Flashcards in Chapter 18 (Marketing planning) Deck (39):
What is Marketing plan?
A marketing plan is a detailed, fully researched written report on marketing objectives and the marketing strategy to be used to achieve them.
The key contents of a typical marketing plan are?
1 Purpose of plan and mission of the business
2 Situational analysis
3 Marketing objectives & strategy
4 Marketing mix (tactics)
5 Marketing budget
6 Executive summary and timescal
Situational analysis should cover five main areas
1 Current product analysis
2 Target market analysis – important features of consumer profiles, establishing whether it is a mass or segmented market, finding out consumers’ perceptions to the company’s existing products
3 Competitor analysis
4 Economic and political environment – a PEST analysis
5 A SWOT analysis of the – (i) internal attributes of the business, e.g. management skills or financial strength and (ii) the external environment and the opportunities and threats that it presents to the business.
Some significant strategic decisions include?
1 Should we pursue a mass-marketing approach – with high market penetration – or a niche marketing strategy with more limited penetration, but higher profit margins?
2 Sell more to the same market or find new markets that the business is not currently targeting?
3 Develop new products for existing customers or new products for new customers?
There should be a brief summary of the existing products, and the planned changes or additions to the product range should be identified. Assuming it is a new product, the development of the new product should be explained and the research behind it outlined. The key features and distinguishing features (perhaps a USP?) should be explained together with the branding, packaging and labelling details.
The pricing decision is a complex one – and, indeed, there could be more than one pricing decision if the product is to be sold in different markets. Much information must be weighed up before taking a price decision: costs, price elasticity, competitors’ prices, market conditions – these are just four issues to be considered. The plan should outline the most significant factors behind the pricing decision, which are likely to be the marketing objectives and marketing strategy.
The plan should explain the decisions taken on how the product will be promoted. Promotion decisions will cover four major areas: advertising, sales promotion, public relations and personal selling. Promotion decisions cannot, of course, be taken in isolation from the other tactical issues. The scale and type of the advertising campaign will depend heavily on the image being created for the product, the market being targeted, the price being charged and the marketing budget available.
Place or distribution decisions tactics
This tactical area lays out the distribution plan for the product. Distribution is a broad concept that included all activities responsible for getting the product ton the consumer. The plan should give details of the channels to be used, the range and number of outlets that will sell the product and how these are linked to the market segment being targeted.
All marketing decisions have financial implications and the plan must give details of?
1 How much is required to put the marketing strategy and tactics into effect
2 The expected sales performance of the plan, to allow a comparison between marketing expenditure and expected sales.
There are three main benefits to marketing planning what are the?
1 A marketing plan is an essential part of an overall business plan, such as a new business proposal. A marketing plan is just one key component of a complete business plan.
2 Specific marketing plans might also be needed to help introduce a new strategy that could determine a business’s future success.
3 Planning is an essential management function that forces marketing personnel to look at the current position of the business, its products and the markets it operates in to allow the setting of achievable goals
Potential limitations to marketing planning?
1 Firstly, detailed marketing plans, are complex, costly and time consuming
2 Secondly, marketing managers may become wedded to the plan that they have devoted so much time and energy to
The demand for a product can be influenced by other factors apart from price, such as?
1 Consumer incomes
2 Promotional spending
3 Prices of related goods
what is Income elasticity of demand?
Income elasticity of demand measures the responsiveness of demand for a product following a change in consumer incomes.
How to calculate Income elasticity of demand?
% change in demand for the product / % change in consumer incomes
What is Promotional elasticity of demand
Promotional elasticity of demand measures the responsiveness of demand for a product following a change in the amount spent on promoting it
How to calculate Promotional elasticity of demand?
% change in demand for the product / % change in promotional spending
What is Cross elasticity of demand
Cross elasticity of demand measures the responsiveness of demand for a product following a change in the price of another product.
How to calculate Cross elasticity of demand ?
% change in demand for the product A / % change in price of product B
The importance of an integrated marketing strategy has two meanings what are they?
1. Integrating with other departments of the business. Marketing strategies cannot be devised or planned without essential input from all other functional departments. All strategic decisions taken within the marketing department must be discussed and agreed with senior managers of other departments to ensure integration and cooperation between them.
2 The four elements of the marketing mix must be mutually supportive and integrated with each other.
what is New product development (NPD)
New product development (NPD) is the design, creation and marketing of new goods and services
For a new product to succeed it must?
1 Have desirable features that consumers are prepared to pay for
2 Be sufficiently different from other products to make it stand out and to offer a ‘unique selling point’
3 Be marketed effectively to consumers – they need to be informed about it
What is Research and development?
Research and development is the scientific research and technical development of new products and processes.
What is Sales forecasting ?
Sales forecasting is predicting future sales levels and sales trends.
Causal links might exist between sales and?
1 Advertising expenditure
3 Competitors’ promotional activity
4 Changes in commission payments to sales staff
5 Levels of disposable income
6 The weather.
What is Time-series analysis ?
This method of sales forecasting is based entirely on past sales data. Sales records are kept over time and, when they are presented in date order, they are referred to as ‘time series’.
What is Extrapolation
Extrapolation means basing future predictions on past results. When actual results are plotted on a time-series graph, the line can be extended, or extrapolated, into the future along the trend of the past data. This simple method assumes that sales patterns are stable and will remain so in the future. It is ineffective when this condition does not hold true.
What is Moving averages?
This method is more complex than simple graphical extrapolation. It allows the identification of underlying factors to influence future sales.
What are the factors in moving average?
1 The trend
2 Seasonal fluctuations
3 Cyclical fluctuations
4 Random fluctuations
What is The trend
The trend is the underlying movement in a time period.
What are Seasonal fluctuations
Seasonal fluctuations are the regular and repeated variations that occur in sales data within a period of 12 months.
What are Cyclical fluctuations
Cyclical fluctuations are variations in sales occur over periods of time of much more than a year and are due to the business cycle.
What are Random fluctuations
Random fluctuations can occur at any time and will cause unusual and unpredictable sales figures. Examples include exceptionally poor weather or negative public image following a high-profile product failure.
what is Centering?
Centering requires the calculation of the 4 and 8 year moving totals in order to find a mid-point. It is then necessary to find the average by dividing the totals by 8.
What is Forecasting from the trend
Having calculated the trend, and illustrated it graphically, it is a simple matter of drawing ‘a line of best fit’, and extending it to forecast future figures.
A reading from the line of nest fit is unlikely to be accurate because it does not consider variations in the data, e.g. raw data is rarely plotted as a straight line. In order to account for these, and obtain more accurate forecasts it is necessary to calculate the variation.
How to calculate variations?
Variation = Actual Data – Trend Data
The seasonal variation
Many businesses will sell products that sell better at some at times of the year than other, i.e. they have seasonal products. In this case it is often better to calculate the seasonal variation (sometimes called cyclical) rather than the variation.
1 It is useful for identifying and applying the seasonal variation to predictions.
2 It can be reasonably accurate for short-term forecasts in reasonably stable economic conditions.
3 It identifies the average seasonal variations for each time period and this can assist in planning for each quarter in future.