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The Creation of a Marketing Plan Phase 1 Phase 2 Phase 3 Phase 4 Situation Report Objectives Statement Execution & Implementation Performance Evaluation Where is the client now? Where does the client want to be? How should the client get there? Has the client reached her/his goals? Communication Creative/ Analytical Process 1. Assess Market Environment Product Price 2. Formulate Strategies & Set Objectives 3. 4. Develop Marketing Tactics Marketing Mix Place Structure Evaluative Process Promotion Distribution Written Outputs to Marketing Plan Executive Summary Corporate Strategy Situation Report Key Assumptions Marketing Strategies & Objectives Marketing Tactics Short & Long Term Measures & Goals Created by Barry Sullivan Consistent Client Interaction & Input OSBI, Director of Client Service & Quality Assurance Illinois MBA 2004 1.0 Assess the Market Environment Sub-Process Objective • Develop the foundation from which marketing strategies, objectives, and tactics are to be developed • Recognize for implementation the consumer orientation for targeted marketing communications • Define necessary assumptions, both internal & external, upon which further planning can be meaningfully based Tips & Key ?s • Is the industry growing? Is it stable? Does technology play a dominant role? • Are the client’s existing/ potential resources & capabilities coincidental with key industry success factors? • How has the client performed? Is the client well-positioned relative to competitors? Conduc t Externa l Analysi s •Determine chief economic traits •Identify drivers of change •Identify key success factors •Determine the impact of external entities upon the industry (government regulation, social goodwill, etc.) •Identify the relative strengths & weaknesses of existing industry players •Identify existing/ potential voids within the market for possible exploitation Conduc t Internal Analysi s •Understand overarching business strategy •Determine the client’s strengths & weaknesses •Earmark areas to be improved for later action •Gather all historical data and secondary/ primary research when appropriate and possible •Evaluate past performance in light of internal goals/ objectives & competitor’s performance where possible •Evaluate past and current positioning for coherence with overarching business strategy Tools EXTERNAL • Porter’s Five Forces • PESTLE Framework • Structure-ConductPerformance Articulation • Segmentation Scheme • Competitive Positioning Articulation • Value Mapping • Perceptual Mapping •Define internal & external assumptions (ie growth rates, advent of regulation, speed of innovation, etc.) using historical data and secondary/ primary research Outputs to Written Marketing Plan INTERNAL • SWOT Analysis • Activity Coherence Mapping ASSUMPTIONS • Historical Trend Analysis • Pareto Affect • A summary of all the external factors which will likely affect the client’s marketing performance in the present & future • A statement of the client’s strengths & weaknesses with relevance to its competition • An exhaustive list of necessary assumptions Created by Barry Sullivan essential to current & future marketing OSBI, Director of Client Service & Quality Assurance decisions Illinois MBA 2004 1.01 Porter’s Five Forces Model Tool Process •Assess strength of each of the five competitive forces (Strong? Moderate? Weak? ) •Explain how each force acts to create competitive pressure. What are the factors that cause each force to be strong or weak? •Decide whether overall competition (the combined effect of all five competitive forces) is fierce, strong, normal/moderate, or weak Personal Computer Industry Supplier Power: Very High Intel and Microsoft extract all industry profits. Substitutes: Low to Moderate Increasing competition from hand held/ portable computing devices Rivalry: Very High Intense price competition Excess capacity and saturation. Some brand recognition, but PCs thought of as commodities Buyer Power: High and Rising Low switching costs, Less brand loyalty. Resellers and retailers have grip on end users Threat of Entry: Moderate to High Low capital costs of manufacturing Relatively easy to assemble PCs Some brand recognition and loyalty Notes/ Implications • Key questions to better understand the ferocity of competition within the industry: Is price competition vigorous? Active efforts to improve quality? Are rivals competing on customer service? Lots of advertising/sales promotions? Active product innovation? Active use of other weapons (strategic, operational, marketingCreated by Barry Sullivan related)? OSBI, Director of Client Service & Quality Assurance Illinois MBA 2004 1.02 PESTLE Analysis Tool Scan of the External Macro-Environment Process •Gather information relevant to client’s external environment and analyze for relevance to the client’s strategies •Implications for the client, customers, intermediaries, the market/ industry, competitors, and stakeholders must be considered •Arrange this information into the categories at left for use during both the internal analysis phase and the strategy & objective development phases Political Economic Social Technological Legal Environmental Tax policy Economic growth Population demographics Automation Pollution control Exchange rates Income distribution Government spending on technology Health & safety laws Trade restrictions & tariffs Waste disposal Interest rates Attitudes towards work & leisure Information technology development