of strategy will influence how prepared you are to capitalize on a market research opportunity or manage risks. Research competitors to understand what they’re doing — and, more importantly, what they’re not doing. Know how you’ll leverage your competitive advantage to meet a new market need or shifting consumer preferences.

Importantly, strategy is not static. It needs to be constantly updated and fine-tuned to keep your business on track and achieve changing marketing objectives.

How to Create a Marketing Plan

Returning to the question of “how” shows us the best way to create a marketing plan that works. Ask yourself these questions as you set out to develop your plan of action:

  • How will we reach consumers? The answer to this question will help define your marketing mix. What types of marketing will you utilize to reach leads, prospects and existing customers? Content marketing, digital marketing, search marketing, social media marketing , event marketing and all other types of marketing are in play here.
  • How will we create marketing materials? Clearly defined workflows and processes will support the creation of high-quality marketing materials. You need to suss out who owns which project phases, how cross-functional teams will collaborate and what quality controls are in place (like checking for adherence to brand guidelines).
  • How will we share content and collateral? Not only must you choose your marketing mix, but also your selection of marketing channels. Once again, there are many types to consider: direct mail, social media, email, your website, pay-per-click (PPC) advertising, organic search, etc. Each distribution channel will have its place in planning.
  • How will we track campaigns and measure results? Data is the lifeblood of strategic marketing. You’ll need to create a list of key performance indicators (KPIs) with which to track campaigns. These may include anything from conversion rates to cost per lead.

Marketing Strategy and Marketing Plan Examples in Action

Let’s look at some examples of how the waterfall of business objectives to marketing strategy to marketing plan works in real life:

  • Business goal: To pivot or reinvent the business, whether due to a merger, new market need or modernization effort.
  • Marketing strategy: Launch a rebranding campaign; craft new messaging to align marketing with the business’s new direction; create new brand guidelines.
  • Marketing plan: Pursue a website redevelopment; create a marketing plan template to ensure all new efforts adhere to guidelines; reoptimize website content and copy; coordinate a rollout of new colors, logos and fonts to all social media platforms; hire a marketing agency to consult on best practices.

It’s much easier to see the differences between marketing strategy vs. marketing plan in such a scenario, but also easier to grasp how they work in conjunction. Let’s consider another:

  • Business goal: To launch a new service or product line.
  • Marketing strategy: Research competitors and the existing market; develop a new set of buyer personas; outline the marketing funnel and customer journey; generate leads for the proposed expansion.
  • Marketing plan: Create content around the new product for outreach (e.g., blogs, emails, white paper, one-pagers, etc.); decide which assets to gate in exchange for a name and email address; balance customer acquisition with retention by creating a loyalty program.

Getting the picture?

  • Business goal: To increase revenue or raise sales by a certain percentage.
  • Marketing strategy: Support sales enablement with high-quality marketing content and collateral; revitalize or refine the value proposition; reach out to new customer segments.
  • Marketing plan: Track KPIs related to conversions; focus on high-performing channels; leverage customer data to make upsell or cross-sell recommendations; start a retargeting campaign.

One more for good measure:

  • Business goal: To become an industry leader.
  • Marketing strategy: Highlight brand strengths and competitive advantages; present the brand as friendly, knowledgeable and authoritative; raise brand awareness and cultivate brand evangelists.
  • Marketing plan: Build influencer marketing relationships; publish thought leadership content and/or guest blogs; use social media for customer service and conversations; conduct webinars.

Level Up Your Marketing Campaign

When a marketing strategy and marketing plan are in harmony, what they create is music to your business’ ears. Alignment between the two gives your brand its best chance to impact consumers, raise its profile and succeed in its key business objectives.

Editor’s Note: Updated December 2022.

compare and differentiate strategic planning and marketing planning using the venn diagram

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Guide to understanding Venn diagrams

compare and differentiate strategic planning and marketing planning using the venn diagram

What is a Venn diagram?

A Venn diagram illustrates the relationships between two or more data sets. Venn diagrams are especially useful for highlighting similarities and differences and are commonly used to compare and contrast the characteristics of different data sets.

In a Venn diagram, circles are used to represent each data set. Inside each circle is a list of characteristics that define that data. Characteristics shared between two or more data sets are listed in the area where the circles overlap. Simple Venn diagrams consist of two overlapping circles, but complex Venn diagrams may compare up to five or more data sets using up to five or more circles.

Venn diagrams are commonly used in business and education settings to visualize and explore how things relate. In a business context, Venn diagrams are commonly used in product development, marketing, management, and more.

Types of Venn diagrams

You can choose the best format for your data sets with a few different Venn diagrams. Types of Venn diagrams include:

Types of Venn diagrams

Two set diagrams

Two set diagrams are the most common—and most classic— type of Venn diagram. They are used to compare two sets of data, and they are formed from two overlapping circles. You could use a two set diagram to compare and contrast one of your products with a similar product from a competitor.

Three set diagrams

Three set diagrams are Venn diagrams with three overlapping circles. In a three set diagram, you compare each data set to each other, and you use the center section to write down similarities between all three data sets. An HR team could use a three set diagram to visualize the responsibilities of three different departments—and where responsibilities overlap—for example, marketing, sales, and operations teams.

Four set diagrams

Four set diagrams use four overlapping circles to compare four data sets. A marketing team might use a four set diagram to compare and contrast the functions and features of four different social media platforms—for example, Facebook, Twitter, Instagram, and LinkedIn.

Five set diagrams

Five set diagrams are more complex, with five overlapping circles arranged to compare and contrast five different data sets. While you could conceivably create a Venn diagram with more than five data sets, it can become difficult to read and interpret large diagrams. A sales team could use a five set diagram to compare and contrast different client prospecting channels. For example, referrals, networking events, cold calling, cold emailing, and social media.

Examples of when to use a Venn diagram

Venn diagrams can compare and contrast an infinite number of different things. For more tips on when to use a Venn diagram in your daily work, check out these Venn diagram example use cases.

Decision making

Venn diagrams help you visually categorize information, which is helpful when facing an important decision. Use a two set diagram to list similarities and differences between two options, or add circles if you choose between more than two potential outcomes. If you’re regularly partnering with outside vendors, onboarding software products, or making other important business decisions, Venn diagrams are a great tool for comparing features and options.

Marketers make Venn diagrams to explore the features and benefits of different marketing channels, social platforms, software options, and more. The visual format can provide a new perspective and valuable insights.

Understanding team roles and responsibilities

As mentioned in the three set diagram example above, Venn diagrams can help you understand job functions and responsibilities within a team or across an organization. If you need greater clarity and accountability within your team, make a Venn diagram to explore your team's various roles, tasks, and responsibilities.

Competitive analysis

When you have competitors providing similar products or services, Venn diagrams are helpful tools for competitive analysis. Use a Venn diagram to identify what sets you apart from your competition and explore ideas for gaining a competitive advantage in other areas.

Competitive Venn diagrams

Benefits of Venn diagrams

Venn diagrams help you organize information and explore similarities and differences between different groups of ideas or objects. Key benefits of Venn diagrams include:

Visually organize information

Venn diagrams provide a visual framework for note-taking and organizing information. The format enables comparing and contrasting to find similarities and differences between concepts and ideas, encouraging creative insights.

Compare two or more things/choices

Venn diagrams help you closely examine the relationships between two or more things—ideas, concepts, objects, places, people, choices, and more. They are a powerful tool for comparison and can also help you find correlations and commonalities that weren't immediately apparent.

Inform decision making

Using a Venn diagram to explore various choices can help inform your decision-making process and influence outcomes. By weighing options with a Venn diagram, you'll have a visual reference that could help make the right choice stand out.

How to make a Venn diagram

Create a Venn diagram using this simple step by step process:

  • Decide on your data sets. Figure out what you will compare and how many data sets you have in total.
  • Draw a circle for each data set. All circles should overlap, and you should make both your circles and the overlapping areas large enough to write notes in.
  • List unique characteristics in each circle. Begin filling in your Venn diagram by listing the unique characteristics of each data set.
  • List shared characteristics in the overlapping spaces. If you have more than two circles, you'll write down commonalities between each data set and things in common between all data sets.
  • Adjust as needed. For example, if your overlapping spaces are too small, you may need to redraw your Venn diagram to accommodate all of your notes.
  • Review your Venn diagram. Make sure all shared characteristics are in overlapping spaces, and everything is legible and neat. Review your notes on your own or with your team, and explore any insights you find.

Why use MindManager to make Venn diagrams

Venn diagrams help you organize notes, compare concepts, and make decisions. A Venn diagram software like MindManager makes creating a Venn diagram simple and seamless. MindManager's key features and benefits include:

  • User-friendly, intuitive interface
  • Extensive image library—over 700 topic images, icons, and symbols to add to your Venn diagrams
  • Convenient file storage, retrieval, and sharing
  • Powerful integrations with file storage apps like Box and OneDrive
  • Google Docs integration via Zapier
  • Numerous templates, tools, and features to facilitate brainstorming and strategic planning
  • Google Chrome extension—MindManager Snap—to easily collect and import text, links, and images from the web

Professionals across various industries and business functions use MindManager to gather, structure, analyze, and share information. With MindManager, you can clarify complex concepts and improve understanding within your team.

Venn diagram templates

MindManager comes pre-installed with Venn diagram templates. To use these templates:

  • Open MindManager
  • Click NEW in the navigation menu
  • Select the template you want to use
  • A preview screen will appear - check to see if you'd like to use your selected template
  • Select 'Create Map'
  • Customize the template for your specific project

Competitive Venn diagrams

Venn diagram FAQs

Is a venn diagram always 3 circles.

While a typical Venn diagram is made of two or three circles, there are other types of Venn diagrams made of four, five, or more. To avoid the confusion of too many overlapping circles, it's best to compare five for fewer data sets in one Venn diagram.

What are the symbols used in Venn diagrams?

Most Venn diagrams do not require the use of special symbols, but some—especially in a mathematical context—use symbols as a system for notation. Common Venn diagram symbols include:

  • ∪ — Union of two sets
  • ∩ — Intersection of two sets
  • Ac — Complement of a set

How do you use a Venn diagram?

Use a Venn diagram to compare two or more sets of data. The steps for making and using a Venn diagram include choosing your data sets, drawing your circles, recording information, comparing characteristics and reviewing insights.

Gain a clearer view—make a Venn diagram

Venn diagrams provide a way to visualize the similarities and differences between two or more sets of data. They're simple to make and useful for decision making, marketing, understanding team roles and responsibilities, competitive analysis, and more.

With multiple types to choose from and many potential use cases, Venn diagrams are popular across various fields and functions.

Visualize more with MindManager

Use a Venn diagram software like MindManager to start making dynamic visualizations. MindManager's premade templates, diagram-making tools, and user-friendly interface will help boost your productivity, streamline communication, and enrich workflows. Give MindManger a try today.

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What Is A Venn Diagram [+ Examples, Purpose, And Types]

By Lydia Hooper , Jun 29, 2023

what is venn diagram + examples

Perhaps there is nothing more ubiquitous, quintessential and delightful than the Venn diagram.

You may have noticed how they have a tendency to appear in social media feeds, online forums and whiteboard discussions.

And it’s no secret how much we love them at Venngage — they only inspired our company name after all!

So it’s only natural I show you just how awesome Venn diagrams are, and how you can easily create one to help you with any communication challenge with Venngage’s Venn Diagram Maker .

Don’t want to design a Venn diagram from scratch? Check out our library of Venn diagram templates instead that lets you customize to your heart’s desire.

Note: Some of our Venn diagram templates are free to use and some require a small monthly fee.  Sign-up  is always free, as is access to Venngage’s online drag-and-drop editor.

Click to jump ahead:

What is a venn diagram.

  • Purpose of Venn diagrams
  • Venn diagram examples
  • Types of Venn diagrams

What can Venn diagrams be used for?

How to create a venn diagram.

A Venn diagram is a graphical representation that shows similarities and differences between items, concepts or data.

They utilize shapes, often circles, to illustrate relationships and compare data.

Venn diagrams are certainly one of the most well-known types of diagrams .

Here’s an example of a Venn diagram. This design, featuring a series of simple circles or ellipses that overlap is ubiquitous.

Dark Venn Diagram Template

The overlapping region of a Venn diagram indicates similarities while others showcase differences.

Although the Venn diagram was created to describe mathematically logical relationships, it’s now used to show all types of relationships.

What is the purpose of Venn diagrams?

The purpose of Venn diagrams is to visually represent relationships between different groups of items or concepts.

Here are some use cases where you’ll want a Venn diagram.

  • Organize diverse information : Venn diagrams help organize data in a way that makes it easy to understand relationships between data.
  • Compare choices : Venn diagrams are perfect tools when you want to compare two or more choices. They highlight shared elements and distinctive features, enabling anyone to make informed decisions.
  • Solve complex problems : Venn diagrams aid in logical reasoning by depicting logical relationships between different elements or statements. For a more advanced guide, check out our post on Venn diagram symbols to see how they help with complex problem-solving.

15 Venn diagram examples

There’s no denying Venn diagrams are popular.

Businesses use them for everything from internal whiteboard sessions to customer-facing ads to inspiration for new products.

Here are some example situations where Venn diagrams really shine.

Compare different solutions

One of the most frequent uses for a Venn diagram is comparing different products, services, or solutions.

Here’s an example comparing two different products by listing things customers are interested in that might cause them to select one over the other:

venn diagram to compare solutions

Source : Tech Digest

Here’s another Venn diagram comparing two different services and what they both offer:

venn diagram to compare solutions

Source : diff.wiki

This Venn diagram describes two offerings and the relationships between them:

venn diagram to compare solutions

Source : InformationWeek

In this example, a Venn diagram details three complementary options.

Again, each can stand alone, or they can be combined:

venn diagram to compare solutions

Source : Supply Chain Shaman

Highlight combinations and overlaps

Venn diagrams are also great if you want to draw attention to combinations or overlaps.

