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Oliver Heil  Marketing-Plan  WS 2006/2007
Professur für Marketing und Allg. BWL, Johannes Gutenberg-Universität Mainz
William A. Cohen: The marketing plan
PROLOGUE
What a marketing plan will do for you
1. to act as a road map
2. assist in management control and implementation of strategy
3. inform new participants of their roles and functions in implementing the plan and reaching your
objectives
4. assist in helping to obtain resources for implementation
5. stimulate thinking and make better use of limited resources
6. help in the organization and assignment of responsibilities, tasks and timing
7. help you become aware of problems, opportunities and threats in the future
 getting in a competitive position before you start
 types of marketing plans:
– the new product plan
– annual marketing plans
1 Planning the development of a marketing plan
The structure of the marketing plan
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I.
II.
executive summary
– synopsis of the entire plan
– description of the product or service
– differential advantage (over that of our competitors)
– the investment needed
– anticipated results (return on investment, sales, profits, market share, etc.)
table of contents
introduction
– what is the product or service? (detailed product description, details/background of our
project)
– how does the product or service fit into the market? (why is there a demand for it?)
situational analysis
A. the situational environs (environmental scanning)
1. demand and demand trends
– what is the forecast demand? – growing, declining or levelled off?
– who is the decision maker? – how, when, where, what, why does he buy?
– who is the purchase agent? – how, when, where, what, why does he buy?
2. social and cultural factors
3. demographics of consumers; educational background; income; age; etc.
4. economic and business conditions for this product at this time and in the geographical
area selected (is business good or bad?)
5. state (effect) of technology for (on) this class of product
– is it high-tech state-of-the-art?
– are newer products succeeding older ones frequently (short life cycle)?
6. politics (current or otherwise)
7. laws and regulations
B. the neutral environs (have to do with groups or organizations)
Oliver Heil  Marketing-Plan  WS 2006/2007
Professur für Marketing und Allg. BWL, Johannes Gutenberg-Universität Mainz
III.
IV.
V.
VI.
VII.
VIII.
IX.
1. financial environment
– availability or unavailability of funds
2. government environment
– current legislative action in state, federal or local government
3. media environment
– does current publicity favour our project?
4. special interest environment
– influential groups (i.e. consumer organizations)
C. the competitor environs
1. main competitors
– their products; plans; experience; know-how; financial, human and capital
resources; suppliers; current and future strategy
– do they enjoy favour with their customers? – if so, why?
– their marketing channels?
– strengths and weaknesses?
D. the company environs
1. company
– products; experience; know-how; financial, human and capital resources; suppliers
– do we enjoy favour with our customers? – if so, why?
– strengths and weaknesses?
the target market
– who are our customers? (exact description) – how, when, where, what, why, how much, how
frequently do they buy? (some segments of the total market are far more likely candidates
than others)
– demographics (i.e. age, income, education); geography (i.e. location); psychographics (i.e.
how they think); lifestyle (i.e. activities, interests, opinions); etc.
– why is this the target market?
– how large is it? (size of each market)
problems and opportunities
– state or restate each opportunity (list them one by one) – why is it an opportunity? how do
we intend to take advantage of each of them?
– state or restate each problem (list them one by one) – why is it a problem? what do we
intend to do about each of them? (later problems later!  VI, VII)
– clearly state the competitive differential advantage
marketing objectives and goals
– accomplishments we intend to achieve:
– objective = overall goal, more general, may not be quantified (i.e. “to establish a
product in the marketplace”)
– goal
= quantified in terms of sales volume, profits, market share, return on
investment, etc. (i.e. “to sell 10.000 units a year”)
– no conflicting objectives/goals!
marketing strategy
– what-to-do section: differentiating our product from that of the competitors, segmenting the
total market, positioning the product in relation to other products, carving out and defending
a certain niche, timing in entering the market, etc.
– alternatives for the overall strategy (i.e. for new market penetration: enter first, early or late;
vertically or horizontally; exploit different niche strategies)
– if at the strategic management level: market attractiveness/business capability matrix and
product life cycle analysis
marketing tactics
– how will the marketing strategy be implemented/carried out?
