Topic 4.
2 Marketing Planning
“Successful marketing doesn’t just ‘happen’, it has to be planned.”
On completing this chapter, you should be able to:
4.2.0 Introduction
Marketing planning is the process of formulating appropriate strategies and
preparing marketing activities to meet marketing objectives. The result of
marketing planning is a marketing plan.
Definition of a Marketing Plan
A marketing plan is a document that defines a marketing strategy for a
company in order to reach their targeted audience and to track their
marketing strategies over a period of time.
Essentially, a marketing plan is your roadmap to all things marketing within
a given period. It is your plan of action so that you can generate leads and
eventually sell more products or services.
A marketing plan is usually preceded by a marketing audit – a review of
the current position of an organization’s marketing mix, in terms of its
strengths and weaknesses and consideration of opportunities and threats
facing the organization. The audit might address questions and issues such
as the intensity of competition in the market, the firm’s product portfolio and
an assessment of the effectiveness of its marketing.
From the marketing audit, managers can then produce a marketing plan. A
marketing plan is likely to include details of the following elements or
components:
• Marketing objectives that are SMART (specific, measurable, agreed,
realistic, and time-bound), such as the expected market share or sales
turnover within a specified time frame.
• An assessment of the strengths and weaknesses of competitors in the
market. [STEEPLE]
• Methods of market research to be used to identify target markets.
• An outline of the marketing mix including the product design, channels of
distribution to be used, anticipated price(s) and pricing methods, and the
promotional strategies to be used.
• Details of the marketing budget, including planned revenues and
expenditures.
• An outline of the anticipated difficulties and the strategies to deal with
these foreseeable problems. [SWOT. STEEPLE]
It is also common to include SWOT and STEEPLE analyses in a marketing
plan. These business management tools help the organization assess the
internal and external factors affecting the business and add context to its
marketing objectives.
Marketing plan for iPhone.
[Link]
Why is marketing planning important? (AO2)
Strategic marketing planning involves segmentation, targeting, and
positioning (STP).
4.2.2 Segmentation, targeting (target market), and positioning (position map)
(STP model)
The STP marketing model consists of three steps:
1. Segmentation is the process of categorizing people into groups based
on their age, social position, psychological qualities, and other
factors.
2. Targeting refers to selling items to certain groups (segments)
discovered through segmentation.
3. Positioning is the process of choosing and implementing the
marketing mix that is most suited to the target client group.
[Link]
BYD’s STP
BYD Is About to Steal Tesla's Crown; Why China's Winning the EV Race ([Link])
Tesla’s STP
[Link]
Define “market segments”.
Once the market is segmented, business can then focus on targeting these
specific subgroups (segments) of the market.
Define “target markets”.
Markets are segmented in several ways. Explain the three commonly
used bases for segmentation.
1. Geographical differences.
2. Demographic differences.
3. Psychographic differences
Targeting (target market)
Targeting refers to each distinctive market segment having its own specific
marketing mix. Targeting is also known as differentiated marketing.
Example:
Coca-Cola not only makes the standard cola drink but also Diet Coke for
“slimmers” and flavoured drinks for consumers with particular tastes.
Once a business has determined the target customers for its goods and
services, a positioning strategy is needed. This requires the business to
determine how best to differentiate each market segment and then devise an
appropriate marketing mix for each targeted segment.
Product positioning (Position map)
Once a market has been segmented and target markets identified, a business
has to ‘position’ its products. Before deciding on which product to develop
and launch, it is common for businesses to analyse how the new brand will
relate to the other brands in the market, in the minds of the consumers. This
is called positioning the product by using a technique such as product
positioning.
Product positioning is a strategic marketing exercise that challenges teams to
decide how they want their product to fit in the marketplace.
There are three stages to positioning:
• Identifying the competitive advantages of the product in
Identifying the competitive
advantages of the product
in
Identifying the competitive advantage of the product in question.
Deciding on which aspects of these strengths should be marketed.
Implementing the desired positioning by using an appropriate
marketing mix.
Every product has a unique positioning; yours may be that it’s cheaper than
the next competitor, faster, more feature-packed, ethical, luxurious,
revolutionizing the space, and so on. Product positioning is all about
how you want the market to think about your product — and requires you to
communicate how it can solve your customers' problems better than
its competitors.
Examples of position maps.
A product position map or perception map is a graph that analyses
consumer perceptions of each group of competing products in respect to
two product characteristics. The key features that can be used for
positioning are: price; quality of materials used; perceived image; level of
comfort offered (hotels) and so on
The usefulness of position maps to an organization.
An old saying states if your product is for everyone, it's actually for no one.
Brands should be looking to target specific customers to help create a competitive
advantage. Product positioning does just that. It allows you to shape how
consumers think about your product based on how you market and communicate
its benefits.
They can be used for targeting strategies. For example, if customers perceive a
brand to be of high price and high quality, then an appropriate market mix can
be applied. With more precise targeting, you can directly interact with your ideal
customer.
To identify any gaps in its product portfolio. Mercedes Benz introduced its A-
Class cars in 1997 after having found that there was a market for smaller cars that
featured the luxury brand name. Similarly, BMW identified a
gap in the market for luxury 4X4 sports utility vehicles and subsequently introduc
ed its X Class line of cars in 2000.
They can inform businesses of a need for repositioning their products.
If an undesired perception exists, the firm needs to devise strategies to change
(reposition) that perception. For example, British Airways revamped its image to
appeal to younger and less affluent customers after findings revealed the airline
was associated with wealthy and elderly travelers only.
The best marketing strategies are built around product positioning. Proper product
positioning can help you reduce ad spending and find interested buyers by presenting
your product to a highly targeted audience.
