Sha Tin College Business Education Department Marketing

Marketing Planning

IB Business and Management

Modified by: Ing. Pablo San Andrés

Sha Tin College Business Education Department

Marketing Planning

 Marketing Mix

 Ethics of marketing

 Marketing Audit

 Porter’s Five Forces

 Marketing Objectives

 Market Research

 Sampling

 Segmentation

 Targeting

 Positioning

 Marketing strategies and tactics

 Sales Forecasting


Marketing Mix

 Product

 Price

 Promotion

 Place

 Process

 People

 Physical http://www.ibbusinessandmanagement.com/42marketing-planning.html


Marketing Mix Activity

 Select any product/service you or your family has purchased in the past year and;

• Describe the marketing mix

• Comment on the effectiveness of the mix

• Suggest any changes to the mix

 Share with the class


Ethics of Marketing

 Ethics

• The study of principles relating to right and wrong

• Morality

• The standards that govern the conduct of a person, especially a member of a profession

 Business Ethics

• Provide moral guidelines for the conduct of business affairs

• Ethical decisions consider more than calculating costs, benefits and profit.

 Ethical Code of Practice

• Is a document setting out the way a business believes its employees should respond to situations that challenge their integrity or social responsibility


Ethic Values from a company

 Honesty

• to be truthful and forthright in our dealings with customers and stakeholders

 Responsibility

• to accept the consequences of our marketing decisions and strategies

 Fairness

• to try to balance justly the needs of the buyer with the interests of the seller

 Respect

• to acknowledge the basic human dignity of all stakeholders.

 Openness

• to create transparency in our marketing operations.

 Citizenship

• to fulfill the economic, legal and societal responsibilities that serve stakeholders in a strategic manner.


Ethics in Marketing

 To what extent should firms create demand for products and services, rather than just satisfying established needs and wants?



 To what extent should marketing create unrealistic aspirations and focus on individual concerns and fears through advertising?



 To what extent should firms market products and services that are dangerous, immoral or a risk to health, even though the sale of the products themselves are legal?



Examples of unethical advertising:

 Health fraud (promises of overnight medical cures)

 “Get rich quick” schemes using promotional activities that offer people the opportunity to get rich in a very short time span with minimal effort

 Pester power involving using children to pester their parents into buying products, such as toys, fast food and automobiles, and choosing certain holiday destinations.

http://www.youtube.com/watch?v=7VHUAW-xnnA http://www.youtube.com/watch?v=2Hdm69hpO-

E&list=PL830314999828F2EE


Bait-and-switch (Unethical marketing techniques)

Ex: Real estate companies launching new developments often use advertisements such as

“Apartments from just $250000 with just $1000 deposit needed” when in fact only one apartment is being sold at that price. It is likely to have already been sold before the advertisement even goes out to print!



 Cultural Differences

 Religious Differences

 Political Differences


Activity

 In groups of 2 or 3

 Select one of the multinationals listed

• McDonalds

• Wal-Mart

• British American Tobacco

• Philip Morris

• Electronic Arts

• Monsanto

• Eli Lilly

• Microsoft

• Disney

• Or any other company approved by Mr. Zawada

1. Find evidence to support

BOTH ethical and unethical marketing practices.

2.

Comment on the company’s motivation for ethical marketing practices

3. Present your findings to the class


Porter’s Five Forces

 Michael Porter's famous Five Forces of

Competitive Position model.



Provides a simple perspective for assessing and analyzing the competitive strength and position.

1. New Entrants

2. Threat of Substitutes

3. Buyer Power

4. Supplier Power

5. Competitive Rivalry



Marketing Plan

 Outline the firm’s marketing objectives and the strategies to achieve

 Must align with corporate objectives

 Marketing Mix

 Marketing Budget

 Preceded by Marketing Audit (review of current position)

• Marketing Mix

Objectives

• SWOT (internal & external)

Strategies

Current Position

+ Budget


Marketing Audit

 SWOT

• Internal

 Strengths

 Weaknesses

• External





Opportunities

Threats


 Internal

• Marketing Mix

• People

• Finance

• Production Process

 External

• Political

• Economic

• Social

• Technological

• Legal

• Environmental

Summary

Force

Threat of New

Entry

Threat of

Substitute

Buyer Power

Supplier Power

Intensity of Rivalry High

Analysis Competitive

High More Competitive

Example e.g. low barriers

High

High

High

More Competitive e.g. low loyalty, low cost of switching

More Competitive e.g. few buyers

More Competitive e.g. few suppliers

More Competitive e.g. price competition

The more forces that are HIGH, the more competitive the industry


Aims, Objectives & Strategies

States what the company wants (a statement of purpose)

