bba marketing pending

BBA MARKETING PENDING

K.ASHWIN KUMAR

Module 2

MARKETING ENVIRONMENT

Marketing Environment

Philip Kotler :

“ A company marketing environment consists of the actors and forces that affect the company’s ability to develop and maintain successful transactions and relationships with its target customers.”


Micro environment Macro environment

Controllable PartiallyUncontrollable

Co Organization Suppliers Demographic

Management Customers Economic

Resources Dealers Ecological

M Mix Competitors Technological

Community Political

( Social groups)Sociological


The inputs concerned with micro environment are –

• Company organization

• Suppliers

• customers


The outputs concerned with macro environment are –

• Political

• Economical

• TechnologicalMacro environment factors may be –Controllable or partially - controllable

Micro environmental factors

Company : • Company organization consists of Board of

Directors and functional managers.

• Marketing plans are drawn up as per the philosophy of Top management

• Marketing decisions like new products, expansion, etc depend on the support of top management. It depends upon finance, managerial skills, organization’s strengths and weaknesses.

1. Company - continued

• Marketing plans should be in harmony with policies of other departments such as production, purchase, finance, personnel, etc

• For ex: quality depends upon production policies

• Advertising and sales promotion – on budgets

2. Suppliers

• Supply raw materials, plant and equipments, human resources, technology

• Their strategies affect ours

• If they increase prices, we have to revise price structure

2. Suppliers - continued

• Decisions like ‘ make or buy’ depend upon suppliers• Depends upon

– Right supplier– Right place– Right time and lead time– Right price– Right quantity– Right quality

2. Suppliers -continued

• Good relations are required for successful marketing

3. Intermediaries

• Wholesalers, retailers, agents, transporters, warehousers, ad agencies, etc.

• This is a choice of channel of distribution

4. Customers

• Purchase requirements vary from customer to customer

• Individual customers are influenced by cultural, social and psychological factors

• They are large in number, scattered, poorly informed, buy in small quantities and frequently and are guided by personal considerations

4. Customers

• Industrial producers are limited in number, geographically concentrated, buy in large in bulk, demand is derived, buy on reciprocal basis, depend on lease hold.

• Dealers buy for resale.

• Government buys for public welfare, defence

5. Competitors

• Supply similar products or substitute products

• Competitors adopt different actions for getting greater share of markets

• All firms compete with each other for consumers buying power.

6. Public

• Financial public: financial institutions, investment houses, insurance co,

• Government public: • Citizen action public: consumer organizations,

environmental groups, minority groups, etc• General public: public image• Internal public: employees, Board, labour

unions, press and media

Macro environment1. Economic

Economic forces influence both marketers and the consumers

Economic forces include –• Competition – monopoly, oligopoly• Buying power• Willingness to spend

Macro environment1. Economic - continued

Economic conditions include

• Economic development

• National income

• Standard of living

• State of agriculture

Macro environment1. Economic - continued

• Business cycles

• Interest rate

• Price levels

• Fiscal policies

marketers have to take into consideration the changes taking place in agriculture and industry

2. Demography

• Demography gives ‘consumer profile’

• It is the study of population in respect of its size, density, location, age, race, occupation, marital status, education, sex composition etc

• All these factors influence marketing decisions

Acronyms used in respect of age

• SKIPPIES

• MOBY’s

• DINKS

• PUPPIES

• WOOFS

2.Demography - continued

• School Kids with Income and Purchasing Power

• Mother Older, Baby Younger

• Double Income, No Kids

• Poor Urban Population

• Well Off Older Folks


• Mexico is a nation of young population

• Japan – ‘old generation’

• America was a melting bowl. Now it is a ‘Salad bowl’ with Chinese, Filipinese, Japanese, Asians, Koreans

• Ads – show women as decision makers due to increase in education

Demography - continued

Education

• Illiterates

• High school drop outs

• Matriculates

• Graduates

• Professional degrees

• Post graduates


• Buying habits are determined by income, education, age, family composition and other demographic factors

• It helps in - Market segmentation, demand forecasting, determination of market potential


• India’s population is roughly 108 crores

• 75% of population lives in villages

• Rural marketing offers immense opportunities and challenges to a creative marketer


• You find that the demand is increasing not only for farm products, but also for non-farm products

Technology

• It has a definite impact on buyers and marketers decisions

• It provides mechanical, physical and numerous other processes which help in attaining higher standard of living

• It has adverse effects like pollution, unemployment, increase in crime rate, etc

• Marketers must be aware of new developments in technology.

Technology-continued

• Technological developments may put some people out of business and at the same time, open up new business opportunities to others

• For ex: introduction of synthetic fabrics drove away sheep raisers and cotton growers out of business

• Solar pocket calculators and hand cameras

• CDs and Video tapes

• Virtual reality applications in Marketing is a new application due to technological progress


• Technological developments have improved the standard of living and given more leisure time

• Improvements in communication, transportation

• Technology has given wonder drugs like Ampicilliin, by- pass surgery,


• Technology grows out of research made by business, universities

• Most of the products that we talk today were not there a few years back. For example, Computers, Photostat, laser technology, scanners.

