3. 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.”
4. Marketing Environment
Micro environment Macro environment
Controllable PartiallyUncontrollable
Co Organization Suppliers Demographic
Management Customers Economic
Resources DealersEcological
M Mix Competitors Technological
Community Political
( Social groups) Sociological
5. Marketing Environment
The inputs concerned with micro
environment are –
• Company organization
• Suppliers
• customers
6. Marketing Environment
The outputs concerned with macro environment
are –
• Political
• Economical
• Technological
Macro environment factors may be –
Controllable or partially - controllable
7. 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.
8. 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
9. 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
10. 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
12. 3. Intermediaries
• Wholesalers, retailers, agents,
transporters, warehousers, ad agencies,
etc.
• This is a choice of channel of distribution
13. 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
14. 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
15. 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.
16. 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
17. Macro environment
1. Economic
Economic forces influence both marketers
and the consumers
Economic forces include –
• Competition – monopoly, oligopoly
• Buying power
• Willingness to spend
18. Macro environment
1. Economic - continued
Economic conditions include
• Economic development
• National income
• Standard of living
• State of agriculture
19. Macro environment
1. Economic - continued
• Business cycles
• Interest rate
• Price levels
• Fiscal policies
marketers have to take into
consideration the changes taking place in
agriculture and industry
20. 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
21. Acronyms used in respect of age
• SKIPPIES
• MOBY’s
• DINKS
• PUPPIES
• WOOFS
22. 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
23. 2.Demography - continued
• 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
24. Demography - continued
Education
• Illiterates
• High school drop outs
• Matriculates
• Graduates
• Professional degrees
• Post graduates
25. 2.Demography - continued
• 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
26. 2.Demography - continued
• India’s population is roughly 108 crores
• 75% of population lives in villages
• Rural marketing offers immense
opportunities and challenges to a creative
marketer
27. 2.Demography - continued
• You find that the demand is increasing not
only for farm products, but also for non-farm
products
28. 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.
29. 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
30. • Solar pocket calculators and hand
cameras
• CDs and Video tapes
• Virtual reality applications in Marketing is a
new application due to technological
progress
31. Technology-continued
• 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,
32. Technology-continued
• 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.
33. 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.
34. 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
35. 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
36. 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
37. Cultural factors - continued
• Food habits
• Internet practice
• Fast foods – Pizza hut, Ken Fried Chicken
38. Cultural factors - continued
• 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
39. 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
40. Cultural factors - continued
• Cultural and ethical forces are of vital
importance
41. Responding to the marketing environment
• There are two general approaches to
respond to marketing environmental
forces, viz., Passive approach and
Aggressive approach
42. 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
43. 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
44. 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
45. 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
46. 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’
47. 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
48. 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
49. The Marketing Environment and
Competitor Analysis
•SWOT analysis
•PEST analysis
•Five forces analysis
54. Economic Factors
• Inflation
• Employment
• Disposable income
• Business cycles
• Energy availability and cost
• Others?
55. Socio cultural factors
• Demographics
• Distribution of income
• Social mobility
• Lifestyle changes
• Consumerism
• Levels of education
• Others?
56. Technological
• New discoveries and innovations
• Speed of technology transfer
• Rates of obsolescence
• Internet
• Information technology
• Others?
57. Five forces analysis
Source: Adapted from M. E. Porter,
Competitive Strategy, Free Press,
1980, p. 4.
Potential
entrants
TThhrreeaatt ooff
ssuubbssttiittuutteess
TThhrreeaatt ooff
eennttrraannttss
Suppliers
BBaarrggaaiinniinngg
ppoowweerr
Substitutes
Buyers
BBaarrggaaiinniinngg
ppoowweerr
COMPETITIVE
RIVALRY
58. 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)?
60. 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.
61. After studying this chapter you
should be able to:
• 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.
62. 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.
63. Target Markets
Targeting:
Selecting which segments in a market
are appropriate to focus on and
designing the means of reaching them.
64. 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.
65. From Mass Marketing to Mass
Customization
• Mass Customization:
– Complex manufactured
products made to order.
66. Criteria for Effective
Segmentation
Five Criteria:
1. Measurability
2. Accessibility
3. Substantialness
4. Durability
5. Differential Responsiveness
71. Countersegmentation Strategy
• Countersegmentation:
• Countersegmentation:
– An alternative strategy to traditional segmentation
approaches.
• Combines market segments
• Consumers accept lower price over variety
– An alternative strategy to traditional segmentation
approaches.
