Lecture notes covering Assignment
Uni1/19: Marketing Planning
NOTE: Always read ALL Questions carefully and relate your answers to what is being
specifically asked.
Importance of Business Environment
The environment plays a major role in the decision making of firms, indeed if companies fail to
note what is happening round them, they can suffer from heavy losses and may be forces to
stop trading. However, if the company is aware of its environment, and the opportunities that
arise because of changes, then there is potential for new revenues.
The Marketing environment factors are often referred to as PEST. (Political, Economic, Social
and Technological) It is difficult or indeed almost impossible for organisations to influence the
environment, unless the organisations are extremely large and then may be able to exert an
influence on government policy.
Generally, organisations have little influence over any of these environmental variables, and
they are therefore referred to as uncontrollable variables. This is in contrast to the variables that
companies have direct control over, such as product, price, place and promotion. (Referred to
as the Marketing ingredients in the Marketing Mix)
The Marketing environment can be studied in different aspects
A. Micro Environment.
B. Macro Environment
C. Competitive Environment
A. Micro environment includes as per Kotler,
1. The company itself
2. Company Markets
3. Company Stakeholder System
Whether organised as a separate department or not, the marketing function operates within an
organisational context, and is most effective when well managed, planned and resourced.
Prepared by Miss Varuna, OCL , March 2010
1. The company
Within Marketing itself, sub functions such as Sales, Advertising. Research and Promotion need
to be co-ordinated to produce effective results.
Marketers should be able to assess the organisation’s strengths and limitations in major
functional specialism, since important policy issues such as product development and
competitive strategy will depend heavily on the commercial exploitation of comparative
advantage.
2. Company Markets.
Many companies begin operations within one clearly defined market and develop through
market penetration, by servicing the market more efficiently and knowledgeably. Later growth,
however may depend on finding or developing new markets, and learning to service new types
of customer with differing requirements.
3. The Stakeholder System
As the term implies, a company operates within the context of a network of interest groups,
each of which has a particular relationship with the organisation, and often conflicting interest
and motivations.
Certainly part of this stakeholder system will be the participants in the company’s value chain.
The concept of the value chain, originated by Harvard Professor Michael porter, models the
vertical supply-market system within which a company seeks to fine-tune its performance in the
interest of adding customer value and furthering corporate objectives.
It should be stressed that the stakeholder system is a negotiated environment in which company
relationships with different parties have to be carefully cultivated and managed.
The company effectively has a series of publics – Customers, Shareholders, Suppliers,
Employers, Community bodies etc with which it must maintain contact and ensure mutually
productive relations.
The Marketing significance of this is that the state of these relationships can exert a powerful
influence on success criteria such as brand image, product, acceptability, customer service,
trade relations and company reputation.
B .Macro Environment
The company is faced by a complex set of uncontrollable variables that collectively shapes its
markets, its resources and the competitive climate, and that pose challenges and opportunities
that may determine the success or failure of the Company as a whole.
PEST Analysis
Political and Legal (External marketing variable – Regulatory) Legislation and measures to
protect consumers.
Prepared by Miss Varuna, OCL , March 2010
Trade Unions, Pressure Groups and Voluntary Associations.
Economic situation (factors affecting demand of the product), effect of Recession or economic
recovery on a product’s sales.
Social (Demographic and Cultural influences) e.g. household group, population age distribution,
geographic location, cultures and belief
Technology and its effect on competition ( effect of technology and research on the Product
life Cycle ) E.g. Nintendo in the games console market .
New product in the market.
In short, it is in the company’s interest to seek to demonstrate good corporate citizenship by
upholding the letter and the spirit of the law, and generally behaving in a responsible and
responsive manner.
The marketing environment comprises the playing field upon which competitive marketing takes
place.
It is important to note at this stage that, there are three types of companies: those who make
things happen, those who watch things happen and those who wonder what happened.
C. The competitive environment
The performance of an organisation will be influenced by the structure of the industry in which it
operates because this will affect the level of competition in that market. Porter (1980),
suggested that in addition to analysing what he calls ‘jockeying for position’ by obvious
competitors, there are four other forces which affect the level of competition. These are
1.
2.
3.
4.
The bargaining power of suppliers
The bargaining power of customers
The threat of new entrants
The threat of substitute products or services.
