LAPLeadership, Attitude, Performance...making learning pay!

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1 LAPLeadership, Attitude, Performance...making learning pay! Market Planning LAP 7 Performance Indicator: MP:007 Student Guide A Winning Plan Table of Contents It s Good to Have a Plan 2 Nature of Marketing Plans Objectives: Explain the benefits associated with having a marketing plan. Put It on Paper Why bother learning about the nature of marketing plans? 7 2 Identify the components of a marketing plan. What would you do? King Avenue, P.O. Box 12279, Columbus, Ohio Ph: (614) Fax: (614) Details: Copyright 2016 by MBA Research and Curriculum Center Use what you ve learned right now! 20 LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 1

2 Madelyn just moved to the big city and has started her own small courier business. She has a small car and a bicycle and is making herself available to deliver documents and packages throughout the city. Now, she just needs to get her name out there. A national pizza chain has decided to introduce a new barbecue chicken specialty pizza. The company is currently successful in its target market, but it really wants to push this new product in the coming year. Both Madelyn and the pizza company need marketing plans to achieve their business goals. Marketing plans organize and provide focus for a firm s marketing strategies. Whether you want to start your own small business, or work for a big, established company, marketing plans are essential tools for organizational success. Learn more about marketing plans and the benefits they can provide for your business. It s Good to Have a Plan What s a marketing plan? There s an old saying that goes something like this: Those who fail to plan, plan to fail. In other words, success is hard to achieve without putting in some thoughtful, careful planning. This fact is especially evident in the business world. Whether a business is just starting up or has been established for decades, it must have a marketing plan in place to succeed. Many different ideas and strategies must come together to form a successful marketing effort. That s why it s important to think carefully and plan ahead! Melpomenem/iStock/Thinkstock LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 2

3 A marketing plan is a set of procedures or strategies for attracting the target customer to a business. There are three common reasons for writing a marketing plan: 1. The marketing plan may be included as part of the organization s overall business plan. 2. The plan may be presented to upper management by the marketing team as a way to demonstrate and solidify its goals and strategies for the upcoming year. 3. The marketing plan may outline the company s intentions for introducing a new product, entering a new target market, or trying a new marketing strategy. Marketing plans are also: Important for businesses both big and small. A small business may have one simple marketing plan, while a major corporation may have hundreds of them one for each individual product. istock/thinkstock Check out Free Sample Marketing Plans by Mplans.com to see how marketing plans work for many types of businesses: sample-marketing-plans.php?a=mc#. VmsU8vkrKUl. Read by a wide audience. Marketing plans may be read by marketing team members, employees in departments throughout the company, upper management, board members, potential investors, etc. Time-consuming. Writing a marketing plan can involve quite a bit of time, effort, and research, but your business and product have a much greater chance of success if you do the legwork first. LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 3

4 For your benefit How exactly do marketing plans contribute to success in business? Here are some specific benefits your organization can receive through the process. Understanding past marketing decisions and outcomes better. They say that history repeats itself. In business, sometimes you want it to, and sometimes you don t! When a business creates detailed marketing plans, it allows itself the opportunity to look back and see which strategies worked well and which didn t. The marketing team can build on its knowledge of the past to create ideas and plans for the future and to avoid repeating mistakes unnecessarily. Jacob Ammentorp Lund/iStock/Thinkstock Understanding target market(s) better. The customer is king no firm achieves success unless it satisfies customers needs and wants. To do this, the business must have a deep understanding of its target market(s). The level of research and detail required to write a marketing plan helps the marketing team to know and understand its target market(s) as well as it possibly can. Setting goals. Writing a marketing plan forces the marketing team to set specific goals. When goals are put in writing, they are easier to remember, to stick to, to measure, and to achieve. The Internet makes it easier than ever to research target markets and understand customers. LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 4