– marketing mix (tactical actions): product, price, promotion, place (distribution), etc.
implementation and control
– calculate breakeven point, make breakeven chart
– forecast other important information to help control the project
– compute sales projections and cash flows on a monthly basis for a 3-year period
– determine start-up costs and a monthly budget, along with the required tasks
summary
– summarize advantages, costs, profits
Oliver Heil  Marketing-Plan  WS 2006/2007
Professur für Marketing und Allg. BWL, Johannes Gutenberg-Universität Mainz
X.
– restate he differential/competitive advantage
– restate why the plan will succeed
appendices
– all relevant supporting information
2 Scanning your environment
I. introduction
– analysis of the product life cycle (PLC) (horizontal: time; vertical: sales and profits)
– different strategies work better for different stages (the curve changes shape from stage to
stage): introduction, growth, maturity, decline
– a new product is not automatically in the introductory stage  do we analyse a new product
in its own life cycle or in the life cycle of its class of products?
II. situational analysis
A. target market
1. geographical location, special climate or topography
B. consumer buyers (buy for their own consumption)
1. television, radio, magazines, newspapers, the internet  hours/week, category
2. cultural, ethnic, religious and racial groups
3. social class(es): upper, middle, lower; lower-lower (unskilled labor), upper-lower (basic
wage earners and skilled workers), lower-middle (white-collar salaried), upper-middle
(professionals and successful businesspeople) upper (the wealthy)  people behave
differently even though their income levels are the same
4. reference group(s)  those you turn to for information
5. basic demographics: sex, age range, education, income, household size and
description, stage of family life cycle (1. the unmarried not living with parents; 2. a newly
married couple, young with no children; 3. a full nest, the youngest child under six; 4. a
full nest, the youngest child six or older; 5. a full nest, an older married couple with
dependent children; 6. an empty nest, no children at home, head of family in the labor
force; 7. an empty nest, family head retired; 8. a solitary survivor in the labor force, 9. a
solitary survivor retired)
6. family work status (husband, wife) and occupation (husband and wife)
7. decision makers (the one who buys the product) and purchase agents (the one who
actually buys the product)  consider as well those who influence them (i.e. children)
8. risk perception: functional (dependability: will it work or not), psychological (possibility to
be disappointed or feel cheated), physical (damage to the user), social (if the buyer
feels open to ostracism or ridicule for using the product), financial (money lost in buying
a worthless product)  risk is calculated as perceived by the customer, it may or may
not exist in reality
9. income for each family member
10. disposable income (the amount left over after the bills for basic necessities, i.e. food
and shelter)  can be used for entertainment, vacation or luxuries
11. additional descriptions, classifications and traits of the target market  i.e. VALS
(value and lifestyles), Roper Starch Worldwide (consumers are nationalists,
internationalists or disengaged)
12. target market wants (desires for things that are nice to have but unnecessary) and
needs (requirements for basic subsistence, i.e. ordinary food, shelter)  Abraham
Maslow’ theory of human motivation (hierarchy of needs, with some overlap: basic
physiological needs, need for safety or security, need for love, need for esteem or selfrespect, self-actualization)  also at a high level: aesthetic needs and the need to
know and understand
13. product general description (abbreviated version of the more detailed material in the
introduction  I.): frequency of usage, traits (attributes: price, size, quality, packaging,
service), marketing factor sensitivity (how sensitive are customers to the traits of the
product?)
Oliver Heil  Marketing-Plan  WS 2006/2007
Professur für Marketing und Allg. BWL, Johannes Gutenberg-Universität Mainz
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.
M.
N.
14. size of target market (total potential of each target market segment)
15. growth trends (is the market growing, declining or has it levelled off?)  profits can be
made under each of those conditions
media habits
1. television, radio, magazines, newspapers, the internet  hours/week, category
organizational buyers (buy for their organization)
1. decision makers (who are they?, i.e. engineers, their supervisors, purchase agents, test
and quality assurance groups)  different motivations  primary motivation of each
decision maker should be determined
2. amount of money available or budgeted for purchase
3. purchase history  buying patterns relating to the time of year
4. additional industrial buyer information (like B. 12. – 15.)