This simple Venn diagram shows how classrooms today use a combination of different instructions:

venn diagram combinations and overlaps

Source : Imagine Learning

This Venn diagram emphasizes how critical events impact people and other assets:

venn diagram combinations and overlaps

Source : CIPHR

This innovative, non-hierarchical spin on an organizational chart is meant to describe how roles can bridge different teams and departments:

creative organizational chart

Source : Metal Toad

Describe markets

Some of the above examples demonstrate how useful Venn diagrams are for helping people better understand complex topics and ideas.

But they can also help break down markets.

This Venn diagram outlines market segments or niches:

venn diagram market analysis

Source : Lending Times

And here’s another that shows the relationship between various competitors based on offerings:

Source : Wall Street Journal

Explain concepts

Some ideas can be so abstract that you’ll need a diagram to help colleagues or clients get the big idea.

For example, you can use a Venn diagram to explain corporate culture.

venn diagram explain concepts

Source : Dan Pontefract

And…sources of competitive advantage…

venn diagram competitive analysis example

Source : Transmission

Or… even how to unlock innovation.

venn diagram analysis example

Source : UX Studio

Advertise brands and products

Many of the examples so far are meant to help inform conversations that happen inside companies.

But due to the popularity of Venn diagrams, they are also being used as customer-facing visuals and even products.

For example, Venn diagrams helped inspire the evolution of Mastercard’s logo :

venn diagram mastercard logo

Source : Mashable . Credit : Pentagram / Mastercard

They were also used in a McDonald’s advertising campaign several years ago:

venn diagram mcdonalds inspiration

Source : TRENDHUNTER

But this example takes the cake.

Nike released a new sneaker inspired by and named after the Venn Diagram known as the Nike Air Max 90 “Venn Diagram”.

venn diagram

Source : Sneaker News

3 types of Venn diagrams

Several types of Venn diagrams are used to represent different types of relationships between sets.

For most needs, a two-set, three-set, and four-set Venn diagram is enough to analyze simple and/or complex scenarios.

This is the simplest type of Venn diagram and one we all know.

It highlights the relationship between two sets using two circles, with the overlapping region showing the elements common to both sets.

Simple Venn Diagram Template

A three-set Venn diagram uses three shapes to represent the relationships between three sets.

The overlapping regions in this diagram indicate elements that are common to specific combinations of sets.

3 Circle Venn Diagram

A four-set Venn diagram uses four shapes to display the intersections and differences among the sets.

This allows for a more comprehensive visualization of the relationships and commonalities. The four-set Venn diagram is a valuable tool in various fields, such as mathematics, statistics, data analysis, and business or social sciences.

Venn Diagram Printable

Remember, these are not the only types of Venn diagrams out there.

Here are some other types of Venn diagrams you can use:

  • Euler diagram
  • Shaded Venn diagram
  • Network Venn diagram

As we’ve seen, Venn diagrams are excellent for multiple reasons.

But let’s see some of their practical applications.

This diagram, for example, draws attention to an important intersection:

Basic Venn Diagram Template

Want to compare two products, highlight the similarities and differences between two services, or show how a solution combines two ideas, then customize this Venn diagram template.

This example compares different options by detailing the strengths of each:

Dark Blog Publishing Triple Venn Diagram Template

So if you want to describe service combinations or overlapping ideas, customize this Venn diagram template .

As you can see, Venn diagrams are incredibly flexible and can be used to see patterns of many kinds.

This visual uses a Venn diagram to describe a complex topic in a clarifying and engaging way:

Sustainable Development Venn Diagram Template

You can customize this Venn diagram template to create a visual that explains your company’s customers, competitors, or culture, for example.

Now that you’ve gotten lots of inspiration, it’s time to make your own Venn diagram!

Here are some simple steps to help you get from pen to Venn.

1. Try different concepts to see what works best

I highly recommend starting with pen and paper so you can start to map out the relationships you might want to show — it’s easy to draw rough-looking ovals after all.

This will allow you to better play around with ideas before you start working with software to create more polished designs.

You may even get inspired to think outside of the box.

Or you might decide there’s a fair amount to explain, and that a Venn diagram is certainly more attractive than a boring text document.

Pandemic vs Epidemic Venn Diagram Template

You might even mix it up by using squares or diamonds if that works well for the topic.

Business Venn Diagram Template

2. Choose a template

Although there are many tools out there that can help create a Venn diagram, I recommend using Venngage’s Venn Diagram Maker . Why?

Well, it’s an intuitive drag-and-drop editor that eliminates the need to have design experience. Just drag and drop elements to create your Venn diagram.

Or if you really want to get a head start, simply pick a Venn diagram template that fits what you outlined, and use Venngage to edit elements like icons, and logos.

venngage venn diagram templates page

Venngage offers over 40,000 icons and illustrations, 2,000 of which are diverse icons.

If you want to change an icon in a template, simply double-click the icon and choose the one you want to change it to:

3. Add straightforward labels

When it comes time to add text, think “keep it simple.”

Use language appropriate for your audience and try to integrate the text and the visual, rather than having one crowd out the other.

If you want to use a fair amount of text, be sure to use a format that still helps people be able to best understand the comparisons you are trying to make.

Organizational Chart Template

4. Be mindful of the size of the shapes

Labels aren’t the only thing that will be communicating your ideas to people.

The size of your shapes can also tell them what’s most important, most significant, or of the greatest magnitude.

For example, in this Venn diagram, the website portion stands out as foundational:

Marketing Venn Diagram Template

Use the size of shapes to help your audience know what matters most.

5. Select colors to help people read

You can also use color to help draw attention to certain elements or themes.

If you are creating a particularly complex Venn diagram, use color in ways that help your audience easily see differences and draw comparisons.

venn diagram

Want to learn other ways to create a Venn diagram? Check out these posts! How To Make A Venn Diagram In Microsoft Word How to Create a Venn Diagram in PowerPoint? How to Make a Venn Diagram in Google Docs

Summary: Venn diagrams are useful, versatile, easy to create, and even fun

You may never be as big of a fan of them as we are, but once you start using them, you will see how helpful they can be, for you, your colleagues, clients and customers.

No design experience? No problem. Venngage’s Venn Diagram Maker makes it easy for you to create engaging, beautiful Venn diagrams in minutes.

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Venn Diagram Template User Guide: Make a Venn Diagram to Organize and Present Your Data Visually

Venn Diagram Template User Guide: Make a Venn Diagram to Organize and Present Your Data Visually

If a picture is worth a thousand words, a Venn diagram is worth at least that many. Why write a whole page on the relationships between different data sets when you can convey the same ideas easily with a few overlapping circles?

Instantly recognizable and easy to understand, the Venn diagram continues to be a favorite method to assess and deliver information visually. A Venn diagram tells viewers at a glance how its subjects compare and contrast on key points. In business, Venn diagrams help us understand important relationships between concepts, products, team roles, marketing demographics, and other aspects of our work.

Read on to discover practical ways your business can use a Venn diagram maker for documentation, presentations, marketing, product design, and more.

What is a Venn diagram?

A Venn diagram is a simple yet powerful visual tool that demonstrates the logical relationships among two or more data sets. Venn diagrams use overlapping circles to illustrate the relevant commonalities and differences between its subjects.

As internet users scrolling through a lot of text each day, we connect instantly with a Venn diagram online. The straightforward form of the Venn diagram cuts through the noise to focus our attention on just the ideas the creator wants us to consider.

Where are Venn diagrams used?

The Venn diagram has a wide range of applications due to its ability to convey important relationships at a glance. This is why we see Venn diagrams pop up everywhere, from boardroom business presentations to high school textbooks to viral memes.

Venn diagrams come in all forms: silly or serious, simple or complex, conceptual or concrete. As a work tool, the Venn diagram is used in fields as wide-ranging as business, logic, linguistics, statistics, education, mathematics, and computer science.

What purposes does a Venn diagram serve?

A Venn diagram is generally created for one of two reasons:

  • Exploration. We can use a Venn diagram as a process tool to discover the overlaps in our data sets. In this case, we start with the circles we want to explore, then examine the intersections to ask what we’ll find there.
  • Explanation. Other times we know what ideas we want to convey, and we’re seeking a concise way to do this. The Venn diagram streamlines this process and helps us communicate the needed information to the viewer quickly and powerfully.

Of course the first type of Venn diagram sometimes evolves into the second one. For instance, you explore a product development strategy on a Venn diagram by seeing where the needs of different target markets intersect. Then you clean up your Venn diagram for a presentation to help explain your process to other stakeholders.

What Venn diagram pitfalls do I need to avoid?

There’s one overarching principle of Venn diagram creation: Your intersections and subsets must follow Venn diagram logic. Wherever a data set appears, be sure the data applies to that intersection and only that intersection on the diagram.

This may sound straightforward, but a Venn diagram online search will quickly turn up diagrams with logical inconsistencies. As your Venn diagrams get more complex, verify that each intersection accurately describes the overlapping circles and also logically excludes all circles that do not overlap.

This principle brings up a related issue: Don’t use a Venn diagram when it isn’t the appropriate visual tool. Your business slogan or vision statement doesn’t necessarily translate into a Venn diagram. For instance, a company may advertise “collaboration, innovation, dedication” but that doesn’t mean the business name should be at the heart of a three-circle Venn diagram. That is, of course, unless you can populate the diagram intersections with features or services that address each of the two intersecting points but not the third. A bunch of empty intersections defeats the purpose of using a Venn diagram in the first place and indicates that you should select a different visual illustration method.

What are the main Venn diagram types? 

Venn Diagram template on Whiteboards.io

A Venn diagram is a flexible way to investigate or demonstrate the important similarities and differences between two or more subjects. Venn diagrams take any number of forms depending on their individual purpose. Here are some of the common ones:

Two-circle Venn diagram 

The most basic form of the Venn diagram consists of two intersecting circles. This version is commonly used to list multiple relevant features of its two subjects. Think of your two-circle Venn diagram as the graphic version of answering a “compare and contrast” question on a test.

For instance, an elementary school lesson about mammals and birds might use a Venn diagram to understand how the two relate. Birds have feathers, lay eggs to reproduce, and feed their young food from their own mouths. Mammals typically have fur or hair, give birth to live young, and produce milk to feed their offspring. Birds and mammals are both warm-blooded vertebrates with lungs for respiration.

The Venn diagram doesn’t include everything students need to know about these two groups. It just highlights some main points that differentiate birds and mammals biologically, and some important things they share in common.

Three-circle Venn diagram

Let’s say in our classroom example above that our students are also studying fish. Their textbook could include a three-circle Venn diagram to compare and contrast fish with both birds and mammals. 

Like birds, fish typically reproduce by laying eggs. Fish and mammals have teeth, while birds do not. Mammals have four limbs, birds have two limbs and two wings, and fish have no limbs. Unlike both mammals and birds, fish have scaly bodies, breathe using gills, are cold-blooded, and in most cases do not stick around to care for their young.

At the center of the Venn diagram are some common characteristics of all three groups: being in the animal kingdom, being classified as vertebrates, and having circulatory systems to pump blood.

Venn diagram with subsets

A Venn diagram doesn’t have to be symmetrical like the two examples above. Some Venn diagram applications call for data subsets to compare and contrast their subjects. Let’s move our example class out of biology and into math to consider a common Venn diagram found in basic geometry.

Any shape with four straight sides is called a quadrilateral. A quadrilateral whose sides are parallel to each other is called a parallelogram. Students need to know three types of parallelograms:

  • Rectangle: any parallelogram whose angles are all 90 degrees
  • Rhombus: any parallelogram with four sides of equal lengths
  • Square: a parallelogram with the properties of both a rectangle and a rhombus

A simple Venn diagram shows the geometry class how these shapes relate, and how a trapezoid is not a parallelogram but is still a quadrilateral. Notice how the Venn diagram creates an easy visual reference for concepts that could otherwise get confusing quickly.

Scaled Venn diagram

Sometimes a Venn diagram shows how its subjects are similar and different qualitatively while also visually demonstrating their relative size. Venn diagrams explaining population data, for example, are easier to comprehend and more visually logical when the numbers inside each circle correlate with that circle’s area.

Let’s say you want to make a Venn diagram of workplace survey results. The survey asked where people prefer to work: remotely or in the office. Your Venn diagram has two overlapping circles labeled “remote” and “office.” The intersection shows respondents who prefer a hybrid workplace. The survey results indicate the following:

  • 60% of employees prefer fully remote work.
  • 15% want to work daily in the office.
  • 25% find a mixture of the two is best.

Your Venn diagram will naturally contain these percentages, since the survey is the point of the diagram. But it will be more powerful visually if the area of the circles and their intersection are proportionate to the data inside them. 

When would I make a Venn diagram for business?

How do the Venn diagram examples above relate to a business that makes software products? Let’s look at some ways you can use different forms of the Venn diagram in the world of development work.

Communicate with users in a Venn diagram online.

An attractive Venn diagram is a great way to convey key information to customers visiting your website. Compare products or services to highlight the features your target customer is most interested in. Contrast your product with a competing product or service. Or, show how your own offerings compare to each other to help the user select the one that’s best for their needs.

Use a simple two-circle Venn diagram to show features differences between products. Or, use circles within circles to demonstrate upgrade options. The largest circle shows the full package of features, and the smallest circle shows what users receive with the free version of the product.

Understand your target customers to prioritize development. 

Analyze the intersection of your different target market segments on a Venn diagram. Place user personas A, B, and C in three overlapping circles. What does each one want from your product? Where are their pain points? What are they asking you for, directly or indirectly? If your user groups are different sizes, represent this with larger and smaller circles to weigh your considerations appropriately.

Now study your new feature ideas based on who they will benefit, and add these solutions to the appropriate diagram intersection. Which solutions serve one, two, or all three target customer bases? If a feature brings value mainly to one type of user, place that feature in that circle only. The middle of your Venn diagram indicates your highest priority development opportunities. 

