ESSENTIALS OF MARKET PLANNING

WEEK 1

1) Strategic marketing planning

-Mission statement
-The three levels of marketing

2) The marketing planning process

Segment refers to a shared demographic characteristic

Partition is the reason why you buy- not demographics.

Strategic Marketing Planning: A set of plans that provides strategic direction from which to
set performance objectives and guide the development of a tactical marketing mix strategy

Why organisations use strategic marketing plans:

Resources are finite

 Wrong moves are costly
 Committed resources are usually not reversible

Decisions are multi-dimensional and coordinated over wide space and time
 Decisions may not achieve outcomes of attended outcomes

Competitive advantage is uncertain and often short-lived

 Environment changes continually
 The need to stay ahead

Mission Statement
 Declares the purpose of a company
 Core ideology that remains unchanged over time
 Acts as the starting point of a business plan
 Can be based on the customer, self-concept, or fulfilment

Mission statement: Why the business exists (important consideration)

Vision: Where the business is going
Mission drives objectives

Mission strategy can be a hierarchy of 3 levels

Corporate/Organisational strategy
 Top down, long range goals, value creation
 Role of CEO/senior management and Board
Business strategy
 SBU scope, markets, resources, how to compete
Marketing Strategy
 Marketing mix plus service, internal marketing

Business Strategy is about developing, sustaining and defending the firm’s competitive
position. Involves analysis, assessment, identification of key issues and then the
development of marketing strategies to address them

Marketing Strategy involves the planning of the marketing mix, and the coordination of
marketing resources and activities in order to meet the strategic objectives of the business
in the markets in which the business has decided to operate. Essentially the planning of the
5 Ps. Cannot be done without a business strategy

The three strategies partially overlap

Defining marketing planning: The Structured process that leads to a coordinated set of
marketing decisions and actions, for a specific organisation and over a specific period of
time
Organisational Stakeholder in a Marketing Plan:
 Customers
 Distributors
 Suppliers
 Employees
 Managers
 Shareholders

Stage 1: Analyse the current external and internal situation

 External audit (political-legal, economic, social-cultural, and technological
environment)
 Internal audit (organisational resources, offerings, capabilities, business
relationships, previous results
 See Week 2

Stage 2: Research and analyse markets and customers

 Gather data about customer needs, interests, perceptions and behaviour
 Understanding the market for each project and how it is changing
 See Week 3
Stage 3: Determine segmentation, targeting and positioning:
 Group customers into segment based on characteristics, behaviours, needs or wants
that demand for or usage of the product
 Choose segments to be targeted, order of entry, and coverage within segments
 Create a competitively distinctive position in the minds of targeted segments
 See Week 3

(Question 1 of assessment can be answered by now)

Stage 4: Set marketing plan objectives and direction

 Guided by mission statement and higher-level goals
 Goals are longer-term for performance and mission
 Objectives are shorter-term targets that lead to goals
 See Week 4

Three Types of marketing plan objectives:

Financial
 Increase unit sales and market share
 Achieve ROI and share price
Marketing
 Increase brand awareness and new products
 Improve customers satisfaction
 Marketing plan goals: Growth, maintence, retrenchment
Societal
 For sustainability and social responsibility reasons
 Cause-related marketing eg to benefit a charity

Objectives should be:

Specific
Measurable
Attainable
Relevant
Time framed
Also:
Consistent with SWOT
Consistent with each other
Aligned with the long-term mission and vision

Stage 5: Plan marketing strategies, programmes and support:

 Product (tangible good, intangible service or combination)
 Channel and logistics (place)
 Price
 Integrated marketing communication (promotion)
 Marketing mix support (service and internal marketing)
 See Week 6
Stage 6: Plan to measure progress and performance:
  Set KPIs
 Decide on measures to track marketing progress, performance towards objectives
 Develop budgets, forecasts, schedules and responsibilities, metrics

Stage 7: Implement, control and evaluate the plan before launching

 Measure performance against KPIs
 Start with objectives
 Set standards for progress
 Measure performance
 Analyse results
 Take corrective action if needed

How rigid should a marketing plan be?

 Environment is more stochastic than deterministic (more random probability)
 No perfect knowledge of inputs and how they work
 A good marketing plan may anticipate contingencies, but sometimes unanticipated
things happen
 A plan is only as good as the time it Is launched
 Requires improvisation and deviations to get to FINAL OBJECTIVE
 A good plan must have the ability to morph and change

What are the potential pitfalls of strategic planning process?

