4.2. Marketing planning

4.2. Marketing planning

The elements of a marketing plan

Without marketing, potential customers may not be aware of the product or service your business is selling. Without customers, your business may meet its demise. Marketing plays a vital role in business because planning how you are going to reach potential customers helps to ensure that people are aware of your product or service and that you have an opportunity to convert that awareness into paying customers.

The marketing plan must be consistent with the corporate strategy

The Role of Marketing Planning

Creates a Guide

The achievement of written goals occurs more often than goals that are not written down. Marketing planning serves as a written guide for a business to follow in promoting its products and services. Planning the marketing strategies ahead of time allows companies to be proactively involved in the success of its sales. Because the marketing plan is a portion of the overall business plan, a company can align marketing strategies during the planning stages with its overall business goals.

Integrates the Business

Planning marketing efforts involves more than the marketing manager. Marketing planning integrates all of the aspects of a business, ranging from how products and services are priced to the financials of the company. As a result, marketing planning brings upper management and the heads of departments such as finance together. Small business owners may be both the marketing manager and upper management, but marketing planning still plays the role of integrating a business requiring you to analyze your business from all of the different vantage points: finance, operations, legal and marketing.

Forecasts

The marketing planning process also plays a forecasting role because it requires you to estimate sales resulting from each marketing effort. A company’s operations department uses sales forecasts to create a production schedule. The finance department uses these forecasts to create budgets, while the human resources department looks to sales forecasts to plan for employees. A small business also requires these forecasts to plan for other areas in the business.

Company Product/Service

An effective marketing plan takes a close look at a company’s products and services and compares these to products and services from competitors in the market sector. The marketing department must review the company’s products in terms of quality, customer interest and customer response, among other qualities. An appreciation of these elements helps a company develop new products and improve existing products as the company pursues its goals.

Pricing

The marketing plan must keep in mind the company’s pricing position for its own products and services. Marketing professionals run pricing comparisons of other company products and services within the marketing sector and then compare these prices to their own company’ s prices. The results help the company develop a pricing plan that serves two primary purposes: enable the company to price itself strategically within the market and assist the company in reaching its own financial goals.

The four Ps of the marketing mix

The marketing mix and the 4 Ps of marketing are often used as synonyms for each other. In fact, they are not necessarily the same thing. "Marketing mix" is a general phrase used to describe the different kinds of choices organizations have to make in the whole process of bringing a product or service to market. The 4Ps is one way – probably the best-known way – of defining the marketing mix, and was first expressed in 1960 by E J McCarthy.

The 4Ps are:

· Product (or Service).

· Place.

· Price.

· Promotion.

A good way to understand the 4Ps is by the questions that you need to ask to define your marketing mix. Here are some questions that will help you understand and define each of the four elements:

Product/Service

• What does the customer want from the product/service? What needs does it satisfy?
• What features does it have to meet these needs?
  • Are there any features you've missed out?
  • Are you including costly features that the customer won't actually use?
• How and where will the customer use it?
• What does it look like? How will customers experience it?
• What size(s), color(s), and so on, should it be?
• What is it to be called?
• How is it branded?
• How is it differentiated versus your competitors?
• What is the most it can cost to provide, and still be sold sufficiently profitably? (See also Price, below).

Place

• Where do buyers look for your product or service?
• If they look in a store, what kind? A specialist boutique or in a supermarket, or both? Or online? Or direct, via a catalogue?
• How can you access the right distribution channels?
• Do you need to use a sales force? Or attend trade fairs? Or make online submissions? Or send samples to catalogue companies?
• What do you competitors do, and how can you learn from that and/or differentiate?

Price

• What is the value of the product or service to the buyer?
• Are there established price points for products or services in this area?
• Is the customer price sensitive? Will a small decrease in price gain you extra market share? Or will a small increase be indiscernible, and so gain you extra profit margin?
• What discounts should be offered to trade customers, or to other specific segments of your market?
• How will your price compare with your competitors?

Promotion

• Where and when can you get across your marketing messages to your target market?
• Will you reach your audience by advertising in the press, or on TV, or radio, or on billboards? By using direct marketing mailshot? Through PR? On the Internet?
• When is the best time to promote? Is there seasonality in the market? Are there any wider environmental issues that suggest or dictate the timing of your market launch, or the timing of subsequent promotions?
• How do your competitors do their promotions? And how does that influence your choice of promotional activity?

The 4Ps model is just one of many marketing mix lists that have been developed over the years. And, whilst the questions we have listed above are key, they are just a subset of the detailed probing that may be required to optimize your marketing mix.

