1

These objectives reflect the syllabus content which is indicated in

brackets.

2
Your journey now the hard work begins

3
This slide essentially defines the scope of the marketing planning.
The next slide shows how these activities interact and impact on
each other. Throughout this unit we will be looking at each of these
aspects in turn, both from the perspective of analysing the process,
planning, implementing and controlling it. (APIC)

4
The top box and the one to the right are concerned with
strategies for marketing the bottom and left box are concerned
with implementing the strategies, once formulated.
Defining markets through analysing existing and potential markets
and their environments macro and micro more later
Once defined the organisation analyses information to determine
the value proposition what the organisation needs to offer to the
market to compete successfully to do this they will analyse their
internal environment to determine their asset base resources,
capacity, capability and competences to ascertain if they are able
to deliver value. The first two processes will be under the control
of the marketing department.

Deliver value is not this process is the role of the whole

organisation, including, for example, product development,
manufacturing, logistics, customer service etc. The marketing
department, however, will be responsible for monitoring the
effectiveness of the value delivered.

5
Narver and Slater defined market orientation as The organisational
culture . That most effectively and efficiently creates the
necessary behaviours for the creation of superior value for buyers
and, thus, continuous superior performance for the business

This was developed into the diagram above the context and
components of market orientation:

Customer orientation understanding customers well enough

continuously to create superior value (customer intimacy Treacy
& Wiersema 2004)
Competitor orientation awareness of the short- and long-term
capabilities of competitors
Interfunctional coordination using all company resources to
create value for large customers
Organisational culture linking employee and managerial
behaviour to customer satisfaction
Long term creation of shareholder value as the over-riding
business objective

6
 Production - Not very common now period of mass production
following industrialisation where companies produced in quantity
(exploiting economies of scale) based on what they were good at.
Gave rise to the erroneous quote re: Model T Ford Car can
have it in any colour as long as its black.

Product/technology organisations which produce what they are

good at frequently innovators, entrepreneurs and risk takers
who create markets e.g. Apple, Microsoft, for product/services
we never knew we needed. Technology orientation is also
prevalent in specialist industries e.g. Pharmaceuticals where
product development is driven by specialist knowledge and
expertise, often in response to latent demand

Sales orientation this is particularly prevalent in very

competitive markets, with downward pressure and prices and the
need to shift volume. A sales oriented organisation is often
defined by a managerial attitude which attributes poor
performance to the customer being stupid or the sales force
are inept. Typical responses to falling performance therefore
include increased advertising and price promotions, and push
strategies for the sales force, rather than actually asking the

7
 customer what they need.

Relationship orientation here the focus shifts from transactional

marketing making the purchase to relationship marketing
developing on-going relationships with customers to increase lifetime
value, move them up the ladder of loyalty, and reduce costs as retaining
an existing customer is considerably cheaper than attracting new ones
(more on all these concepts in later sessions).

Societal orientation takes relationship marketing to the next level.

Identified by Kotler in the late 1990s, societal moves the focus of
organisations from the bottom line profit to the triple bottom line
(Elkington 2004) profit, people and planet. This is partly in response
to government (and EU) initiatives and regulations, particularly around
the environment and employment legislation, but is also pursued for
sound business purposes as part of an organisations Corporate Social
Responsibility (CSR) of which, more later.

7
Follow the instructions above. If you have difficulty finding the
assessment form, or completing it, simply contact
support@oxfordcollegeofmarketing.ac.uk and they will be able to
guide you in.

Dont be concerned if you are the first one to post your scores
someone has to be

8
There are many plan frameworks SOSTAC is one of the most
common, but was originally developed by PR Smith specifically for
marketing communications planning, rather than strategic marketing
planning. The generic framework here picks up all the elements
required in a marketing plan.

Starting with the mission and vision Taking the vision first
where does the organisation see itself in 5 years time? World
leader? Most ethical? Etc. The mission is how, in broad terms,
they are going to realise the vision e.g. through deployment of
innovation, people, values and so on. The Mission, vision and values
help an organisation to identify which markets they are looking to
enter and their financials give an indication of the scale and scope
of any marketing plan.

From that point the organisation answers the standard questions

where are we now (situational analysis), where do we want to be?
(objectives), how do we get there? (strategies and tactics), how do
we ensure arrival? (Gantt, budget, measurement, monitoring and
control).

