APPENDIX - Pearson Canada

APPENDIX

::: SONIC MARKETING PLAN EXERCISES

The Marketing Plan:An IntroductionAs a marketer, you’ll need a good marketing plan to pro-vide direction and focus for your brand, product, orcompany. With a detailed plan, any business will be bet-ter prepared to launch a new product or build sales forexisting products. Nonprofit organizations also use mar-keting plans to guide their fundraising and outreachefforts. Even government agencies put together market-ing plans for initiatives such as building public aware-ness of proper nutrition and stimulating area tourism.

The Purpose and Contentof a Marketing PlanUnlike a business plan, which offers a broad overview ofthe entire organization’s mission, objectives, strategy,and resource allocation, a marketing plan has a morelimited scope. It spells out how the organization’s strate-gic objectives will be achieved through specific market-ing strategies and tactics, with the customer as the start-ing point. It is also linked to the plans of other depart-ments within the organization. Suppose a marketingplan calls for selling 200,000 units annually. The produc-tion department must gear up to make that many units,the finance department must have funding available tocover the expenses, the human resources departmentmust be ready to hire and train staff, and so on. Withoutthe appropriate level of organizational support andresources, no marketing plan can succeed. Although theexact length and layout will vary from company to com-pany, a marketing plan usually contains the sectionsdescribed in Chapter 2. Smaller businesses may createshorter or less formal marketing plans, whereas corpora-tions frequently require highly structured marketingplans. But to ensure correct implementation, every partof the plan must be described in considerable detail.Sometimes a company will post its marketing plan on aninternal Web site, which allows managers and employeesin different locations to consult specific sections andcollaborate on additions or changes.

The Role of ResearchTo develop successful strategies and action programs,marketers need up-to-date information about the envi-ronment, the competition, and the market segments tobe served. Often, analysis of internal data is the startingpoint for assessing the current marketing situation, sup-plemented by marketing intelligence and researchinvestigating the overall market, the competition, keyissues, and threats and opportunities. As the plan is putinto effect, marketers use advertising and other forms of

research to measure progress toward objectives andidentify areas for improvement if results fall short of pro-jections. Finally, marketers use marketing research tolearn more about their customers’ requirements, expec-tations, perceptions, and satisfaction levels. This deeperunderstanding provides a foundation for building com-petitive advantage through well-informed segmenting,targeting, and positioning decisions. Thus, the market-ing plan should outline what marketing research will beconducted and how the findings will be applied.

The Role of RelationshipsThe marketing plan shows how the company will estab-lish and maintain profitable customer relationships. Inthe process, however, it also shapes a number of internaland external relationships.

First, it affects how marketing personnel work withone another and with other departments to deliver valueand satisfy customers. Second, it affects how the compa-ny works with suppliers, distributors, and strategicalliance partners to achieve the objectives listed in theplan. Third, it influences the company’s dealings withother stakeholders, including government regulators,the media, and the community at large. All these rela-tionships are important to the organization’s success.

From Marketing Planto Marketing ActionCompanies generally create yearly marketing plans,although some plans cover a longer period. Marketersstart planning well in advance of the implementationdate to allow time for marketing research, thoroughanalysis, management review, and coordinationbetween departments. Then, after each action programbegins, marketers monitor ongoing results, comparethem with projections, analyze any differences, and takecorrective steps. Because of inevitable and sometimesunpredictable environmental changes, marketers mustbe ready to update and adapt marketing plans at anytime. Some marketers also design contingency plans.

For effective implementation and control, the market-ing plan should define how progress toward objectives willbe measured. Managers typically use budgets, schedules,and performance standards for monitoring and evaluatingresults. With budgets, they can compare planned expendi-tures with actual expenditures for a given week, month, orother period. Schedules allow management to see whentasks were supposed to be completed—and when theywere actually completed. Performance standards track theoutcomes of marketing programs to see whether the com-pany is moving toward its objectives. Some examples ofperformance standards are: market share, sales volume,product profitability, and customer satisfaction.

2 APPENDIX Sonic Marketing Plan Exercises

The Executive Summary is forsenior managers who mustreview and approve the mar-keting plan.

The Executive Summary is anoverview of the market opportu-nity and strategy for meetingneeds of targeted market segments.

The Executive Summaryincludes marketing and finan-cial objectives and expectedresults.

The Situation Analysis focuseson market definition and thecurrent capability of the com-pany to serve the market.

Market Summary includes size,needs, growth, and trends.

Description of targeted seg-ments provides context for themarketing strategies andaction programs discussedlater in the plan.

Sample Marketing Plan for SonicThis section takes you inside the sample marketing plan for Sonic, a hypothetical start-upcompany. The company’s first product is the Sonic 1000, a multifunction personal digitalassistant (PDA), also known as a handheld computer. Sonic will be competing withpalmOne, Hewlett-Packard, and other well-established rivals. The annotations explain moreabout what each section of the plan should contain.

1.0 Executive SummarySonic is preparing to launch a PDA product, the Sonic 1000, in a maturing market. Despitethe dominance of PDA leader palmOne, we can compete because our offering combinesexclusive features at a value-added price. We are targeting specific segments in consumerand business markets, taking advantage of opportunities indicated by demand for easy-to-use, wireless-enabled PDAs with expanded communications functionality.

The primary marketing objectives of this plan are to achieve first-year U.S. market shareof 3 percent and unit sales of 240,000. The primary financial objectives are to achieve first-year sales revenues of $60 million, keep first-year losses to less than $10 million, and breakeven early in the second year.