Lack of corporate direction
 Are executive aligned towards same goals?
 Have employees bought into the plan?
Lack of ownership
 Have all key stakeholders been consulted and given inputs?
Lack of empowerment
 Are people involved or responsible given the authority and tools to make decisions
and take actions?
Lack of accountability
 Are the empowered people held accountable for their decisions and actions?
Lack of communication
 Are the plans communicated clearly down the line to all involved?
Lack of timely review and evaluation
 How often are plans reviewed against actual performance?
 Are the plans revised accordingly, if needed?

Summary
 Strategic planning is critical to an organisation’s success
 It starts with a clear mission statement
 Specific objectives aligned with the mission statement serve as measurable targets
 Strategic marketing planning occurs at three overlapping levels: Corporate, business,
and marketing
 A marketing plan serves as the starting point of a changeable, dynamic guide
 WEEK 2

Analysing Internal and external Environments

Analysing Internal Environment

 BCG Matrix
 GE/McKinsey Grid
Analysing External Environment
 SWOT and environmental scanning
 Porter’s 5-forces model
 Competitor analysis

BCG Matrix

Low Growth & Low Share – Dog Product

Not necessarily bad or good, like small niche cinema

Low Growth & High Share – Problem children ??

Dvds at JBHiFI

Low Growth & High Share – Cash Cow

Telecommunications industry
High Growth & High Marketshare – Star
Uber

Long Range corporate health requires a balance of:

 Products that generate cash NOW

 Others that use cash now but promise to generate cash in the FUTURE

BCG Matrix
 Useful for planning and strategy involving companies with portfolio of different
prodcuts and business units
 Simplistic – eg- assumes that cash flow is more important than ROI
 Assumes market share and growth rate are the only factors affecting cash flow
GE Grid

 Also called GeMcKinsey Grid

 Market Attractiveness: eg
Market Size, industry profit margin, amount of competition, seasonality or demand,
energy requirements and industry cost structure
 Competative Strength:
Price competitiveness, product quality, unit costs, customer and market knowledge,
sales effectiveness, distribution network, customer satisfaction, brand reputation,
and geographical advantages
 YOU choose the criteria and their relative weights, and their scores
Red = Offensive Strategy
Black = Defensive Strategy

New Market Entry

 For ner product-markets
 Requires large investments
 Operating at a loss until breakeven levels

Improve Position
 Seek to improve competitive advantage
 Selectively focus on existing products
 Aim to capture more market share than competitors

Invest to Grow
 Often out of recofnised deficiency in competitive advantage
 Target both organic and inorganic growth
 Resource intensive

Optimise Position
 Occurs in late all mature PLC
 Growth potential limited and positioning stable
 Protect customer base
 Reduce unwanted customer base

Monetise
 Limited Market size and growth
 Maximise cash flow with minimal resources
 Do not exit market

Harvest/divest
 Maximise short-term profit and cash flow
 Exit slowly (harvest) or quickly (divest)
 Allow reallocation of resources to more profitable areas
 Cut loss
SWOT Analysis

 It comprises two fundamental areas of analysis, the internal (S&W) and Extneral
(O&T)
 Helps us to identify where strategies are required to pursue opportunities and
defend against threats
 One of the most MISUED tool in marketing and business planning

External:
 Political-legal factors
 Economic factors
 Social-cultural factors
 Technological factors
  Ecological factors
 Competitive factors

Internal
 Resources and capabilities
 Current offerings
 Previous performance
 Business relationships
 Key Issues

Internal Strengths & Weaknesses

Strengths: Internal capabilities/factors that may help in

 Achieving objectives;
 Addressing opportunities;
 Deflecting competition, other threats

Weaknesses: Internal capabilities/factors that may prevent firm from:

 Achieving objectives;
 Making the most of opportunities;
 Addressing competition, other threats

Tangible assets:
 Land & buildings
 Plant & equipment
 IT systems hardware and software
 Cash
 Ability to borrow

Intangible assets:
 Brands
 Reputation
 Knowledge and experience
 Intellectual capital

External Threats & opportunities

Opportunities: external circumstances/factors that may be exploited for higher performance

Threats: External circumstances/factors that may inhibit performance if not addressed

Look at this through the PEST analysis

Political: Instability, leadership, law and regulations

Economic: Recession or recovery, buying power
Social-Cultural: Demographics, attitudes, perceptions
Technological: Innovation, standards, marketing uses

Turned into PESTE

Environmental factors:

Summary:
 Before strategies can be developed, it is important to have an in-depth and honest
assessments of one’s own organisation
 Then research and obtain insights into external factors that maydirectly or indirectly
affect one’s organisation
 Various tools are available to aid this process; they overlap and can be used
simultaneously to give more complete picture

Week 3
 Market Research & Segmentation

Market Research is defined as: “the systematic and objective process of generating
information to aid in marketing decisions” -Zikmund et al, 2008

Why do market research?