• Combines market segments
• Consumers accept lower price over variety
72. 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
73. Estimating Segment Potentials
1. Set time period of interest.
2. Define product level.
3. Specify segment characteristics or
bases.
4. Identify geographic market boundaries.
74. 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.
76. Firm and Market Potentials and
Forecasts
Industry Level
Firm Level
Industry Level
Firm Level
BBeesst tP Poossssibiblele R Reessuultlsts EExxppeecctetedd R Reessuultlsts f oforr G Giviveenn S Strtraateteggyy
Market Potential Market Forecast
Sales Potential Sales Forecast
Market Potential Market Forecast
Sales Potential Sales Forecast
77. Targeting Market Segments
• To select target segments, the firm
must consider:
• To select target segments, the firm
must consider:
– The segment’s potential sales volume and
profits.
– The segment’s potential sales volume and
profits.
– Competition currently selling to the
segments.
– Competition currently selling to the
segments.
– The firm’s abilities and objectives.
– The firm’s abilities and objectives.
78. Positioning
Positioning:
Designing a marketing program, including
the product mix, that is consistent with how
the company wants its products or
services to be perceived.
Repositioning:
When a firm wants to shift consumer
opinions about an existing brand.
79. Perceptual Maps
• Perceptual Maps:
– Spatial representations of consumer
• Perceptual Maps:
– Spatial representations of consumer
perceptions of products or brands, are often
used to evaluate brand positions in a market.
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
81. 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.
82. Market Segmentation and Ethics
– Advertising to Children
– Harmful Products
– Privacy Issues
– Product Proliferation
– Advertising to Children
– Harmful Products
– Privacy Issues
– Product Proliferation
84. 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?
85. 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.
86. Types of Marketing Research Firms
• Syndicated service
• Custom
• Specialty-line
87. The Marketing Research Process
• Define the problem
• Develop research plan
• Collect information
• Analyze information
• Present findings
• Make decision
88. Step 1: Define the Problem
• Define the problem
• Specify decision alternatives
• State research objectives
89. Step 2: Develop the Research
Plan
• Data sources
• Research approach
• Research instruments
• Sampling plan
• Contact methods
90. Research Approaches
• Observation
• Ethnographic
• Focus group
• Survey
• Behavioral data
• Experimentation
92. 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
93. Question Types - Dichotomous
In arranging this trip, did you contact
American Airlines?
Yes No
94. 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
95. 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
96. Question Types – Semantic
Differential
American Airlines
Large ………………………………...…….Small
Experienced………………….….Inexperienced
Modern……………………….…..Old-fashioned
97. Question Types – Importance Scale
Airline food service is _____ to me.
Extremely important
Very important
Somewhat important
Not very important
Not at all important
98. Question Types – Rating Scale
American Airlines’ food service is _____.
Excellent
Very good
Good
Fair
Poor
99. 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
100. Question Types –
Completely Unstructured
What is your opinion of American Airlines?
101. Question Types –
Word Association
What is the first word that comes to your mind
when you hear the following?
Airline ________________________
American _____________________
Travel ________________________
102. Question Types –
Sentence Completion
When I choose an airline, the most important
consideration in my decision is:
_____________________________________
_____________________________________
_____________________________________
_____________________________________
_____________________________________
_____________________________________
__________________.
103. 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.
_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________
_______________________________________
107. 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?
108. Table 4.2 Types of Samples
Probability Samples
• Simple random
• Stratified random
• Cluster
Nonprobability Samples
• Convenience
• Judgment
• Quota
109. Contact Methods
• Mail questionnaire
• Telephone interview
• Personal interview
• Online interview
110. Pros and Cons of Online Research
Advantages
Disadvantages
• Inexpensive
• Small samples
• Fast
• Skewed samples
• Accuracy of data,
• Technological
even for sensitive
problems
questions
• Inconsistencies
• Versatility
111. 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.
112. 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
113. Table 4.3 Characteristics of
Good Marketing Research
• Scientific method
• Research creativity
• Multiple methods
• Interdependence
• Value and cost of information
• Healthy skepticism
• Ethical marketing
114. What are Marketing Metrics?
Marketing metrics are the set of
measures that helps marketers quantify,
compare, and interpret marketing
performance.
115. Table 4.4 Marketing Metrics
External
• 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
116. 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.
117. 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.