2.0 Situation AnalysisSonic, founded 18 months ago by two entrepreneurs with experience in the PC market, isabout to enter the PDA market dominated by palmOne. Overall PDA sales have slowed andprofitability has suffered. The emergence of multifunction PDAs and advanced cell phoneshas increased competitive pressures. Estimated market size for multifunction PDAs and cellphones is $63.7 billion, with 50% growth expected within 4 years. To gain market share in thisenvironment, Sonic must carefully target specific market segments.

2.1 MARKET SUMMARY Sonic’s market consists of consumers and business users whoneed to conveniently store, communicate, and exchange information on the go. Segmentsbeing targeted during the first year include professionals, students, corporations, entrepre-neurs, and medical users. Exhibit 1 shows how the Sonic 1000 addresses the needs of target-ed consumer and business segments.

PDA purchasers can choose between models based on two different operating systemscreated by Palm and Microsoft. Sonic licenses the market-dominant Palm system becausethousands of software applications and hardware peripherals are compatible with this sys-

| EXHIBIT 1 | Needs and Corresponding Features/Benefits of Sonic PDA

Targeted Segment Customer Need Corresponding Feature/Benefit

Professionals(consumer market)

Students(consumer market)

Corporate users(business market)

Entrepreneurs(business market)

Medical users(business market)

■ Stay in touch while on the go

■ Record information while on the go

■ Perform many functions withoutcarrying multiple gadgets

■ Express style and individuality

■ Input and access critical data on the go

■ Use for proprietary tasks

■ Organize and access contacts, scheduledetails

■ Update, access, and exchange medicalrecords

■ Wireless e-mail to conveniently send and receive messagesfrom anywhere; cell phone capability for voicecommunication from anywhere

■ Voice recognition for no-hands recording

■ Compatible with numerous applications and peripheralsfor convenient, cost-effective functionality

■ Case wardrobe of different colours and patterns allowsusers to make a fashion statement

■ Compatible with widely available software

■ Customizable to fit diverse corporate tasks and networks

■ No-hands, wireless access to calendar and address bookto easily check appointments and connect with contacts

■ No-hands, wireless recording and exchange of informationto reduce paperwork and increase productivity

APPENDIX Sonic Marketing Plan Exercises 3

Market trends must be consid-ered as the company developsits marketing strategies.

Strengths are internal capabili-ties that can help the companyreach its objectives.

Weaknesses are internal ele-ments that may interfere withthe company’s ability toachieve its objectives.

Opportunities are areas ofbuyer need or potential interestin which the company mightperform profitably.

tem. Product proliferation and increased competition have resulted in lower prices andlower profit margins. Lower prices are helping sales of PDAs in the lower end of the con-sumer market, but at the expense of gross margins. Customers with first-generation PDAsare reentering the market by buying newer, high-end multifunction units.

2.2 STRENGTHS, WEAKNESSES, OPPORTUNITIES, AND THREAT (SWOT) ANALYSISSonic has several powerful strengths on which to build, but our major weakness is lack ofbrand awareness and image. The major opportunity is growing demand for multifunctionPDAs that deliver communication-specific benefits. We also face the threat of ever-greatercompetition and downward pressure on pricing.

Strengths Sonic can build on three important strengths:

1. Innovative product. Sonic 1000 includes a voice recognition system that simplifies usageand allows hands-free operation. It also offers features such as built-in cell phone func-tionality, wireless communication, and MP3 capabilities.

2. Compatibility. Our PDA can work with the hundreds of Palm-compatible peripheralsand applications currently available.

3. Pricing. Our product is priced lower than competing multifunction models—all of whichlack voice recognition—which gives us an edge with price-conscious customers.

Weaknesses By waiting to enter the PDA market until the initial shakeout and consolida-tion of competitors has occurred, Sonic has learned from the successes and mistakes of oth-ers. Nonetheless, we have two main weaknesses:

1. Lack of brand awareness. Sonic has not yet established a brand or image in the market-place, whereas palmOne and other rivals have strong brand recognition. This is an areawe will address with promotion.

2. Heavier weight. To accommodate the multifunction features, the Sonic 1000 is slightlyheavier than most competing models. To counteract this, we will emphasize our multi-function features and value-added pricing, two important competitive strengths.

Opportunities Sonic can take advantage of three major market opportunities:

1. Increasing demand for multiple communication methods. The market for wirelessWeb-enabled PDAs with cell phone functionality is projected to grow faster than themarket for nonwireless models. There are more users with PDAs in work and education-al settings, which is boosting primary demand. Also, customers who bought entry-levelmodels are now trading up.

2. Add-on peripherals. More peripherals, such as digital cameras and global positioningsystems, are available for the Palm operating system. Consumers and business users whoare interested in any of these peripherals will see the Sonic 1000 as a value-priced deviceable to be conveniently and quickly expanded for multiple functions.

3. Diverse applications. The wide range of Palm-compatible software applications avail-able for home and business use allows the Sonic PDA to satisfy communication andinformation needs.

Threats We face three main threats at the introduction of the Sonic 1000:

1. Increased competition. More companies are entering the U.S. PDA market with modelsthat offer some but not all of the features and benefits provided by Sonic’s PDA.Therefore, Sonic’s marketing communications must stress our clear differentiation andvalue-added pricing.

2. Downward pressure on pricing. Increased competition and market-share strategies arepushing PDA prices down. Still, our objective of seeking a 10% profit on second-yearsales of the original model is realistic, given the lower margins in the PDA market.

3. Compressed product life cycle. PDAs seem to be reaching the maturity stage of theirlife cycle more quickly than earlier technology products. We have contingency plansto keep sales growing by adding new features, targeting additional segments, andadjusting prices.

