Businesses that succeed do so by creating and keeping customers. They do this by providing better value for the customer than the competition. Marketing management constantly have to assess which customers they are trying to reach and how they can design products and services that provide better value (“competitive advantage”). The main problem with this process is that the “environment” in which businesses operate is constantly changing. So a business must adapt to reflect changes in the environment and make decisions about how to change the marketing mix in order to succeed. This process of adapting and decision making is known as marketing planning.
So, marketing planning is a plan involves designing activities relating to marketing objectives and attach with the capability of changing marketing environment. It contains with the issues of product lines, distribution channels, marketing communications and pricing.
Marketing planning process is a fundamental part of Marketing Audit. It is conducted not only at the beginning of the process but also during and after the process completion. Marketing audit not only consider its own plan but also considers internal and external factor that affects marketing planning. Some important tools used by marketing audit are SWOT for internal and external environment where as PEST and Five Forces Analysis which focus only on the external environment.
Where does marketing planning fit in with the overall strategic planning of a business?
Strategic planning which you will cover in your studies of “strategy” is concerned about the overall direction of the business. It is concerned with marketing, of course. But it also involves decision-making about production and operations, finance, human resource management and other business issues. The objective of a strategic plan is to set the direction of a business and create its shape so that the products and services it provides meet the overall business objectives.
Marketing has a key role to play in strategic planning, because it is the job of marketing management to understand and manage the links between the business and the “environment”. Sometimes this is quite a straightforward task. For example, in many small businesses there is only one geographical market and a limited number of products (perhaps only one product!). However, consider the challenge faced by marketing management in a multinational business, with hundreds of business units located around the globe, producing a wide range of products. How can such management keep control of marketing decision-making in such a complex situation? This calls for well-organised marketing planning.
What are the key issues that should be addressed in marketing planning?
The following questions lie at the heart of any marketing (or indeed strategic) planning process:
- Where are we now?
- How did we get there?
- Where are we heading?
- Where would we like to be?
- How do we get there?
- Are we on course?
Steps of the strategic marketing planning process
Several stages have to be completed in order to arrive at a strategic marketing plan. These are summarized below:
- Mission: A company’s mission is its reason for being. The mission often is expressed in the form of a mission statement, which conveys a sense of purpose to employees and projects a company image to customers. In the strategy formulation process, the mission statement sets the mood of where the company should go.
- Corporate Objectives: Objectives are concrete goals that the organization seeks to reach, for example, an earnings growth target. The objectives should be challenging but achievable. They also should be measurable so that the company can monitor its progress and make corrections as needed.
- Marketing Audit: Identification, measurement, collection, and analysis of all facts and opinions that affects a company’s problem. The application of judgement to uncertain areas that remain after the initial analysis.
- SWOT Analysis: A SWOT analysis is a tool, used in management and strategy formulation. It can help to identify the Strengths, Weaknesses, Opportunities and Threats of a particular company. Strengths and weaknesses are the internal factors that create value or destroy value. Opportunities and threats are the external factors that create value or destroy value.
- Marketing Assumptions: There are certain key determinants of success in all companies about which assumptions have to be made before the planning process can proceed. For example, it would be no good receiving plans from two product managers, one of whom believed the market was going to increase by 10 percent, while the other believed the market was going to decline by 10 percent.
- Marketing Objectives and Strategies: Marketing objectives can be defined for each product-market segment in terms of revenue, volume or market share whereas product, price, place and promotion define the marketing strategies.
- Forecasts of Expected Results: Having completed this major planning tasks, it is normal at this stage to employ judgement, analogous experience, field tests and so on to test out the feasibility of the objectives and strategies in terms of market share, costs, profits, etc.
- Create Alternative Plans: It is also normal at this stage that alternative plans and mixes are considered, if necessary.
- Marketing Budget: The incremental marketing expense can be considered to be all costs that are incurred after the product leaves the factory, other than costs involved in physical distribution, the costs of which usually represent a discrete subset.
- Detailed Action Plan: The general marketing strategies would be developed into specific sub-objectives, each supported by more detailed strategy and action statements. For example, a product-based company might have a product plan, with objectives, strategies and tactics for price, plan and promotion as necessary.
The extent to which each part of the above process needs to be carried out depends on the size and complexity of the business. In an un diversified business, where senior management have a strong knowledge and detailed understanding of the overall business, it may not be necessary to formalise the marketing planning process. By contrast, in a highly diversified business, top level management will not have knowledge and expertise that matches subordinate management. In this situation, it makes sense to put formal marketing planning procedures in place throughout the organisation.
Why is marketing planning essential?
Businesses operate in hostile and increasingly complex environment. The ability of a business to achieve profitable sales is impacted by dozens of environmental factors, many of which are inter-connected. It makes sense to try to bring some order to this chaos by understanding the commercial environment and bringing some strategic sense to the process of marketing products and services. A marketing plan is useful to many people in a business. It can help to:
- Identify sources of competitive advantage
- Gain commitment to a strategy
- Get resources needed to invest in and build the business
- Inform stakeholders in the business
- Set objectives and strategies
- Measure performance
Marketing planning involves the selection of a marketing strategy and the tactics of implementing it to reach a defined set of goals. Marketing planning differs from strategic market planning in three ways: time horizon, responsibility, and details. The components of marketing planning are executive summary, current marketing situation, threats and opportunities, objectives and issues, marketing strategies, action plans and control measures. The strategic planning process consists of developing the company’s mission; objectives and goals, business portfolio, and functional plans. Controlling requires that various relevant aspects of performance be measured and compared with corresponding aspects of the plan. The purpose of the situation assessment is to identify threats and opportunities posed by changes in the environment (environmental assessment).
The issue of strategy formulation and planning for any new product or market is dependent on the product life cycle. There are three basic approaches for strategy formulation for new products. The essential task is to identify a proper product market combination where the barriers to entry are at a minimum. A marketing strategy has to take several factors into account, the prime one being the company’s position in the particular market, specifically whether it is a market leader, challenger, follower or nicher. There are four major marketing strategies depending on the timing of the technologically intensive firm’s entry into an industry.
Corporate strategic planning involves four planning activities. The first is developing a clear sense of the company’s mission. A well-developed mission statement provides employees with a shared sense of purpose, direction, and opportunity. The second activity calls for identifying the company’s strategic business units (SBU). Its customer groups, customer needs, and technologies define a business. SBUs are business units that can benefit from separate planning, face specific competitors, and be managed as independent profit centers. The third activity calls for allocating resources to the various SBUs based on their market attractiveness and company business strengths. Several portfolio models, including those by Boston Consulting Group and General Electric, are available to help corporate management determine the SBUs that should be built, maintained, harvested, or divested. The fourth activity calls for expanding present businesses and developing new ones to fill the strategic planning gap. The tools described provide powerful support for the formulation of marketing strategies. In particular, they are useful to evaluate the firm’s current Product-Market portfolio, evaluate competitors’ current Product-Market portfolio, project the firm’s future competitive situation and guide the development of a Strategic Intelligence System.
The need for a lengthy time frame in industrial marketing can arise from a variety of reasons, like long lead times, long life cycles of many existing industrial products and alternative sources of resources on a long term basis. The selection of a suitable forecasting technique depends on (a) identification of new opportunities or threats (b) identification of potential markets and (c) market estimation and product specification.