4.2 - Marketing Planning

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4.2 – Marketing Planning

Marketing planning looks at identifying, anticipating and satisfying consumer demand in

order to make a profit. They need to ensure that they have the right marketing mix to do

this. They will conduct research and use it in decision-making.

The Marketing Mix

The marketing mix is the combination of marketing factors a firm uses to sell its product.

Businesses need to monitor their marketing mix in order to meet consumers needs and sell

their product.

Product

The product of a business may be tangible or intangible.

This element of the marking mix involves the appearance and the function of the product,

and ensuring that these are right for the target market. A business may have a product

range, which is a variety of products of the same brand, designed to meet the same market.

This is also called a product line, and can help improve the profits of a business.

Also, a business may decide to reposition a product to market it to a new target market.

They may try to sell it to a different demographic of people, such as older or younger

people.

Consumers will differentiate products based on factors such as packaging, functions, brand

image and after-sales care.

Products can be classified into two categories. Producer products are sold to other

businesses to continue the production process. These include raw materials, machinery and

components. Consumer products are sold to the end-user. These are further classified as:

Convenience products – also called fast-moving consumer goods, including things

like food.


Consumer durables – long lasting items such as furniture

Speciality products – these are expensive items like jewellery

Place

Place involves using the best distribution channels to reach customers, as well as transport

and storage. The business will choose their distribution methods based on which is the most

convenient: wholesalers, retailers or directly to the customers.

A business may use multiple distribution methods. These days, many retailers also sell over

the internet. The traditional distribution channels are:

Price

Price is essential for the business because it creates the revenue necessary for them to

cover their costs.

The price of a product can change the way customers perceive its quality. At the same time,

if the price is too high, it will not sell well. Therefore, a business must ensure that they select

the right price to give the product the right image and affordability.

Businesses decide the price of their products based on demand, supply, their objectives,

competition, costs of production and their image.

Manufacturer Wholesaler Retailer Customer


Promotion

Businesses need to communicate with their customers to be able to inform them about the

product and convince them to buy it.

One method of promotion is through branding, which differentiates the products of one

business form others. Promotion can be above-the-line, using mass media, or below-the-

line, using tactics such as packaging, sponsorship and direct mail.

Promotion can be very costly, but the rewards can be very substantial.

There are three additional P’s which make up the Extended Marketing Mix for services:

People

Customer service has a huge impact on the overall purchasing experience. It can increase

customer loyalty to the business. Friendly staff with positive attitudes and good motivation

is a huge asset. The business may also offer after-sales service.

Process

This involves customer service. A business needs to be able to handle customer complaints,

identify customer needs, handle orders, etc. If these things can be done effectively, then

they will improve their customer loyalty.

The business may look to make the delivery of their products more convenient for

customers, by reducing shipping time and having more options.

Physical Appearance

Customers expect their products to be presented well. This element is also affected by

location, how well the staff are groomed, ambience and cleanliness.


Packaging

This is how a product is presented, and is important to differentiate it from other products.

Colour, texture and appearances are all important for getting the right response from

consumers. Packaging affects: customer perception, protecting the product, information on

labels, storage and distribution, inducing impulse buying and advertising the product.

However, packaging can be expensive and excess packaging can lead to environmental

impact, affecting the business’ corporate social responsibility.

When applying the marketing mix, it is important to consider how all these elements

combine. Whilst some will be more important than others, they all still need to be

accounted for. A great product won’t sell if no one knows it exists!

Ethics of Marketing

There are a number of marketing techniques which are unethical and can damage a firm’s

reputation, especially if they get media attention.

One example is bait-and-switch, which is when the business promotes deals that are “too

good to be true.” Once the customer enters into the deal, the business switches by saying

Marketing Mix

Product

Place

Price

Promotion

People

Process

Physical Evidence

Packaging


that the product is no longer available and the customer is forced to buy a more expensive

alternative. Other examples are health fraud, ‘get rich quick’ schemes, travel fraud, product

misrepresentation, ‘limited stock only’ and other urgent phrases, unsubstantiated claims,

pester power from children and confusion marketing by giving too much price information

to prevent comparison with other firms.

Culture can have a huge influence on people’s perceptions of what is ethical. Therefore,

businesses that are marking overseas need to ensure that their practices are acceptable in

that region. A lack of understanding of these issues can lead to trouble.

Unethical marketing is risky, as it will often result in boycotts or government intervention.

Many businesses must follow an ethical code of practice set out for their industry. These

outline what is acceptable so that businesses have a clear line between ethical and unethical

behaviour.

Marketing Audit

To ensure that their marketing techniques and marketing mix are appropriate and meeting

their objectives, firms can undergo a marketing audit. This looks at their strengths,

weaknesses, opportunities and threats so that they can make informed decisions. IT analysis

things such as:

Marketing objectives and strategies

Product portfolio

Effectiveness of marketing techniques

Market share

Competitor analysis

Demographic profile of their customers

Based on these findings, the business can alter their marketing plan.


Marketing Objectives

These are targets that support the firm’s objectives. They can:

Give a sense of purpose, direction and motivation for the department

Provides a measure for success and progress

Used to devise marketing strategies

Examples of common marketing objectives include: market share, market leadership,

product positioning, consumer satisfaction, diversification, market development, new

product development, product innovation and market standing.

However, a business may be limited by internal or external factors from achieving these

objectives. This includes finance, costs of production, the firm’s size and status, social issues,

time lag, competition, state of the economy and the political environment.

Market Research

The Role of Market Research

Market research is when a business collects, records and organises information about their

market. The aim is to answer the questions:

Who makes up the target audience?

What do they want?

When do they need it?

Where does it sell best?

How can it be taken to them?

Why do they want/need it?

