Business Strategy/Marketing Plans and Strategies

From Wikibooks, open books for an open world
Jump to navigation Jump to search
Previous page
Business Plans
[[Business Strategy
The Art, Science, and Craft of Decision-Making]]
Marketing Plans

A marketing plan is a written document that details the necessary actions to achieve one or more marketing objectives. It can be for a product or Service (economics)|service, a brand, or a product line. Marketing plans cover between one and five years.

A marketing plan may be part of an overall business plan. Solid marketing strategy is the foundation of a well-written marketing plan. While a marketing plan contains a list of actions, a marketing plan without a sound strategic foundation is of little use.

The marketing planning process[edit | edit source]

The marketing process model based on the publications of Philip Kotler. It consists of 5 steps, beginning with the market & environment research. After fixing the targets and setting the strategies, they will be realised by the marketing mix in step 4. The last step in the process is the marketing controlling.

In most organizations, "strategic planning" is an annual process, typically covering just the year ahead. Occasionally, a few organizations may look at a practical plan which stretches three or more years ahead.

To be most effective, the plan has to be formalized, usually in written form, as a formal "marketing plan." The essence of the process is that it moves from the general to the specific; from the overall objectives of the organization down to the individual Objective (goal)|action plan for a part of one marketing program. It is also an interactive process, so that the draft output of each stage is checked to see what impact it has on the earlier stages - and is amended.

Marketing planning aims and objectives[edit | edit source]

Behind the corporate objectives, which in themselves offer the main context for the marketing plan, will lay the "corporate mission"; which in turn provides the context for these corporate objectives. This "corporate mission" can be thought of as a definition of what the organization is; of what it does: "Our business is …".

This definition should not be too narrow, or it will constrict the development of the organization; a too rigorous concentration on the view that "We are in the business of making meat-scales," as IBM was during the early 1900s, might have limited its subsequent development into other areas. On the other hand, it should not be too wide or it will become meaningless; "We want to make a profit" is not too helpful in developing specific plans.

Abell suggested that the definition should cover three dimensions: "customer groups" to be served, "customer needs" to be served, and "technologies" to be utilized [1]. Thus, the definition of IBM's "corporate mission" in the 1940s might well have been: "We are in the business of handling accounting information [customer need] for the larger US organizations [customer group] by means of Punch card|punched cards [technology]."

Perhaps the most important factor in successful marketing is the "corporate vision." Surprisingly, it is largely neglected by marketing textbooks; although not by the popular exponents of corporate strategy - indeed, it was perhaps the main theme of the book by Peters and Waterman, in the form of their "Superordinate Goals." "In Search of Excellence" said: "Nothing drives progress like the imagination. The idea precedes the deed." [2] If the organization in general, and its chief executive in particular, has a strong vision of where its future lies, then there is a good chance that the organization will achieve a strong position in its markets (and attain that future). This will be not least because its strategies will be consistent; and will be supported by its staff at all levels. In this context, all of IBM's marketing activities were underpinned by its philosophy of "customer service"; a vision originally promoted by the charismatic Watson dynasty.

The emphasis at this stage is on obtaining a complete and accurate picture. In a single organization, however, it is likely that only a few aspects will be sufficiently important to have any significant impact on the marketing plan; but all may need to be reviewed to determine just which "are" the few.

A "traditional" - albeit product-based - format for a "brand reference book" (or, indeed, a "marketing facts book") was suggested by Godley more than three decades ago:

  1. Financial data --Facts for this section will come from management accounting, costing and finance sections.
  2. Product data --From production, research and development.
  3. Sales and distribution data - Sales, packaging, distribution sections.
  4. Advertising, sales promotion, merchandising data - Information from these departments.
  5. Market data and miscellany - From market research, who would in most cases act as a source for this information.

His sources of data, however, assume the resources of a very large organization. In most organizations they would be obtained from a much smaller set of people (and not a few of them would be generated by the marketing manager alone). It is apparent that a marketing audit can be a complex process, but the aim is simple: "it is only to identify those existing (external and internal) factors which will have a significant impact on the future plans of the company."

