1. Chapter Two The Marketing Plan

2. 2.1 Marketing Planning Objectives Conduct a SWOT analysis List the three key areas of an internal company analysis Identify the factors in an environmental scan Explain the basic elements of a marketing plan

3. 2.1 Marketing Planning Key Terms SWOT Analysis Environmental scan Marketing Plan Executive Summary Situation analysis Marketing Strategy Sales Forecast Performance Standard

4. SWOT Analysis Good marketing relies on good plans Analyzing a company’s strengths, weaknesses, opportunities, and threats is called SWOT analysis This analysis lists everything that can foster the business’s success and what could make it fail

5. Internal Strengths & Weaknesses Strengths and weaknesses are internal factors that affect a business operation Internal analysis revolves around (CN) –Company –Customer –Competition Some firms bring in outside consultants to conduct this analysis

6. Company Analysis Question of a company’s internal analysis are about what a company does well and what areas are weak Review of: –Staff –Financial situation –Production Capabilities –Marketing Mix (Four P’s)

7. Staff Related Questions What is the company’s mission statement? Does everyone know it? Is everyone on staff following it? Does the company have too much or not enough staff in each area to provide the quality of service it should? Should staff be re- assigned?

8. Staff Related Questions How experienced are the company executives? What have they accomplished? What is the quality of the staff? Are there formal training and assessment programs? How effective is its sales force?

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

10. Production Capability Questions How are adjustments made in production due to an increase or decrease in sales orders? Has the research and development department created successful new products?

11. Production Capability Questions What percentage of sales come from products that are five years or older? What changes in technology are required to remain competitive?

12. Marketing Mix Questions Product What new products have been successful and why? Does the company own a patent on any of those products? Are any patents expiring in the future

13. Marketing Mix Questions Price What are the present pricing strategies? Are the pricing strategies working?

14. Marketing Mix Questions Promotion How is the company positioned in the marketplace? What are the promotional strategies and have they been successful? What is the company’s reputation and image among customers?

15. Marketing Mix Questions Place Do products easily reach customers? Who helps the company with distribution?

16. Customer Analysis Customers are a great source of information Studying their habits may reveal patterns that offer insight into product offerings and pricing strategies

17. Customer Questions Who are the customers? How do groups of customers differ from one another? What, when, where and how much do they buy?

18. Customer Questions How do customers rate the company on quality, service, and value ? How satisfied is each customer segment? What customer segments are not having their needs met? Is your customer base increasing or decreasing? Why?

19. Customer Analysis Companies with technologies such as databases have a major advantage over their competition because they can structure their product selection, pricing, and promotional messages to targeted audience

20. Customer Analysis Many firms ask customers to complete a questionnaire or survey to monitor satisfaction Data from this research helps companies pinpoint areas that need improvement Monitoring customer satisfaction reveals both strengths and weaknesses

21. Competitive Position A company may find that it has strengths and weaknesses when compared to its competitors If a company’s market share is greater than its competitors it has an advantage and vice versa

22. Competitive Questions Internal Competitive Position –What market share does the company have? –What advantages does the company have over its competitors?

23. Competitive Questions Internal Competitive Position –What core competencies does the company possess? Does it have a better reputation, own a patent, have special resources, or better distribution capabilities? –Are competitors taking business away from the company? How? New product? Better promotion?

24. External Opportunities and Threats Company must always look for opportunities to create competitive advantage due to external factors: –Competition –Environmental Scan –Political - Economic - Socio-Cultural - Technological

25. Competition To stay competitive, companies need to know what their competitors are doing at all times Changes in competitors financial situation and problems in the marketplace can provide opportunities

26. Competition Companies that conduct a SWOT analysis on an ongoing basis are in better position to react and make adjustments to their marketing mix To make this process easier, companies must continually scan the external environment

27. Environmental Scan An environmental scan is an analysis of outside influences that may have an impact on an organization This is a methodical look at the world that typically includes four areas –Political –Economic –Socio-cultural –Technological

28. Environmental Scan Understanding how each of these areas is changing or is likely to change in the future can lead to a better appreciation of potential opportunities or threats for a firm

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

30. Political To assess potential political risks and new opportunities, it is important to see what changes are likely in the laws governing your business operation and how it will affect your marketing plans

31. Political Examples of current regulations: Do Not Call Registry – gives people the ability to demand that telemarketers not call their phone numbers Downloading Music from the Internet: this new industry may hurt music stores

32. Economic The current state of the economy is of interest to all businesses If the economy is robust, businesses are more likely to invest in new products and markets An economy that is in recession sends a company a completely different message

