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MARKETING PLANS

Professor Hugh Wilson and Dr Emma Macdonald

Istanbul Technical University

Air Transportation Management, M.Sc. Program

Airline Marketing

Module 5-7

28th January 2014

Marketing Plans

Professor Hugh Wilson

Professor of Strategic Marketing, Cranfield School of Management

Dr Emma MacdonaldSenior Lecturer, Cranfield School of Management

Research Director, Cranfield Customer Management Forum

[email protected]

About Hugh Wilson

Hugh Wilson MA (Oxon) DipCompSci (Cantab) PhDProfessor of Strategic Marketing and Director of the Customer Management ForumHugh Wilson is Professor of Strategic Marketing and Director of the Customer Management Forum atCranfield School of Management, and an influential author, speaker and consultant in marketing and IT.Hugh is listed in the Chartered Institute of Marketing`s global `Guru Gallery` of `the 50 leadingmarketing thinkers alive today` (www.shapetheagenda.com). Hugh has a mathematics degree fromOxford University, a postgraduate computer science degree from Cambridge University and a prize-winning PhD in marketing planning from Cranfield. He has extensive industrial experience, includingtwenty years in the IT industry working for IBM, Logica, Artificial Intelligence Ltd and NCR in marketing,consulting and business development. He now spends much of his time working with companies such asIBM, Lloyds TSB, BT, Taylor Woodrow and Skandia on marketing planning, e-commerce, CRM and multi-channel marketing, as well as teaching on these topics in Cranfield. His books include `The NewMarketing` (with Malcolm McDonald, 2002), ‘The Multichannel Challenge’ (with Rod Street and LindsayBruce, 2008) and the bestselling ‘Marketing Plans’, 7th edition (with Malcolm McDonald, 2011). He wasrecently honoured by the DTI as one of the "Internet Decade" list of the hundred individuals who havehad most influence over the development of e-commerce, according to an NOP poll. He writes regularlyfor academic and practitioner journals, including a recent article for Harvard Business Review with DrEmma Macdonald.

http://www.som.cranfield.ac.uk/som/research/centres/ccmf

http://www.shapetheagenda.com/

A value-based

approach to marketing

plans

Marketing is a process for:

Defining markets and understanding customer needs

Identifying customer groups (segments) with shared needs

Coordinating value propositions to meet these needs

Bringing the voice of the customer into the business

Monitoring the value actually delivered

A marketing plan documents the conclusions reached.

What could your business unit improve in its marketing

planning?

Your marketing plans:

Thought starters

Can you list your key target markets? (in order of priority)

Can you describe (quantitatively and qualitatively) the value

that is required by each of your key target markets?

In each of these key target markets, can you describe how

your organisation creates this value?

Do the relevant senior people in your organisation

understand and support the above three points?

Are all the relevant functions in your company organised in a

way that is supportive of delivering the value required by the

customer?

© Cranfield University 2013 5

The contents of a strategic marketing

plan (t+3) (less than 20 pages)

Mission statement

Financial summary

Market overview

SWOT analyses

Portfolio summary

Assumptions

Objectives and strategies

Budget


Inter Tech’s 5 year performance


Performance (£million) Base Year 1 2 3 4 5

Sales Revenue

- Cost of goods sold

£254

135

£293

152

£318

167

£387

201

£431

224

£454

236

Gross Contribution

- Manufacturing overhead

- Marketing & Sales

- Research & Development

£119

48

18

22

£141

58

23

23

£151

63

24

23

£186

82

26

25

£207

90

27

24

£218

95

28

24

Net Profit £16 £22 £26 £37 £50 £55

Return on Sales (%) 6.3% 7.5% 8.2% 9.6% 11.6% 12.1%

Assets

Assets (% of sales)

£141

56%

£162

55%

£167

53%

£194

50%

£205

48%

£206

45%

Return on Assets (%) 11.3% 13.5% 15.6% 19.1% 24.4% 26.7%

Performance (£million) Base Year 1 2 3 4 5

Market Growth 18.3% 23.4% 17.6% 34.4% 24.0% 17.9%

InterTech’s 5 Year Market-Based Performance

Customer Retention (%)

