Unit Concept And Process Of Marketing

Module: Marketing Principles

Unit: Concept and Process of Marketing

Lesson: The Marketing Planning Process Overview

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The Marketing Planning Process Overview

Introduction

The marketing in an organisation needs to be specific to that organisation. No two businesses are the same in terms of their culture, organisational structure, management styles and strategies for the marketplace. By the same token, it would be unwise for a company to believe that it could approach a market in exactly the same way as the competition that it faces.

In order to establish how to market it differently from the competition, and to ‘win’ the numbers of customers needed to make target levels of sales and profits, an organisation needs to set out its marketing plans. It is the marketing plan that identifies where the company intends itself to be in the future.

A marketing plan is essentially a process of marketing and management actions. A staged approach is taken in order that the organisation is able to meet the overall objectives set by the company for the future.

Marketing success depends on integrating all of the principles into one coherent customer, competitor and environment focused strategy – in essence a route map for the marketing stance and the subsequent marketing actions of the company.

When looking at this marketing plan or marketing process for an organisation, a stage-based model can be used. This is illustrated in figure 1.0.6 below:

Figure 1.0.6 – the marketing planning process

Go to the following website and make additional notes in relation to marketing planning and what it involves.

http://www.tutor2u.net/busines /marketing/planning_strategic_link.asp

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Determining organisational objectives

The basic goals, or objectives, of the organisation are the starting points for marketing planning. These goals serve as signposts from which marketing plans are established. Goals will vary amongst organisations, but will generally focus on market shares, profitability, sales and shareholder value. In most cases the objectives will be quantifiable; for example, ‘achieve an 8% profits increase over last year’, ‘attain a 15% increase in market share by 2013’.

Non-quantifiable objectives can be included, but only if such objectives are in fact difficult to quantify. As an example, attaining the ‘best image in the marketplace’ could be considered to be an objective. It would be better, however, if this could be measured in some way, perhaps through customer research, so that it can be clearly seen as a quantifiable objective.

The marketing audit is very important for an organisation, as future strategies will take account of the information thrown up by the actual audit.

The main points associated with an audit are:

The current marketing situation of a company or department is compiled using a marketing audit. The marketing audit is the means by which information for planning is organised.

The audit is the means by which a company can understand how it relates to the environment in which it operates.

An audit is a systematic, critical and unbiased review and appraisal of the environment, and of the company’s marketing and its operations.

The marketing audit, in attempting to answer the question ‘where are we now?’, must take account of the fact that:

A company is faced with two kinds of variables; those over which the company has no direct control – environmental and market variables – and those over which it has complete control – the operational variables

The audit is therefore split into two parts: external audit – concerned with the

uncontrollable variables – and an internal audit – concerned with the controllable

variables.

What do you think are included in the internal and external audits? What are the variables? Make a list of those elements that you believe should be considered. (The external audit will be looked at in detail in the next main section of the module.)

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A list of items that could be included in the internal audit: Marketing operation variables:

Sales

Total

1.By location.

2.By customer type.

3.By product.

4.Market share.

5.Profit margins/cost profiles.

6.Marketing procedures.

7.Marketing organisation.

8.Marketing information/research. Marketing mix variables:

1.Product/service management

2.Product range and quality

3.Stock levels

4.Pricing, discounts, credits

5.Distribution characteristics

6.Sales promotion

7.Advertising

8.Packaging

9.Selling

10.Point of sale materials

11.Public relations

12.Training

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Environmental analysis

When conducting an examination of the external environment of a business, the main areas of investigation can be split into:

The competition.

Suppliers and intermediaries.

The political environment.

The economic environment.

The technological environment.

The social and cultural environment.

The examination of the external environment will again be individual to a particular organisation, as the influences of the external environment will vary according to the company being considered. This process is usually called the PEST analysis.

SWOT analysis

Following on from the initial internal and external audit, a company with a marketing focus will then establish its key strengths and weaknesses (internal to the business) and the key opportunities and threats that the business needs to face up to (external to the business).

The marketing audit can generate very detailed data and information. You need to concentrate on areas of analysis that determine which trends and developments will actually affect the company in the future. The goal of the audit is to indicate what a company’s marketing objectives and strategies should be. The SWOT represents a way to organise the major audit findings.