Employ ment regulati ons Political stability Inflation rates Social mobility Deregulation Business cycles Unemploy ment Speed of technology transfer Environmental regulations Privatization Health consciousness Population growth rate Emphasis on safety Monop olies legislati on Noise levels Additional requirements on manufacturing processes Research & Development Technology incentives Rate of change Technological maturity Notes/ Implications • What influences have been particularly important to the client in the past? • Are any of these more or less significant in the future for the client and her/his competitors?Created by Barry Sullivan • Which of these are the most important at the present time? In the nextOSBI, few years? Director of Client Service & Quality Assurance Illinois MBA 2004 1.03 Structure-Conduct-Performance Articulation Tool Process • To identify the structure of the industry, the dominant conduct of existing players, and the resulting performance of newer firms • To define the relationships illustrated at right, the following industry conditions must first be considered: Consumer Elasticity of demand Substitutes Seasonality Rate of growth Location Lumpiness of orders Method of purchase Production Technology Raw materials Unionization Product durability Location Scale economies Scope economies Structure •Numbers of buyers •Numbers of sellers •Barriers to entry facing new firms •Product differentiation •Vertical integration Conduct •Diversification •Advertising and marketing •Research and development •Pricing behavior •Plant investment •Legal tactics •Product choice •Collusion Performance •Profits •Product quality •Production efficiency •Technical progress/ progressiveness •Allocative efficiency •Equity Notes/ Implications • Threat of entry is stronger when…entry barriers are low, a sizable pool of entry candidates exists, incumbents are unwilling or unable to contest a newcomer’sCreated entryby Barry Sullivan efforts, and/or newcomers can expect to earn attractive profits OSBI, Director of Client Service & Quality Assurance Illinois MBA 2004 1.04 Segmentation Scheme Tool Determine Which Segmentation Variables to Use Process •Define distinct customer groups that have problems/ needs which can be solved/ serviced in one or more ways • Establish segment variables that yield mutually exclusive and exhaustive segments • Develop Segment Profiles • Evaluate Segments for their viability and “attractiveness” Develop Market Segment Profiles Evaluate Relevant Market Segments Segmentation Variables User-Related •Demographics: Age, Gender, Race, Ethnicity, Income, Education, Occupation, Family Size, Family Life Cycle, Religion •Social Class •Geographic: Region, Urban, Rural, City Size, County Size, State Size, Market Density, Climate, Terrain •Lifestyles & Psychographics Behavioral •Benefits •Usage •Price •Brand •Situational Are acquired segments viable? Measurable • Size, purchasing power, profiles of segments can be measured Actionable •Must be able to attract and serve the segments Substantial •Segments must be large or profitable enough to serve Differential •Segments must respond differently to different marketing mix elements & actions Accessible •Segments must be effectively reached and served Notes/ Implications • Segmentation scheming defines potential markets and serves as an essential component of the client’s ultimate marketing mix decisions Created by Barry Sullivan OSBI, Director of Client Service & Quality Assurance Illinois MBA 2004 1.05 Positioning Articulation Tool Student-Staffed Consulting Process Quality Management Consortium MBA Consulting Program OSBI •Determine current competitive positioning within the marketplace •Identify holes, potentially representative of untapped markets, for further exploration •Formulate strategies to seize advantage, whether by challenging competitors’ positioning or by seeking “vacant” space Primarily Fortune 500 Austin Power Low Student Participation Carlson Business Consulting Network Center for Experiential Learning High Student Participation Community Consulting The MBA Consulting Project Darden Business Projects Freeman Consulting Group Primarily Start-up Companies Notes/ Implications • With positioning articulated, unfulfilled customer groups or needs can be more readily identified and targeted Created by Barry Sullivan • Should current positioning prove incoherent with the client’s business strategy, this articulation becomes OSBI, Director of Client Service & Quality Assurance essential to developing new marketing strategies Illinois MBA 2004 1.06 Value Mapping Tool Price Value Map of the Toothpaste Industry, 1992 Process $3.00 •Determine the current value-price orientation prevalent in the industry $2.80 •Define the customer groups to which major competitors cater (pricesensitive or qualityfocused) $2.20 Oral-B Regular $2.60 $2.40 •Formulate strategies to combat competitors or to seize “vacant” space Price Aquafresh Flex $2.00 Pepsodent Professional $1.80 Colgate Plus Reach Advanced Reach Regular $1.60 Price •Identify areas of the existing value orientation scheme within which client could capture value Oral-B Indicator $1.40 $1.20 Pepsodent Regular Colgate Classic $1.00 Perceived Perceived Performance Benefits Notes/ Implications • Use the acquired value map to identify holes in the market’s current pricing scheme; where large gaps exist between products on the value line, there is opportunity for new product introduction Created by Barry Sullivan OSBI, Director of