The competitive environment is the most dynamic environment in which an organisation will
operate. Success comes from improving on existing offers. Companies can decide to try to lead
developments and move faster than their rivals into new areas. It is necessary for marketers to
study both customers and competitors.
The role of marketers is to try to influence factors in such a way that their organisation’s
products or market offerings are chosen. The object of this is to try to gain a sustainable
advantage over competitors.
Prepared by Miss Varuna, OCL , March 2010
Marketing Planning
The Marketing Plan can be used as the basis for negotiations with organisations such a banks
that can provide start-up finance for a new venture or additional finance for expansion.
One approach to Marketing Planning is to set the overall objectives of the business in a mission
statement .
Stages
1
Where are we starting from?
The Marketing Audit, Product Range Analysis
2
Where do we want to be?
Marketing Objectives, Targeting and Positioning
3
How do we get there?
Evaluation of alternatives. Choice
Marketing Mix Strategies and Resource Allocation.
4
How do we ensure we get there?
Control and Feedback
The Marketing Planning Process has evolved to provide a framework for all four of these listed
activities.
Marketing Audit
All decisions in the planning process need to be made in the context of the skills and resources
available to the organisation. This involves recognising what these are in comparison to the
competition. Marketers are interested in those key elements of the wider business audit that
involve marketing issues, usually termed the Marketing audit.
A Marketing Audit has four major components that reflect the four levels of the marketing
environment which are:
1. The wider environment
2. The company stakeholder system
3. The markets in which the company operates and the performances of the products in
these markets.
4. The review of resources and skills that are available to the organisation, and the
systems and structure to deliver them.
The external part of the Marketing Audit focuses on the uncontrollable macro environmental
factors affecting the business. For many businesses, the economic climate is of vital
importance, so needs to be assessed critically. The technical and regulatory environments that
affect the organisation, its markets and competitors also need to be at least discussed.
Prepared by Miss Varuna, OCL , March 2010
The audit should also include information that shows the size of the market in terms of both
value and volume, and the trends in these.
The position of the organisation should be compared with that of each significant competitor.
The characteristics of the market should be defined and compared in terms of range of products
offered, their prices, distribution and promotion. In addition, the audit provides an opportunity for
information gathered by marketing research function, relevant to any aspect of the business , to
be presented and its relevance assessed.
Macro factors:
1.
2.
3.
4.
Social and Cultural influences
Technological Influences
Economic Environment
Political and Legal Environment
Micro factors:
1.
2.
3.
4.
Customers
Competition
Suppliers
Other Stakeholders.
The Stakeholder audit covers the values and attitudes of those interest groups in this category.
In particular, it will concentrate on suppliers and customers. It should also be noted that the
evaluation of all the product range in relation to customers and competitors is a key part of the
audit. It covers both a wide look at the balance of the total product range offered and the
individual elements of the marketing mix, concentrating on how these meet customer needs and
wants in a competitive context.
The final part of an audit involves an appreciation of what an organisation is capable of
achieving and the systems it uses. It will cover the current situation with regard to marketing
research and information, personnel, planning and control systems and product development.
Business ethics
Ethics involve the application of moral principles to decisions made by individuals within an
organisation.
It is the study of what is ‘right’ in any activity and is influenced by the collective values present in
an organisation.
Many of the issues gaining importance in the UK include genetically modified foods, exploitation
of Third World Labour and globalisation of marketing messages.
Prepared by Miss Varuna, OCL , March 2010
For example, studies have shown that domestic laundry detergents are a significant source of
environmental pollution. Those manufacturers adopting the code of practice are committed to
improving the biodegradability of their products and including information on their packs
instructions for use. For example, sorting laundry by colour, fabric and soiling, using minimum
temperature for each wash and using washing machines at full capacity. This is clearly good
advice for protecting the environment but it can also be likely to reduce rather than increase
sales of detergent.
Global warming, damage of ozone layer though use of products is alarming!
Corporate Social Responsibility
It is generally considered to be the ‘duty’ of an organisation to conduct its activities with due
regard to the interests of society as a whole. Social responsibility encompasses all activities,
practices and policies through which a commercial organisation affects society at large and its
interests.
Marketing Mix
1. Product
2. Price (Market Penetration, Price Skimming
3. Place (Channels of Distribution)
4. Promotion (Branding, Personal selling, Advertising)
Extended Marketing Mix
5 .People
6. Process
7. Physical Location.
Prepared by Miss Varuna, OCL , March 2010