States what the company needs to achieve to meet the aim

Objectives

Aims

Objectives

States the course of action to meet the objective

Strategies Strategies Strategies

Objectives


Marketing Objectives

 Must be aligned with corporate aims and objectives

 Must be realistic within the market, therefore based on market research

 Must have sufficient marketing budget



 Growth

• Higher targets are set for sales or market share

• May motivate if targets are realistic

• Need to ensure other aspects do not suffer; quality, customer service, etc.

• Ansoff









Market Penetration

Product Development

Market Development

Diversification (Virgin Group

(Virgin Atlantic, Virgin Blue, Virgin

Mobile, Virgin Trains and Virgin

Cola)



 Continuity

• Ensure the brands survive the long term

• Ensure strategies do not damage the image of the brand. Price cuts may increase sales, but damage image of brand.


Marketing Objectives - Types

 Increase Product

Differentiation

• Ensure products remain distinctive

• Looking for alternative distribution channels

• Displaying products in a distinctive way

• Promoting the image of the products more



 Innovation

• Developing new ideas

• Key in fashion industry and technology industry

• “Get it right” and “Get in first”


Marketing Objectives - Constraints

 Internal

• Financial

• Costs of Production

• Personnel

• Market positions

• Size of Firm

 External

• Competition

• The economy

• Tastes & fashions

• Political & Legal


 Activity

 Chose a company you are familiar with and;

• Propose what 1 of their marketing objectives might be.

• Consider what constraints they might face when developing strategies to achieve the objective.

How does a company…

 … find out the size of their market?

 … find out their market share?

 … what type of customer will buy their product?

 … what price customers will pay?

 … how often customer buy the product?

 … what customers like and dislike about the product?


MARKET

RESEARCH

Market Research

 Market Research

• Is the process of collecting, analyzing, and presenting information about a given product and market

• Information about product, consumers, competitors, distributors

 Primary Research

• Data that is collected from a new source

 Secondary Research

• Data that has already been collected by someone else


Market Research

 Quantitative

• Statistical information about customers and markets vs.

 Qualitative

• Information about the reasons for customer behavior

 Desk Research

• Secondary data vs.

 Field Research

• Primary data http://www.youtube.com/watch?v

=7tJpoUpdiGo


Primary Research

On-line Survey

Experimentation

Observation

Questionnaires


Market Research - Questionnaires

 Types

• Self Completed.- They are completed by a sample of people (feedback questionnaires)

• In Person

• Postal.- They are sent to people’s home or offices addresses.

• Telephone

• Online


Market Research - Questionnaires

 Avoid bias (Asking people how much they like Coca-Cola is not as good question as asking them which brand of Cola they prefer)

 Avoid jargon (technical language) so that respondents understand the questions

 Both open & closed questions (yes or no, multiple choice options/provide ideas or suggestions)

 Only relevant questions

 Ensure enough data is collected to achieve objective


Primary Research

 Advantages

• Current (Up to date)

• Relevant

• Confidential

• Unique

• Objectivity (Helps to provide hard facts and figures to aid decision making)

 Disadvantages

• Time consuming

• Costly

• Validity.- poor questionnaire design, too small sample size , people are not always honest in their responses to certain questions (such as age, income level or their ability to pay certain prices for product), or people’s suspicion of the intention of the researcher


Secondary Research

 Advantages

• Cheaper

• Faster

• More accessible

• Provides an insight to changes or trends in the whole industry, such as whether customers are spending more money on household goods, automobiles, and tourism.

 Disadvantages

• Out of date

• Not relevant or appropriate

• Incomplete

• Widely available to competitors http://www.ecuadorencifras.gob.ec/


Assignment

 Hoang, page 477

 Question 4.2.5

 All parts (a,b)


Business case

Toys “R” Us is the World’s largest supplier of toys, with over

13000 chain stores around the world. It stocks toys that are based on all the latest and classic trends, such as Barbie dolls, Star Wars and Disney characters. The toy industry is a massive business. CNN reported in late 2006 that Americans spend over $221 billion a year on toys-and that’s just the figure for children aged between 8 and 12 years (known as preteens or “tweens”. Toy manufacturers are often keen to investigate the television programmes and movies watched by children and the magazines that they read


Questions

1) Explain why Toys “R” Us might be interested in the television programmes or magazines viewed by children.

