Marketing planning model analysis

Marketing planning is the technique by which an organization or a company analyses the marketing conditions, markets and clients, choose upon the course of marketing action and execute those outcomes. Kotler (1999) states that good marketing planning energies the company to heighten its goals and standpoints leads to a greater degree co-ordination of company endeavors and allows clearer implementation standards for control. Marketing planning is very significant for a company to sustain in the market and to organize itself for unforeseen environmental fluctuations. An organization has to go from a number of procedures to archive the objective of a marketing proposal, as follows (Wood, 2004):

Evaluation of the current market condition

Objective for the targeted sector

Implementing the strategies

Monitoring and examining the plan to achieve coveted objective

SOSTAC Model

There are different types on marketing planning available for developing an organization’s marketing strategies. One such model is SOSTAC. SOSTAC is focused on six factors situational analysis, objectives, strategy, tactics, action and control. These factors can be analyzed as (Smith, Berry & Pulford, 1999):

Situational analysis (Internal and external): – Internal analysis is the overall analysis within an organization, whereas external analysis is the analysis of extrinsic environment. A company can use a number of tools to examine contemporary market condition and competitiveness within the market. A company can execute SWOT (Strength, Weakness, Opportunities and Threats), which can be used to examine an internal environment as well as outer environment or PEST (Political, Economic, Social and Technological) or Five Forces analysis, which is used only for external analysis.

Objective: – Objective is a short summary of a company’s mission and objectives. It helps the marketing managers to stay in focus on the marketing strategies and company’s goals.

Strategies: – An organization will plan marketing strategy to achieve its objective. This stage is mainly focused on different areas to redeem the value to the consumer such as pricing of the product, distribution, promotion and service offering. A company should target a market as per customer needs Pricing a product is a significant part of any marketing plan because a customer can compare the price of that particular product with other products over the internet (Wood, 2004).

Tactics: – An organization should compute its financial means to attain its objectives. This incorporates shaping relevant action, scheduling and timing, areas of responsibility and budget planning. By examining these areas an organization can forecast its future sales, net profit, turnover and market share, which will indicate company’s approach towards its objective.

Action: – Marketing plan is set out as per the objectives of an organization. Mainly, marketing plan used by an organization is to strength the growth. For example, increase in gross revenue can be accomplished in a number of ways such as by incisive existing market, offering improved service, introducing a new product, launching existing product in a modified way and entering a new market.

Control: – An organization should monitor the plan at different stages in contrast to the target or designing reparative course of action where needed. Feedback of an implemented marketing plan can be taken out monthly or quarterly basis.

Limitation Of Marketing Planning Model

Some of the common limitations of implementing a marketing planning model from a practical point of view are suggested by Drummond and John (2005), as follows:

Power and politics: – Every organization has inner politics and sometimes wrong use of power on other employees by their superior colleagues. This may result in consuming more time and resources for the implementation of a marketing plan.

Use of resource: – For forming and implementing an effective marketing plan, an organization needs financial resource. Marketing planner must be able to analysis these resources from the practical point of view. If these resources are not utilized in an effective way then it may create problems in implementing the marketing plan.

Skills: – In some cases, managers or the market planner are not skilled enough to prepare a good marketing plan. This influence can also cause problems during the effective implementation of the marketing plan.

Careful analysis of plan: – Forming and implementing an effective marketing plan is a long process. However, sometimes market planner tends to use sort cuts during the formation of a plan, which may create strategic issues.

MARKETING AUDITS

What is marketing audit?