Client Service & Quality Assurance Illinois MBA 2004 1.07 Perceptual Mapping Tool Liquid Detergent Market Process •Evaluate the current players and their respective abilities in light of all-important consumer perceptions •Formulate strategies to exploit the weaknesses and nullify the strengths of competitors in terms of consumer perception Long-lasting suds Most pleasant fragrance Mildness 50% Best Value for money Overall Cleaning 100% Leaves dishes shiny Competitor #1 #2 #3 Cutting Grease Removing baked-on foods Notes/ Implications • By mapping perceptions, the relative strengths & weaknesses of competitors become more clear and actionable Created by Barry Sullivan • What are the respective foci of competitors, and how do consumers perceive them in the marketplace? OSBI, Director of Client Service & Quality Assurance Illinois MBA 2004 1.08 SWOT Analysis Tool Process • Gather relevant information and list all issues, external & internal, that have or will likely have impact upon the client’s activities • Use this information in conjunction with the findings of the external analysis (specifically the PESTLE) to develop a thorough understanding of the client’s reality Strengths Weaknesses Opportunities Threats List internal strengths List internal weaknesses List external opportunities List external threats •Brand awareness •Converse of suggested strengths (ie lack of brand awareness, lack of access to resources) •An unfulfilled customer need •Emergence of substitutes •Arrival of new technologies •Tightening of applicable regulations •Patents/ trademarks •Cost advantages •Proprietary knowledge •Exclusivity of resources •Preferential distributive access •May sometimes be the “flip-side” of a strength (ie large manufacturing capacity, while generating low perunit costs, might also inhibit flexibility/ adaptability) •Relaxation of regulations •Dissolution of preexisting trade barriers •Institution of new trade barriers •Shifts in consumer preferences away from client’s offerings Notes/ Implications • Compiled strengths should be considered potential points of competitive advantage for the client and her/his activities • This information is useful in the immediate to better understand the current environment, willSullivan Createdand by Barry again prove essential during the strategy formulation & recommendation stages of the plan OSBI, Director of Client Service & Quality Assurance Illinois MBA 2004 1.09 Activities Map Tool Process Southwest Airlines • Evaluate the existing strategic coherence of the client’s current activities No meals No assigned seats Flexible Union contracts High employee compensation Limited Passenger Amenities No connections Point-to-Point flights Frequent Departures 15 min. turnaround • Identify the higherlevel activities and then list those actions undertaken and policies adopted to support main actions/ initiatives No transfers Lean and productive crew Employee Stock ownership Limited use of travel agents Standard fleets Automatic Ticketing machines Low prices High aircraft utilization Notes/ Implications • The more relationships/ linkages that exist among current activities, the more coherent and integrated is the client’s strategy • Planned activities for the future can herewith be evaluated prior to adoption/ implementation for coherence with existing activities Created by Barry Sullivan OSBI, Director of Client Service & Quality Assurance Illinois MBA 2004 1.10 Historical Trend Analysis Tool Trends in US GDP Growth Process Increasing Annually at $256B Billions of '96 $s • Acquire historical data and establish relevant time periods for examination (ie similar in duration, behavior, conditions, etc) Most Recent 10-Years: 10,000 9,000 8,000 7,000 6,000 5,000 • Examine data for statistical relevance and significance, being careful to adjust for seasonality where appropriate 4,000 3,000 Long-term: Trending 2,000 increases of $118B 1,000 0 1929 • Extrapolate forward into the future for periods of appropriate relevance to the client positively with annual 1939 1949 1959 1969 1979 1989 1999 Notes/ Implications • While long-term trends are often beneficial in establishing the broad perspective, it is often more insightful to limit trend analysis to a more current term given that influential factors/ conditions can change dramatically over time. ExaminingCreated the by Barry Sullivan past for periods of similar observable behavior to that of the current period can OSBI, Director of Client Service & Quality Assurance prove useful in predicting upcoming movements. Illinois MBA 2004 1.11 The Pareto Effect (80/20 Rule) Tool Process • To quickly estimate with demonstrated accuracy the importance of existing customer segments • This “effect” is generally applicable across industries and basically states that approximately 80% of a firm’s sales are attributable to only 20% of same firm’s customers • With this tool, marketing efforts can be better focused/ targeted to generate maximum impact with respect to stated goals Observed Pareto Effect in the Capital Industrial Goods Market % of client’s current sales Customer Customer Group A accounts for 75% of sales and represents only 25% of total customer base Group C accounts for 5% of sales and represents 20% of the total customer base Customer Group B accounts for 20% of sales while comprising 55% of customer base % of client’s existing customer base Notes/ Implications • While this tool is useful in a general sense, it is static and therefore must be used carefully. Created