5 Planning marketing strategies with more precision. Once marketing goals have been set, marketing strategies must be designed and implemented to achieve those goals. Without a marketing plan, things can get chaotic. One member of the team may plan a television advertising campaign, while another sets sales promotions into action, and yet another runs social media campaigns without coordination, these marketing strategies can compete with each other and create confusion among customers. A marketing plan provides clear guidance on what strategies will be used, by whom, and when. Obtaining funding. A very important benefit of writing a marketing plan can be obtaining funding for specific products or projects. This funding might come from within the company or from outside investors. For example, large companies often have different marketing teams for each of their specific products. These teams might have to compete to get the funding they want out of each yearly budget and a well-written marketing plan can be the key to obtaining it. A small business, on the other hand, might need investment dollars to get off the ground. A marketing plan, as part of an overall business plan, is something that potential investors will want to see before deciding whether or not to put money into the business. vitchanan/istock/thinkstock Often, marketers must present their plans in order to obtain funding. A well-done plan should demonstrate the importance of investing in marketing efforts and help the presentation run smoothly! LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 5

6 Providing direction for everyone in the organization. Marketing plans provide clear direction for everyone in the organization, both inside and outside the marketing team. All company departments are interrelated. Can you see why sales representatives, accounts payable clerks, and shipping supervisors would all need to know what s in the marketing plan? When everyone in the organization is informed, it s easier to stay on track. Tracking progress more effectively. It s hard to gauge the effectiveness of marketing when no specific objectives have been set. A well-written marketing plan allows a business to track its progress in a measurable way. Being able to demonstrate success can be essential for obtaining further funding or getting the go-ahead to continue with certain products or marketing strategies. istock/thinkstock The video The Importance of a Marketing Plan in Generating Results demonstrates a real-life example of a marketing plan in action: watch?v=hxmr-0b_r9k. Summary A marketing plan is a set of procedures or strategies for attracting the target customer to a business. Writing a marketing plan can have many benefits for a business, including understanding past marketing decisions and outcomes better, understanding target market(s) better, setting goals, planning marketing strategies with more precision, obtaining funding, providing direction for everyone in the organization, and tracking progress more effectively. 1. What is a set of procedures or strategies for attracting the target customer to a business? 2. What types of businesses use marketing plans? 3. What are the benefits of writing a marketing plan? LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 6

7 Put It on Paper Not every marketing plan looks exactly the same. Different organizations have different needs, types and numbers of products, and audiences. Therefore, marketing-plan formats may vary from business to business. Most marketing plans, however, will include the following sections. Executive summary. The executive summary serves as an introduction. It allows the reader to understand the purpose of the marketing plan. It should include: Background information on the organization, for those readers who may not be familiar with the company The organization s mission statement A brief introduction to the organization s management team and/or the marketing management team A brief review of the plan s highlights and objectives Although the executive summary may be short compared to other sections of the marketing plan, its importance should not be underestimated. For many readers, this is the only part of the marketing plan that they will take the time to read. Many important decisions may be made based solely upon the information contained in the executive summary. For this reason, the summary must clearly and concisely state the purpose of the marketing plan. LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 7

8 Experts tend to disagree on when the executive summary should be written. Traditionally, it has been written after the rest of the marketing plan, as a summary, then positioned at the beginning of the document. Some experts, however, recommend writing the executive summary first, as an outline for the rest of the plan. No matter what the authors decide, the executive summary must sell the marketing plan to the reader, and it must include all the major highlights from the body of the plan. You re on the marketing team for a product made by a big company that also makes hundreds of other products. To get the money you need out of the budget this year, your marketing plan has to wow those in upper management. In the financial plans section of your document, one of your team members has overestimated the expected revenues your marketing programs should bring in. He explains to you that he has not fudged the numbers too much, just enough to give your team the edge for the budget money it needs. He tells you that overestimating is not exactly lying, and it s all right to round up because your team really needs funding for its marketing programs. What do you think? Is it okay to inflate the numbers a bit if you believe it will help the company in the long run, or is it unethical? LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 8