Marketing managers must:

 Review existing research
 Learn about the industry
 Organisations customers
 Buying processes

What market research can tell you:

 Who buys
 Where they buy
 When they buy
 How much they buy
 What price they paid

Market research is the collection of information to turn management problems and

opportunities into decisions.

Market research will aid and help inform a decision, but will not make the decision itself

Quantitative Market Research (Numerical)

 Syndicated
 Observation
 Telephone
 Online
 Mail
 In-person

 Quantitative research typically applies some form of statistical analysis

 Typically a structured closed-end questionnaire with pre-coded responses
 The aim is to have a big enough sample that you can infer the findings to the general
population
 Qualitative data identifies the issues and gives areas of consensus and non
consensus. Quantitative data puts proportions on these

 Seeking to put proportions or means to the issues that you are researching (ie – how
many respondents prefer dogs to cats as pets, or what is the mean rating given for
our customer service?)

 Each respondent needs to be asked the same question in the same wording
 Answers need to be recorded consistently for statistical analysis
Syndicated
 Subscription based data
 Pooling of sales data, surveys or panel data
 For buying and media consumption
 Individualised reports or standardised reports

Observational
 Store flow traffic
 Shelf placement
 Product choice
 Eye tracking
 Advantages: Removes consumer biases, accurate and verified consumer behaviour
 Disadvantages: Expensive to collect & analyse, time consuming, brands may have
difficulty access stores

Telephone interviews
 Personal interview conducted over phone
 Speedy data collection
 Absence of face to face contact is more impersonal
 Cooperation
 Lack of visual medium
 Representative samples
 Central location: 1300 or 1800 lines to a central location
 Computer-assisted: Answers to telephone interviews entered directly into a
computer
 Computerised voice-activated: done without human interviewers
 Random digit dialling: use of table of random numbers to contact respondents
 Advantages: Great for B2B research, can be randomized, can be contained to a fixed
geographical location, able to reach geographically difficult locations
 Disadvantages: Fewer and fewer people have fixed phone lines, more expensive
than mail or online surveys, less willing respondents

Online Surveys
 Quick
 Inexpensive
 Flexible
 Efficient
 Accurate
 Disadvantages: Some representativeness issues, lack or verifiability, inexperiences
reserchers use DIY sites

Mail Questionnaires
 Self-adminstered questionnaire sent through the mail
 Geographic flexibility
  Absence of interviewers
 Anonymity of respondent
 Time consuming
 Highly standardised questions
 Advantages: Can be included with other mail from organisation, great for surveying
customers with limited internet access
 Disadvantages: Slow data collection, expensive compared to online, often biased
surveys (heavy users)

In Person Interviews
 Form of direct communication in which an interviewers asks respondents questions
face-to-face
 Versatile and flexible
 Door to door
 Instore or public places (interepts)
 Advantages: Opportunity for feedback, length of interview controlled, high
participation, props and visual aids, completeness of questionnaire (non-response is
least likely to occur), probing for complex answers (asking for clarification)
 Disadvantages: Cost, interviewer influence (different characteristics and techniques),
lack of anonymity (makes reluctant)
 Difficult to balance demographics

Qualitative Market Research (Words)

 Focus Groups
 Depth interviews
 Observation

An unstructured exploratory research methodology, typically based on small samples, which

provides insights and understanding of the problem setting
 Fleible, but it doesn’t mind disorganised
 Normally use open-ended questions, rather than yes/no or set choice questions
 No numbers, but DO NOT think it is easier for the researchers

Purpose of qualitative research:

 Generate ideas
 Test concepts of hypotheses
 The company knows little about the market or customers
 There is doubt about how much/well respondents know about the research issues
 There is a need for interactions amongst respondents either with each other or a
product
 Develop a quantitative instrument eg question wording & response sets
  Explain Post survey analysis:
-Explore beyond results and explain unexpected results

Onion metaphor:
Peels away the various layers to finally get to the heart of the matter of interest. Tear away
facades or barriers to reveal consumers’ true underlying, fundamental feelings, views &
beliefs

