marketing

Summary Thinking on the basis of what the target groups want (the marketing concept) is becoming important for an ever-increasing number of organizations. The strategic marketing concept means that a company’s primary point of departure consists of the wishes of the target au- dience; the company is customer-oriented, strives for competitive advantage, takes retailers and suppliers into account, and uses long-term planning. In recent marketing philosophy two other points have been added: the striving for customer satisfaction and value creation and the development of a brand personality. To accomplish this, a company should use a market-oriented focus, which includes, aside from customer orientation and competitor ori- entation, interfunctional coordination and decision making. Three levels play a role within a company: the entire company (upper management), strategic business units (product groups), and products. Brands play a role at every level. In addition to customer satisfac- tion, brand reputation is important in achieving customer loyalty. The brand positioning (desired brand associations) should be a balance between customer desires and the unique strengths of the brand. It is important to be willing to make a choice. Basically, the essence of marketing is that choices for customer values are made both at the company level (value strategy) and at the brand level (positioning), a kind of specialization. To make the best marketing decisions, it is best to use a systematic approach to knowledge acquisition. This book discusses the strategic marketing planning process. Starting from the chosen market definition and the evaluation of results, a situation analysis is performed: an internal analy- sis and an external analysis (customers, industry, competitors, distributors, and suppliers). The data obtained in this way are further analyzed via several strategic analysis methods, after which objectives, strategies, and a marketing plan are formulated. Finally, the plan needs to be implemented. Monitoring of the implementation and the results occurs through interim measurements. The evaluation results provide the input for a new planning process.

Structure of a Marketing Plan Figure 1-12 contains an overview of the components of a marketing plan. The various com- ponents largely parallel the structure of the strategic marketing planning process. It should be noted that the development of a marketing plan does not include company objectives or company strategies. A marketing plan essentially is developed for a single brand.

1. EXECUTIVE SUMMARY The summary enables top management to review the core points of the plan quickly. The summary includes the most important conclusions from the SWOT analysis, the goals in- cluded in the plan, the chosen strategies, and the financial expectations. In the summary the

MRKT20052 Marketing Plan Guideline

28 Part One Introduction and Market Definition

Component Number of Pages

1. Executive summary - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1–2 2. Introduction and background - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2–3

• Company mission, company objectives, and SBU objectives • Market definition and product or brand background • Evaluation of results and conclusion about problem

3. Situation analysis - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 6–10

• Internal analysis • Customer analysis • Industry analysis • Competitor analysis • Distribution and supplier analysis

4. SWOT analysis - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2–3

• Key issues (SWOTs) • Matrix-plus options • Choice of option (value strategy and/or brand positioning)

5. Marketing objectives/expected results - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1 6. Marketing strategy - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2–4

• Target audiences • Brand or product positioning

7. Decisions regarding marketing mix elements (“marketing programs”) - - - - - - - - - - - - - - - - - - - - - - - - 6–10

• Objectives for marketing mix elements • Strategies and tactics for marketing mix elements

8. Financial indicators and budgets - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1–2 9. Evaluation criteria - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 1

10. Attachments: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 10+

• Any further market data and information about past marketing activities • Any clarifications for the situation analysis • Scenario analysis and “contingency plans” • Timetable and schedule of activities • References

FIGURE 1.12 Contents of a Marketing Plan for a Product or Brand

Sources: Based on Dibb, S., L. Simkin, J. Bradley (1996), The Marketing Planning Workbook, Routledge, London, p. 162.

arguments supporting the chosen strategy are very important. Although the summary should be short, it should be quite concrete.

2. INTRODUCTION AND BACKGROUND This part serves as general introduction to the marketing plan and a framework for decision making. The following components are included.

The first item is a description of the company mission and the company objectives as well as SBU objectives. It may be assumed that these objectives are considered an established fact for the product or brand. Subsequently, the market that is specifically

applicable to the particular product is defined according to the dimensions discussed in Chapter 2. Without this definition it is not clear what the plan refers to. At this point it is also an option to describe the results of the identification of the competition (the first step in competitor analysis). The advantage of doing this is that it provides an idea of the mar- ket at the beginning of this section. Some background information about the product or brand is also included. After all, not every reader of the marketing plan will be familiar with the situation to which the marketing plan refers. Finally, a summary conclusion re- garding the basic problem is provided. This forms the starting point for the plan. Therefore, it is included at the beginning. In the actual planning process; the conclusion regarding the basic problem is dealt with at a later stage (see Section 8.1).