From here, assess the other intersections in terms of how crucial they are to that customer base. Certain solutions may serve a smaller demographic but be especially important to those customers. The Venn diagram helps you prioritize your broad appeal features first and order the product backlog from there.

Form a clearer picture of branding opportunities.

Explore how your brand intersects with your various user personas in order to reach each target demographic more effectively. Create a basic Venn diagram where the two circles represent your product’s overall brand vision and the lifestyle of a given user persona. 

Add your market research data points to the second circle, then strategize the intersection of your brand’s offerings and your customers’ desires. Do this for each user persona to create targeted sales strategies that speak to your different bases.

Document cross-functional collaboration expectations.

Clarify team roles and responsibilities with a Venn diagram showing who’s accountable for doing which types of work. Use circles to represent two or three teams, then label the intersections to show where these teams are jointly responsible for certain tasks or project outcomes.

This process can also help clarify different management responsibilities. Where do the roles of the Product Owner and product manager intersect? How do these two job functions interact with the project manager or head of the marketing team? A Venn diagram maker helps you think through individual and joint responsibilities as well as document them for general reference.

Highlight important information for stakeholders.

Use a Venn diagram to illustrate key points when you create your next whiteboard slide presentation for company execs or screen-record a demo for your project team. Whiteboards’ Venn Diagram template features translucent circles that perfectly blend overlapping colors so you can create visually appealing diagrams for professional presentations with very little time investment. Focus yourself and your viewers on the most important points by showing off your data in a way that stands out and sticks with the audience. 

How do I use the Venn Diagram template?

Whether you’re collaborating with coworkers via video chat or creating visuals for your next presentation, the Venn Diagram template produces stunning results with minimal effort. Add the template to your virtual canvas and customize it to suit your process or design:

  • Add or subtract circles. The template starts with a three-circle Venn diagram. Delete a circle or alternately copy-paste to add as many circles as you need.
  • Change shapes. Circles are the Venn diagram standard, but if you want to get creative choose from a palette of shapes to change things up.
  • Edit text. Adjust the size, color, alignment, and style of your text to tweak the appearance of your Venn diagram. 
  • Adjust circle size and color. Drag the corners of your shapes to change their sizes. Demonstrate proportionality between different data sets or use smaller circles within larger ones to illustrate subsets. Select different colors for your circles and their borders to match your presentation color scheme.
  • Create Jira issues. Any text on your Whiteboards templates can become a Jira issue in two clicks. If your Venn diagram session leads to next steps in development work, add these to your project backlog without leaving Whiteboards. Convert the relevant text to a new Jira issue, import existing issues from Jira, and manage any of these items on the digital canvas. Whiteboards’ native Jira integration ensures all changes sync in Jira. Meanwhile, edits made in Jira also appear instantly on the whiteboard for seamless project management.

Ready to create a Venn diagram online? Try out Whiteboards for free to get the Venn Diagram template and over 100 other customizable templates for marketing, design, and development work.

Angelika Troka

Angelika Troka

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What is a Venn Diagram? Definition, Importance and Examples

By Paul VanZandt

Published on: August 25, 2021

What is a Venn Diagram

Table of Contents

What is a Venn Diagram?

Why venn diagrams are important, venn diagram vs euler diagram, 9 examples of venn diagram.

Using a Venn diagram is one of the most common forms of visual collaboration and is likely something that you’ve done since childhood. Even though it’s a very simple template, it has some serious business applications and can be used to clarify several important scenarios.

In this article, we will define a Venn diagram and talk about some of the professional applications that make it increasingly pertinent to businesses everywhere.

A Venn Diagram is defined as a powerful visual representation consisting of overlapping circles that systematically illustrate shared characteristics between two or more entities. This versatile tool, commonly employed in educational settings to elucidate relationships among concepts, extends its utility to virtual workshops, presentations, and collaborative brainstorming sessions within professional environments. By simplifying complex associations, Venn Diagrams serve as invaluable aids, fostering a deeper understanding of connections and distinctions.

The most common use case for businesses is taking two or more items and analyzing their advantages or disadvantages when compared to each other. Their commonalities and differences can be crucial in determining how compatible they are with your current business plan and with each other. Because of this, Venn diagrams are great templates for problem-solving and brainstorming connections. These exercises will help your business decide what is the correct path forward.

Brief History of Venn Diagrams

Venn diagrams have a long history of use both in the classroom and for businesses and are most widely used in math, statistics, and logic. Their use in multiple areas gives them multiple aliases too. They’re also commonly known as Set diagrams or Logic diagrams. As previously mentioned they’re most commonly found in school due to their basic level of comprehension and simple structure.

While Venn diagrams are very simple at their core, they can be expanded to form very complex relationships and have a unique connection to the mathematical world. The total set of areas in a Venn diagram will always be a prime number, making way for some interesting mathematical properties. Additionally, the relationship that Venn diagrams present is always a logical one, meaning the items will be related directly. This is important because it means there is no extraneous relationships or assumptive connection – everything is 1:1

This dichotomy between very simple templates and more complex structures makes Venn diagrams widely appreciated by many different communities and dates their use back hundreds of years.

We’ve already talked about how Venn diagrams work and how they apply to various classroom and business applications, but it can still be a little unclear as to why Venn diagrams are important. After all, they’re just a very basic set of circles, right? Even though they are shockingly simple, this simplicity can be extremely helpful in providing clarity and understanding to students and businesses. Here are some of the biggest advantages of using a Venn diagram.

  • Visual Organization

The biggest advantage of using a Venn diagram is its ability to organize information in a simple and understandable format. This allows you to clarify any misaligned information and align it under the proper umbrella.

Being able to organize information in a clear structure is a massive advantage, but the main advantage is the visualization that comes with the organization. Thanks to this diagram you’re able to visualize your data on a board and implement a graphic organization of the information. Being able to visualize ideas and connections is extremely helpful when people are trying to comprehend the connections between items and is a massive boost to people’s understanding of the topic at hand.

People are inherently visual learners, so when this information is displayed on a physical board in front of them, it becomes much easier to pick up, learn, and move forward with that knowledge. Due to the powerful nature of visualization, many teams use Venn diagrams during presentations to get their point across in the most efficient and digestible manner.

  • Direct Comparison

When analyzing different items or choices it can be really hard to understand where exactly they overlap and intersect, and sometimes the best way to understand this is to create a physical intersection. This intersection is the entire purpose of a Venn diagram.

When comparing items on a Venn diagram it is incredibly easy to see what they have in common and also what features are unique to each section. This could be important when choosing from different design styles, or maybe when selecting a service provider.

This ability is also commonly used when comparing data, predicting future intersections of products, or as a probability measurement. All of these use cases and more are beneficiaries of the direct comparison that the Venn diagram offers.

  • Simplifying Ideas

One of the reasons Venn diagrams are so helpful is that they break down complex relationships into simple, digestible information. By breaking down ideas into their simplest relationships you can gain a better understanding of what they mean and how they relate to one another. Only when seeing things in their barest form can you understand the relationship and move forward.

For both students and professionals, thinking through the logic behind the relationship between items can be helpful when understanding their bearing and importance to the greater concept you’re analyzing. Visually communicating these ideas makes understanding the logic behind their relationships much easier and is a big advantage to teams who use this structure.

Learn more: What is UML Diagram?

Venn diagrams aren’t the only templates that help break down the relationship between multiple items. The Euler diagram is one of the Venn diagram’s closest relatives and does many of the same things but with its own unique differences.

Venn vs Euler

The principal difference between a Venn diagram and an Euler diagram is that Venn diagrams show all possible relations between a set of items while a Euler diagram only shows the actual relations between the same set.

What this means is that Euler diagrams will only show the relevant connections between a set of items in the context that you’re analyzing them, while Venn diagrams will show every connection even if it isn’t relevant to the current analysis. Venn diagrams show overlapping sections even if there are no overlapping criteria, while if there isn’t any overlap that section will not exist in the Euler diagram.

The visualization of Venn and Euler diagrams are also similar yet different, with Euler diagrams having concentric circles while Venn diagrams have overlapping circles. Because of this structure, Euler diagrams are best suited for categories that have long hierarchies or overlap in the majority of their criteria.

While they have their differences, both Venn and Euler diagrams are important templates that help teams understand the comparison between different items and how to break down the nature of their relationships.

If you are wondering how these diagrams will operate in different scenarios or contexts, here are some examples of how Venn diagrams can be applied.

1. Triple Venn Diagram

A triple Venn diagram is pretty much a Venn diagram with another circle added, which creates four more intersections to place items. This template is practically identical in use to a traditional Venn diagram but allows you to incorporate an additional element to compare.

While the purpose of adding a triple Venn diagram is ultimately to increase the number of items that can be compared, it is also to point out that you can scale Venn diagrams to an infinite degree. While this isn’t super helpful when you reach a certain point, it goes to show how dynamic Venn diagrams are. Being able to scale your template is an important advantage of using a Venn diagram and shows how applicable they are to many different scenarios.

2. Scaled Venn Diagram

The scaled Venn diagram is also similar to the traditional Venn diagram but adds a layer of importance to the elements being compared. While traditional diagrams maintain a standard size for all of the elements being compared, scaled Venn diagrams have different-sized shapes based on the importance and influence of those elements.

This means that while comparing items you’ll also be able to weigh the importance of the various elements and use this information to aid in your decision making. This is a really important thing to do when mapping stakeholders or product concerns, because while there might be some overlap it’s also important to consider which item maintains priority.

The scaled Venn diagram is also known as the Area Proportional, where the shapes holding the items are proportional to their representation of the whole.

Triple vs Scaled

3. Business Applications

Business is one area where Venn diagrams can be extremely useful because in business there are always things to compare and consider when making decisions. This process can become much easier by using a simple comparison template.

Venn diagrams can be used to compare and contrast different products and prototypes, multiple different design iterations, or different approaches to a marketing plan. All of these are examples of how versatile Venn diagrams can be to help businesses compare items and find their path forward. Not only can they help businesses compare different elements, but they increase their ability to communicate effectively about their ideas and come to a reasonable middle ground.

Being able to use an online whiteboard, like IdeaScale Whiteboard , to map out comparisons is hugely important to the success of a business and helps create new solutions in any practice area.

4. Statistics

Statistics and probability are fields that have a close relation to Venn diagrams and are often using these templates to predict the likelihood of certain outcomes. This field is more associated with the mathematical implications that Venn diagrams have and their relation to prime numbers but still can gather important data from the use of these templates.

Venn diagrams can be used to find the relative commonalities, similarities, and differences between diverse data sets. This is an important application in the field of statistics and yet another reason why Venn diagrams have important applications in the professional world.

5. Educational Insights

Imagine a Venn diagram illustrating the similarities and differences between two historical events. This visual aid can help students grasp the nuanced connections, fostering a deeper understanding of historical contexts.

6. Literary Analysis

Use a Venn diagram to compare and contrast characters from different novels. By overlapping circles to represent character traits, readers can visualize the intersections and disparities, facilitating a more comprehensive analysis.

7. Scientific Classifications

Utilize a Venn diagram to categorize and compare different species based on shared and unique characteristics. This visual approach is particularly effective in biology classes, simplifying complex taxonomies.

8. Project Management

When managing projects with overlapping tasks, a Venn diagram can visually depict the dependencies and shared responsibilities between teams. This enhances project coordination and ensures a smooth workflow.

9. Technology Integration

Showcase the integration of technology tools in education with a Venn diagram. Highlight the common features and distinctions between various educational apps, aiding educators in selecting the most suitable tools for their classrooms.

These examples demonstrate the adaptability of Venn diagrams across different disciplines, making them a valuable asset in both educational and professional settings. Whether it’s for academic understanding, literary exploration, strategic planning, scientific analysis, project coordination, or technological integration, Venn diagrams offer a visually intuitive way to explore relationships and highlight key insights.”

Learn more: What is a Fishbone Diagram?

While Venn diagrams can be incredibly simple, that doesn’t stop them from being one of the most effective comparative templates that you can use. Whether you’re auditing your business or teaching a class, Venn diagrams are sure to help improve your comparison and communication skills.

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Marketing Strategy vs. Marketing Plan – Similarities and Differences

Clint sanchez.

  • April 5, 2020
  • Digital Marketing

marketing plan vs marketing strategy similarities differences

We cringe when we hear these two words used interchangeably, especially by marketing “experts” here in Louisiana.

A marketing plan and a marketing strategy are two separate elements of your business’s marketing.

Your marketing strategy is your approach to achieving your competitive advantage — the marketing plan is the activities that will help you achieve your marketing goals.

Simply put, a marketing strategy is the “what,” and a marketing plan is the “how.”

Both a marketing plan and a marketing strategy are essential for your business’s growth, and this article will explain what each is, how they are alike, how they differ, and how the two work to help you meet your long-term marketing objectives.

Related Reading:

  • 10 Free Marketing Tools You Can Use to Market Your Construction Company
  • Best Free Digital Marketing Tools 2020
  • 2020 Digital Marketing guide for NGOs and Nonprofits

What is a Marketing Strategy?

A marketing strategy is essentially a document that answers some of your company’s biggest questions:

  • What you’re offering
  • Who your target audience is
  • What your company stands for
  • Your brand’s guidelines
  • What industry or niche you serve
  • Who your main competitors are.

Of course, your marketing strategy can contain more or less information, but the purpose is to be a sort of compass and help you keep your company’s marketing focused on your marketing goals.

Your marketing strategy should be based on your overall business goals.

Suppose your business strategy is to grow your business revenue by 40%.  

Then your marketing strategy will explain how marketing will help you achieve those goals.

It’s a 50,000-foot point of view.

Your marketing strategy should NOT go into laser-focused marketing tactics.  That will come into play later on.

