Copyright © 2001 by Harcourt, Inc. All rights reserved. 6-1 CHAPTER SIX MARKETING PLANNING AND...

6-1

Copyright © 2001 by Harcourt, Inc. All rights reserved.

CHAPTER SIX

MARKETING PLANNING AND FORECASTING

Text by Profs. Gene Boone & David KurtzMultimedia Presentation byProf. Milton PressleyThe University of New Orleans

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CHAPTER OBJECTIVESCHAPTER OBJECTIVESCHAPTER OBJECTIVESCHAPTER OBJECTIVES• Distinguish between strategic planning

and tactical planning• Explain how marketing plans differ at

various levels in the organization• Identify the steps in the marketing-

planning process• Describe the concept of a SWOT

analysis and its major elements

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CHAPTER OBJECTIVESCHAPTER OBJECTIVESCHAPTER OBJECTIVESCHAPTER OBJECTIVES• Explain how the strategic business-unit

concept, the market share/market growth matrix, the market attractiveness/business strength matrix, and spreadsheet analysis can be used in marketing planning

• Identify a major types of forecasting methods

• Explain the steps and forecasting process

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WHAT IS MARKETING WHAT IS MARKETING PLANNING?PLANNING?WHAT IS MARKETING WHAT IS MARKETING PLANNING?PLANNING?• Planning is the process of anticipating future

events and conditions and determining the courses of action necessary to achieve organizational objectives

• Marketing planning is the process of anticipating future events and conditions and determining the courses of action necessary to achieve marketing objectives

© PhotoDisc

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KraftKraft

Adding Products to Adding Products to Increase Market ShareIncrease Market Share

KraftKraft

Adding Products to Adding Products to Increase Market ShareIncrease Market Share

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AllAllBUSINESSBUSINESS..COMCOM: A Resource for Business Planners: A Resource for Business PlannersAllAllBUSINESSBUSINESS..COMCOM: A Resource for Business Planners: A Resource for Business Planners


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PlanMagic Corporation’s Web Site Promotes Software PlanMagic Corporation’s Web Site Promotes Software for Planning Including this Marketing Planning Softwarefor Planning Including this Marketing Planning SoftwarePlanMagic Corporation’s Web Site Promotes Software PlanMagic Corporation’s Web Site Promotes Software for Planning Including this Marketing Planning Softwarefor Planning Including this Marketing Planning Software


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Figure 6.1: GM Ads Strengthen Relationships With Women Car BuyersFigure 6.1: GM Ads Strengthen Relationships With Women Car Buyers

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Strategic Planning Vs. Strategic Planning Vs. Tactical PlanningTactical PlanningStrategic Planning Vs. Strategic Planning Vs. Tactical PlanningTactical Planning• Strategic planning is the process of determining

an organization’s primary objectives, allocating funds, and then initiating actions designed to achieve those objectives

• Tactical planning is the process of defining implementation activities that the firm must carry out to achieve its objectives

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The Patricia Seybould Group: A Consulting The Patricia Seybould Group: A Consulting Service Specializing in Strategic PlanningService Specializing in Strategic PlanningThe Patricia Seybould Group: A Consulting The Patricia Seybould Group: A Consulting Service Specializing in Strategic PlanningService Specializing in Strategic Planning


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PLANNING AT DIFFERENT PLANNING AT DIFFERENT ORGANIZATIONAL LEVELSORGANIZATIONAL LEVELSPLANNING AT DIFFERENT PLANNING AT DIFFERENT ORGANIZATIONAL LEVELSORGANIZATIONAL LEVELS

• Top management spend greater proportions of their time engaged in planning than do middle- level and supervisory- level managers• Top managers also usually focus their planning activities on long-range strategic issues

Top ManagersTop Managers

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• Middle level managers tend to focus on operational planning

Top Managers

Middle LevelMiddle Level


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• Supervisors often engage in developing the specific programs to meet goals in their areas of responsibility

Top Managers

Middle Level

SupervisorsSupervisors


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Table 6.1: Planning at Different Management LevelsTable 6.1: Planning at Different Management LevelsTable 6.1: Planning at Different Management LevelsTable 6.1: Planning at Different Management Levels

Management Level Types of Planning Emphasized at This

Level

Examples

Top Management

Board of DirectorsChief Executive Officer (CEO)Chief Operating Officer (COO)Divisional vice presidents

Strategic Planning Organization-wide objectives; fundamental strategies; long-term plans; total budget