5. media habits (television, radio, magazines, newspapers  hours/week, category;
trade shows  number/year)
competition
1. competitor, products, market share, strategy
resources of the firm
1. strengths and weaknesses
technological environment (may not be relevant to our particular situation, i.e. computer,
internet)
economic environment (economy and business conditions when entering market)
political environment (i.e. export, import)
legal and regulatory environment (i.e. difference in tax)
social and cultural environment (i.e. bikini, sushi)
other important environmental aspects (i.e. natural disasters)
problems/threats and opportunities  review and restate approx. 5 problems and 5
opportunities
primary research  minimize the cost by thorough planning!
1. face-to-face interview
2. mail survey
3. telephone survey
3 Establishing goals and objectives
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the “there” of the marketing plan
Establishing objectives
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What are we trying to achieve?  i.e.
– establish a product, product line or brand in the marketplace
– rejuvenate a failing product
– entrench and protect a market under attack by competitors
– introduce a new product
– harvest a product that is in the declining stage of its life cycle
– introduce a locally successful product nationally or overseas
– achieve maximum return on investment with a product or product line
normally should focus on a single task, but it is possible to have more than one objective or to
specify additional conditions (i.e. “To dominate the market, while achieving maximum sales.”
no conflict!
by what time? (specification of a date)
criteria to help in developing objectives by George A. Steiner:
– suitability
– measurability over time
– feasibility
Oliver Heil  Marketing-Plan  WS 2006/2007
Professur für Marketing und Allg. BWL, Johannes Gutenberg-Universität Mainz
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–
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acceptability
flexibility
motivating
understandability
commitment
people participation
linkage
Goals
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goals = specifics of the objectives
what exactly do the words in our objectives mean? (i.e. dominating = 100%? 90%? 50%?)
the final goals can be broken down into smaller intermediate units within the specified overall
period  these shorter-term objectives are also goals
by what time? (specification of a date)
specification of our goals
 affects vision (leaders/managers)
 makes avoiding conflict easier
The concept of competitive or differential advantage
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satisfying the customer (customer benefit)  by achieving a competitive/differential advantage
over our competitors  organizations try to improve their services  better products at lower
prices
our product has one or more advantages + our advantages are more important than those of our
competitors
there can be one overriding competitive advantage, but there can also be more than one
competitive advantage  the number is less important than the total strength of our
advantage(s) over our competitor
sustainability [Nachhaltigkeit/Zukunftsfähigkeit] of our competitive advantage  not indefinitely
(the environment will change sooner or later)
think about, develop and find ways to promote our competitive advantage
competitive advantages can be derived from a number of widely varying factors, i.e.
– ability to buy in quantity from special sources not enjoyed by others  low price
– great number of Ph.D.s in our research and development department  state-of-the-art
technology
– best chef in our restaurant  best gourmet food
– marketing know-how (knowledge)  customer needs are better satisfied
even what we might think of as disadvantage could be a competitive advantage (i.e. MercedesBenz: Diesel fuel models)
characteristics of competitive advantages:
– advantages must be real  not wishes  benefits must be important to the customer, not
to us
– advantages must be specific  what? why?
– advantages must be promotable  government regulations?
4 Developing marketing strategy
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strategy  strategos (Greek) = the art of the general
many of our concepts evolved from early use in military strategy:
– very top level:
grand strategy (includes military force and many other elements such as
economic power and diplomacy)
Oliver Heil  Marketing-Plan  WS 2006/2007
Professur für Marketing und Allg. BWL, Johannes Gutenberg-Universität Mainz
– one level down: military strategy (all actions taken by military forces up to the point of
reaching the battlefield)
– lowest level:
tactics (actions taken on the battlefield)
The strategy pyramid
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similar concept  strategic pyramid:
– very top level:
strategic marketing management (SMM) seeks to achieve the mission of
the firm (decides on what business, product lines and products to pursue)
 overall company objective achievement
– one level down: marketing strategy in support of the business, product lines and products
decided on in SMM  new market penetration, expansion, market
segmentation, etc.
