Marketing Planning and Marketing Planning and ControlControl
Revision session
Different kinds of organizations
• Production led
• Product led
• Sales led
• Market led
• People Led
Planning IssuesPlanning Issues
Short-term vs long term Profit margins vs competitive position
Profit vs non-profit objectives Related vs non-related growth
opportunitiesMarket penetration effort vs market
development effortGrowth vs stability Risk avoidance vs risk taking
SOSTAC ModelSOSTAC ModelSS SituationSituation (where are we now?)(where are we now?)
O ObjectivesObjectives (where do we want to be?)(where do we want to be?)
SS StrategyStrategy (how do we get there – (how do we get there – broad direction?)broad direction?)
TT TacticsTactics (how do we get there – (how do we get there – tactical tools?)tactical tools?)
AA ActionAction (implementation)(implementation)
CC ControlControl (how do we know that we (how do we know that we have arrived?)have arrived?)
SOSTAC ModelS Situation PEST, Micro environment
O Objectives SMART, Planning Qs
S Strategy Acquire? Incremental vs Step change etc
T Tactics 4 Ps etc
A Action Project management
C Control Contingency, Variance Analysis
Marketing environmentMarketing environment
• Comprised of actors and forces affecting marketing Comprised of actors and forces affecting marketing management’s ability to develop and maintain management’s ability to develop and maintain successful relationships with its target customers.successful relationships with its target customers.
• These can be both inside and outside the These can be both inside and outside the organisationorganisation
• Micro or macroMicro or macro• Long term or short termLong term or short term• Future or nowFuture or now
The microenvironmentThe microenvironment
The company’s The company’s macroenvironmentmacroenvironment
Segmentation
• Buyers have different needs and wants
• Segmentation divides market into buyer groups with similar needs / characteristics
• Each segment can be considered a separate market
Segmentation
• Use segmentation to decide:– Which segments to address (i.e. which markets
to target)
• Positioning– How to position offerings in a way that will
appeal to each chosen segment
• Marketing strategies for each offering in each segment– Segments, by their nature, differ from each other
Characteristics Segmentation
• Geographic– Region, city etc. e.g. popularity of black pudding in
North of England
• Demographic– Age, gender, lifestage, family size etc. e.g. breakfast
cereals aimed at children vs. adults, different box sizes
• Geodemographic– Residential areas organised into demographic groups
• Psychographic– Social class, lifestyle, personality e.g. Organic foods
and healthy eaters
Behavioural Segmentation• Buying / usage occasion
– e.g. Regular coffee for the morning, decaf for the evening
• Benefits sought– e.g. Economy, status, convenience
• User status: non-user, ex-user, potential user• Usage rate: light, medium, heavy users• Loyalty status, e.g. through reward schemes• Buyer-readiness, e.g. remind when car service is
due• Attitudes, to determine time / effort on given groups
Sales and Advertising Plan
• Advertising plan
• To convey information• To alter perceptions• To alter attitudes• To create desires• To establish connections• To direct actions• To provide reassurances• To remind• To give reasons for buying• To demonstrate• To generate enquiries
• Sales plan • Personal selling and
manpower issues
Price plan
• Selecting the pricing objective• Determining demand• Estimating costs• Selecting a pricing method
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Pricing objectives
»Market share»Profit maximisation»Survival»Product Quality leadership»Relationship pricing»Cost recovery»Customer Behavioural changes
The Ansoff MatrixProduct or Service
Market
Existing New
Market penetration
Market Development
Product Development
Diversification
Existing
New
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Pricing methods»Cost based (mark up, target margin)»Competitor based (leader, follower, challenger, niche)
»Market based
Premium,Good value, Low cost, Overcharging (also plc issues)
Adapting prices: BOGOF, 99p, discriminatory, product line
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Profit levels•Cost from Supplier = £1
•Cover Variable Cost ie Gross profit , charge £1.20
•Cover Fixed costs ie ROS charge £1.40
•Justify heavy Investment ie ROCE, charge £1.50
•Share holder value ie money needed for Dividend, charge £1.60
What is price elasticity?
• This determines the changes in demand with unit change in price
• If there is little or no change in demand, it is said to be price inelastic.
• If there is significant change in demand, then it is said to be price elastic.