9 Situation analysis. In a marketing plan, situation analysis is the determination of a firm s current marketing situation. It answers the basic question Where do things stand right now? and serves as a snapshot of the business s current state of affairs as related to marketing. Situation analysis is an important and time-consuming component of a marketing plan. It covers the following key areas, which are sometimes referred to as the 5 C s. Company (the organization itself) What are the company s overall goals? What is the company s organizational culture like? What goods and services does the company currently produce? What are the features and benefits of the company s goods and services? What makes the company unique? What is the company s current financial situation? Customers (target market) What is the size of the company s current target market? What are the demographics (defining characteristics) of the current target market? What are the purchasing behaviors of the current target market? LAP-MP-007-SP 2016, MBA Research and Curriculum Center olm26250/istock/thinkstock A Winning Plan 9

10 Competitors What is the market position of the company s main competitors? What are the strengths and weaknesses of the company s main competitors? Collaborators How strong are the company s relationships with its current distributors? Does the company currently have any subsidiaries or joint ventures? If so, how do these relationships affect the company s current marketing situation? Climate (external factors): How are the following trends affecting the company s current marketing situation? Social and cultural Demographic Economic Technological linetic/istock/thinkstock Understanding the competition is essential to achieving success. Political and legal LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 10

11 Some marketers choose to summarize this section of the marketing plan with a SWOT analysis chart. This is a chart that lists the strengths and weaknesses in a company s internal environment, as well as its external opportunities and threats. Using a SWOT chart can be an effective way to illustrate the conclusions drawn in the situation analysis section of the plan. istock/thinkstock To see an example of a SWOT analysis chart, check out SWOT Analysis Examples for Every Business Situation by Jim Makos: Zoonar RF/Zoonar/Thinkstock LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 11

12 When entering a new target market, it is important to carefully research demographic information, such as median income, that might impact marketing strategy. robuart/istock/thinkstock Desired target market. Next, the marketing plan should include information on the target market the company desires to reach. If the plan is not written for a new target market or a new product, it may not need to include this particular section. For example, Madelyn s courier business targets other small businesses (having 50 or fewer employees) in the city. She provides information about this target market in the situation analysis portion of her plan she does not need to repeat it here. However, for a bigger company entering a new target market or introducing a new product, further information will be needed. LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 12

13 This section of the marketing plan should include a full demographic description of the target market and should provide answers to questions such as: What does our target market want and need? How will our target market use this product? How much will our target market be willing to pay for this product? What message do we want our target market to hear from our marketing efforts? How do we want to position our brand to the target market? r_a_v_e_n22/istock/thinkstock Marketing objectives. This section of the marketing plan outlines the specific marketing objectives that the company wants to achieve. Keep in mind that marketing objectives serve as a foundation for achieving sales and overall financial objectives as well. Setting marketing objectives is a very important task! Like any effective goal, a marketing objective should be SMART specific, measurable, achievable, realistic, and time-bound. It s not enough to say, We want our target market to love our new product. The objective must have more focus. For example, how much market share does the organization want to achieve? By what date? LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 13

14 There are many different types of marketing objectives that a company can set for itself. They can relate to issues including target markets, promotions, channels of distribution, and even the research and development of new products. A marketing plan may even include different sets of objectives for different groups within the same target market. A company may set different goals for reaching new customers, for instance, than it does for reaching existing customers. The marketing objectives section also mentions any issues that might affect the organization s ability to reach its goals. Examples of these types of issues include a competitor coming out with a similar product or a predicted downturn in economic activity. The plan should address how the organization will overcome these obstacles with its marketing programs. Tracking financial markets can help you foresee changes in the economy that could affect your marketing strategy. DragonImages/iStock/Thinkstock Marketing strategies and programs. Here is the heart of the marketing plan. This is usually the longest section of the plan, taking up 50 percent or more of the overall length. The plan s authors may start out by identifying a general marketing strategy, such as growth (i.e., obtaining a bigger market share), stability (i.e., keeping the same market share), or market exit (i.e., taking a product off the market before introducing a replacement). LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 14