The SWOT analysis is a relatively short document, highlighting internal differential strengths and weaknesses vis-Ã – vis competitors and key external opportunities and threats. The internal strengths and weaknesses are related to the external opportunities and threats. The SWOT analysis should be interesting to read, contain concise statements, and include only relevant and important data. The SWOT needs to be undertaken regularly as it is only relevant at the time of development.

Below are some examples of strengths, weaknesses, opportunities and threats that can be considered by an organisation.

Example strengths

Low costs/low overheads.

Good location.

Well-motivated staff.

Good product expertise.

Good market knowledge.

Broad customer base.

Sound finances.

Example weaknesses

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High costs/high overheads.

Poor location.

Poor internal communications.

Poorly motivated staff.

Poorly skilled staff.

Poor market knowledge.

Small customer base.

Example opportunities

Weak competition (at least in some areas).

Competitor going out of business or moving away.

Expanding market.

New legislation in pipeline that will be good for the market.

Useful exhibition/promotional event coming up.

Example threats

Strong competition.

Competitor giving special offers or discounts.

Shrinking market.

New legislation in pipeline that will be bad for the market.

Supplier problems/raw material price rises.

Using relevant sources, carry out a SWOT analysis for your own organisation or one that you are familiar with. Discuss your results with a fellow student or your line-manager.

Objectives, Constraints and Strategic Options

The Marketing Objectives

The next step in the marketing planning process is to set the marketing objectives. These marketing objectives will mirror the corporate objectives that the organisation has set for itself –

At this stage of the marketing planning process, realistic and achievable objectives should be set for the company’s major products and / or services in each of its major markets.

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Unless the objective setting is done well, everything else that follows in the planning process will lack focus and cohesion.

For further information on setting marketing objectives, go to the following web site:

http://www.websitemarketingpla .com/marketing_management/MarketingObjectivesArticle.htm

The specific marketing objectives are created in order to accomplish the broad objectives. The end result of the process should be objectives that are:

Consistent with the strategic plan.

Attainable within budget limitations.

Compatible with the strengths, limitations and economics of other functions within the organisation.

Strategic Options

Marketing planning must be directed towards establishing marketing strategies that are efficient, effective, flexible and adaptable. The marketing strategy represents the overall company strategy and action for the seven elements of the ‘marketing mix’.

What do you think the 7Ps stand for?

The 7 Ps are price, promotion, place, product, process, physical and people.

In broad terms, a company will select a particular target market of customers and will then satisfy the customers in the particular segment through careful use of the elements of this marketing mix.

In determining the strategy best suited to their marketplace, a company will need to fully understand the market, customers and competitors in order to come to a sound decision. This information is combined with the other audit information covering the resources of the company. The marketing audit section that was covered above outlined the key points to consider, and also introduced the SWOT analysis techniques that can be used to combine the company’s resources with the opportunities in the marketplace. Incude the term ‘integrated marketing (from specification)

Having established where you are now through the marketing audit, and where you are going via the establishment of corporate and marketing objectives, the next step is deciding how to get there – your marketing strategy.

Very often where a company wants to go (based on its objectives) and where it is actually going do not match up. ‘Gap analysis’ highlights the fact that if corporate sales and other financial objectives are greater than the current long-range forecasts, new strategies are needed to fill the gap. This is illustrated in figure 1.0.7 below:

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Figure 1.0.7 – gap analysis

Ansoff (1987) suggests that the strategies gap can be filled through one of the following:

Improved productivity

Reducing costs.

Improving the sales mix.

Increasing prices.

Market penetration.

Reducing the objectives.

Market extension.

Product development.

Diversification.

How some of these key strategies relate to each other in practice can be seen in figure 1.0.8 below:

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Figure 1.0.8 – The Ansoff strategies matrix

Think about companies or particular brands of companies that have pursued the strategies given in the Ansoff matrix. Look at the descriptions given in each quadrant of the matrix and identify companies/ brands that fit the criteria.

Taking each quadrant in turn, examples are given for each below. Don’t worry if your answers are different, the primary concern is to ensure your understanding of the principles.

Examples include:

Market penetration

Kellogg’s (http://www.kellogs.com) – advertising the fact that we can eat cornflakes at any time of the day!

BT (http://www.bt.com) ‘it’s good to talk’

Special offers through the post, in magazines – attempting to get you to buy something e.g. take out life insurance and receive a store voucher, house insurance… ‘we will pay the switching fee’.

Special offers on the Sky Digital box (http://www.sky.com) to encourage non-users to subscribe to the monthly payment service.

Product development

40 plus’ toothpaste.