New Customers (%)

% Dissatisfied Customers

88.2%

11.7%

13.6%

87.1%

12.9%

14.3%

85.0%

14.9%

16.1%

82.2%

24.1%

17.3%

80.9%

22.5%

18.9%

80.0%

29.2%

19.6%

InterTech Sales Growth (%)

Market Share(%)

12.8%

20.3%

17.4%

19.1%

11.2%

18.4%

27.1%

17.1%

16.5%

16.3%

10.9%

14.9%

Relative Product Quality

Relative Service Quality

Relative New Product Sales

+10%

+0%

+8%

+8%

+0%

+8%

+5%

-20%

+7%

+3%

-3%

+5%

+1%

-5%

+1%

0%

-8%

-4%

Why market growth rates are

important


Percentage of market

represented by segment

Percentage of all profits in

total market produced by

segment

Ratio of profit produced by

segment to weight of

segment in total population

Defection rate

Total

Market

Segment

1

Segment

2

Segment

3

Segment

4

Segment

5

Segment

6

27.1

14.7

0.54

15%

18.8

21.8

1.16

28%

18.8

28.5

1.52

30%

11.0

23.0

2.09

35%

9.5

4.9

0.52

17%

14.8

7.1

0.48

20%

100.0

100.0

1.00

23%

Measurement of segment

profitability


Assessing market/segment

attractiveness

Assessing market/segment

attractiveness

Compare the attractiveness of different product-

markets as an aid to prioritisation

Objective:


Market

Attractiveness

KEY

Present

position

Forecast

position in

3 years

High Low

Low

High

?

ResearchExec

MBA

C.S.

G.M.Ps

Distance

Education/

CMR

MANDAS

Directors

Seminars

C.S.

Full-Time

MBA

Our competitive position /

business strength


Product-market table

Products:

Markets:

1: 2: 3: 4: 5: 6: 7:

1:

2:

3:

4:

5:

6:

7:

1. Select a business unit, or part of the business, for which you wish to develop a partial plan.

Business unit: ___________________

2. Along the top of the table below, list the principal products, product groups or services sold by the business unit, ignoring

unimportant ones.

3. Down the left of the table, list the principal markets, or market segments, you sell into, ignoring unimportant ones

4. Now choose 4 to 6 product-markets (cells) to concentrate on during the course. For each, estimate your current revenue

in the box.

13

Boston matrix


Share relative to competitors

HIGH

LOW

Mar

ket

gro

wth

LOWHIGH

C

DF

B

E

A

1.0Higher Lower

Directional policy matrix:

truck tyresM

AR

KE

T/

SE

GM

EN

T A

TT

RA

CT

IVE

NE

SS

RELATIVE BUSINESS STRENGTH

Higher

Lower

Higher Lower

CURRENT POSITION

Ancillary operations

Construction & mining

Military

Business

Large haulage


Market attractiveness

evaluation

1.

2.

3.

4.

5.

6.

Market Size (£ millions)

Volume Growth (Units)

Competitive Intensity

Industry Profitability

Vulnerability

Cyclicality

8 - 10

>£250

>10%

Low

> 15%

Low

Low

4 - 7

£51 - 250

5 - 9%

Medium

10 - 15%

Medium

Medium

3 - 0

< £50

< 5%

High

< 10%

High

High

Factor Scoring Criteria

Score

5

10

6

8

6

2.5

Total

Weighting

15

25

10

25

15

10

Score x weight

0.75

2.5

0.6

2.0

0.9

0.25

7.1


Scoring MAFs - example


AttractivenessWeight

(%)