Middle Management

General sales managerMarket research managerAdvertising director

Tactical Planning Quarterly and semi-annual plans; divisional budgets; divisional policies and procedures

Supervisory Management

District sales managerSupervisors in staffMarketing departments

Operational Planning Daily and weekly plans; unit budgets; departmental rules and procedures

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STEPS IN THE MARKETING STEPS IN THE MARKETING PLANNING PROCESSPLANNING PROCESSSTEPS IN THE MARKETING STEPS IN THE MARKETING PLANNING PROCESSPLANNING PROCESSFigure 6.2: the Marketing Planning Process

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Defining the Defining the Organization’s MissionOrganization’s MissionDefining the Defining the Organization’s MissionOrganization’s Mission• The planning process begins with activities to

define the firm’s mission• Mission: the essential purpose that differentiates

one company from another• The mission statement specifies the

organization’s overall goals and operational scope and provides general guidelines for future management actions

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CrestCrest

Education Programs: Education Programs: Part of Procter & Part of Procter & Gamble’s Mission to Gamble’s Mission to Improve the Lives of Improve the Lives of Consumers Consumers

CrestCrest

Education Programs: Education Programs: Part of Procter & Part of Procter & Gamble’s Mission to Gamble’s Mission to Improve the Lives of Improve the Lives of Consumers Consumers


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Boston Consulting Group’s Mission Statement Is, Boston Consulting Group’s Mission Statement Is, Appropriately, a Major Part of It’s Web Site Appropriately, a Major Part of It’s Web Site Boston Consulting Group’s Mission Statement Is, Boston Consulting Group’s Mission Statement Is, Appropriately, a Major Part of It’s Web Site Appropriately, a Major Part of It’s Web Site


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Determining Determining Organizational ObjectivesOrganizational ObjectivesDetermining Determining Organizational ObjectivesOrganizational Objectives• An organization lays out its basic objectives, or

goals, in its mission statement• These objectives in turn guide development of

supporting marketing objectives and plans• Well-developed objectives should state specific,

quantitative intentions along with deadlines for achieving them

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Assessing Organizational Resources Assessing Organizational Resources and Evaluating Environmental Risks and Evaluating Environmental Risks and Opportunitiesand Opportunities


• This step involves a back-and-forth assessment of strengths, risks, and available opportunities

• Organizational resources and environmental factors affect marketing opportunities and the planning process

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Assessing Organizational Resources Assessing Organizational Resources and Evaluating Environmental Risks and Evaluating Environmental Risks and Opportunitiesand Opportunities• SWOT analysis is a strategic planning tool • A SWOT analysis is a method of studying

organizational resources and capabilities to assess the firm’s strengths and weaknesses and scanning its environment to identify opportunities and threats

• SWOT is an acronym for strengths, weaknesses, opportunities, and threats

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Table 6.2: SWOT Analysis: GM Versus FordTable 6.2: SWOT Analysis: GM Versus FordTable 6.2: SWOT Analysis: GM Versus FordTable 6.2: SWOT Analysis: GM Versus Ford

General Motors

Ford

Annual Revenue $178 billion $154 billion

Vehicles sold annually, worldwide

8.78 million 6.94 million

Labor hours spent per vehicle 46.5 34.7

Selling, general and administrative expenses as percentage of sales

8.2% 5.6%

Productivity: Revenue per senior manager

$2.12 billion $2.67 billion

Productivity: Units produced per hourly worker

27.3 units 45.6 units

Number of dealers 8,000 5,000

Vehicles sold per dealership 552 761

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Figure 6.3: SWOT Analysis

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• Strategic window: a limited period with an optimal fit between the key requirements of a market and the particular competencies of a firm

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Figure 6.4: Taking Advantage of a Strategic WindowFigure 6.4: Taking Advantage of a Strategic Window

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HydrogenMedia HydrogenMedia

Growth in Internet Growth in Internet Creates a Strategic Creates a Strategic Window for Window for HydrogenMedia HydrogenMedia

HydrogenMedia HydrogenMedia

Growth in Internet Growth in Internet Creates a Strategic Creates a Strategic Window for Window for HydrogenMedia HydrogenMedia


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FORMULATING A FORMULATING A MARKETING STRATEGYMARKETING STRATEGYFORMULATING A FORMULATING A MARKETING STRATEGYMARKETING STRATEGY• Marketing strategy: a firm’s overall

program for selecting and satisfying a target market

• A marketing strategy is aimed at satisfying consumers in the selected target market through a careful balance of the elements of the marketing mix – each of which represents a subset of the overall marketing strategy