The marketing audit is a method of analyzing and assessing company’s marketing competences and performance. Kotler (1999, pp.111) states that the marketing audit is a standardized and periodic study of a company’s goals, plan and activities to encounter problematic areas and to create new opportunities. Internal and external audits are important components of any marketing plan. Not only these audits are carried out at the commencement of a marketing plan but also make a foundation for a good marketing plan. An organization use number of tools to carry out marketing audits such as SWOT analysis, used for both internal as well as an external audit. PEST and Five Forces analysis are only used for examining external environment. The (Wilson & Gilligan, 2005) conduct of the organization in the market is directly affected by three components, as follows:

Current market situation of the organization

External environmental factors

To deal with consumer demand

Internal and external audit

Internal audit: – Internal audit is conducted within the organization. In order to perform the internal audit an organization should look forward to some important areas such as company’s image and culture, key staff, access to natural resources, operational efficiency and capacity, brand awareness and market share, etc. Moreover, an overall view of the organization. The strengths and weaknesses do not indicate all the details of an organization, but only those relating to critical success factor. As strength is the inner ability of an organization which can be used as plus point to achieve the company’s objective. Whereas weakness is also the inner ability of an organization, but at some point it can obstruct a company in achieving the objective.

External audit: – External audit is carried out outside or the external environment of the organization. To examine the external environment a company use number of approaches such as PEST (Political, Economic, Social and Technological) and Five Force analysis. These methods are very effective in order to make full use of opportunities and to resist future threats. External audit also highlights the competitive influence which can help in acquiring the opportunities or causing threats. The market becomes more unpredictable when a competitor freely penetrates the market, making more difficult to execute the marketing plan and affecting the capability to obtain company’s objectives.

Effect of marketing audits on market and organization

The audit presents a comprehensive view of the marketing strategies for an organization that will assist in revealing the areas of concern. By looking over the problem an enhanced marketing plan can be deployed, which will be profitable for a company.

A marketing audit also help administrative people to ensure that they are going in the right direction and will help in the growth of a company.

A marketing audit also helps in improving the net sales. Moreover, it will increase the market shares of a particular company.

With the help of marketing audit a company can take an overview of the competitors present in the market and can manipulate the strategies accordingly.

A marketing audit provides a clear outlook of forthcoming opportunities and threats.

It also allows a company to allocate their resources according to their performance in the market.

SWOT Analysis

SWOT analysis is a powerful tool for the evolution of marketing strategies in an organization. Moreover, it provides the comprehensive strategic position of an organization and its ambience and helps marketing administrators to engrossment on the vital issues. Sometimes SWOT is also mentioned to as TOWS. SWOT stands for strengths, weaknesses, opportunities and threats. Where strengths and weaknesses are the internal factors and opportunities, and threats are external factors.

The purpose of SWOT analysis is to examine the strengths and favorable opportunities and to see how strength can protect against weakness and threats in marketing planning. SWOT analysis will be profitable for an organization to strengthen their position in the competitive market by overwhelming their weakness.

To develop the marketing plans an organization need to examine both internal and external factors in detail.

Internal factors (strengths and weakness): – In order to examine internal factors an organization should look forward to some important areas such as company’s image and culture, key staff, financial means, operational capability, brand awareness and market share, etc. The strengths and weaknesses in the SWOT analysis do not list all features of a company, but only those relating to critical success factor.

External factors (opportunities and threats): – In order to analyse the external factors an organization should look forward to their future opportunities available in the market. A proper analysis of the upcoming opportunities can be very effective in implementing the marketing strategies and for the success of the company. Whereas threats are those factors which can be responsible for the restraining company’s growth. Threats can be in a number of ways for an organization such as a competitor, change in market trends, government policies, lifestyle, etc.

TOWS Analysis

TOWS analysis is somewhat similar to SWOT analysis. Moreover, it is an effective tool to analyse the combination of strength against opportunities and threats and weaknesses against opportunities and threats for productive implementation of a marketing plan. The representation of strength and weaknesses against opportunities and threats is also called as TOWS matrix.

A typical type of TOWS matrix can be formed by the combination of internal and external factors, as represented:

TOWS MATRIX

Internal Strengths

Internal Weakness

External Opportunities

SO Strategies

WO Strategies

External Threats

ST Strategies

WT Strategies

Source: Wood (2004)

SEGMENTATION, TARGETING AND POSITIONING

Introduction

Segmentation is the process of splitting the market into the group of consumer according to their varied necessities, characteristics or conduct. A company uses a number of different approaches to segment the market in line with their wide ranging products. Targeting is the selection of segment in which a company tends to satisfy the demand of the consumer in the targeted market with a specific product. Market positioning is the process in which a company tries to form an image of a product in the targeted market in respect to other competitive products available in the market.