Threats are challenges posedby an unfavourable trend ordevelopment that could lead tolower sales and profits.


| EXHIBIT 2 | Selected PDA Products and Pricing

Competitor Model Features Price

PalmOne Tungsten C PDA functions, wireless capabilities, colour screen, tiny keyboard, wireless capabilities $499

palmOne M130 PDA functions, colour screen, expandable functionality $199

Handspring Treo 270 PDA and cell phone functions, colour screen, tiny keyboard, speakerphone capabilities; no expansion slot $499

Samsung i500 PDA functions, cell phone functions, MP3 player, colour screen, video capabilities $599

Garmin iQue 3600 PDA functions, global positioning system technology, voice recorder, expansion slot, MP3 player $589

Dell Axim X5 PDA functions, colour screen, e-mail capable, voice recorder, speaker, expandable $199

Sony Clie PEG-NX73V PDA functions, digital camera, tiny keyboard, games, presentation software, MP3 player, voice recorder $499

Competition identifies keycompetitors, describes theirmarket positions, and providesan overview of their strategies.

2.3 COMPETITION Increased entry of established computer and cell phone companies haspressured industry participants to continually add features and cut prices. Competitionfrom specialized devices for text and e-mail messaging, such as Blackberry devices, is also afactor. Key competitors:

■ palmOne has had financial struggles because of the need to reduce prices for competitivereasons. Its acquisition of Handspring boosted its product development strength and expandedits product mix. As the best-known maker of PDAs, palmOne has achieved distribution innearly every channel, including distribution by U.S. cell phone service carriers. At present,palmOne products lack some of the voice recognition software standard in the Sonic 1000.

■ Hewlett-Packard targets business markets with its iPAQ Pocket PC devices, many withwireless capabilities to accommodate corporate users. For extra security, one model allowsaccess by fingerprint match as well as by password. HP enjoys excellent distribution, and itsproducts are priced from below $300 to more than $600.

■ Garmin’s iQue 3600 was the first PDA with built-in global position system (GPS) capabil-ity. Priced at $589, its mapping software and verbal commands eliminate the need for anautomotive device. Garmin’s PDA uses the Palm operating system and has other uniquefunctions, such as a digital voice recorder for brief memos.

■ Dell’s PDA model is priced starting at $199. However, this product is larger than compet-ing palmOne products, and it lacks wireless functionality as a standard feature. New, slim-mer models are expected at regular intervals from this low-cost competitor, which marketsdirectly to customers.

■ Samsung is one of several manufacturers that have married cell phone capabilities withmultifunction PDA features. Its i500 uses the Palm operating system, provides speedy e-mailand MP3 downloads, plays video clips, and offers PDA functions such as address book, cal-endar, and speed dial.

Despite strong competition, Sonic can carve out a definite image and gain recognitionamong targeted segments. Our licensing arrangement with Cellport Systems allows us toprovide the exclusive feature of voice recognition for hands-off operation, a critical point ofdifferentiation for competitive advantage. Exhibit 2 shows a selection of competitive PDAproducts and prices.

2.4 PRODUCT OFFERING The Sonic PDA 1000 offers the following standard features:

■ Voice recognition for hands-free commands and communication

■ Built-in cell phone functionality

■ Wireless Web access and e-mail capabilities

■ MP3 music downloading and player capabilities

■ Full organization and communication functions, including calendar, address book,memo pad, Internet browser, e-mail program, and text and instant messaging programs

■ Connectors to accommodate all palmOne-compatible peripherals

Product Offering summarizesmain features of the compa-ny’s products.


Distribution describes eachchannel used by the companyfor this product and mentionsnew developments and trends.

The marketing and financialobjectives should be defined inspecific terms so managementcan measure progress andtake corrective action to stayon track.

■ Ability to run any palmOne-compatible application

■ Large colour display

■ Keyboard for input

■ Cradle for synchronizing data with PC

■ Interchangeable case wardrobe of different colours and patterns

First-year sales revenues are projected at $60 million, based on sales of 240,000 Sonic1000 units at a wholesale price of $250 each. During the second year, we plan to introducethe Sonic 2000 as a higher-end product with the following standard features:

■ Global positioning system (GPS) for identifying locations, obtaining directions

■ Built-in digital camera

■ Translation capabilities to send English text as Spanish text (other languages to be offeredas add-on options)

2.5 DISTRIBUTION Sonic-branded products will be distributed through a network of selectstore and nonstore retailers in the top 50 U.S. markets. Among the most important channelpartners being contacted are:

■ Office supply superstores. Office Depot and Staples will both carry Sonic products instores, in catalogues, and on Web sites.

■ Computer stores. Gateway stores will carry Sonic products.

■ Electronic specialty stores. Circuit City and Best Buy will carry Sonic PDAs.

■ Online retailers. Amazon.com will carry Sonic PDAs and, for a promotional fee, will giveSonic prominent placement on its home page during the introduction.

Distribution will initially be restricted to the United States. We plan to expand intoCanada and beyond.

We will emphasize trade sales promotion in the first year.

3.0 Marketing Strategy3.1 OBJECTIVES We have set aggressive but achievable objectives for the first and secondyears of market entry.

■ First-year Objectives We are aiming for a 3 percent share of the U.S. PDA market throughunit sales volume of 240,000.

■ Second-year Objectives Our second-year objectives are to achieve a 6 percent share basedon sales of two models and to achieve break-even early in this period.

An important objective will be to establish a well-regarded brand name linked to a mean-ingful positioning. We will have to invest heavily in marketing to create a memorable and dis-tinctive brand image projecting innovation, quality, and value. We also must measure aware-ness and response so we can adjust our marketing efforts if necessary.