Focus Group:
 Unstructured/free-flowing interview with a small group
 Meets at central location with moderator
 Allow people to interact and discuss feelings, anxieties or frustrations
 6-10 people
 Typically homogeneous
 Similar lifestyles and experiences and communication skills
 Includes insentive
Environmental conditions:
 Commericial facilities
 Videotape camera, microphone, one-way mirror
Moderator:
 Develops rapport & helps people relax
 Listens to comment
 Promotes interaction
 Ensures everyone speaks
Advantages:
 Flexible, fast and easy to execute
 Able to probe beyond answers that are superficial or incomplete
 Numerous topics can be discussed and insight gained
 Combined effort of the group will produce a wider range of information, insights and
ideas
 Snowballing: bandwagon effect where a comment form one individual triggers a
chain of responses from others. Includes brainstorming
Disadvantages:
 Focus groups require sensitive and effective moderators
 Small sample ize
 Not representative of entire market
 Each respondent may speak only for a few minutes
 Unrealistic environment
 Relies of respondent recall
 Interpretation of findings relies on moderator

In Depth Interviews
 A relatively unstructured, extensive interview in which the interviewer asks many
question and proves for in depth answers
  Usually 1 on 1
 Probing questions: “Can you give me an example” “Why do you say that?” “How do
you feel about this”

Advantages:
 Depth of material collected
 Observational aspect if done in-situ
 Facilitates respondent to reveal attitudes, perceptions or motivations which they
may be reluctant to reveal in a group setting
Disadvantages:
 Costly and time consuming
 Sample size tends to be small
 Relies on respondent recall
 Interpretation may be subjective
 Acquiescence bias potential – tend to agree without protest

Observational
 Customers explain what you observed
 Similar advantages and disadvantages or in-depth

Market Segmentation
Definition: “Customer groupings within a market, based on distinct needs, wants,
behaviours or other characteristics that affect product demand or usage and can be
effectively addressed through marketing” -Wood, 2013

Analysing consumer and business markets

1) Market definition
 Potential market (all customers who need, want or are interested in a certain
product)
 Available market (customers who are interested and have adequate income
and access to product)
 Qualified available market (customers who are qualified to buy based on
specific criteria)
 Target market (customers who the marketer decides to serve)
 Penetrated market (customers who currently buy or have bought a certain
product)

2) Market changes
 Number of customers (increasing or decreasing)
 Purchases (What is the industry volume going to be? Any trends?)

3) Market Share
 Percentage of sales ($ or units)

Market Segments should be:

 Measurable (measurable so they can be identified)
 Accessible (reachable through communication and distribution channels)
 Substantial (Sufficiently large enough to justify the resources required to target
them)
 Differentiable (Segments must respond differently to the different marketing
mixes)
 Actualisable (relatively stable to minimize the cost of frequent changes)
Segmentation variables

Demographic:
 Age
 Family Size
 Marital status
 Gender

Geographic:
 Global, hemispheric, national, state, city, postal code
 Climate
 Rural vs Urban

Socioeconomic:
 Income
 Class
 Occupation
 Education
 Religion
 Ethnicity

Lifestyle/Personality
 Attitudes/opinions
 Interests
 Avocations
 Tastes and preferences
Behavioural:
 Usage rate
 Main brand
 Media used
Other:
 Occasion/situation
 Benefits sought
 Media habits

Demographics:
 Industry (position and type)
 Location
 Number of employees
 Annual turnover
 Publicly or private owned
 Technology employed

Strategy:
 Distribution channels used
 Growth ambitions
 Local or export marketing

Strategies to reach the targeted segment

 Undifferentiated Marketing
 Differentiated Marketing
 Concentrated Marketing
Undifferentiated Marketing
Advantages:
 Same marketing mix for everyone
 All customers will respond the same
 Less expensive
Disadvantages:
 Markets may not be homogenous
 Might ignore potential competitive advantages

Differentiated Marketing
Advantages:
 Separate marketing mix for 2-3 segments
 Segments will respond better to tailored offering
Disadvantages:
 More expensive
 Might overburden resources

Concentrated Marketing
Advantages:
 Separate marketing mix for each segment
 Allows focus on one segment, rather than multiple
 Efficient use of resources
Disadvantages:
 Segment might not be attractive in the future

Positioning:
Create a distinctive position in consumers minds
Link brand to certain attributes
Research can help determine these

Analysing customers in business markets

Individuals or groups make buying decisions for:

 Businesses
 Government
 Non-governmental organisations
Involve
 Large sums of money
 Longer periods of time
 Relationships inside and outside the organisation

Characteristics, needs and considerations

Standardised classifications:
 European community’s Eurostat
 North American Industry Classification System

Considerations:
 Annual budgets
 Purchase timings
 Buying policies and procedures

