The Marketing Plan Chapter 2

Marketing Planning O The SWOT analysis is an assessment that lists and analyzes the company’s internal strengths and weaknesses and it’s external opportunities and threats O S – Strengths O W – Weaknesses O O – Opportunities O T - Threats

Marketing Planning O The internal and external awareness will help a business identify weaknesses and prepare for handling threats such as competition or a changing marketplace O Help a company be more competitive because it provides guidance and directions

Internal Strengths and Weaknesses The three C’s of internal analysis C C C ompany ustomers ompetition

Company Analysis O Questions that are part of a company’s internal analysis are about what a company does well (core competencies) and what are weak. O Includes – O Review of the staff O Company’s financial situation O Production capabilities O Aspects of the Marketing Mix (4 P’s)

Company Analysis Company Staff Financial Situation Production Capabilities Internal Strengths and Weaknesses

Sample Questions O Staff-Related Questions O What is the company’s mission statement? Is everyone following it? O How experienced are the company executives? What have they accomplished? O Does the company have too much or not enough staff to provide the quality of service it should? Should staff be reassigned? O What is the quality of the staff? Are there training and assessment programs? O How effective is the sales force?

Sample Questions O Financial Questions O Has the company been profitable? In which areas and why? O Are there enough financial resources to achieve the company’s goals? O What is the company’s sales history? Are sales increasing or decreasing?

Sample Questions O Production Capability Question O How are adjustments made in production due to an increase or decrease in the company’s sales orders? O Has the research and development (R&D) department created any successful new products? O What percentage of sales come from products that are five years or older? O What changes in technology are required to remain competitive?

Sample Questions O Marketing Mix (Four P’s) Questions O What new products have been successful and why? O Does the company own a patent on any of those products? O What are the present pricing strategies? O Are the pricing strategies working?

Sample Questions O Marketing Mix (Four P’s) Questions O Do products easily reach customers? O Who helps the company with distribution? O How is the company positioned in the marketplace? O What are the promotional strategies and have they been successful? O What is the company’s reputation and image among customers?

Customer Analysis O Studying customers buying habits reveals patterns that offer insights into product offerings and pricing strategies. O Includes – O Who are the customers? O How do groups of customers differ from one another? O What, when, where and how much do they buy? O How do customers rate the company on quality, service and value? O Is your customer base increasing or decreasing?

Competitive Position O A company may find that it has certain strengths and weaknesses when compared to its competitors. O Includes – O What is the company’s market share? O What advantages does the company have over its competitors? O What core competencies does the company posses? A better reputation? A patent? Special resources? Better distribution? O Are competitors taking businesses away? Why?

Internal Strengths and Weaknesses

External Opportunities and Threats O Companies must always look for opportunities to create competitive advantages due to external factors O Includes: O Competition O Political Issues O Economic Issues O Socio-Cultural Factors O Technology

Competition O To stay competitive, companies need to know what their competitors are doing at all the time. O Changes in a competitor’s financial situation and problems in the marketplace can provide opportunities O Example – Starbucks became largest coffee company in the world, but it relied heavily on US sales. In 2008, due to economic slowdown in consumer spending, consumers sought coffee at less expensive competitors

PEST Analysis O A PEST analysis is the scanning of outside influences on an organization. O Methodical look at the world that includes four factors: O Political O Economic O Socio-cultural O Technological

PEST Analysis O A PEST analysis is the scanning of outside influences on an organization. O Methodical look at the world that includes four factors: O Political O Economic O Socio-cultural O Technological O An understanding how each of these areas is changing or is likely to change can lead to a better appreciation of potential opportunities of threats to a business.

Political Issues O Political issues center around government involvement in business operations. O Companies need to be alert to changes in laws and regulations that affect their industries. O Global companies need to understand the political structure and regulations of each foreign country in which they conduct business.

Political Issues O Examples of issues and current regulations in the US that may affect certain industries in a positive way (opportunity) or negative way (threat) O Do Not Call Registry O Downloading Music from the Internet

Economic Factors O The current state of the economy is of interest to all businesses O If economy is expanding; businesses are more likely to invest in new products O If economy is slowing down,

Economic Factors O Economic Factors marketers need to consider as opportunities or threats: O Recession – companies slow or stop plans for new facilities; R&D reduced O Unemployment – people lose jobs; consumer spending decreases O Currency rates- impacts production of goods in other countries O Import Pricing – illegal dumping can be threat to businesses in that industry O Trade Regulations – tariffs, changes in trade restrictions

Socio-Cultural Factors O Based on customers and potential customers O Changes in their attitudes, lifestyles, and opinions provide many opportunities and threats O Examines changes in all demographic factors O Examples: O Diversity – US becoming more ethnically and racially diverse O Health – Obesity being a more apparent health issue

Technology O Changing technology may be a threat for one industry or company, but an opportunity for others O Example: Digital photography

Writing a Marketing Plan

Marketing Plan O A marketing plan is a formal, written document that directs a company’s activities for a specific period of time O Details analysis and research efforts O Provides a road map for how a product will enter the market, be advertised and sold

Elements of a Marketing Plan O Executive Summary – a brief overview of the entire marketing plan O Situation Analysis – the study of the internal and external factors that affect marketing strategies O Objectives – lets the readers know that the marketing plan O Marketing Strategies – identifies target market and sets marketing mix choices that focus on those markets

Elements of a Marketing Plan O Implementation – putting the marketing plan into action and managing it O Evaluation and Control – measures that will be used to evaluate the plan O Performance Standards and Evaluation – expectation for performance that reflects the plan’s objectives O Appendix – includes supplemental materials such as financial statements, sample ads, etc.