3.2 TARGET MARKETS Sonic’s marketing strategy is based on a positioning of product dif-ferentiation. Our primary consumer target is middle- to upper-income professionals whoneed one portable device to coordinate their busy schedules and communicate with familyand colleagues. Our secondary consumer target is high school, college, and graduate stu-dents who need a multifunction device. This segment can be described by age (16–30) andeducation.

Our primary business target is mid- to large-sized corporations that want to help their man-agers and employees stay in touch and input or access critical data on the go. This segment con-sists of companies with more than $25 million in annual sales and more than 100 employees. Asecondary business target is entrepreneurs and small-business owners. We are also targetingmedical users who want to reduce paperwork and update or access patients’ medical records.

This section describes issuesthat might affect the compa-ny’s marketing strategy and implementation.

All marketing strategies startwith Segmentation, Targetingand Positioning.


Target segments must bedefined before positioning canbe done, since positioningrequires identification of com-petitive positions available tothe company as potentialpoints of difference.

Positioning identifies thebrand, customer benefits, andpoint(s) of difference and parity for this product or product line.

Product Strategy calls forcoordinated decisions onproduct mixes, product lines,brands, packaging and labell-ing, and warranties.

Pricing strategy includespolicy, objectives, and actionprograms to set initial pricesand for adapting prices inresponse to opportunities andchallenges from competitors.

Distribution strategy includesselection and management ofchannel relationships requiredto deliver value to customers.

Each of the four marketing-mix strategies conveys Sonic’s differentiation to the targetmarket segments identified above.

3.3 POSITIONING Using product differentiation, we are positioning the Sonic PDA as themost versatile, convenient, value-added model for personal and professional use. The mar-keting strategy will focus on the voice-recognition system as the main feature differentiatingthe Sonic 1000.

3.4 STRATEGIES Marketing strategies need to be broken down into strategies in specificareas such as product, pricing, distribution, and marketing communications.

Product The Sonic 1000, including all the features described in the Product Review sec-tion, will be sold with a one-year warranty. We will introduce a more compact, more power-ful high-end model (the Sonic 2000) during the following year, with GPS functionality andother features. Building the Sonic brand is an integral part of our product strategy. The brandand logo (Sonic’s distinctive yellow thunderbolt) will be displayed on the product and pack-aging, and reinforced by its prominence in the introductory marketing campaign.

Pricing The Sonic 1000 will be introduced at $250 wholesale, $350 estimated retail priceper unit. We expect to lower the price of this first model when we expand the product line bylaunching the Sonic 2000, to be priced at $350 wholesale per unit. These prices reflect a strat-egy of (1) attracting desirable channel partners and (2) taking market share from palmOne.

Distribution Our channel strategy is to use selective distribution to have Sonic PDAs soldthrough well-known stores and online retailers. During the first year, we will add channelpartners until we have coverage in all major U.S. markets and the product is included in themajor electronics catalogues and Web sites. We will also investigate distribution through cell-phone outlets maintained by major carriers such as Cingular Wireless. In support of ourchannel partners, Sonic will provide demonstration products, detailed specification hand-outs, and full-colour photos and displays featuring the product. We will also arrange specialtrade terms for retailers that place volume orders.

Marketing Communications By integrating all messages in all media, we will reinforcethe brand name and the main points of product differentiation, especially our exclusivevoice-recognition feature. Research about media consumption patterns will help our adver-tising agency choose appropriate media and timing to reach prospects before and duringproduct introduction. Thereafter, advertising will appear on a pulsing basis to maintainbrand awareness and communicate various differentiation messages. The agency will alsocoordinate public relations efforts to build the Sonic brand and support the differentiationmessage. To attract market attention and encourage purchasing, we will offer as a limited-time premium a leather carry-case. To attract, retain, and motivate channel partners for apush strategy, we will use trade sales promotions and personal selling to channel partners.Until the Sonic brand has been established, our communications will encourage purchasesthrough channel partners rather than from our Web site.

3.5 MARKETING MIX The Sonic 1000 will be introduced in February. Here are summariesof action programs we will use during the first six months to achieve our stated objectives.

■ January We will initiate a $200,000 trade sales promotion campaign to educate dealersand generate excitement for the product launch in February. We will exhibit at the majorconsumer electronics trade shows and provide samples to selected product reviewers, opin-ion leaders, and celebrities as part of our public relations strategy. Our training staff willwork with sales personnel at major retail chains to explain the Sonic 1000’s features, bene-fits, and competitive advantages.

■ February We will start an integrated print/radio/Internet campaign targeting profession-als and consumers. The campaign will show how quickly Sonic PDA users can accomplishtasks using voice recognition. This multimedia campaign will be supported by point-of-salesignage as well as online-only specials.

■ March As the multimedia advertising campaign continues, we will add consumer salespromotion tactics such as giving away leather carry-cases as a premium. We will also dis-tribute new point-of-purchase displays to support our retailers.

Marketing Communicationsstrategy includes managementof all efforts to communicatevalue to customers, potentialcustomers, and channel members.

The marketing mix includes thetactics and programs that sup-port each marketing strategy.These programs should bespecific and measurable, witha name, a responsible person,milestone dates, and a budget.

Programs should be coordinat-ed with the resources andactivities of other departmentsthat contribute to the creation,delivery, or communication of customer value for thisproduct.


Marketing Research is used to support development,implementation, and evaluationof strategies and action programs.

Financials include marketingbudgets and sales forecasts toplan for expenditures, schedul-ing, and operations related toeach action program.

Breakeven Analysis includesestimated revenues, relevantfixed costs, and variable costsfor the product for the timeperiod covered by the market-ing plan.

■ April We will hold a trade sales contest offering prizes for the salesperson and retail orga-nization that sells the most Sonic PDAs during the 4-week period.