It should, however, attempt to answer the following questions:

8 Questions to Ask When Creating your Marketing Strategy

marketing plan vs marketing strategy

1. What business objectives does your marketing strategy need to support?

Believe it or not, this simple question tends to be overlooked.

Define your end game. 

If your business hasn’t defined what you’re trying to sell, and to whom then your marketing strategy has a 0.00% chance of being successful.

Your marketing should move your business to a different place than where it currently is, such as:

  • Gaining a larger market share
  • Serving more customers
  • Selling more products
  • Expanding your services
  • Increasing your market position

First, you want to clearly define your business objectives in measurable terms, for example:

  • Increase revenue from $1M per year to $2M per year.
  • Increase profit margin of 19%
  • Sell 300k units of a new product

2. What statistics and metrics will we use to determine success or failure?

Before you type the first word on your marketing strategy, ask yourself (or your team) how you are going to determine if your marketing efforts have been successful.

Make sure that you have a means in place to measure and report on that data.

For example, if you define success as the number of conversions (new customers) from an email marketing campaign, you’ll need to have a CRM in place to know which new customers came from your email blast.

Invest in quality measurement tools so that you can effectively implement your marketing strategies.

3. What should my marketing budget be?

We get this question all the time.  Marketers and business owners focus way too much on the perfect number and end up spending nothing at all.

Or, worse they spend based on a random figure, and no system is in place to have any meaningful impact.

The amount you should spend on your marketing is simply to spend what makes sense for your business. 

How do you figure that out?

  • Experts agree that 10-15% of your overall budget should be spent on planning and measurement tools.
  • Be sure to include the costs of using your company’s internal resources (such as staff) for things like content marketing, segmenting lists, and addressing customer feedback, and budget accordingly.
  • Simply figure out how much of your company’s profits you can invest in the business to support future growth.  Don’t go out of business funding your marketing efforts.

4. What marketing strategies and plans have you used in the past?

Before you look ahead, it would do you well to look behind. 

Look back at what you’ve already done to determine what’s worked in the past, and what hasn’t.

If you have access to performance data, now’s the perfect time to pull it out.

Learn from your mistakes, and try to duplicate your successes as best you can.

The more information you can analyze before you start making new decisions, the better informed you’ll be (and the smarter your decisions will be).

5. What’s your competitive landscape like?

semrush traffic analytics for google

When building a new marketing strategy, it’s not just important to know what works and doesn’t work for your company.  Take the time to analyze your competition as well.

Identify your competition, both locally and nationally (depending on your industry).  It’s important to know how those that provide the same products or services are representing themselves.

Not only that, but you’re probably competing against businesses—and other factors—that might not occur to you without doing a little research.

Better said, you’re competing against more than just your competitors.

You are also competing against businesses that may not offer the exact same thing as you, but those whose offerings can have an impact on yours.

Throw in the digital marketplace, and now you’re competing with other businesses that may have the same name as yours.

So now that you know who your competition is, you’ll need to audit their marketing in the same manner that you did your own.

Take a look at what they’re doing, and compare it to what you’ve done.  

or Semrush .

Now you can see what’s working for them, and what isn’t, just like you did for your own efforts.

6. What messages will work for your audience, and how will you position them?

Before you start banging out content, you need to establish who you’ll be talking to and how you should talk to them. 

Don’t take a shot in the dark, and don’t make assumptions.  Actually do the research to identify your audience and to determine what messages and positioning will be the best suited for them.

You can easily do this by examining data you should already be collecting from your website via analytics tools such as Google Search Console (Webmaster Tools) and Google Analytics .

If your company doesn’t have a website, check out our pay-per-month website program to help avoid resource-draining website development costs.

  • Who’s searching for you
  • Who’s visiting your website
  • What their behavior is on your website

Build customer personas based on that and any other market research you have access to or have done yourself.

Now that you have that information, it should be evident what your message should be, and who it should be said to.

Bear in mind, that it is critical that your content 

  • Matches your branding strategy
  • Matches your organization’s voice and persona
  • Is authentic to who your brand

7. Who can assist in implementation?

Take an inventory of those people inside and outside your organization who can assist with carrying out your plan. 

Allow these people to guide your strategic marketing plan. 

A strategy is of no use if you lack the financial or human capital to execute it.

Get creative . 

In addition to company staff, think about bringing in the expertise of industry leaders, key partners, influencers, vendors, clients, and interns. 

How can you use all of these individual contributions to support mutual goals?

42 percent of companies have a designated content strategist. Consider hiring one for your business.

The main reason that great ideas and strategies are unexecuted is that no one took the time to figure out who was going to do the work.

8. Who is going to be in charge?

While momentum is important in marketing, so is consistent execution.

Without a clear decision-making process prior to content creation, your ideas and work may get lost in unresponsiveness or opinions.

Assign one trustworthy person the responsibility of approving all content.

The more complex your process is the smaller your chances of having a strategic marketing effort.

Too many chefs spoil the stew.

What is a Marketing Plan?

Your marketing plan is based on your marketing strategy, and consists of the specifics and methods you will be using to achieve your goals:

  • What channels and tactics you’ll use
  • Which portions of your target market will you focus on
  • How will you be measuring success

As opposed to your marketing strategy, your marketing plan is more concerned with which tactics, campaigns, initiatives, and promotions you’ll run in a designated amount of time. 

When you create a marketing plan, bear in mind that typical marketing plans can range from three months to a year and should remain semi-flexible in the event that your marketing needs to shift priorities.

Marketing Strategy vs. Marketing Plan

marketing plan vs marketing strategy infographic blaksheep creative

To help you visualize all of this, we’ve created a graphic that explains some of the core differences between a marketing strategy and a marketing plan.

In our experience, your marketing strategy probably won’t change as much as your marketing plan. 

If it does, it’s almost impossible to gain any real traction or to effectively measure the impact of your marketing on the business. 

However, you’ll probably need to revisit your marketing strategy each year, whereas you’ll be executing against your marketing plan regularly.

Example: Content Marketing

Most marketers have some knowledge of content marketing, so we’ll it as an example. 

Like mentioned earlier, strategies address high-level issues whereas plans show how you’re going to execute.

Content Marketing Strategy

Your content marketing strategy plan should include some basic questions:

  • Who will we be writing to?
  • How will our content marketing support our business goals?
  • How much money can we spend on content creation?
  • Who are our competitors?
  • What tone do we want our content to take?

Your content marketing strategy isn’t intended to point out every single topic you’re going to write about or even what your specific KPIs for the upcoming year are going to be. 

Instead, it’s supposed to give you some context as to why you’re investing in content marketing , who you’re targeting, what mediums (website, social media, print ads)  you’re going to use, and more.

Content Marketing Plan

Now that you have your content marketing strategy set, your content marketing plan will explain how you’re going to attack the problem.

Here is where you will document your goals and KPIs, the resources you intend on creating, when you will be creating them, who will be creating them, how you’ll be promoting each piece of content, and more.

At the least, you should set up an editorial calendar to make everyone aware of what topics your content is addressing, where it’s being published, when it’s being published, what channels it’ll be promoted through, and what goals it should be aiming to hit.

We realize that this may seem like a lot cause it is.  The important thing to remember is that effective marketing requires planning, execution, and analytics.

As always, if you need help creating an effective marketing plan, analyzing your marketing strategy, or anything else in our wheelhouse, feel free to contact us , and we’ll give you a free consultation.

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compare and differentiate strategic planning and marketing planning using the venn diagram

What is a Venn Diagram

What are your venn diagram needs.

Creating Venn diagrams is super simple and easy with our Venn diagram maker. Learn the essentials of Venn diagrams, along with their long history, versatile purposes and uses, examples and symbols, and steps to draw them. 

7 minute read

Want to make a Venn diagram of your own? Try Lucidchart. It's quick, easy, and completely free.

What is a Venn diagram?

A Venn diagram uses overlapping circles or other shapes to illustrate the logical relationships between two or more sets of items. Often, they serve to graphically organize things, highlighting how the items are similar and different.

Venn diagrams, also called Set diagrams or Logic diagrams, are widely used in mathematics, statistics, logic, teaching, linguistics, computer science and business. Many people first encounter them in school as they study math or logic, since Venn diagrams became part of “new math” curricula in the 1960s. These may be simple diagrams involving two or three sets of a few elements, or they may become quite sophisticated, including 3D presentations, as they progress to six or seven sets and beyond. They are used to think through and depict how items relate to each within a particular “universe” or segment. Venn diagrams allow users to visualize data in clear, powerful ways, and therefore are commonly used in presentations and reports. They are closely related to Euler diagrams, which differ by omitting sets if no items exist in them. Venn diagrams show relationships even if a set is empty.

Venn diagram history

Venn diagrams are named after British logician John Venn. He wrote about them in an 1880 paper entitled “On the Diagrammatic and Mechanical Representation of Propositions and Reasonings” in the Philosophical Magazine and Journal of Science.

But the roots of this type of diagram go back much further, at least 600 years. In the 1200s, philosopher and logician Ramon Llull (sometimes spelled Lull) of Majorca used a similar type of diagram, wrote author M.E. Baron in a 1969 article tracing their history. She also credited German mathematician and philosopher Gottfried Wilhelm von Leibnitz with drawing similar diagrams in the late 1600s.

In the 1700s, Swiss mathematician Leonard Euler (pronounced Oy-ler) invented what came to be known as the Euler Diagram, the most direct forerunner of the Venn Diagram. In fact, John Venn referred to his own diagrams as Eulerian Circles, not Venn Diagrams. The term Venn Diagrams was first published by American philosopher Clarence Irving (C.I.) Lewis in his 1918 book, A Survey of Symbolic Logic.

Venn Diagrams continued to evolve over the past 60 years with advances by experts David W. Henderson, Peter Hamburger, Jerrold Griggs, Charles E. “Chip” Killian and Carla D. Savage.  Their work concerned symmetric Venn Diagrams and their relationship to prime numbers, or numbers indivisible by other numbers except 1 and the number itself. One such symmetric diagram, based on prime number 7, is widely known in math circles as Victoria.

Other notable names in the development of Venn Diagrams are A.W.F. Edwards, Branko  Grunbaum and Henry John Stephen Smith. Among other things, they changed the shapes in the diagrams to allow simpler depiction of Venn Diagrams at increasing numbers of sets.

Example Venn diagram

Say our universe is pets, and we want to compare which type of pet our family might agree on.

Set A contains my preferences: dog, bird, hamster.

Set B contains Family Member B’s preferences: dog, cat, fish.

Set C contains Family Member C’s preferences: dog, cat, turtle, snake.

The overlap, or intersection, of the three sets contains only dog. Looks like we’re getting a dog.

Of course, Venn diagrams can get a lot more involved than that, as they are used extensively in various fields.

Venn diagram purpose and benefits

  • To visually organize information to see the relationship between sets of items, such as commonalities and differences. Students and professionals can use them to think through the logic behind a concept and to depict the relationships for visual communication. This purpose can range from elementary to highly advanced.
  • To compare two or more choices and clearly see what they have in common versus what might distinguish them. This might be done for selecting an important product or service to buy.
  • To solve complex mathematical problems. Assuming you’re a mathematician, of course.
  • To compare data sets, find correlations and predict probabilities of certain occurrences.
  • To reason through the logic behind statements or equations, such as the Boolean logic behind a word search involving “or” and “and” statements and how they’re grouped.

Venn diagram use cases

  • Math: Venn diagrams are commonly used in school to teach basic math concepts such as sets, unions and intersections. They’re also used in advanced mathematics to solve complex problems and have been written about extensively in scholarly journals. Set theory is an entire branch of mathematics.
  • Statistics and probability: Statistics experts use Venn diagrams to predict the likelihood of certain occurrences. This ties in with the field of predictive analytics. Different data sets can be compared to find degrees of commonality and differences.
  • Logic: Venn diagrams are used to determine the validity of particular arguments and conclusions. In deductive reasoning, if the premises are true and the argument form is correct, then the conclusion must be true. For example, if all dogs are animals, and our pet Mojo is a dog, then Mojo has to be an animal. If we assign variables, then let’s say dogs are C, animals are A, and Mojo is B. In argument form, we say: All C are A. B is C. Therefore B is A. A related diagram in logic is called a Truth Table, which places the variables into columns to determine what is logically valid. Another related diagram is called the Randolph diagram, or R-Diagram, after mathematician John F. Randolph. It uses lines to define sets.
  • Linguistics: Venn diagrams have been used to study the commonalities and differences among languages.
  • Teaching reading comprehension: Teachers can use Venn diagrams to improve their students’ reading comprehension. Students can draw diagrams to compare and contrast ideas they are reading about.
  • Computer science: Programmers can use Venn diagrams to visualize computer languages and hierarchies.
  • Business: Venn diagrams can be used to compare and contrast products, services, processes or pretty much anything that can depicted in sets. And they’re an effective communication tool to illustrate that comparison.

Venn diagram glossary

On a lighter note: venn diagrams hit the small screen.

Not many diagrams have crossed over into popular culture, but the esteemed Venn diagram has.

  • Drama: In the CBS TV show NUMB3RS, produced from 2005 to 2010, math genius Charles Eppes uses a Venn diagram to determine which suspects match a description and have a history of violence.
  • Comedy: On NBC’s Late Night with Seth Meyers, the comedian has a recurring routine called “Venn Diagrams,” comparing two seemingly unrelated items to find their funny commonality (he hopes.)

Steps to draw and use a basic Venn diagram

  • Determine your goal. What are you comparing, and why? This will help you to define your sets.
  • Brainstorm and list the items in your sets, either on paper or with a platform like Lucidchart.
  • Now, use your diagram to compare and contrast the sets. You may see things in new ways and be able to make observations, choices, arguments or decisions.

Additional Resources

  • Venn Diagram Templates
  • How to Create a Venn Diagram in PowerPoint

Lucidchart lets you create professional-looking Venn diagrams with easy-to-use software. With all editing taking place in the cloud, it’s easy to collaborate with colleagues on a Venn diagram. You can even import images and share your diagram digitally or via print.

