Understanding Marketing Planning, Analysis, and Strategies

Posted on May 31, 2024 in Economy

Marketing Planning

A marketing plan outlines the marketing objectives (market share, sales, brand awareness), strategy, budget, and activities required to achieve those objectives. It considers various departments:

  • Operational Department: Product availability and timing.
  • Human Resources: Staffing needs and skillsets.
  • Financial Forecast: Projected profits and cash flow.

Elasticity of Demand

Income Elasticity: (% change in quantity demanded) / (% change in income)

  • Income Elastic (Luxury Product): Demand increases more than income.
  • Normal Product: Demand increases proportionally with income.
  • Inferior Product: Demand decreases as income increases.
  • Income Inelastic: Demand changes less than income (in %).

Cross-Price Elasticity of Demand: How demand for product A changes with the price of product B.

(% change in quantity demanded of A) / (% change in price of B)

  • Substitutes: Demand for A increases when the price of B increases.
  • Complements: Demand for A decreases when the price of B increases (negative cross-price elasticity).

Promotional Elasticity of Demand: Sensitivity of demand to changes in promotional spending.

(% change in quantity demanded) / (% change in promotional expenditure)

Weather Elasticity of Demand: Sensitivity of demand to weather changes.

(% change in quantity demanded) / (% change in weather factor, e.g., rainfall)

The Need to Forecast Marketing Data

Companies analyze the market before creating a marketing plan to understand:

  • Market Size: Value or volume of sales.
    • Value of sales: Total money spent on products.
    • Volume of sales: Number of units sold.
  • Market Share: Proportion of the market held by firms.
  • Entry Barriers: Costs and challenges of entering the market.
  • Market Trends: Growth, sales fluctuations, etc. Examines changes in sales value and volume.
  • Sales Patterns: Seasonality, for example.
  • Substitute Products: Likelihood of customers switching.

Methods of Analyzing Trends

  • Moving Averages: Smoothing out data fluctuations.
  • Extrapolation: Projecting past data patterns into the future.
  • Correlation: Identifying links between variables.
    • Positive correlation: E.g., advertising and sales.
    • Negative correlation: E.g., price and sales.

Other Ways of Estimating Future Sales

  • Market Research:
    • Primary research: Gathering new data.
    • Secondary research: Using existing data.
  • Expert Opinions: Leveraging experience or hiring industry specialists.

Benefits of Sales Forecasting

  • Improved preparedness.
  • Enhanced planning.
  • Flexibility for updates.

Information technology advancements have made data collection easier.

Reliability of Forecasts

Forecasts are more likely accurate when:

  • Trends are extrapolated under consistent market conditions.
  • Test markets represent the target population.
  • Experts provide forecasts.
  • Forecasts focus on the near future.

Forecasts can be inaccurate due to:

  • Sudden shifts in customer behavior.
  • Flawed market research.
  • Inaccurate expert predictions.
  • Long-term forecasting challenges.

The Need for a Coordinated Marketing Mix

Developing a marketing strategy involves considering:

  • Marketing objectives.
  • Target market.
  • Product/service offerings.
  • Competitive positioning.

Marketing Strategy Development Process

  1. Set corporate objectives.
  2. Define marketing objectives.
  3. Analyze internal environment (strengths and weaknesses).
  4. Analyze external environment (opportunities and threats).
  5. Create a marketing strategy.
  6. Implement the strategy.
  7. Review and adapt.

Reasons to Change a Marketing Strategy

  • Shifts in objectives.
  • Changes in market conditions.
  • Competitor actions.

International Markets

Reasons for Overseas Expansion

  • Saturated domestic market.
  • Increased competition or regulations domestically.
  • Opportunities in specific foreign markets.

Methods of Entry into International Markets

  • Exporting: Low-risk initial strategy.
  • Overseas Marketing: Expanding marketing efforts abroad.
  • Overseas Representatives: Establishing a presence in the foreign market (low risk).
  • Foreign Partnerships: Collaborating with local partners (higher risk).
  • Foreign Direct Investment: Acquisitions or setting up operations (high risk).

Global vs. Localized Strategies

  • Global Strategy: Standardized marketing mix across markets.
  • Localized Strategy: Adapting the marketing mix to local conditions.

Factors to Consider for International Expansion

  • Costs.
  • Risks.
  • Competition.
  • Market understanding.
  • Time frame.
  • Company strengths and experience.
  • Entry mode.
  • Potential returns (profitability).

Strategic Analysis

SWOT Analysis

  • Strengths.
  • Weaknesses.
  • Opportunities.
  • Threats.

PEST(EL) Analysis

Analyzing the external macro environment:

  • Political.
  • Economic.
  • Social.
  • Technological.
  • Environmental.
  • Legal.

Vision, Mission, and Values

Guiding principles for the organization.

Porter’s Five Forces Analysis

  1. Rivalry: Number and intensity of competitors.
  2. Supplier Power: Influence of suppliers based on their size and dependence on the firm.
  3. Buyer Power: Influence of buyers based on their number and availability of alternatives.
  4. Entry Threat: Ease of new competitors entering the market.
  5. Substitute Threat: Availability of alternative products or services.

Actions to Shape the Competitive Environment

  • Create high entry barriers.
  • Reduce the number of competitors and substitutes.
  • Minimize supplier power.
  • Decrease buyer power.

Corporate Culture

Types of Culture

:

-Power culture

oOne dominant person (or few key people)

oDecisive leadership, quick decision making, consistent approach

oIf company grows; overloaded boss, slower decision making, dependent employees.

-Role culture

oRules and procedures

oHierarchy

oFollow systems and do what is expected of you to do

oCommunication via channels

oPredictable outcomes in terms of performance; certainty.

oMight be inflexible to change.

-Task culture

oValue of an individual to a project depends on expertise rather than formal titles.

oExpert teams

oCoordinating this can be difficult

-Person culture

oWell-qualified individuals who respect each others’ skills and knowledge.

oSelf-reliant employees

oOperate independently, share expertise and knowledge when needed.

oMay lack consistency and may overlap

National culture (Hofstede)

-Power distance; distance between power in a company

-Uncertainty avoidance; the extent to which employees need to know exactly what they are supposed to do

-Individualism V collectivism; the extent to which people feel part of a team or whether they want to work on their own.

-Masculinity V femininity; the extent to which employees feel they need to be dominant and assertive or whether they feel that concern for others is more important.

-Long-term orientation: Extent to which individuals planned ahead.