IB Business & Management
4.2 Marketing Planning
Pg. 456-495
1. Think about it ...
“You generally hear that what a man
doesn’t know doesn’t hurt him, but in
business what a man doesn’t know does
hurt” - E. St. Elmo Lewis (1872-1948)
What does this quote mean to you?
2. Focus Questions
1. What is marketing planning?
2. What is the marketing mix?
3. Are there any ethics in marketing? Should
there be? Why or Why not?
4. What is a marketing audit? What do they
examine? ...
3a. Marketing Planning
What is marketing planning?
It is a process whereby devising marketing objectives,
while using appropriate marketing strategies to achieve
these goals.
Requires the collection & analysis of information (market
research) on existing and potential customers.
So, how does one achieve a marketing objective? Can you
name some marketing objectives?
Increase sales 25%, 10 new listings a month, "to have one
Starbucks for every 3,000 people in every city and town.”
3a. Marketing Planning
Sales growth? How would you achieve this objective?
This is the role of the marketing planning. The Marketing
Department.
Here is a typical marketing planning process:
1. Marketing Audit - conduct market research. Why?
2. Marketing objectives - what is your goal or target? The audit will tell
you.
3. Marketing strategies - this is the plan and use of the marketing mix
(4P’s) & ethics to achieve the objectives.
4. Monitoring & review - continual process of checking and assessing.
Did the plan work? Why or why not? How can we improve?
5. Evaluation - examine the extent to which the firm had succeeded in
achieving these objectives.
4a. The Marketing Mix
• What is the marketing mix?
• It is the heart of marketing planning.
• Combination of elements needed to successfully market any product.
• Used to review and develop marketing strategy.
• Also known as the FOUR P’s
• Product: the good or service being marketed to meet the
NEEDS and WANTS of a customer.
• Price: how much the customer is charged.
• Place: where the product is sold.
• Promotion: process of informing, reminding, and persuading
customers to BUY your product.
4b. The Marketing Mix- Product
•
1. A product can be a physical good or an intangible service.
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What is the one purpose products serve?
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Can you name some examples?
to fulfil the NEEDS or WANTS of the customer.
What differentiates one product from another?
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the customer benefits of purchasing that product.
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Why do you go to McDonald’s to purchase a hamburger?
•
What are the benefits for you to go to McDonald’s and eat a meal
there?
•
Why do you buy Nike Air? (brand image? packaging? functions,
after-sales service?)
4b. The Marketing Mix- Product
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Several kinds of products; two major kinds are:
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Producer products: raw materials, machinery, and components. Sell
to other businesses.
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Consumer products: sold to end-user...YOU
Convenience products – food
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Consumer durables – furniture
•
Specialty products - diamonds
Most businesses sell a collection of related products – Product line
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EX: Honda sells Civics, Accord, SUVs
Some businesses produce more than one type of product – Product mix
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EX: Samsung makes cell phones, tvs, cameras
4c. The Marketing Mix- Price
• 2. Pricing is one of the hardest decisions in the marketing mix. Why?
• What if the product is over-priced? (customer feels ripped off)
• What if the product is under-priced? (customer thinks product is of poor
quality)
• Is there a balance? Yes, economists define this as equilibrium price.
• This is where buyers and sellers agree on a price for the product.
• Buyers want a price to reflect value for money and sellers want a price that
exceeds their cost of production to earn a profit.
• Pricing decisions depend on many factors:
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Demand: the higher the demand, the higher the price will be.
Supply: the lower the supply, the higher the price will be.
Business objectives: charities / NPO’s vs. profit seeking firms.
Competition: high competition, similar pricing.
Costs of production: higher the costs, higher the price tends to be.
Corporate image: Lamborghini vs Ford cars
4d. The Marketing Mix- Place
•
3. Place is used to describe the ways of distributing products to customers.
• Can also refer to channels of distribution, retail stores or other intermediaries used to get a
firm’s products to the consumer
EX: Coca-Cola uses wholesalers and vending machines
Factory
Wholesalers
•
The channels start at the factory, who sells to the wholesalers.
•
The wholesalers buy in bulk and sell to the retailers.
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The retailers sell the product to the customers.
•
Obviously the fewer intermediaries, the lower the price.
Retailers
Consumers
4e. The Marketing Mix- Promotion
•
4. Promotion refers to the strategies used to attract customers to a firm’s
products.
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Branding – helps differentiate a product from its rivals
Can be above the line or below the line. What does this mean?
•
Above the line: promotional activities that use TV, newspaper, and radio.
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Below the line: uses packaging, sponsorship, and direct mail.
All business will use a combination of above and below the line when
promoting their products.
•
Think of some examples of where you have seen your favorite product
being advertised.
