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Developing a Marketing Plan - SAGE - the natural home for authors

By Peggy Ford,2014-05-16 20:40
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A quality SWOT analysis provides a clear understanding of the company or organization in relation to its competitive environment.

    Developing a Marketing Plan

     While there is no one magic way to write a marketing plan, the Figure 1 below provides a

    general outline of the components that are normally present. The purpose of a marketing plan is

    to determine the current situation a company is facing and then to generate marketing strategies

    and tactics in response. A quality marketing plan requires a careful analysis and understanding of

    the firm, its resources, and its customer base.

    Figure 1

    Components of a Marketing Plan

    Executive Summary

    Current Situation

    SWOT Analysis

    Marketing Objectives

    Target Markets

    Marketing Strategies

    Marketing Tactics

    Implementation

    Evaluation and Control

    Executive Summary

     The executive summary appears first on this list of components, however, it is often

    written last. It summarizes the report for executives to read. It should be one to two pages in

length. After an executive reads this section, he or she would have a basic grasp of the entire

    marketing plan. This should not be a teaser designed to get someone to read the plan. Instead,

    highlighting the content of the marketing plan should be the intent. This includes information

    about the firm’s current situation and the recommended marketing approach. If the executive

    desires more detail, he or she can then examine additional sections.

Current Situation

     The current situation involves an analysis of the firm’s internal environment, its external

    environment, its competitors, and its customers. Before decisions can be made about the future, it

    is important to assess the current status and situation. First, an examination of the internal

    environment can be accomplished by reviewing:

    ? The firm’s mission statement

    ? The firm’s portfolio of products and services

    ? The firm’s current marketing strategy and performance

    ? The firm’s financial status

    ? The available resources

     The mission statement describes the focus and direction of the company. Understanding

    the firm’s mission makes it possible to align it with the marketing plan. Every marketing

    decision should support and reflect the firm’s mission.

     The current situation involves a discussion of the firm’s portfolio of products and

    services. The products offered are based on achieving firm’s mission statement and are

    extensions of the firm's identity and image. The same holds true for services. When the mission

    statement emphasizes innovation, the product portfolio will consist of a large number of new and recently developed. A mission statement that highlights customer service leads to activities designed to make certain that the level of service exceeds all competitors.

     An analysis of the product and service portfolio provides information that assists in developing marketing strategies and tactics. Brands or products that are best sellers and are ranked top in an industry or category should be highlighted in advertisements and other promotions. Customer service stories that emphasize the quality of service provided by a firm can be used to convey the type of experience customers can expect.

     An examination of current and past marketing strategies and performance should be conducted. When the level of performance does not match the strategies and objectives, an investigation is necessary. If the failure is due to lack of resources, then the company's leaders will re-examine the firm's allocation of resources. If it is due to poor execution of an activity, then it becomes necessary to examine what went wrong. Finally, if it is due to an incorrect or misdirected marketing plan, then the goal becomes to identify the changes needed in the plan itself to help ensure future success.

     A company’s financial resources and sources available are important additional

    consideration. A marketing plan costing $3 million cannot be developed if the firm only has $1.5 million in the budget. The marketing plan becomes unrealistic due to the lack of resources. When resources are not available, it becomes necessary to modify the marketing plan. The new plan should fit with the available resources.

     Firms do not operate in a vacuum. The external environment has a significant impact on the firm’s marketing decisions and its ultimate success. In examining the external environment

    the marketing and management teams look at past, current, and future trends. Issues to be examined include:

    ? Economic trends

    ? Technological trends

    ? Political-legal trends

    ? Social-cultural trends

     Economic forces include all of the factors that have an impact on a product's market in a

    given region. Levels of economic growth, employment, unemployment, and inflation in an area as well as the cost of living in that location all may affect a company's operations.

     The prices and availability of raw materials needed to produce goods and services are also economic forces. For example, an increase in fuel costs triggers increases in transportation costs and an increase in raw material costs for chemicals, plastics, and other products made from petroleum. When the costs are passed onto other members of the channel of distribution, each succeeding level in the channel is affected. Company leaders consider the impact of a price change on a finished product as well as price elasticity. The greater the elasticity, the more managers are concerned about increasing the price of the product. In the short term, consumers may turn to competitor products with a lower price; in the long run, buyers may search for suitable substitutes.

