Marketing Notes Chapter 2 Developing A Marketing Plan And ...
Marketing Notes Chapter 2 Developing A Marketing Plan And Marketing Strategies Levels Of Strategic Planning In Corporations Strategic planning occurs at two levels: Corporate level – done by the company’s top management and focuses on overall direction of the entire company Functional level – planning that deals with functions such as H/R, R&D, finance, etc. Strategic business units (SBU) – division of the company that can be managed somewhat independently from other divisions since it markets a specific set of products to a clearly defined group of customers Marketing planning process – a set of steps a marketer goes through to develop a marketing plan Levels of strategic planning:
The Marketing Plan Marketing plan – a written document composed of an analysis of the current marketing situation, opportunities, and threats for the firm, marketing objectives and strategy specified in terms of the four P’s, action programs, and projected or proforma income (and other financial) statements Three major phases of the marketing plan: planning, implementation, and control
Developing a marketing plan:
Planning phase – Where marketing executives and other top managers define the mission and objectives of the business (Step 1), and evaluate the situation by assessing how various players, both inside and outside the organization, affect the firms potential for success (Step 2) Implementation phase – where marketing managers identify and evaluate different opportunities by engaging in a process know as segmentation, targeting, and positioning (Step 3), they then develop and implement the marketing mix using the four P’s (Step 4) Control phase – the part of strategic marketing planning process where managers evaluate the performance of the marketing strategy and take any necessary corrective actions (Step 5) Step 1: Define The Business Mission And Objectives Mission statement – a broad description of the firm’s objectives and scope of activities; attempts to answer two main questions: What type of business is it? And what does it need to do to accomplish its goals and objectives The questions must be answered at the highest corporate level before marketers can get involved Step 2: Conduct A Situational Analysis Situational analysis – uses the SWOT analysis that assesses both the internal environment with regard to its strengths and weaknesses and the external environment in terms of its opportunities and threats Situational analysis also includes an examination of trends, customer analysis, and competitive analysis.
It also assesses cultural, demographic, social, technological, economic, and political forces (CDSTEP) The SWOT analysis enables the firm to understand where it has sustainable competitive advantage or unique advantages that cannot be easily copied by competitors Strengths and weaknesses are in the firm’s control The firm can inly respond to opportunities and threats Examples of elements considered in a SWOT analysis
Step 3: Identify And Evaluate Opportunities By Using STP (Segmentation, Targeting, And Positioning) Identify and evaluate opportunities for increasing sales and profits STP – the processes of segmentation, targeting, and positioning that firms use to identify and evaluate opportunities for increasing sales and profits Segmentation Market segment – a group of consumers who respond similarly to a firm's marketing efforts Market segmentation – the process of diving the market into groups of customers where each individual has similar needs, wants, or characteristics – who therefore might appreciate products or services geared especially for them in similar ways Targeting Target marketing (targeting) – the process of evaluating the attractiveness of various segments and then deciding which to pursue as a market
Positioning Marketing position – involves the process of defining the marketing mix variables so that target customers have a clear, distinct, desirable, understanding of what the product does or represents in comparison with competing products Set marketing objectives These objectives may be market share, revenue and profitability targets, unit sales volumes, and brand awareness Step 4: Implement Marketing Mix And Allocate Resources Product and value creation Firms attempt to develop products and services that customers perceive as valuable enough to buy Price and value for money A firm provides a product or service and receives money Price should be based on the value customers perceive Place and value delivery The product or service must be readily accessible when and where the customer wants it Promotion and value communication Marketers communicate the value of their product to their customers through promotion Marketers must determine the most efficient and effective methods to communicate with their customers, which goes back to understanding the customer, the value created, and the message being communicated Sponsorship of charities and community events is a growing trend in Canada Other Marketers must develop schedules (timelines) for each activity and the person responsible for the respective activity to avoid bottlenecks and ensure smooth and timely implementation of the marketing plan
The marketer must also design the organization that will be responsible for putting the plan into action (organizational chart). Step 5: Evaluate Performance By Using Marketing Metrics Understand the causes of the performance, regardless of whether that performance exceeded, met, or exceeded, met, or fellow below the firm’s goals, enables firms to make appropriate adjustments Who is accountable for performance? At each level of an organization, the business unit and its manager should be held accountable only for revenues, expenses, and the profits they can control Performance evaluations are used to pinpoint problem areas Performance objectives and metrics Comparing a firm’s performance over time or to competing firms View the firm’s products or services as a portfolio and see if adjustments need to be made Financial performance metrics Review revenue, sales, and profits An attempt to maximize only one metric may lower another Metric evaluation depends on (1) the level of the organization at which the decision was made and (2) the resources the managers control Social responsibility performance metrics Measure the social responsibility the company has (charities, donations, etc.) Strategic Planning Is Not Sequential Actual planning moves back and forth among the steps Portfolio analysis Management evaluates the firm’s products and business – its “portfolio” – and allocates resources according to which products are expected to be the most profitable, etc.
