4.2 - marketing planning
TRANSCRIPT
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4.2 – Marketing Planning
Marketing planning looks at identifying, anticipating and satisfying consumer demand in
order to make a profit. They need to ensure that they have the right marketing mix to do
this. They will conduct research and use it in decision-making.
The Marketing Mix
The marketing mix is the combination of marketing factors a firm uses to sell its product.
Businesses need to monitor their marketing mix in order to meet consumers needs and sell
their product.
Product
The product of a business may be tangible or intangible.
This element of the marking mix involves the appearance and the function of the product,
and ensuring that these are right for the target market. A business may have a product
range, which is a variety of products of the same brand, designed to meet the same market.
This is also called a product line, and can help improve the profits of a business.
Also, a business may decide to reposition a product to market it to a new target market.
They may try to sell it to a different demographic of people, such as older or younger
people.
Consumers will differentiate products based on factors such as packaging, functions, brand
image and after-sales care.
Products can be classified into two categories. Producer products are sold to other
businesses to continue the production process. These include raw materials, machinery and
components. Consumer products are sold to the end-user. These are further classified as:
Convenience products – also called fast-moving consumer goods, including things
like food.
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Consumer durables – long lasting items such as furniture
Speciality products – these are expensive items like jewellery
Place
Place involves using the best distribution channels to reach customers, as well as transport
and storage. The business will choose their distribution methods based on which is the most
convenient: wholesalers, retailers or directly to the customers.
A business may use multiple distribution methods. These days, many retailers also sell over
the internet. The traditional distribution channels are:
Price
Price is essential for the business because it creates the revenue necessary for them to
cover their costs.
The price of a product can change the way customers perceive its quality. At the same time,
if the price is too high, it will not sell well. Therefore, a business must ensure that they select
the right price to give the product the right image and affordability.
Businesses decide the price of their products based on demand, supply, their objectives,
competition, costs of production and their image.
Manufacturer Wholesaler Retailer Customer
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Promotion
Businesses need to communicate with their customers to be able to inform them about the
product and convince them to buy it.
One method of promotion is through branding, which differentiates the products of one
business form others. Promotion can be above-the-line, using mass media, or below-the-
line, using tactics such as packaging, sponsorship and direct mail.
Promotion can be very costly, but the rewards can be very substantial.
There are three additional P’s which make up the Extended Marketing Mix for services:
People
Customer service has a huge impact on the overall purchasing experience. It can increase
customer loyalty to the business. Friendly staff with positive attitudes and good motivation
is a huge asset. The business may also offer after-sales service.
Process
This involves customer service. A business needs to be able to handle customer complaints,
identify customer needs, handle orders, etc. If these things can be done effectively, then
they will improve their customer loyalty.
The business may look to make the delivery of their products more convenient for
customers, by reducing shipping time and having more options.
Physical Appearance
Customers expect their products to be presented well. This element is also affected by
location, how well the staff are groomed, ambience and cleanliness.
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Packaging
This is how a product is presented, and is important to differentiate it from other products.
Colour, texture and appearances are all important for getting the right response from
consumers. Packaging affects: customer perception, protecting the product, information on
labels, storage and distribution, inducing impulse buying and advertising the product.
However, packaging can be expensive and excess packaging can lead to environmental
impact, affecting the business’ corporate social responsibility.
When applying the marketing mix, it is important to consider how all these elements
combine. Whilst some will be more important than others, they all still need to be
accounted for. A great product won’t sell if no one knows it exists!
Ethics of Marketing
There are a number of marketing techniques which are unethical and can damage a firm’s
reputation, especially if they get media attention.
One example is bait-and-switch, which is when the business promotes deals that are “too
good to be true.” Once the customer enters into the deal, the business switches by saying
Marketing Mix
Product
Place
Price
Promotion
People
Process
Physical Evidence
Packaging
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that the product is no longer available and the customer is forced to buy a more expensive
alternative. Other examples are health fraud, ‘get rich quick’ schemes, travel fraud, product
misrepresentation, ‘limited stock only’ and other urgent phrases, unsubstantiated claims,
pester power from children and confusion marketing by giving too much price information
to prevent comparison with other firms.
Culture can have a huge influence on people’s perceptions of what is ethical. Therefore,
businesses that are marking overseas need to ensure that their practices are acceptable in
that region. A lack of understanding of these issues can lead to trouble.
Unethical marketing is risky, as it will often result in boycotts or government intervention.
Many businesses must follow an ethical code of practice set out for their industry. These
outline what is acceptable so that businesses have a clear line between ethical and unethical
behaviour.
Marketing Audit
To ensure that their marketing techniques and marketing mix are appropriate and meeting
their objectives, firms can undergo a marketing audit. This looks at their strengths,
weaknesses, opportunities and threats so that they can make informed decisions. IT analysis
things such as:
Marketing objectives and strategies
Product portfolio
Effectiveness of marketing techniques
Market share
Competitor analysis
Demographic profile of their customers
Based on these findings, the business can alter their marketing plan.
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Marketing Objectives
These are targets that support the firm’s objectives. They can:
Give a sense of purpose, direction and motivation for the department
Provides a measure for success and progress
Used to devise marketing strategies
Examples of common marketing objectives include: market share, market leadership,
product positioning, consumer satisfaction, diversification, market development, new
product development, product innovation and market standing.
However, a business may be limited by internal or external factors from achieving these
objectives. This includes finance, costs of production, the firm’s size and status, social issues,
time lag, competition, state of the economy and the political environment.
Market Research
The Role of Market Research
Market research is when a business collects, records and organises information about their
market. The aim is to answer the questions:
Who makes up the target audience?
What do they want?
When do they need it?
Where does it sell best?
How can it be taken to them?
Why do they want/need it?
What are our competitors doing?