Amongst the other marketing mix models have been developed over the years is Boom and Bitner's 7Ps, sometimes called the extended marketing mix, which include the first 4 Ps, plus people, processes and physical layout decisions.

Another marketing mix approach is Lauterborn's 4Cs, which presents the elements of the marketing mix from the buyer's, rather than the seller's, perspective. It is made up of Customer needs and wants (the equivalent of product), Cost (price), Convenience (place) and Communication (promotion). In this article, we focus on the 4Ps model as it is the most recognized, and contains the core elements of a good marketing mix.

Extended Marketing Mix

Services have a different nature to traditional products. In particular, they have the following characteristics that products do not. They have no physical form, are inseparable from the provider and may lack consistency as a different member of staff may provide them each time they are provided. Additionally, they cannot be stored and usually do not result in the transfer of property.

The three additional elements of the extended marketing mix are:

· People – services are provided by members of staff who are inseparable from the service

· Process – services involve a process, for example, a haircut may involve waiting to be served, a hair wash, styling, colouring and drying

· Physical evidence – as services are intangible, some physical items should be provided to give the customer evidence of ownership.

An appropriate marketing mix for a particular product or business

MARKETING MIX EXAMPLE – NIVEA

The Company

NIVEA is a well-known company that is in the high quality skin and beauty care product market. NIVEA is one the brands manufactured and sold by Beiersdorf, which was established in 1882. In UK, the company has always focused on ensuring availability of their products to as many people as possible. In addition, the company has always strived to understand the varied needs of its vast consumer base and bring as many specific products to market as possible.

Marketing mix for new product line

Market research revealed an opportunity in the market for a younger customer base. This led to the launch of Nivea Visage Young in 2005. This product was developed for girls in the 13 to 19-year age range.

For the eventual launch of the product, the company needed to develop a balanced and relevant marketing mix to appeal to its young audience. Through its initial launch in 2005 to a subsequent re launch in 2007, the company focused closely on the marketing mix balance to help ensure that all elements of the product appeal to the target audience to achieve success.

Product

The company put significant importance in ongoing research to understand the constantly evolving market and consumer dynamics. This knowledge has helped the company develop more innovative new products that fulfill consumer needs. Through this research, it became clear that younger consumers wished for a more specific product that addressed the skin needs of their age category. The need was for a product that offered a beautifying regime for daily use rather than a medicated product that targeted specific skin problems. The latter were abundantly being offered by competition. The product was subsequently redesigned to meet these specialized requirements.

From the company’s perspective, some of the changes helped meet its commitment to the environment which included more efficient packaging to reduce waste, the use of more natural products and the use of recyclable plastic.

Price

An effective pricing strategy takes into account the product’s perceived and actual values. The final price should be based on both these in order to make the product attractive to both buyer and seller. After its relaunch, Nivea Visage Young was priced a little higher than before to account for the new formula, better packaging and extended range of products. Since the product as being bought by mothers for their daughters, it remained low enough to remain good value for money. Effective pricing means that sales from this product account for nearly 7 percent of all Nivea Visage sales.

Place

As mentioned, Nivea aims to have a wide reach for its products to ensure that it is easily available wherever needed by the extensive target market. The primary channels used are retail stores. High Street stores such as Boots and Superdrug account for nearly 65 percent of all sales. Another portion comes from grocery chain stores such as ASDA or Tesco. This covers young people making their own purchases (mostly high street), as well as their mothers buying for them (mostly grocery stores). These stores ensure a cost effective distribution channel that has a wide reach. The company manages its own cost by selling to wholesalers rather than directly to smaller stores. It also does not sell online directly, but the product is sold through stock-lists.

Promotion

Nivea’s has always tried to base its promotions on the actual lifestyle of its target market. The company does not find above the line promotions to be very effective as these are one way communications through TV for example. Instead, the promotion is more consumer led through different below the line solutions. Sample sales are a key activity that allows consumers to try out the actual product. There is also an interactive online magazine FYI (fun, young, independent) to increase product visibility and association. The company has also maintained a strong social media presence on popular social media networks. This used of new media has ensured a better brand awareness and association among target audience.

Conclusion

Through its successful use of a balanced marketing mix, Nivea Visage Young has managed to create a clear position in the market. It addresses a need felt by a specific niche segment. Traditional distribution methods are balanced by a unique product and updated promotional strategies. This ensures that the brand message reaches the right people at the right time in the right way.

As we see from the Nivea example, it is vital for any company to focus equally on all elements of the marketing mix while planning for a product. Eventually, there may be a need to divert more resources towards one variable such as strong distribution channels over promotional activities. But this needs to come after a clear plan and strategy has been decided upon. An effective marketing mix can mean the difference between a flash in the pan product or one that is bound to become a well-loved classic.