33. Economic An economy in recession poses a threat to nearly all companies. Most companies slow or stop plans for new facilities and reduce research and development efforts If unemployment figures decrease and consumer confidence increases, companies may see an opportunity to grow their business

34. Economic Changes in foreign currency rates could be seen as a threat or an opportunity depending on whether this makes the company’s products of services cheaper or more expensive in their foreign target market

35. Economic Selling imported products at a very low price in a given market is a threat to all businesses in that industry Changes in trade restrictions could be considered a threat or an opportunity depending on where a company does business

36. Socio-Cultural A socio-cultural analysis is based on customers and potential customers Changes in their attitude, lifestyles, and opinions provide a multitude of opportunities and threats Socio-cultural analysis covers changes in all demographic factors

37. Socio-Cultural Examples: The United States is becoming a more ethnically and racially diverse country. Marketing plans need to meet this change Obesity is an issue also, as it causes many health problems. Consumers advocates for healthier eating habits have criticized the fast food industry.

38. Technological Changing technology may be a threat for one industry, but a opportunity for another –Example Digital photography: companies such as Kodak are looking for was to adapt to the new technology of digital cameras

39. Technological Companies that keep abreast of the newest technological breakthroughs can use that knowledge to be more competitive –Computer Automation: the home of the future may be completely automated. You may be able to call from your cell phone to change your thermostat so your home is warm when you arrive

40. Writing a Marketing Plan Marketing is a complicated activity that relies on many different tasks For this reason, marketers create a marketing plan A marketing plan is a formal, written document that directs a company’s activities for a specific period of time

41. Writing a Marketing Plan It details analysis and research efforts and provides a roadmap of how a product will enter the market, be advertised, and sold. Marketing plans also communicate goals, objectives, and strategies of a company to members of the management team.

42. Writing a Marketing Plan The specifics in the plan let managers know their responsibilities, budget, and timelines for completion A marketing plan helps a company monitor a company’s performance A small retail business may develop a simple marketing plan for a year, but a large manufacturer would prepare a plan to cover five years

43. Elements of a Marketing Plan Marketing plans differ from company to company Elements included in all marketing plans: –Executive summary –Situation Analysis –Marketing goals/objective –Marketing strategies –Implementation –Evaluation and control

44. Executive Summary An executive summary is a brief overview of the entire marketing plan It briefly addresses each topic in the plan and gives an explanation of the cost involved in implementing the plan The executive summary may also be used to provide information to people outside the organization

45. Situation Analysis Situation Analysis is the study of the internal and external factors that affect marketing strategies. The information from a company’s SWOT analysis and from the environmental scan become the base for this portion of the marketing plan

46. Goal and Objectives Objectives let everyone know what the marketing plan will accomplish. To be useful, an objective must be single minded, specific, realistic, measurable, and have a time frame.

47. Goals and Objectives Specific means that the objective provides enough detail that there can be no misunderstanding Measurable means that the objective includes a way to evaluate it A time frame must be included

48. Goals and Objectives Marketing objectives must be in line with the organization’s goals and mission A company’s mission statement provides the focus for a firm’s goals with its explanation of the company’s core competencies, values, expectations, and vision for the future

49. Marketing Strategies A marketing strategy identifies target markets and sets marketing mix choices that focus on those markets All strategies must take the customer’s needs and wants into account as well as the companies objectives

50. Marketing Strategies A company or product’s position in the marketplace determines its marketing strategy and drives decisions for the four P’s An effective marketing strategy should be focused on the key points of difference The key point of difference is the advantage a company or product has over competition

51. Implementation: Make the Plan, Work the Plan Implementation is putting the marketing plan into action and managing it This means obtaining the financial resources, management, and staffing necessary to put the plan into action The phase requires excellent communication among management team members

52. This part of the marketing plan outlines a schedule of activities, job assignments, sales forecasts, budgets, details for each activity and who will be responsibility for each activity Sales forecast is the projection of probable, future sales in units or dollars, budgets, details of each activity and who is responsible Implementation: Make the Plan, Work the Plan (cont.)

53. Evaluation and Control In this section, measures that will be used to evaluate the plan are discussed It is important to explain how a specific objective will be measured

54. Performance Standards Performance standards are the measuring stick A performance standard is an expectation for performance that reflects the plans objectives In the control phase, the company’s goal is to reduce the gap between planned performance standards and actual performance

55. Appendix The appendix is the section of the marketing plan that includes extra material such as financial statements that support the plan

56. Conclusion The marketing process is ongoing The planning, implementation, and control act as parts of a circular cycle The key question is “Did we accomplish the objectives listed in the marketing plan within the boundaries?”