What is a Venn diagram?

Venn Diagram in Miro

Table of Contents

Venn diagrams: a tutorial.

A Venn diagram is a type of graphic chart made of overlapping circles. Each circle represents a different concept or group of data, with the overlapping sections representing their shared qualities. This makes Venn diagrams an excellent tool for data comparison and measuring probability. By plotting out your thoughts on a Venn diagram, you can begin to see relationships and patterns emerge, which can then help you make decisions or better understand complex concepts. Creating a Venn diagram makes it easy to visualize how concepts overlap, compare, and contrast.

Types of Venn diagrams

A Venn diagram can be represented in a variety of ways. You may be most familiar with the 3 circle Venn diagram, but there are several types of Venn diagrams, each of which is used for a different reason.

2 circle Venn diagram

compare and differentiate strategic planning and marketing planning using the venn diagram

Two circles overlapping at the center.

Create a 2 circle Venn diagram with Miro's template.

3 circle Venn diagram

compare and differentiate strategic planning and marketing planning using the venn diagram

Three circles in a triad form, overlapping at the center form the 3 circle Venn diagram .

4 circle Venn diagram

compare and differentiate strategic planning and marketing planning using the venn diagram

Four circles in diamond form, overlapping at the center.

Create a 4-circle Venn diagram with Miro's template.

5 circle Venn diagram

compare and differentiate strategic planning and marketing planning using the venn diagram

Five circles overlapping at the center.

Miro has a fully customizable 5-circle Venn diagram template.

Edwards-Venn diagram

A fourth version of the Venn diagram was developed in the mid-1800s by a British biologist named Anthony Edwards. He called it the Edwards-Venn diagram, or EV diagram. Instead of having 2-4 circles, the EV diagram is inspired by the layout of a tennis ball. This Venn diagram type helps identify and classify overlapping characteristics between a much larger number of groups or concepts. While the traditional 2, 3, and 4 circle Venn diagrams are best used for smaller groups of datasets, the Edwards-Venn diagram is best suited for analyzing a subject from a wider variety of perspectives. However, all Venn diagram types serve the purpose of comparison and contrast.

Advantages of using a Venn diagram

The beauty of a Venn diagram lies in its simplicity but versatility. From marketing to mathematics, the Venn diagram is an asset. Here are some of the many benefits of using Venn diagrams with your team.

Useful for brainstorming

If your team is looking for a quick way to brainstorm ideas and get to the root of an issue, a Venn diagram may be just what you need. By using the circles to represent potential ideas, the overlapping areas can help highlight what works best and is most conducive to your strategy.

See the relationships between two items

When two circles inside a Venn diagram overlap, the overlapping portion shows the connection point between the two different groups. This can be extremely useful in identifying the relationships between various subjects and gaining a deeper understanding of shared benefits.

Compare choices

A compare and contrast Venn diagram is one of the most popular ones you will find in the workplace. This unique visual chart allows teams to draw tangible comparisons between vastly different datasets, allowing for more informed decision-making.

compare and differentiate strategic planning and marketing planning using the venn diagram

Visually organize and represent information

A visual chart is a great way to encourage an intuitive understanding of a diverse group of people. During a meeting or a conference, using a Venn diagram can help speakers communicate and organize their ideas in a naturally graspable way.

Solve difficult math problems

The Venn diagram has been used for thousands of years in mathematics and science. When applied through a mathematical lens, Venn diagrams can visually compare numbers and reach probability conclusions instead of simply comparing concepts or ideas.

When to use a Venn diagram

Many professions and environments rely on the Venn diagram as a source of clarity for measuring and dissecting relationships between items. You can find Venn diagrams in a wide variety of industries, including:

Part of what makes the Venn diagram so popular in so many different industries is the fact that it can be simplified to such a point that even a child can easily interpret its symbols. Education is a great place to use the Venn diagram because it introduces students to the concepts of probability and interconnectedness between multiple objects. It also helps lay a foundation for learning mathematics in high school.

Decision-making

Venn diagrams are a great tool for helping you make decisions. When you need to consider several factors that overlap to make a decision, creating a Venn diagram can help you analyze the different options available and which one will give you the best outcome. For example, you may have come up with a list of business ideas and are trying to decide which idea is the best to pursue. A Venn diagram can help you decide on the best option by identifying which hits that ‘sweet spot’ of being profitable, has demand, and is something you are passionate about.

Mathematics

In the field of mathematics, a Venn diagram can illustrate logical connections between numbers and determine probability outcomes. For example, a mathematician may use a Venn diagram to show the correlation between different groups of subsets or numbers. Because a Venn diagram can help you measure, compare, and connect data sets, it makes sense that this unique chart can be used to analyze numerical values.

When estimating or predicting a particular event’s outcome, you need tools to help visualize all the potentialities. For this reason, the Venn diagram has been instrumental in the field of statistics and probability.

There is something very straightforward and logical about the structure of a Venn diagram. Separating different concepts or items into equally positioned circles makes it easier to visualize and understand the relationships between a diverse group of ideas.

Computer science

In modern computer science, Venn diagrams are often used to help visualize relations between sets of data. They are helpful in understanding how different classes, sets, and objects relate to each other within any given computing system, and can be used to express similar elements between different languages of code to create more efficient systems.

Linguistics

Global linguistics is full of interconnected pathways and hierarchies. The Venn diagram is extremely useful to those studying the complex relationships between different languages and dialects. This diagram allows people to visualize these connections with ease.

You might most commonly find the Venn diagram in the corporate world. Business operations call for constant comparisons of data. This helps professionals set up business strategies and campaigns for future success.

compare and differentiate strategic planning and marketing planning using the venn diagram

Glossary and symbols of the Venn diagram

There are many symbols of a Venn diagram worth learning if you want to use this type of diagram to its full potential. The most notable ones include:

A collection of objects or elements. Each set is represented by a closed shape, most commonly a circle.

Where two shapes (representing individual ideas) interconnect. This is represented by the union symbol ∪. For example, A ∪ B denotes all elements that are in set A, or in B, or in both.

Intersection (∩)

The center point of a Venn diagram, where all the shapes intersect. The intersection is represented by the symbol ∩. In this example, A ∩ B includes all elements that are in both A and B.

Universal set (U)

A set that includes all the relevant information from your Venn diagram. The universal set is denoted as U or sometimes ξ.

Empty set (Ø)

A set that does not contain any elements.

Complement (')

A set comprised of the elements present in a universal set. The complement of a set A (denoted by A' or sometimes Ac) includes all elements that are not in A, but are in the universal set.

How to make a Venn diagram

There are lots of different ways to go about creating a Venn diagram. But the right template can help format and structure any compare or contrast analysis. Here’s how to draw a Venn diagram using Miro’s intuitive Venn Diagram Template :

compare and differentiate strategic planning and marketing planning using the venn diagram

First, write down all the objects, elements, and ideas you want to depict. This collection of data is your universal set.

Next, decide which type of Venn diagram is most suitable. For example, to find the similarities and differences between three sets, you should use a 3 circle Venn diagram.

Draw a circle for each data set. The template already has three circles for each set, and you can add and delete circles as necessary.

Add each element to your diagram depending on whether they have similarities or differences with the other sets. Elements with no similarities will go in one of the circles for each set: A, B, or C. If there is a similarity between an item from A and B, this item will go into the overlapping section of these two circles. This will be included in the union of your Venn diagram.

If the characteristic of an element is shared with A, B, and C, this element will go into the center of the diagram, where all the circles intersect. This will be the intersection of your diagram.

Once all your sets are added to your diagram, it’s time to personalize your Venn diagram with colors, labels, and notes. Share your Venn diagram with your team, and tag your team members to ask for their input and feedback.

Venn diagrams and set theory

We discussed earlier how Venn diagrams are useful in several fields. Let’s look at how Venn diagrams are used in a branch of mathematics called set theory. Set theory is a branch of mathematics that tackles an object’s shared and individual properties. The 2, 3, and 4 circle Venn diagram is used in this segment of mathematics. The process behind set theory marries well with the structure of a Venn diagram because they both deal with comparing multiple objects (or numbers) at once. For example, a Venn diagram could help illustrate a set theory equation to determine which properties are shared by a group of numbers. A “set” is a collection of objects, each object representing a single element of the whole. Let’s say we have a 2 circle Venn diagram. One circle is red, and the other is blue. These are our two objects. The center point where these two objects overlap is called the intersection. The space within that intersection now represents the quality that red and blue share: purple. This process can be applied to any objects and their relative overlapping similarities. From colors to numbers to sports, any objects can be compared through the lens of set theory and a Venn diagram.

Calculating probability with a Venn diagram

Another area where Venn diagrams are used extensively is to calculate probability. Venn diagram probability is a product of mathematics used to predict the outcome of a scenario. For example, you might use a 2 circle Venn diagram to calculate the probability of an event occurring. They would do this by inserting numbers rather than concepts or ideas into the circles. Let's use the example of a pack of playing cards to show how Venn diagrams are used to calculate the probability of different events. Excluding jokers, a pack of cards has 52 cards. The pack consists of four suits, with 13 types of cards in each suit. You want to know the probability of picking a Queen or a Heart. The rectangle represents all of the outcomes, which is all 52 cards. Since there are four Queens in a pack, the possibility of picking a Queen is 4/52. The probability of picking a Heart is 13/52. But one of those cards is both — a Queen and a Heart (the Queen of Hearts). The circles overlap to show that this card is in both sets. Visualizing the outcomes with a Venn diagram ensures you don’t double-count the Queen of Hearts. Based on the Venn diagram, you would use the following calculation: 4+13-1 = 16. The probability of picking a Queen or a Heart is 16/52. A calculation like this could help people determine the probability of a wide variety of events or situations, such as the success of a project, how many customers to expect, or the outcome of a marketing campaign. Probability forms a big part of how businesses track and measure success.

compare and differentiate strategic planning and marketing planning using the venn diagram

Using Venn diagrams to compare and contrast

One of the most popular uses for the Venn diagram is as a tool for brainstorming ideas by comparing and contrasting them against one another. A compare and contrast Venn diagram is easy to understand visually and can be broken down into simple structures for easy interpretation. For example, if you were writing a compare and contrast essay, you might use a Venn diagram to help elucidate the main differences between your chosen topics. To write a compelling compare and contrast essay, you need a profound understanding of your subjects' innate characteristics and differences. Start by drawing 2-4 overlapping circles representing your main topics or subjects of comparison. Then, fill up the overlapping spaces with characteristics that the intersecting subjects share. The outer, non-connected spaces can be filled with characteristics that are unique to the subject, thus representing the differences. The central intersection will represent what ties all of your subjects together. Before writing a compare and contrast essay, you might consider using a Venn diagram to help draw a clearer picture of how your topics are related to each other — and how they are not.

Venn diagrams vs Euler diagrams

Another type of diagram that looks very similar to a Venn diagram is the Euler diagram . Both Euler and Venn diagrams are based on set theory and consist of circles showing the relationships between a set. However, they are not the same. A Venn diagram shows all the possible relationships between different sets. This includes relationships that are hypothetically possible. Venn diagrams include all possible combinations of intersections between the elements. An Euler diagram only shows the intersection combinations or relationships that already exist. It includes circles that either include, exclude, or intersect.

compare and differentiate strategic planning and marketing planning using the venn diagram

A key tip for identifying whether a diagram is a Venn or Euler diagram is to see if there is an empty intersection. With Venn diagrams, you must depict each intersection between sets, even if the intersection is empty. But an Euler diagram only depicts intersections that are not empty. Euler diagrams tend to be more complicated than Venn diagrams. They are used to explain complex hierarchies, depict overlapping definitions, and determine whether a logical argument is valid.

Venn diagram example

Here’s a practical example of how to use a Venn diagram in the world of business. Let’s say you need to compare the roles or responsibilities of different teams within an organization for a more streamlined workflow. You want to depict the relationship between marketing teams and web development teams. Marketing teams handle data analytics, legal administration, consumer research, social media representation, and brand management. Web development teams handle UX and UI design, brand management, quality testing, SEO analysis, project management, consumer research, and data analytics. In this Venn diagram example, the intersection would include all the overlapping areas of responsibility — data analytics, brand management, and consumer research. These would be areas where marketing and web development teams can collaborate. Venn diagram examples can illustrate the relationships and differences between any objects or elements. In the workplace, a Venn diagram provides profound insights for brainstorming, strategy development, and comparing or contrasting arguments.

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Venn Diagrams to Plan Essays and More

  • M.Ed., Education Administration, University of Georgia
  • B.A., History, Armstrong State University

A Venn diagram is a great tool for brainstorming and creating a comparison between two or more objects, events, or people. You can use this as a first step to creating an outline for a  compare and contrast essay .

Simply draw two (or three) large circles and give each circle a title, reflecting each object, trait, or person you are comparing.

Inside the intersection of the two circles (overlapping area), write all the traits that the objects have in common. You will refer to these traits when you  compare  similar characteristics.

In the areas outside the overlapping section, you will write all of the traits that are specific to that particular object or person.

Creating an Outline for Your Essay Using a Venn Diagram

From the Venn diagram above, you can create an easy outline for your paper. Here is the beginning of an essay outline:

1. Both dogs and cats make great pets.

  • Both animals can be very entertaining
  • Each is loving in its own way
  • Each can live inside or outside the house

2. Both have drawbacks, as well.

  • They can damage property
  • Both can be costly
  • Both require time and attention

3. Cats can be easier to care for.

  • Leaving for a day

4. Dogs can be better companions.

  • Going to the park
  • Going for walks
  • Will enjoy my company

As you can see, outlining is much easier when you have a visual aid to help you with the brainstorming process.