BMT
Porter’s three generic (or basic) competitive strategies for businesses to achieve market
positioning success:
• Cost leadership - is strategy involves the business
Cost leadership - This strategy involves the business aiming to excel as low-cost
suppliers of particular products. Can you find examples of cost leadership?
• Dierentiation - is strategy involves producing distinct
Differentiation - This strategy involves producing distinct products to distinguish them
from those supplied by competitors. Having a distinctive or unique selling point can
give the organization a competitive advantage. Can you find some examples?
• Focus - is approach involves a business paying close
Focus- This approach involves a business paying attention to a particular market
segment, such as high-end premium products or specific niche markets. Examples?
Porter argued that it is unrealistic for a business to be good at everything in all market
segments and such an approach would result in the business not being good at anything
in particular. For example, he suggested that a business cannot logically and
simultaneously provide cost leadership and high quality.
[Link]
leadership-focus/
What Is Competitive Advantage? Definition, Examples & Identification
([Link])
Common mistake
When using perception maps in the exams, students often create or refer to a
position map based on their own personal perceptions of certain brands and
products. This is inappropriate as the tool is used to gauge the perceptions of
the target markets (customers as a whole, rather than opinions of a single
person).
4.2.4 Targeting Strategies
There are two broad targeting strategies that a business can use: niche
marketing or mass marketing.
Niche marketing vs Mass marketing
Definition of a ‘niche market’
A niche market is a small segment of a larger market that can be
defined by its own unique needs, preferences, or identity that makes it
different from the market at large.
[Link]
Define “niche marketing”.
Advantages and disadvantages of niche marketing.
Advantages Disadvantages
Explain two advantages for Pink Ladies operating in a niche market. [4]
Define ‘mass market’
Define ‘mass marketing’
Advantages and disadvantages of mass marketing
Advantages Disadvantages
4.2.5 Unique selling point/proposition (USP)
Define USP
Think of USP as ‘what you have that competitors don’t”.
Examples of effective USPs include:
Domino’s pizza deliveries – “it arrives in 30 minutes or it’s free”.
Apple’s iPhone- The only touchscreen Smartphone in the market.
Describe the benefits and limitations of an effective USPs.
4.2.6 How organisations can differentiate themselves and their products
from competitors.
Define differentiation.
Common differentiation strategies include:
1. By price.
2. Relationships
3. People- quality of customer service
4. Product
5. Packaging.
6. Distribution.
7. Promotion.
8. Process.
9. Physical environment.
[Link] or reputation.
Advantages and limitations of differentiation.
Advantages Disadvantages
Differentiation Strategy: Definition, Benefits and Creation | [Link]
Marketing planning is essentially a prerequisite to marketing strategy (the
ways in which the business intends to achieve its marketing objectives).
Strategic decisions will affect the direction of the organization and
determine its future prosperity and whether the business can survive in a
sustainable way.
Links of marketing planning to the Core
Theory of Knowledge (TOK)
How can managers know whether it is best for the organization to opt for an
undifferentiated or differentiated approach to marketing?
ATL Activity (Research and communication skills)
Investigate examples of product differentiation in one of the following
industries: airline carriers, fast food, hotels, higher education or any other
industry of your choice. Share your findings with the rest of the class.
Marketing planning and the key concepts
Change is an important concept for marketing planning. Having a unique
selling point, for example, can give a business a competitive advantage in
the short term, but it is unlikely to be sustainable as competitors will respond
accordingly. Competition can mean that businesses continually strive to
differentiate themselves and their products from their rivals (creativity).
Changes occur for many reasons beyond the control of an organization,
such as changes in technology, fashion and economic conditions. Hence, all
aspects of marketing planning (such as marketing plans, the STP model and
the marketing mix) are exposed to the forces of change. Marketing planning
ensures that managers monitor and respond to these changes accordingly
through the use of tools such as repositioning strategies. It also helps to
reduce risks as marketing planning can help managers to make more
informed decisions.
Ethical marketing is a growing part of strategic marketing planning. It
refers to the social and moral responsibilities of marketers. Ethical marketing
can present a moral dilemma for businesses - if firms sell products aimed at
children that are perfectly legal, such as war toys or fast-food products, why
shouldn’t they be allowed to promote these toys? Marketers would argue
that advertising can be informative, not just persuasive or pressurising.
Marketing can also help customers to make better and more informed
decisions by weighing up the costs and benefits of their purchases.
Arguably, using inappropriate and unethical marketing strategies can
damage an organization’s brand image, so ethics shouldn’t be an issue
(in theory).
Strategic marketing planning involves segmentation, targeting and
positioning (STP). However, it is unlikely that smaller businesses will have
the financial and human resources to target all segments. Hence, they may
need to resort to more creative and cost-effective methods of marketing.
Essentially, effective marketing planning is an essential part of an
organization’s strategy and can help to ensure the firm’s sustainability and
longevity.
Key concepts
With reference to an organization of your choice, examine how creativity
and ethics have influenced its marketing mix.
With reference to an organization of your choice, discuss how change and
sustainability have influenced its marketing planning.
Business Management Toolkit
In developing effective strategies, marketing managers can choose from an
array of additional tools, such as:
• SWOT analysis - Identification of a firm’s marketing strengths,
weaknesses, opportunities and threats.
• Ansoff’s matrix - Marketing strategies for growth.
• STEEPLE analysis - Used to identify opportunities and threats in the
external business environment that will impact marketing.
• Boston Consulting Group (BCG) matrix - Development of a firm’s
product portfolio strategy (see Topic 4.5).
• Force Field analysis - Quantitative method used to implement and manage
organizational change based on driving and restraining forces.
With reference to an organization of your choice, examine how Porter’s
generic strategies can help a business to achieve market positioning success.
IA?
How creative is Company X’s marketing planning?