For example, PepsiCo and Coca-Cola are the world’s leading company, which makes soft drinks with their presence in almost all countries. Both the companies have divided the market in different segments by lifestyle, buying patterns or as per consumer and then targeting the specific segment with their range of products such as Pepsi or Coke and Diet Pepsi or Diet coke, etc. Their main consumers are those ages between 15 to 25 years. For market positioning, both the companies advertise their product with the help of celebrities or sports stars in the targeted market (Wood, 2004).

STP process

Segmentation, targeting and positioning process can be divided into four stages, which were also suggested by Kotler (1999, pp.380), as follows:

Identification of segments

Assessing the segments

Targeting through a marketing mix

Market positioning

Market segmentation process: – An organization can segment the market based on different criteria such as buying patterns, lifestyle and consumer behavior. Successful implementation of a segmentation process, which is a part of a marketing planning process, will help in achieving company’s objectives. The process of marketing segmentation can be carried out at different levels.

Market can be segmented on the basis of wide range of variables such as:

Geographic segmentation: – It can be carried out based on locality, climate, regional, national and population density. For example, if a company manufactures farm tools than geographical area will be a significant aspect in segmenting the market. Moreover, it depends on the company to choose the type of location as per their requirements and products.

Demographic segmentation: – It can be carried out based on various demographic aspects such as age, income, occupation and buying capacity, etc. This is the most frequently used method for differentiating the groups. For example, Indian watch manufacture company ‘Titan’ has segmented the market on different demographic factors. They have launched their product based on the criteria of age, income and purchasing power. Some of the famous brands under ‘Titan’ are Fast track, Raga, Edge and Nebula etc.

Psychographic segmentation: – In this method the groups are segmented according to their values and lifestyle. Many organizations launch their products based on aspects, expectations and feelings in their chosen market. These are the factors which decide the consumer purchasing power. Owing an expensive product is always being a status symbol for the people.

Behavioral segmentation: – An organization can segment the market based on consumer behavior or buying pattern. It can be carried out by evaluating customer importance and their impression towards various products in the same segment.

Market targeting process: – After selecting the desired segments an organization should set the priority for each segment and then applying targeting approaches on different segment based on their priority, but in some cases the targeting approaches are applied on the entire market rather differentiating it. In general a company can practice three different approaches for targeting the market as stated by Wood (2004) such as mass marketing, micromarketing and concentrated marketing. The main idea behind targeting the market is that an organization finds more convenient when facing with the situations like publicity of their product, costing, distribution and cost effective services.

Market positioning process: – As stated by Wilson & Gilligan (2005) positioning is a campaign for the consumer’s mind, which decides fortune or failure based on consumer appreciation on the company or brand. The most important aspect of positioning a product or a brand into the mind of consumer is that how efficiently an organization managed its product in the targeted market and another important aspect is how proficiently an organization focused its product above other competitive products available in the market. Moreover, positioning is not implemented only once over a period of time, as the demand and nature of the market change with the time an organization should also look for the different options for their development of the product.

KEY STRATEGIES IN RELATION TO MARKET GROWTH AND COMPETITIVE POSITIONING

An effective marketing strategy plays a significant role in the market growth and competitive positioning of a company. The key strategies in relation to market growth and competitive positioning can be explained by Ansoff product and market growth matrix.

Ansoff analysis is a very effective tool for market planners to implement key strategies for the success of company in the market with its current or brand new product. It also helps an organization to examine their performance in the targeted areas. The four key strategies of Ansoff matrix are as follows (Ansoff, I.H., 1987):

Market Penetration: – In this an organization penetrates the market with their current or brand new products and applies all marketing strategies in the targeted area to gain the new consumers as well as the competitor’s portion in the market. A company can choose other preferences for hyping their product and services such as advertisement, publicity, discount offers, etc.