Typically performed at the strategic business unit (SBU) Strategic business unit (SBU) – a division of the company that can be managed somewhat independently from other divisions since it markets a specific set of products to a clearly defined group of customers Product line – a group of products that consumers may use together or perceive as similar in some way Boston Consulting Group’s Portfolio Analysis
Relative market share – a measure of a product’s strength in a particular market, defined as the sale of the focal product divided by the largest firm in the industry Market growth rate – the annual rate of growth of the specific market in which the product competes Growth Strength
Market Penetration Market penetration strategy – a growth strategy that employs the existing marketing mix and focuses the firm’s efforts on existing customers Generally requires greater marketing efforts Examples: increase in advertising, sales and promotions, intensified distribution efforts, loyalty or reward programs, and improved store atmosphere Market Development Market development strategy – a growth strategy that employs the existing marketing offering to reach new market segments whether domestic or international or segments currently not served by the firm Product Development Product development strategy – a growth strategy that offers a new product or service to a firms current target market Diversification Diversification strategy – a growth strategy whereby a firm introduces a new product or service to a market segment that does not currently exist Related diversification –the current target market shares something in common with the new opportunity Unrelated diversification - the current target market shares nothing in common with the new opportunity Other Downsizing – exiting markets, reducing product portfolios, or closing certain businesses or store or plant locations Marketing Strategy And Sustainable Competitive Advantage Four overarching strategies that focus on aspects of the marketing mix to create and deliver value and to develop sustainable competitive advantages Customer excellence – involves a focus on retaining loyal customers and excellent customer service Operational excellence – involves a focus on efficient operations and excellent supply chain management
Product excellence – involves a focus on high-quality products and effective branding and positioning Locational excellence – involves focus on a good physical location and Internet presence Customer excellence Competitive advantage Retaining loyal customers Exceptional customer services Viewing the customers with a lifetime value perspective rather than on a transaction-by-transaction basis, is key to modern customer retention programs Operational excellence Competitive advantage Efficient operations Efficient supply chain management Firms with strong relationships may gain exclusive rights to (1) sell merchandise in a particular region, (2) obtain special terms of purchase that are not available to competitors, or (3) receive popular merchandise that may be short in supply Human resource management Product excellence Locational excellence Multiple Sources Of Advantage Firms require multiple sources of advantage
The Marketing Plan Marketing plan – a written document composed of an analysis of the current marketing situation, opportunities, and threats for the firm, marketing objectives and strategy specified in terms of the four P’s, action programs, and projected or proforma income (and other financial) statements Three major phases of the marketing plan: planning, implementation, and control
Developing a marketing plan:
Planning phase – Where marketing executives and other top managers define the mission and objectives of the business (Step 1), and evaluate the situation by assessing how various players, both inside and outside the organization, affect the firms potential for success (Step 2) Implementation phase – where marketing managers identify and evaluate different opportunities by engaging in a process know as segmentation, targeting, and positioning (Step 3), they then develop and implement the marketing mix using the four P’s (Step 4) Control phase – the part of strategic marketing planning process where managers evaluate the performance of the marketing strategy and take any necessary corrective actions (Step 5) Step 1: Define The Business Mission And Objectives Mission statement – a broad description of the firm’s objectives and scope of activities; attempts to answer two main questions: What type of business is it? And what does it need to do to accomplish its goals and objectives The questions must be answered at the highest corporate level before marketers can get involved Step 2: Conduct A Situational Analysis Situational analysis – uses the SWOT analysis that assesses both the internal environment with regard to its strengths and weaknesses and the external environment in terms of its opportunities and threats Situational analysis also includes an examination of trends, customer analysis, and competitive analysis.
