Download 2. If serious price differences exist, describe how you will

Contemporary Marketing, Second Canadian Edition
Boone/ Kurtz/MacKenzie/Snow
PART THREE OF THE MARKETING PLAN
Marketing Strategies
In this section of the marketing plan you will develop your marketing strategies. The end
result of this process will be a plan that possess both internal and external fit – i.e., leverage
the organization’s strengths, minimize the effect of or eliminate its weaknesses, take
advantage of the external opportunities, and minimize the effect of, or avoid, market threats.
The first step in the process is to identify the segment(s) in the market you want to target.
Next, the optimal positions of your product mix, product lines, and individual product items
are selected. From this point forward, you will plan how to support the sales of your
products via promotional, distribution, and customer service efforts.
The strategic dimensions can be viewed via a continuum ranging from inadequate,
adequate, to leadership. This perspective is meant to provide a basis from which to compare
the relative strategic targets (not necessarily “positions,” as strategy is more about where you
want to be, than where you actually are) of the industry players (i.e., your competitors). The
“relative” consideration is important because it implies that the target is judged by how it
stacks up against competitors in the consumers’ mind (i.e., your place in the market). This is
to say that you can spend an extremely high amount of money, time, effort, resources,
attention, etc., on a particular dimension and still not be seeking a leadership position
because others in the industry are targeting the same position (i.e., level of focus). In other
words, your focus could be considered adequate, as this level of focus on a particular
dimension is the “cost of doing business” (i.e., what is expected by consumers and required
to compete in this industry given your overall comprehensive business strategy and it’s
corresponding fit and trade-off requirements, as well as the industry forces). Similarly, a
leadership position might be somewhat “easily” achieved if other players in the industry are
not (or can’t) focused on this dimension. It is important to note that “adequacy” is not
necessarily a “bad thing.” Rather, it implies that a firm is focusing on (doing) what at least
minimally (and perhaps optimally) needs to be done to compete with respect to a particular
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Part Three of the Marketing Plan
dimension. An inadequate strategy (position) is by its nature, a “bad thing,” as it implies that
a firm is not focusing on (doing) what minimally needs to be done to compete with respect to
a particular dimension. As such, a recommendation will need to be made to elevate this
status to at least adequate, if not to pursue a leadership focus/position.
Leadership is literally defined as surpassing all other competitors on a particular
dimension. While a sole position in front of all other competitors is a good metric to start
with, one does not have to limit oneself to a categorical delineation (i.e., there is only one
leader). For some (if not most or all) dimensions in some (most/all) industries, there may
incidences in which a couple, or a perhaps a few firms hold a significant “lead” over most of
the other competitors, but there is not necessarily a significant difference between these
leaders.
The first important point is that one recognize who, how and why these firms conduct
business via this strategy/position to compete, relative to each of the other leaders and versus
the other non-leaders. Of course, the debate is contingent upon how the industry/market is
defined in the first place. In the end, the important point is not to spend an inordinate amount
time debating sole leadership (however, the debate process can be an insightful exercise);
rather, the key is to gain a better understanding of how and why the relevant industry players
conduct business.
The second important point is that a firm should either pursue a leadership or an adequate
position – not a position somewhere along the continuum. The reason for this is the nature of
the definition of “adequate.” That is, this is what is minimally required to “adequately”
compete. Any more than this is viewed as a waste of resources, unless a firm is seeking, and
can justify via a cost/benefit analysis, a leadership position (a competitive advantage is to be
gained, if it is affordable, by pursuing it). Otherwise, a strategy of adequacy is appropriate. It
is important to note, then, that adequate is not one finite position; rather, it should be viewed
as a minimal necessary range to compete (one could consider this the “price of entry” or the
“cost of doing business”), and it is a function of the competitors’ strategies and their actual
efforts, considered, in addition, within the context of the strategy and resources of the firm
itself. Any strategy and actual effort less than this minimal target range is considered to be
“inadequate,” and must be addressed.