3. Natural factors and ecological factors - also

• These also affect the pattern of industries and marketing

• Industries create pollution of air, water and environment

• The package in the form of plastic bags and bottles create a lot of problems

• Some governments have banned the use of plastic bags.

Political factors

• Marketing is affected by monetary, fiscal, import and export policies

Some of the Acts applicable are as follows:• Essential Commodities Act• Prevention of Food Adulteration Act• Trade and Merchandise marks Act• Packaged Commodities Act • Companies Act

Political factors - continued

• Political and legal factors are inter connected

• Discontinuation of – CCI, FERA, IDRA

• Introduction of SEBI, FEMA, VAT

• Rules allow private participation in transportation , telecom, airlines

Social-Cultural environment

• Advertisements and culture

• Some ads are banned on TVs

• Festivals like Ganesh festival, Diwali, Id-Milad, Christmas,

• Dress styles are different

• School uniforms

Cultural factors - continued

• Food habits

• Internet practice

• Fast foods – Pizza hut, Ken Fried Chicken


• There are several movements like trade union movement, consumer movement, women's lib, deprived classes movement , etc.

• These have their own expectations from the market. If they are against their ideas, they boycott the products

Cultural factors - continued Cause related Marketing

• 1980 saw the advent of “ cause related marketing”

• The distinctive feature of case-related marketing is the firm’s contribution to a designated cause being linked to customers’ engaging in revenue-producing transactions with the firm

• Example: CRY, AWWA, WWF cards


• Cultural and ethical forces are of vital importance

Responding to the marketing environment

• There are two general approaches to respond to marketing environmental forces, viz., Passive approach and Aggressive approach

1) Passive or reactive approach

• Under this approach the marketing strategy is subject to micro environment with macro environment

• Environmental objectives of 2010 are set in 2000 and strategies are developed in 1998 and the organizational structure is established in 1995

1) Passive or reactive approach - continued

• Stable environment is very rare. Turbulent environment is common

• Marketing environment should be scanned systematically. These guide marketing opportunities

• Marketing strategy normally follows passive approach that is coordinating micro environment with macro environment

1) Passive or reactive approach - continued

• India has opportunities for handcraft goods, ready made garments, fast food products, software development, call centres and those areas which are labour intensive

2) Aggressive approach

• Marketing manager tries to influence environmental forces so as to create market opportunities.

• A firm can be able to influence the shape of legislation through lobbying

• A single organization cannot influence – population, economic condition

Indian Marketing environment

• Prosperity in rural area

• Overflowing unaccounted money everywhere

• Inflationary condition [ inflation is a permanent guest]

• Aggressive advertising on TV inspiring children and women. Consumer is a ‘King’

Indian Marketing environment - continued

• Middle class explosion - ‘Consumption community’

• Better educated and exposed to the life styles of the rich

• Their aspirations have been constantly growing.

• They often spend more than what they earn

Middle class explosion

• Their expenditure on non-food items is continuously

• Our market is on par with UK, France, West Germany

• More disposable income

• Spend more on non food items

• Invest in stock market

The Marketing Environment and Competitor Analysis

•SWOT analysis

•PEST analysis

•Five forces analysis

SWOT analysis

• Strengths (internal)

• Weaknesses (internal)

• Opportunities (external)

• Threats (external)

PEST analysis

• Political factors

• Economic factors

• Socio-cultural factors

• Technological factors

Political/legal

• Monopolies legislation

• Environmental protection laws

• Taxation policy

• Employment laws

• Government policy

• Legislation

• Others?

Economic Factors

• Inflation

• Employment

• Disposable income

• Business cycles

• Energy availability and cost

• Others?

Socio cultural factors

• Demographics

• Distribution of income

• Social mobility

• Lifestyle changes

• Consumerism

• Levels of education

• Others?

Technological

• New discoveries and innovations• Speed of technology transfer• Rates of obsolescence• Internet• Information technology• Others?

Source: Adapted from M. E. Porter, Competitive Strategy, Free Press, 1980, p. 4.

Threat ofThreat ofsubstitutessubstitutes

Potentialentrants

Threat ofThreat ofentrantsentrants

Suppliers

BargainingBargaining powerpower

Substitutes

Buyers

BargainingBargaining powerpower

COMPETITIVE RIVALRY

Five forces analysis

Five Forces Analysis: Key Questions and Implications

• What are the key forces at work in the competitive environment?

• Are there underlying forces driving competitive forces?

• Will competitive forces change?• What are the strengths and weaknesses of

competitors in relation to the competitive forces?• Can competitive strategy influence competitive forces

(eg by building barriers to entry or reducing competitive rivalry)?

McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

Market Segmentation and TargetingMarket Segmentation and TargetingMarket Segmentation and TargetingMarket Segmentation and Targeting

After studying this chapter you should be able to:


• Define and explain market segmentation, target markets, and product differentiation and positioning.

• Understand the criteria used for evaluating the likely success of a segmentation strategy.