Source - https://www.cleverism.com/understanding-marketing-mix-concept-4ps/

Task 1: Construct a basic marketing mix for an online company selling branded swim-wear

The effectiveness of a marketing mix in achieving marketing objectives

The marketing mix is the set of controllable, tactical marketing tools that a company uses to produce a desired response from its target market. It consists of everything that a company can do to influence demand for its product. It is also a tool to help marketing planning and execution.

Marketing strategy

An effective marketing strategy combines the 4 Ps of the marketing mix. It is designed to meet the company’s marketing objectives by providing its customers with value. The 4 Ps of the marketing mix are related, and combine to establish the product’s position within its target markets.

Weaknesses of the marketing mix

The four Ps of the marketing mix have a number of weaknesses in that they omit or underemphasize some important marketing activities. For example, services are not explicitly mentioned, although they can be categorized as products (that is, service products). As well, other important marketing activities (such as packaging) are not specifically addressed but are placed within one of the four P groups.

Another key problem is that the four Ps focus on the seller’s view of the market. The buyer’s view should be marketing’s main concern.

The four Ps as the four Cs

The four Ps of the marketing mix can be reinterpreted as the four Cs. They put the customer’s interests (the buyer) ahead of the marketer’s interests (the seller).

• Customer solutions, not products: Customers want to buy value or a solution to their problems.
• Customer cost, not price: Customers want to know the total cost of acquiring, using and disposing of a product.
• Convenience, not place: Customers want products and services to be as convenient to purchase as possible.
• Communication, not promotion: Customers want two-way communication with the companies that make the product.

REFERENCES

Kotler, P., Armstrong, G., Cunningham, P.H. (2005). Principles of Marketing. Toronto: Pearson Education Canada. pp. 67-70.

Source - https://www.marsdd.com/mars-library/the-marketing-mix-in-marketing-strategy-product-price-place-and-promotion/

The difference between target markets and market segments

Every product or service will appeal to the needs and desires of a certain market. The target market of a new construction tool may be an adult male, while the target market of a new line of diapers might be an adult male or female with children. Creating a strategy with your users in mind is target marketing. However, it usually is necessary, and even appealing, to take your marketing one step further by using market segmentation.

Definition

Target marketing is the overall term for directing your marketing endeavors toward a group of people. Market segmentation is the breaking down of the market into smaller groups with the intention of promoting your product or service differently to each of them. Market segmentation allows your target marketing to become more specific; it divides broad markets--such as male, female, teen and adult--into smaller segments in which people are grouped by shared characteristics.

Source - http://smallbusiness.chron.com/discuss-difference-between-market-segmentation-target-marketing-1480.html

Possible target markets and market segments in a given situation - https://smallbusiness.chron.com/examples-demographic-segmentation-12367.html

Task 2: Do marketers have an ethical responsibility in how they target certain market segments?

The difference between niche market and mass market

In most markets there is one dominant (mass) segment and several smaller (niche) segments. For example, in the confectionery market, a dominant segment would be the plain chocolate bar. Over 90% of the sales in this segment are made by three dominant producers – Cadbury’s, Nestle and Mars. However, there are many small, specialist niche segments (e.g. luxury, organic or fair-trade chocolate).

Niche marketing can be defined as:

Where a business targets a smaller segment of a larger market, where customers have specific needs and wants

Targeting a product or service at a niche segment has several advantages for a business (particularly a small business):

• Less competition – the firm is a “big fish in a small pond”

• Clear focus - target particular customers (often easier to find and reach too)

• Builds up specialist skill and knowledge = market expertise

• Can often charge a higher price – customers are prepared to pay for expertise

• Profit margins often higher

• Customers tend to be more loyal

The main disadvantages of marketing to a niche include:

• Lack of “economies of scale” (these are lower unit costs that arise from operating at high production volumes)

• Risk of over dependence on a single product or market

• Likely to attract competition if successful

• Vulnerable to market changes – all “eggs in one basket”

By contrast, mass marketing can be defined as:

Where a business sells into the largest part of the market, where there are many similar products on offer

The key features of a mass market are as follows:

•Customers form the majority in the market

•Customer needs and wants are more “general” & less “specific”

• Associated with higher production output and capacity (economies of scale)

• Success usually associated with low-cost operation, heavy promotion, widespread distribution or market leading brands

How organizations target and segment their market and create consumer profiles

Market Segmentation

A market is not a single homogenous group of customers wanting an identical product. Markets consist of potential buyers with different needs and different buying behaviour.