More Uses for Venn Diagrams

Besides its usefulness for planning essays, Venn Diagrams can be used for thinking through many other problems both at school and at home. For example:

  • Planning a Budget: Create three circles for What I Want, What I Need, and What I Can Afford.
  • Setting Priorities: Create circles for different types of priorities: School, Chores, Friends, TV, along with a circle for What I Have Time for This Week.
  • Choosing Activities: Create circles for different types of activities: What I'm Committed to, What I'd Like to Try, and What I Have Time for Each Week.
  • Comparing People's Qualities: Create circles for the different qualities you're comparing (ethical, friendly, good looking, wealthy, etc.), and then add names to each circle. Which overlap?
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Venn Diagram – A Practical Tutorial

Venn diagram was named after John Venn, an English philosopher and logician, in 1880A Venn diagram is a visual tool used to compare and contrast two or more objects, events, people, or concepts. It is often used in math classes to organize differences and similarities. In mathematics, it is also called Primary Diagram, Logic Diagram or Set Diagram. This simple graphic makes it easy for anyone to understand how two things are both different and alike at the same time. Here is the use cases of Venn diagrams:

  • Venn diagrams are effective in displaying the similarities or the differences between multiple data set (usually two to four).
  • Venn diagrams also describe the result of unifying several data group.
  • Venn Diagrams can also describe the overlapping responsibilities of two organization / team

Suppose we have the three sets and the Venn diagram can be drawn as follows:

  • A = {2, 3, 5}

compare and differentiate strategic planning and marketing planning using the venn diagram

Venn Diagram Examples

Listed below are some Venn diagram examples. As you can see, Venn diagram consists of overlapped oval shapes, showing content of data set as well as the data that co-exists in multiple groups.

Note that instead of ovals, Venn Diagrams can also be formed with triangles, rectangles, squares, and other shapes, although uncommon.

Venn Diagram Example – Share and Disparate Characteristics of 2 Things

compare and differentiate strategic planning and marketing planning using the venn diagram

Venn Diagram Example – Team Formation

compare and differentiate strategic planning and marketing planning using the venn diagram

Venn Diagram Example – The Commonalities of UML and SysML Diagram Types

compare and differentiate strategic planning and marketing planning using the venn diagram

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10 Types of Venn Diagrams That Help You Visualize Relationships

Creating a Venn diagram is a great way to compare and contrast multiple subjects. Here, we'll go over several different layouts you can use.

Venn diagrams provide a creative way to show the relationship between multiple theories, concepts, or subjects.

Here, we'll go over the many Venn diagram variants you can make using Visme. But since the layout for Venn diagrams is the same no matter what tool you use to create them, you can make the same type of diagrams using other software and sites as well.

1. Two-Circle Venn Diagram

A visual illustration of 2-circle Venn diagram in Visme

This is the simplest type of Venn diagram, as it shows the relationship between two subjects or elements. This diagram features two overlapping circles. The common characteristics belong in the middle, while the other traits go on either side of the respective circles.

Since it’s super easy to make, you've probably seen the two-circle Venn diagram used in the classroom or during a business presentation. LIke we mentioned earlier, we created this Venn diagram (and all the others on this list) using the templates from Visme .

If you want to make a professional-looking two-set Venn diagram, use colors and fonts that mesh well together. You might want to try adding a contrasting background to the circles to create an interesting visual. You can also try using the black or white border of the circles to define the overlapped section.

2. Three-Set Venn Diagram

An image showing 3 set Venn diagram

Another common type of Venn diagram is the three-set Venn diagram. This diagram helps you visualize the relationship between three different subjects or elements. Usually, this diagram contains three overlapping circles that are part of a set or theory.

When creating a three-set Venn diagram, you need to focus on two different aspects. Make sure to display how each element compares to its counterparts, and also include how all the elements come together and overlap.

By keeping all these points in mind, you can create an easy-to-understand three-set Venn diagram.

3. Four-Circle Venn Diagram

An illustration of the four-circle Venn diagram on Visme

This Venn diagram is a bit complex. Hence, it's used less often than the previous two types. It contains four circles or ovals that overlap with each other. With this diagram, you can represent the commonalities and differences between four subjects.

Each circle in this diagram contains different aspects of a subject. In the intersections, you can show the similarities and differences between the sections. Since there are many overlapped areas here, make sure you leave sufficient space to include all your information.

4. Raindrop Venn Diagram

A visual showing raindrop Venn diagram

If you're tired of using the common two-set diagrams, you can add a touch of creativity by using the raindrop Venn diagram. It consists of raindrop-like shapes that overlap at each circular end.

Its nature-inspired look makes it suitable for presentations on topics such as the environment, climate, energy, sustainability, etc.

This diagram is only different from the two-set diagram in terms of style. So, you can always use it as a substitute for a two-circle diagram. Any information you would include in a two-circle diagram will fit in the raindrop diagram as well.

5. Picture-Based Venn Diagram

An image showing the idea of picture-based Venn diagram

Picture-based Venn diagrams are very unique. Instead of using text, you fill the diagram with images. These are best used for young children, however, you can still use them if you want to keep your audience engaged.

This diagram includes very little text and uses images to convey the relationship between multiple subjects. You can include photos that represent what you're comparing in the outer circles, and add a picture in the overlapped section that sums up their similarities.

6. Olympic Rings Venn Diagram

An illustration of Olympics type Venn diagram

As the name suggests, this Venn diagram looks like the Olympic rings. You can use this diagram to show the relationship between any topics. However, it looks best when used for sports-related topics.

Related: The Best Flowchart Templates for Microsoft Office

Each circle of this diagram represents a different subject. The overlapped sections show how each subject relates. It's a fun twist on the typical Venn diagram, and lets you compare and contrast four different subjects.

7. Arcing Venn Diagram

A visual showing arcing Venn diagram on Visme

When you need to visualize how different parameters interact with each other, an arcing Venn diagram is the best choice.

Let's say you want to visualize the level of importance between different elements in a digital marketing project. In this case, try drawing an arcing Venn diagram displaying each element in the project, including elements like a website, search engine optimization, pay-per-click advertisement, social media, and email.

All of the above units share certain services to some extent, like keyword research, sharable content, authorship, social links, upselling, user services, news, and updates. Now, plot these services in your Venn diagram according to your project data and you'll get a presentable graphic. For a more accurate representation, you'll probably need a few months' worth of data from these departments.

8. Multi-Layered Venn Diagram

An illustration of multi-layered Venn diagram

If you want to show the relationship between subjects in a different light, the multi-layered Venn diagram is the right choice. This diagram consists of a large outer circle that contains smaller circles inside it.

The nested circles show how each one of them changes the original entity. Meanwhile, the outer circle represents a single subject. Some circles can be standalone entities, and some can be contained within others. You can add as many layers as you want, as there aren't any constraints.

9. Diamond/Rectangle Venn Diagram

An image showing diamond Venn diagram

The diamond/rectangle Venn diagram is a variation of the four-circle diagram. However, in place of circles, you use diamonds or rectangles. Besides adding an interesting look to the design, it presents the information in an easy-to-follow manner.

Related: The Best Google Docs Add-Ons for Creating Diagrams

Keep in mind that this diagram can also be relatively complex. Not only are there multiple connections between each diamond, but you also need to use blended colors in the overlapped sections to make it easier to read.

10. Star Venn Diagram

A visual display of star Venn diagram

Whenever you need to show something really complex through a Venn diagram, you risk losing your audience's attention. But the star Venn diagram can be a lifesaver in such situations. In addition to its ability to explain a complicated subject or relationship, it can also retain the interest of the audience.

The star Venn diagram contains five different oval shapes. They are positioned in a way so that they overlap each other. The star diagram helps you display the interaction between five different subjects, resulting in multiple unique options.

Though this diagram tends to be complex, you can make it easily understandable with some effort. Use blended colors for the overlapping areas. You can also add labels to make the intersections easier to track.

Represent Data Relationships With Venn Diagrams

Whether you work in the field of logic, mathematics, businesses, teaching, statistics, or computer science, Venn diagrams can help you visualize the logical relationship between different elements.

Choose from any of the Venn diagram variants, and help your audience understand complex relationships easily. While we used Visme in this article, any advanced flowchart software should work for creating Venn diagrams.

Venn Diagram: Make Efficient Connections between Things

compare and differentiate strategic planning and marketing planning using the venn diagram

A Venn diagram provides a clear way to express the relationships between entities, and particularly where two or more things have overlapping attributes. Venn diagrams simply make data visualization easier, which is why they are commonly used in presentations and reports.

If you need to communicate the relationship between two sets of objects, a Venn diagram is a powerful and efficient way to do so.

What Is a Venn Diagram?

At the most fundamental level, a Venn diagram is a pictorial exhibition of all the possible real relations between a collection of varying sets of items. It is made up of several overlapping circles (or sometimes ovals) with each representing a single set or item.

Put more simply, a Venn diagram can be used to show what attributes two sets of objects have, and how they differ. For instance, a simple comparison of the sets of “whales” and “fish” might be drawn like this:

Venn Diagram example with whales and fish | Klaxoon

A complex comparison of different creatures uses more circles to represent various attributes:

Venn Diagram, a comparison of different creatures | Klaxoon

What purposes does a Venn diagram serve?

A Venn diagram serves a fairly straightforward purpose. Like many other types of diagram and illustration, the aim of a Venn diagram is to make information visualization clear and efficient. 

Venn diagrams are particularly useful, though, when you need to quickly express how two sets of things relate to each other – the similarities and differences between corporate teams, for instance, or project responsibilities.

When is it crucial to build a Venn diagram for business purposes?

Venn diagrams form part of a set of diagrams and illustrations that are very useful in business,  projects, and the concept of visual management. They can be used alongside maps of processes as flowcharts to quickly communicate how teams, computer systems, or tasks within a larger project overlap.

In addition, Venn diagrams also have a major advantage over more “complex” chart forms. Since many people are familiar with Venn diagrams from their school days, even non-technical audiences are typically able to read Venn diagrams easily.

A Venn diagram is an illustration that uses circles to show the relationship between two or more groups.  Venn diagrams are commonly used in the fields of statistics, probability, mathematics, linguistics, logic, and computer science, and are also invaluable for project management as well.

Brief History of Venn Diagrams 

Venn diagrams were invented way back in 1880, and are named after their inventor, British mathematician and logician John Venn. That year, he published a paper in the Philosophical Magazine and Journal of Science with the title “On the Diagrammatic and Mechanical Representation of Propositions and Reasonings”.

However, the roots of Venn’s diagram go much further back than this. Some have claimed that the first use of the diagrams was in the 1200s, by philosopher and logician Ramon Llull of Majorca. German mathematician Leibnitz also used similar diagrams, as did Swiss mathematician and polymath Leonard Euler. Euler’s diagrams continue to be used, in fact, and even John Venn referred to his own diagrams as Eulerian Circles.

Since the 1880s, Venn diagrams have continued to be used and developed in many fields of pure and applied mathematics.

Use Cases For Venn Diagrams

Venn diagrams have a wide range of use cases, across many different fields. Some of these include:

  • In mathematics, Venn diagrams are used to teach basic math concepts such as sets, intersections, and unions. They are also used by research mathematicians to solve complex problems in set theory (and other branches of mathematics). 
  • In statistics and probability, Venn diagrams are used to express the relationships between two or more data sets in an easily understood way.
  • In logic, Venn diagrams can be used to work through the implications of a particular assertion. It can also check the validity of particular arguments and conclusions that stem from that assertion as well. 
  • In linguistics, Venn diagrams are used to show how and where different languages overlap, which can reveal information about when and where they diverged.
  • The same technique is also used for computer languages, both as a teaching aid and in order that programmers can work out the best language to use to approach a particular task.

What Problems do Venn Diagrams Solve?

All this said, the most common use of Venn diagrams is in business. In business contexts, Venn diagrams can be used to compare and contrast products, services, processes or anything that can be depicted in sets. 

Not only can this help you to think through a problem, but the Venn diagram itself is also an effective communication tool to illustrate the comparison you are making.

In business, Venn diagrams are particular useful at solving two sets of problems:

  • First, these diagrams can provide an easy-to-read reference for decision makers to check the validity of their conclusions. In a large project with many moving parts, it can be easy to get lost in the details, and Venn diagrams provide project managers with an easy way to express the relationships between various parts of a project.
  • Secondly, Venn diagrams are very effective in presentations, reports, and for anytime you need to communicate the relationship between two sets quickly and easily. Most people find them much easier to read than SIPOC diagrams , for instance, and so Venn diagrams are particularly useful when talking to non-technical audiences.

Venn Diagrams for Project Management 

Venn diagrams have several uses when it comes to managing or planning projects. As discussed, the primary purpose of a Venn diagram is to show the relationship between two or more sets.

In the case of managing projects , a Venn diagram can therefore be used to compare the different aspects of your project, including:

  • Each project you run will need to stay in compliance with a pre-specified budget, allotted time, and overall scope. A Venn diagram can be used to show the relationship between all three. Each circle in your diagram could increase or decrease with an increase or decrease in the budget or time, for instance. 
  • Taking things a step further, your Venn diagram could be used to break down your project’s budget (such as into material procurement costs, labor costs, or operating costs) while showing the relationship between all three. 
  • Your Venn diagram could also be used to display the relationship between the roles of your project team members. Specifically, you can have different circles representing different tasks that comprise the project, with the names of the team members who are assigned the different tasks under each respective circle(s). Team members working on more than one task would share circles, providing a quick visual representation of which team members will be working directly together. 

Business Applications for Venn Diagrams 

Venn diagrams have many applications in business as well. They can be used any time that the relationships between things can be seen in terms of sets. And, as mathematicians will tell you, that’s essentially everything.