• Know the role of market segmentation in the development of marketing strategies and programs.

• Describe the issues involved in product and brand positioning.

• Understand the alternative bases for segmenting consumer and business-to-business markets.

• Evaluate alternative approaches for pursuing segmentation strategies.



Market Segmentation

• Market Segmentation:– Divides a market into

subsets of prospective customers who behave in the same way, have similar wants, or have similar characteristics that relate to purchase.

• Intermarket Segments:– Well-defined, similar

clusters of customers across national boundaries.

Target Markets

Targeting:Selecting which segments in a market

are appropriate to focus on and designing the means of reaching them.

Product Differentiation

• Product Differentiation:– Exists when a firm’s

offerings differ or are perceived to differ from those of competing firms on any attribute, including price.

From Mass Marketing to Mass Customization

• Mass Customization:– Complex manufactured

products made to order.

Criteria for Effective Segmentation

Five Criteria:1. Measurability

2. Accessibility

3. Substantialness

4. Durability

5. Differential Responsiveness

Stages in Developing Market Segmentation Strategies

Bases for Segmentation

• Demographics• Geographics• Psychographics &

Lifestyles• Benefit Segmentation• Economic

Segmentation• International

Segmentation

• Demographics• Geographics• Psychographics &

Lifestyles• Benefit Segmentation• Economic

Segmentation• International

Segmentation

Combining Bases of Market Segmentation

Segmentation Strategies

Undifferentiated Strategy

Differentiated Strategy

Concentrated Strategy

Countersegmentation Strategy

• Countersegmentation: – An alternative strategy to traditional segmentation

approaches.

• Combines market segments

• Consumers accept lower price over variety

• Countersegmentation: – An alternative strategy to traditional segmentation

approaches.

• Combines market segments

• Consumers accept lower price over variety

Factors Influencing Segmentation Strategy

• Size and type of the market

• Competitive factors

• Product-related factors:1. Stage in the product life cycle.

2. Degree to which the product may be varied or modified.

• Firm’s size and financial position

• Size and type of the market

• Competitive factors

• Product-related factors:1. Stage in the product life cycle.

2. Degree to which the product may be varied or modified.

• Firm’s size and financial position

Estimating Segment Potentials

1. Set time period of interest.

2. Define product level.

3. Specify segment characteristics or bases.

4. Identify geographic market boundaries.

1. Set time period of interest.

2. Define product level.

3. Specify segment characteristics or bases.

4. Identify geographic market boundaries.

Estimating Segment Potentials

5. Make assumptions about the marketing environment.

6. Make assumptions about company’s own marketing efforts and programs (controllable factors).

7. Make estimates of market potential, industry sales, and company sales.

5. Make assumptions about the marketing environment.

6. Make assumptions about company’s own marketing efforts and programs (controllable factors).

7. Make estimates of market potential, industry sales, and company sales.

Developing Forecasts

• Qualitative Procedures:

– Survey of Buyers’ Intentions

– Expert Opinion

– Composite of Salesforce Estimates

• Quantitative Methods:– Trend Analysis

– Market Tests

– Statistical Demand Analysis

Firm and Market Potentials and Forecasts

Industry LevelFirm Level

Industry LevelFirm Level

Best Possible Results Expected Results for Given StrategyBest Possible Results Expected Results for Given Strategy

Market Potential Market ForecastSales Potential Sales Forecast

Market Potential Market ForecastSales Potential Sales Forecast

Targeting Market Segments

• To select target segments, the firm must consider:– The segment’s potential sales volume and

profits.

– Competition currently selling to the segments.

– The firm’s abilities and objectives.

• To select target segments, the firm must consider:– The segment’s potential sales volume and

profits.

– Competition currently selling to the segments.

– The firm’s abilities and objectives.

Positioning

Repositioning:When a firm wants to shift consumer

opinions about an existing brand.

Positioning:Designing a marketing program, including

the product mix, that is consistent with how the company wants its products or

services to be perceived.

Perceptual Maps

• Perceptual Maps:– Spatial representations of consumer

perceptions of products or brands, are often used to evaluate brand positions in a market.

• Perceptual Maps:– Spatial representations of consumer

perceptions of products or brands, are often used to evaluate brand positions in a market.

• Diet Pepsi

• Pepsi Cola

• RC Cola

• Dr Pepper

• Diet Sprite

• Diet 7-Up

• 7-Up• Sprite

• Orange Crush

• Coke Classic

Micromarketing

Micromarketing:Combines census and

Demographic data to identify clusters of households

that share similar consumption patterns.

Micromarketing:Combines census and

Demographic data to identify clusters of households

that share similar consumption patterns.

Micromarketing

• Enhances the effectiveness of marketing efforts by:– Identifying potential markets for direct selling

through mail and telemarketing campaigns.

– Profiling customers by matching them to demographic and lifestyle clusters.

– Learning which areas offer the greatest potential in site selection for new stores or offices.

– Tailoring advertising themes and planning media.

• Enhances the effectiveness of marketing efforts by:– Identifying potential markets for direct selling

through mail and telemarketing campaigns.