Product-market A

Product-market B

Product-market C

ScoreScore x weight

ScoreScore x weight

ScoreScore x weight

Growth 25 6 1.5 5 1.25 10 2.5

Profitability 25 9 2.25 8 2.0 7 1.75

Size 15 6 0.9 5 0.75 8 1.2

Vulnerability 15 5 0.75 6 0.9 6 0.9

Competition 10 8 0.8 8 0.8 4 0.4

Cyclicality 10 2.5 0.25 3 0.3 2.5 0.25

Total 100 6.45 6.0 7.0

Prioritising using MAFs

MAF Bar Chart

ReceptToNewTech

VanillaSale

RevenuePerCust

MktGrowth

ExtentOfNeed

0

1

2

3

4

5

6

7

8

PP

-AV

/Co

ntM

gr

PP

-Ba

nkin

g

PP

-Exe

c M

ail

PP

-Go

ve

rnm

en

t

PP

-In

su

rBro

ke

PP

-IS

P/P

ort

al

PP

-Le

ga

l

PP

-Me

dic

al

PP

-Po

stO

ffE

tc

PP

-Tru

stIn

vM

a


Market Attractiveness Factors

AttractivenessWeight

(%)

Product-market: Product-market: Product-market:

ScoreScore x

weightScore

Score x

weightScore

Score x

weight

Total 100%

19

Process for evaluating

market attractiveness


1. At the corporate level, decide what the MAFs are (usually 3 to 5

factors)

2. Give each MAF an importance weighting to the company (total weights

should sum to 100%)

3. For each MAF, define the scoring criteria (what constitutes low

attractiveness, medium attractiveness, and high attractiveness)

4. Using the scoring criteria, score each product-market on a scale of 0 to

10 against each factor (where 0 is extremely low and 10 is extremely

high attractiveness)

5. Multiply the importance weights by the attractiveness scores to

produce a weighted attractiveness score

6. Evaluate the total weighted scores – do they seem to make sense,

intuitively?

Hints for MAF analysis

Keep it simple – ideally 6 factors or less

Keep factors independent of each other

Typically size, growth and profitability

represented

Clear the factors and weights with the board at an

early stage

Use the results to decide which business areas to

concentrate on


Summary

An MAFs (Market Attractiveness Factors) analysis forms an impartial way of prioritising effort

Use the results to decide which business areas to concentrate on


Assessing busines strengths:

critical success factor analysis

Assessing business

strengths

To understand how to compare the competitive

position of different product-markets using Critical

Success Factors

To understand how to construct a Directional Policy

Matrix as a basis for resource allocation

Objectives:


Boston matrix


Share relative to competitors

HIGH

LOW

Ma

rke

t g

row

thLOWHIGH

C

DF

B

E

A

1.0Higher Lower


truck tyresM

AR

KE

T/

SE

GM

EN

T A

TT

RA

CT

IVE

NE

SS


Higher

Lower

Higher Lower

CURRENT POSITION



Military

Business

Large haulage


© Cranfield University 2013

SWOT analysis using critical

success factors

1

2

3

4

5

You Comp A Comp B Comp C Comp D

Total 100

1

2

3

4

5

1. SEGMENT DESCRIPTION

It should be a specific part of

the business and should be

very important to the

organisation

2. CRITICAL SUCCESS

FACTORS

In other words, how do

customers choose?

3. WEIGHTING

(How important

is each of these

CSFs? Score

out of 100)

1

2

3

4

5

THREATS

5. OPPORTUNITIES / THREATS

What are the few things outside your

direct control that have had, and will

have, an impact on this part of your

business?

6. KEY ISSUES THAT NEED

TO BE ADDRESSED

What are the really key issues

from the SWOT that need to

be addressed?

OP

PO

RT

UN

ITIE

S

4. STRENGTHS / WEAKNESSES

ANALYSIS

How would your customers score you and

each of your main competitors out of 10 on

each of the CSFs?

Multiply the score by the weight.

27

Critical success factors -

tyre company


Remember your VIU analysis

Good night out with friends

Soul-food

Vicarious pride

A sense of belonging

Value-in-use

Food & drink

Performer engagement

Chances to mingle

People like me

Concert quality

Travel ease

Experience surround

Service

Product

Post concert bar


The role of relationship

varies: Five types of key

account


Exploratory

Basic

Cooperative

Interdependent

Integrated

Strategic

intent of

seller

Strategic intent of buyer

CSF analysis


1. Identify the Critical Success Factors (CSFs) that influence the

customers’ decision. There are usually not more than 6 really

important factors.