Price Elasticity of DemandPrice
Demand (units)
50
40
30
20
10
100 200 300 400 500
50
40
30
20
10
100 200 300 400 500
Price
Demand (units)
Inelastic demand Elastic demand
Price elasticity of demand = % change in demand
% change in price
Price Sensitivity
• Generally less price-sensitive where:– Superior benefits justify the premium– Buyers think price increases are justified
• e.g. inflation, increased quality, improved customer service
– Few competitors or substitutes– Outlay a small proportion of income– Cost is borne by another party– Buyers are slow to notice price increases– Buyers are reluctant to ‘shop around’ for low
prices
Price Quality Strategies
Super value(Damn I AM smart)
High value Premium(I want the best)
Good value Medium value Overcharging(it makes me feel good!)
Economy False economy(I think I am being smart)
Rip off(Please take my money!)
Price
qual
ity
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PLC and the diffusion process
Pro
fita
bili
ty
Product Market share
Intro Growth Maturity Decline Senility
Sales
Profit
Time
Sal
es a
nd
pro
fit PLC
Innovators2.5%
Early adopters13.5%
Early Majority34%
Late Majority34%
Laggards 16%
Roger’s DiffusionProcess
Types of Intermediary
Wholesalers
RetailersFranchisees
Agents and brokers
Distributors and dealers
Types of Channels• Consumer:
– Retailers / dealers– Catalogues / mail order companies– Vending machines– Direct marketing sources
• eg telesales, direct mail, door to door– Internet– QVC / TV shopping channels
• Industrial:– Own salesforce / agents– Industrial distributors– Growth in direct (Internet) for industrial supplies
What Channels Do
• Find and communicate with customers• Promote and sell the product to customers• Provide information on customer needs
and competitors’ activities• Agree price and trading terms• Transport and store the product• Carry the cost of all the above• Assume the risks of all the above
Key Channel Decisions
• How wide the distribution (market coverage) should be:– How many channels– How many levels
• Type of channel• Depends on:
– Number and nature of market segments – Range and nature of tasks to move products to
end customer– Effectiveness of channel alternatives
Market Coverage
• Intensive– Mass distribution e.g. confectionery, soft drinks,
batteries, camera film
• Selective– e.g. electrical appliances (electrical retailers and
department stores)– may also be specialist e.g. package holidays
• Exclusive– Restricted or sole rights e.g. franchisees, designer
items, luxury cars
Selecting Channel Members
• Own strengths & weaknesses– e.g. company size, brand strength
• Channels used by competitors
• Characteristics of the product / service– Range and nature of tasks needed to move
product / service to end customer
• Effectiveness of the channel alternatives
Differences between country markets
• Stage of economic development
• Market structure and competition
• Rate of growth in similar markets
• Diverse cultures and languages
• Politics, regulations and associated risk
• Legal and financial systems and bodies
• Business rules and customs
• Currency and exchange risks
• Customer profiles • Data expensive and
difficult to obtain• Control & coordination
difficult
Order of Entry
• Indirect exporting•Direct Exporting• Licensing• Franchising•Strategic alliances•Joint Ventures• Acquisition
•ASSESS ON TIME COST CONTROL
•Consider also profit and risk
• Planning Regulations, Tenders/Bribes
• Consideration to Environment,
• Compliance Issues/H&S
• Local Materials, Earthquakes
• Level of development• Climate (Materials
required)• Level of technological
advancement• Family culture (size of
house)• Amount of available
land
• Use of Sub Contractors• Communication/
Logistics, • Availability and
skill/knowledge of labour,
• Low cost supplier, Cultural differences, Low income, Poor infrastructure/distribution
• Different eating habits (ie more family meals, less packaged food),
• No fridges/freezers (or electricity)
• MR difficult
Lesser developed Countries
Marketing Information
• Data
• Information
• Knowledge
• Wisdom/intelligence
• But things change and so information has to reflect this!
Implementation issues
• The main issues are:
• 1. Size
• 2. Diversity
• 3. Culture
• 4. History
• 5. Nature of the industry
• 6. The management team.