– Profiling customers by matching them to demographic and lifestyle clusters.

– Learning which areas offer the greatest potential in site selection for new stores or offices.

– Tailoring advertising themes and planning media.

Market Segmentation and Ethics

– Advertising to Children

– Harmful Products

– Privacy Issues

– Product Proliferation

– Advertising to Children

– Harmful Products

– Privacy Issues

– Product Proliferation

Conducting Marketing Research and

Forecasting Demand

Marketing Management, 13th ed

4

Chapter Questions• What constitutes good marketing

research?

• What are good metrics for measuring marketing productivity?

• How can marketers assess their return on investment of marketing expenditures?

• How can companies more accurately measure and forecast demand?

What is Marketing Research?

Marketing research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company.

Types of Marketing Research Firms

• Syndicated service

• Custom

• Specialty-line

The Marketing Research Process

• Define the problem• Develop research plan• Collect information• Analyze information• Present findings• Make decision

Step 1: Define the Problem

• Define the problem

• Specify decision alternatives

• State research objectives

Step 2: Develop the Research Plan

• Data sources• Research approach• Research instruments• Sampling plan• Contact methods

Research Approaches

• Observation• Ethnographic• Focus group• Survey• Behavioral data• Experimentation

Research Instruments

• Questionnaires

• Qualitative Measures

• Technological Devices

Questionnaire Do’s and Don’ts

• Ensure questions are free of bias

• Make questions simple• Make questions specific• Avoid jargon• Avoid sophisticated

words• Avoid ambiguous words

• Avoid negatives• Avoid hypotheticals• Avoid words that could be

misheard• Use response bands• Use mutually exclusive

categories• Allow for “other” in fixed

response questions

Question Types - Dichotomous

In arranging this trip, did you contact American Airlines?

Yes No

Question Types – Multiple Choice

With whom are you traveling on this trip?

No one

Spouse

Spouse and children

Children only

Business associates/friends/relatives

An organized tour group

Question Types – Likert Scale

Indicate your level of agreement with the following statement: Small airlines generally give better service than large ones.

Strongly disagree

Disagree

Neither agree nor disagree

Agree

Strongly agree

Question Types – Semantic DifferentialAmerican Airlines

Large ………………………………...…….Small

Experienced………………….….Inexperienced

Modern……………………….…..Old-fashioned

Question Types – Importance Scale

Airline food service is _____ to me.

Extremely important

Very important

Somewhat important

Not very important

Not at all important

Question Types – Rating Scale

American Airlines’ food service is _____.

Excellent

Very good

Good

Fair

Poor

Question Types –Intention to Buy Scale

How likely are you to purchase tickets on American Airlines if in-flight Internet access were available?

Definitely buy

Probably buy

Not sure

Probably not buy

Definitely not buy

Question Types –Completely Unstructured

What is your opinion of American Airlines?

Question Types –Word Association

What is the first word that comes to your mind when you hear the following?

Airline ________________________

American _____________________

Travel ________________________

Question Types –Sentence Completion

When I choose an airline, the most important consideration in my decision is: ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________.

Question Types –Story Completion

“I flew American a few days ago. I noticed that the exterior and interior of the plane had very bright colors. This aroused in me the following thoughts and feelings.” Now complete the story. __________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Question Types –Picture (Empty Balloons)

Qualitative Measures

• Word association

• Projective techniques

• Visualization

• Brand personification

• Laddering

Technological Devices

• Galvanometers

• Tachistoscope

• Eye cameras

• Audiometers

• GPS

Sampling Plan

• Sampling unit: Who is to be surveyed?

• Sample size: How many people should be surveyed?

• Sampling procedure: How should the respondents be chosen?

Table 4.2 Types of Samples

Probability Samples• Simple random• Stratified random• Cluster

Nonprobability Samples• Convenience• Judgment• Quota

Contact Methods

• Mail questionnaire

• Telephone interview

• Personal interview

• Online interview

Pros and Cons of Online Research

Advantages• Inexpensive• Fast• Accuracy of data,

even for sensitive questions

• Versatility

Disadvantages• Small samples• Skewed samples• Technological

problems • Inconsistencies

What is a Marketing Decision Support

System (MDSS)?A marketing decision support system is a coordinated collection of data, systems, tools, and techniques with supporting hardware and software by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action.

Barriers Limiting the Use of Marketing Research

• A narrow conception of the research

• Uneven caliber of researchers

• Poor framing of the problem

• Late and occasionally erroneous findings

• Personality and presentational differences

Table 4.3 Characteristics of Good Marketing Research

• Scientific method• Research creativity• Multiple methods• Interdependence• Value and cost of information• Healthy skepticism• Ethical marketing

What are Marketing Metrics?

Marketing metrics are the set of measures that helps marketers quantify,

compare, and interpret marketing performance.