2) Analyze how market research can allow toys “R”

Us to differentiate itself from its competitors.


Answers

1)

 Making the promotion more effective by advertising during television programmes and in specific magazines read by children

 Target the correct customer via the correct media

 Better financial management by reducing the changes of unfavourable variance in marketing budget.

 Discover opinions, beliefs and feelings of potential and existing customers who watch these programmes /read these magazines


Answers

2)


Answers

 Market Research can help to give Toys R US upto-date and accurate information-vital in a changing business environment and an industry that constantly faces changing consumer trends.

This information is useful to distinguish the products from its rivals.

 It can also give Toys R Us a better understanding of the activities and strategies used by its competitors in order to device its own

(differentiated) marketing strategies.


Answers

 The use of perception mapping information can also better inform Toys R US of its market standing in order to device marketing strategies to differentiate itself from its competitors.


Sampling

 Sampling is the selecting of a small group from the total population of a market



Sampling Methods

• Quota

• Random

• Stratified

• Cluster

• Snowballing


Sampling

Description Advantages Disadvantages

Quota

Random

Stratified

Cluster

Snowballing

Based on market segmentation, a certain number from each segment is selected

Representative sample can be obtained, cheaply and easily

Everyone in population equal chance of being in sample, assumes everyone in population is similar

Minimize bias, easy method.

Similar to Quota, but population is further segmented (strata), chose number of each strata based on % of total population

Select clusters of population, and randomly select. Used when too difficult and costly to sample entire population

When interviewee suggests other people to include in the sample

Representative of a market segment, random within a segment which provides more relevant data

Easier and cheaper, when population is wide spread geographically

Cheap and easy to obtain sample details

Method for choosing the quota may not be representative

Indiscriminate, select people not part of the target group, large sample sizes required

Expensive to obtain population data and difficult to select relevant strata

Assumes cluster is representative of entire population, contains bias and sampling error

Sample can be very biased


Sampling

 The larger the sample the more statistically reliable the results



Sample design can also reducing sampling errors

 Sampling Errors

• Size is too small

• Not representative of population

• Bias in the research collection



Confidence Level

• Allow for margin of error

• 95% confidence (1 in 20 is invalid)


Market Research - Limitations

 Accuracy of data

• Method of collection

• Sample

• Source bias

 Cost of research

Garbage In

Garbage Out


Business Case (Stratified sample)

 Assume that the management at secondary school

(high school) is proposing to change the timing of the school day. This will involve an earlier start to the day, but an earlier finish too. The management are seeking the views of staff. The demographics of the staff are as follows:

 Full-time teachers: 40 male and 30 female staff

 Part time teachers: 10 male and 20 female staff.

In order to get their stratified sample, calculate how many people should be sampled from each segment according to the above information


Answer

Step 1: Calculate the percentage of staff in each group

Step 2: Stratify each group according to the percentages

Category of staff

Full-time

Part-time

Total

Males

Females

Males

Females

Staff Percentages Stratified sample size

40 (40/100)x100= 40% 40% of 40= 16

30 (30/100)x100= 30% 30% of 30= 9

10 (10/100)x100= 10% 10% of 10= 1

20 (20/100)x100= 20% 20% of 20= 4

100 100% 30 staff

* 16 male full-time teachers who represent 40% of the teaching

* 9 female full-time teachers who represent 30% of the teaching population

* 1 male part-time teacher who represent 10% of the teaching staff

* 4 female part-time teacher who represent 20% of the teachers


Segmentation

 Market Segment

• Distinct group of customers with similar characteristics, such as age or gender, and similar wants or needs.

 Market Segmentation

• The process of splitting the market into groups of buyers. The main methods of market segmentation are based on:

 Demographic factors

• Age, Gender, Race and Ethnicity, Marital status, Religion, Socio-

Economic, and Language





Geographic factors

• Location, climate

Psychographic factors

• Status, Values, Culture, Hobbies and interests


Segmentation

 Effective Segmentation

• D ifferential

•

A ctionable

• M easurable

• A ccessible

• S ubstantial

 Advantages

• Better understanding of customers

• Increase sales

• Growth opportunities

• New product opportunities


Consumer Profile

 Characteristics of a typical customer within a given market segment, such as:

• Age

• Income

• Gender

• Buying habits

• Etc.