■ May We plan to roll out a new national advertising campaign this month. The radio adswill feature celebrity voices using the voice-recognition system to operate their Sonic PDAs.The print ads will show these celebrities holding their Sonic PDAs.

■ June Our radio campaign will add a new voice-over tag line promoting the Sonic 1000 asa graduation gift. We will also exhibit at the semiannual electronics trade show and providechannel partners with new competitive comparison handouts as a sales aid. In addition, wewill tally and analyze results of customer satisfaction surveys for future promotions and toprovide feedback for product and marketing activities.

3.6 MARKETING RESEARCH Using research, we will identify specific features and benefitsour target market segments value. Feedback from market tests, surveys, and focus groupswill help us develop the Sonic 2000. We are also measuring and analyzing customers’ atti-tudes toward competing brands and products. Brand awareness research will help us deter-mine the effectiveness and efficiency of our messages and media. Finally, we will use cus-tomer satisfaction studies to gauge market reaction.

4.0 FinancialsTotal first-year sales revenue for the Sonic 1000 is projected at $60 million, with an averagewholesale price of $250 per unit and variable cost per unit of $150 for unit sales volume of240,000. We anticipate a first-year loss of up to $10 million. Break-even calculations indicatethat Sonic 1000 will become profitable after the sales volume exceeds 267,500, early in theproduct’s second year. Our breakeven analysis assumes per-unit wholesale revenue of $250per unit, variable cost of $150 per unit, and estimated first-year fixed costs of $26,750,000.Based on these assumptions, the breakeven calculation is:

26,750,000 � 267,500 units

$250 - $150

5.0 Controls5.1 IMPLEMENTATION We are planning tight control measures to closely monitor quality andcustomer service satisfaction. This will enable us to react very quickly in correcting any prob-lems that may occur. Other early warning signals that will be monitored for signs of deviationfrom the plan include monthly sales (by segment and channel) and monthly expenses.

5.2 MARKETING ORGANIZATION Sonic’s chief marketing officer, Jane Melody, holds overallresponsibility for marketing strategy and direction. Exhibit 3 shows the structure of the eight-person marketing organization. Sonic has hired Worldwide Marketing to handle national salescampaigns, trade and consumer sales promotions, and public relations efforts.

Controls help managementmeasure results and identifyproblems or performance vari-ations that need correction.

The Marketing Organizationmay be organized by function,as in this example, or by prod-uct, customer, or some combi-nation of these.


Jane Melody,Chief Marketing

Officer

Amelia Howard,AdvertisingManager

Ron Hall,Promotion Manager

Tony Calella,Sales

Manager

Tiffany White,Regional

Sales

Viktor Chenkov,Regional

Sales

Carlos Dunn,Advertising

Analyst

Kate McConnell,Promotion

Analyst

| EXHIBIT 3 | Sonic’s Marketing Organization

Sources: Background information and market data adapted from: Pui-Wing Tam, “Palm Unveils palmOne Name, after Breakup,”Wall Street Journal, August 18, 2003, p. B4; Elaine C.Y. Chen, “Lean, Mean Multimedia Machine,” Laptop, August 2003, p. 20;Michael V. Copeland, Om Malik, and Rafe Needleman, “The Next Big Thing,” Business 2.0, July 2003, pp. 62–69; Steve Hamm,“Tech Comes Out Swinging,” Business Week,June 23, 2003, pp. 62–66; “Dell Rides Wireless Wave,” eWeek, July 7, 2003,http://www.eweek.com; Stephen H. Wildstrom, “Wi-Fi Handhelds? Not for the Footloose,” Business Week, June 16, 2003, p. 24;Bob Brewin, “Palm to Buy Handspring to Bolster Hardware Unit,” Computerworld, June 9, 2003, p. 12; “PDAs with Phones,” PCMagazine, May 6, 2003, p. 108; “Handheld Market Declines in 2002,” Health Management Technology,March 2003, p. 6; BobBrewin, “Palm Slashes Pricing to Match the Competition,” Computerworld, February 10, 2003, p. 36.

Sonic PDA Marketing Plan Chapter Assignments

Chapter 2 Developing Marketing Strategies and PlansEvery marketing plan must include the company mission, analysis of strengths, weaknesses,opportunities and threats and state the marketing and financial objectives for the plan peri-od. As shown in the sample marketing plan on pages A1–A7, Sonic is a start-up company thatwill soon introduce a new multi-function personal digital assistant (PDA) to compete withestablished products made by Palm, Hewlett Packard, Sony and others. As an assistant toJane Melody, Sonic’s chief marketing officer, you have been assigned to:

■ Draft a mission statement for Sonic’s senior management to review.

■ Prepare a summary of strengths, weaknesses, opportunities and threats (SWOTs).

■ List the marketing and financial objectives the company has for the new PDA being devel-oped by Sonic.

As your instructor directs, enter Sonic’s mission statement, SWOTs, and financial and mar-keting objectives in a written marketing plan, or type them into the Mission, SWOT, andObjectives sections of Marketing Plan Pro.

Chapter 3 Gathering Information and Scanning the EnvironmentMarketing information systems, marketing intelligence systems, and marketing researchsystems are used to gather and analyze data for various parts of the marketing plan. Thesesystems help marketers examine changes and trends in markets, competition, customerneeds, product usage, and distribution channels. Some changes and trends may turn up evi-dence of opportunities or threats.


Sonic has developed information about the competition and competitive situation, butJane Melody believes more information is needed in preparation for launching the first PDA.Based on the marketing plan contents discussed in Chapter 2, how can you use MIS andmarketing research to support the marketing planning for the new PDA:

■ For which sections of the plan will you need secondary data? Primary data? Why do youneed information for each section?