Table 4.4 Marketing MetricsExternal• Awareness• Market share• Relative price• Number of complaints• Customer satisfaction• Distribution• Total number of

customers• Loyalty

Internal• Awareness of goals• Commitment to goals• Active support• Resource adequacy• Staffing levels• Desire to learn• Willingness to change• Freedom to fail• Autonomy

What is Marketing-Mix Modeling?

Marketing-mix models analyze data from a variety of sources, such as retailer

scanner data, company shipment data, pricing, media, and promotion spending data, to understand more precisely the effects of specific marketing activities.

Marketing Dashboards• A customer-performance scorecard

records how well the company is doing year after year on customer-based measures.

• A stakeholder-performance scorecard tracks the satisfaction of various constituencies who have a critical interest in and impact on the company’s performance including employees, suppliers, banks, distributors, retailers, and stockholders.

Table 4.5 Sample Customer-Performance Scorecard Measures

• % of new customers to average #• % of lost customers to average #• % of win-back customers to average #• % of customers in various levels of satisfaction• % of customers who would repurchase• % of target market members with brand recall• % of customers who say brand is most

preferred

Common Measurement Paths

• Customer metrics pathway

• Unit metrics pathway

• Cash-flow metrics pathway

• Brand metrics pathway

The Measures of Market Demand

• Potential market

• Available market

• Target market

• Penetrated market

Vocabulary for Demand Measurement

• Market demand

• Market forecast

• Market potential

• Company demand

• Company sales forecast

• Company sales potential

How Can We Estimate Current Demand?

• Total market potential

• Area market potential– Market buildup method– Multiple-factor index method

Estimating Future Demand

• Survey of Buyers’ Intentions

• Composite of Sales Force Opinions

• Expert Opinion

• Past-Sales Analysis

• Market-Test Method

Use a good Marketing Plan to guide the strategic and tactical direction of your

business

Developing a Marketing Plan

At the end of this module, you will be able to:– Identify the importance and the need for a good Marketing Plan.

– List the key components of a Marketing Plan and its details.

– Track the Marketing Plan in tandem with your overall business plan.

Learning Objectives

125Developing a Marketing Plan

• The Federal Deposit Insurance Corporation (“FDIC”) recognizes the important contributions made by small, veteran, and minority and women-owned businesses to our economy. For that reason, we strive to provide small businesses with opportunities to contract with the FDIC. In furtherance of this goal, the FDIC has initiated the FDIC Small Business Resource Effort to assist the small vendors that provide products, services, and solutions to the FDIC.

• The objective of the Small Business Resource Effort is to provide information and the tools small vendors need to become better positioned to compete for contracts and subcontracts at the FDIC. To achieve this objective, the Small Business Resource Effort references outside resources critical for qualified vendors, leverages technology to provide education according to perceived needs, and offers connectivity through resourcing, accessibility, counseling, coaching, and guidance where applicable.

• This product was developed by the FDIC Office of Minority and Women Inclusion (OMWI). OMWI has responsibility for oversight of the Small Business Resource Effort.

About FDIC Small Business Resource Effort


• A Marketing Plan is at the core of directing and coordinating all marketing efforts within a firm.

• It usually operates at two levels, strategic and tactical: strategic to identify the overall market play and tactical to execute on the marketing plan.

• A Marketing Plan does not need to be long or expensive to put together. If it is carefully researched, thoughtfully considered, and evaluated, it will help your firm achieve its goals.

Executive Summary


• A good Marketing Plan details what you want to accomplish and helps you meet your objectives.

• A Marketing Plan should:– Explain (from an internal perspective) the impact and results of past

marketing decisions.

– Explain the external market in which the business is competing.

– Set goals and provide direction for future marketing efforts.

– Set clear, realistic, and measurable targets.

– Include deadlines for meeting those targets.

– Provide a budget for all marketing activities.

– Specify accountability and measures for all activities.

A Good Marketing Plan


Feedback and Control Process

• You should create and implement your Marketing Plan.

• Some major steps involved in this process are:– Planning

• Define your corporate mission• Establish business units• Assign resources to business units• Assess growth opportunities

– Implementing

– Gaining Feedback and Control• Measuring results• Diagnosing results• Taking corrective action

Overall Planning Process


Ask yourself these five critical questions: 1. What is unique about your business idea? What is the general need that

your product or service aims to meet?

2. Who is your target buyer? Who buys your product or service now, and who do you really want to sell to?

3. Who are your competitors? How can your small business effectively compete in your chosen market?

4. What positioning message do you want to communicate to your target buyers? How can you position your business or product to let people know about your product?

5. What is your sales strategy? How will you get your product or service in the hands of your customers?

The Marketing Challenge


A good Marketing Plan includes these 10 elements:1. Describe Your Business

2. Conduct a Situation Analysis

3. Define Your Customer

4. Strategize Your Market Entry

5. Forecast your Sales or Demand Measurement

6. Define Your Marketing Budget

7. Integrate Your Marketing Communication

8. Identify Sales Channels

9. Track Marketing Activities

10. Evaluate Your Progress

The 10 Elements of a Good Marketing Plan


• Small business owners often describe themselves by their product or services; however, business must be viewed as a customer-satisfying process, not goods-producing.

