Business / Marketing Minor Marketing Fundamentals M21439 Session 2: Marketing Planning & Auditing 1

Key Concepts Definition of marketing planning Contents of a marketing plan Definition of a marketing audit Dimensions of a marketing audit

Definition of a Marketing Planning “Marketing planning can be defined as the planned application of marketing resources to achieve marketing objectives.” McDonald,M. (1999)

Strategic Marketing Plan A strategic marketing plan is a plan which covers a period beyond the next fiscal year. Usually this is for between three and five years. Source: McDonald,M.(1999) Marketing Plans 4th ed, UK:Butterworth Heinemann, p.31

Tactical Marketing Plan A tactical marketing plan covers in quite a lot of detail the actions to be taken, by whom, during a short term planning period. This is usually for one year or less.

Question: Do all organisations formally plan their marketing activities? If not, why not?

Start of Marketing Planning Marketing planning should start with an analysis of the potential market. Porter’s Five Forces (1985) model provides a useful tool for analysing the overall attractiveness of the market. Source: Doyle,P.(2002) Marketing Management and Strategy 3rd ed, Harlow:Prentice Hall, p.404

Porter (1985) Five Competitive Forces That Determine Industry Profitability Model POTENTIAL ENTRANTS Threat of new entrants Bargaining power of suppliers INDUSTRY COMPETITORS SUPPLIERS BUYERS Bargaining power of buyers Rivalry among existing firms Threat Of substitute Products or services Lecturer’s Notes: The principle of this model it that it is possible to classify competitive forces acting against an organisation into five main categories. The five forces can act continuously and adversely against the organisation unless it defends/reacts or is proactive itself. SUBSTITUTES Source: Porter, M.E. (1985) Competitive Advantage: Sustaining and Creating Superior Performance New York:Free Press p.5 25 10

Evolution of Strategy & Management Systems Characteristics Financial Planning Long Range Planning Strategic Planning Strategic Market Management Management Focus Budgets and control Anticipate market growth Respond to environmental changes Capitalise on strategic windows Assumptions Long-run stability Past trends to continue New trends and discontinues are predictable Many changes will be sudden and unpredictable Objective Meet the budget Predict the future Think strategically Create opportunities through change Planning Process Annual 5 years, annual revisions Annual revisions Real time When Popular Until late 1950s 1960s 1970s After 1980s Source: Doyle,P.(2002) Marketing Management and Strategy 3rd ed, Harlow:Prentice Hall, p.97

Question: Why do you think organisations have changed their strategy & management systems? Do you know of any organisational examples?

Factors Influencing Company Marketing Strategy Demographic / Economic Environment Marketing intermediaries Suppliers Marketing information system Place Technological / Physical Environment Product Political/ Legal Environment Target customers Marketing planning system Marketing control system Promotion Price Marketing organisation and implementation Competitors Publics Social / Cultural Environment Source: Kotler,P.(2000) Marketing Management Millennium edition, USA:Prentice Hall International, p.88.

The marketing planning cycle Source: Dibb,S, Simkin, Pride, Ferrell (2001) Marketing: Concepts & Strategies 4th ed, USA:Houghton Mifflin

Contents of a Marketing Plan 1. Executive Summary & Table of Contents Presents a brief overview of the proposed plan. 2. Current Marketing Situation Presents relevant background data on sales, costs, profits, the market, competitors, distribution and the macroenvironment. 3. Opportunity & Issue Analysis Identifies the main opportunities/threats, strengths/weaknesses and issues facing the product line. 4. Objectives Defines the plan’s financial and marketing goals in terms of sales volume, market share and profit. 5. Marketing Strategy Presents the broad marketing approach that will be used to achieve the plan’s objectives. 6. Action Programs Presents the special marketing programs designed to achieve the business objectives. 7. Projected Profit-&-Loss Statement Forecasts the plan’s expected financial outcomes. 8. Controls Indicates how the plan will be monitored. Source: Kotler,P.(2000) Marketing Management Millennium edition, USA:Prentice Hall International, p.89.

The Marketing Plan 1. Management or Executive Summary 2. Marketing Objectives 3. Product/Market Background 4. Marketing Analysis 5. Marketing Strategies 6. Statement of Expected Sales Forecasts & Results Source: Dibb,S, Simkin, Pride, Ferrell (2001) Marketing: Concepts & Strategies 4th ed, USA:Houghton Mifflin,p.696

The Marketing Plan – cont. 7. Marketing Programmes for Implementation 8. Control & Evaluation: Monitoring of Performance 9. Financial Implications/Required Budget 10. Operational Considerations 11. Appendices Source: Dibb,S, Simkin, Pride, Ferrell (2001) Marketing: Concepts & Strategies 4th ed, USA:Houghton Mifflin, p.696

Question: How long should it take to devise a marketing plan Question: How long should it take to devise a marketing plan? … is there a right answer?

