Marketing Planning PDF

Marketing planning is the process of setting marketing objectives and determining marketing strategies for their achievement. Once marketing objectives and strategies are determined, they need to be recorded in a document that could act as a guide to decision-making. Marketing planni...

Marketing planning is the process of setting marketing objectives and determining marketing strategies for their achievement. Once marketing objectives and strategies are determined, they need to be recorded in a document that could act as a guide to decision-making. Marketing planning is a systematic, cyclical, reflective process of setting and resetting marketing objectives and strategies for their achievement. Marketing cycle — a series of reflective actions that organizations go through to maintain the reflective nature of marketing and its maximum efficiency. Advantages of marketing planning: 1. Marketing planning reduces risks: the more you’ve planned, the more prepared to changes you are. 2. It fosters interdependence: all business functions are related, so a good marketing plan will take account of all the functional departments of organisations and will ensure their collaboration. 3. Marketing planning motivates staff: once you have a plan that includes objectives and strategies, you know what to do and you are very much likely to be trying to work towards achieving these objectives. Disadvantages of marketing planning: 1. Marketing planning does not guarantee success: regardless of how hard and thoroughly organisation plans, there will definitely be some unforeseen changes 2. Marketing planning is time-consuming and costly: it might be quite easy to plan if you are a sole trader, but once you put yourself into a large multinational company’s shoes, marketing planning might look like a big challenge.  3. Marketing planning bureaucratizes organisations: if there is a plan, there has to be someone who makes sure that it is being followed and that there are certain procedures in place, as per the plan. a. Very often it might add paperwork and more accountability if there are too many plans to design and follow. Market segmentation: is the process of dividing potential customers into groups with similar characteristics. 1. Demographic segmentation is a process of dividing the market (customers/consumers/users) by age, gender, ethnicity, marital status and other demographic characteristics. 2. Geographic segmentation is a process of dividing the potential market by continent, country, region, province, climate zone, etc. 3. Psychographic segmentation is a process of dividing the market by people’s lifestyles, hobbies, wealth, “class” (middle, high, middle high, etc.), “collar” (blue collar vs white collar). Important: - Keep in mind, that businesses do not have to stick to one type of segmentation only. - Segmentation is like a lens through which you see the market in different colors. Targeting is the process of selecting the relevant market segments to sell to. Target market refers to potential customers that share similar characteristics. 3 main types of targeting: 1. Undifferentiated (mass) targeting is basically not targeted at all, it’s pretty much covers all human beings. a. Example: Coca-Cola, Pepsi, Kleenex could be examples of firms using undifferentiated targeting. 2. Differentiated (segmented) targeting selects a few segments and targets them differently. a. Example: Nike, Dior, Toyota might do it. Their products might also be pretty much for everyone but different group of customers have to be approached differently. 3. Concentrated (niche) targeting is aimed at a very specific and narrow group of customers/consumers/users. a. Example: Billabong targets surfers, Burton targets snowboard riders, etc Consumer profiling the process of outlining the description of a “perfect customer” by listing their key characteristics. It’s very similar to targeting, and is basically a written summary of targeting and segmentation. Consumer profile is a description of a potential customer. This potential customer in a consumer profile can be a person that might not exist in reality, for example he/she might have a range of ages (as opposed to one age), several genders, multiple lifestyles and live in different locations at the same time. Positioning It refers to the process of presenting the brand/product in a specific way in order to create the desired customer perception. 1. Positioning is something that a business can manipulate by alternating its product, price, promotion, and change. 2. But perception is something that firms do not have direct control over. 3. Perception happens in the heads of customers, and businesses can affect it, but are not able to control it directly Product Perception Map (PPM) is a visual tool that outlines customers’ perceptions on brands/products. 