• Describe your business in detail and clearly identify goals and objectives.

• Answer the following questions:– What is your product or service? – How will your product benefit the customer? – What is different about the product your business is offering?– Is it a new business, a takeover, or an expansion?– Why will your business be profitable?– What are the growth opportunities? – What is your geographic marketing area?

1. Describe Your Business


– Strengths: assets or a resources that can be used to improve your business’ competitive position.

– Weaknesses: resources or capabilities that may cause your business to have a less competitive position.

– Opportunities: situations or conditions arising from a business’ strengths, or set of positive externalities.

– Threats: problems that focus on your weaknesses and which can create a potentially negative situation.

StrengthsWeaknesse

s

Opportunities

Threats

A situation analysis details the context for your marketing efforts by considering internal and external factors that could influence your marketing strategy.

This section of the plan could include a SWOT analysis to summarize your Strengths, Weaknesses, Opportunities and Threats.

2. Conduct a Situation Analysis


Defining your market does not need to be a difficult process. You do not need a huge market base, but you need to be realistic and your market needs to be well-defined.

– Who are your competitors, and who do they target?– Who is your perfect customer and client base?– What is your current customer base (in terms of age, sex, income, and

geographic location)?– What habits do your customers and potential customers share? Where do they

shop, what do they read, watch, listen to?– What prospective customers are you currently not reaching? How can you reach

them?– What qualities do your customers value most about your product or service? Do

they value selection, convenience, service, reliability, availability, or affordability? – What qualities about your product or service do you need to improve? How can

they be adjusted to serve your customers better?

3. Define Your Customers


Once you have identified what is unique about your business and who your target buyers are, focus on your competition:

– Identify your direct competitors and learn what they do.

– Sharpen your decisions about the best business category and

market segment in which to compete.

4. Strategize Your Market Entry


• Sales forecasting provides the basis for comparison over a period of time.

• Market demand is the total volume that could be bought by a defined customer group in, a defined geographical area, in a defined time period, and under a defined marketing program.

• You should:– Correctly identify and estimate current demand by considering total

market potential, market share, and expected sales.

– Estimate future demand by considering past sales patterns, consumer trends, and overall market projections.

5. Forecast Sales or Demand Measurement


• Marketing budgets, especially in small and mid-sized businesses, are often arbitrarily set as either x% of planned revenue or y% over the prior year's marketing budget.

• Use targeted budgeting to more intelligently set your budget based on company objectives.

6. Define Your Marketing Budget (Slide 1 of 2)


Answer the following questions:– What previous marketing methods have been most effective?

– What are your costs compared to sales?

– What is your cost per customer?

– What marketing methods will you use to attract new customers?

– What percentage of profits can you allocate to your marketing campaign?

– What marketing tools (i.e. - newspapers, magazines, Internet, direct mail, telemarketing, event sponsorships) can you implement within your budget?

– What methods are you using to test your marketing ideas?

– What methods are you using to measure results of your marketing campaign?

6. Define Your Marketing Budget (Slide 2 of 2)


• Integrate marketing communication to consolidate marketing tools, approaches, and resources within a company to maximize impact and gain edge over the competition.

• Build on a "Marketing Mix“ and include the following:– 4P’s: Product, Price, Promotion, and Place– Marketing & Advertising

• Internet• Events• Direct • Database

– Public Relations

A COLLABORATIVE APPROACH

7. Integrate Your Marketing Communication


• Part of the challenge of marketing is figuring out which distribution method to use for your business.

• Include all relevant distribution channels: – Retail: Stores selling to final consumer buyers (one store, or a chain of

stores).– Wholesale: An intermediary distribution channel that usually sells to retail

stores.– Direct mail: Generally catalog merchants that sell directly to consumers.– Telemarketing: Merchants selling directly to consumer buyers at retail via

phones.– Cyber-Marketing: Merchants selling directly to consumer buyers at retail

prices, or business-to-business products and services at wholesale prices via computer networks.

– Sales force: Salaried employees of a company or independent commissioned representatives who usually sell products for more than one company.

8. Identify Sales Channels


• Tracking helps monitor the effectiveness of each marketing activity and is especially helpful with your overall program evaluation.

• Include procedures for tracking each type of marketing activity you are using.

• Some examples are:– Display advertising: With traditional consumer publications, tracking can be

done through the use of different phone numbers, special offers (specific to that advertisement or publication), or reference to a specific department.

– Internet marketing: Usually, this is easily tracked by monitoring web traffic.– Trade shows: A trade show’s effectiveness can be tracked by collecting the right

information at the show and following up on it.– Database: Before your Marketing Plan is kicked off, make sure you have the

database structure in place to record this information.

• The tabulated results and customer information is very valuable information.

9. Track Marketing Activities


• Identify how you will measure your success and in what ways your objectives have been met. Then, use these metrics to determine the success of your marketing efforts.

