Chapter 9 - The Marketing Plan PDF

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Chapter 9 – The Marketing Plan A marketing plan should indicate that a business has the tools, talent, and team to turn brilliant ideas into realities.  A marketing plan should serve as a road map for a business. It is not a static document that is written once and then filed away. Marketing Planning Defined Marketing planning follows a structured and systematic approach that enables marketers to understand and take advantage of the dynamic environment in which a company operates.  Gaining insight into their operational environments enables marketers to identify and evaluate opportunities and threats within the external environment, and strengths and weaknesses within the internal environment. Therefore, it is the structured process of determining how to provide value to customers, the organization, and key stakeholders by researching and analyzing the current situation, including markets and customers; developing and documenting marketing objectives, strategies, and programs; and implementing, evaluating, and controlling marketing activities to achieve the objectives.  The marketing plan is the outcome of an ongoing process evaluating marketing activities, as shown below.

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In this process, marketing intelligence is used to evaluate opportunities, and suitable opportunities are pursued to create value and satisfy the needs of selected target markets. A strategic marketing plan deals with the total strategy in a market and links customers, competitors, and organizational capability and resources. An operational marketing plan deals with the marketing mix strategy that will be used to gain leverage in a specific product market for a specific market segment. Both strategic and operational marketing plans should: o Explain intended strategies for building relationships by creating, communicating and delivering value to customers. o Outline the activities that employees will undertake to reach objectives, including gaining value for the organization. o Show the mechanisms for measuring progress towards objectives.

o Allow for adjustments if actual results are off course or the environment shifts. Benefits of Planning A marketing plan serves several purposes within an organization by:  Providing a blue print and road map for all marketing activities for the next year.  Aligning marketing activities with the corporate strategic plan.  Requiring that managers objectively review and think through all steps in the marketing process at least once a year.  Assisting with the budgeting process.  Matching resources with marketing objectives. The main outcomes of marketing planning within an organization are:  The systematic identification of emerging opportunities and threats.  Preparedness to meet change.  The specification of sustainable competitive advantage.  Improved communication among executives.  Reduction of conflicts between individuals and departments.  The involvement of all levels of management in the planning process.  More appropriate allocation of scarce resources.  Consistency of approach across the organization.  A more market-focused orientation across the organization. Positioning Marketing Planning Within Strategic and Marketing Management It is generally agreed that strategic marketing revolves around: 1. A clear market definition: A market definition is essential to understand market dynamics (situation and opportunity analysis) and define possible customers and markets (customer and industry analysis). 2. Segmentation, targeting and positioning: Positioning entails the development of appropriate value propositions based on product/service offerings and costs to meet needs expressed by the segments (creating a sustainable competitive advantage). 3. Formulating and implementing marketing strategies: We consider how to formalize strategies in a marketing plan, and the implementation of strategies. 4. Measuring marketing performance: This is based on control and typically measures performance against objectives as discussed. As its simplest, marketing strategy must have two necessary components: a definition of the target market and a statement of the product or value proposition aimed at that target market. Properties of Effective Strategies 

Marker definition: Effective strategies direct resource allocation between markets guided by the overall market direction and strategy.

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Definition of intended competitive advantage: Resources are allocated between internal functions on the basis of their contribution to the intended competitive advantage. Internal consistency and synergy: Efficiency is enabled by minimizing internal conflicts between areas of activity and optimizing synergy between areas of activity. Degree of uniqueness: The effects of competition should be minimized by focusing resources and activity in a way that is significantly different from that of competitors. Congruence with the external environment: Effective strategies lever relative the company’s internal strengths against relevant market opportunities and counteracts relative organizational weaknesses against likely market threats. Consistency with the organization’s objectives: Effective strategies define a target market that is large enough and perceive the company’s value proposition superior relative to the competition, to win a market share in accordance with the organization’s objectives. Acceptability of risk level: Effective strategies involve a level of risk that is within the organization’s limits of acceptability. Feasibility within the organization’s resources: Effective strategies consider the availability of resources prior to execution. Provision of a level of guidance to tactical activity: Effective strategies facilitate their own implementation by providing clear tactical activities that are necessary for and appropriate to the execution of the strategy.

The Marketing Planning Process

Marketing Intelligence During the stage of gaining market intelligence, the marketer’s primary concern is with the methods used by the company to identify its current market position clearly and take stock of its marketing resources and capacity.  To do so, companies need to conduct a detailed marketing audit and review of their marketing effectiveness to gain this intelligence.  A market audit provides an understanding of the business environment in which a company operates and should be the basis of setting marketing objectives and strategies.

Opportunity Analysis Market selection depends on the internal strategic benefits to be gained and the demands that will be made on marketing recourse by pursuing a particular opportunity or segment.  Once the market has been segmented, marketers can decide on targeting strategies, including whether to market to one segment, several segments, or the entire market.  This value proposition then informs the formulation of marketing mix strategies.  Given the opportunities presented by the marketing environment, marketers should use segmentation and targeting to focus on opportunities, and then use positioning to create competitive advantage through relevant marketing mix strategies. Marketing Objectives Objectives translate the mission into targeted levels of performance to be achieved by a specified time.  Objectives exist at the corporate, business unit, and functional levels of an organization and can pursue different goals relating to profitability, sales, marketing share, quality, customer satisfaction, employee welfare, social responsibility and more.  Marketing objectives concern one or more of the following: o Existing products for existing markets (Market penetration). o New products for existing markets (Product development). o Existing products for new markets (market development). o New products for new markets (diversification). Marketing Strategies Marketing strategies are the means by which an organization sets out to achieve its marketing objectives. Typically, it is at this level that marketers should detail how they intend to create a competitive advantage by outperforming the competition in some way.  A company should aim to make its competitive advantages sustainable by striving for continuous improvement.  Marketing strategy therefore refers to how a company will manage its relationship with customers in a manner that gives it an advantage over the competition. Marketing Programs Marketing programs concern the detailed actions required by market segment, product and functional are to implement all these strategies.  Such a program will precisely specify activities, responsibilities, and timescales to be followed if strategies are to be put into operation.  It is important to note that the marketing mix is not a scientific theory, but a conceptual framework that identifies key elements to be considered when they configure their offerings.