It is clear that the basic material to be input to the marketing audit should be comprehensive. Accordingly, the best approach is to accumulate this material continuously, as and when it becomes available; since this avoids the otherwise heavy workload involved in collecting it as part of the regular, typically annual, planning process itself - when time is usually at a premium. Even so, the first task of this "annual" process should be to check that the material held in the current "facts book" or "facts files" actually "is" comprehensive and accurate, and can form a sound basis for the marketing audit itself.

The structure of the facts book will be designed to match the specific needs of the organization, but one simple format - suggested by Malcolm McDonald - may be applicable in many cases. This splits the material into three groups:

  1. "Review of the marketing environment." A study of the organization's markets, customers, competitors and the overall economic, political, cultural and technical environment; covering developing trends, as well as the current situation.
  2. "Review of the detailed marketing activity." A study of the company's marketing mix; in terms of the 7 Ps - (see below)
  3. "Review of the marketing system." A study of the marketing organization, marketing research systems and the current marketing objectives and strategies.

The last of these is too frequently ignored. The marketing system itself needs to be regularly questioned, because the validity of the whole marketing plan is reliant upon the accuracy of the input from this system, and `garbage in, garbage out' applies with a vengeance.

  • "Portfolio planning." In addition, the coordinated planning of the individual products and services can contribute towards the balanced portfolio.
  • "80:20 rule." To achieve the maximum impact, the marketing plan must be clear, concise and simple. It needs to concentrate on the 20 per cent of products or services, and on the 20 per cent of customers, which will account for 80 per cent of the volume and 80 per cent of the profit.
  • "7 P's": Product, Place, Price and Promotion, Physical Environment, People, Process. The 7 P's can sometimes divert attention from the customer, but the framework they offer can be very useful in building the action plans.

It is only at this stage (of deciding the marketing objectives) that the active part of the marketing planning process begins'.

This next stage in marketing planning is indeed the key to the whole marketing process. The "marketing objectives" state just where the company intends to be; at some specific time in the future. James Quinn succinctly defined objectives in general as: "Goals (or objectives) state 'what' is to be achieved and 'when' results are to be accomplished, but they do not state 'how' the results are to be achieved."[3]

They typically relate to what products (or services) will be where in what markets (and must be realistically based on customer behavior in those markets). They are essentially about the match between those "products" and "markets." Objectives for pricing, distribution, advertising and so on are at a lower level, and should not be confused with marketing objectives. They are part of the marketing strategy needed to achieve marketing objectives.

To be most effective, objectives should be capable of measurement and therefore "quantifiable." This measurement may be in terms of sales volume, money value, market share, percentage penetration of distribution outlets and so on. An example of such a measurable marketing objective might be "to enter the market with product Y and capture 10 per cent of the market by value within one year." As it is quantified it can, within limits, be unequivocally monitored; and Corrective Action|corrective action taken as necessary.

The marketing objectives must usually be based, above all, on the organization's financial objectives; converting these financial measurements into the related marketing measurements.

He went on to explain his view of the role of "policies," with which strategy is most often confused: "Policies are rules or guidelines that express the 'limits' within which action should occur."

Simplifying somewhat, marketing strategies can be seen as the means, or "game plan," by which marketing objectives will be achieved and, in the framework that we have chosen to use, are generally concerned with the 7 P's. Examples are:

Price- The amount of money needed to buy products

Product- The actual product

Promotion (advertising)- Getting the product known

Placement- Where the product is located

People- Represent the business

Physical environment- The ambiance, mood, or tone of the environment

Process- How do people obtain your product

In principle, these strategies describe how the objectives will be achieved. The 7 P's are a useful framework for deciding how the company's resources will be manipulated (strategically) to achieve the objectives. It should be noted, however, that they are not the only framework, and may divert attention from the real issues. The focus of the strategies must be the objectives to be achieved - not the process of planning itself. Only if it fits the needs of these objectives should you choose, as we have done, to use the framework of the 7 P's.

The strategy statement can take the form of a purely verbal description of the strategic options which have been chosen. Alternatively, and perhaps more positively, it might include a structured list of the major options chosen.

One aspect of strategy which is often overlooked is that of "timing." Exactly when it is the best time for each element of the strategy to be implemented is often critical. Taking the right action at the wrong time can sometimes be almost as bad as taking the wrong action at the right time. Timing is, therefore, an essential part of any plan; and should normally appear as a schedule of planned activities.