4e. The Marketing Mix- People
•
Marketing of Services - Extra 3 P’s:
• 1. People:
•
Attitude/aptitude of the employee determines experience and quality of
service for customer.
•
Chinese saying “A man without a smiling face must not open a shop.”
•
highly motivated and competent staff is likely to deliver good
customer service.
•
Happy customers are more likely to remain loyal. Can also spread
marketing through word-of-mouth promotion
•
CRM-Customer Relations Management – training staff to deliver
good service.
•
Emphasizes customer lifetime value
•
Cheaper to keep existing customers than to find new ones
4e. The Marketing Mix- Process
• 2. Process:
• methods and procedures used to give clients the
best customer service.
• Must keep promises to customers and handle
complaints
•
Can help build customer loyalty by fulfilling
needs/wants
•
Customers want improved convenience
• EX: Amazon, IKEA
4e. The Marketing Mix- Physical
evidence
•
3. Physical evidence:
• the image portrayed by a business. (tangible)
• Looks do count when marketing a product.
• Banks, hotels, schools, restaurants
• A welcoming reception area, well-groomed
staff portray good quality
• Looks count when it comes to marketing a
product
4f. The Marketing Mix- Packaging
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Packaging: refers to the ways a product is presented to the customer.
•
A form of product differentiation.
•
Important if product’s design, functions, or features are not easily
differentiated from others
•
How are you going to make your product look unique? Desirable?
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People’s moods are affected by things such as:
•
color
•
texture
•
appearances
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Businesses use these factors to entice customers
•
Wrapping services
4f. The Marketing Mix- Packaging
• What are the various functions that packaging can have on the
marketing mix?
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Has an impact on customer perceptions of a product or brand.
acts as a form of differentiation - free gift wrapping
protects against damage during transportation.
labeling informs your customer of the contents.
makes distribution easier.
can encourage impulse buying – eye catching
used to advertise the brand or the business.
• One major drawback to packaging is the COST
4g. The Marketing Mix- 8 P’s?
Product
Packaging
Process
Price
Marketing
Mix
People
Promotion
Place
Physical
evidence
5a. Ethics of Marketing
•Moral principles that guide business behavior.
•Marketing ethics refers to the moral aspects of a firm’s marketing strategies
•Unethical marketing behavior exists when moral codes of practice are not adhered to and their
actions offend the public.
• Bait-and-switch marketing techniques?
•are techniques which are considered unethical.
•they are used to entice customers by advertising deals that are too good to be true.
•Once customers are hooked on the deal (the bait), they discover that it is no longer
offered and change to purchase another more pricey alternative (the switch).
• Who uses bait-and-switch?
•Airlines companies
•Mobile phone companies
•Real Estate companies
5a. Ethics of Marketing
• British newspaper reported that $2 billion was spent by customers on the bait-and-switch
•
Other dubious marketing tactics:
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Health fraud
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Get rich quick schemes
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Travel fraud
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Product misrepresentation
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fear tactics - limited stock only
•
unsubstantiated claims - 4/5 prefer our products
• Pester power - using children to pester parents into buying products.
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Confusion marketing - swamping customers with excessive price information.
5a. Ethics of Marketing
• Ethics are rather subjective – what is offensive to one person may not be offensive to
another
• Cigarettes advertising is banned in America
• Use of unethical marketing is a high-risk strategy
• These strategies can backfire and make customers boycott the products
•
Because of this most business will follow the rules of ethical marketing
•
These rules are called ethical codes of practice
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3 functions:
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Identify acceptable business practices
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Encourage internal management and control
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Avoid confusion regarding what is and is not acceptable
Most countries monitor marketing activities of businesses through various practices
6. Marketing Audit
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Is a review of the strengths and weaknesses of a firm.
Helps to identify the marketing opportunities and threats facing a business.
What internal and external issues will the audit examine?
• the business’s marketing objective and strategies
• existing products and brands sold by the business.
• the effectiveness of the firm’s recent marketing activities.
• firm’s market share
• competitor analysis
• update on the demographic profile
Gives an overview of your current marketing situation.
Can also assist in creating a SWOT and a PEST Analysis.
7a. Marketing Objectives
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These are the targets that the marketing department wants to achieve.
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These objectives should be in-line with the firm’s overall objectives.
•
Marketing guru Philip Kotler states, “the objective of marketing is to create customer satisfaction in
a profitable way”.
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These targets can:
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provide a sense of purpose.
allow progress to be monitored.
assist in the planning and development of market strategies.