15 The marketing strategies and programs section then details the specific marketing activities that the plan proposes to undertake. This includes schedules, timetables, and the assignment of responsibility for all the tasks involved in: Product Branding Variety Features Benefits Quality Warranty Packaging Labeling For example, a large corporation such as Procter & Gamble may want to introduce a new brand of anti-chlorine shampoo formulated specifically for frequent swimmers. The marketing plan will cover all aspects of the product itself its name, its special ingredients, what it will look like, etc. LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 15

16 Price List price New product pricing Bundling Discounts Price competition Credit terms Payment periods Leasing options Procter & Gamble s marketing plan for its new shampoo brand will include specific details about price. How much will it cost? Will the company issue coupons to encourage customers to buy the new product? For big-ticket items such as cars or computers, a marketing plan will likely include detailed information about credit terms and payment periods offered to customers. Remember, marketing strategies and programs are key to achieving sales and financial goals, so price decisions are very important! LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 16

17 Place (Distribution) Channel members Locations Inventory Coverage (how widely the product will be distributed) Transportation Warehousing Order fulfillment How will Procter & Gamble get its new shampoo into the hands of its target market? Which wholesale and retail intermediaries will it choose to become channel members? How much of the new product will be produced in the next quarter or year? All these questions will be answered in this section of the marketing plan. LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 17

18 Promotion Advertising Sales promotions Public relations Personal selling Direct marketing Internet marketing The marketing plan must detail what promotional activities will be undertaken. For example, Procter & Gamble is targeting frequent swimmers with its new anti-chlorine shampoo. It might plan to advertise at aquatic centers or during the television commercial breaks of the Summer Olympic Games. The company might also plan sales promotions for members of high school and college swimming and diving teams. Depending on the size of the company, marketers might complete a separate plan to outline, schedule, and budget specifically for promotional activities. LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 18

19 Financial plans. This section of the marketing plan provides details on the expected expenses and profits of the plan s programs. How much will each specific marketing program or project cost? What are the projected revenues for each program? It s all outlined here, in detail. Performance and implementation. In this section of the plan, marketers explain their expected results and indicate how the marketing plan s progress will be measured. This portion also describes potential changes and adjustments that can be made to keep the marketing plan on track. Appendix. The appendix includes any charts, graphs, or miscellaneous materials related to the marketing plan. It might include detailed research findings that are only summarized in other parts of the plan, samples of proposed marketing literature, press clippings, product photographs, estimates from vendors, etc. Careful planning in the form of a well-researched, wellwritten marketing plan can mean the difference between your business s success or failure. Take the time to do it right, and then reap the rewards of your hard work. Nednapa/iStock/Thinkstock Charts and graphs provide visual representation that can supplement information in other parts of the marketing plan, making it engaging and easier to understand. istock/thinkstock The video Marketing Plan: How to Get Started by Soma Jurgensen provides a detailed walkthrough that applies the concepts of a marketing plan to real-world examples: LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 19

20 Summary Each marketing plan is unique, but a general plan includes the following sections: executive summary, situation analysis, desired target market, marketing objectives, marketing strategies and programs, financial plans, performance and implementation, and appendix. 1. Describe the following parts of a marketing plan: a. Executive summary b. Situation analysis c. Desired target market d. Marketing objectives e. Marketing strategies and programs f. Financial plans g. Performance and implementation h. Appendix Think about a local business in your community, whether it be a restaurant, bookstore, coffee shop, or clothing boutique. Do you think this business has a marketing plan? Why does this business need a marketing plan? What areas of the marketing plan do you think are most important for this business? Can you see the effects of the marketing plan in action? If so, how? If the business did not have a marketing plan, do you think it would still be able to keep running? Why or why not? LAP-MP-007-SP 2016, MBA Research and Curriculum Center A Winning Plan 20