Having completed this crucial stage of the planning process, you will need to re-check the feasibility of your objectives and strategies in terms of the market share, sales, costs, profits and so on which these demand in practice. As in the rest of the marketing discipline, you will need to employ judgment, experience, market research or anything else which helps you to look at your conclusions from all possible angles.

Detailed plans and programs[edit | edit source]

At this stage, you will need to develop your overall marketing strategies into detailed plans and program. Although these detailed plans may cover each of the 7 P's, the focus will vary, depending upon your organization's specific strategies. A product-oriented company will focus its plans for the 7 P's around each of its products. A market or geographically oriented company will concentrate on each market or geographical area. Each will base its plans upon the detailed needs of its customers, and on the strategies chosen to satisfy these needs.

Again, the most important element is, indeed, that of the detailed plans; which spell out exactly what programs and individual activities will take place over the period of the plan (usually over the next year). Without these specified - and preferably quantified - activities the plan cannot be monitored, even in terms of success in meeting its objectives.

It is these programs and activities which will then constitute the "marketing" of the organization over the period. As a result, these detailed marketing programs are the most important, practical outcome of the whole planning process. These plans should therefore be:

  • Clear - They should be an unambiguous statement of 'exactly' what is to be done.
  • Quantified - The predicted outcome of each activity should be, as far as possible, quantified; so that its performance can be monitored.
  • Focused - The temptation to proliferate activities beyond the numbers which can be realistically controlled should be avoided. The Pareto principle|80:20 Rule applies in this context too.
  • Realistic - They should be achievable.
  • Agreed - Those who are to implement them should be committed to them, and agree that they are achievable.

The resulting plans should become a working document which will guide the campaigns taking place throughout the organization over the period of the plan. If the marketing plan is to work, every exception to it (throughout the year) must be questioned; and the lessons learned, to be incorporated in the next year's planning.

Content of the marketing plan[edit | edit source]

A marketing plan for a small business typically includes Small Business Administration Description of competitors, including the level of demand for the product or service and the strengths and weaknesses of competitors

  1. Description of the product or service, including special features
  2. Marketing budget, including the advertising and promotional plan
  3. Description of the business location, including advantages and disadvantages for marketing
  4. Pricing strategy
  5. Market Segmentation

Medium-sized and large organizations[edit | edit source]

The main contents of a marketing plan are:[citation needed]

  1. Executive Summary
  2. Situational Analysis
  3. Opportunities / Issue Analysis - SWOT Analysis
  4. Objectives
  5. Strategy
  6. Action Programme (the operational marketing plan itself for the period under review)
  7. Financial Forecast
  8. Controls

In detail, a complete marketing plan typically includes:[citation needed]