Any available time series of various relevant variables (such as market shares and ad- vertising expenses) can be attached as a “product fact book.”

3. SITUATION ANALYSIS The situation analysis is reviewed extensively in this book. Forecasts and/or planning as- sumptions for variables for the various components also may be included. This involves prognoses of variables such as macroenvironmental factors, market data, and competitor behavior. For variables for which no prognoses were made, the assumptions about future development should be provided. These assumptions should be defined as specifically as possible. For example: the assumptions for the next year are:

• Economic growth of 2 percent.

• Inflation of 4 percent.

• No reaction from competitor G will follow.

• No increase in excise duty will occur.

• Costs of raw materials will remain constant.

• Market demand will grow 5 percent.

The explicit description of assumptions is very important for the process of choosing objectives and for the later evaluation of the results (in the internal analysis). If the pre- dicted results are not achieved, this may have been caused by an assumption that was not met; for example a competitor showed a reaction after all. In such a case an alternative strategy should be chosen (this is described in part 10 of the marketing plan).

In practice, the competitor analysis and the industry analysis are often described together.

4. SWOT ANALYSIS The SWOT analysis and SWOT matrix form a summarizing description of the situation analysis and provide a starting point for strategies.

5. MARKETING OBJECTIVES/EXPECTED RESULTS The results that need to be achieved in terms of sales, turnover, and market share are an important reason why a particular strategy is chosen. Objectives are often formulated for several years, for example, for a three-year period.

6. MARKETING STRATEGY A brief indication of the marketing strategy is not sufficient here: Elements such as target audience personality, brand personality, and type of positioning should be described in detail. The line of reasoning that supports the choice of a particular strategy should also be described.

Chapter 1 The Strategic Marketing Planning Process 29

7. DECISIONS REGARDING MARKETING MIX ELEMENTS The plans should be translated in detail into concrete programs of action for the upcoming year (year plans). In this context, four questions should be answered: What exactly is going to happen? When will it happen? Who will do it? How much will it cost? A detailed development and assignment of responsibilities is important for a good implementation.

8. FINANCIAL INDICATORS AND BUDGETS Financial understanding is a very important component of the marketing plan. In this part the following financial indicators are described:

• The required budgets: budgets for sales promotion, sales expenses, research, product de- velopment, and so forth.

• The predicted expenses, revenues, cash flow, and profit; these predictions have been used at an earlier stage during the analysis of shareholder value.

This part is very important for top management, providing it with insight into the required investments and the extent to which the plan will contribute to the financial objectives of the company. The financial part therefore becomes the starting point for the negotiations between the manager who submits the plan and top management. To gain perspective on the risks, top management will always judge the “financial picture” in relation to the assumptions. Although an expected high profit is attractive, if there is great uncertainty about this assump- tion, it becomes an important minus. Top management will also attempt to estimate the payoff time, which is determined by issues such as the point when a profit will start to be made. If this point is too far in the future, the plan will not be considered very attractive.

9. EVALUATION CRITERIA To allow an evaluation of whether the plan will be able to meet its targeted goals during the course of a year, two subjects should be elaborated in this part. First, the objectives and budgets must be translated (differentiated) into regions, varieties, distribution channels, and periods within the year (for example, for each month or for each quarter). Next, the infor- mation that is needed for progress control should be indicated. In other words, the company needs to know which criteria will be used for the control and how they will be measured. These criteria depend on the objectives. Suppose the company wants to gain a market share of 5 percent in one year with the introduction of new brand X (marketing objective). This objective is translated as follows: On April 1 a share of 2 percent needs to have been achieved, on July 1 3 percent, on October 1 4 percent, and on December 31 the full 5 per- cent. Progress control occurs through Nielsen (scanning) data.

10. ATTACHMENTS: ALTERNATIVE STRATEGIES AND TIME SCHEDULES Especially in a strongly dynamic environment, it is advisable to have alternative strategies in case something “unexpected” (a contingency) occurs, such as the introduction of a com- peting product. These unexpected events may already have been analyzed in the scenario analysis. A “contingency plan” may be based on a strategy that was considered earlier but dropped. An attachment could describe which option should be chosen in which scenario. In addition, it should be indicated as specifically as possible when a particular scenario be- comes relevant, for example, “when sales are more than 10 percent below the objectives” or “when the weighted distribution does not exceed 70 percent.”

30 Part One Introduction and Market Definition