2. Assign an importance weighting to each CSF so that the weightings

for each segment totals 100%

3. Identify the key competitors for each segment and score performance

of your company and each key competitor on a scale of 1 to 10,

where 1 = very poor and 10 = excellent. Limit to a few competitors

(between 1 and 3).

4. Multiply the weights by the scores and add up the weighted score for

each competitor.

5. Assess your relative strength by dividing your score by the best

competitor’s score.

6. Identify the key issues from the analysis.

7. Note you can change your relative business strength by focusing on

improving your strength on the criteria that matter most to customers.

Hints on CSF analysis


1. Critical success factors are in the eye of the customer:

perception is reality!

2. External validation best

Market research ideal

B2B: you can fill in with a customer

Consider involving channel partners

If necessary, use internal cross-functional team of people who are

close to the customers in that segment (eg sales, service, market

research, R&D…)

3. Validate the results against current financials

4. Different segments are likely to have different CSFs

..or at most, the same CSFs but with different weightings

If they’re identical, either you need to do your market research, or

your segmentation is wrong!

C.S.F.’s

Score/weightingAbove the diagonal line: Score out of 10Below the diagonal line: Multiply score x weight

Weights

You Compet. A Compet B Compet C

1.

2.

3,

4.

5.

6.

Totals 100

Critical Success Factors

Product-market: __________________

Relative Business Strength: ____ (Our score minus best competitor score)

Critical Success Factors


Critical Success Factors:

example


C.S.F.’s

Score/weight

Score out of 10 - multiplying these by the weightWeights


1. Thought leadership 50

2. Impact on practice

throughput 25

3. Patient satisfaction 15

4. Impact on practice budget 10

5.

6.

Totals 100

63.0 4.0

8

82.0 1.8

7

71.1 1.5

10

60.6 0.5

5

6.7 7.8

Relative Business Strength: -1.1


truck tyresM

AR

KE

T/

SE

GM

EN

T A

TT

RA

CT

IVE

NE

SS


Higher

Lower

Higher Lower

CURRENT POSITION



Military

Business

Large haulage


Directional Policy Matrix

High

Low

+2 +1 0 -1 -2Low

Relative business strength

Market

attractiveness

High


About the DPM

Vertical axis = attractiveness of market segments, constructed from the Market Attractiveness Factors for the business. These should be generic, and allow comparison of existing and potential business.

Horizontal axis = business strengths against the Critical Success Factors for each segment, relative to the competition.

Relative business strengths should be measured against best competitor (not average) and from the point of view of the customer.

Size of circles should be proportional to amount of business (current revenue); you can add a pie slice indicating profit/contribution.

Information-rich matrix allows the application of useful policy guidelines for marketing strategies



Summary

Critical Success Factors provide a customer-focused way of assessing the strengths and weaknesses of our offering

Obtain a customer view where possible –otherwise use a team of those who are close to the customer

Validate the results against current financials

Our weighted average score, compared with the best competitor score, is plotted on the horizontal axis of the Directional Policy Matrix

38

Marketing objectives and

strategies

Objectives, strategies and

tactics

OBJECTIVES Defined and measurable aims,

eg market share/revenue/profit by

product-market.

STRATEGIES Say how objectives will be achieved.

Can be driven from critical success

factor analysis.

TACTICS Short term programmes with timings

/ actions. Say who will do what

and by when.


Strategies suggested by portfolio

matrix analysis

MA

RK

ET

SE

GM

EN

T A

TT

RA

CT

IVE

NE

SS


INVEST FOR GROWTH:

•Gain / Defend leadership

•Accept moderate short-term profits and

negative cash flow

•Geographic expansion, product line

expansion, product differentiation

•Aggressive marketing posture - selling,

advertising, pricing, sales promotion, service

levels etc.