Customers with the greatest potential may well be within the 80 percent, or within a by Barry Sullivan OSBI, Director of Client Service & Quality Assurance heretofore untapped segment of the market. Illinois MBA 2004 2.0 Formulate Strategies & Set Objectives Sub-Process Objective • Develop marketing strategies and associated objectives based upon the environmental assessment • Translate into concrete form the needs, hopes, & desires of the client with respect to her/his business performance Tips & Key ?s • This process must be one of continuous review, as the strategies and associated objectives need to be evaluated forwards and backwards for coherence. •Develop cohesive marketing strategies to best approach the client’s environment now and into the future •Establish broad objectives applicable to these marketing strategies and to the client’s overarching wants/ needs (ie target ROI, improved image, social responsibility) Tools • Ansoff Matrix • TWOS Matrix •Translate the broad objectives into key result areas (ie market penetration, sales growth rate) commensurate with key industry success factors •Create subobjectives necessary for the accomplishment of the broad objectives (ie sales volume goals, geographical expansion, product line extension) Outputs to Written Marketing Plan • A set of overarching marketing strategies relevant to the client’s environment • A definitive statement of the client’s objectives replete with associated complementary subobjectives Created by Barry Sullivan OSBI, Director of Client Service & Quality Assurance Illinois MBA 2004 2.1 Ansoff’s Matrix of Growth Strategies Existing Markets • This tool is useful as it allows for the simplification of even the most complicated industry. By reducing complexities along two dimensions, the client has only to consider four broad growth strategies. Market Penetration Product Development •In a growing market, maintaining the status quo will result in growth; there may also exist opportunities to increase market share if competitors reach capacity limits •Mitigates risk by basing operations within an established customer base •May be appropriate if the client’s strengths are related to specific customers rather than products •As the market approaches saturation/ maturity another strategy must be pursued if further growth is desired • Develop marketing strategies for which specific objectives can be defined and later measured Notes/ Implications New Products •Least risky of the four as it leverages the client’s existing resources and capabilities Process • Conceptualize the client’s competitive situation within two dimensions only: products and markets (ie what is offered and to whom it is offered) Existing Products Market Development •Mitigates risk by basing market expansion on existing products New Markets •Can include entering new geographical areas, promoting new uses for an existing product and entering new market segments •May be appropriate when the client’s distinct competence rests with the product rather than the market Diversification •Most risky of the four growth strategies since it requires both product and market development ─also know as the “suicide cell” of this matrix •Horizontal: development of activities which are complementary to or competitive with the client's existing activities •Vertical: development of activities which involve the preceding or succeeding stages in the client’s production process (upstream/backward or downstream/forward) •Conglomerate: refers to the situation where at face value the new activity of theCreated clientbyseems to Barry Sullivan bear little or no relation to it's existing products or markets OSBI, Director of Client Service & Quality Assurance Illinois MBA 2004 2.2 TWOS Matrix Tool Process • Analyze most relevant information from SWOT in an attempt to maximize strengths and minimize weaknesses • Complete the matrix as shown, with careful focus upon the actionable recommendations arising from the analysis Opportunities (O) List external opportunities Threats (T) List external threats Strengths (S) Weaknesses (W) List internal strengths List internal weaknesses SO Strategies Generate strategies here that use strengths to take advantage of opportunities WO Strategies Generate strategies here that take advantage of opportunities to overcome weaknesses ST Strategies Generate strategies here that use strengths to avoid threats WT Strategies Generate strategies here that minimize weaknesses and avoid threats Notes/ Implications • This model, while seemingly academic in nature, is one of the essential elements of strategy formulation and the written Marketing Plan. Created by Barry Sullivan OSBI, Director of Client Service & Quality Assurance Illinois MBA 2004 3.0 Develop Marketing Tactics Sub-Process: Use of Marketing Tactics to Attain Objectives Objective • Develop the overall route to be followed for the achievement of stated objectives • Determine the appropriate Marketing Mix, with special emphasis upon relevant & coherent Communications •Determine where within the Product Life Cycle the client’s offering is currently, as the maturity of the offering will determine much of the MM Product •Policies & decisions related to client’s offerings: line extensions/ retractions, feature modifications, branding, etc. Promotion (Communication) •Impersonal: advertising, POS displays, public relations •Personal: faceto-face selling on& off-site Adjust the Marketing Mix as appropriate to pursue objectives Place (Distribution) •Agent, retailer, wholesaler, direct, etc. •Issues associated with the physical movement of goods Price •Skimming & penetration policies •Cost & value approaches •Revisit marketing strategies to ensure coherence with defined objectives and associated tactics •Refine objectives as necessary and adjust strategies accordingly; this process is one for continuous review & modification Tips & Key ?s • Any and all Marketing Mix decisions (especially those to do with product & pricing) must be made with due consideration for competitive positioning • Product Life Cycle Articulation • Communication means & messages are largely dependent upon the complexity of client’s offering • Elements of Environmental Assessment • Each aspect of the MM should correspond to definite, measurable, and attainable objectives Tools Outputs to Written Marketing Plan • Definite marketing tactics formulated specifically to attain established objectives • Associated expenditure requirements and estimated results of each strategy relevant to stated objectives (to be coordinated Created with by Barry Sullivan OSBI, Director of Client Service & Quality Assurance Evaluation Phase) Illinois MBA 2004 3.1 Product Life Cycle Articulation Tool Process • Determine where within the life cycle the client’s offering is currently Growth Product: establishment of branding & quality level; acquisition of trademarks/ patents Product: maintenance of quality; addition of functionality/ support Price: low penetration pricing to build share or high skim pricing to recover development costs • Formulate marketing mix strategies using the accepted PLC as a guide Notes/ Implications Place: selective distribution until demonstrated acceptance Product Sales • The appropriate Marketing Mix is heavily dependent upon where within the life cycle the product/ service currently is. As the product/ service matures and demonstrates profit potential, competitors are likely to enter and influence the client’s tactics, objectives, & strategies. Introduction Promotion: targeting innovators/ early adopters; message is education & awareness Price: static pricing Maturity Product: enhancement of features to pursue differentiation Maintain: continue operations with a desire to retain competitive position Price: decreased price due to competition Improve: rejuvenate product with additional features, new issues, or alternative customers Place: “incentivize” Place: addition existing channels to of channels to gain preference over serve growing competitors customer base Promotion: broad message to widening audience Decline Promotion: strong emphasis on differentiation Harvest: reduce costs and target loyal/ niche customers Exit: discontinue offering and liquidate inventory to end-users or competitors Enter: develop new products/ services (usually for a new customer group or market) Created by Barry Sullivan OSBI, Director of Client Service & Quality Assurance Time Illinois MBA 2004 4.0 Structure Evaluative Process Sub-Process Objective • Predict the outcomes associated with each defined tactic and the marketing plan as a whole to better align stated objectives with reality • Evaluate in progress and in retrospect the successes/ failures of the marketing plan Complete projections associated with each tactic and evaluate against budgeted expenditures Employ test markets when appropriate and where possible to evaluate the paper plan in the “real world” prior to full-scale implementation Evaluate observed successes/ failures against stated objectives (ie did advertising expenditures create desired awareness levels?) Examine the external environment for events that may have contributed positively/ negatively to observed outcomes Tips & Key ?s • Where will the client be if she/he adopts the recommended actions? • In retrospect, has the client reached her/his stated objectives within the parameters established? If not, why not? • Did the marketing efforts have the desired effect or even cause the observed effect? • Evaluate all phases of the planning process for validity and improvement Tools • Sales Trend Analysis (with & without control markets) • Growth Rate of Improvement Analysis Outputs to Written Marketing Plan • Structured process for predicting success in the “pre-period,” analyzing progress in the “test period,” and measuring success in the “post period” • List of measures (ie sales growth, brand Barry Sullivan awareness, penetration rate, marketCreated share,by etc.) OSBI, Director of Client Service & Quality Assurance and associated goals for each Illinois MBA 2004 The Written Marketing Plan Marketing Plan Inclusive of Defined Analyses Objective • Develop for articulation a coordinated plan that translates stated marketing strategies into actionable objectives and associated tactics, replete with a process for evaluation Tips & Key ?s • Answer with the Marketing Plan these four questions: Where is the client now?; Where does the client want to be?; How should the client get there?; Did the client reach stated goals? • Be concise and keep in mind the endaudience for this marketing plan • Obtain “buy-in” from all levels of management, while maintaining overarching strategies & objectives and rejecting biased, individualistic goals 2. 1. Corporate Strategy Executive Summary 3. Situation Report 4. Key Assumptions 7. 5. Marketing Tactics Marketing Strategies & Objectives 9. 8. Short & Long Term Measures & Goals Conclusion Created by Barry Sullivan OSBI, Director of Client Service & Quality Assurance Illinois MBA 2004