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Strategic Implications: Implementing Strategic Implications: Implementing a Strategy Through Marketing Plansa Strategy Through Marketing PlansStrategic Implications: Implementing Strategic Implications: Implementing a Strategy Through Marketing Plansa Strategy Through Marketing Plans

• The next step in the marketing-planning process consists of using operating plans to implement the previously developed marketing strategy

• The final step in this process is monitoring the organization’s performance to ensure that objectives are being achieved

• Sometimes, strategies will require modifications to help bring performance in line with expected results

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• Strategic Business Units (SBUs) are key business units within diversified firms

• A division, product line, or single product may define an SBU

• Firms redesign their SBUs as market conditions dictate

TOOLS FOR MARKETING PLANNINGTOOLS FOR MARKETING PLANNINGTOOLS FOR MARKETING PLANNINGTOOLS FOR MARKETING PLANNING

Strategic Business Units (SBUS)


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Figure 6.5: An SBU Focused on Merchandise for Women

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3M3M

Tape Products: A Tape Products: A 3M Strategic 3M Strategic Business UnitBusiness Unit

3M3M

Tape Products: A Tape Products: A 3M Strategic 3M Strategic Business UnitBusiness Unit


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• Market Share/ Market Growth Matrix: a marketing planning tool that classifies of firm’s products according to industry growth rates and market shares relative to competing products



Market Share/Market Growth Matrix


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Home Page of the Boston Consulting Group – Home Page of the Boston Consulting Group – Developers of the market Share/Market Growth MatrixDevelopers of the market Share/Market Growth MatrixHome Page of the Boston Consulting Group – Home Page of the Boston Consulting Group – Developers of the market Share/Market Growth MatrixDevelopers of the market Share/Market Growth Matrix


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Figure 6.6: Market Share/ Market Growth Matrix

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Market Attractiveness/Business Strength Matrix


• Market Attractiveness/Business Strength Matrix: a portfolio analysis technique but that rates SBUs according to the attractiveness of their markets and their organizational strengths


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Figure 6.7: Market Attractiveness/Business Strength Matrix

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Evaluating the Matrix Evaluating the Matrix Approach to PlanningApproach to PlanningEvaluating the Matrix Evaluating the Matrix Approach to PlanningApproach to Planning

Market Share/Market Share/Market Growth Market Growth MatrixMatrix

• Emphasizes the importance of creating market offerings that will position the firm to its best advantage

• Acknowledges changes in successful SBUs as they move through their life cycles from question mark, to star, to cash cow, to dog

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Gillette for Gillette for WomenWomen

Gillette’s Sensor Excel Gillette’s Sensor Excel for Women: An for Women: An Example of a Cash Example of a Cash CowCow

Gillette for Gillette for WomenWomen

Gillette’s Sensor Excel Gillette’s Sensor Excel for Women: An for Women: An Example of a Cash Example of a Cash CowCow


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Evaluating the Matrix Evaluating the Matrix Approach to PlanningApproach to PlanningEvaluating the Matrix Evaluating the Matrix Approach to PlanningApproach to Planning

Market Market Attractiveness/Attractiveness/Business Strength Business Strength MatrixMatrix

• A useful diagnostic tool for intensifying SBUs with the greatest, and the least, potential

• Can also help identify a firm’s need for new sources of growth, while indicating its most and least attractive markets

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Market Market PenetrationPenetration

ProductProductDevelopmentDevelopment

Market Market DevelopmentDevelopment

PresentPresent NewNew

P R O D U C TP R O D U C T

NewNewM A

R K

E T

M A

R K

E T

DiversificationDiversification

PresentPresent

Growth StrategiesGrowth Strategies


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Market Market PenetrationPenetration

ProductProductDevelopmentDevelopment

Market Market DevelopmentDevelopment

PresentPresent NewNew

P R O D U C TP R O D U C T

NewNewM A

R K

E T

M A

R K

E T

DiversificationDiversification

PresentPresent

Class Discussion Class Discussion What GROWTH STRATEGY was it pursuing when BLOCKBUSTERS What GROWTH STRATEGY was it pursuing when BLOCKBUSTERS

Developed It’s “Guaranteed In Stock or It’s Free” Policy?Developed It’s “Guaranteed In Stock or It’s Free” Policy?