Product development: – Product development is a very decisive process for any organization. A company can launch new products with their current products in the market to gain new consumers. This will help the company to enhance its market share and to stay in the competitive environment.

Market development: – It is the strategy which an organization can implement in order to promote their product and services in the new or existing market. A company can target different segments for their growth in the market or to make more profit.

Diversification: – In this a company can monopolize in the new market by supplying a modern range of products other than their current products. In this way, an organization can gain their market share and consumers in the new market.

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MARKETING MIX

Marketing mix process

Marketing planning is a part of an organization’s marketing strategy which is formed to operate on a focused ambience. However, marketing mix plays a vital role in marketing design planner. The marketing mix is classified into four important elements, which are suggested by McCarthy (1960) as Product, Price, Place and Promotion. Sometimes these are also called as 4P’s. The mix of all these key elements is the base of every marketing proposal. Moreover, these should be examined entirely in order to target consumers.

The marketing mix or 4P’s can be examined by taking a scenario “Same product in two different markets or countries”:

Product: – This is the most prominent aspect of marketing mix and strategic planning of the marketing mix begins with this element. There are many factors, which are to be considered while selecting a product for a particular market such as product life cycle, quality, design and packaging. For launching a same product in two different markets or countries, the first and foremost things for an organization or market planner are to examine the demographic factor i.e. which age group an organization will target and the need of product in that specific market because the business environment in two distinct markets or countries may be varied in many aspects. Product policies can be explained by taking an example of KFC a well-known fast food restaurant having a presence in many countries across the world. They have a wide range of products as per the geographic, demographic and psychographic demands of the consumer. So it is very significant for a company to analyse all these factors before launching a product in the market.

Price: – This is the second most prominent component of the marketing mix and sometimes a most difficult one to handle for marketing planners. In many aspects pricing can be used as a very influential tool from the point of view of marketing and impression of a product or a handy variable in competition. In order to set the price of a product it is very important for an organization to examine the consumer needs and cost for generating buyer satisfaction and to earn a profit. A company should look at all the aspects of fixed and variable cost such as manufacturing cost, salaries, light, electricity and other expenses before finalizing the price of a product, sometimes an organization also uses breakeven reduction for pricing strategies. When considering the pricing strategy of a product in two distinct markets the price of a product does not change considerably in the context with the different section of the market (Wilson & Gilligan, 2005). Taking the example of KFC, the price of a product is generally set by evaluating income generation, consumer behavior and consumption of a targeted market as well as on the lifestyle of the citizens, which means targeting the class of the people like middle class or upper class.

Place: – Place and distribution reflect an image of a company in providing a competent and convenient service to its customers and also distinguish the services from the competitor point of view. Distribution plan is all about moving a product and services through a proper distribution channel. An effective distribution plan can moderate company’s expenses. For example, Nokia (Wood, 2004) a world largest manufacturer of mobile phones having billion of customer around the world. The sales of Nokia are mainly depended on the services, which they are providing to the customer and reaching their products through a well-managed distribution channel, which incorporates service providers, distributors and retailers. Moreover, Nokia has a tie-up with the local service provider to fulfill the customer needs in different markets or countries. Similarly, when a product is introduced in two distinct markets these distribution strategies can be applied to deliver a product in the hands of the consumer through a proper channel.

Promotion: – Promotion is a very effective tool in a marketing planning process. It is used to produce a good image of a company and its product through various means of communication services in the minds of the customer. There are lots of different resources available for promotion like advertising, events, discount offers, publicity, etc. when it comes to the introduction of a product in two varied markets or countries, the promotion planning plays a vital role in strengthening the sale of a product. Moreover, the promotion of the services should be in regional language for better understanding. Another way of promotion is sponsorship, which can be very useful in strengthening the image of a company as Nokia is a co-sponsor of cricket world cup 2011. However, at the last what matters are the results of the promotion. An organization should conduct a market analysis on, to what extent the promotion is successful.