More specifically, Venn diagrams are typically used in a number of key applications in business:

  • To depict the various, overlapping audiences that your brand is targeting, and how they relate to each other. By mapping audiences onto a Venn diagram, you may find that your audiences have more in common that you assumed.
  • Similarly, Venn diagrams can be used to compare products – either comparisons between your own products, or between your products and those of your competitors. Doing this can help you see how effectively you are differentiating your offer.
  • You can also use Venn diagrams to compare the attributes, strategy, and other features of your company to those of your competitors. This can help you gain a commercial edge, or help you to explain a new business strategy to executives and employees alike.

What Are Your Goals with Your Venn Diagram?

In order to start designing your Venn diagram, you need to first define what your goals are in creating it. Some datasets and ideas work very well with Venn diagrams, and others don’t. A good rule of thumb here is that if you are using the phrase “in comparison to” a lot, you probably have a set of data that can work well as a Venn diagram.

Second, and as we’ve noted above, there are two main goals for any Venn diagram. Some are made to act as a quick reference guide for decision makers, and can be quite complex. Others are made to quickly communicate complex ideas to staff who may not be familiar with all of the complexities of your project, role, or proposal.

Because of this, you will need to think carefully about the goals of your diagram before moving on to the next step of your diagram.

Brainstorming Your Venn Diagram 

The next step before you can start using a Venn diagram maker is to brainstorm some ideas for how your diagram will look, and perform the initial data analysis that it will be based on.

With regard to brainstorming, remember that a Venn diagram can be very simple, or very complex. Simple Venn diagrams – those with just two circles, and perhaps three labels – can be effective at making a particular point, but are unlikely to be particularly useful tools in themselves. 

However, it can be complex to build diagrams with more than four or five circles: if you find yourself in this position, it’s probably time to break your diagram into a set of illustrations, or re-think your approach.

Second, you may need to perform some data analysis. In general, Venn diagrams do not contain huge amounts of numeric data. However, if you want to make a diagram that compares the key attributes of two audience groups (for example) you could perform analysis to ascertain whether people in a particular audience live in a particular location.

Creating Your Venn Diagram 

With all of your planning, brainstorming, and data analysis done, it’s time to actually start building your Venn diagram. So long as you have a clear idea of what you want your diagram to look like, and who you want it to communicate to, this is actually the easiest part of producing a Venn diagram.

Then, you can make things even more straightforward by downloading our Venn diagram template . 

Core Reasons To Use Klaxoon’s Venn Diagram Template: 

  • Using this template, you can use circles that intersect together to illustrate the relationships between different elements 
  • The template allows you or your team to easily add titles, labels, and play around with shapes and colors
  • You can identify and analyze the relationships between the different elements in a visual way, so your team can easily find a solution that suits your team the best 
  • Your team can use the templates to reflect together on a project and compare the options to settle on a logical solution 
  • Our Venn Diagram template is suitable for statistics, mathematics, education, and business purposes 

It’s important, at this stage, to feel free and experiment. As long as you’ve planned your diagram and data correctly, your diagram should be relatively easy to read in whatever combination of colors, shapes, and graphics you choose. There is no harm getting creative though, and especially so if you are planning on using your diagram in a presentation or report.

Defining Venn Diagram Terms

Because Venn diagrams are drawn from mathematics, many of the terms that are used in relation to them are mathematical. As such, they can be difficult to understand for those of us who last encountered pure mathematics in high school. 

You don’t need to know these terms to create great Venn diagrams, but they can be useful if you are using software to create your diagrams, or need to discuss them with technical staff. Here are some key definitions to help you out:

Venne Diagram: key definitions to help you out | Klaxoon

FAQs About Venn Diagrams

When do you need to create a venn diagram.

There are two main reasons for creating a Venn diagram. One is when you need visual help to think through the logical relationships between sets of objects. A second is when you need to communicate the same kind of relationship quickly, easily, efficiently, and beautifully.

What Should Your Venn Diagram Communicate?

Venn diagrams are incredibly flexible, and can be used to communicate a huge variety of different things. In business, they are commonly used for audience, product, or competitor analysis, but any time you are comparing two (or more) sets of objects, you can use a Venn diagram to quickly produce a

What Are The Primary Benefits of Creating A Venn Diagram For Your Business Project?

The major advantage of Venn diagrams is that they provide a visual way of communicating complex comparisons between datasets. Since many people are familiar with them, they can make your presentations and reports more readable, effective, and persuasive. 

Venn diagrams are a powerful, flexible tool for communicating complex ideas. They can be used to elegantly show the relationships between two sets of objects – where they differ, but also where they overlap. 

This said, not all Venn diagrams are necessarily effective. It’s important to design your diagram carefully, so it can be read easily. That’s why we’ve produced a number of great template for Venn diagrams , as well as a broader set of project management templates , which can act as great starting points for your exploration of visual communication.

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  • The Strategic Marketing Process: A Complete Guide

compare and differentiate strategic planning and marketing planning using the venn diagram

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compare and differentiate strategic planning and marketing planning using the venn diagram

A well defined and feasible marketing strategy makes meeting customer needs a likely and attainable goal. And while most companies do great marketing, only a few have created brand attachment and customer loyalty through their marketing practices and tactics.

The Strategic Marketing Process: A Complete Guide

© Shutterstock.com | PureSolution

In this article, we explore, 1) the definition and purpose of strategic marketing , 2) the three phases of the strategic marketing process , 3) guidelines for effective strategic marketing process , 4) problems to expect in the strategic marketing process , 5) p.e.s.t: trends to consider when implementing marketing strategy , 6) strategic marketing process simplified , and 7) why Apple’s strategic marketing process is genius .

DEFINITION AND PURPOSE OF STRATEGIC MARKETING

Strategic Marketing is a process of planning, developing and implementing maneuvers to obtain a competitive edge in your chosen niche. This process is necessary to outline and simplify a direct map of the company’s objectives and how to achieve them. A company wanting to secure a certain share of the market, should ensure they clearly identify their mission, survey the industry situation, define specific objectives and develop, implement and evaluate a plan to guarantee they can provide their customers with the products they need, when they need them. Of course, the central objective of any company will be customer satisfaction so they may dominate the market and become leaders in their industry and thus providing substantial business satisfaction. In order to do that, three phases of marketing strategy must be perfected to create delight in their customers and beat out the competition.

THREE PHASES OF STRATEGIC MARKETING PROCESS

1. planning phase.

The planning phase is the most important as it analyzes internal strengths and weaknesses, external competition, changes in technology, industry culture shifts and provides an overall picture of the state of the organization. This phase has four key components that will provide a clear diagram of where your company is and what it is doing.

  • Analyze competitors
  • Research company’s current and prospective customers
  • Assess company
  • Identifying trends in the company’s industry

Once this analysis is complete the results should be used as a basis for developing the company’s marketing plan, which should be measurable and attainable.

  • Marketing program – Once the needs of the customers have been determined, and the decisions have been made about which products will satisfy those needs, a marketing program or mix must be developed. This marketing program is the how aspect of the planning phase, which focuses on the 4Ps and the budget needed for each element of the mix.
  • Once the customer needs are understood, goals can be set to meet them, thus increasing the chances of success with new products.
  • Find points of difference: like your company’s unique selling point, each product should also have a certain set of traits or characteristics that makes it superior to the competitive substitute. For example, your product could be longer lasting, more accessible, more reliable or very user-friendly so the buyers will choose it over the competition each time.
  • Position the product: market so that in people’s minds your product is the “go to” for their problem. Through emotional and mental marketing customers will associate your brand with their solution and eliminate choice. For example, many mothers use “Pampers,” when referring to diapers, as this brand has been positioned as the go to in baby diapering needs.
  • Select target markets: based on the research and their commonalities, that way needs and goals are both met.
  • Price strategy : focuses on the list price, price allowances (reductions), discounts, payment periods, and credit contracts.
  • Place (Distribution) Strategy : the final ‘P’ in the marketing mix should focus on distribution channels, outlets and transportation to get the product to the customer when they need it.
  • Promotion Strategy : this element of the program should focus on direct marketing, advertising, public relations and sales promotions that create brand awareness.
  • Product Strategy : this element focuses on the features, packaging, branding and warranty of the product.

2. Implementation Phase

The implementation phase is the action portion of the process. If the firm cannot carry out the plan that was determined in the early stages, then the hours spent planning were wasted. However, if the planning was adequately and competently structured, then the program can be put into effect through a sales forecast and a budget, using the following four components.

  • Obtaining Resources – sums of cash to develop and market new products.
  • Designing marketing organization – there should be put in place a marketing hierarchy to properly see the plans to fruition.
  • Developing planning schedules – time needs to be allocated to specific tasks so they can be accomplished.
  • Executing the marketing plan – effectively executing the marketing plan will take attention to detail, and focus on the strategy and tactics defined in your marketing plan.

3. Evaluation or Control Phase

The evaluation phase is the checking phase. This process involves ensuring that the results of the program are in line with the goals set. The marketing team, especially the manager will need to observe any deviations in the plan and quickly correct negative deviations to get back on course; for example fluctuations of the dollar creates a lesser need for the product than in the past, then the production of said product should be repurposed for a new more desired item. And they should exploit the positive divergences as well, for example if sales are better than predicted for certain products then there could be more resources allocated to greater production or distribution of the same item.

A few ways to evaluate the effectiveness of your marketing strategy include paying attention to:

  • Strategy versus tactic – strategy defines goals and tactic defines actions to achieve goals.
  • Measurable versus vague – have milestones that define when you’ve achieved your goals.
  • Actionable versus Contingent – According to Inc.com : “ A strategic goal should be achievable through the tactics that support it, rather than dependent upon uncontrollable outside forces.”
  • Marketing strategy should be backed by a business plan with tactical moves to accomplish goals, or it is useless.

GUIDELINES FOR EFFECTIVE STRATEGIC MARKETING PROCESS

A well thought out plan for offering value and solutions to your target market allows the company to discover the needs of the targeted customers and fulfill those needs in a cost effective and timely fashion. This in turn allows for the marketing team to be able to measure a company’s value based on your ideal customer’s response to your product and strategy. Some guidelines to ensure this strategy is effective are:

  • Set measurable, achievable goals by ensuring they are clear, structured and measurable it will be easier to accomplish your purpose.
  • Base plans on facts and validated assumptions through market research .
  • Use simple, clear and precise plans to detail what benefits you will offer your clients and how. Customers are driven by needs and desires so a clear plan will target those to gain customer loyalty.
  • Have a feasible plan by using research to decide the best way to connect with and engage your ideal customers and then implement a plan your company can afford and carry to fulfillment to do so.
  • Ensure control and flexibility by customizing your business plans and goals to match the needs of the customers, as they determine the success or failure of your company.

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PROBLEMS TO EXPECT IN THE STRATEGIC MARKETING PROCESS

While creating the perfect marketing plan for your company, there are certain issues that could arise to deter the process. Here are a few possible issues to be prepared to face:

  • Organizational Issues such as Poor Assumptions : – assuming customer needs without validation, lack of skilled workforce to implement the plans once they are arrived at, loss of sight of customer needs during the planning phase and changing demographic of consumers.
  • Issues in the Marketing Department such as : inflexibility, performance assessment problems, coordination problems, poor information management and human relations issues.
  • General problems such as : trouble obtaining marketing feedback, issues related to cost of marketing and problems integrating collected information into plans.

P.E.S.T: TRENDS TO CONSIDER WHEN IMPLEMENTING MARKETING STRATEGIES

According to Business news daily , while industry related factors could affect a company’s performance, outside factors can also play a major role in the outcome of a business’s plans. To determine the role of the external factors, it is recommended that companies perform a PEST analysis. Below is a break-down of what the four factors analyze.

  • Political – this analyzes how legal issues and government regulations affect profit and consumer behavior. The major considerations of the political aspect are tax guidelines, political stability, trade regulations and embargos, employment laws and safety regulations. An example of this analysis and how it works is looking at the effects of political instability in a foreign market and how it affects your company’s plans.
  • Economic – this factor looks at the outside economic issues that affect a firm’s success. Companies should pay attention to economic growth, inflation rates, exchange, interest rates and local business cycles. Changes in interest rate could improve or decrease the company’s bottom line.
  • Social – demographic and cultural aspects affect whether a company can compete in the market or not. The social factor helps businesses to examine why customers purchase and what exactly their needs are. Issues to consider include lifestyle changes, health consciousness, environmental responsibility awareness, and attitudes toward work, education levels, population growth rates and country demographics. A certain shift in educational requirements may result in career changes that could reflect in changing needs of the customers.
  • Technical – this aspect considers how technology impacts product placement and marketing. Technology can bring advantages and challenges that will increase or decrease production level. Specific areas to consider are new technological advancements, the use of technology in marketing, the role of the Internet and the impact of the information technology changes. The introduction of the Internet has created an expectation of instant gratification in today’s consumer; so social media marketing has to be considered an option.

STRATEGIC MARKETING PROCESS SIMPLIFIED

According to Center for Simplified Strategic Planning , “ Any strategic planning process involves digesting information and some fairly difficult analysis. Good strategic planning should be simplified, not simplistic. ” And it should also answer the questions: what are we selling, to whom and how do we beat the competition? The first two questions will determine the focus of your overall business while the third will help you specify your strategies to market. The following five steps are essential to accomplishing a simple, effective strategic plan.

  • Identify objectives and determine mission
  • Do business environmental scan-including trends and competition
  • Devise strategy including SWOT , budget, marketing, price and distribution
  • Implement strategy-put your plan into action
  • Evaluate and modify- measure how close or far you are from objectives, track what works and change what doesn’t.

WHY APPLE’S STRATEGIC MARKETING PROCESS IS GENIUS

Apple has a significant competitive advantage over it’s rival because of it’s strategic marketing process. This company was voted overall winner of the 2012 CMO Survey Award for Marketing Excellence and before that it was listed in the top marketers group for five years in a row, as reported in Forbes.com . This competitive advantage is due to a thirty-five year old, 3-point philosophy employed by the Apple brand. The three points that constitute this philosophy include

  • empathy -authentic understanding of customer need,
  • focus- eliminate all unimportant opportunities and
  • impute – ensuring creative, professional presentation of products.