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Of course, while a firm’s strategy should only target to be adequate or to be a leader on a
dimension, a firm’s actual position on the position may be, and is often, somewhere in
between. This can be explained by two possibilities. The first possibility is that the firm is
strategically targeting a leadership position and is in the process of attaining this (i.e.,
allocating resources), and the change (i.e., movement along the continuum) can take time due
to necessary expenditures, technological or logistical developments, and/or the perceived
position in consumer’s minds. Conversely, a firm could be attempting to move from a
leadership position to an adequate position (e.g., because they do not have the resources to
maintain the leadership position or perhaps they no longer consider the leadership position as
a worthwhile advantage given the ROI or its synergy, or the lack thereof, with its targets for
the other strategic dimensions). The second explanation for this “actual” middle-ground
position is that the firm is not strategically grounded. That is, they lack a solid, justifiable
direction. In other words, they are wasting resources that could otherwise be allocated to
other strategic dimensions to more effectively compete and to achieve the overall
organizational mission, objectives, and goals.
This often occurs because of a lack of
strategic planning that is not integrated across all of the functions of an organization.
The judgment of whether or not a strategic focus/position is optimal is of course a
function of the analysis of, interpretation of, and decisions regarding the comprehensive
business strategy, the firm’s focus on the other strategic dimensions, the firm’s resources, the
industry forces and environmental influences, and the relative strategic focus/positions and
capabilities of the competitors. As such, an adequate or leadership position may be the
optimal choice (strategy) for a particular dimension. It is important to note that leadership is
not required in all or most of the dimensions, or even any leadership focuses/positions for the
dimensions within one particular strategy. In fact, it is quite likely that no firm would be able
to financially support this combination of strategies; nor is it likely that it would be necessary
to compete and/or succeed.
The key is in designing a combination of strategies that
optimally fits the internal and external environments, leverages the firm’s resources, and
targets a position that provides a sustainable competitive advantage relative to the strategic
targets and actual strategic positions of the other industry players.
The pursuit of an optimal combination of the strategic targets for these market
dimensions is a key to success (i.e., a sustainable competitive advantage). Again, the optimal
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combination is a function of its fit with the internal and external environments, the firm’s
resources, and current and future effects of the industry structure and forces, relative to the
strategic targets and actual strategic positions of the other industry players.
Don’t let the
concept of one (sole) industry leader, nor a rigid absolute categorical definition of leadership, or
even the dimensions themselves bind your thinking/analytical and strategic recommendation
process. The important point to remember is that you should use these frameworks as a means to
help you better understand the intent (strategy/choice) of the industry players and their potential
effect on each other and market conditions. A strategy should attempt to be adequate or a leader
(within some given range, not necessarily a specifically defined, immobile point), and it should
be revisited because market conditions are dynamic, not static; as such, strategies should be, too,
when necessary (i.e., there is some limit to how often and how much a strategy should change, as
there is a benefit to be realized by keeping on target and focusing on execution, rather than a
continuous strategy development process). Once again, don’t target a middle of the road strategy
(i.e., between adequate and leadership), as this is a waste of resources (but keep in mind the
actual position might be in the middle, as explained earlier due to the process of achieving the
adequate or leadership strategy) – it is here that your analysis will have to help you decide which
way and how to go forward.
1.1. Target Market(s) Selection
Based on the market segments identified in the previous section, you need to determine
which one(s) you will target as individual, unique and separate segments. By selecting these
segments you are acknowledging that you will treat them differently with respect to one or
more of components of your marketing strategies; and therefore, as you develop your plan
via the remaining parts of this framework outline, be sure to address how each component
will be constructed to meet the needs, wants, and characteristics of each of your targeted
segments. Listed immediately below are some questions to consider for this section. (Keep
in mind that you can include other information you deem relevant and beneficial for the
reader.)
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o Using the labels of the segments you identified in the previous section, list the market
segment(s) you will target in which to sell your product.
o Discuss why this segment (these segments) is (are) targeted?

What are the unique product features(in terms of performance, price, and
brand status) that this targeted segment needs/wants, and how can your
product(s) fulfill these needs?

What are the unique characteristics of this segment that make it appealing to
your organization and why/how does it fit with your product offering?