118. 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
119. Common Measurement Paths
• Customer metrics pathway
• Unit metrics pathway
• Cash-flow metrics pathway
• Brand metrics pathway
120. The Measures of Market Demand
• Potential market
• Available market
• Target market
• Penetrated market
121. Vocabulary for Demand
Measurement
• Market demand
• Market forecast
• Market potential
• Company demand
• Company sales forecast
• Company sales potential
122. How Can We Estimate
Current Demand?
• Total market potential
• Area market potential
– Market buildup method
– Multiple-factor index method
123. Estimating Future Demand
• Survey of Buyers’ Intentions
• Composite of Sales Force Opinions
• Expert Opinion
• Past-Sales Analysis
• Market-Test Method
124. Developing a
Marketing Plan
Use a good Marketing Plan
to guide the strategic and
tactical direction of your
business
125. Learning Objectives
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.
125
Developing a Marketing Plan
126. About FDIC Small Business
Resource Effort
• 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.
126
Developing a Marketing Plan
127. Executive Summary
• 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.
127
Developing a Marketing Plan
128. A Good Marketing Plan
• 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.
128
Developing a Marketing Plan
129. Overall Planning Process
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
129
Developing a Marketing Plan
130. The Marketing Challenge
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?
130
Developing a Marketing Plan
131. The 10 Elements of a Good
Marketing Plan
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
131
Developing a Marketing Plan
132. 1. Describe Your Business
• 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?
132
Developing a Marketing Plan
133. 2. Conduct a Situation Analysis
Strengths Weaknesse
s
Opportuniti
es 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.
– 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.
133
Developing a Marketing Plan
134. 3. Define Your Customers
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?
134
Developing a Marketing Plan
135. 4. Strategize Your Market Entry
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.
135
Developing a Marketing Plan
136. 5. Forecast Sales or Demand
Measurement
• 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.
136
Developing a Marketing Plan
137. 6. Define Your Marketing
Budget (Slide 1 of 2)
• 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.
137
Developing a Marketing Plan
138. 6. Define Your Marketing
Budget (Slide 2 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?
138
Developing a Marketing Plan
139. 7. Integrate Your Marketing
• 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
Communication
139
Developing a Marketing Plan
140. 8. Identify Sales Channels
• 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.
140
Developing a Marketing Plan
141. 9. Track Marketing Activities
• 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.
141
Developing a Marketing Plan
142. 10. Evaluate Your Progress
• 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?
142
Developing a Marketing Plan
143. Key Takeaways from This
Module
• 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.
143
Developing a Marketing Plan
145. 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
155. 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)
157. 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.
159. 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)
160. Marketers need to develop
• Knowledge of markets and customers
• Core Competencies
• Relationships
170. 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
171. Designing Marketing Metrics
Step By Step
• 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.
172. Designing Marketing Metrics
Step By Step
• 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).
173. Designing Marketing Metrics
Step By Step
• 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.
174. Designing Marketing Metrics
Step By Step
• 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).
175. Designing Marketing Metrics
Step By Step
• 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.
176. Designing Marketing Metrics
Step By Step
• Specifying and obtaining feedback data
– The sales invoice or other transaction
records.
– Marketing research projects.
177. Designing Marketing Metrics
Step By Step
• 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.
178. Designing Marketing Metrics
Step By Step
• 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.
179. 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.
180. 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.
181. Design Decisions For Marketing
Metrics
• Who needs what information?
• Sales information is needed by:
– Top management.
– Functional managers.
– Marketing managers.
182. Design Decisions For Marketing
Metrics
• Sales analysis
– Involves breaking down aggregate sales data
into various categories.
– The objective is to find areas of strength and
weakness.
183. Design Decisions For Marketing
Metrics
• 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.
184. Design Decisions For Marketing
Metrics
• 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.
185. Design Decisions For Marketing
Metrics
• 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.
186. Design Decisions For Marketing
Metrics
• 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.
187. Design Decisions For Marketing
Metrics
• 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.
188. Design Decisions For Marketing
Metrics
• 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.
189. Design Decisions For Marketing
Metrics
• 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.
190. Design Decisions For Marketing
Metrics
• 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.
191. Design Decisions For Marketing
Metrics
• 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.
192. Design Decisions For Marketing
Metrics
• 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.
194. Design Decisions For Marketing
Metrics
• 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.
195. 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.
196. 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
197. Measuring And Delivering
Marketing Performance
• Measure well—and in a timely and easy-to-
use fashion—and performance is likely
to follow.
198. 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.
199. 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.
200. 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.