■ Where can you find secondary data that will be useful? Identify two Internet sources andtwo non-Internet sources. Describe what you plan to draw from each source, and indicatehow you will use the data in your marketing plan.

■ What primary research will Sonic need to support its marketing strategy, including prod-uct management, pricing, distribution, and marketing communication? What questions orissues should Sonic seek to resolve using primary data?

■ What technological, demographic and/or economic changes can potentially affect PDAdevelopment, buyer acceptance of PDAs, and development of substitute or enhanced products?

Enter your answers about Sonic’s use of marketing research in a written marketing plan or inthe Marketing Research, Market Analysis, and Market Trends sections of Marketing Plan Pro.

Chapter 4 Conducting Marketing Researchand Forecasting DemandSonic has developed a sales forecast for its new PDA for the next two years. Jane Melody wantsto review estimates of industry demand for PDAs. She also wants to develop an approach formeasuring the effectiveness of Sonic’s marketing efforts. She has asked you to:

■ Determine, from available secondary data, estimates of total demand for PDAs for thenext two years. She understands you will have to do Internet searches and determine indus-try trade association sources for such data.

■ Look at the various ways to evaluate marketing effectiveness and recommend to her thebest way that Sonic can determine the effectiveness of its marketing efforts.

Enter the answers to these questions in a written marketing plan or into the SalesForecasting and Controls sections of Marketing Plan Pro.

Chapter 5 Creating Customer Value, Satisfaction, and LoyaltySonic has decided to focus on total customer satisfaction, since studies have shown that cus-tomers who are “completely satisfied” with the product or service are much more likely tobuy more from the company than customers who report they are “satisfied.” You have beenasked by Jane Melody to:

■ Recommend how Sonic should measure total customer satisfaction.

Review the possible ways to gain customer satisfaction information and write the recom-mended approach in a marketing plan or into the Positioning section of Marketing Plan Pro.

Chapter 6 Analyzing Consumer MarketsEvery company has to study customer markets and behaviour prior to developing a market-ing plan. Marketers need to understand who constitutes the market, what and why they buy,who participates in and influences the buying process, and how, when and where they buy.

You are responsible for researching and analyzing the consumer market for Sonic’s PDA.These are the questions Sonic needs to answer:

■ What cultural, social, personal, and psychological factors have the most influence onconsumers buying PDAs?

■ What research tools will help you better understand the effect of these factors on buyerattitudes and behaviour?

■ What consumer buying roles and buying behaviours are particularly relevant for PDAproducts?


■ What kind of marketing activities should Sonic plan to coincide with each stage of theconsumer buying process?

Document your findings and conclusions in a written marketing plan or type them into theMarket Demographics and Target Markets sections of Marketing Plan Pro.

Chapter 7 Analyzing Business MarketsBusiness-to-business marketers have to understand their markets and the behaviour of mem-

bers of the buying centre in order to develop appropriate marketing plans. Jane Melody hasdefined the business market at Sonic as mid- to large-sized corporations that need to helptheir workforces stay in touch and input or access important data from any location. She hasasked you to find out:

■ What specific types of businesses appear to fit the business market definition used at Sonic?

■ What needs could Sonic’s PDA address for these businesses?

■ Who would participate in and influence the purchase of PDAs for use in these businesses?

■ Which environmental, interpersonal, and individual influences are likely to be mostimportant to business buyers of PDA products—and why?

Report your findings and conclusions in a written marketing plan or type them into theMarket Demographics and Target Markets sections of Marketing Plan Pro.

Chapter 8 Identifying Market Segments and TargetsMarket segmentation is an important part of any marketing plan. It is the first step in the STPprocess that precedes any marketing strategy: Segmentation, Targeting, and Positioning. Thepurpose of STP is to identify and describe distinct market segments, target-specific seg-ments, and then pinpoint the differentiating benefits to be stressed in marketing.

In your role as Jane Melody’s assistant, you are responsible for market segmentation andtargeting for Sonic’s PDA product. Look at the SWOT analysis, Market Description, andCompetitive Review sections and then answer:

■ Which variables should Sonic use to segment its consumer markets?

■ Which variables should Sonic use to segment its business markets?

■ How can Sonic evaluate the attractiveness of each identified segment?

■ Should Sonic pursue full market coverage, market specialization, product specialization,selective specialization, or single-segment concentration? Why?

Summarize your conclusions in a written marketing plan or enter them in the marketDemographics and Target Markets sections of Marketing Plan Pro. Note any additionalresearch you may need in the Marketing Research Section of Marketing Plan Pro.

Chapter 9 Creating Brand EquityDecisions about branding are critical for any marketing plan. During the planning process,marketers must consider issues related to brand strategies and brand equity. Sonic’s PDA isa new brand name entering the market. Sonic begins with zero brand equity. Brand equity isbuilt via choices with brand elements and marketing activities and programs. A strong brandhas awareness and a positive brand image. Sonic begins with no meaning. Jane Melody hasasked you to:

■ Suggest what Sonic 1000 with its distinctive yellow thunderbolt might mean for attributesand benefits levels of meaning.

■ Determine what strategies and action programs should be used to build brand equity forSonic 1000.

Summarize your ideas in a written marketing plan or type them into the Marketing Mix sec-tion of Marketing Plan Pro. Also indicate in the Marketing Research section what studies youwill need to support decisions about managing the brand equity for Sonic 1000.


Chapter 10 Crafting the Brand PositioningThe third part of STP is to select and communicate an effective positioning to differentiateyour offering from competitors’ offerings. The marketer must also plan for appropriate mar-keting strategies for each stage of the product life cycle. As you continue your work to devel-op Sonic’s marketing plan for launching Sonic 1000, consider these questions about posi-tioning and life-cycle strategies:

■ Which of the differentiation variables related to product, services, personnel, channels,and image are best suited for Sonic’s situation, strategy, and marketing objectives? Why?