     Technological forces include new products created by technology as well as product improvements and improvement in production methods. Technology also impacts the ways in which marketing materials are delivered as well as marketing jobs and occupations. Consider, for example, the ways in which technology has changed methods for creating interesting and attention-getting Internet and television commercials.

     Many political forces originate from laws, regulations, and regulatory agencies, such as the Occupational Safety and Hazards Act (OSHA), the Environmental Protection Agency (EPA), laws regarding discrimination, and the various laws and agencies that oversee marketing activities, including the Federal Trade Commission (FTC). Courts often influence marketing and business through decisions regarding product safety and reliability, fair advertising and promotion tactics, and in protecting the interests of various groups. Political forces also include the ways in which government influences an economy; taxes companies, products, and individuals; and by how it provides subsidies and loans to various organizations. At times, the government competes with private enterprise (United States Postal System versus FedEx and UPS).

     The social-cultural forces that influence business practices include changing demographics or population characteristics, shifting cultural and sub-cultural trends, and rising educational levels. Demographic trends include the aging of the population as the Baby Boom generation retires as well as shifting locations of populations away from core parts of cities to the suburbs and from the Northern and Eastern United States to more Southern and Western states. Other demographics that might influence marketing consist of the size and composition of family units, including single parent households and mixed families. Also, the racial distribution in an area affects marketing patterns, such as when Hispanic families move into new regions, towns, and cities. A wide variety of cultural trends affect marketing and business.

     When the marketing team does not closely watch industry trends, they can fail to recognize opportunities and lose customers to competitors who are more in-tune with what is going on in the marketplace and with changes in customer preferences. This means that a competitive analysis involves constant surveillance of ongoing and anticipated industry trends.

     As part of an assessment of the current situation, marketing managers spend a great deal

    of time considering all of the forms of competition that affect a market, a product, and individual consumers. A competitive analysis begins with identifying the various levels of competition

    starting with the most direct competitors and then moving to competitors selling substitute

    products and competing for the same dollars a business or consumer has to spend.

     Once competitors have been identified, some questions that should be investigated

    include:

    ? What are the competition’s strengths and weaknesses?

    ? What product positioning strategies do competitors use?

    ? What is the target market for each competitor?

    ? Why do individuals buy from a competitor?

    ? What makes the competitor’s product unique or attractive?

    ? What types of marketing programs do the competitors use?

    ? How does the competition promote and/or advertise products?

    ? What competitive advantage do they seem to possess or promote?

     Analyzing the competition helps a company's leaders analyze the manner in which the

    organization is perceived by customers. The analysis assists the marketing team in understanding how a firm's brand and products are viewed and may reveal any unique benefits the company can

    provide to its own customers. It can also identify areas in which the company might be able to outperform the competition. Thus, the competitive analysis goes hand-in-hand with the customer analysis, which is the final component of a situational analysis.

     The goal of a customer analysis is to collect detailed information about customers in

    order to develop effective marketing plans. Typically, a customer analysis involves answering

the questions of who, where, when, what, and how. Identifying “who” provides a demographic

    and psychographic profile of customers. Sometimes one target market is served while in other situations the goal is to reach multiple target markets. The marketing team develops a profile for each type of customer that requires a different marketing approach. For example, when demographics are used, it may be that the product benefits sought by the 18-30 female target market are substantially different than the benefits sought by females 31-45. In that case, the two segments should be described separately.

     The “where” question notes the location or locations of product purchases. If an item is

    to be sold in retail stores, the goal is to identify the best stores. The item may fit in "big box" discount stores or in more upscale department stores. The marketing team will also seek discover any other products that are typically are purchased with the item. This information can be especially beneficial in helping to reach the target market through proper placement of the product in retail stores, in various geographic areas, and also assist in creating creating tie-ins with other products.

     Serious consideration is given to the Internet. The marketing team evaluates the feasibility of selling the product online. Then they will study the sites a customer or potential customer visits before and after purchasing or examining the product. The purpose is to determine not only where the product is purchased, but what other types of products are purchased or examined with it.