Marketing Audit “A marketing audit is a comprehensive, systematic, independent and periodic examination of a company’s – or business unit’s – marketing environment, objectives, strategies and activities with a view to determining problem areas and opportunities and recommending a plan of action to improve the company’s marketing performance.” Source: Kotler,P.(2000) Marketing Management Millennium edition, USA:Prentice Hall International, p.708.

Marketing Audit The broadest control advice of the marketing plan is the marketing audit – a thorough, systematic, periodic evaluation of the goals, strategies, structure and performance of the marketing organisation. Source: Lamb,C.W.,Hair.J.F. & McDaniel,C.(2003) Marketing 7th ed, Canada:Thomson South Western, p.44

Question: How does a marketing plan differ from a marketing audit – do you need both?

Dimensions of a Marketing Audit PART 1 - Marketing Environment Forces - Task Environment PART 2 - Marketing Strategy Audit PART 3 - Marketing Organisation Audit PART 4 - Marketing Systems Audit PART 5 - Marketing Productivity Audit PART 6 - Marketing Function Audit Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrel.O.C. (2001) Marketing: Concepts and Strategies 4th European ed, USA:Houghton Mifflin, pp.710-712

Part 1: Marketing Environment Forces Economic Technological Political/Legal/Regulatory Societal/Green Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrel.O.C. (2001) Marketing: Concepts and Strategies 4th European ed, USA:Houghton Mifflin, p.710

Part 1: Task Environment Markets Customers Competitors Distribution & Dealers Suppliers Facilitators & Marketing Organisations Publics Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrel.O.C. (2001) Marketing: Concepts and Strategies 4th European ed, USA:Houghton Mifflin, p.710

Part 2: Marketing Strategy Audit Business Mission Marketing Objectives & Goals Strategy Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrel.O.C. (2001) Marketing: Concepts and Strategies 4th European ed, USA:Houghton Mifflin, p.711

Part 3: Marketing Organisation Audit Formal Structure Functional Efficiency Interface Efficiency Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrel.O.C. (2001) Marketing: Concepts and Strategies 4th European ed, USA:Houghton Mifflin, p.711

Part 4: Marketing Systems Audit Marketing Information System Marketing Planning System Marketing Control System New Product Development System Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrel.O.C. (2001) Marketing: Concepts and Strategies 4th European ed, USA:Houghton Mifflin, p.711

Part 5: Marketing Productivity Audit Profitability Analysis Cost Effective Analysis Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrel.O.C. (2001) Marketing: Concepts and Strategies 4th European ed, USA:Houghton Mifflin, p.712

Part 6: Marketing Function Audit Products and Services Price Distribution Promotional Mix Salesforce Source: Dibb.S, Simkin.L, Pride.W.M. & Ferrel.O.C. (2001) Marketing: Concepts and Strategies 4th European ed, USA:Houghton Mifflin, p.712

Marketing Audit – Four Characteristics Comprehensive Systematic 3. Independent 4. Periodic Source: Kotler,P.(2000) Marketing Management Millennium edition, USA:Prentice Hall International, p.708.

Marketing Audit - Comprehensive Covers all of the major marketing activities of a business – not just a few trouble spots. Source: Kotler,P.(2000) Marketing Management Millennium edition, USA:Prentice Hall International, p.708.

Marketing Audit - Systematic Orderly examination of the macro & micro environments, mkting objectives & strategies, mkting systems and specific activities. Source: Kotler,P.(2000) Marketing Management Millennium edition, USA:Prentice Hall International, p.708.

Marketing Audit - Independent Can be conducted in six ways: 1. Self-audit 2. Audit from across 3. Audit from above 4. Company auditing office 5. Company task force 6. Outsider Source: Kotler,P.(2000) Marketing Management Millennium edition, USA:Prentice Hall International, p.708.

Marketing Audit - Periodic Typically only initiated after sales have turned down but can prevent companies from being thrown into crisis. Companies should conduct a marketing audit periodically. Source: Kotler,P.(2000) Marketing Management Millennium edition, USA:Prentice Hall International, p.709.

Question: One of assessments asks you to undertake a marketing audit – how will you go about it? What organisational information can you access?