• Answer the following questions: – Did we reach our goals? – Was the marketing campaign successful? – Were we able to determine Return on Investment (ROI)? – Did our efforts result in conversion? In other words, were we able to

convert an inquirer to a visitor, a visitor to a customer? – Can we utilize our database to survey, capture additional information, or

establish a more comprehensive customer relationship program?

10. Evaluate Your Progress


• Every business has marketing challenges and opportunities. • A Marketing Plan:

– Allows you to analyze your current situation, describe your business, and define your customer base.

– Helps you to strategize your market entry, identify your sales channels, and integrate your marketing communications for maximum efficiency.

– Gives you a means of evaluating your progress.

Key Takeaways from This Module


Introduction to Marketing Planning

Today’s discussion

• Overview of Marketing Planning– Marketing Planning Defined– Contents of a marketing Plan

• Developing a Marketing Plan– Research and Analyze the Current Situation– Understand markets and Customers– Plan Segmentation, Targeting, and Positioning– Plan Direction, Objectives and marketing Support– Develop Marketing Strategies and Programs– Prepare to Track Progress and Control the Plan

• Preparing for Marketing Planning– Primary Marketing Tools

• 7 Ps

– Supporting the Marketing Mix– Guiding Principles

• Expect Change• Emphasize Relationships• Involve Everyone• Seek Alliances• Be Innovative

Overview of Marketing Planning

• Nestle• China• Turkey• India

http://www.nestle.com/

http://www.youtube.com/watch?v=YFCIUNBvCRA

Crash test MG 6

http://www.youtube.com/watch?v=vx5JpY9DM_k

http://www.youtube.com/watch?v=IIZmC90NpHQ

http://www.reuters.com/video/2007/03/27/mg-rover-reborn-in-china?videoId=46740

http://www.msnbc.msn.com/id/21134540/vp/36096587

http://www.yumfranchises.com/

http://www.pepsico.com/

http://www.msnbc.msn.com/id/21134540/vp/36096587

• Marketing Plan

• Part I

• Part II

• Part III

• Part IV

Research and Analyze the Current Situation

• Starbucks (Joe magazine)

• Sony (New Competition from new rivals)

• Michaels Stores (Scrapbooking near term sales increasing 40% a year)

http://www.creativememories.com/

http://www.starbucks.com/preview

http://www.sony.com/

http://www.facebook.com/Michaels

Understand markets and Customers

• Segmentation

• Targeting

• Positioning

http://www.myinspirasian.com/html/english/index.html

http://www.mcdonalds.com/us/en/websites.html

http://www.mcdonalds.com/

Objectives and marketing Support

• What makes a good objective?

• Sustainable Marketing– The establishment, maintenance and

enhancement of customer relationships so that objectives of the parties involved are met without compromising future generations

– Fed Ex cutting air pollution 30,000 low-emission diesel-electric vans over the next decade.

Marketing Strategies and Programs

http://www.amazon.com/exec/obidos/subst/home/redirect.html/ref=nh_gateway/103-8777789-4027037

Marketing Control

• On going process continuous process• Living.com upscale furniture store on-line

– Few upscale manufacturers wanted to sell on-line– Thought customers would browse in store and buy

on-line (opposite happened)– Failed to account for returned merchandize (just threw

it away)

http://www.living.com/

Marketers need to develop

• Knowledge of markets and customers

• Core Competencies

• Relationships

Primary Marketing tools

Supporting the Marketing Mix

• Service is the key

http://www.escada.com/

Calvin Ball

• When the ball goes up the rules change

Be Innovative

http://www.bluenile.com/

http://www.bluenile.com/

Designing Marketing Metrics Step By Step

• Performance measurement processes differ at each organizational level.

• It consists of five steps:– Setting performance standards– Specifying feedback– Obtaining data– Evaluating it– Taking corrective action


• Setting standards of performance– Performance standards derive largely from

the objectives and strategies set forth at the SBU and individual product-market entry level.

– Performance-based measures are often tied to the compensation of those individuals responsible for attaining the specified goals.


• Setting standards of performance (cont.)– The shift from primarily using financially based

performance measures to treating them as part of a broader array of marketing metrics.

– Balanced scorecard.– Using the SMART acronym (specific,

measurable, attainable, relevant, and timebound).


• Profitability analysis– Determine the costs associated with specific

marketing activities to find out the profitability of such units as different market segments, products, customer accounts, and distribution channels.

– Limitations:• Many objectives can best be measured in

nonfinancial terms.• Profit is a short-term measure and can be

manipulated.• Profits can be affected by factors beyond control.


• Full costing: Analysts assign both direct, or variable, and indirect costs to the unit of analysis.– Indirect costs involve certain fixed joint costs

that cannot be linked directly to a single unit of analysis.

– Direct costing involves the use of contribution accounting.

• The shift to activity-based costing (ABC).


• Measures of customer satisfaction– Understanding and measuring the criteria used

by customers to evaluate the quality of the firm’s relationship with them.

– Some companies ask customers one simple question: How likely is it that you would recommend us to a friend or a colleague?

– Face-to-face approaches– Using CRM data to measure the lifetime value

of customers.


• Specifying and obtaining feedback data– The sales invoice or other transaction

records.– Marketing research projects.