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Spreadsheet Analysis

Spreadsheet Analysis

• Spreadsheet analysis helps planners anticipate marketing performance given specified sets of circumstances

• Computer software, like Microsoft’s Excel, help players answer “what-if” questions


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Table 6.3: Example of a Spreadsheet AnalysisTable 6.3: Example of a Spreadsheet Analysis

Manufac-turing

Marketing

R & D Total Per-Unit Variable

Cost

Sales Price

Break-even Point

$100,000 $120,000 $90,000 $310,000

$5 $10 62,000

Fixed Costs

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Manufac-turing

Marketing


Cost

Sales Price

Break-even Point

$100,000 $120,000 $90,000 $310,000

$5 $10 62,000

$100,000 $230,000 $90,000 $420,000

$5 $10 84,000

Fixed Costs

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Manufac-turing

Marketing


Cost

Sales Price

Break-even Point

$100,000 $120,000 $90,000 $310,000

$5 $10 62,000

$100,000 $230,000 $90,000 $420,000

$5 $10 84,000

$100,000 $120,000 $90,000 $310,000

$4 $9 62,000

Fixed Costs

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Mission/Goal StatementMission/Goal Statement

Corporate StrategyCorporate Strategy

SBU StrategySBU Strategy

Marketing StrategyMarketing Strategy

Marketing Mix ElementsMarketing Mix Elements

Strategic Marketing Planning Levels Strategic Marketing Planning Levels


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SALES FORECASTINGSALES FORECASTINGSALES FORECASTINGSALES FORECASTING• Sales forecast: an estimate of a

firm’s sales or income for a specified period.• Qualitative forecasting

techniques supply subjective data – opinions rather than exact historical data

• Quantitative forecasting methods develop numerical data through statistical computations

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August Schell Enterprises, Inc. Provides Sales August Schell Enterprises, Inc. Provides Sales Forecasting Services and SoftwareForecasting Services and SoftwareAugust Schell Enterprises, Inc. Provides Sales August Schell Enterprises, Inc. Provides Sales Forecasting Services and SoftwareForecasting Services and Software


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© PhotoDisc

SALES FORECASTINGSALES FORECASTINGSALES FORECASTINGSALES FORECASTING

• Jury of Jury of Executive Executive opinionopinion

• A qualitative sales forecasting method that combines and averages the sales expectations of various executives

© PhotoDisc

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© PhotoDisc


• Delphi Delphi techniquetechnique

• Date qualitative sales forecasting method that gathers and redistributes several rounds of anonymous forecasts until the participants reach a consensus

© PhotoDisc

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© PhotoDisc


• Sales force Sales force compositecomposite

• A qualitative sales forecasting method that develops sales estimates based on the combined estimates of the firm’s salespeople

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© PhotoDisc


• Survey of buyer Survey of buyer intentionsintentions

• A qualitative sales forecasting method that samples opinions among groups of present and potential customers concerning their purchase intentions

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© PhotoDisc


• Market testMarket test • A quantitative forecasting method that introduces a new product, price, promotional campaign, or other marketing variable in a relatively small test-market location in order to assess consumer reactions

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Figure 6.8:Using a Market Test to Gauge Consumer Response

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Windex OutdoorWindex Outdoor

This Ad Was Part of a This Ad Was Part of a 20-State Test Market of 20-State Test Market of the Product. Following the Product. Following the Market Test, It Was the Market Test, It Was Introduced to to the Introduced to to the Entire Country. Entire Country.

Windex OutdoorWindex Outdoor

This Ad Was Part of a This Ad Was Part of a 20-State Test Market of 20-State Test Market of the Product. Following the Product. Following the Market Test, It Was the Market Test, It Was Introduced to to the Introduced to to the Entire Country. Entire Country.


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• Trend analysisTrend analysis • A quantitative sales forecasting method that estimates future sales through statistical analysis of historical sales patterns

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© PhotoDisc


• Exponential Exponential smoothingsmoothing

• A quantitative forecasting techniques that assigns weights to historical sales data, giving the greatest weight to the most recent data

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Table 6.4: Benefits and Limitations of Various Table 6.4: Benefits and Limitations of Various Forecasting TechniquesForecasting Techniques

Techniques Benefits LimitationsQualitative Methods

Jury of executive Jury of executive opinionopinion

Opinions come from executives in many different departments; quick; inexpensive

Managers may lack sufficient knowledge and experience to make meaningful predictions

Delphi techniqueDelphi technique Group of experts can accurately predict long-term events such as technological breakthroughs

Time-consuming; expensive

Sales force compositeSales force composite Salespeople have expert customer, product, and competitor knowledge; quick; inexpensive

Inaccurate forecasts may result from low estimates of salespeople concerned about their influence on quotas

Survey of buyer Survey of buyer intentionsintentions

Useful in predicting short-term and intermediate sales for firms that serve only a few customers

Intentions to buy may not result in actual purchases; time-consuming; expensive

Continued on next slide . . .