 The more information about the customer the better chance of a successful marketing mix


AGE

INCOME

GENDER

Targeting

 …refers to the market segments the business plans to sell into.



A strategy is developed for each of the target markets

 There are three broad targeting strategies that a business can use

• Niche

• Mass

• Differentiated


Niche Marketing

 Targets a small and welldefined segment

 Usually new or underserved segment

 Highly Specialized product/service

 Smaller sales volume, therefore higher prices per unit

 Can be both large and small companies

 Must know their customer http://www.youtube.com/wat ch?v=Cqv5_U1e4aI


Niche Marketing

Advantages

 Product/Service will meet the needs of customer

 Specialized product/service should encourage customer loyalty

 Higher profit margins

Ex: Businesses that cater for minority sports, such as horse riding and Tae Kwon Do. Also, high-end luxury goods.


Disadvantages

 Smaller number of customers

 Little opportunity for economies of scale

 Risk of competitors

How has the internet impacted

Niche

Marketing?

Mass Market

 Also known as undifferentiated marketing or market aggregation

 A large number of different market segments are targeted in order to maximize sales volume.

 Requires mass production, to lower costs


Mass Marketing

Advantages

 Economies of scale, reduces costs

 Fewer marketing mixes, reduces costs

 Larger customer base, increased revenue

Disadvantages

 High barriers to entry

 Very competitive

 Marketing campaigns can be very expensive and inefficient


Which type of marketing strategy has more risk,

Niche or Mass?

Differentiated Marketing

First Class

 a.k.a. selective marketing or multi-segment marketing

 More than one segment is targeted for a given product/service

 A marketing mix is created for each segment, which could include new products

Business Class

Economy Class


Differentiated Marketing

Advantages

 Better chance of satisfying customer needs

 Marketing campaigns more successful

 Reduces risk

Disadvantages

 More expensive

 Economies of scale not fully exploited

 Customer confusion

 Brand dilution

What is the difference between Niche and

Differentiated marketing?


Target Market Activity

 For each of the target market strategies

• Niche

• Mass

• Differentiated

 identify an Hong Kong company that employs the strategy

 For niche marketing, describe the segment



For differentiated, describe how the marketing mixes differ


Positioning

 All product/services within a market segment have a perceived rank or position by the general public.

 Most common ranking attributes are price and quality

 Corporate Image can have a significant impact on a product/service position


Unique Selling Point (USP)

 A USP is any aspect of a product/service that is different from the competition

 Usually a key competitive advantage is emphasized in the marketing mix

 a.k.a Unique Selling

Proposition


For any product you are familiar with, list 2 USP’s?

Position Maps

Low

Cowboy

Brands

Quality

High

Premium

Brands

Bargain

Brands


Economy

Brands

Position Map


Low High


Position Maps

 Develop strategies based on position

 Identify gaps in the market

 Identify need to reposition

 a.k.a. Perception maps

What are some other possible attributes used on a position map for an automobile?


Position Map Assignment

 For any product you can purchase in Hong Kong

 Prepare a position map based on price and any other attribute (e.g. quality, after sales service, etc.)

 Use PowerPoint and the logos of the company/brand


Sales Forecasting

 Quantitative technique to estimate sales over a period of time

 Essential for planning purposes

 Identify problems & opportunities


Techniques

 Extrapolation

 Delphi technique.- Independent experts, consensus on forecasting)

 Market Research

 Time Series Analysis

• Trends (Growth or decline sales)

• Erratic fluctuations (Unpredictable fluctuations)

• Seasonal fluctuations (Summer holidays or Christmas season)

• Cyclical factors (Economic cycle of bums and slumps)

• Responses to events (Ex: Promotions)


Factors affecting choice

 How accurate forecasts need to be (It would be more meaningful to use monthly or quarterly data to forecast the sales of ice cream, using annual figures would not reveal seasonal fluctuations in demand)

 Time frame (It is easier to predict sales for the next day, month or week than over the next five years)

 Data availability (If access to information is highly expensive, the choice of forecasting method will be affected)

 Stage of life cycle (More data and information will become available during the growth and maturity)


Benefits

 Cash flow

 Stock control

 Operational productivity

 Access to finance

Is forecasting more important for a NEW or

EXISTING company?