■ Write the positioning statement for Sonic 1000.

■ Knowing the stage of the product life cycle for Sonic 1000, what are the implications forthe marketing mix, product management strategy, service strategy, and R&D strategy?

Record your answers in a written marketing plan or type them in the Positioning section ofMarketing Plan Pro. Note any additional research you may need in the Marketing Researchsection of Marketing Plan Pro.

Chapter 11 Dealing with CompetitionCompetitive strategy analysis is an important part of two areas within the marketing plan.First, in assessing the Current Situation, businesses need to identify key competitors andlearn about each rival’s strengths and weaknesses. Second, competitive intelligence andanalysis shapes the competitive strategy, which is supported by the marketing mix.

Sonic is a new entrant in an established industry which has competitors with relativelyhigh brand identity and strong market positions. As you assist Jane Melody in developmentof the Sonic marketing plan, consider the following key issues that will affect Sonic’s abilityto introduce a new PDA successfully:

■ What is the strategic group for Sonic?

■ Which firm is the market leader, and what are its objectives, strengths, weaknesses?

■ What additional competitive intelligence is needed to answer the question about themarket leader more completely, and how should Sonic go about getting the information?

■ Which competitive strategy should be most effective for Sonic?

Enter your answers in a written marketing plan or enter them into the Competition, SWOTAnalysis, and Critical Issues sections of Marketing Plan Pro.

Chapter 12 Setting Product StrategyDecisions about products are critical elements of any marketing plan. During the planningprocess, marketers must consider issues related to product mix and product lines. Productmarketers distinguish five levels of product, each adding more customer value: core benefit,basic, expected, augmented, and potential. In assessing product strategy:

■ How would you define the core benefit for Sonic 1000?

■ How would you define the augmented product for Sonic 2000, the second product to belaunched by Sonic next year?

Write your answer to the questions in a written marketing plan or enter it in the ProductOffering and Marketing Mix sections of Marketing Plan Pro.

Chapter 13 Designing and Managing ServicesAll marketers need to develop a service strategy when preparing their marketing plans.Marketers of intangible products must consider how to manage customer expectations andsatisfaction. Marketers of tangible products must create suitable support services. You areplanning product support services for Sonic’s PDA. The following questions will help youmap your service strategy:

■ What support services do buyers of PDA products want and need? Consider what Sonic’scompetitors are doing in this area.


■ How can Sonic identify and manage gaps between expected and perceived service to sat-isfy customers?

■ What post-sale services must Sonic make available to customers who buy the Sonic PDA?

■ What internal marketing does Sonic need to do to implement its service strategy?

Summarize your recommendations in a written marketing plan or enter the information inthe Marketing Mix section of Marketing Plan Pro.

Chapter 14 Developing Pricing Strategies and ProgramsPricing is a critical element in any company’s marketing plan, because it directly affects rev-enue and profit goals. Effective pricing strategies must consider costs as well as customerperceptions and competitor reactions, especially in highly competitive markets.

You are in charge of pricing Sonic’s first PDA. Review your SWOT Analysis andCompetition Analysis. Also think about the markets you are targeting and the positioningyou want to achieve. Then, answer the following questions about pricing:

■ What should Sonic’s primary pricing objective be? Why?

■ Are PDA customers likely to be price-sensitive? Is demand elastic or inelastic? What arethe implications of the answers for pricing decisions?

■ What price adaptations such as discounts, allowances, and promotional pricing shouldSonic include in its marketing plan?

Document your pricing strategies and programs in a written marketing plan or type theminto the Marketing Mix section of Marketing Plan Pro.

Chapter 15 Designing and Managing Value Channelsand Marketing NetworksManufacturers need to pay close attention to their marketing channels. By planning thedesign, management, evaluation, and modification of their marketing channels, manufac-turers can ensure their products are available when and where customers want to buy.

At Sonic, you have been asked to develop a channel strategy for Sonic 1000. Based on theinformation you previously gathered and the decisions you have already made about the tar-get market, product, and pricing, answer the following:

■ What decisions must Sonic make to develop the five marketing flows (physical product,title, payment, information, and promotion) for Sonic 1000?

■ How many levels would be appropriate for the consumer and business markets you aretargeting for Sonic 1000?

■ Should you plan for exclusive, selective, or intensive distribution?

■ What decisions must Sonic make to develop the five service outputs (lot size, waitingtime, spatial convenience, product variety, and service back up) for Sonic 1000?

Document your recommendations about marketing channels and strategy in a written market-ing plan or type the recommendations into the Marketing Mix section of Marketing Plan Pro.

Chapter 16 Managing Retailing, Wholesaling, and LogisticsRetailers and wholesalers play a critical role in marketing strategy because of their relation-ships with the final consumer. Manufacturers need to manage their connections with thesechannel intermediaries.

You are responsible for channel management for Sonic’s PDA. Based on your previousstrategic choices, respond to the following questions about wholesaling and retailing strategy:

■ What types of retailers will be most appropriate for distributing Sonic 1000? What areadvantages and disadvantages of selling through these types of retailers?

■ What role should wholesalers play in Sonic’s distribution strategy? Why?

■ What market logistics issues must Sonic consider for the launch of its first PDA?

Summarize your answers in a written marketing plan or type them into the Marketing Mixsection of Marketing Plan Pro.


Chapter 17 Designing and Managing Integrated Marketing CommunicationsEvery marketing plan must include a section showing how the company will use marketingcommunications. The question is not whether to communicate, but rather what to say, towhom, how to say it, how often, and which promotional tools to use.