Market segmentation may be defined as the subdividing of a market into distinct and increasingly homogenous subgroups of customers where any subgroup can conceivably be selected as a target market to be met with a distinct marketing mix.

Target Markets

A target market is a market or segment selected for special attention by an organization possibly served with a distinct marketing mix.

The bases of segmentation

Simple segmentation could be one of the bases below:

· Demographic – considers a number of factors such as gender and stage in family lifecycle. Individuals and families may be categorized as bachelor, newly married couple, full nest (1, 2 and 3) and empty next (1 and 2) – see below

· Situational and end-use (products being bought at different times or for different uses such as for work or leisure)

· Level of income

· Occupation

· Education

· Socio-economic

· Buyer behaviour

· Psychological – lifestyle (upwardly mobile and ambitious; traditional and sociable; security and status seeking; hedonistic preference) – see below

Full Nest

Those in the full nest category are often the least financially well-off as much of the family income is spent on housing and raising children. Categories 2 and 3 describe families becoming better off as the children age and perhaps both partners work. As income rise, the products purchased become less practical and more luxury.

Empty Nest

Those in the empty nest 1 category have a good level of income and can spend on expensive goods and holidays. Empty nest 2 describes people with very little disposable income for example those living on the state pension. Purchases are limited to necessities such as food and medicines.

Lifestyle

Rogers' Product Adoption Model - see https://ondigitalmarketing.com/learn/odm/foundations/5-customer-segments-technology-adoption/

A product position map/perception map

Positioning

Market position refers to how customers perceive a brand or product relative to other brands or products. When positioning their products and services, most organizations want to achieve a clear, unique and positive position.

Developments in market segmentation and product positioning

· There is a growing awareness that consumers should be segmented according to the purpose of the segmentation – customers of a retail bank may be segmented according to their risk/socio-economic type

· There is growing interest in customer database analysis, and the idea of ‘letting the data speak for itself’ – data mining – customer information on a database is analyzed in order to identify segments or patterns of behaviour

· Growing emphasis on segmentation by soft data – consumer attitudes and needs and lifestyles as distinct from hard data such as age, lifestyle, socio-economic grouping and so on

· Growing use of sub-segmentation or hybrid segmentation methods – consumers within a particular segment can be sub-divided into different segments and each segment is targeted in a different way

· Computer models are used – these will discover suitable additions to a product line, that will appeal to a separately-distinguishing market segment.

Perceptual Mapping

Perceptual mapping involves using customer perceptions of brands to map out how the market is currently serviced. Any gaps in the market could be used by an organisation to deploy new products or reposition existing ones. Two critical success factors are identified and the current market is mapped.

Example of a market opportunity

• Task 4: Construct a Product Positioning Map for EVs based on the information in this website - http://www.businessinsider.com/electric-car-comparison-chart-2013-8

The importance of having a unique selling point/proposition (USP)

A unique selling proposition (USP, also seen as unique selling point) is a factor that differentiates a product from its competitors, such as the lowest cost, the highest quality or the first-ever product of its kind. A USP could be thought of as “what you have that competitors don’t.” A successful USP promises a clearly articulated benefit to consumers, offers them something that competitive products can’t or don’t offer, and is compelling enough to attract new customers.

Here are a few famous examples of USPs:

• Avis’ “We’re only number two. We try harder” campaign.
• Domino’s “30 minutes or it’s free” promise.
• FedEx’s “When it absolutely, positively has to be there overnight.”
• Southwest’s claim to be the lowest-priced airline.

A USP is sometimes formally expressed in a positioning statement.

Creating a unique selling proposition for your product should be your first priority, because without making your business stand out from the rest, it will be difficult for you to convince your target audience to buy from you. The reason it’s so important to create a unique selling proposition is that you need a way to show your prospective customers that you’re offering them something that’s not identical to everything else

Without a unique selling proposition, your potential buyers won’t have any reason to patronize you, as they won’t see how your product is different and original. If you want people in your target market to buy your product, you have to create a unique selling proposition, which shows them how your product differs from the competition.

One of the secrets to convincing people to purchase your product is to introduce a unique selling proposition, something that convinces them that your product is different and superior.} The USP is ultimately what convinces people to try your product, so it makes sense to make it as powerful as you can. When you have a USP, you’ll find that all of the other tactics you employ to improve your sales will become more effective as well.