Writing a Marketing Plan Useful Objectives Single-MindedSpecific MeasurableTime Framed

Writing a Marketing Plan Marketing Plan Objectives

Writing a Marketing Plan Key Point Differences The quality of the product A superior distribution system A more competitive pricing structure A more creative ad campaign

Writing a Marketing Plan Implementation Schedule of activities Job assignments Sales forecasts Budgets Details of each activity Who is responsible for each activity sales forecasts The projection of probable, future sales in units or dollars.

Writing a Marketing Plan performance standard An expectation for performance that reflects the plan’s objectives. Performance standards help assess Marketing Objectives Financial Objectives Marketing Mix Strategies

Marketing Audit O The marketing process is ongoing O Three phases of the marketing process O Planning O Implementation O Control O Key question – “Did we accomplish the objectives listed in the marketing plan within the boundaries of the plan?”

Marketing Audit O Evaluation at the end of the marketing process is the marketing audit O Marketing audit evaluates company’s: O Marketing objectives O Strategies O Budgets O Organization O Performance

Writing a Marketing Plan

Market Segmentation Identifying and Analyzing Markets

Market Segmentation O The process of classifying people who form a given market into smaller markets O 4 Ways Marketers Segment the Market O Demographics O Geographics O Psychographics O Behavioral Characteristics

Market Segmentation AgePrice Desired Features

Market Segmentation

Demographics O Refers to statistics that describe a population in terms of personal characteristics such as O age O gender O income O marital status O ethnic background O education O occupation

Age O Marketers can easily use age to segment the market by age ranges O Examples O Baby Boomer Generations - born , older with more income and spending power O Generation X – followed baby boomers, children of duel-career households, bombarded with media at early age O Generation Y – racially and ethnically diverse, lots of spending power, instant gratification

Gender and Income O Gender segmentation is segmenting by sex O Male or female O Who is the end user? O Income segmentation is knowing how much money people have to spend O Disposable Income – the money left after taking out taxes O Discretionary Income – the money left after paying for basic living necessities such as food, shelter, and clothing

Marital Status O Marital status is the percentage of married, single, divorced and widowed people in the US. O Currently there are less married people today than in the 1950’s O Marrying older O Living longer O Divorcing more

Ethnic Background O US population is becoming more multicultural and ethnically diverse O Also includes: O Population density (urban v suburban) O Climate (warm v cold) O Local, State, and Regional Geographics O National and Global Geographics

Psychographics O Grouping people with similar attitudes, interests, opinions, lifestyles and shared values together. O Lifestyles includes how people spend their time and money O Attitudes, values and opinions require research to learn more about a group’s personality traits and motivation

Attitudes and Opinions O Consumer attitudes and opinions are created by changing times and person experiences O Example - Going “green” O New products O Packaging O Healthy options at Fast Food restaurants O Recycled products

Interests and Activities O Things you like to do O Running O Cycling O Make-up O Music O Reading

Personalities and Values O Maslow’s hierarchy of needs that help define the personality and values of individuals O 5 Stages O Survival O Safety O Love and Belonging O Esteem O Self-Actualization

Behavioral Characteristics O Segmenting the market based on purchasing-related behavior involves analyzing your customers with regard to sales generated, shopping patterns, and purchase decision-making processes O 80/20 Rule – 80% of company’s sales are generated by 20% of its loyal customers O Usage rate

Identifying and Analyzing Markets Government Data Private Research Trade Associations Company Research A company gathers data from multiple sources.

Types of Segmentation DemographicGeographicPsychographicBehavioral Age Gender Income Marital status Ethnic background Local State Regional National Global Attitudes Opinions Interests Activities Personality Values Shopping Patterns Decision-making process demographic Statistics that describe a population in terms of personal characteristics such as age, gender, income, marital status, and ethnic background. psychographic Grouping people with similar attitudes, interests, and opinions, as well as lifestyles and shared values.

Types of Segmentation DemographicsPsychographics += Comprehensive Customer Profile + Geographics geographics Segmentation of the market based on where people live.

Types of Segmentation

Mass Marketing vs Segmentation O Mass marketing – when products have universal appeal and few features to differentiate them from competitors O Involves using a single marketing strategy to reach ALL customers Examples -

Mass Marketing Vs. Segmentation Mass Marketing AdvantagesDisadvantage mass marketing Using a single marketing strategy to reach all customers. Economics of scale Simplified marketing plan Competitors can identify unmet needs and wants and then steal customers

Mass Marketing vs Segmentation O Niche Marketing – narrows and defines a market with extreme precision, which increases the chances the chances the chance of a product’s success O Disadvantage – cost involved O Example – “Got Milk” campaign

Mass Marketing Vs. Segmentation Niche Marketing AdvantagesDisadvantage Extremely precise Increased chance for success Cost – Research – Production – Packaging – Advertising