You are responsible for planning integrated marketing communications for Sonic’s newPDA. Review the strategies you previously documented in the marketing plan for the target-ing, positioning, branding, product management, pricing, and distribution of the Sonic1000. Now use your knowledge of communications to answer these questions:

■ What audience(s) should Sonic target in its integrated marketing communications plan?

■ What image should Sonic seek to create for its first PDA product?

■ What objectives are appropriate for Sonic’s initial communications campaign?

■ What message design and communication channels are likely to be most effective for thetarget audience?

■ Which promotional tools would be most effective in Sonic’s promotional mix? Why?

■ How should Sonic decide the amount to allocate to its marketing communications budget?


Chapter 18 Managing Mass Communications: Advertising,Sales Promotions, Events, and Public RelationsAdvertising, sales promotion, and public relations are among the most visible outcomes ofany marketing plan. These mass communications tools provide support for branding, prod-uct, pricing, and distribution strategies.

At Sonic, you are starting to plan promotional support for launching the new PDA. Afterreviewing your earlier marketing mix decisions and your current situation as a new player inthe PDA market, respond to the following questions about your promotion strategy:

■ Should Sonic use advertising to support the PDA introduction? If so, what advertisinggoals will you set, and how will you measure your results?

■ What message(s) do you want to communicate to your target audience? What media aremost appropriate, and why?

■ Should you use consumer or trade promotion or both?

■ Should you use public relations to promote Sonic and its products? If so, what objectiveswill you set for your public relations program(s)?


Chapter 19 Managing Personal Communications: Direct Marketing and Personal SellingMany marketers have to consider sales force management in their marketing plans. The highcost of maintaining a direct sales force and the need to establish multiple channels of distri-bution have led some companies to include online, mail, and telephone sales for some oftheir personal selling efforts.

In your marketing role at Sonic, you are planning a sales strategy for the new PDA. Afterreviewing your decisions about other marketing mix activities, answer these questions aboutpersonal selling:

■ Does Sonic need a direct sales force, or can it sell through agents and outside repre-sentatives?

■ Toward whom should Sonic’s selling activities be focused?

■ What kinds of sales objectives should Sonic set for its sales personnel?


■ What role should e-marketing play in the new PDA launch?

■ What training will sales representatives need to sell the Sonic 1000?

Summarize your answers in a written marketing plan or type them into the Marketing Mix,Marketing Organization, and Sales Forecast sections of Marketing Plan Pro.

Chapter 20 Introducing New Market OfferingsProduct strategy is based on the choices companies make as they select target segments andcreate a distinctive positioning for their brand and products. With this foundation, a mar-keter is ready to plan for new product development and management.

Now that you have developed the marketing plan for Sonic 1000, you are considering newproduct options for the Sonic 2000. Answers to the following questions will help you narrowthe options for the second Sonic PDA product:

■ What specific needs of the targeted customer segments should Sonic seek to satisfy witha second PDA product?

■ Working alone or with other students, generate at least four new ideas for new PDA prod-ucts, and indicate the criteria Sonic should use to screen these ideas.

■ Develop the most promising idea into a product concept and explain how Sonic can testthis concept.

■ Assuming the most promising idea tested well, develop a marketing strategy for intro-ducing the new product, including: 1. description of the target market(s), 2. product posi-tioning, 3. objectives for sales, profit, and market share for first year, 4. channel strategy, and5. marketing budget for first year.

■ Into which of the six categories of new products identified by Booz, Allen, and Hamiltondoes Sonic’s first PDA product fit? Into which of these categories does the suggested secondPDA product fit? What are the implications of the answers to this question for Sonic’s mar-keting plan for the second PDA?

Summarize your answers to these questions in a written marketing plan or enter the answersinto the Marketing Mix, Marketing Research, Breakeven Analysis, Sales Forecast, andMilestone sections of Marketing Plan Pro.

Chapter 21 Tapping into Global MarketsGlobal marketing offers a way for companies to grow by expanding the customer basebeyond the domestic market. However, the complexities of global marketing demand care-ful planning and implementation.

As Jane Melody’s assistant, you are researching markets outside the United States forSonic’s first PDA product. Review the recommendations you have made for Sonic’s market-ing plan. Then answer these questions about how Sonic can approach global marketing:

■ Should Sonic use licensing, joint ventures, direct investment, or exporting to enter theCanadian market? To enter other markets?

■ If Sonic wants to start marketing a PDA in other countries, which of the five internation-al product strategies (straight extension, communication adaptation, product adaptation,dual adaptation, product/forward invention) is most appropriate? Why?

■ Identify one international market that seems most promising for Sonic. Why did youselect this international market as most promising?

Summarize your answers in a written marketing plan or enter the answers in the SWOT,Critical Issues, Marketing Strategy, and Marketing Research sections of Marketing Plan Pro.

Chapter 22 Managing a Holistic Marketing OrganizationThe last step in completing a marketing plan is to provide for organizing, implementing,evaluating, and controlling the total marketing effort. In addition to measuring progress


toward financial targets and other objectives, marketers need to plan how to audit andimprove their marketing activities.

Sonic has asked you to plan the management of the marketing effort for the PDA product.Look back at the objectives, strategies, and programs you have developed. Then answerthese questions:

■ What is the most appropriate organization for Sonic’s marketing and sales departments?

■ What control measures should Sonic incorporate into its marketing plan?

■ What can Sonic do to evaluate its marketing?

■ How can Sonic evaluate its level of ethically and socially responsible marketing?

Summarize your answers in a written marketing plan or enter the answers in the MarketingOrganization and Implementation sections of Marketing Plan Pro.

Documents

APPENDIX - Pearson Canada