  1. Title page
  2. Executive Summary
  3. Current Situation - environmental scanning Macroenvironment
    • economy
    • legal
    • government
    • technology
    • ecological
    • sociocultural
    • supply chain
  4. Current Situation - industry or market research|Market Analysis
    • market definition
    • market size
    • market segmentation
    • industry structure and strategic groupings
    • Porter 5 forces analysis
    • competition and market share
    • competitor analysis|competitors' strengths and weaknesses
    • market trends
  5. Current Situation - Consumer Analysis [4]
    • nature of the buying decision
    • participants
    • demographics
    • psychographics
    • buyer motivation and expectations
    • loyalty segments
  6. Current Situation - Internal
    • company resources
      • financial
      • people
      • time
      • skills
    • objectives
      • mission statement and vision statement
      • corporate objectives
      • financial objective
      • marketing objectives
      • long term objectives
      • description of the basic business philosophy
    • corporate culture
  7. Summary of Situation Analysis
    • external threats
    • external opportunities
    • internal strengths
    • internal weaknesses
    • Critical success factors in the industry
    • our sustainable competitive advantage
  8. Marketing research
    • information requirements
    • research methodology
    • research results
  9. Marketing Strategy - Product management|Product
    • product line|product mix
    • product strengths and weaknesses
      • perceptual mapping
    • Product Life Cycle Management|product life cycle management and new product development
    • brand|Brand name, brand image, and brand equity
    • the product (business)|augmented product
    • product Product portfolio|portfolio analysis
      • B.C.G. Analysis
      • contribution margin analysis
      • G.E. Multi Factoral analysis
      • Quality Function Deployment
  10. Marketing Strategy [5] - Market segment|segmented marketing actions and market share objectives
    • by product,
    • by customer segment,
    • by geographical market,
    • by distribution channel.
  11. Marketing Strategy - Pricing|Price
    • pricing objectives
    • pricing method (e.g.: cost plus, demand based, or competitor indexing)
    • pricing strategy (e.g.: skimming, or penetration)
    • discounts and allowances
    • price elasticity of demand|price elasticity and customer sensitivity
    • geographical pricing|price zoning
    • break even analysis at various prices
  12. Marketing Strategy - promotion (marketing)|promotion
    • promotional goals
    • Promotional_mix|promotional mix
    • advertising reach, frequency, flights, theme, and media
    • sales|sales force requirements, techniques, and management
    • sales promotion
    • publicity and public relations
    • electronic promotion (e.g.: e-marketing|Web, or direct marketing|telephone)
    • word of mouth marketing (buzz)
    • viral marketing
  13. Marketing Strategy - Distribution (business)|Distribution
    • geographical coverage
    • distribution channels
    • physical distribution and logistics
    • electronic distribution
  14. Implementation
    • personnel requirements
      • assign responsibilities
      • give incentives
      • training on selling methods
    • financial requirements
    • management information systems requirements
    • month-by-month agenda
      • Program Evaluation and Review Technique|PERT or critical path analysis
    • monitoring results and benchmarks
    • adjustment mechanism
    • contingencies (What if's)
  15. Financial Summary
    • assumptions
    • pro-forma monthly income statement
    • contribution margin analysis
    • breakeven analysis
    • Monte Carlo methods in finance|Monte Carlo method
    • ISI: Internet Strategic Intelligence
  16. Scenarios
    • Prediction of Future Scenarios
    • Plan of Action for each Scenario
  17. Appendix
    • pictures and specifications of the new product
    • results from research already completed

Measurement of progress[edit | edit source]

The final stage of any marketing planning process is to establish targets (or standards) so that progress can be monitored. Accordingly, it is important to put both quantities and timescales into the marketing objectives (for example, to capture 20 per cent by value of the market within two years) and into the corresponding strategies.

Changes in the environment mean that the forecasts often have to be changed. Along with these, the related plans may well also need to be changed. Continuous monitoring of performance, against predetermined targets, represents a most important aspect of this. However, perhaps even more important is the enforced discipline of a regular formal review. Again, as with forecasts, in many cases the best (most realistic) planning cycle will revolve around a quarterly review. Best of all, at least in terms of the quantifiable aspects of the plans, if not the wealth of backing detail, is probably a quarterly rolling review - planning one full year ahead each new quarter. Of course, this does absorb more planning resource; but it also ensures that the plans embody the latest information, and - with attention focused on them so regularly - forces both the plans and their implementation to be realistic.

Plans only have validity if they are actually used to control the progress of a company: their success lies in their implementation, not in the writing'.

Performance analysis[edit | edit source]

The most important elements of marketing performance, which are normally tracked, are:

Sales analysis[edit | edit source]

Most organizations track their sales results; or, in non-profit organizations for example, the number of clients. The more sophisticated track them in terms of 'sales variance' - the deviation from the target figures - which allows a more immediate picture of deviations to become evident.. `Micro- analysis', which is a nicely pseudo-scientific term for the normal management process of investigating detailed problems, then investigates the individual elements (individual products, sales territories, customers and so on) which are failing to meet targets.

Market share analysis[edit | edit source]

Few organizations track market share though it is often an important metric. Though absolute sales might grow in an expanding market, a firm's share of the market can decrease which bodes ill for future sales when the market starts to drop. Where such market share is tracked, there may be a number of aspects which will be followed:

  • overall market share
  • segment share - that in the specific, targeted segment
  • relative share -in relation to the market leaders
  • annual fluctuation rate of market share

Expense analysis[edit | edit source]

The key ratio to watch in this area is usually the `marketing expense to sales ratio'; although this may be broken down into other elements (advertising to sales, sales administration to sales, and so on).