Widescreen television.

CD Rewriter on a computer.

TNT ‘guaranteed’ overnight delivery.

Market development

Tesco home shopping (http://www.tesco.com)

Amazon.com (http://www.amazon.co.uk)

Morrisons supermarkets (http://www.morrissons.co.uk) (moving from their northern base in the UK to the midlands region.)

Staples (http://www.staples.co.uk) (catering for the emerging ‘home office’ market.)

Diversification

Numerous examples of mergers and takeovers – Time Warner (http://www.timewarner.c m), BHS (http://www.bhs.co.uk) and Arcadian (http://www.arcadian.biz) etc.

Joint ventures – the SMART car (http://www.smartcar.co.uk) – Mercedes (http://www2.mercedes-benz.co.u) and Rolex (http://www.rolex.com)

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Constraints

When an organisation determines it’s corporate and marketing objectives it has to recognise the constraints under which it operates. Achieving profit objectives may seem to necessitate cutting the marketing budget, whilst achieving a sales targets may appear to mean lowering the price, which in turn reduces the profitability. In addition to the trade-off between sales expansion and profitability, there may well be other constraints.

Consider other types of constraints and discuss these with fellow students by entering the Discussion Forum.

Examples may include, a company wishing to enter a new market and may not have a good understanding of what the market dynamics are. A further example would be a company wishing to introduce a new product or service, with question marks over whether the company as the necessary resources and skills to actually do this.

Other limiting factors can range from a lack of money to finance a new investment, the wrong skills amongst the workforce, and a lack of understanding of a new market place. All of these constraints must be recognised and accounted for if the plan is to actually work in practice.

Target markets and the marketing mix

Figure 1.0.9 below shows the stages that an organisation will move through when constructing its corporate and marketing plans. Although the figure shows that objectives based on the marketing audit will be achieved through the marketing strategy, the role of the customer must be fully accounted for. The 7Ps used in the marketing strategy must always be focused on the particular needs and requirements of the target market. In this way, figure 1.0.9 should perhaps be read in terms of the target market taking priority and determining the plans and approaches used by the organisation.

Figure 1.0.9 – putting the marketing plan together

The elements of the marketing mix are the way to see this in action, as the most effective combination will be that which works in the target market. Even though a plan has been produced and based on a particular marketing mix,

organisations will need to continually alter the marketing mix variables going forward.

For now it is sufficient to understand that the mix elements are the main tools through which a company can differentiate itself from the competition. The first four Ps are generally considered in terms of marketing products, whilst the latter three Ps are generally of most significance when considering the marketing of service-based businesses.

Following our examination of some of the key principles of marketing, and prior to looking in more depth at the application of these principles to business, we will complete this unit of the module by examining the costs and benefits of marketing.

Costs and benefits

It should by now be apparent that a marketing focus, and particularly closeness to your customers, is a pre-requisite for success in the modern marketplace. Any company, however, needs to weigh up the costs of their marketing and customer efforts against the benefits that ensue. A key question to ask therefore is: “what are the benefits of providing customer satisfaction?”

For any company, the benefits of customer satisfaction should amount to retention of these customers and subsequent loyalty. In turn this means that less marketing spend is needed going forward, and these customers will support your business.

Achieving this needs effort on behalf of the particular company:

Some differentiation needs to be achieved that sets the company apart from its competitors.

Real customer extras and benefits need to be identified.

A company needs to receive feedback from its customers, and to be able to measure the results of its marketing and customer focus efforts.

The delivery of the product and service needs to be constantly updated to meet the needs of customers – new services and products added consistently.

The staff who deal with customers need to reflect the brand image and service delivery standards of the company – internal marketing is, therefore, as important as external promotion.

All of the above can help to create the customer focus that is so important in the markets that companies face today. Companies, however, can develop this customer focus further by taking on the principles of relationship marketing.

Ultimately, an organisation will seek to gain competitive advantage within a market. This may be achieved through a number of different means, with each individual market situation throwing up different obstacle to be overcome. Nevertheless, in each case organisations will need to plan their marketing orientation to suit the specific circumstances presented. Without this type of flexibility, it will quickly become apparent that the organisation is losing ground to its competitors and, therefore, falling behind. Maintaining competitive advantage is an essential component of any marketing strategy.

Knowledge Checks

 

© 2012 Resource Development International Ltd. All rights reserved.

© 2012 Resource Development International Ltd. All rights reserved.