1. PPM should be based on customers’/consumers’/users’ perceptions, not on what the business thinks of itself and it should be supported by market research data!. The most common way to draw PPM is to use quality and price as axes. If price and quality are the axes of PPM, then all products may be divided into four categories: 1. Premium products (high price, high quality), 2. Cowboy products (high price, low quality), 3. Economy products (low price, low quality), 4. Bargain products (low price, high quality). Niche market is a very specifically and narrowly defined group of potential customers. - Marketing approach to niche markets is targeted (see what that means in the previous part of class). - Consumer profiles on niche markets are very specific and “realistic”, meaning that the description of a potential customer is likely to sound like a description of a real person with specific characteristics (age, gender, lifestyle, etc). - All these markets are quite specific and it’s quite hard to say that these businesses are “for everyone”. - Examples of businesses that operate in niche markets are Billabong that targets surfers, Lewwinski.com that targets IB DP BM students, Yves Saint-Laurent that targets people (mostly women) interested in upscale fashion and cosmetics. Mass market it is very unspecific and broadly defined group of potential customers. - Mass markets are non-targeted. - We may say that mass market products are “for everyone”. - Consumer profiles for mass market customers sound very broad and “unrealistic”, meaning that the customers are described using a range of ages, genders, lifestyles, and other characteristics - There products are nearly for everyone and there is no need to target a very specific narrowly defined group in order to sell mass market products. - Examples of businesses that operate in mass markets are Coca-cola, Kleenex and Pepsi. Unique selling point (USP) is a special feature of a product or organisation that helps it to stand out among competitors. - This way, different businesses that are in the same industry (i.e. offer the same product) can emphasize different features of this product to help them stand out (differentiate) among competitors. - Very often, USP is based on one or several elements of the marketing mix: product, price, promotion, place (distribution), processes, people, physical evidence. Differentiation is the process of using the USP in such a way that customers perceive the product or organisation as unique and different from those that are offered by competitors. - As you can see, USP and differentiation are closely related, but the former is a feature and the latter is a process. - Very often, differentiation strategies are based on the elements of the marketing mix , similar to USP: product, price, promotion, place, processes, people, physical evidence. - USP and differentiation may be based on several elements of the marketing mix at the same time or not relate to it at all. - Any feature or any strategy that can be used to help a product/organisation be special compared to competitors refers to USP and differentiation accordingly. Businesses can differentiate themselves and their products from competitors. Differentiation strategies based on the elements of the marketing mix: 1. product differentiation, 2. price differentiation, 3. promotion differentiation, 4. place (distribution) differentiation, 5. processes differentiation, 6. people differentiation, 7. physical evidence differentiation. Porter’s Generic Strategies: A matrix that identifies cost and differentiation strategies for a business looking to gain a competitive advantage. The matrix also considers whether a business is targeting a broad market of consumers or a narrow niche market. Outlines the various ways that any business of any size and operating in any industry can gain a competitive advantage, through cost leadership, differentiation, or focus. Cost Leadership: A generic strategy that aims to establish a competitive advantage by achieving the lowest operational costs in the market for a particular good or service. It means to become the lowest cost supplier of a product within the market. 1. Business aims to minimize costs of production. 2. Must continually innovate and find new ways to reduce costs. 3. Must sell a lot to remain profitable because of low profit margins. 4. Can cause predatory pricing strategies and price wars with competition. Methods to achieve cost leadership 1. Economies of scale 2. Improved supply chains 3. Relocation 4. Insourcing production Differentiation: Firm makes mass-market products distinct from those of its competitors (eg. packaging or branding). Attention on quality rather than cost/price. Can charge a higher price. Focus (two types): 1. Cost Focus Strategy - focus on being a low cost producer in a niche market 2. Differentiation focus Strategy - producing a specialized, or differentiated, product for a niche market Cost Focus Strategy: 1. Charging low prices within a niche target market 2. Costs kept low by concentrating on a limited number of products or focusing on a small geographical area Differentiation focus Strategy:Producing a specialized, or differentiated product for a niche or single segment of the market 1. Can be high quality, very exclusive, provides some special characteristic for a niche market 2. Can charge higher prices and less competition 3. Drawback: Low market size Stuck in the middle: No clear business strategy ○ not differentiated enough to convince consumers to buy its product ○ costs of production and prices too high compared to competitors No competitive advantage ○ Probably earning low profits or may be experiencing losses