• Evaluating feedback gata– To identify any deviation from the plan, and if

so why. – At the line-item level, whether for revenue or

expenses, results are compared with the standards set in step one of the control process.


• Taking corrective action– Prescribing the needed action to correct the

situation.– In most cases it is difficult to identify the

cause of the problem.– Delayed responses and carry-over effects.

Design Decisions For Strategic Monitoring Systems

• Identifying key variables

• The key variables to monitor are:– Those concerned with external forces.– Those concerned with the effects of certain

actions taken by the firm to implement the strategy.

Design Decisions For Strategic Monitoring Systems

• Tracking and monitoring– Specify measures needed on each of the variables to

determine whether the implementation of the strategic plan is on schedule—and if not, why not.

– Real-time monitoring of critical strategic information.

• Strategy reassessment– Can occur when the firm evaluates its performance to

date along with changes in the external environment.– A strategic monitoring system can also alert

management of a significant environmental change.

Design Decisions For Marketing Metrics

• Who needs what information?

• Sales information is needed by:– Top management.– Functional managers.– Marketing managers.


• Sales analysis– Involves breaking down aggregate sales data

into various categories.– The objective is to find areas of strength and

weakness.


• Sales data is grouped under:– Geographical areas.– Product, package size, and grade.– Customer.– Channel intermediary.– Method of sale.– Size of order.

• These breakdowns are not mutually exclusive.


• Sales analysis by territory– The first step is to decide which geographical

control unit to use.– Next, compare actual sales against a

standard to single out territories that fall below standard for special attention.

– Category and brand development indices are often used.


• Sales analysis by product– Before deciding which products to abandon,

management must study such variables as: • Market-share trends.• Contribution margins.• Scale effects. • The extent to which a product is complementary

with other items.

– Particularly helpful when combined with account size and sales territory data.


• Sales analysis by order size– May identify which orders, in monetary size,

are not profitable.– This may lead to:

• Setting a minimum order size.• Charging extra for small orders.• Training sales reps to develop larger orders.• Dropping some accounts.


• Sales analysis by customer– Typically show that a relatively small

percentage of customers account for a large percentage of sales.

– The key is to find useful decompositions of the sales data that are meaningful in a behavioral way.

– Three useful variables in doing so are: recency, frequency, and monetary value.


• Line-item margin and expense analysis– Gross and net margins must be tracked, and

the effectiveness and efficiency of all line-item marketing expenses must be measured.

– Budget analysis requires that managers continuously monitor marketing–expense ratios to make certain the company does not overspend in its effort to reach its objectives.


• When and how often is the information needed?– Buyers and merchandise managers in retailing

firms typically assess item and category sales performance on a weekly basis.

– Performance of industrial salespeople is typically done on a monthly basis.

– Strategic control indicators are likely to be measured and reported less frequently.


• Media and Format(s) or Levels of Aggregation – Having good and timely information and

reporting it in such a manner that it is easy and quick to use are different things.

– Thoughtful attention to the format in which marketing performance information is reported can be a significant competitive advantage.


• Getting the metrics aligned with the strategy.

• A good first step is to identify the elements in an informational “dashboard” that the top management team can use to track marketing performance from period to period.


• What contingencies should be planned for?– Because all strategies and the action plans

designed to implement them are based on assumptions about the future, they are subject to considerable risk.

The Contingency Planning Process


• Global marketing control– Measuring the performance is more difficult

than with domestic marketing.– Global companies typically use essentially the

same format for both their domestic and foreign operations.

– Report frequency and extent of detail can vary. – A single system facilitates comparisons

between operating units and communications between home office and local managers.

The Marketing Audit

• Audits are broader in scope and cover longer time horizons than sales and profitability analyses.

• An SBU-level audit covers both the SBU’s objectives and strategy and its plan of action for each product-market entry.

• It must consider environmental changes that can affect the SBU’s strategy and product-market action programs.

The Marketing Audit

• Types of Audits– The marketing environment audit– The objectives and strategy audit– The unit’s planning and control system audit– The organization audit– The marketing productivity audit– The marketing functions audit– The company’s ethical audit– The product manager audit

Measuring And Delivering Marketing Performance

• Measure well—and in a timely and easy-to-use fashion—and performance is likely to follow.

Take-Aways

• Most managers and entrepreneurs are evaluated primarily on the results they deliver.

• Effective design of control systems, whether for strategic control or for marketing performance measurement, helps ensure the delivery of planned results.

• A step-by-step process for doing so is provided in this chapter.

Take-Aways

• Control systems that deliver the right information—in a timely manner and in media, formats, and levels of aggregation that users need and can easily use—can be important elements for establishing competitive advantage. – Four key questions that designers of such

systems should address are discussed in this chapter.

Take-Aways

• From time to time, it is useful to step back from day-to-day results and take a longer view of marketing performance for a company or an SBU. A marketing audit, as outlined in this chapter, is a useful tool for conducting such an assessment.

THANK YOU

• K.ASHWIN KUMAR

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