It also assesses cultural, demographic, social, technological, economic, and political forces (CDSTEP) The SWOT analysis enables the firm to understand where it has sustainable competitive advantage or unique advantages that cannot be easily copied by competitors Strengths and weaknesses are in the firm’s control The firm can inly respond to opportunities and threats Examples of elements considered in a SWOT analysis
Step 3: Identify And Evaluate Opportunities By Using STP (Segmentation, Targeting, And Positioning) Identify and evaluate opportunities for increasing sales and profits STP – the processes of segmentation, targeting, and positioning that firms use to identify and evaluate opportunities for increasing sales and profits Segmentation Market segment – a group of consumers who respond similarly to a firm's marketing efforts Market segmentation – the process of diving the market into groups of customers where each individual has similar needs, wants, or characteristics – who therefore might appreciate products or services geared especially for them in similar ways Targeting Target marketing (targeting) – the process of evaluating the attractiveness of various segments and then deciding which to pursue as a market
Positioning Marketing position – involves the process of defining the marketing mix variables so that target customers have a clear, distinct, desirable, understanding of what the product does or represents in comparison with competing products Set marketing objectives These objectives may be market share, revenue and profitability targets, unit sales volumes, and brand awareness Step 4: Implement Marketing Mix And Allocate Resources Product and value creation Firms attempt to develop products and services that customers perceive as valuable enough to buy Price and value for money A firm provides a product or service and receives money Price should be based on the value customers perceive Place and value delivery The product or service must be readily accessible when and where the customer wants it Promotion and value communication Marketers communicate the value of their product to their customers through promotion Marketers must determine the most efficient and effective methods to communicate with their customers, which goes back to understanding the customer, the value created, and the message being communicated Sponsorship of charities and community events is a growing trend in Canada Other Marketers must develop schedules (timelines) for each activity and the person responsible for the respective activity to avoid bottlenecks and ensure smooth and timely implementation of the marketing plan
The marketer must also design the organization that will be responsible for putting the plan into action (organizational chart). Step 5: Evaluate Performance By Using Marketing Metrics Understand the causes of the performance, regardless of whether that performance exceeded, met, or exceeded, met, or fellow below the firm’s goals, enables firms to make appropriate adjustments Who is accountable for performance? At each level of an organization, the business unit and its manager should be held accountable only for revenues, expenses, and the profits they can control Performance evaluations are used to pinpoint problem areas Performance objectives and metrics Comparing a firm’s performance over time or to competing firms View the firm’s products or services as a portfolio and see if adjustments need to be made Financial performance metrics Review revenue, sales, and profits An attempt to maximize only one metric may lower another Metric evaluation depends on (1) the level of the organization at which the decision was made and (2) the resources the managers control Social responsibility performance metrics Measure the social responsibility the company has (charities, donations, etc.) Strategic Planning Is Not Sequential Actual planning moves back and forth among the steps Portfolio analysis Management evaluates the firm’s products and business – its “portfolio” – and allocates resources according to which products are expected to be the most profitable, etc.
Typically performed at the strategic business unit (SBU) Strategic business unit (SBU) – a division of the company that can be managed somewhat independently from other divisions since it markets a specific set of products to a clearly defined group of customers Product line – a group of products that consumers may use together or perceive as similar in some way Boston Consulting Group’s Portfolio Analysis
Relative market share – a measure of a product’s strength in a particular market, defined as the sale of the focal product divided by the largest firm in the industry Market growth rate – the annual rate of growth of the specific market in which the product competes Growth Strength
Market Penetration Market penetration strategy – a growth strategy that employs the existing marketing mix and focuses the firm’s efforts on existing customers Generally requires greater marketing efforts Examples: increase in advertising, sales and promotions, intensified distribution efforts, loyalty or reward programs, and improved store atmosphere Market Development Market development strategy – a growth strategy that employs the existing marketing offering to reach new market segments whether domestic or international or segments currently not served by the firm Product Development Product development strategy – a growth strategy that offers a new product or service to a firms current target market Diversification Diversification strategy – a growth strategy whereby a firm introduces a new product or service to a market segment that does not currently exist Related diversification –the current target market shares something in common with the new opportunity Unrelated diversification - the current target market shares nothing in common with the new opportunity Other Downsizing – exiting markets, reducing product portfolios, or closing certain businesses or store or plant locations Marketing Strategy And Sustainable Competitive Advantage Four overarching strategies that focus on aspects of the marketing mix to create and deliver value and to develop sustainable competitive advantages Customer excellence – involves a focus on retaining loyal customers and excellent customer service Operational excellence – involves a focus on efficient operations and excellent supply chain management
Product excellence – involves a focus on high-quality products and effective branding and positioning Locational excellence – involves focus on a good physical location and Internet presence Customer excellence Competitive advantage Retaining loyal customers Exceptional customer services Viewing the customers with a lifetime value perspective rather than on a transaction-by-transaction basis, is key to modern customer retention programs Operational excellence Competitive advantage Efficient operations Efficient supply chain management Firms with strong relationships may gain exclusive rights to (1) sell merchandise in a particular region, (2) obtain special terms of purchase that are not available to competitors, or (3) receive popular merchandise that may be short in supply Human resource management Product excellence Locational excellence Multiple Sources Of Advantage Firms require multiple sources of advantage
