MARKETING PLANNING Introduction

MARKETING PLANNING.

Introduction.

            A plan is a way of achieving something. Your revision plan is a way of helping to achieve success in business studies exams. In business, it is no different. If a business wants to achieve something, it is more likely to do so with a well-constructed and realistic plan.

What does planning involve?  Planning involves:   

• Setting objectives, quantifying targets for achievement, and communicating these targets to people responsible for achieving them
• Selecting strategies, tactics, programmes etc for achieving the objectives.

The whole topic of planning brings with it some important terminology that it is worth spending time getting to know well. You will come across these terms many times in your study of marketing (and business studies in general):

Strategy

Strategy is the method chosen to achieve goals and objectives

Example: Our strategy is to grow sales and profits of our existing products and to broaden our business by introducing new products to our existing markets

Tactics

Tactics are the resources that are used in the agreed strategy

Example: We will use our widespread distribution via UK supermarkets to increase sales and existing products and introduce new products

Goals

Goals concern what you are trying to achieve. Goals provide the “intention” that influence the chosen actions

Example: Our goal is to achieve market leadership in our existing markets

Objectives

Objectives are goals that can be quantified

Examples:
- We aim to achieve a market share of 20% in our existing markets
- We aim to penetrate new markets by achieving a market share of at least 5% within 3 years
- We aim to achieve sales of growth of 15% per annum with our existing products

Aims

Aims are goals that cannot be measured in a reliable way. However, they remain important as a means of providing direction and focus.

Examples: We aim to delight our customers

Marketing is the process of developing and implementing a plan to identify, anticipate and satisfy consumer demand, in such a way as to make a profit. The two main elements of this plan are market research to identify and anticipate customer requirements and the planning of an appropriate marketing mix to meet these requirements. Market research involves gathering and recording information about consumers, market, product, and the competition in an organised way. The information is then analysed and used to inform marketing decisions. There are three main ways of gathering information for market research:
1.From internal information already held by an organisation, e.g. details of existing customers and their spending habits.
2. External primary information - i.e. information collected at first hand by interviewing customers and potential customers to get their views about a company, products and services.
3. External secondary information - using published sources of information e.g. those produced by marketing organisations about products, markets and brands.
Marketing planning can then be used:
1. To assess how well the organisation is doing in its markets.
2. To identify current strengths and weaknesses in these markets.
3. To establish marketing objectivesto be achieved in these markets.
4. To establish a marketing mix for each market designed to achieve organisational objectives.

Marketing Planning Process - Introduction

The extent to which each part of the above process needs to be carried out depends on the size and complexity of the business.

In a small or undiversified business, where senior management have a strong knowledge and detailed understanding of the overall business, it may not be necessary to formalise the marketing planning process.

By contrast, in a highly diversified business, top level management will not have knowledge and expertise that matches subordinate management. In this situation, it makes sense to put formal marketing planning procedures in place throughout the organisation.

From the diagram, the main components of a marketing plan can be summarised as:

Component of the plan	Description
Mission statement	A meaningful statement of the purpose and direction of the business
Corporate objectives	The overall business objectives that shape the marketing plan
Marketing audit	The way the information for marketing planning is organised. Assesses the situation of marketing in the business – the products, resources, distribution methods, market shares, competitors etc
Market analysis	The markets the business is in (and targeting) – size , structure, growth etc
SWOT analysis	An assessment of the firm’s current position, showing the strengths & weaknesses (internal factors) and opportunities and threats (external factors)
Marketing objectives and strategies	What the marketing function wants to achieve (consistent with corporate objectives) and how it intends to do it (e.g. Ansoff, Porter)
Marketing budget	Usually a detailed budget for the next year and an outline budget for the next 2-3 years
Action plan	The detailed implementation plan

Marketing planning - the mission statement

A strategic marketing plan starts with a clearly defined business mission.

Mintzberg defines a mission as follows:

“A mission describes the organisation’s basic function in society, in terms of the products and services it produces for its customers”.

