Unit 4

MARKETING PLAN AND STRATEGIC MARKETING

Syllabus
Building basic marketing plan - SWOT, PEST analysis, Translating
information into strategies and into business resources, legal implication of
marketing plan.

Pricing- significance- factors affecting price - product pricing methods and

strategies

Notes
BUILDING BASIC MARKETING PLAN

SWOT ANALYSIS
SWOT is basically the acronym for strength, weakness, opportunities, and
threats. It is a very effective tool used in the business industry to form
strategies. SWOT analysis in marketing helps to analyze the marketing
strategies. It helps to decide which marketing strategy can be used to get the
best results for a business. The strength helps to capitalize the opportunities
using all the strengths. it will also avoid the threats and minimize the weakness.
It helps to understand internal and external factors that can make or break your
success towards your marketing goals.

STRENGTH

Strengths are the factors that helps us to get better results. A company can do
wel only if the strategy is based on these factos. Strength is an internal factor
and can be controlled. In Swot analysis the following things are considered as
strength.

a. brand recognition: If a company's brand image is well established and

recognized by consumers, it can acts as a strength.

b. Location of the business: If the company or outlet is located at a proper

place convenient for the consumers, it is the big strength to have among the
competition.
c. Marketing expertise: an expert in marketing can develop a marketing
strategy quiet easily based on their experience which gives a massive strength

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 when doing a SWOT analysis in marketing.

d. Innovative: Building a strategy based on innovation and novelty providing

new products and services to consumers is a better way to capture the market.

WEAKNESS

There are internal factors which affect the growth of the company. While doing
a SWOT analysis you need to consider the following things which makes the
strategy look week and unconvencing.

a. Poor distribution:

If the distribution channel of the product are scare in number, it creates

difficulty for the customer to obtain the product.

b. Poor distinguishable features:

If the products have no difference from the rest of the competitors, it cannot
stand out in the market. you need to have own signitature of identity for the
products.
c. Lack of online presence:

In the mordern era, online marketing is a key way to grab the customers'
attention. Absence of online presence cannot lead to suceed well.

OPPORTUNITIES

SWOT analysis in marketing will look at almost everything as an opportunity.

This is because all events or situation can be used as marketing weapon.

a. Advancement in technology

Introducing never technology or newer ways to produce goods can be termed

as an opportunity. This will help the company to strategize in a different way.

b. Increase in demand:

a situation where demand for the goods increases both locally and
internationally occurs in a concern at particular times and this has to be used
better to create a brand name through SMART marketing.

c. Social events:

Seasonal happening and festivities increase the demand for certain goods. The
marketing strategy should take full advantage of such a situation offer

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 discounts and other benefits to selling more products. E.x.: Festive occasion.

THREATS

While doing a SWOT analysis, it is essential to be aware of the situation that

will hamper the marketing strategy. These situations are known as threats.
Threats develop and come out of nowhere. so it's better to identify them as
soon as possible. That way the SWOt analysis will have a contingency plan to
face the threat.

a. Competition lower price:

If the competitor lowers the price of their product. It is the toughest threat to
deal with as people are always likely to got for things that are less expensive.
This can be oer come by better quality or promotional offer.

b. changes in consumer's choice

If the consumers change their choice all of us sudden such as in fashion trend
the business. the business is likely to be in trouble. It is better to produce
different and new kinds of goods and service.

c. Economic condition

Inflation, exchanger rates, taxes and so on are all economic factors. If these
things change too often it might affect the growth of the business. doing a
SWOT analysis in marketing keeping such things in mind is essential to avoid
threats.

PEST ANALYSIS

It is the measurement told used to assess markets for a particular product at a

given frame, PEST stands for potential economic, social, and technological
factors. PEST analysis helps the organization to make a better decision and
improve efficiency by studying various factors which might influence a
business. It is similar to SWOT analysis and helps in making a strategic
business decision, planning marketing activities product development, and
research.

P stands for political environment. It includes the government regulation or any

defined rules for that particular industry of business. It also involves the study
of tax policy which includes exceptions, if any, employment laws and
environmental laws.

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 E stands for economic factors. It analyses the economic environment by
studying factors in the macro economy such as interest rates, economic
growth, exchange rate as weel as inflation rate. These factors also help in
assesing the demand costing of the product, expansion and growth.
S stands for social factors that form the macro environment of the
organization. It includes the study of demographics, as well as the target
customers. These factors helps to know the potential size of the market. It
includes study of population growth, age, distribution and career attitude.

T stands for technology in a PEST analysis. It is well known that technology

changes very rapidly and consumers are hungry to adopt new technology. It
involves understanding the factor advancements rate at which technology gets
obsolete automation and innovation.

Legal implication of marketing plan

Legal issues are one of several categories that causes a potential to the
company.

 Legal environment Basis

Legal issues, technology, soceital changes, and trend are among common
elements of the external environment. Increased industry regualtions can
benefits the company if it is an established industry. however, legal issues
generally involve challenging employment laws limiting regulations and law
suits.

 Adjusting to threats
One of the main reasons to complete the SWOT is to prepare for favorable
environmental factors and to protect against threats. Recognizing
regulation or legal changes well in advance gives you a chance to make
adjustments. Another advantage of recognizing regulations is that you can
potentially diversify your offering to match.

 Budgeting

Allocating resource to combat legal challenges is another benefit of

weighing legal issues in strategic planning. In some situations, companies
plan marketing budgets to research and promote brands in accordance
with the changing legal environment. Buying new equipment and providing
employee training to adapt to legal and safety requirements costs in the

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 budget also lawsuits sometimes cost might benefit from budgeting funds to
defend the business.