The Marketing Mix Into the 21st Century There are four fundamental trends that should be considered when developing marketing strategies by using the marketing mix framework. 1. Consumers are all connected… Tap into these connections.  It is important to navigate these endless social media platforms that consumers use to communicate while understanding differences among consumers in different market segments.  Marketers can no longer rely on capturing consumer attention via reach, instead marketers must focus on both capturing and continuing attention via engagement. 2. Consumers can compare prices or set their own prices… Differentiate your value proposition.  Today, cost transparency, decreased search costs and the ease of price comparisons are observed in dynamic pricing, as shown below. Forms of Dynamic Pricing Yield/revenue management

Demand-based pricing

Auctions

Reverse auctions

Group buying

Negotiations

Definitions and Applications Revenue management users aim to maximize revenue and ultimately profit through improving sales by increasing operating efficiency and effective management of three main areas: pricing, inventory control and customer mix. Suitable products and services that benefit from this strategy include offers with a relatively fixed supply and a revenue producing ability that decreases with time and diminishes to zero. For example, flights and hotel rooms. This practice is also known as customer-based pricing and prices vary according to customer demand as determined by the perceived value of a product category. For example, cellphone companies charge different call rates at different times. A seller engages several buyers, either in a physical setting or online, to outbid one another. The seller benefits by securing the highest bid and the buyer from paying a price deemed fitting by themselves. For example, ebay. The role allocation of bidders is reversed as sellers become bidders. In this pricing strategy the buyer engages several qualified sellers to compete with downward pricing. For example, government tenders. A form of collective buying in which a community of small buyers combines to create a larger purchase with limitedtime buying opportunities. Collective buying often leads to significantly reduced prices. For example, Groupon. A process during which a buyer and seller engage directly to reach an understanding in terms of pricing or settlements.

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Although dynamic pricing offers an attractive alternative pricing strategy, marketers should take care not to create consumer perceptions of unfairness and other negative emotions. Marketers also need to appreciate that they need to clearly differentiate their value propositions from those of competitors.

3. Consumers are part of the value chain… Use them as co-creators of your products and services.  Consumers are adopting increasingly active roles in co-creating marketing content with companies and their respective brands.  Co-creation refers to the process by which both consumers and producers collaborate or participate in the creation of value.  Co-creating value also requires a continuous two-way communication between the consumer, and the company creating a closer relationship between the two parties.  The example of the Shoprite and Checkers Boerewors Championships is a prime example of this. 4. Delivery is at most 48 hours away.  More companies are participating in a global, boundary-less world, facing a dynamic and interconnected international environment.  As a result, distribution channels need to respond rapidly to the dynamics of the market by adapting to the requirements of the industry. The Budget Once marketers have established what they need to do, the next step is to determine how much money to budget for marketing programs.  There are three approaches to producing a marketing budget that is based on a specific marketing plan and the marketing mix strategy designed to achieve the target level of performance. o Top-down budgeting: the budget is based on projected sales objectives and is determined by using past marketing expenses as a percentage of sales. o Customer mix budgeting: the cost of customer acquisition and retention and the combination of new and retained customers are used to derive a new marketing budget. o Bottom-up budgeting: each element of the marketing effort is budgeted for specific tasks identified in the marketing plan. Marketing Plan Structure Executive summary: Briefly reviews the plan’s highlights and objectives, linking the marketing effort to higher level strategies and goals. Current marketing situation: Summarizes the environmental trends:  Customer analysis.  Market demand analysis.  Internal analysis.

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Competitor analysis. Cross-impact analysis.

SWOT analysis: Strengths, Weaknesses, Opportunities and Threats. Opportunity analysis: Explains segmentation, targeting and positioning decisions. Discusses the segments to be targeted with an overview of customers’ and prospects’ needs, wants, behavior, attitudes, loyalty and purchasing patterns. Marketing objectives: Outlines the specific marketing plan objectives. Marketing strategy: Shows the overall strategy to be used in achieving the marketing plan objectives by creating, communicating, and delivering value to the target market. Indicates areas of competitive advantage. Marketing programs: Lays out the marketing mix elements per target market segment, supporting the marketing strategy, including specific activities, schedules and responsibility for:  Product  Price  Promotion  Place  Service  Facilities  Internal marketing  Other applicable marketing mix elements. Budgets: Details expected revenues, budgets, and profits based on the marketing programs in the plan. Implementation controls: Indicates how the plan will be implemented, including metrics for measuring performance. Shows how adjustments will be made to keep programs on track toward objectives. Includes contingency plans as needed.

Major Obstacles to Developing and Implementing Marketing Plans...