7b. Marketing Objectives
high
market
standing
product
innovation
increase
market
share
market
leadership
Marketing
Objectives
Include
product
positioning
new
product
development
consumer
satisfaction
market
development
diversification
7c. Marketing Objectives Constraints
finance
legal
environment
political
environment
costs of
production
Marketing
Objectives
Constraints
size and
status of
the firm
state of the
economy
social issues
competitors
time lags
8a. The Role of Market Research
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Market research is used to gather the opinions, beliefs, and feelings of potential customers.
It serves to identify the NEEDS and WANTS of customers.
There are two major categories of market research:
• Ad hoc market research: focuses on specific marketing problems or issues.
• Continuous research: takes place on a regular ongoing basis.
The Role of Market Research:
• gives business up-to-date information
• see if current products meet the needs of the customers
• to improve a firm’s marketing
• assesses potential customer reactions
• provides information about the competition
• gives an idea of the future; future trends
Market research is usually carried out when a firm launches a new product.
Effective market research helps reduce risks of failure.
Drawbacks of market research:
• Garbage
in, garbage out (GIGO): unreliable or inaccurate data generates poor quality
information.
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Biased information can be unreliable.
Costs of good market research is very high.
8b. Primary Research
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Primary research is new data gathered from first-hand sources.
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What are the several methods of conducting primary research?
Also know as field research, information directly collected from customers to identify their buying
patterns and changes in behaviour.
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Questionnaires:
• Self-completed questionnaires
• Personal questionnaires
• Postal questionnaires
• Telephone questionnaires
• questions.
Good questionnaires avoid bias, avoid jargon, include closed and open-ended
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Observations: watching how people behave and respond to different situations.
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Experimentation: introduces marketing activities to a group of people to measure their
responses and reactions.
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Online surveys: using email or software programs
8c. Advantages & Disadvantages of Primary Research
Advantages
Disadvantages
up to date
time consuming
relevance
costly
confidential and unique
validity
objectivity
8d. Secondary Research
•
Secondary research is also known as desk research, which involves collecting second hand data and
information.
•
This means that the data has been gathered by others.
•
Tends to be cheaper and faster to collect.
Advantages
Disadvantages
cheaper & faster to collect
maybe out of date
huge range of sources
info may be inappropriate
provides insight into trends
widely available to the
competition
8e. Qualitative Research
•
Market research can also be classified as qualitative or quantitative.
• Qualitative
respondents.market research involves getting non-numerical answers and opinions from
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Used mostly in primary research.
main purpose is to understand the behaviour, attitudes, and perceptions of customers.
Two main types of qualitative research: focus groups and in-depth interviews.
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Focus groups:
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involve small discussion groups who share similar customer profile.
main goal is to get everyone to generate insightful information.
a drawback may be that only extroverts tend to take part in these groups.
another limitation is that participants want to get paid, so it can be costly.
another variation is called consumer panel.
•
small group within a business’s target market and are specialists rather than
random people.
8f. Qualitative Research
•
The second type of qualitative market research is in-depth interviews.
• involve
an interviewer
a customer
having a one-on-one interview to find out more about
the customer’s
personaland
situation
and opinions.
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can be conducted face-to-face or over the phone.
these interviews can also include a range of non-quantifiable information, which prove to be
difficult to analyze.
Advantages
Disadvantages
better exploring the motivators and
the de-motivators of customers
information used does not
represent the whole population
can be rich in depth
can be time consuming
can be inexpensive
need interview expertise
respondents not under any pressure
interviewer can be bias
8g. Quantitative Research
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This research relies on a much larger sampling base.
It requires the gathering of factual and measurable data rather than people’s opinions.
Will involve the use of surveys and questionnaires to gather such data.
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Closed question - allow respondents to choose from a given list of options.
Ranking or sliding scales - rank your favourite soft drink; strongly agree to strongly disagree.
Can also supply data such as market share, sales figures, and changes in consumer income.
Advantages for using this research is it is easier to analyze, but this method is not as flexible as
using qualitative methods, as questions are all fixed.
9a. Market Segmentation
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Can be defined as the process of splitting a market into distinct groups of buyers in order to better
meet their needs.
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A segment refers to a group of customers with similar characteristics.
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Such as age, gender, similar wants and needs.
Targeting means that each distinctive market segment can have its own marketing mix.
Consumer profile:
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For example: Can you name the different markets that exist to meet YOUR needs and wants?
are the characteristics of customers and consumers in different market such as:
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age
gender
income
purchasing habits
Main methods of market segmentation are based on:
• demographic factors
• geographic factors
• psychographic factors
9b. Segmentation by Demographics
Income
Socioecon.
Languag
e
Age
grouping
s
Segment
by
demograph
ics
Gender
Race
and
Ethnicity
Religion
Marital
status
9c. Segmentation by Geographic & Psychographic Factors
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They come in two broad categories:
• 1. Location: different areas and regions of a country may have different cultures and attitudes.