1.2. Product Portfolio Mix
The combination of products (i.e., goods and services) that a business unit sells is called its
“product mix.” The level of intensity refers to the “breadth and depth” of this mix, wherein
breadth is defined by the number of product “lines,” and depth is defined by the number of
product “items/models” within a product line. Typically, breadth is represented horizontally on a
product-mix chart/diagram, and depth is depicted vertically. The key question for this dimension
is to determine the optimal mix of product offerings. The breadth and depth decision is a
function of a firm’s internal resources, its overall comprehensive business strategy, and the
strategies and capabilities of its competitors, as well as industry forces, consumer trends of needs
and wants, and how the market is segmented. The goal is to better understand how each firm
attempts to compete, and the relative advantages of each strategy, given the existing marketplace
conditions. A firm may want more product lines if it wants to address needs and wants across a
variety of product uses within a market. This strategy can help the firm to gain and leverage the
brand name, if a family brand (i.e., the same brand name) is uses for all of the product lines. A
firm may want more product items with a product item if the market has targeted segments that
are quite diverse in terms of it needs and wants, as well as other driving factors (e.g.,
demographics) that would cause each segment to want significantly different attributes from the
product type/line. While giving the target market more choice of product lines/items (which is
an obvious result of more breadth and depth – i.e., this approach allows a firm to “cover more
ground”), more choice is not always a good thing. An answer to the question “Is there too much
choice?” should be considered. There can be such a thing as “too much choice,” wherein the
result might be one of the following conditions: confusing the consumer; product lines/items not
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seen as being significantly different; or the sub-segments with different preferences not being
large enough to justify special attention. There are, of course, other strategic considerations
when making breadth and depth decisions. If a firm wants more breadth and depth, it will need
to consider the cost and benefit requirements of and impact on other strategic dimensions.
Finally, does the division of product lines make sense in terms of fit within the organizational
structure? Listed immediately below are some questions to consider for this section. (Keep in
mind that you can include other information you deem relevant and beneficial for the reader.)
o How many product lines and items are needed to fulfill the needs of the market segments
targeted? Why?
o Do you have the internal resources to financially support and manage this product mix?
o What synergies can be achieved by this product combination?
o What are the potential drawbacks to this product mix combination?
 Cannibalization?
 Consumer Confusion?
 Other?
1.3. Product Positioning Strategy
A product’s position is the function of how consumers view it in terms of its quality,
value, and status.
The product dimensions of performance, price, and brand address these
three benefits respectively. For each product you must decide how/where to position it on all
three dimensions. The combination of these dimensions will result in the overall product
position (i.e., the consumer’s opinion of the product). This positioning decision is, of course,
predicated on the needs, wants, and characteristics of the market segments targeted for this
product, the external business environment, the positions of products in the competitors’
product mixes, the positions of other products in your product mix, and the financial and
managerial capabilities of supporting this mix of product positions via the sales support
strategies that follow in this section.
1.3.1. Performance
In short, the performance dimension of a product’s position pertains to what it does and
how well it does it.
The specific factors one would use to define a product level of
performance can/will vary from product to product and even from segment to segment,
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depending on what the segment deems important and how/why it uses the product (i.e., the
needs and wants the product is fulfilling by purchasing/using the product). The combination
of the levels of performance for each of these factors (weighted by each factors degree of
importance) will then represent the overall level of performance of the product.
It is
important to note that the judgment of performance is predicated on the segment’s perceived
performance. That is, a product is only as good as what the segment believes it to be. This is
not to say that the reality of a product’s performance is not important, because how a product
really performs certainly will influence how it’s performance is perceived by users (based on
their experience with it) or potential users (based on what they have read about it, what they
have observed from others using it, or judgments taken from such cues as price, brand equity,
the packaging, etc.; however, consumers do not conduct scientific tests to evaluate a product
performance or might not be able to delineate or value distinct, minor, or unobservable
differences in product quality Listed immediately below are some questions to consider for
this section. (Keep in mind that you can include other information you deem relevant and
beneficial for the reader.)
o Does your product address the performance criteria that are most important to your target
segment(s)?
o How does your product compare to competitors’ products in regard to what your target
segment(s) need and/or want? For example:
 Speed
 Durability
 Reliability
 Taste
 Size
 Portability
 Convenience
 Longevity
1.3.2. Price
Of course, the price of a product is a dimension in which virtually all products are judged
to some extent, depending on its degree of demand elasticity. While this analysis is fairly
straight-forward (i.e., comparing the product’s actual price to the price of competing products),
you should also consider how your targeted segment(s) determine the price of a product – for
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example, the purchase price, or the cost of ownership (e.g., repairs, product life, frequency of
repurchase), resale value, interest paid on a loan to purchase the product, etc.).
