The Marketing Plan

Hisrich

Peters

Shepherd

Chapter 8The Marketing Plan

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

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Understanding the Marketing Plan

Marketing plan - A written document stating marketing objectives, strategies, and activities to be followed in a business plan.

It is designed to provide answers to three basic questions:- Where have we been?: this segment focusing on some history of

the marketplace, market opportunities and threats (external). And strengths and weaknesses of the firm (internal).

Where do we want to go (in the short term)?: this segment addresses the marketing objective and primarily goals of the new venture in the next 12 months.

How do we get there?: this segment discusses the specific marketing strategy that will be implemented, when it will occur, and who will be responsible for the monitoring activities.

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Characteristics of a Marketing Plan

A marketing plan should be designed in a way to meet following criteria's:- Provide a strategy to meet company mission or goal. Be based on proper facts (marketing research) and valid

assumptions (considering available resources such as finance, equipment, human resource, technology etc).

Describe an appropriate organization of the plan for implementation of marketing activities.

Provide for continuity means short-term goals should be align to achieve long tem marketing objectives.

Be simple and short but the plan should not be so short that details on how to accomplish a goal is excluded.

Be flexible, means if scenarios changes then plan should have the enough flexibility to incorporate counter strategies.

Specify organisation performance criteria that could be monitored for control purpose such as 10% market share, 50% growth in sales etc.

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Marketing Research for the New Venture Before making a Marketing plan need to do

some marketing research for the new business venture which involves four steps process (for detail see next slides):-

1.Defining the Purpose or Objectives2.Gathering Data from Secondary Sources3.Gathering Information from Primary Sources4.Analyzing and Interpreting the Results

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Marketing Research for the New Venture (cont.)

Step One: Defining the Purpose or Objectives Make a list of the information that will be

needed to prepare the marketing plan. Generally objectives are set to determine the

following:- How much potential customers would be willing to pay

for the product or service? Where potential customers would prefer to purchase

the product or service? Where the customer would expect to hear about or

learn about such a product or service?

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Step Two: Gathering Data from Secondary Sources (data that already exists) Secondary sources can include trade magazines,

newspaper articles, libraries, government agencies, the internet, universities and commercial data.

Considering Pakistan’s context information regarding business sectors could be availed from SMEDA, Chamber of commerce, SECP, and SBP’s etc website.

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Step Three: Gathering Information from Primary Sources (information that is new) Data collection procedures are following:-

Observation: observe potential customers and record some aspect of their buying behavior.

Networking: informal method to gather data from experts in the field.

Interviewing: formal method of collecting data in person, by telephone, or through mail or e-mail.

Focus groups: a group of 10-12 people invited to participate in a discussion related to research objective.

Experimentation: in a laboratory setting observing a certain phenomenon by controlling specific variables in the research process.


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A Comparison of Survey Methods

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Step Four: Analyzing and Interpreting the Results Results can be tabulated by hand or on a

computer. Evaluation and interpretation should be based

on research objectives. Cross-tabulated data can provide more focused

results.


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The marketing system identifies the major interacting components, both internal and external to the firm, that enable the firm to successfully provide products/services to meet customer needs in the chosen market place (see next figure)

The Marketing System

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The Marketing System (Cont.)

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External environment

• External environment covers the macroenvironment, and the microenvironment aspects.

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External environment (cont.)

•The macroenvironment consists of broad environmental issues that may impinge on the business. These include the economy, social/cultural issues, technological changes, political/legal factors (PEST or STEP).1.Economic forces: economic growth and unemployment, interest and exchange rates, the growth of economic areas2.Social/cultural forces: demographic forces, brought up culture , religious forces, corporate social responsibilities and marketing ethics.3.Technological forces: current technology, upcoming technology. 4.Political/legal forces: monopolies and mergers, codes of practices, restrictive practices.5.Physical forces (consumer movement to safeguard consumer rights): use of environmental friendly ingredients, recyclable and non-wasteful packaging, protection of the ozone layer, animal testing of new products, energy conservation etc

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External environment (cont.)

•The microenvironment demands for analysing the market and competitors to identify the potential threats and opportunities

•The market consists of statistical analysis of market (size, growth rates and trends), customer analysis (who they are , what choice/criteria they use) and distributors analysis (covering channel attractiveness studies, and influence within distributors) and suppliers analysis.

•The competitor analysis examines the nature of actual and potential competitors and their objectives and strategies, their strengths and weaknesses, market share, size, and profitability considering industry. Recommended analysis is Porters ‘five forces’.

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External environment (cont.)Porters ‘five forces’.