Higher

Lower

Higher Lower

MAINTAIN / MANAGE FOR SUSTAINED

EARNINGS:

•Manage key product lines, prune less

successful product lines

•Differentiate products to maintain share

•Limit marketing expenditure

•Stabilize prices except where a temporary

aggressive stance is needed

OPPORTUNISTIC:

•Move to left if resources are available

•Keep a low profile until resources are

available

•Divest to a buyer able to exploit the

opportunity

SELECTIVE / MANAGE FOR PROFIT &

CASH:

•Acknowledge low growth

•Identify / exploit growth segments

•Emphasise quality, avoid commodity

•Improve productivity

•Prune product line aggressively, maximise

cash flow, minimise marketing expenditure,

maintain or raise prices at expense of volume.



tyre company (top level)M

AR

KE

T A

TT

RA

CT

IVE

NE

SS


Higher

Lower

Higher Lower

CURRENT POSITION

Car

LCV

Car

2 wheel

Agricultural

Earthmover

Truck


Directional Policy Matrix:

Car tyresM

AR

KE

T A

TT

RA

CT

IVE

NE

SS


Higher

Lower

Higher Lower

CURRENT POSITION

Price

Ignorant

Rational Buyer

Technical


‘Rational buyers’ – critical

success factors


Marketing options -

Ansoff matrix

Market

Penetration

Product

Development

Market

ExtensionDiversification

Present New

Present

New

PRODUCT GROUPS

CUSTOMERS/

SEGMENTS


Relative market

attractiveness

KEY

Present

position

Forecast

position in

3 years

High Low

Low

High

?

Product X

Exec MSc

Research

Open

programmes

Tailored

programmes

FT MSc

MBA

Relative

business strength

Introducing new product-

markets


Types of objective

Profit improvement

Productivity improvement Sales growth

Product

development

Market

development

Market

penetration

Change

asset base

Existing

assets

Cost

reduction

Improve

asset

utilisation

(experience

and

efficiency)

Increase

price /

reduce

discounts

Improve

product /

sales mix

(margins)

New

markets

Existing

markets

Convert

non-

users

New

segments

Take

competitors’

customers

Increase

usage

Growth focusCash and margin focus

Investment

•Acquisition

• Joint ventures

• etc

Divestment

• Redevelopment of

capital resources

Capital Utilisation focus


Objectives


For each product-market, set an objective in terms of revenue, market share and/or

profit by the end of the planning period. Put this below, or annotate the Directional

Policy Matrix with objectives.

C.S.F.’s

Score/weighting

Score out of 10 - multiplying these by the weightWeights


1. Price 50

2. Features 25

3. Service 15

4. Reliability 10

5.

6.

Totals 100

63.0 4.0

8

82.0 1.8

7

7 9

1.1 1.31.2

8

60.6 0.5

5

6.7 6.9 7.5

Relative Business Strength: - 0.8 (current) -0.6 (strategy)

Strategies: revisit C.S.F.

scores


Product-market: _____________________________

CSF: ________________ Scores: _______ (current) _________ (objective)

Description

of strategy

Actions to

achieve

strategy

Responsibility

Approximate cost

Strategy details



Barriers to effective planning

Lack of top management support & involvement

Lack of cross-functional involvement

Inadequate planning procedures

Lack of creativity & innovation

Lack of follow-through to implementation

Structure not market-focused

Culture stifling idea generation & openness

51

Appendix: organising the planning

process

February, March & April

Scottish Widows: process

overview

Position

Assessment

Initial

Prioritisatio

n

Business

Model

Defender

Strategic

Marketing

Plan

Detailed

Activities

Plans

• Segmentation

• Evaluate Market

Attractiveness

• Evaluate

Competitive

Position

• Articulate

Findings

(Directional

Policy Matrix)

• Identify options

and valuing these

for each of the

areas of Strategic

Focus

• Recommendations

for overarching

prioritise and

areas of reduced

focus

• Identify New

Markets &

evaluate

opportunities

• Produce Initial

Business

Projection

• Iterations to

Determine

Optimal

Strategic Mix

• Prioritisation of

all segments

• Validation of

strategy across

segments

• Company level

financial plan

• Recommended

Strategy for

Approval by

Executive

Executive Board Review Points 29/1, 8/4 and 29/4

May-JuneJanuary

Strategic

Options

Initial

Prioritisation

• Identify initial

proposals for

areas of strategic

focus

• Identify areas of

reduced focus

• Detailed Activity

Plans to deliver the

agreed Strategy

• Link with new M&D

Operating Model and

Effective Systems

Infrastructure

• Immediate priorities

progress to detailed

study


Scottish Widows: segmentation

• Product * channel used as a proxy for true customer segments

Product:

Channel:

Customer:



Scottish Widows: MAFsFactors Description Weight Score

Market EconomicProfit Pool

a) Market EconomicProfit Margin

Market wide Economic Profit Pools avoiding distortion due to shape of existingScottish Widows profitability

Factor in future profit trends from 2003 to 2007

70% 10 – High1 – Low

b) Market Size & Growth

Market size in 2003 (APE) Allowance for market growth/decline up to 2007

Competitive Intensity Effort required to improve “share of voice” and hence growth market share

Ease with which new entrants can enter market

Different for IFA , DSF & Network

15% 10 – Low1 – High

Regulatory Risk(not include inEconomic ProfitAssesment)

Risk assessment of following items:

Regulatory:- regulatory risk, price caps etc

Market Change:- pensions replaced by ISAs, life bonds replaced with mutualfunds etc

15% 10 – Low1 – High

Total 100%

55


Scottish Widows: teams

Protection

Savings/Investment

Individual Pensions

Retirement Income

Corporate Pensions

• Cross divisional teams set up to review each of the core markets

• Representatives from each channel, marketing, offer development, technical, client

services etc

• Ensured buy-in to resulting strategy

• External input to teams to provide additional challenge and alternative thinking

Separate Teams Covering

….

56


Top Priorities:1. Product X in Network - up selling protection

products along side LTSB mortgage offers 2. IFA Product Y - very large market with significant

scope to grow our market share if enhanced rates were offered to all IFAs

3. Product A in Network - superior LTSB customer insight makes this an attractive market

• Core Competencies: underlying all the above is a need to develop our core skills as a protection player (risk management, utilisation of customer insight etc)

Scottish Widows: first

board presentation

Protection

Reduced Focus:

1. Product B - market volumes and hence profit pool continue to decline.

Directional Policy Matrix

Key Points:• Network Product X slight weakness

• IFA Product Y rates are currently “out of the market”

• IFA Product Z, we aren’t punching our weight in terms of market share

• Network Product A offer is poor against basic business customer need

Mark

et A

ttractiv

eness

SW Competitive Strength

Low

High

Low High

57


2003 2004 2005 2006 2007

Option A1

Option A2

Option B

Option C

Scottish Widows: valuing

options

ProtectionEconomic Profit

Option A1: Current Strategy without Price Adjustment

Option A2: Current Strategy with 2004 Price

Adjustment

Option B: New Offer

Option C: Fully Integrated Offer

General: LTSB branding

Volumes

Recommendation: Option C

• Justification ….

• …..

• …..

• ….

• …..

2001 2002 2003 2004 2005 2006 2007

Actual/Plan

Option A1

Option A2

Option B

Option C

58


Need to invest up-front effort in mapping out process and methodology

Use existing information sources where possible avoiding subjective judgements

Sufficient time for assessment of market attractiveness and competitive strength - drives prioritisation which is the foundation of the strategy

Don’t be a slave to the process, continually balancing further analysis vsavailable time

Cross functional teams key to ensure end customer understanding and buy-in to strategy

Scottish Widows: Learning

Points

59


Some key decisions

Scottish Widows Your organisation

Top level sponsorship Managing director

Driver Marketing director

Core team Marketer + accountant + junior

analyst

Cross-functional workshops Teams of 8 for each product area

from each channel, market

research, product marketing

etc

Top level involvement Board presentations of current

DPM, draft strategies and

final strategies

Basis of segmentation Product-channel combination

External input Process facilitator, channel

representatives, industry

expert60

Documents

Professor Hugh Wilson and Dr Emma ... - aviation.itu.edu.traviation.itu.edu.tr/\img\aviation\datafiles/Lecture Notes/Airline... · MARKETING PLANS Professor Hugh Wilson and Dr Emma