Listed below are some of the main strategies used by Apple to ensure they beat the competition in marketing, placement and brand awareness and loyalty.

  • Identify and respond to trends – though an innovative visionary, (the Apple Tablets ignited a market and were an industry leader) Apple’s team saw the digital trend shifting and responded with the iPad mini, despite Steve Jobs showing his disdain for smaller tablets in the past.
  • Analyze competition and adjust – Though Apple and Microsoft have always been in competition, the two technology giants have not passed up opportunities to collaborate. And while Apple worked with Microsoft to accumulate a very big share of the market, the company went ahead and added Intel chips into their computers to ensure they were a step ahead of the competition including Microsoft.
  • Innovation – Apple is usually first to market with products and visions customers love, and though it does not strive to be an innovator, usually focusing on specific strategy and enthusiasm, Apple is usually a leader in the market segment they occupy.
  • Emotional branding – Companies like Apple tend to have very specific strategic aims and work hard to ensure they are met. One such strategy can be seen as forming an emotional attachment to the products sold to ideal customers. By effectively integrating emotions into the marketing strategy, the brand recognizes positive results, such as customers spending nights lined up to be the first to own the newest product.
  • Enhanced distribution systems – Apple opened international retail stores and improved sales drastically. Now Apple representatives can be found in local malls and plazas to help solve customers’ issues and offer upsells and upgrades. This accessibility helps to build customer trust and helps make the decision process much easier when choosing a brand.
  • Excellent customer service – Apple brand is synonymous with excellence customer service, friendly environments, and great customer experiences. The secret lies in the acronym APPLE, which, according to Social media today spells out:
“ A pproach customers with a personalized warm welcome P robe politely to understand all the customer’s needs P resent a solution for the customer to take home today L isten for and resolve any issues or concerns E nd with a fond farewell and an invitation to return ”
  • Product placement – The Apple App store and iTunes compliment and extend the customer experience and the personality and reputation of the brand lead to loyalty and evangelism.

By incorporating these practices into your company’s marketing program and ensuring to follow through consistently, your company will be rewarded and recognized for its efforts.

compare and differentiate strategic planning and marketing planning using the venn diagram

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Venn Diagram ELL Modifications and More

For students who may find it challenging to complete the Venn Diagram task, try these tips and strategies:

  • Recognize academic vocabulary. Introduce these words that signal compare/contrast: distinguish between, differentiate, group, identify, illustrate, point out, recognize, separate, describe common attributes, describe  commonalities, describe differences, classify.
  • Graphic organizers. Venn diagram as well as many other types of graphic organizers are useful for  visualizing and organizing information to compare and contrast, including Compare Contrast Matrix, Double Bubble Chart, T Chart, and Semantic Features Analysis.
  • Partner practice. ELLs should not only be able to complete a Venn diagram, but they must know how to explain the similarities and differences, too. Encourage partners to practice explaining their Venn diagrams to each other as a way to help them become more comfortable and familiar with the academic language. They can use sentence frames for help.
  • Signal words.  Displaying a chart in the classroom of compare/contrast signal words and/or sentence frames allows students to recognize the text structure while reading while also helping them to speak and write fluently about comparing and contrasting.  Here is an example:

compare contrast signal words

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How to Use a Venn Diagram

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What Is a Venn Diagram?

A Venn diagram is a visual tool used to compare and contrast two or more objects, events, people, or concepts. It is often used in language arts and math classes to organize differences and similarities. This simple graphic makes it easy for students to understand how two things are both different and alike at the same time. 

A Venn diagram can become complicated, but in its simplest form, it is two circles that overlap in the middle.

  • Each circle represents one item that is being compared: Item 1 and item 2.
  • One circle contains the qualities that are unique to item 1. The other circle contains the qualities unique to item 2.
  • The area where the circles overlap contains qualities that both item 1 and item 2 have in common.

Simple Venn diagrams can be used to compare more than two things by adding more circles.

Venn Diagram Uses

Children will often learn to use Venn diagrams in language arts. They can be used to compare characteristics in two different books or two characters in the same book. A Venn diagram can also be used to:

  • Visualize information for a compare-and-contrast essay : For example, a student may need to compare the differences between a fish and a whale. They are alike because they both live in the water and that is written in the overlap. Only fish have scales so that would go in the fish-only circle. Only whales breathe air and that would go in the whale-only circle.
  • Brainstorm ideas when writing a story:  For example, each circle may represent a character in the story and a student may write down personality traits or events that happen to each character separately, then use the overlap to figure out where the characters interact in the story.
  • Help make decisions:  A Venn diagram can also be used like a list of pros and cons when making a decision. Maybe your child wants to get a pet and you have given permission, but they cannot decide whether they want a dog or cat. You can use a Venn diagram to help them decide (and get a teaching moment in at the same time).

Venn Diagram Examples

Here are a couple more Venn diagram examples to help illustrate the many ways students can use this tool.

Compare Jobs in the Government

A student may need to compare the executive and legislative branches of the U.S. government for social studies. In one circle they would list the responsibilities and powers of the president and in the other circle the job details of the Congress.

In the center would be commonalities like the fact that they are both elected to office, have term limits, and so on.

Compare Books

A Venn diagram can be used to compare two books by the same author. Dr. Seuss is a popular topic for young children. When comparing The Cat in the Hat and Green Eggs and Ham, we can see that:

  • Both books : Rhyme; include hats and fish; have characters who are asked to leave, get upset, and think they don't like something.
  • The Cat in the Hat : There is a cat and six characters; the setting stays in the house; includes people.
  • Green Eggs and Ham : There is no cat and only two characters, the story moves to different locations and includes no people. It does have green eggs and ham!

Different Ways to Make a Venn Diagram

Venn diagrams use two or more circles and there are a few different ways to make them. They can be interactive and fun.

  • Draw the circles on a blank piece of paper and fill in the information. Use watercolor paints or crayons to color in the finished diagram (use two colors that combine to make a third color, such as blue and yellow to make green in the overlapping area.
  • Use a dry erase board and three different colors of marker.
  • Place two hula hoops on the floor and cut out strips of paper to write on and place in the correct circle. Pieces of string laid out in a circle can be used as well.
  • Instead of or in addition to text, include pictures to illustrate differences and similarities.

IMAGES

  1. What is a Venn Diagram and How to Make One?

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  2. Relationship Of Marketing And Planning With Content Strategy In Venn

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  3. Basic Venn Diagrams Solution

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  4. How to Create a Venn Diagram for Business Use

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  5. The Venn diagram of content marketing strategy has three elements as

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  6. Venn Diagram of Marketing Channels

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VIDEO

  1. Using Venn Diagram to solve problems involving two sets Lesson 2

  2. Problems based on Venn diagram: 02

  3. Problems based on Venn diagram: 03

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  5. VENN DIAGRAM

  6. SET: How to Solve two Sets Problems|Venn Diagram

COMMENTS

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  2. Difference Between Planning and Strategy (with Comparison Chart)

    Planning is anticipation and preparation in advance for uncertain future events. The strategy is the best plan chosen among the various alternatives for accomplishing objectives. Planning is like a map for guidance, while strategy is the path which takes you to your destination. Strategy leads to planning, and planning leads to programs.

  3. Strategic Planning is a Venn Diagram, Not a Linear Process

    An effective planning process never leads you to a place where you have such narrow options that you freeze in a crisis. It's just the opposite. Strategic planning is not a linear process. It is more of a Venn diagram with each element in conversation with the other, and through this interactive process an overall understanding of the best ...

  4. Venn diagrams: what they are and how to use them

    We're glad you asked! Venn diagrams are a great way to visualize and think through related ideas, proposals, or processes - like when you need to streamline workflow, compare outcomes, or make improvements to a particular business area. You might use Venn diagrams to: Visualize what all your best customers have in common

  5. Chapter 4: Strategy and Strategic Planning

    4.8 Strategic Marketing Planning - Making the Pieces Fit 4.8.1 Interrelationships of strategy components. The relationships among strategy components must follow a certain internal logic. The first component of Ansoff's [74] strategy concept is product/market scope. The component implies the vital link between product and customer decisions.

  6. Marketing Strategy vs. Marketing Plan: What's the Difference?

    That ship needs a direction in which to travel (i.e., a strategy) and the sails to power it (i.e., a plan). Marketing strategy and plan work hand in hand, with the latter taking cues from the former. Everything laid out by your strategy should be addressed with a plan — one that defines the processes for tactical marketing.

  7. What is a Venn Diagram and How to Make One?

    Decision making Venn diagrams help you visually categorize information, which is helpful when facing an important decision. Use a two set diagram to list similarities and differences between two options, or add circles if you choose between more than two potential outcomes.

  8. How to Create a Venn Diagram for Business Use

    CREATE THIS VENN DIAGRAM. Use the size of shapes to help your audience know what matters most. 5. Select colors to help people read . You can also use color to help draw attention to certain elements or themes. If you are creating a particularly complex Venn diagram, use color in ways that help your audience easily see differences and draw ...

  9. A Venn Diagram Template for Visualizing Your Projects and Plans

    The Venn diagram streamlines this process and helps us communicate the needed information to the viewer quickly and powerfully. Of course the first type of Venn diagram sometimes evolves into the second one. For instance, you explore a product development strategy on a Venn diagram by seeing where the needs of different target markets intersect.

  10. Boost Your Business Strategy with Venn Diagrams

    Before you start creating your Venn Diagram, make sure you clearly define the different groups or sets of data you want to compare. This will ensure that your Venn Diagram is accurate and provides valuable insights. Use accurate data. Your Venn Diagram is only as good as the data you put into it. Make sure you use accurate, up-to-date data to ...

  11. What is a Venn Diagram? Definition, Importance and Examples

    Published on: August 25, 2021 Table of Contents What is a Venn Diagram? Why Venn Diagrams are Important Venn Diagram vs Euler Diagram 9 Examples of Venn Diagram Using a Venn diagram is one of the most common forms of visual collaboration and is likely something that you've done since childhood.

  12. Marketing Strategy vs. Marketing Plan

    Clint Sanchez April 5, 2020 Digital Marketing A marketing plan and a marketing strategy are two separate elements of your business's marketing. The differences - Simply put, a marketing strategy is the "what," and a marketing plan is the "how." Learn the similarities and differences here. Table of Contents What is a Marketing Strategy?

  13. What is a Venn Diagram

    7 minute read Want to make a Venn diagram of your own? Try Lucidchart. It's quick, easy, and completely free. Make a Venn diagram What is a Venn diagram? A Venn diagram uses overlapping circles or other shapes to illustrate the logical relationships between two or more sets of items.

  14. What is a Venn Diagram?

    A Venn diagram is a type of graphic chart made of overlapping circles. Each circle represents a different concept or group of data, with the overlapping sections representing their shared qualities. This makes Venn diagrams an excellent tool for data comparison and measuring probability. By plotting out your thoughts on a Venn diagram, you can ...

  15. Using a Venn Diagram for a Compare and Contrast Essay

    A Venn diagram is a great tool for brainstorming and creating a comparison between two or more objects, events, or people. You can use this as a first step to creating an outline for a compare and contrast essay . Simply draw two (or three) large circles and give each circle a title, reflecting each object, trait, or person you are comparing.

  16. Venn Diagram

    Venn diagram was named after John Venn, an English philosopher and logician, in 1880A Venn diagram is a visual tool used to compare and contrast two or more objects, events, people, or concepts. It is often used in math classes to organize differences and similarities. In mathematics, it is also called Primary Diagram, Logic Diagram or Set ...

  17. 10 Types of Venn Diagrams That Help You Visualize Relationships

    8. Multi-Layered Venn Diagram. If you want to show the relationship between subjects in a different light, the multi-layered Venn diagram is the right choice. This diagram consists of a large outer circle that contains smaller circles inside it. The nested circles show how each one of them changes the original entity.

  18. Venn Diagram: Make Efficient Connections between Things

    07. /. 2022. A Venn diagram provides a clear way to express the relationships between entities, and particularly where two or more things have overlapping attributes. Venn diagrams simply make data visualization easier, which is why they are commonly used in presentations and reports. If you need to communicate the relationship between two sets ...

  19. what is the difference between strategic planning from marketing

    Answer: Strategic planning-is designed to provide an organization, its divisions, departments or even individual players with a game plan or road map to achieve specific goals and objectives. ... From a marketing standpoint, strategic planning might help to identify new market opportunities as well as new competitive threats. Marketing Planning -

  20. The Strategic Marketing Process: A Complete Guide

    THREE PHASES OF STRATEGIC MARKETING PROCESS. 1. Planning Phase. The planning phase is the most important as it analyzes internal strengths and weaknesses, external competition, changes in technology, industry culture shifts and provides an overall picture of the state of the organization. This phase has four key components that will provide a ...

  21. Venn Diagram ELL Modifications and More

    For students who may find it challenging to complete the Venn Diagram task, try these tips and strategies: Recognize academic vocabulary. Introduce these words that signal compare/contrast: distinguish between, differentiate, group, identify, illustrate, point out, recognize, separate, describe common attributes, describe commonalities, describe differences, classify. Graphic organizers. Venn ...

  22. compare and differentiate strategic planning and marketing planning

    We're glad you asked! Venn diagrams are a great way to visualize and think through related ideas, proposals, or processes - like when you need to streamline workflow, compare outcomes, or make improvements to a particular business area. You might use Venn diagrams to: Visualize what all your best customers have in common... Planning is like a map for guidance, while strategy is the path ...

  23. How to Use and Create a Venn Diagram

    Draw the circles on a blank piece of paper and fill in the information. Use watercolor paints or crayons to color in the finished diagram (use two colors that combine to make a third color, such as blue and yellow to make green in the overlapping area. Use a dry erase board and three different colors of marker.