Download 6.4 THE MARKETING PLAN There are several factors that need to

6.4 THE MARKETING PLAN
There are several factors that need to be considered when developing the market plan:
product position in the market;
stage of the lifecycle for the product class, and therefore the position
of the new product on the product class lifecycle;
relationship of the new product marketing mix to the overall
company marketing mix;
interaction of the parts of the marketing mix - market channel with
price, promotion with price, product with promotion;
quantitative relationship between sales volumes and the various parts
of the marketing mix;
marketing profitability and efficiency of the marketing mix;
reactions to the marketing mix of the industrial, social, legal and
political environments.
Marketing Plan Example
Overall Marketing Plan
Objectives: volume of sales, market area, profit.
Predicted environment: economic, political, social, industrial.
Place of product in product mix (product line): type of product, quality level, price range, place in line
(leader, minor product).
Market segment(s): type(s), location, size, characteristics.
Market channel: type of channel, retail, food service, institutional, industrial; intermediate
organisations (wholesalers, agents, brokers); geographical positions of all organisations in the
channel.
Marketing strategy: strategy outline, target markets, marketing mix, marketing expenditure level.
Product plan
Product: proposition, uses, characteristics.
Packaging: branding, information, legal requirements, size(s), aesthetics.
Costs and prices
Costs: fixed and variable costs, marginal costs.
Prices: company list price, distributors' margins, retail price.
Sales and distribution plan
Sales organisation: personnel, training, launch, post-launch.
Physical distribution: transport, store location, inventory plan.
Sales: reporting, analysing, forecasting.
Sales targets and budgets: area targets, sales persons' targets, areas and sales budgets.
Sales promotion: merchandising, sales communications.
Sales evaluation: targets and costs analysis.
Advertising and promotion
Message selection: creative development.
Consumer advertising: press, television, cinema, radio, outdoor posters, public relations, internet
Consumer promotions: price specials, reduced price offers, competitions, coupons, free
samples.
Point-of-purchase: display material, tasting, cooking demonstration.
Trade promotions: incentive schemes, display competitions, sales contests.
Trade advertising: trade journals, trade displays, conferences, publications.
Schedules
Production: times, quantities, quality, losses
Distribution: times, quantities, quality, losses.
Selling: times, launch quantity, future predicted quantities.
Promotion and advertising: times.
Example 6.1
Low-calorie chicken hotpot
A medium-sized canning company decided that it would move into the nutritional diet market. The
general manager thinks the present products - beans in tomato sauce, soups, spaghetti, meat and
vegetables - have a poor nutritional image. The product designer has produced a low-calorie chicken
hotpot and the marketing manager has produced the following market mix plan.
Marketing objectives
Enter the diet food market segment emphasising the nutritional/low calorie/ convenience
aspects
of the product.
Recover development costs within two years.
Maximise profits.
Predicted Environment
At present, the country is in an economic recession but there is predicted to be a minor resurgence in
the economy. This will justify the product launch in this year.
The social environment is changing, with an increased awareness of the nutritional value of foods,
personal fitness and weight control. If the market follows overseas trends, this trend could continue
affecting a greater proportion of the population. This means the product should be readily accepted
with little social resistance.
At present, there are no calorie reduced, nutritionally balanced, canned convenience meals on the
market. This could be expected to change rapidly once the product is launched. Thus the company
must have a flexible marketing plan to adjust to the changing competitive environment.
Product
The product has the appeal of being:
a balanced meal of nutrients and minerals;
low in calories;
convenient.
These factors were established from the market trial and from this a product image developed of
'calorie reduced, highly nutritious, convenience meal'. Factors such as 'good for you', 'balanced',
'quick' and 'healthy' could be emphasised as product benefits.
Product name
As the sponsoring company is diversifying into the product area of diet foods, it could be preferable to
establish a new brand with a 'health' image. Brand suggestions include 'LITEWEIGHT', 'VITALITE' or
'NUTRILITE'. The latter brand name tends to be better suited to the product image of a calorie
reduced, nutritional product line.
The product name decided on is 'CHICKEN HOTPOT' as this describes a chicken and vegetable mix
suitable for a quick but special meal. It also implies the product is different from competing canned
meat and vegetable products. This distinction must be emphasised as the developed product is
establishing a different product image
As the product is to be canned, it is important that the label be distinctive to attract consumer
attention. The label must meet the Food Regulations.
Consumer
The product has to appeal to two distinct consumers:
consumers on calorie reduced/health food diets;
general consumers of convenience foods who would buy the product for the reduction in
calories,
nutritional attributes and possibly taste preferences to competing convenience products on the
market.
Price
There are three alternative pricing strategies:
price high, to the upper end of the diet market;
price intermediate, to the low calorie/convenience market;
price low, to the convenience canned meals market.
One of the marketing goals set was to maximise profits. To achieve this, the company's demand, cost
and profit functions were analysed. The production cost was estimated at $1.71 and to cover
company costs and profits the wholesale list price was set at $3.22. If there was a retailer mark-up of
30%, this would give a retail price of $4.19. As the product would have to be promoted, it was decided
that the price should be first set to the upper end, i.e. the diet market, and then as production
increases and development costs are recovered the price should be dropped to the low
calorie/convenience market.
The price set allows for 'specials', 'discounting' and other retail discounts that may be necessary in the
marketing of the product and establishing good relationships with retail outlets.
Market channels
The alternative market channels are:
market through supermarkets and convenience stores via a wholesaler;
market direct to major supermarket chains (eliminating wholesaler);
market to smaller health food shops and delicatessens via wholesaler;
market to all retail stores directly.
