4.2 Marketing Planning
Chapter 25
Part 1
Marketing Planning
A formal document which outlines the
details of how a business plans to
achieve its marketing objectives as
derived from its corporate objectives.
Marketing Mix
Effectively combining key decisions in
the areas of product, price, promotion,
and place to successfully market a
product.
The 4 P’s of Marketing
Product
Price
Promotion
Place
Product
The right product could include:
An existing product
An updated existing product
A new product
Price
The right price must be set for the product
Too low – the product quality may be perceived
as low quality
Too high – the customer may not be able to
afford the product
Can you identify a product that fits into a too LOW
price and a too HIGH price category?
Promotion
Telling your customer about your product and
convincing them to buy.
Packaging is considered part of promotion and
can reinforce image or create a product
preference.
Can you think of any promotion activities that
encouraged you to make a purchase?
Can you think of any creative packaging that would
make you purchase one product over another?
Place
Distributing the product to the proper
PLACE so customers can make a
purchase.
If your product is not available at
the right time and place, customers
cannot buy it.
Where might you make purchases?
How is “PLACE” changing?
The 3 other P’s
There are 3 more P’s – related to Service
People: Selling services require people to
create a positive experience for the customer
(restaurants, hair salons)
Process: Satisfying customer needs as part of
marketing services (automatically renewing a
membership)
Physical Evidence: Customers can see for
themselves the quality of the product (a clean
lobby at a hotel, table clothes used a nice
restaurant)
Successful Marketing Mix
The marketing mix must be consistent in
order to be successful in sending a clear
message to customers.
Example: McDonald’s
Product: Fast Food
Price: Inexpensive to moderate
Promotion: Billboards, road signs, TV
commercials
Place: Convenient, busy streets
People: FAST service, Order takers
Physical Evidence: Clean
What is wrong with this picture?
An expensive well-known brand of
perfume for sale by a street-vendor.
Saks Fifth Avenue wrapped your fine
china purchase in newspaper.
Lamborghini sports cars are
advertised in Seventeen magazine.
Marketing Ethics
Ethical marketing issues are
increasing with the globalization of the
world’s markets.
What do you think of these situations?
Sell a printer cheaply or give it away to
sell expensive ink cartridges.
Advertise low airfare then add taxes and
surcharges after the purchase has been
made.
What do you think?
Advertise toys to children and not
clearly distinguish between and
advertisement and children’s
programming.
Close retail stores and only sell on the
Internet when your customer base
historically does not use computers.
Buy cheap raw materials to decrease
a products price.
Marketing Audit
A regular review of the cost and
effectiveness of a marketing plan
including the analysis of external and
internal influences.
Marketing Audit
A marketing audit answers the question:
What is our current situation?
3 Factors:
Examine INTERNAL strengths and
weaknesses
Examine EXTERNAL opportunities and threats
Review progress of the plan:
Market share – how does it compare with the
objective
Actual sales performance – is it meeting original sales
goals
Is the company meeting its SMART objectives
Porter’s Five Forces
A framework that helps industries
analyze competition in the market
place and understand the elements
involved.
1. Threat of entry
2. The power of buyers
3. The power of suppliers
4. The threat of substitutes
5. Competitive rivalry
HL
Porter’s 5 Forces
Supplier Power
Threat of Entry
Competitive
Rivalry
Buyer Power
HL
Threat of Substitutes
1. Threat of Entry
The ease that other businesses can join the industry.
Threat is highest when:
Economies of scale are low in the industry
Technology needed to enter the business is
relatively cheap
Distribution channels are easy to access
There are no legal or patent restrictions
The importance of product differentiation is low so
extensive advertising is not required.
Name a business that fits this description.
HL
2. The power of buyers
The power that customers have on the
industry.
Customer buyer power is greatest when:
There are many small undifferentiated
firms to buy from.
The cost of switching suppliers is low.
Buyers can easily buy from other
businesses.
Name a business that fits this description.
HL
3. The power of suppliers
The power of suppliers to businesses is great.
Supplier power is greatest when:
The cost of switching suppliers is high.
The brand being sold is well-known (or powerful)
like Nike shoes
Suppliers could realistically open their own
forward-integration operations (coffee suppliers
open their own cafes)
Name a business that fits this description.
HL
4. The threat of substitutes
The existence of substitutes (replacing metal with plastic….NOT
substituting brands – Honda cars with Ford cars)
Substitute threats exist when:
New technology makes other options available
Satellite TV replaces antenna reception
Price competition forces customers to consider alternatives
Train fare is cheaper than airfare
New products lead to consumers spending on different
products leaving less to be spent on your product.
Paying for Internet service reduces the amount spent on
clothing.
Name a business that fits this description.
HL
5. Competitive Rivalry - CENTER
Competition from your competitors.
Competition is greatest when threats exist from the
four elements of Porter’s 5 Forces.
1.
2.
3.
4.
HL
Threat of entry – easy to enter the market
Threat of substitute products – alternatives
Suppliers have power
Customers have power
5. Competitive Rivalry - CENTER
Competition from your competitors.
Rivalry from existing firms is greatest when:
There are many firms with a similar market share
– Think Coke vs Pepsi
High fixed costs force firms to try to obtain
economies of scale – Think Toyota vs Honda
There is slow market growth that forces firms to
take market share from their rivals to increase
sales – Think Bank of America vs Wells Fargo
Can you think of other examples?
HL
Porter’s 5 Forces
How does this impact business decision making?
By analyzing new markets potential.
By analyzing existing markets.
Develop strategies to improve a businesses
current market position and gain a competitive
advantage.
Product differentiation
Patents and copyrights
Focus on less competitive market segments
Merging with suppliers or customers
Signing exclusive agreements with suppliers and commit
customers to long-term contracts.
HL