57. Chapter Two The Marketing Plan

58. 2.2 Market Segmentation Objectives Explain the concept of market segmentation Analyze a target market Differentiate between mass marketing and market segmentation

59. 2.2 Market Segmentation Key Terms Market segmentation Demographics Disposable income Discretionary income Geographic Psychographics Mass marketing

60. Identifying and Analyzing Markets Businesses look for ways to connect with current and potential customers When a company looks at its customers to identify groups of people who have many things in common Marketers analyze groups of customers to see if any of them can be further broken

61. Identifying and analyzing Marketers The process of classifying people who form given market into smaller groups is called market segmentation Markets are classified by –Age –Price –Desired features

62. Identifying and Analyzing Markets It is unusually too costly to target all potential target markets This is why it is very important to identify those markets in which the company has an advantage that enables it to survive its competition over a long period of time

63. Identifying and Analyzing Markets This is what marketers call a sustainable competitive advantage Companies study data generated by governments, private research firms, trade associations, and their own research to determine if a given target market is large enough to justify the expense

64. Demographics Demographics refer to statistics that describe a population in terms of personal characteristics such as: –Age - Ethnic Background –Gender- Education –Income- Occupation –Marital status

65. Age Marketers can easily use age to segment the market by creating age ranges

66. Age Baby Boom Generation The 76 million babies born in the United States between 1946 and 1964 are known as baby boomers. As baby boomers get older, their income and spending power increase. Therefore, they are the prime targets for all types of products

67. Age Generation X They followed the Baby Boom Generation. Most members of this generation are children of dual career households or divorced parents. They have been bombarded with media from an early age.

68. Age Generation Y These are the sons and daughters of the later baby boomers. Generation Y is also known as the Echo Boomers or Millennium Generation. Fashion and information about products get passed along via the Internet.

69. Gender Gender helps to create market segments as well Jockey underwear doubled its sales when it entered the woman’s market after targeting solely men

70. Income Marketers want to know how much money they have to spend on different products They look at two types of income measurement:  Disposable income  Discretionary income

71. Income Disposable Income –The money left after taking out taxes Marketers who produce and distribute products that are necessities are interested in the change of consumers disposable income

72. Income Discretionary Income –The money left after paying for basic living necessities such as food and clothing Marketers who sell luxury and premium products are interested in changes in consumer’s discretionary income

73. Marital Status Married couples have slipped from 80% in the 1950’s to 50.7% People are older when they get married for the first time, divorcing more, living longer, and remarrying less

74. Ethnic Background The U.S. population is becoming more multicultural and ethnically diverse, mainly as a result of increased immigration By 2020 these ethnic groups will represent 37.2 percent of all Americans

75. Geographics Geographics refers to segmentation of the market based on where people live Geographics relate closely to demographics because of the similarity among people who live in a certain area

76. Geographics To segment a market geographically, you can refer to local, regional, national, even global markets Example: –A small independent restaurant generally cater to people who live in its vicinity. Some products such as Pepsi and Coca-Cola are marketed nationally and internationally

77. Geographics If you were interested in marketing to Latinos, it would be good to know the top Hispanic markets such as Los Angeles, NY, Miami, Chicago, Houston 55% of African Americans live in the South. However, the city with the largest number of African Americans live in New York City

78. Psychographics Psychographics involves grouping people with similar lifestyles, as well as shared attitudes, values, and opinions

79. Psychographics Consumer lifestyles include how people spend their time and money Attitudes, values, and opinions require special research to learn more about a groups personality traits and motivation

80. Psychographics Activities A good way to get a feel for market segmentation by activities is to visit the magazine section of a bookstore For each interest group and activity, you will find at least one related magazine, which represents the market segment

81. Psychographics Attitudes Consumers attitudes are trend setting issues for marketers in the twenty first century Attitudes include responsibility for one’s health, eating healthier, and becoming physically fit

82. Psychographics Personality and Values More advanced study of psychographics includes the study of personality characteristics and values

83. Behavioral Segmenting the market based on product- related behavior involves looking at the benefits desired by consumers, shopping patterns, and usage rate

84. Behavioral Example Many people, regardless of their socio- economic status, desire luxury and premium merchandise They luxury market is a growing consumer trend as individuals define themselves through the products they buy

85. How Marketers Use Consumer’s Behavioral Patters Astute marketers study shopping patterns to determine usage rates Companies classify their customers according to the percentage of sales each group generates

86. Mass Marketing vs. Segmentation Mass Marketing involves using a single marketing strategy to reach all customers

87. A New Marketing Trend Most products can be segmented by demographics, psychographics, geographics, or buying behavior Mass marketing is not as popular as it once was The current trend is niche marketing, which means that markets are narrowed down and defined with extreme precision