1.3.3. Brand
A product’s brand is in essence its reputation, its “personality.” It conveys the level of
status that segments’ associate with the product and the degree to which they identify with it and
want it. In addition, it can have a significant effect on the value judgments of the perceived
performance of a product’s and the value of the price to be paid for it. The assessment of how a
product’s brand compares to its competitors is, for the most part, more subjective than the
assessments of performance and price.
That is, you must ascertain what your brand, and
competitors’ brands represent and communicate to your targeted segment(s). This analysis will
require consumer research (e.g., surveys, and focus groups) on the awareness, recall, perceived
meaning, status, and value of the brands.
1.4.
Sales Support Strategies
Once your have established your product portfolio and positioning strategies, you develop
what it will take to support the sales process for all of its product lines. The Sales Support
strategy dimensions that a business unit should manage include: switching costs, promotion,
distribution, and customer service.
1.4.1. Switching costs
This dimension refers to the extent that it is difficult for a customer to switch to a
competing product/brand. Conversely, you could also consider how easy a firm makes it for a
competitor’s customer to switch to your product/brand. In essence, we are talking about barriers
to switching. The idea behind creating barriers to switching is to hold on to a customer, because
there is often a strong correlation between profitability of a customer and length of time as a
customer (i.e., it is often more costly to attract a new customer than to retain one – there are of
course, exceptions to this). Some examples of barriers to switching include: contracts, product
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use complexity, training, compatibility with existing systems and use situations, customer service
(which could be a key attribute of the product itself), the prestige of a product/brand, the overall
quality, price, and value of a product/brand, as well as product/brand loyalty. The key concept
here is that a firm wants to make it difficult for (or less likely that) a customer will switch to a
competitor’s product/brand. Of course, a proactive/positive approach would be preferred (e.g.,
due to quality, brand image, value, customer service, loyalty), rather than a more
defensive/negative approach (e.g., contracts, complexity, capability) because a firm would not
want its customers to feel as though they are “stuck” and then always on the look out to switch as
they become more frustrated. In essence, a positive switching cost is an opportunity to build a
relationship with the customer, but in some cases, the other switching cost can be the most
effective and do not have to be viewed as necessarily negative if other positive/proactive actions
(e.g., customer service, value, etc.) are pursued by the firm. Similarly, a key consideration is
whether the target segment views the product as different than other products in the marketplace.
If brands are not seen as being significantly different in terms of fulfilling customer needs, then it
will be difficult to keep them from wanting (or not seeing a reason not) to switch, and a firm
would then want to possess some barrier (make it more difficult) to switch.
1.4.2. Promotion
A firm can support the sales its product lines and items by building awareness and
perception of the product, its status, value, and/or its quality. How does the business unit
promote the overall awareness of the brand of all of the product lines and items? Does the
promoted message/position of the product fit with all of the product lines and items? Leadership
is this dimension would be defined by the firm that has the greatest brand and promotional
support for all of its product lines and items. Some key considerations in this area include: how
much money is spent and the effort (frequency and reach) on promoting the product mix and the
overall brand name; what level of awareness of the brand exists; and how correct or consistent
the perception of the overall brand is as it relates to the target markets and the product items
themselves. As you analyze this dimension, you must obviously consider its effect on the impact
of its product mix intensity (breadth and depth) and geographic coverage, as well as the efforts of
it competitors. In some cases (e.g., the beverage and automobile industry), the price of entry can
be quite high/expensive and sole leadership may not be possible/feasible. In these cases, there
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might be several leaders that are significantly above the rest. A determination of whether or not
the lower level competitors are inadequate, would have to include a review of their overall
strategic goals, capabilities, and the markets (e.g., coverage and niche) that they want to serve at
this time.