– lowest level:
marketing tactics (actions to support the marketing strategy)  marketing
mix: product, price, place, promotion
Strategic marketing management
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methods for deciding to what business, product lines or products we should allocate our
resources:
Four-cell portfolio matrix (designed ob the Boston Consulting Group in 1960)
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box with 4 cells, vertical axis represents business strength, horizontal axis represents market
attractiveness  locate candidate business, product lines or products
decide whether we are going to work with individual products, product lines or an entire business
if strategy for only a few products: plot their individual product positions in the matrix;
if several product lines: plot them in the matrix;
if SMM for a large corporation with many businesses: plot businesses in the matrix
products or product lines: strategic product units (SPUs) will be plotted;
businesses:
strategic business units (SBUs)
 simplification of our work  take advantage of economies of scale (where possible)
calculation of SPU value for business strength (vertical axis)  important criteria: current market
share, growth rate, sales effectiveness, proprietary nature of the product, price competitiveness,
advertising or promotion effectiveness, facilities’ location or newness, productivity, experience
curve effects, value added, raw materials cost, image, product quality, technological advantages,
engineering know-how, personnel resources, product synergies, profitability, distribution, etc. 
1. which criteria are relevant in our situation?  2. establish relative importance weightings 
3. ranking  weighted rank
calculation of market attractiveness (horizontal axis)  important criteria: size of the market
segment, growth of the market segment, market pricing, strength of demand, vulnerability to
inflation and depression, government regulation, availability of raw materials, ease of entry, lifecycle position, competitive structure, product liability, political considerations, distribution
structure, etc.  1. which criteria are relevant in our situation?  2. establish relative
importance weightings  3. ranking  weighted rank
plot the location of our SPU on the matrix
– the amount of current sales can be illustrated by the size of the circle
– the percentage of the market share that this SPU represents can be indicated with a shaded
portion of the circle
business high
stars
question marks /
strengths
problem children
low
cash cows
dogs
Oliver Heil  Marketing-Plan  WS 2006/2007
Professur für Marketing und Allg. BWL, Johannes Gutenberg-Universität Mainz
high
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low
market attractiveness
the location of the SPU in the matrix suggests a number of strategic moves:
– stars:
additional investment priority
– question marks: selective investment
– cash cows:
apply selective investment
– dogs:
harvest or divest (can be moved)
if our SPUs are potential ones, we should just invest in stars
Product life-cycle analysis (PLC)
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shows graphically what happens to product sales and profits as a new business, product line or
product passes through the phases of introduction, growth, maturity and decline
trend for products to proceed more rapidly through the PLC
the best is to maintain a portfolio of products in different stages
each product has a cycle of life that contains different stages:
– introduction
– high costs due to marketing
– short production runs of highly skilled labour content, overcapacity  high
production/manufacturing costs
– buyers have not yet been persuaded to purchase the product regularly or may be
altogether unaware of the product
– competitors are few or nonexistent
– profits are nonexistent or negligible
– basic strategy: establish market share and persuade early adopters to buy the product
– growth
– the product has established itself and is successful
– sales are continuing to increase
– other companies are attracted and new competitors enter the market rapidly
– marketing costs are still high
– production costs are reduced somewhat
– production undercapacity develops because of a shift toward mass production
– distribution channels are not limited (because of limited resources) any more
– distribution becomes intensive, multiple channels may be used
– profits peak levels because of the increased demand (high pricing)
– strategy: new market penetration, market share expansion
– tactics: product improvement, development of new channels of distribution,
manipulation of price and quality
– maturity
– many competitors remain, they compete for smaller and smaller market shares 
competition heats up  shake-out (less efficient competitors go under or withdraw
from the market)
– regular buyers continue to buy, sales continue to increase
– profits begin to fall (prices are forced down because of the increased competition)
– production costs are much lower
– strategy: entrenchment, search for new markets is still possible
– tactics: reducing some channels to improve profit margins, low-pricing tactics against
weaker competitors, increasing emphasis on promotion
– decline
– few competitors
– buyers are sophisticated and much more selective
– production overcapacity caused by reduced demand
– maybe reduced marketing expenditures
– profits and sales decline
– liquidation of inventory
– strategy: some form of withdrawal (entrenchment in selective markets over the short
term)
Oliver Heil  Marketing-Plan  WS 2006/2007
Professur für Marketing und Allg. BWL, Johannes Gutenberg-Universität Mainz
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– tactics: reduction of distribution channels to those that are still profitable, low prices,
selective but quick spurts of promotion when rapid liquidation is needed
– ultimate product removal
locating the product in its product life cycle
– the general shape of the PLC is true in many cases, but not in all
– we must know what the PLC looks like  what has happened to the product so far? 