     “When” involves determining the most likely times a product is purchased. This

    information can be extremely valuable in the timing of a marketing campaign. Products such as candy may be purchased throughout the year; however there are spikes in sales at Halloween, Christmas, and Easter. The question of when is often closely tied to the question of "where." For

    instance, if a product is placed in a point-of-purchase display at the end of a retail aisle during a holiday, sales may be greater than if the point of purchase display is used during non-holidays.

     The “what” is a crucial issue. What are customers purchasing? In most cases, the benefits

    that a product's attributes deliver matter the most. A customer probably has no idea what

    chemicals are used in cosmetics; however, the shopper does know how a particular brand of

    cosmetics makes her feel and how she believes it enhances her beauty. Few people can tell you

    how automobiles run, yet they can tell you how driving a given car makes them feel. Some love

    to be seen in a sleek red convertible. Ford's leadership understood this concept when the

    company offered the" retro" Mustang in 2005, which looked like the first Mustangs built in the 1960s. While young people purchased the car, the target market for the retro-Mustang was baby

    boomers who were teenagers in the 1960s. Many owned Mustangs or idealized those who did.

    The car immediately resonated with this target market because it brought back their “youth” and gave them an opportunity to feel like teenagers again. To this market, the purchase was not a car, but rather re-living of teenage years.

     The “how” of a customer analysis involves examining the manner in which purchases are

    made. It is not just the method of payment: cash or credit. It includes the entire consumer buying decision-making process. This involves identifying:

    ? What triggers the problem recognition

    ? Where, when, and how consumers search for information

    ? How consumers evaluate the various brands and alternative products

    ? What may alter the actual purchase decision

    ? How consumers evaluate the product after it is purchased.

SWOT Analysis

     A quality SWOT analysis provides a clear understanding of the company or organization

    in relation to its competitive environment. The key to preparing a SWOT analysis is to

    understand each component. Note that the “Strengths and Weaknesses” are internal to the

    organization and the “Opportunities and Threats” are external factors.

     A Strength is something the company does well that makes it unique and stronger than its competitors, such as a superior marketing team or the product itself. It might also be its

    position in the marketplace, or the market share that the brand or company holds.

     Weaknesses are characteristics of the company that make it vulnerable. These are things that can do harm to the firm, such as excessive debt, poor market position, or inferior

    product quality. Understanding weaknesses helps the marketing team and marketing managers to

    make corrections to forestall additional future problems.

     Opportunities are external to the firm. These exist for all firms in the industry. Examples might be an emphasis on healthy products by individuals age 50 and over, or an

    increasing interest in green products by younger consumers. When such opportunities are

    identified, they are available to every firm in the industry. Some students and marketing

    professionals confuse opportunities with strategies. “The opportunity to expand a company’s

    product offerings through a flanker brand" is a strategy, not an opportunity. The opportunity may

    be that a specific market is receptive to a cheaper version of a product.

     Threats are similar to opportunities in that they are external and faced by all companies in the industry. When raw material costs increase for all firms in the industry, this becomes a

threat. Again, when students and marketing managers evaluate threats, they should consider

    anything that impacts the industry as a whole.

Marketing Objectives

     In developing marketing objectives, the process begins by designating marketing goals.

    Goals are broad, general statements that provide overall direction for a marketing plan. They

    typically state the industry or market involved. Examples of marketing goals include:

    ? Become the dominant provider of non-meat breakfast foods in the United States.

    ? Become the top of mind brand within the snack food industry.

    ? Become known as the “innovation company” in the electronics industry.

    ? Be the provider of choice for health care professionals.

     Marketing objectives are more specific, are measurable, and are stated within a specific

    time frame. Some companies designate the person or unit that is responsible for the stated

    objective. Examples of marketing objectives include:

    ? Expand the customer based by adding 300 new customers by the end of the year.

    ? Expand the distribution by placing products in 50 more retail stores.

    ? Increase market share by 3% within the next 2 years.

    ? Introduce five new products during the next year.

    ? Reduce customer churn by 2% by the end of the year.

    ? Increase sales by $1 million within the next six months.

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