All businesses want to brand themselves to get more publicity. However, when we talk about online businesses that sell various products in different niches, not much is being done by many to stand out of the crowd. The way to rise above the competition is to demonstrate a unique selling point that’s powerful. A USP is the way to convince your prospective customers that you’re offering something different and high quality that they should buy. The best thing about a USP is that it causes customers to talk about your product and do a lot of the selling on your behalf.

It’s not enough to just drive traffic to your website if you want to market your products online. You have to give your potential customers good reasons to purchase your product rather than somebody else’s. For this reason, one of the most important factors that your business depends upon is having a unique selling point.

How organizations can differentiate themselves and their products from competitors

Porter's Generic Strategies

Which do you prefer when you fly: a cheap, no-frills airline, or a more expensive operator with fantastic service levels and maximum comfort? And would you ever consider going with a small company which focuses on just a few routes?

The choice is up to you, of course. But the point we're making here is that when you come to book a flight, there are some very different options available.

Why is this so? The answer is that each of these airlines has chosen a different way of achieving competitive advantage in a crowded marketplace.

The no-frills operators have opted to cut costs to a minimum and pass their savings on to customers in lower prices. This helps them grab market share and ensure their planes are as full as possible, further driving down cost. The luxury airlines, on the other hand, focus their efforts on making their service as wonderful as possible, and the higher prices they can command as a result make up for their higher costs.

Meanwhile, smaller airlines try to make the most of their detailed knowledge of just a few routes to provide better or cheaper services than their larger, international rivals.

Generic Strategies

These three approaches are examples of "generic strategies," because they can be applied to products or services in all industries, and to organizations of all sizes. They were first set out by Michael Porter in 1985 in his book, "Competitive Advantage: Creating and Sustaining Superior Performance."

Porter called the generic strategies "Cost Leadership" (no frills), "Differentiation" (creating uniquely desirable products and services) and "Focus" (offering a specialized service in a niche market). He then subdivided the Focus strategy into two parts: "Cost Focus" and "Differentiation Focus."

These are shown in Figure 1 below.

Task 5: Porter’s Generic Strategies

Complete the remaining boxes in the following table

MORAL VALUES CAN BE A SOURCE OF INNOVATION AND DIFFERENTIATION

In 1959 Nils Bohlin, an engineer at the Swedish Car Manufacturer Volvo, invented the first three-point safety belt. It was much more effective than the standard lap belt (as still used on airplanes). Volvo, realizing the importance of this invention, chose not to patent it but to share the idea with other vehicle manufacturers. They may have lost some revenues but their action undoubtedly saved many lives and it cemented Volvo’s reputation as a highly ethical company committed to safety.

In the 1970s Anita Roddick founded the Body Shop. She deliberately chose a radically different approach from other vendors of cosmetics and toiletries. The Body Shop’s products were shipped in cheap clear plastic bottles with an emphasis on simplicity, sustainability and fair trade. The retail chain differentiated itself by stating that it would never use animal testing in its product development. The Body Shop grew rapidly. It used social and environmental campaigns to promote its business. In 1997, Anita Roddick launched a global campaign to raise self-esteem in women and to oppose the media stereotyping of women.

A modern day example of this approach is provided by the clothing manufacturer, Patagonia. They caused a stir with a Black Friday advert saying, ‘Don’t Buy our Product.’ In an interview in Fast Company their CEO, Rose Marcario, explained, ‘What it was really saying was, “Don’t buy more than you need.” The more you consume, the more strain you put on the Earth’s resources. We don’t want that because we all care about this nest we’re in. We put out a film, Worn Wear, which celebrated the durability of our product, the fact that it can be handed down from generation to generation and the fact that you can bring it back to us and we’ll repair it.’

Patagonia recently invested $13m of tax credits in installing solar panels in homes in Hawaii. They financed an outspoken political film, Damnation. It is a documentary which condemns the environmental impacts of the Chinese government’s actions in damming so many rivers.

Rose Mercario has practiced Shambhala Buddhism for many years. In 2010 she organized a group of employees to provide relief in the Gulf of Mexico after the oil spill. Patagonia has a company policy of sharing product material innovations with competitors. Mercario’s creed is ‘I really believe that business can be an agent for change in the world.’ This approach may look like soft-hearted sentimentalism but it has led to a loyal customer base, growth in sales and profits and, most importantly, enormous respect. This will be invaluable in their new venture, Patagonia Provisions, a company supplying sustainable food products. Just don’t buy more than you can eat.

Many firms are seen by consumers as greedy and profit focused. What Volvo, the Body Shop and Patagonia show is that high moral values can provide a source for innovation. They can give a clear point of differentiation, a better image and a business advantage.

Source - http://www.destination-innovation.com/moral-values-can-source-innovation-differentiation/

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