approximate sales, profits, margins, market share, prices  varying periods (very
low/small, low/small, average high/large, very high/large), trend (declining steeply, declining,
plateau, ascending, ascending steeply)
– analysis of the recent trends in competitors’ product share and their strengths (very weak,
weak, medium, strong, very strong)
– analysis of the recent trends in competitors’ product quality, performance characteristics,
shifts in distribution channels and their relative advantages
– analysis of the competitors’ short-term tactics (probable meaning of action)
– scan the historical information on product life cycles of similar or related products 
number and strength of competitors, profits, pricing, strategies used and the length of time in
each stage  during introduction, growth, maturity and decline
– matrix: sales and profits (vertical axis), time (horizontal axis)  determine the shape of the
(sales and profits) curves (sketch)
– project sales of our current product over the next 3 to 5 years  estimate sales, total direct
costs, indirect costs, pretax profits and profit ratio (= estimate of total direct costs to pretax
profits)
developing strategies for the products in each stage of the product life cycle
– we must consider industry obsolescence trends, the pace of new product introduction, the
average length of product life cycles of all products in our product line, growth and profit
objectives, the general situation
– changes will sometimes occur that will alter the anticipated shape of the PLC
– a need may disappear (i.e. buggy whip)
– a better, cheaper or more convenient product may be developed to fill a need (i.e.
electronic calculator)
– a competitive product may – by superior marketing strategy – suddenly gain an
advantage (i.e. IBM’s PC)
– there may be an intentional change in the shape of the curve by product repositioning,
innovation or extension
Alternative strategies for the marketing plan
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Jay Abraham: 3 basic ways to increase business:
– increase the number of customers
– increase the average size of the sale per customer
– increase the number of times customers return to custom again
New market penetration
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entry
– being first
– being first to benefit from the learning curve (experience in manufacturing and
marketing)  advantage: cost goes down
– lower price for the customer or using higher profits for additional promotion, to establish
new channels of distribution, etc.
– competitors attempt to enter the market (they must catch up)
– advantage: the first firm can continue to innovate to maintain a lead over its competition
– being fist requires an extreme concentration on effort on a clear-cut goal
– not without risks (doesn’t automatically ensure victory)  the first firm must expend
effort to maintain leadership
– being early
Oliver Heil  Marketing-Plan  WS 2006/2007
Professur für Marketing und Allg. BWL, Johannes Gutenberg-Universität Mainz
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– intentional or unintentional
– can be advantageous if the firm has sufficient resources to fight the firm ahead
– advantages:
– reduced risk because risk in demand, technological obsolescence and other areas
of business have been absorbed by the first entry (some knowledge will be gained
of what works and what does not)
– much of the opportunity in the marketplace still exists (few competitors)
– product is usually still in the very early stage of its introduction
– disadvantages:
– barriers to entry set up by the first entry
– market opportunity may be reduced
– being late
– advantages:
– late entrants can include the latest technological improvements without penalty (i.e.