Control
Awareness – effectiveness of advertising, maturity of market, noise, timingDemand – The right mix of 4Ps, growth in market, complexity of product, competitorsSupply – Stock, Delivery, Variance analysisService – Satisfaction levels, repeat purchase, word of mouth
Boston Matrix
Stars High Market share/High Market growth Usually New products in growth phase High Market Share Cash generation may not cover investment
needs Strategy to grow cash cow
Problem Children Low Market share/High Market growth Usually new product, not yet in growth
phase Consumes cash heavily Strategy to grow through star to cash
cow stage if market remains attractive May need to be killed quietly
Cash Cows High market share , low market growth
rate Typically mature life cycle phase Low investment needs, hence profit cash
generator Use cash to invest in other new products –
‘milking’
Dogs Low Market share/Low Market growth No future prospects Can consume resources Strategy is to discontinue where
practical.
Hi Relative Market Share Lo
Hi
Lo
MarketGrowth
DPM/GE Matrix
Invest forgrowth
Invest selectivelyfor growth
Developfor income
Investselectively forgrowth
Developselectively for
income
Harvesting
Developselectively.
Build onstrengths
Harvesting Divest
High
Medium
Low
Marketattractivness
Competitive position
Strong Average Weak
Advantages of models
•Makes complexity understandable•Communicable (eg Cash cows)•Aids planning•Gives a customer and/or competitor focus•Considers cash and/or profit consequences•Looks at both gaps and future performance•Can look at products and/or SBUs
Problems with models
• Generally useful to compare one model with another•Tends towards the average (DPM)•Focus on cash (BCG) - ignores profit•Focus on profit (DPM) - ignores cash•Too inward looking (PLC), (Value Chain) -ignores customers•Ignores competitors (4Ps)•Difficult to gather data•Better at control than forecasting
Problems with models
• Too reliant on supposedly hard info (BCG)•(ie definition of market, measuring share/growth)• Possibly subjective but can take many factors into account(DPM)• One factor can mask another• Market share focus (PIMS/BCG) - ignores value of niche• Often better at control than forecasting (PLC)• What’s true generally of an industry may not be true of a particularly successful (or unsuccessful) company (Porter’s 5 forces)
Strategic implications - BCG
Problem children = BUILD Create awareness, Improve New Product Development etc
Rising Stars BUILD/HOLD Grow = invest££, Advertise, Competitor response, Price response may be needed
Cash cows = HOLD/HARVEST Cash to flow to PCs and RSs, Rejuvenate /Differentiate
Dogs = HARVEST/DIVEST low cost survivor, introduce new products?
Other issues: Tendency to invest in safer cash cows and dogs, Market growth difficult to influence
Invest for growth Capital needed, might be starving other products, shareholders may expect quick results
Invest selectively Needs regular reviews, competitor response may force you to double or quit
Harvest Price hikes may damage brand, low cost survivor? Will leaving market give competitors a bonus?
Divest Gov’t intervention? might have unforseen consequences, may weaken portfolio
Strategic Implications - DPM
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Porter’s Five Forces
Competitive Rivalry
Threat of new entrants
Power ofsuppliers
Power ofbuyers
Threat of substitutes
Exam format and expectations
• Part A Compulsory (60%)
• Part B one out of 3 (40%)
• Write well and give examples show the marker that you know the subject area!
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Tackling the exam paper
• read the whole paper• identify context/content for ALL questions• identify the questions you will answer• identify points split in all questions • answer your favourite question first• start each new question on a new page• manage your time effectively
CCF format
• Content– the Syllabus area(s) that are being examined
• Context– the industry/business/situation to which you
must apply the theory
• Format– typically report but check for other types
• Evaluate and Examples– some questions demand them
As the Marketing Operations Manager of a tour operations business that targets package holidays at the 55 and over age group, you have been asked by your Marketing Director to review your distribution strategy
a. Outline the various channels of distribution available.(7 marks)
b. Identify a set of criteria for their evaluation. (7 marks)
c. Recommend an appropriate strategy for your target market. (6 marks)
Sometimes it’s obvious
As the Marketing Operations Manager of a tour operations business that targets package holidays at the 55 and over age group, you have been asked by your Marketing Director to review your distribution strategy. He has asked you to outline the various channels of distribution available, . identify a set of criteria for their evaluation and to recommend an appropriate strategy for your target market.
Sometimes it isn’t
Benefits of planning your answers….
• you must plan– it avoids duplication– it provides a logical structure to your answer
• writing is easy when you know what to say next!
• it is better to move onto the next question after 30 minutes than plough on– more marks are gained in the first 15 minutes spent per
question than the second 15 mins. – therefore running over time risks not moving on and
gaining the next batch of marks
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