How is our market changing?
Conducting research can help a firm devise marketing techniques most suitable to their
customers and respond to changes in the market. It can help them identify and predict
changes in demand.
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There are two types of market research:
Ad hoc market research – this does not take place on a regular basis, but when a
need arises as a one-off
Continuous research – this takes place regularly in order to get a more accurate
picture of the market and can help to identify trends.
However, market research is useless if it is not done properly. Bias and a poor approach will
mean that the results are inaccurate. Also, this can be very expensive to do.
Primary and Secondary Research
Primary Research
This is when the business gathers data itself, and is usually more recent. It is collected in the
field, directly from customers. This can be done in a number of forms:
Questionnaires – these can be conducted by post, telephone or in person. It is an easy way
to get detailed information from the customers themselves. However, people may not
always fill them in properly which affects the results. Firms usually have control questions
to ensure that this does not happen. A good questionnaire is unbiased, does not contain
jargon, have both closed and open-ended questions, easy to complete and meet the
objective of the questionnaire. Questionnaires are also useful because they can provide
quantitative and qualitative information.
Online Surveys – These are usually emailed or use a dedicated website. These are cheaper
and often save the firm a lot of time.
Observations – These can be done under controlled or real-life conditions to see how
customers respond to a product, instead of how they say they would. The only drawback is
that it does not inform the business of their motivation for their behaviour. The ethical
issues behind this need to be considered before the research is undertaken.
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Experimentation – This is also called test-marketing, and is a way of measuring people’s
reactions to the product, allowing them to identify problems before they do the full product
launch.
Advantages Disadvantages
Up to date
Relevant to the decision to be made
Confidential and unique to the business
Objective
Time consuming
Costly
May be valid due to choosing a poor sample
Secondary Research
This is collecting information that already exists and has been gathered by others. This can
be cheaper and faster, but is often only partially relevant and out-of-date.
The organisation may use its own data such as reports and sales records. Alternatively,
external sources may be used such as government data, articles and the internet.
Advantages Disadvantages
Cheap and fast
More accessible
Information on the whole industry
Out-of-date
Requires further adaption to suit the firm’s purposes
Only provides partial information
Also available to competitors
Quantitative Research – This is numerical and measurable data that allow for statistical
analysis of the market. This data is easier to analyse but is very inflexible and may not
accurate reflect the market conditions.
Qualitative Research – This is non-numerical data that looks at behaviours, motivation,
attitudes and perceptions of customers. This allows the firm to understand why customers
buy (or don’t buy) their products and is very detailed. However, this becomes very time
consuming and interviewers must be skilled in order to engage the interviewee.
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Market Segmentation and Consumer Profile
Market segmentation is when a business divides its consumers into groups that have similar
demographics (gender, age, income), and wants and needs. This allows the business to
create a market mix or produce different products for each segment in order to meet these
needs, called targeting.
Consumer profiling involves identifying the demographics of a particular market, include
age, gender, race, marital status, religion, language and income. This is useful in order to
identify the needs and wants of their consumers and market their products appropriately.
A business may segment the market based on geographical factors such as location and
climate, or by psychographic factors such as status, values, culture and interests.
Advantages of segmentation include:
Better understanding of customers
Increased sales
Growth opportunities
Supports product differentiation
Targeting
This is when the business selects a market segment to sell their product to, and devises
marketing strategies to suit it.
Niche Marketing
The business focuses on a specific market segment, such as providing speciality products
Advantages Disadvantages
Better market focus
Less competition, so they can charge higher prices
Can become more specialised
Smaller market, fewer customers
Less opportunity for economies of scale
High success can attract competition
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Undifferentiated Marketing
This is also called mass marketing, as the business does not target a specific segment, but
markets the same way to all segments.
Advantages Disadvantages
Economies of scale
Save time as they use the same marketing mix for all segments
Larger customer base
High entry barriers
Greater competition
Do not target specific customers
Differentiated Marketing
This is when a business markets to each segment individually by using a different market
mix for each one. They will often use perception mapping to help devise marketing
strategies.
Advantages Disadvantages
Meet the specific needs and wants of customers
Spread their risks across a number of segments
Costly
Cannot fully exploit economies of scale
Drains resources
Positioning
Corporate Image
This is how customers and the general public perceive a business. Poor image can damage
sales and customer loyalty. This can be improved through corporate social responsibility or a
unique selling point.
Position or Perception Maps
This looks at how consumers view a brand based on price and quality. A business can use
this to identify where they stand and develop their marketing strategies accordingly. It may
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demonstrate gaps in their portfolio, changes that need to be made to the marketing mix or
if a product needs to be repositioned.
Quality
High Low
Price High Premium Brands Cowboy Brands
Low Bargain Brands Economy Brands
Unique Selling Point
A unique selling point is an aspect of a product that makes it different from others. This
helps to differentiate a firm’s product and encourage people to purchase their product.
Examples include The Body Shop, who use their environmental and corporate social
responsibility. They advertise that they do not test on animals and advocate environmental
issues.
Development of Marketing Strategies and Tactics
Marketing tactics and strategies are designed to help meet the overall objectives of the firm.
Their tactics may include:
Promotion
High-pressure sales
Dubious marketing
Bargain brands to boost sales
Short-term price reductions
Marketing strategies involve:
1. Market research to identify the wants and needs of customers
2. Product planning, design and development
3. Implementation of strategy
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There are many tools that can be used to develop the most appropriate strategy.
Perception mapping
Porter’s five forces strategies
Porter’s generic strategies
Ansoff matrix
Boston matrix
SWOT analysis
Force field analysis
Good planning will lead to more successful marketing strategies and the most appropriate
marketing mix. The firm should ensure that they consider the costs of their strategies before
they implement them to ensure that they work within their budget.