A clear business mission should have each of the following elements:

Taking each element of the above diagram in turn, what should a good mission contain?

(1) A Purpose

Why does the business exist? Is it to create wealth for shareholders? Does it exist to satisfy the needs of all stakeholders (including employees, and society at large?)

(2) A Strategy and Strategic Scope

A mission statement provides the commercial logic for the business and so defines two things:

- The products or services it offers (and therefore its competitive position)
- The competences through which it tries to succeed and its method of competing

A business’ strategic scope defines the boundaries of its operations. These are set by management.

For example, these boundaries may be set in terms of geography, market, business method, product etc. The decisions management make about strategic scope define the nature of the business.

(3) Policies and Standards of Behaviour

A mission needs to be translated into everyday actions. For example, if the business mission includes delivering “outstanding customer service”, then policies and standards should be created and monitored that test delivery.

These might include monitoring the speed with which telephone calls are answered in the sales call centre, the number of complaints received from customers, or the extent of positive customer feedback via questionnaires.

(4) Values and Culture

The values of a business are the basic, often un-stated, beliefs of the people who work in the business. These would include:

• Business principles (e.g. social policy, commitments to customers)
• Loyalty and commitment (e.g. are employees inspired to sacrifice their personal goals for the good of the business as a whole? And does the business demonstrate a high level of commitment and loyalty to its staff?)
• Guidance on expected behaviour – a strong sense of mission helps create a work environment where there is a common purpose

What role does the mission statement play in marketing planning?

In practice, a strong mission statement can help in three main ways:
• It provides an outline of how the marketing plan should seek to fulfil the mission
• It provides a means of evaluating and screening the marketing plan; are marketing decisions consistent with the mission?
• It provides an incentive to implement the marketing plan

Marketing Objectives

Let’s face it.  Of the four main functional areas of a business, marketing has to be the most important!
Marketing is at the heart of a business.  Remember the definition of marketing:

“The process of identifying, anticipating (predicting) and satisfying customer needs profitably”

Almost every activity that a business undertakes can be linked back to this definition, whether it is:

Raising finance to support an investment in new product development

Introducing quality assurance and lean production to improve product profitability

Training staff to improve customer service standards

Ultimately, almost every functional activity or objective can be linked back to marketing.

A similar picture emerges when you consider how corporate objectives link to the functional objectives for marketing.

Typical corporate objectives might be to:

Be a market leader within 5 years

To grow market share by 5% in core markets

To become the most trusted and recognised brand in our industry

Each of these has a strong marketing element.

Marketing objectives need to be seen as part of a hierarchy of objectives, in the sense that they are shaped and informed by the corporate objectives.  A corporate objective influences a marketing objective, which in turn shapes the marketing strategies and marketing tactics employed:

Because marketing is involved in every aspect of a business, you often find that marketing objectives are wide-ranging.  There can also be a lot of them!  Some examples are provided below

Objective area	Example objectives
Maintaining or increasing market share	Achieve revenue growth of 15% per year for the next four years Increase our market share in the UK by 4% by 2012 Improve the online order conversion rate from 65% to 75% by 2011 Add 1,000 new customer accounts generating at least £100,000 per account within three years Become the market leader in the UK educational sector by 2013
Developing new products / innovation	Launch at least 25 new products into the industrial channel in 2010 and 2011 Grow average first-year sales of new editions by 25% in the Higher Education sector
Meeting the needs of customers	Achieve at least an 95% excellent customer service rating each month Increase the proportion of sales bookings from repeat business to 45% for the summer season
Entering a new market / market positioning	Supply a minimum of 50,000 trial downloads per month Increase the number of customer enquiries from the EU by 10,000 per month Recruit five suitable distribution agents in the four target countries within 12 months
Gaining an advantage over competitors	Reduce average distribution costs to less than 5% of gross revenue Reduce the order lead time by 15% Improve brand recognition amongst the 25-34 age group