It was established from the market trial that the main retail outlets at which the consumer would
expect to buy the product were supermarkets and convenience stores. A smaller proportion of the
respondents indicated buying the product at health food shops and delicatessens. The company
could use the latter if they adopted the high price strategy (i.e. price to the upper end of the market).
The market channel for sale of the product through a wholesaler to supermarkets and convenience
stores is already established. Using this would minimise the cost and marketing effort required in
moving the product through the channel. Marketing to delicatessens and health food shops requires
marketing through a wholesaler or using a manufacturers' agent to a large number of retail outlet in
small volumes. This may suit the initial small volume produced. Alternatively, during the initial low
throughput, it may be more useful to market the product only to one or two supermarket chains in one
of the major cities.
On considering the effectiveness, experience and cost of the alternatives, the first alternative
(supermarkets and convenience stores via a wholesaler) would appear to have the greatest potential.
Physical Distribution
The product is canned and has an estimated shelf life of two years at ambient temperatures. Due to
the nature of the product, damage is restricted to dented cans and torn labels, occurring only with
excessive handling.
The existing company's physical distribution system is by road or rail, which can be adapted to the
Chicken Hotpot. The product is distributed to warehouses in main city centres. On analysis of
transport costing, it would appear rail is the cheaper method for this initial distribution. Distribution to
the smaller centres could be by road or rail as dictated by local costs and availability of the transport.
The company adopts a policy of minimising the level of capital invested in inventory.
During the initial product launch, it is estimated a three-month supply of product is required to fill the
market channel. As the market establishes, this level of inventory in the warehouses can decrease to
approximately a two-month supply.
This does not allow for any possible seasonal trends such as increased consumption during winter;
these can only be established during the initial years of marketing the product.
Promotion
The promotional mix consists of a combination of four promotional methods:
advertising;
personal selling;
sales promotion;
publicity.
The mix must be coordinated and conform to the overall market plan. The theme for all promotional
work is:
CHICKEN HOTPOT a calorie reduced, highly nutritious, convenience meal
This theme emphasises that the product is a convenience product giving a balanced meal of essential
vitamins and nutrients for those people on calorie-reduced diets or interested in weight control. It is
felt that the main product benefit to emphasise is convenience: quick to prepare, calorie-reduced
meal.
Advertising aims are to stimulate sales, and generate the new product image and the NUTRILITE
brand image.
The advertising media available for marketing the product, in order of increasing cost and increasing
penetration, are:
1. newspapers;
2. magazines;
3. mail pamphlets with discount offers;
4. radio;
5. television.
Due to limited finance, the possibility of television as a promotional medium is eliminated. Radio tends
to be specific for local regions and has intense competition and short attention span. Thus it was also
eliminated. The final media are within the company’s budget allocation. Newspapers have a wide
coverage but date quickly and have a short attention span. Magazines reach a specialist target
audience and have a longer life due to magazine circulation. The mailing of pamphlets provides a
rapid means of informing the public (important during the product launch) but is relatively expensive.
Two possible magazines for advertising the Chicken Hotpot throughout the market could be:
a high circulation women’s magazine;
a high circulation general magazine.
Both magazines have a high reach (i.e. a large number of people exposed one or more times to the
advertisement). The frequency of exposure will be determined by the number of times the product is
inserted.
Coordinating the advertising schedules is important to achieve a high reach at product launch. A
possible schedule is outlined below:
Delivery of pamphlets to householders with a discount on the product.
At the same time, concentrated magazine advertising in both magazines.
Periodical burst advertising in magazines as the product is established on the market.
Personal selling in the company consists of a sales force of two area managers with eight sales
persons. The sales persons establish contact with potential customers. To ensure the presentation is
effective, sales staff must be informed of the product, sales method, any possible discounts, trade
benefits, advertising and promotion to be used.
Sales promotions are to gain retailer and consumer confidence in the product. To gain trade
acceptance of the product and achieve prime shelf space and in-store displays, cooperative
advertising and buying allowances could be offered.
In-store displays portray the calorie reduced, convenience, health aspect of the product, for example
a poster with a slim, healthy young couple eating the casserole and a caption underneath stating the
ease of preparation. The displays could show methods of serving the product and, if possible, in-store
cooking demonstrations will be used. Samples could also be given. In-store promotion is important to
show the attractive eating qualities and to emphasise the lower calories than the existing canned
meals.
Publicity is to gain widespread awareness of the product in the trade and among the consumers. At
the product launch it may be possible to obtain media coverage of the revolution in food - a calorie
reduced, convenience meal balanced in nutrients and vitamins. This is justified by the fact that the
type of product is not presently available but corresponds to the new awareness in health and fitness.
Promotion of this type would require careful planning to be effective but in general publicity has a high
level of truth attached to it, i.e. consumers tend to believe it is more authentic than advertisements.
Overall, the promotional mix will be informative, building up an awareness of the product at the time of
launching. As the product establishes a market, the mix will become more persuasive.
Timing and test market
The most suitable time for launching of the product is prior to winter. This is because the hotpot may
show a seasonal trend with increased demand in the winter months for a hot meal. The extent of the
trend can only be determined by actual marketing, but it will probably not be very marked due to the
‘light’ sauce.
Prior to national launching of the product, it may be advantageous to test market the product in a
small region. The cost of this is justified by the newness of the product.
It is essential the product is launched soon to obtain maximum benefit from the change in consumer
awareness of health and fitness combined with the increasing demand for convenient, quick-toprepare foods.