Financial analysis[edit | edit source]

The `bottom line' of marketing activities should at least in theory, be the net profit (for all except non-profit organizations, where the comparable emphasis may be on remaining within budgeted costs). There are a number of separate performance figures and key ratios which need to be tracked:

  • gross contribution<>net profit
  • gross profit<>return on investment
  • net contribution<>profit on sales

There can be considerable benefit in comparing these figures with those achieved by other organizations (especially those in the same industry); using, for instance, the figures which can be obtained (in the UK) from `The Centre for Interfirm Comparison'. The most sophisticated use of this approach, however, is typically by those making use of PIMS (Profit Impact of Management Strategies), initiated by the General Electric Company and then developed by Harvard Business School, but now run by the Strategic Planning Institute.

The above performance analyses concentrate on the quantitative measures which are directly related to short-term performance. But there are a number of indirect measures, essentially tracking customer attitudes, which can also indicate the organization's performance in terms of its longer-term marketing strengths and may accordingly be even more important indicators. Some useful measures are:

  • market research - including customer panels (which are used to track changes over time)
  • lost business - the orders which were lost because, for example, the stock was not available or the product did not meet the customer's exact requirements
  • customer complaints - how many customers complain about the products or services, or the organization itself, and about what

Use of marketing plans[edit | edit source]

A formal, written marketing plan is essential; in that it provides an unambiguous reference point for activities throughout the planning period. However, perhaps the most important benefit of these plans is the planning process itself. This typically offers a unique opportunity, a forum, for information-rich and productively focused discussions between the various managers involved. The plan, together with the associated discussions, then provides an agreed context for their subsequent management activities, even for those not described in the plan itself.

Budgets as managerial tools[edit | edit source]

The classic quantification of a marketing plan appears in the form of budgets. Because these are so rigorously quantified, they are particularly important. They should, thus, represent an unequivocal projection of actions and expected results. What is more, they should be capable of being monitored accurately; and, indeed, performance against budget is the main (regular) management review process.

The purpose of a marketing budget is, thus, to pull together all the revenues and costs involved in marketing into one comprehensive document. It is a managerial tool that balances what is needed to be spent against what can be afforded, and helps make choices about priorities. It is then used in monitoring performance in practice.

The marketing budget is usually the most powerful tool by which you think through the relationship between desired results and available means. Its starting point should be the marketing strategies and plans, which have already been formulated in the marketing plan itself; although, in practice, the two will run in parallel and will interact. At the very least, the rigorous, highly quantified, budgets may cause a rethink of some of the more optimistic elements of the plans.

Marketing Strategy[edit | edit source]

A marketing strategy[6] [7] is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage[8]. A marketing strategy should be centered around the key concept that customer satisfaction is the main goal.

Key part of the general corporate strategy[edit | edit source]

A marketing strategy is most effective when it is an integral component of corporate strategy, defining how the organization will successfully engage customers, prospects, and competitors in the market arena. Strategic management|corporate strategies, corporate missions, and corporate goals. As the customer constitutes the source of a company's revenue, marketing strategy is closely linked with sales. A key component of marketing strategy is often to keep marketing in line with a company's overarching mission statement[9].

Basic theory: 1) Target Audience 2) Proposition/Key Element 3) Implementation

Sectorial tactics and actions[edit | edit source]

A marketing strategy can serve as the foundation of a marketing plan. A marketing plan contains a set of specific actions required to successfully implement a marketing strategy. For example: "Use a low cost product to attract consumers. Once our organization, via our low cost product, has established a relationship with consumers, our organization will sell additional, higher-margin products and services that enhance the consumer's interaction with the low-cost product or service."

A strategy consists of a well thought out series of tactics to make a marketing plan more effective. Marketing strategies serve as the fundamental underpinning of marketing plans designed to fill market needs and reach marketing objectives[10]. Plans and objectives are generally tested for measurable results.

A marketing strategy often integrates an organization's marketing goals, policies, and action sequences (tactics) into a cohesive whole. Similarly, the various strands of the strategy , which might include advertising, channel (marketing)|channel marketing, internet marketing, promotion (marketing)|promotion and public relations can be orchestrated. Many companies cascade a strategy throughout an organization, by creating strategy tactics that then become strategy goals for the next level or group. Each one group is expected to take that strategy goal and develop a set of tactics to achieve that goal. This is why it is important to make each strategy goal measurable.

Marketing strategies are dynamic and interactive. They are partially planned and partially unplanned. See strategy dynamics.