1.4.3. Distribution
Where, geographically, these products are sold denotes the extent of “coverage” that a
business unit is strategically pursuing. For example: Are the products available city or provincewide, regionally, nationally, or in the global marketplace? A leadership target/position in this
marketing dimension is exhibited by having the largest territorial presence (i.e., their products
are available in more geographic places than any other competitor’s). Pursing more coverage, of
course, increases the potential market (number of consumer and sales) to be served. It also
provides the opportunity to spread the word (awareness and image) of the brand. The pursuit of
increased presence comes at a cost and increases the number of competitors and segments that
have to be strategically addressed – and of course, it has implications regarding a firm’s other
strategic business decisions. The distribution channel(s) a business unit utilizes to “go-tomarket” (i.e., where the products are sold) signifies the strategic level of “exposure” targeted.
Examples of possible distribution channels include: brick and mortar retail, direct-sales force, the
Internet, telemarketing, call-centers, etc. Of course, depending on the industry, one can take
more of a micro perspective to differentiate between channels (e.g., in the beverage market, one
could identify grocery stores, convenience stores, vending machines, and on-premise locations as
different ways to go-to-market). While all selling products via all available channels and to all
available target segments would maximize exposure, the important consideration here is that
each of these distribution mediums represents different ways and means to make your products
available to your target market(s), and thus, a decision has to be made to determine the optimal
combination of channels to achieve the strategy (i.e., level of adequacy or leadership). The
single versus multiple versus exhaustive channels decision should be made with respect to
strategic trade-offs. There are different variable and fixed costs associated with each channel,
and each channel will have different levels of effectiveness for different target markets due to the
unique characteristics of each. One must also consider the fit of the different attributes of the
product lines and items with different channels. As such, the purpose of the distribution channel
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exposure analysis and recommendation is to determine which channels best fit each product and
target segments in terms of cost, demand, ability to best position, communicate, and make the
product available. Convenience to the target market is of course, a key consideration (i.e., you
want your product available to your target segment); however, there are some other
considerations; for example, the image that is projected when a product line(s) /item(s) are sold
in exclusive channels (i.e., only one channel that may connote prestige or quality) versus a more
mass-market, exhaustive approach (i.e., available in most or all channels). How is this decision
effected, or how does it impact the other strategic business unit level decisions such as niche,
flexibility, mix-intensity and coverage, etc.? The dimension of distribution channel control
refers to the extent to which an organization has power in a channel (e.g., it influences where and
when a firm’s products are sold, the wholesale and retail price, and how and when payments are
made). A firm can gain control (power and influence) via the volume it sells, the service and
value it provides, the prestige of its products/brands, the demand for its products, and the access
to target markets it provides. The dimension of branding and promotion can be integrated with
this discussion of distribution channel control to illustrate the two methods of supporting the
sales process—the “push” or “pull” strategy. A “push” strategy is when a firm focuses it
promotion and channels sales efforts on the next member (forward) of the value chain. For
example, when a manufacturer tries to persuade a distributor or a retailer to sell its products by
providing incentives and influence, this is referred to as “pushing” the product through the
channel. The more effective this effort is, the more influence and/or control a firm has – thus,
there exists a dual perspective or consideration of branding and promotion and distribution
channel control. A “pull” strategy is when a manufacturer focuses its branding and promotion
efforts at the end consumer. By creating a demand for the product/brand, the retailers and
distributors will want (have to) be very willing and want to carry the product – thus the product
is “pulled” down through the channel. The result of this can also provide control – here again,
there exists a dual perspective or consideration of branding and promotion in conjunction with
distribution channel control.
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Marketing Plan Worksheets
I. Price Decisions
A. Marketing Plan Financials
1. Identify costs associated with each of the following elements of
the plan:
Feature
Cost
Product manufacture
Marketing research
Competitive intelligence
Packaging
Intermediaries
Distribution network
On-line promotion
Promotional tools design
Promotional tools production
Media costs
Sales force compensation
Domain name registration
ISP contract
Website development – design
Website hosting
OTHER
TOTAL
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2. Calculate the break-even point for selling:
Break even = $
3. Can you sell enough to cover costs?
Yes
No
B. Strategy
1. Circle the strategy you are most likely to use:
Penetration
Skimming
Status-quo
2. Where is your product in the PLC?
Introductory
Growth
Maturity
Decline
3. How will this affect your pricing strategy?
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C. Price Comparison
1. Compare your price to that of your competitor. Whose is
higher?