Internal Relationships
Buying Centre:
 Users – often initiate the buying process and help define specifications
 Influencers – often define specifications and provide information for evaluating
alternatives
 Buyers – Have the formal authority to select suppliers and negotiate purchases
 Deciders – Have the formal or informal power to select or approve suppliers
 Gatekeepers – control the flow of information to other buying centre participants

External Relationships
Current suppliers:
 Check relationship with current suppliers
 One off deals or long term contracts

Current needs beyond price:

 Staff expertise play a large role
 Quality of product or service
 Reliable delivery
 After sales service

Analysing customers in consumer markets

Characteristics and needs

Cultural elements
Social connections
Personal elements
 Week 4 and 5

Strategies and Planning for Competitive Advantage

Fooled by experience – (Soyer and Hogarth 2015) – Mandatory reading

1 - The nature of strategy

 What is strategy and what makes a good strategy
 Different approaches to developing strategies
- Planned vs emergent
- Driving market vs market driven
- Scenario planning

A definition of strategy: “Those decisions which have high medium term to long term impact
on the activities of the organisation, including the implementation of those decisions, to
create value for customers and key stakeholders and to outperform competitors” – Graham
Hubbard (2002)

“We function best when we can take some things for granted, at least for a little time…that
is the major role of strategy…it resolves the big issues so that people can get on with the
little issues…like targeting and serving customers” -Mintzberg et all (1998)

“A strategy is about shaping the future through human attempt to get to desirable ends
with available means” -McKeown, M, The strategy book (2011)

Characteristics of a good strategy:

 Takes medium to long-term outlook
 Focuses on big picture matters
 Identifies desired and end results
 Has high impact on organization
 Relies on available or obtainable resources

A good strategic plan must possess the same characteristics of a good strategy
Planned vs Rigid strategy

Planned Strategy (Aim, then shoot)

Traditional strategic planning comprises six elements:

 Choosing the product market in which to compete
 The level of investment required
 Individual business unit strategies
 Strategic assets that support the strategy
 Allocation of resources over business units
 Development of synergy across the business

Traditional strategic planning requires:

 Precise intentions at the start
 Collective actions towards intentions
 No interference from external forces

Emergent Strategy (Shoot, then aim)

Emergent strategic planning involves:

 Total absence of precise intentions
 Presence of order
 Consistency in action overtime

The creation of a continuous flow of competitive advantages that, taken together, form a
semi-coherent strategic direction

Environment is stochastic, not deterministic

 Markets, industries and economies are driven by change
 Change is unpredictable
 The pace of change is rapid, and increasing
Strategy is “a pattern in a stream of decisions” which continually re-aligns as the vision
changes.

If the market behaviour is only slightly stochastic, you can take a more planned approach.

The more stochastic the market behaviour, the more emergent your approach will need to
be.

Driving Market vs Market Driven

Market Driven: refers to a business orientation that is based on understanding and reacting
to the preferences and behaviours of players within a given market structure

Driving markets: On the other hand, implies influencing the structure of the market and/or
the behaviour of market players in a direction that enhances the competitive position of the
business

Market- Driven
 Not self centred but driven from outside the organisation
 Take cues from all external players
 Adapt to changes in market
 Seize unfolding opportunities
 Deep insightful knowledge of market structure is crucial
 Often equated to a ‘positioning’ approach
Driving-Market
 Centred on organisations strength and resources
 Develop difficult to imitate or exclusive competences
 Market opportunity identification comes after
 Requires long-term commitment to a limited set of competences
 May need continual shifts as differentiating competence erodes

Market-Driven versus Driving-Market

 Incremental gains versus quantum-leap in innovation
 Different levels of resource requirements
 Reactive versus disruptive
 Rigid versus agile
 Different risk profiles

Scenario Planning

Scenario: A postulated sequence of imagined future events

Used for:
 Global scenarios for the macro environment, affecting all industries
 Focused (local) scenarios for a region or industry
 Start from the outside in- macro environment analysis
 Planning horizon is often very long term – 10 to 20 years is NOT unusual
2 - Setting Strategic Goals
 Different types of goals
 Developing competitive advantage
 The role of core competence

Market-Oriented goals
 Growth
 Maintenance
 Retrenchment

Ansoff Matrix
Maintenance
 Sustain current revenues or share
 May be due to internal issues such as inventory or resources, or external issues such
as recession
 Wring short-term profits
 May be preparing for change, future growth or retrenchment

Retrenchment
 Exit markets
 Drop products
 Downsize marketing
 Limit distribution
 Close down in an orderly fashion