the Japanese entered the American car market with another manufacturing
process)
– late entrants may be able to achieve greater economies of scale because all
entrants have a better idea of the actual size and demand of the market and can
produce optimal facilities
– late entrants may be able to get better terms from suppliers, employees or even
customers because earlier entrants may be locked into negotiations or fixed ways
of doing business
– late entrants will enjoy reduced costs of research and development because thes
have been borne by earlier competitors
– late entrants can attack a perceived soft spot in the market
– disadvantages:
– several competitors have become established in the market
– reduced opportunities
niche
– finding a distinguishable market segment,, identifiable by size, need and objective, and
dominating it
– concentration of all resources on fulfilling the needs of this particular niche and no other
– advantage: a niche may not be large enough to be worthwhile to larger competitors
– 3 separate niching strategies:
– toll-gate
– establish a company so that potential buyers cannot do without its product
– the product must be essential
– the risk of not using it must be greater than the cost of the product
– the market must be eliminated so that he who controls the niche preempts others
from entrance
– specialty skill
– is used when a company has a particular skill that is lacking in other organizations
– specialty market
– is used when a company is specialized in a particular market
– danger: when the specialty market becomes a larger market (more attractive to
larger competitors)
dimension
– vertical expansion
– combining two or more stages of the production or marketing processes under a single
ownership
– can be a type of niching
– advantages:
– narrow focus  can make marketing activities easier and more effective by the
concentration of resources in a certain class of market
– economies of scale of combined operations
– disadvantage:
– potential loss of specialization due to different management requirements for
different types of operation in the vertical integration
– capital investment requirements will increase, higher fixed costs
Oliver Heil  Marketing-Plan  WS 2006/2007
Professur für Marketing und Allg. BWL, Johannes Gutenberg-Universität Mainz
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– methods of management, marketing and production may have little in common
(there may be an increase in costs instead of a reduction)
– horizontal expansion
– expansion into new markets
– risk: new markets may not be well understood
– advantage:
– greater potential for sales than in vertical integration (it is a workable strategy in
markets that are as yet untapped)
– more difficult when competitors are already established in markets in which penetration
is sought
– vertical and horizontal new market penetration require an investment in resources  an
assessment of the investment and the potential payoff as well as the risks and uncertainties
must be considered before a decision can be made
positioning
– position of the product in relation to those of competing products in the minds of the
customers
effective at the introduction and growth stage of the PLC
Market share expansion
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product differentiation versus market segmentation
– product differentiation
– promotes product differences to the target market
– successful: giving the marketer a horizontal share of a broad (large) and generalized
market
– a product should be superior to its competition
– market segmentation
– strategy that emphasizes that subgroups of buyers may have common characteristics
that can best be served individually
– successful: producing greater sales to the market segments that have been targeted
– a product is optimized for the target markets selected  because the product is
optimal for the market segments, it is superior to its competitors’ products in these
markets
– can be employed simultaneously, but a company usually chooses one or the other
– both involve coordinating the market with the product offered
– if two or more competitors target the same segments: both may pursue a product
differentiation strategy in addition to market segmentation in the segments in which they are
competing
– R. William Kotruba: “The strategy selection chart”:
– alternatives that must be considered: size of market (narrow/broad), consumer sensitivity to
product differences (high/low), stage of product life cycle (introduction/satzration), type of
product (commodity/distinct), number of competitors (few many), typical competitor
strategies (product differentiation/market segmentation)
– best choice:
– do a little market segmenting and select the target market – along with the competitors
– carefully
– if many competitors are using a product differentiation strategy
limited versus general expansion
– depending on resources, objectives and the competition
effective at the growth and maturity stage of the PLC
Entrenchment
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means “digging in”
may be necessary when a product is in its mature or even declining stage of the life cycle – the
market is no longer expanding
repositioning
Oliver Heil  Marketing-Plan  WS 2006/2007
Professur für Marketing und Allg. BWL, Johannes Gutenberg-Universität Mainz
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changing the position of our product in the mind of the buyer relative to competitive products
to position the product somewhere else (not where it was before)
advantage: finding a position in which competition is less or can be overcome more easily
disadvantages: cost of repositioning, promotion to make the consumer aware of the new
position of the brand in relation to its competitors, repackaging, establishing new distribution
channels
direct confrontation
– fight it out toe-to-toe against the competition
– should never be attempted unless you are is certain to win (superior resources or know-how
to use the resources better that the competitors)
effective at the maturity and decline stage of the PLC
Withdrawal
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take a product out of the market (when? how?)
types:
– risk reduction:
try to limit the risk of profit loss (not withdraw the entire product from all
geographical areas)
– harvesting:
eventual total withdrawal at a planned rate
– liquidation / sell-out: leaving the marketplace now (maybe with repositioning as a part of this
strategy)
effective at the maturity and decline stage of the PLC
5 Developing marketing tactics
Manipulation the controllable variables
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Product
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Price
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Place
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Promotion
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x
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Oliver Heil  Marketing-Plan  WS 2006/2007
Professur für Marketing und Allg. BWL, Johannes Gutenberg-Universität Mainz
x
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x
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… to be continued …