Limitations

 Assumes future will mirror the past

 Trend line is based on averages

 Quantitative

 Time lag

 Dependent on stage of product life cycle


Statistical Analysis Techniques

The sales for the first semester of the year are:

January $201

February $197

March $202

April $199

May $ 199

June $ 198

What is the forecast of July?



What we call in

Statistics “Dispersion” , in finance it’s named

“Risk”

If you say “ There is too much dispersion in some statistical data”, it means there is too much risk that the mean occurs.



Junuary

February

March

April

May

June

Mean

$ 200,00

$ 200,00

$ 299,00

$ 298,00

$ 200,00

$ 1.000,00

$ 366,17

The mean is not representative



 Mean

 Median

 Modal

 Range

 Standard Deviation

Jan Feb Mar Apr May

100 300 600 100 250

Pearson: St Dev/Mean =

(183,30/270)x 100= 67,88%


Mean

Median

Modal

Range

270

250

100

500

183,30

Is it easier to forecast when the

Std Dev is small or large?

Std

Dev

Up 20% = The mean is not representative

Assignment

 Hoang, page 493

 Question 4.2.10

 All parts (a,b,c)

 Hoang, page 494

 Question 4.2.11

 All parts (a,b,c,d)


Business Case

SALES

Koz and Richard Paisey own and run their own bed and breakfast boarding house in New Plymouth, New

Zealand. Located near the waterfront, Paised B&B booms in the summer season but suffers form a lack of tourists in the winter months. Their sales forecasts for the next twelve months, based on past data, are shown below.

March April May

3500 3000 3000

June

2500

July

2800

August September October November December January February

2600 2900 3000 3600 4500 4000 4000


Questions

1) Calculate the mean, median and modal averages from the sales data above.

2) Calculate the range and comment on your findings.

3) Explain the importance of forecasting sales

4) Explain how the above calculations may be of use to Roz and Richard Paisey


Answers


Moving averages

The most frequently method of calculating averages is the arithmetic mean. However, moving averages are a more accurate method of identifying trends so are, perhaps, more useful for sales forecasting.

Mean: 555000/5 =111000 per annum

Moving averages helps to identify the trend that exists within a set of data (above) by smoothing out fluctuations that may exist.


Moving averages

1) (100000+110000+120000)/3 = $110000

2) (110000+120000+95000)/3 = $108333

3) (120000+95000+130000)/3 = $115000

Whist more time consuming to calculate than the simple arithmetic mean, moving averages show how the underlying trend has moved over the five-year period, by smoothing out irregular fluctuations in the series of data.


Summary

 Marketing Mix

 Ethics of marketing

 Marketing Audit

 Porter’s Five Forces

 Marketing Objectives

 Market Research

 Sampling

 Segmentation

 Targeting

 Positioning

 Marketing strategies and tactics

 Sales Forecasting


Learning Outcomes

 Apply the elements of the marketing mix to given situations.



Discuss the effectiveness of a selected marketing mix in achieving marketing objectives.

 Construct an appropriate marketing mix for a particular product or firm.



Discuss the effectiveness of a selected marketing mix in achieving strategic objectives.



 Discuss the ethical issues of what is marketed and how it is marketed: nationally, internationally and across cultures.

 Explain the value of a marketing audit as a business tool.

 Apply Porter’s five forces model to classify and analyse competitive pressures in the marketplace

 Examine how appropriate the marketing objectives are in achieving the goals of an organization.



 Analyse the role of market research.

 Evaluate different methods of market research.

 Evaluate different methods of sampling, for example, quota, random, stratified, cluster and snowballing.

 Analyse the usefulness of market segmentation and consumer profiles.



 Identify possible target markets.

 Apply an appropriate marketing mix to the target market(s).

 Construct a position map from given information.

 Discuss how organizations can differentiate themselves and their products from competitors.

 Develop and evaluate strategies designed to change customer perceptions.



 Design or evaluate marketing strategies for given situations. Apply an appropriate marketing mix to the strategy.

 Analyse sales trends and forecasts from given data, and evaluate the significance for marketing and resource planning.