Types of strategies[edit | edit source]

Marketing strategies may differ depending on the unique situation of the individual business. However there are a number of ways of categorizing some generic strategies. A brief description of the most common categorizing schemes is presented below:

  • Strategies based on market dominance - In this scheme, firms are classified based on their market share or dominance of an industry. Typically there are three types of market dominance strategies:
    • Leader
    • Challenger
    • Follower
  • Porter generic strategies - strategy on the dimensions of strategic scope and strategic strength. Strategic scope refers to the market penetration while strategic strength refers to the firm’s sustainable competitive advantage.
    • Product differentiation
    • Market segmentation
  • Innovation strategies - This deals with the firm's rate of the new product development and business model innovation. It asks whether the company is on the cutting edge of technology and business innovation. There are three types:
    • Pioneers
    • Close followers
    • Late followers
  • Growth strategies - In this scheme we ask the question, “How should the firm grow?”. There are a number of different ways of answering that question, but the most common gives four answers:
    • Horizontal integration
    • Vertical integration
    • Diversification
    • Intensification
A more detailed scheme uses the categories:
  • Prospector
  • Analyzer
  • Defender
  • Reactor
  • Marketing warfare strategies - This scheme draws parallels between marketing strategies and military strategies.

Strategic models[edit | edit source]

Marketing participants often employ strategic models and tools to analyze marketing decisions. When beginning a strategic analysis, the 3C's|3Cs can be employed to get a broad understanding of the strategic environment. An Ansoff Matrix is also often used to convey an organization's strategic positioning of their marketing mix. The 4P's|4Ps can then be utilized to form a marketing plan to pursue a defined strategy.

Marketing in Practice

The Consumer-Centric Business

There are a many companies especially those in the Consumer Package Goods (CPG) market that adopt the theory of running their business centered around Consumer, Shopper & Retailer needs. Their Marketing departments spend quality time looking for "Growth Opportunities" in their categories by identifying relevant insights (both mindsets and behaviors) on their target Consumers, Shoppers and retail partners. These Growth Opportunities emerge from changes in market trends, segment dynamics changing and also internal brand or operational business challenges.The Marketing team can then prioritize these Growth Opportunities and begin to develop strategies to exploit the opportunities that could include new or adapted products, services as well as changes to the 7Ps.

Real-life marketing primarily revolves around the application of a great deal of common-sense; dealing with a limited number of factors, in an environment of imperfect information and limited resources complicated by uncertainty and tight timescales. Use of classical marketing techniques, in these circumstances, is inevitably partial and uneven.

Thus, for example, many new products will emerge from irrational processes and the rational development process may be used (if at all) to screen out the worst non-runners. The design of the advertising, and the packaging, will be the output of the creative minds employed; which management will then screen, often by 'gut-reaction', to ensure that it is reasonable.

For most of their time, marketing managers use intuition and experience to analyze and handle the complex, and unique, situations being faced; without easy reference to theory. This will often be 'flying by the seat of the pants', or 'gut-reaction'; where the overall strategy, coupled with the knowledge of the customer which has been absorbed almost by a process of osmosis, will determine the quality of the marketing employed. This, almost instinctive management, is what is sometimes called 'coarse marketing'; to distinguish it from the refined, aesthetically pleasing, form favored by the theorists.

References[edit | edit source]

  1. Abell, "Defining the Business: The Starting Point of Strategic Planning"
  2. "The Marketing Imagination"
  3. J. B. Quinn, "Strategies for Change: Logical Incrementalism" (Richard D. Irwin, 1980)
  4. Quick MBA Marketing plan based on consumer and competitor analyses
  5. Marketing plan basics Table of marketing targets, actions, means and results
  6. UK govt businesslink marketing strategy guide.
  7. Marketing strategy Australian administration small business guide.
  8. Baker, Michael (2008), The Strategic Marketing Plan Audit, Cambridge Strategy Publications, p. 3 {{citation}}: Check |author-link= value (help); External link in |author-link= (help)
  9. Baker, Michael (2008), The Strategic Marketing Plan Audit, Cambridge Strategy Publications, p. 27 {{citation}}: Check |author-link= value (help); External link in |author-link= (help)
  10. Marketing basics Marketing strategy based on market needs, targets and goals.
Previous page
Business Plans
[[Business Strategy
The Art, Science, and Craft of Decision-Making]]
Marketing Plans