Understanding Marketing Planning, Analysis, and Strategies
Marketing Planning
A marketing plan outlines the marketing objectives (market share, sales, brand awareness), strategy, budget, and activities required to achieve those objectives. It considers various departments:
- Operational Department: Product availability and timing.
- Human Resources: Staffing needs and skillsets.
- Financial Forecast: Projected profits and cash flow.
Elasticity of Demand
Income Elasticity: (% change in quantity demanded) / (% change in income)
- Income Elastic (Luxury Product): Demand increases more than income.
- Normal Product: Demand increases proportionally with income.
- Inferior Product: Demand decreases as income increases.
- Income Inelastic: Demand changes less than income (in %).
Cross-Price Elasticity of Demand: How demand for product A changes with the price of product B.
(% change in quantity demanded of A) / (% change in price of B)
- Substitutes: Demand for A increases when the price of B increases.
- Complements: Demand for A decreases when the price of B increases (negative cross-price elasticity).
Promotional Elasticity of Demand: Sensitivity of demand to changes in promotional spending.
(% change in quantity demanded) / (% change in promotional expenditure)
Weather Elasticity of Demand: Sensitivity of demand to weather changes.
(% change in quantity demanded) / (% change in weather factor, e.g., rainfall)
The Need to Forecast Marketing Data
Companies analyze the market before creating a marketing plan to understand:
- Market Size: Value or volume of sales.
- Value of sales: Total money spent on products.
- Volume of sales: Number of units sold.
- Market Share: Proportion of the market held by firms.
- Entry Barriers: Costs and challenges of entering the market.
- Market Trends: Growth, sales fluctuations, etc. Examines changes in sales value and volume.
- Sales Patterns: Seasonality, for example.
- Substitute Products: Likelihood of customers switching.
Methods of Analyzing Trends
- Moving Averages: Smoothing out data fluctuations.
- Extrapolation: Projecting past data patterns into the future.
- Correlation: Identifying links between variables.
- Positive correlation: E.g., advertising and sales.
- Negative correlation: E.g., price and sales.
Other Ways of Estimating Future Sales
- Market Research:
- Primary research: Gathering new data.
- Secondary research: Using existing data.
- Expert Opinions: Leveraging experience or hiring industry specialists.
Benefits of Sales Forecasting
- Improved preparedness.
- Enhanced planning.
- Flexibility for updates.
Information technology advancements have made data collection easier.
Reliability of Forecasts
Forecasts are more likely accurate when:
- Trends are extrapolated under consistent market conditions.
- Test markets represent the target population.
- Experts provide forecasts.
- Forecasts focus on the near future.
Forecasts can be inaccurate due to:
- Sudden shifts in customer behavior.
- Flawed market research.
- Inaccurate expert predictions.
- Long-term forecasting challenges.
The Need for a Coordinated Marketing Mix
Developing a marketing strategy involves considering:
- Marketing objectives.
- Target market.
- Product/service offerings.
- Competitive positioning.
Marketing Strategy Development Process
- Set corporate objectives.
- Define marketing objectives.
- Analyze internal environment (strengths and weaknesses).
- Analyze external environment (opportunities and threats).
- Create a marketing strategy.
- Implement the strategy.
- Review and adapt.
Reasons to Change a Marketing Strategy
- Shifts in objectives.
- Changes in market conditions.
- Competitor actions.
International Markets
Reasons for Overseas Expansion
- Saturated domestic market.
- Increased competition or regulations domestically.
- Opportunities in specific foreign markets.
Methods of Entry into International Markets
- Exporting: Low-risk initial strategy.
- Overseas Marketing: Expanding marketing efforts abroad.
- Overseas Representatives: Establishing a presence in the foreign market (low risk).
- Foreign Partnerships: Collaborating with local partners (higher risk).
- Foreign Direct Investment: Acquisitions or setting up operations (high risk).
Global vs. Localized Strategies
- Global Strategy: Standardized marketing mix across markets.
- Localized Strategy: Adapting the marketing mix to local conditions.
Factors to Consider for International Expansion
- Costs.
- Risks.
- Competition.
- Market understanding.
- Time frame.
- Company strengths and experience.
- Entry mode.
- Potential returns (profitability).
Strategic Analysis
SWOT Analysis
- Strengths.
- Weaknesses.
- Opportunities.
- Threats.
PEST(EL) Analysis
Analyzing the external macro environment:
- Political.
- Economic.
- Social.
- Technological.
- Environmental.
- Legal.
Vision, Mission, and Values
Guiding principles for the organization.
Porter’s Five Forces Analysis
- Rivalry: Number and intensity of competitors.
- Supplier Power: Influence of suppliers based on their size and dependence on the firm.
- Buyer Power: Influence of buyers based on their number and availability of alternatives.
- Entry Threat: Ease of new competitors entering the market.
- Substitute Threat: Availability of alternative products or services.
Actions to Shape the Competitive Environment
- Create high entry barriers.
- Reduce the number of competitors and substitutes.
- Minimize supplier power.
- Decrease buyer power.
Corporate Culture
Types of Culture
:
-Power culture
oOne dominant person (or few key people)
oDecisive leadership, quick decision making, consistent approach
oIf company grows; overloaded boss, slower decision making, dependent employees.
-Role culture
oRules and procedures
oHierarchy
oFollow systems and do what is expected of you to do
oCommunication via channels
oPredictable outcomes in terms of performance; certainty.
oMight be inflexible to change.
-Task culture
oValue of an individual to a project depends on expertise rather than formal titles.
oExpert teams
oCoordinating this can be difficult
-Person culture
oWell-qualified individuals who respect each others’ skills and knowledge.
oSelf-reliant employees
oOperate independently, share expertise and knowledge when needed.
oMay lack consistency and may overlap
National culture (Hofstede)
-Power distance; distance between power in a company
-Uncertainty avoidance; the extent to which employees need to know exactly what they are supposed to do
-Individualism V collectivism; the extent to which people feel part of a team or whether they want to work on their own.
-Masculinity V femininity; the extent to which employees feel they need to be dominant and assertive or whether they feel that concern for others is more important.
-Long-term orientation: Extent to which individuals planned ahead.