What are our competitors doing?

How is our market changing?

Conducting research can help a firm devise marketing techniques most suitable to their

customers and respond to changes in the market. It can help them identify and predict

changes in demand.


There are two types of market research:

Ad hoc market research – this does not take place on a regular basis, but when a

need arises as a one-off

Continuous research – this takes place regularly in order to get a more accurate

picture of the market and can help to identify trends.

However, market research is useless if it is not done properly. Bias and a poor approach will

mean that the results are inaccurate. Also, this can be very expensive to do.

Primary and Secondary Research

Primary Research

This is when the business gathers data itself, and is usually more recent. It is collected in the

field, directly from customers. This can be done in a number of forms:

Questionnaires – these can be conducted by post, telephone or in person. It is an easy way

to get detailed information from the customers themselves. However, people may not

always fill them in properly which affects the results. Firms usually have control questions

to ensure that this does not happen. A good questionnaire is unbiased, does not contain

jargon, have both closed and open-ended questions, easy to complete and meet the

objective of the questionnaire. Questionnaires are also useful because they can provide

quantitative and qualitative information.

Online Surveys – These are usually emailed or use a dedicated website. These are cheaper

and often save the firm a lot of time.

Observations – These can be done under controlled or real-life conditions to see how

customers respond to a product, instead of how they say they would. The only drawback is

that it does not inform the business of their motivation for their behaviour. The ethical

issues behind this need to be considered before the research is undertaken.


Experimentation – This is also called test-marketing, and is a way of measuring people’s

reactions to the product, allowing them to identify problems before they do the full product

launch.

Advantages Disadvantages

Up to date

Relevant to the decision to be made

Confidential and unique to the business

Objective

Time consuming

Costly

May be valid due to choosing a poor sample

Secondary Research

This is collecting information that already exists and has been gathered by others. This can

be cheaper and faster, but is often only partially relevant and out-of-date.

The organisation may use its own data such as reports and sales records. Alternatively,

external sources may be used such as government data, articles and the internet.


Cheap and fast

More accessible

Information on the whole industry

Out-of-date

Requires further adaption to suit the firm’s purposes

Only provides partial information

Also available to competitors

Quantitative Research – This is numerical and measurable data that allow for statistical

analysis of the market. This data is easier to analyse but is very inflexible and may not

accurate reflect the market conditions.

Qualitative Research – This is non-numerical data that looks at behaviours, motivation,

attitudes and perceptions of customers. This allows the firm to understand why customers

buy (or don’t buy) their products and is very detailed. However, this becomes very time

consuming and interviewers must be skilled in order to engage the interviewee.


Market Segmentation and Consumer Profile

Market segmentation is when a business divides its consumers into groups that have similar

demographics (gender, age, income), and wants and needs. This allows the business to

create a market mix or produce different products for each segment in order to meet these

needs, called targeting.

Consumer profiling involves identifying the demographics of a particular market, include

age, gender, race, marital status, religion, language and income. This is useful in order to

identify the needs and wants of their consumers and market their products appropriately.

A business may segment the market based on geographical factors such as location and

climate, or by psychographic factors such as status, values, culture and interests.

Advantages of segmentation include:

Better understanding of customers

Increased sales

Growth opportunities

Supports product differentiation

Targeting

This is when the business selects a market segment to sell their product to, and devises

marketing strategies to suit it.

Niche Marketing

The business focuses on a specific market segment, such as providing speciality products


Better market focus

Less competition, so they can charge higher prices

Can become more specialised

Smaller market, fewer customers

Less opportunity for economies of scale

High success can attract competition


Undifferentiated Marketing

This is also called mass marketing, as the business does not target a specific segment, but

markets the same way to all segments.


Economies of scale

Save time as they use the same marketing mix for all segments

Larger customer base

High entry barriers

Greater competition

Do not target specific customers

Differentiated Marketing

This is when a business markets to each segment individually by using a different market

mix for each one. They will often use perception mapping to help devise marketing

strategies.


Meet the specific needs and wants of customers

Spread their risks across a number of segments

Costly

Cannot fully exploit economies of scale

Drains resources

Positioning

Corporate Image

This is how customers and the general public perceive a business. Poor image can damage

sales and customer loyalty. This can be improved through corporate social responsibility or a

unique selling point.

Position or Perception Maps

This looks at how consumers view a brand based on price and quality. A business can use

this to identify where they stand and develop their marketing strategies accordingly. It may


demonstrate gaps in their portfolio, changes that need to be made to the marketing mix or

if a product needs to be repositioned.

Quality

High Low

Price High Premium Brands Cowboy Brands

Low Bargain Brands Economy Brands

Unique Selling Point

A unique selling point is an aspect of a product that makes it different from others. This

helps to differentiate a firm’s product and encourage people to purchase their product.

Examples include The Body Shop, who use their environmental and corporate social

responsibility. They advertise that they do not test on animals and advocate environmental

issues.

Development of Marketing Strategies and Tactics

Marketing tactics and strategies are designed to help meet the overall objectives of the firm.

Their tactics may include:

Promotion

High-pressure sales

Dubious marketing

Bargain brands to boost sales

Short-term price reductions

Marketing strategies involve:

1. Market research to identify the wants and needs of customers

2. Product planning, design and development

3. Implementation of strategy


There are many tools that can be used to develop the most appropriate strategy.

Perception mapping

Porter’s five forces strategies

Porter’s generic strategies

Ansoff matrix

Boston matrix

SWOT analysis

Force field analysis

Good planning will lead to more successful marketing strategies and the most appropriate

marketing mix. The firm should ensure that they consider the costs of their strategies before

they implement them to ensure that they work within their budget.

Documents

4.2 - Marketing Planning