Whichever framework is adopted it needs to include the four

9
elements of APIC. And as part of the assessment for this unit, you will
be required to develop a strategic marketing plan using an appropriate
framework. Your preparation for that begins now, as we move to look at
how you will analyse your external environment.

9
There are a wide range of strategies with potential for achieving
competitive advantage for organisations. These will be looked at in
more detail in Session 5. Listed here of 4 of the more widely
known and used approaches.

Strategy is the how of the marketing process. Before an

organisation can determine how it is going to achieve something, it
must first complete two other steps:

1: Where are we now? to understand their internal

strengths and weaknesses, and determine the opportunities and
threats facing the organisation which in turn enables them to
answer the next step ..

2: Where do we want to be? the need to develop

SMART objectives (more later). The R stands for realistic
objectives cannot be realistic if organisations do not have a
realistic view of what they are capable of doing (SW), and what the
environment is like that they will do it in (OT).

3: How do we get there? the strategies required to

10
deliver the objectives.

To fully deliver the strategies, organisations require a structured

marketing planning framework to ensure that all steps are covered to
achieve success. Lets look at a few now.

10
All organisations exist in wider operating environments. There are
three broad environments that marketing needs to analyse to
answer the where are we now? question:

Macro environment PESTEL uncontrollable factors which the

organisation has to work with and around. Individually an
organisation has limited influence on these factors, although may
work collectively to lobby for/against change e.g. CBI and industry
groups.

Micro environment formerly called the proximate (or near) macro

environment - factors outside of the direct control of the
organisation, but which the organisation is able to influence through
marketing activity, contractual relationships, or ultimately
litigation.

Finally the task environment this is the organisations internal

environment which should be (but not always is) under the control
of the organisation e.g. marketing activities, mix, strategy etc.

In this session, we are focussing on the external environments

11
macro and micro and will now look at each of these in more detail.

11
PESTEL the most common framework (there are variations) for
analysing the macro environment.

Political often combined with legal due to the fact that many
political initiatives eventually become law. When analysing an
organisations political environment, factors should be considered at
three levels:

Local any relevant factors (opportunities/threats) arising from

local and regional councils
National as above, but for the national government e.g.
Westminster, the Scottish Parliament, the Welsh Assembly, and
Northern Ireland Assembly
Supra-national European Union there are a considerable
quantity of directives, regulations and initiatives which impact
across the UK emanating from the European Commission and
voted through by the MEP in the European Parliament, such as
regional trade and trading areas, and the enlargement of the
European Union. In addition, the UN, World Bank etc.,
decisions/initiatives can represent potential opportunities (e.g.
decision to go to war opportunity for defence companies) and
threats (e.g. decision not to lend to a particular country which

12
 was a target market).

Economic forces taxation, inflation, interest rates, unemployment,

consumer confidence all impact on consumer spending power and
behaviour. Corporate taxation, investment confidence, availability of
credit, exchange rates, economic growth and the business cycle e.g.
boom, recession etc. all impact on B2B decisions. These are further
complicated by internationalisation and globalisation.

Social/cultural the broad areas analysed here are:

Demographic change, particularly the aging population in
developed countries vs a younger profile in emerging economies
the grey market and the youth market
Multi-ethnic societies and their impact on traditional culture,
values and needs
Changing lifestyles and living patterns partly driven by changing
values and attitudes towards traditional relationships, but also by
the impact of technology on daily living and working.
Technological the only constant in this environment is change.
Technological change has led to shortening of commercialisation times
(the time it takes a company to bring a product to market) which
impacts on customer expectations. This in turn has led to shorter
product life cycles. In some cases technology has disrupted lifestyles
as discussed above, with most organisations, and increasingly
consumers, having their own clouds which have nothing to do with
angels There have been downsides and challenges here issues of
privacy, data protection, damage limitation and crisis management have
come to the fore, with organisations moving blindly into digital
marketing without a clear strategy in place to manage it.
Environmental (and ethical) there has been increasing focus on
environmental and ethical issues, which are driven both by
political/legal factors, and changing attitudes openly discussed in a wide
range of media (including social networks). The spectrum is extensive
from organisations being a good neighbour (consideration for their
local operating environment) to global initiatives e.g. Gates Foundation.
Ethical issues have the potential to produce reputational threats to
entire sectors, not just individual organisations within them e.g.
financial services, banking etc.
Legal as for political above.
Organisations need to understand these factors and their implications for
the value proposition the organisation must offer to the customer to be
successful.