 Image emphasis

Legal issues can affect a company's public image. An industry has to

promote a response to changing consumer expectations in order to protect
the image. in some cases, the company must invest significantly in
promotion for rebuilding the image after negative events.

Pricing
Pricing is the process whereby a business sets the price at which it will sell its
products and services. In setting prices, the business will take into account the
price at which it should acquire the goods, the manufacturing cost, the
marketplace, competition, market condition, brands, and quality of the product.
It is a fundamental aspect of financial modeling and is one of the 4P's of the
marketing mix.
SIGNIFICANCE OF PRICING

Pricing is an important desicion making aspect which determines the future of

the product. The significance of pricing can be studied under the following
heads:

 Flexible element of marketing mix

Price is the most adjustable aspect of the marketing mix. Prices can be
changed rapidly as compared to other elements like product, place or
promotion.

 Right level pricing

The wrong price decision can bring about the downfall of a company. It is
extremely significant to fix prices at the right level after sufficient market
research and evaluation of factors.

 Price creates the first impression

Often price is the first factor a customer notices about a product. while the
customer may base his final decision of buying on the overall benefits
offered by the product, he is likely to compare the price with the perceived
value of the product to evaluate it.

 Vital elements of sales promotion

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 Price is the most important part of sales promotion. In order to encourage
more sales, the price is reduced in marketing management. In the case of
goods whose demand is price sensitive, even a small reduction will lead to
a higher volume of sales.

 Influences demand level

the choosen price directly influences demand level and determines the
level of activity. A price set too high or too low can endanger the product's
developemt.

 Determines the profitability

the selling price directly determines the profitability of the operation not
only by the profit margin alone but also through quantities sold by fixing the
conditions under which fixed costs can be recovered over the appropriate
time horizon. Thus a small price difference may have a major impact on
profitability.

 Means of comparison
the price is an easy means of comparison between competing products or
brands especially when there is hardly any brand differentiation. The
slightest change in price is quickly perceived by the market and because it
is so visible, it gives remarkable changes.

FACTORS AFFECTING PRICING

 PRODUCT COST
The price for a commodity is determined on the basis of the total cost. So
sometimes while entering a new market or launching a new product
business firm have to keep their prices below the cost level for a particular
period, it is necessary to cover more than its total cost later if it wants to
survive the competition.

 UTITLITY AND DEMAND

Usually, consumers demand more units of a product when its price is low
and vice versa. however, when the demand for a product is elastic little
variation in the price may result in large changes in the quantity demanded.
In the case of inelastic demand, a change in the prices does not affect the
demand significantly.

 EXTENT OF COMPETITION IN THE MARKET

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 The next important factor affecting the price of a product is the nature and
degree of competition in the market. A firm can fix any price for its product
if the degree of competition is low. however, when the level of competition
very high, the price of a product is determined on the basis of the price of
competitors of products their features, and quality.

 GOVERNEMNT AND LEGAL REGULATION

the firm which has a monopoly in the market usually charges a high price
for their products. In order to protect the interest of the public, the
government intervenes and regulates the prices of the commodities for
their purpose.

 PRICING OBJECTIVES

Another important factor affecting pricing is the objective of any business.

It can be profit maximization, obtaining market share leadership, surviving
in a competitive market, and attaining product quality leadership.

 MARKETING METHODS USED

The various marketing methods such as distribution system. Quality of

salesman advertising system, advertising,type of packaging, customer
services affect the price of the product.

PRODUCT PRICING METHODS AND STRATEGIES

The pricing methods can be broadly divinded into two groups:

 Cost oriented method

 Market oriented method

cost oriented method

Cost oriented method of pricing are as follows:

 cost plus pricing

It involves adding a certain percentage to the cost in order to fix the price.
for example, if the cost of the product is Rs. 200 per unit and the marketer
expects 10% profit on cost then the selling price will be 220. This method is
simpler as marketers can easily determine the cost and add certain
percentages to determine the selling price.

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  Mark-up pricing

It is a variation of cost pricing. In this case, mark-ups are calculated as

percentages of the selling price and not as a percentage of the cost price.

 Break-even pricing
In this case, the firm determines the level of sales needed to cover all
relevant fixed and variable cost. The break-even price is the price at which
the sales revenew is equal to the cost of the goods sold. In other words,
there is neither profit or loss.

 Target return pricing

In this case, the firm sets pricing in order to achieve a particular level of
return on investment. The limitation of this method is that they are derived
from cost without considering the market factors.

 Early cash recovery pricing

Some firms may fix price to realize early recovery of investment involved.
When the market forecast suggest that the live of the market is likely to be
short. such pricing can also be used when a large firm enters the market in
the neart future with its lower price forcing existing firms to exit.

Market oriented method

 Perceived Value pricing:

Many firms fix the price of their goods and services on the basis of
customers' perceived values. They consider customers perceived value as
the primary factor for fixing prices and firms' cost as the secondary.

 Going- rate pricing

In this case, the limit for setting prices is the price set by major
competitors. If a major competitor changes its price, then the smaller firms
may also change their price irrespective of their cost/ demand.

 shield bid pricing

this pricing is adopted in the case of large orders or contracts especially

those of industrial buyers or government departments. the firm submits
shield bids for jobs in response to an advertisement.

 Differentiate pricing

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 firms may change different prices for the same product or service. It can be
customer segment pricing, time pricing, area pricing and product form
pricing.

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