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Internal environment

•In addition to external environmental factors, there are internal environmental factors that are controllable to entrepreneur and are critical for making marketing plan and its implementation while assuming marketing strategy.

•Financial resources: availability of financial resources or funds to meet the goals and objectives.•Suppliers: who will be the supplier, suppliers terms and conditions, pricing etc. •Goals and objectives: goals and objectives of the business should be defined considering mission statement (… a broadly defined, enduring (continuity or long lasting) statement of purpose that distinguishes a business from others of its type).•Management team: availability of expertise in terms of personnel and their job delegation to meet organisation’s objectives .

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The Marketing Mix

A combination of product, price, promotion, and distribution and other marketing activities needed to meet marketing objectives.

Variable Critical Decisions

ProductQuality of components or materials, style, features, options, brand name, packaging, sizes, service availability, and warranties.

PriceQuality image, list price, quantity, discounts, allowances for quick payment, credit terms, and payment period.

Channels of distribution

Use of wholesalers and/or retailers, type of wholesalers or retailers, how many, length of channel, geographic coverage, inventory, and transportation.

PromotionMedia alternatives, message, media budget, role of personal selling, sales promotion (displays, coupons, etc.), and media interest in publicity.

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Steps in Preparing the Marketing Plan

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Steps in Preparing the Marketing Plan Defining the Business Situation

Situation analysis - Describes past and present business achievements of new venture.

In case of a new start-up; information should relate to how and why the product or service was developed.

After started up information should relate to: Present market conditions. Performance of the company’s goods and services. Future opportunities or prospects.

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Defining the Target Market/ Opportunities and Threats The target market is specific group of potential

customers toward which the venture aims its marketing plan.

Market segmentation - Dividing a market into definable and measurable groups for purposes of targeting marketing strategy.

Steps in Preparing the Marketing Plan (cont.)

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Process of segmenting and targeting customers Decide on general market or industry to pursue. Divide market into smaller groups based on:

Characteristics of the customer – Geographic, demographic (include gender, age, ethnicity, knowledge of languages), and psychographic (study of personality, values, opinions, attitudes, interests, and lifestyles).

Buying situation – Desired benefits, usage, buying conditions, and awareness of buying intention.

Select segment or segments to target.

Consider the strengths and weaknesses in the target market.


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Establishing Goals and Objectives These are statements of level of performance

desired by new venture. Realistic and specific marketing goals (SMART)

and objectives respond to the question: “Where do we want to go?”.

Not necessarily all goals are quantifiable. Limit the number of goals or objectives to

between six and eight (easy to pursue). Goals should represent key areas to ensure

marketing success.


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Defining Marketing Strategy and Action Programs (Develop a marketing plan integrating product, price, distribution (placement), and promotion) Product/service

May consider more than the physical characteristics. Involves packaging, brand name, price, warranty, image,

service, delivery time, features, style, and even the website (IBM, DELL).

Pricing Costs - Material costs, labor costs, cost of goods from

suppliers, labor and overhead expenses, etc. Margins or markups - Expected to cover overhead costs and

some profit. Competition.


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Distribution Provides utility to the consumer (internet, retail stores,

home delivery, bulk purchase). Must also be consistent with other marketing mix

variables (e.g. sending expensive products through registered mail services).

Promotion To inform potential consumers about the product’s

availability or to educate the consumer. Methods include print, radio, or television advertising,

Internet, direct mail, trade magazines, or newspapers. The entrepreneur should consider costs and

effectiveness of the medium both in meeting the market objectives.


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Major Considerations in Channel Selection (for promotion and distribution)

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Marketing Strategy: Consumer versus Business-to-Business Markets Business-to-business markets involves selling of

products or services to another business. Usually aims at selling a large volume in one

transaction. Involves a more direct channel of distribution. Use trade magazine advertising, direct sales, and trade

shows.

Consumer markets involve sales to households for personal consumption.


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Budgeting and Implementation Budgeting

Business operational and production costs should be reasonably clear.

Assumptions if necessary should be clearly stated. Useful in preparing the financial plan.

Implementation The plan is meant to be a commitment by the

entrepreneur to a specific strategy. Entrepreneur should ensure coordination and

implementation of the plan.


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Monitoring the Progress of Marketing Actions Involves tracking results of the marketing effort. Entrepreneur should prepare for contingencies. Minor adjustments in the plan are normal;

significant changes indicate a poorly prepared plan.

Weaknesses in market planning may be due to: Poor analysis of the market and competitive strategy. Unrealistic goals and objectives. Poor implementation of the outlined plan actions. Unforeseen hazards like weather or war.


Education

The Marketing Plan