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Techniques Benefits LimitationsQuantitative Methods

Market testMarket test Provides realistic information on actual purchases rather than on intent to buy

Alerts competition to new product plans; time-consuming; expensive

Trend analysisTrend analysis Quick; inexpensive; effective with stable customer demand and environment

Assumes the future will continue the past; ignores environmental changes

Exponential Exponential smoothingsmoothing

Same benefits as trend analysis, but emphasizes more recent data

Same limitations as trend analysis, but not as severe due to emphasis on recent data

Table 6.4: Benefits and Limitations of Various Table 6.4: Benefits and Limitations of Various Forecasting TechniquesForecasting Techniques (Continued) (Continued)

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Steps in Sales ForecastingSteps in Sales ForecastingSteps in Sales ForecastingSteps in Sales ForecastingEnvironmental Forecasting

• Environmental forecasting focuses on events and influences external to the firm that affect its markets

• Examples include:• Consumer spending and saving patterns• Balance-of-trade surpluses and deficits• Government expenditures• Business investments

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The FDIC’s Website: A Source of Data on The FDIC’s Website: A Source of Data on Consumer Savings and SpendingConsumer Savings and SpendingThe FDIC’s Website: A Source of Data on The FDIC’s Website: A Source of Data on Consumer Savings and SpendingConsumer Savings and Spending


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The U.S. Census Bureau’s Website: A Source The U.S. Census Bureau’s Website: A Source of Data on Trade Surpluses and Deficitsof Data on Trade Surpluses and DeficitsThe U.S. Census Bureau’s Website: A Source The U.S. Census Bureau’s Website: A Source of Data on Trade Surpluses and Deficitsof Data on Trade Surpluses and Deficits


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The GODORT Website: A Listing of Frequently Used The GODORT Website: A Listing of Frequently Used U.S. Government Related Sites – Potential Sources U.S. Government Related Sites – Potential Sources for Forecasting Datafor Forecasting Data

The GODORT Website: A Listing of Frequently Used The GODORT Website: A Listing of Frequently Used U.S. Government Related Sites – Potential Sources U.S. Government Related Sites – Potential Sources for Forecasting Datafor Forecasting Data


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Steps in Sales ForecastingSteps in Sales ForecastingSteps in Sales ForecastingSteps in Sales ForecastingIndustry Sales Forecasting

• The general economic forecast combined with other relevant environmental conditions to guide development of an industry sales forecast

• Trade associations and publications for most industries provide short-term, intermediate, and long-term industry sales forecasts

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Barnard Retail Trend Report: A Potential Source Barnard Retail Trend Report: A Potential Source for Sales Forecasters in the Retail Businessfor Sales Forecasters in the Retail BusinessBarnard Retail Trend Report: A Potential Source Barnard Retail Trend Report: A Potential Source for Sales Forecasters in the Retail Businessfor Sales Forecasters in the Retail Business


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Steps in Sales ForecastingSteps in Sales ForecastingSteps in Sales ForecastingSteps in Sales ForecastingCompany and Product Sales Forecasting

• After the industry forecast is completed, the company and product forecast is developed

• This begins with a detailed analysis of the previous year’s performance

• Past and present market share, input from product and sales managers, and the coming year’s marketing plans are among the factors considered at this stage

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Figure 6.9:Using Product Sales Forecasting

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Steps in Sales ForecastingSteps in Sales ForecastingSteps in Sales ForecastingSteps in Sales ForecastingGrass-Roots Forecasting

• An alternative approach to top-down forecasting is grass-roots or bottom-up forecasting

• This method begins with sales estimates from each salesperson for their territory

• These estimates are refined by sales and marketing managers at higher levels

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Steps in Sales ForecastingSteps in Sales ForecastingSteps in Sales ForecastingSteps in Sales ForecastingNew-Product Sales Forecasting

• No historical data is available for new products

• Firms often employ consumer panels and/or test markets to gauge probable purchase behavior

Copyright © 2001 by Harcourt, Inc. All rights reserved. 6-1 CHAPTER SIX MARKETING PLANNING AND...

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Transcript of Copyright © 2001 by Harcourt, Inc. All rights reserved. 6-1 CHAPTER SIX MARKETING PLANNING AND...