• 2. Climate: the weather in an area can have a large impact on business activities.
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Segmentation by Psychographic Factors:
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are considered to be the emotions and lifestyle of customers, such as habits, hobbies, interests, and values.
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Advantages of Segmentation:
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Status
Values
Culture
Hobbies and interests
better understanding of customers
increase sales
growth opportunities
gives support to product differentiation
How to ensure successful segmentation? Use DAMAS:
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Differential: must be unique
Actionable: suitable products to cater to each segment
Measurable: size and purchasing power of each segment must be quantifiable
Accessible: reach customers in a cost effective way
Substantial: each segment must be large enough to generate profits
10a. Targeting
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Once markets have been segments, the next stage is targeting.
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Targeting refers to:
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the market segment that a business wishes to sell to.
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there are three main targeting strategies that a business can use:
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1. niche marketing
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2. Mass marketing (undifferentiated marketing)
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3. Mass marketing (differentiated marketing)
Niche Marketing:
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Also know as concentrated marketing.
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targets a very specific and well-defined market segment.
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Can you name some of these well-defined market segments?
10b. Targeting
Advantages of Niche Marketing
Disadvantage of Niche Marketing
better marketing focus
very small markets
less competition
small market size = no economies of scale
become highly specialized
highly successful markets
may attract new competition
10c. Targeting
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Undifferentiated Marketing:
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also know as mass marketing or market aggregation.
this strategy ignores targeting individual market segments.
a large number of different market segments are targeted to maximize sales volume.
Advantages
Disadvantages
huge economies of scales
high entry barriers
no tailed marketing mixes
fierce competition
caters to larger markets = larger profits
lack of focus
mass marketing can be wasteful
10d. Targeting
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Differentiated Marketing:
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also know as selective marketing or multi-segment marketing.
this strategy tailors a marketing mix to each market segment.
will use positioning maps (p. 488) to identify how customers think and feel.
Advantages
Disadvantages
customers enjoy a satisfying
experience
it is costly
risks are spread out
can not exploit economies of scale
can drain a firm’s resources and confuse customers
11a. Positioning
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Marketing positioning:
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is a tool that ranks different products, services, or firms in relation to others in the market.
Three stages of positioning:
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2. Decide - which aspects of these strengths should be marketed.
3. Implement - desired positioning by using the right marketing mix.
Corporate Image:
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1. Identify - the competitive advantages of the product.
plays a vital part in the success of a business.
Can improve corporate image through CSR (Unit 1.3)
Seek a unique selling point (USP) or a unique selling proposition, how your product stands
out from those of your competitors.
Three competitive strategies:
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1. Cost leadership - aim to excel as low cost suppliers of products.
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2. Differentiation - produce distinct products by rival firms.
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3. Focus - pay close attention to a specific market segment.
11b. Positioning
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Position (perception) Maps:
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is a visual tool that shows the customers’ perception of a product or brand in relation to
others.
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Customers perceptions using price and quality:
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Bargain brands - high quality, reasonably priced...
Cowboy brands - poor quality, highly priced...
Low
Premium brands
Cowboy brands
Use of position maps:Bargain brands
Economy brands
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Low High
High
Price
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Premium brands - high quality products, high priced; BMW...
Economy brands - low quality, reasonably priced; Ford...
used to identify gaps in a firm’s product portfolio.
used for targeting strategies.
can inform a business of a need for reposition their products.
12a. Development of Marketing Strategies & Tactics
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So what are all these tactics and strategies?
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Marketing tactics are short term plans and strategies are medium to long-term plans.
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Marketing tactics include:
• Promotional tactics
• High-pressure sales tactics
• Dubious marketing tactics
• Bargain brands
• Short-term price reductions
Marketing tactics are used to achieve the marketing strategies:
• Market research
• Product planning
• Implementation
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In developing a marketing strategy, marketing managers may choose from the following:
• Perception mapping (Unit 4.2)
• Porter’s five forces analysis (Unit 4.2)
• Porter’s generic strategies (Unit 4.2)
• Ansoff matrix (Unit 1.7)
• Boston matrix (Unit 4.3)
• SWOT analysis and Force field analysis (Unit 1.8)
12b. Development of Marketing Strategies & Tactics
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Remember a market strategy is carried out through an appropriate marketing mix.
Some
argue that the marketing mix (the 4 P’s) should be examined through the eyes of the
consumer.
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Called the 4 C’s of marketing :)
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Customer solution (PRODUCT)
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Cost to the customer (PRICE)
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Communication (PROMOTION)
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Convenience (PLACE)
Execution of the marketing strategy should be done in a cost-effective way without overspending
your budget.
The End