2. If serious price differences exist, describe how you will
communicate your differential advantage:
D. Discounts
1. Circle the discounts you will offer to online customers:
Quantity
Cash
Seasonal
Promotional Rebates
Functional
2. Circle the discounts you will offer to off-line customers:
Quantity
Cash
Seasonal
Promotional Rebates
Functional
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3. Account for any differences in discounts allowed to two
customer groups:
E. Geographic Price Differences
1. Customers will pay shipping
Yes
No
2. All customers will pay same shipping
Yes
No
3. Customers pay shipping based on distance
Yes
No
Rationale:
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II. Promotion Decisions
A. Marketing and Promotions Objectives
1. Promotional objectives:
a.
b.
c.
d.
e.
f.
2. Online promotion?
Yes
No
Yes
No
Describe:
3. Off-line promotion?
Describe:
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4. Promotional Theme
a. Promotional theme is:
b. Promotional message is:
5. Copyright needed?
Yes
No
B. Design
1. Promotional tools designed by:
In-house personnel
Outside agency
Combination
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C. Media
1. Select media for promotions:
Television
(stations)
Radio
(stations)
Newspaper
s
Magazines
Outdoor
(cities)
Internet
(sites)
Other
D. Advertising
1. All advertising pieces have uniform theme and style:
Yes
No
If not, justify:
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2. Ads have sufficient information on product benefits:
Yes
No
If not, how can you increase this information?
3. Will customers be given details in ad on how to request
additional product information from your company?
Yes
No
E. Public Relations Activities
1. List public relations activities:






2. Bad publicity response strategy:
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F. Sales Promotion Tools
1. Select promotion tools:
Regular coupon
Rebate
Tradeshow
Contest
Sweepstakes
Samples
On-line coupon
Demonstrations
Premiums
Other
G. Sales
1. Do you need a sales force?
Yes
No
Yes
No
If yes, how will you compensate them?
Salary only
Salary + Commission
Commission Only
Other
2. Will salespeople have a quote?
3. How will you organize sales territories?
By product
By customer type
Geographically
4. Will you compensate differently for online sales activity?
Yes
No
5. List sales alliances you intend to pursue:




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
III. Distribution and Distribution Methods
A. Method
1. Preferred distribution method:
Direct
Intermediaries
2. If applicable, number of channels:
Dual channels
Multiple channels
Channel alliances
Nontraditional
channels
B. Costs
1. Variable distribution costs will affect price of end product to
consumer:
Yes
No
2. Describe the role cost will play in your distribution method:
C. Distribution Facilities
1. Global distribution facilities needed
2. Warehouses needed
Yes
Yes
No
No
a. If yes, number of warehouses:
b. List warehouse locations:


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


3.
4.
5.
6.
7.
Fulfillment services
Yes
Packing companies
Yes
Transportation firms
Yes
Billing services
Yes
List other channel facilitators you anticipate needing:

No
No
No
No




8. Will you distribute your product through a retail location?
Yes
No
a. If yes, what type of retail location will you use? (Select all that apply.)
Chain store
Department store
Convenience store
Restaurant
Specialty store
Discount store
Drugstore
Factory outlet
Franchise
Supermarket
Warehouse club
9. Will you distribute your product through nonstore channels?
Yes
No
a. If yes, what type of retail location will you use? (Select all that apply.)
Vending machine
Catalogue and mail order
Shop-at-home
Direct retailing
Telemarketing
Direct mail
Internet
10. Will you be a part of a franchise system as a franchisee?
Yes
No
11. Business format franchise?
Yes
No
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12. Product and trade-name franchise?
13. Will you franchise your offering?
Yes
Yes
No
No
14. Describe your retailing mix, if applicable:
15. If you will have your own distribution outlets, describe your plan
for each element of the store atmosphere:
Employee type
and density
Merchandise type
and density
Fixture type and
density
Sound
Visual factors
Odors
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D. Special Consideration for Services
1. Will you distribute your service via a website?
Yes
2. Will you distribute your service to other websites?
Yes
3. What level of service will you distribute via the Web?
Full
Partial
4. List aspects of service you will distribute via the Web:
No
No
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