12
This activity is designed to help you to develop the skills you will
need to conduct an audit of your organisations marketing
environment as part of the marketing plan for your assessment

13
Turning now to the Micro environment.

Porter suggested that there are 5 main forces which shape

competition, and that a systematic analysis of each can help
managers identify the keys to competitiveness in any particular
industry Read page 68-71 for more detail.

Briefly they are:

Competitive rivalry within an industry existing competitors, this

is likely to be more intense where competitors are roughly evenly
balanced e.g. no one competitor has a distinct advantage size,
product etc.; during periods of low market growth or recession;
where exit barriers are high and it is difficult for an
organisation to leave the market due to costs of redundancy etc;
where product differentiation is low; and where fixed costs are
relatively high.
Threat of new entrants this is high when costs of entry are
low; existing or new distribution channels are open to use e.g.
online; little competitive retaliation is expected (e.g. current
players in the market are weak); differentiation is low (so low

14
 barriers to entry/low costs of entry); and there are gaps in the market
Threat of substitutes substitutes can increase the competitiveness
of an industry for a number of reasons by making existing
technologies redundant e.g. digital cameras and camera film; by
incremental product improvement; by offering more choice
Bargaining power of suppliers suppliers will have more power where:
there are few suppliers relative to the number of organisations wishing
to buy from them; the cost of switching suppliers are high (as is still
the case with banks, and used to be the case with utility companies);
suppliers offerings are highly differentiated so buyers have a
preference for a particular supplier.
Finally, bargaining power of customers they will tend to be more
powerful when there are few buyers and lots of seller (high
competition); there are readily available alternative sources of supply,
plus substitutes; and where buyer switching costs are low.

Organisations need to analyse their macro environment to identify

opportunities and threats arising from the 5 forces. Take care with
suppliers and customers it may well be that your organisation has some
suppliers who have relatively low bargaining power, but a few (or even just
the one) who has very high bargaining power. Likewise with customers it
is not always possible to come to one conclusion about any one force.

14
Lehmann and Winer take competitor analysis to another level. They
identified 5 steps which should be undertaken to ensure that
organisations gain relevant competitive intelligence as follows:

1: Define the competitive arena for the generic, specific

and variant product markets often organisations do not clearly
identify all direct and indirect competitors leading to gaps in their
intelligence and flawed decision making - (example above using soft
drinks market) .

2: Identify key competitors as you will see from the

slide above, Diet Coke has direct competitors from Diet Pepsi and
generic diet colas, but is also in the broader categories of soft
drinks, beverages and in terms of capturing share of wallet food
and entertainment.

3: Evaluate key competitors

4: Anticipate actions by competitors

15
5: Identify and evaluate potential competitors.

Read Chapter 2 in the core text for details of this approach.

15
5Ws and 1H a flexible framework for any analysis.

Who? in B2B it is critical to understand the decision making unit

who is the initiator of any requirement? Who is the influencer, the
decider, the purchaser and the end user. Increasingly in consumer
purchase decisions there will be a DMU and with technology, the
characteristics of a consumer DMU are changing, with the major
influencers/deciders on technology based products/services
devolving down to younger generations (digital natives) rather than
the traditional head of the household.

How? organisations need to understand how their customers will

use their products and services. This is particularly important in
the context of the total product packaging, handling, warranties
and after sales service.

Where they buy we will be looking at the marketing mix in later

sessions however, PLACE is the route to market in the 7Ps
Kotler calls this Convenience so to ensure that our value
proposition contains convenience for the customer we need to know
where they buy.

16
Why? the buying motivation which problem/need are they addressing?
Old example, but consumers do not buy a lawn mower, they buy something
which will give them a beautiful lawn. There are alternatives e.g. Astro
turf!

When? timing can be both in terms of buying the product/service

(seasonal factors), or using it (time of day/occasion)

What? ultimately what criteria do they use when choosing between

alternatives? Is brand important? Peer review? Price? Service support?
Choice etc.

16
Lehmann and Winer suggested 4 main stages for competitor
analysis:

1: Assessing competitors current and future objectives

understanding what the competitor is setting out to achieve can
give clues as to the direction it will take and the aggressiveness
with which it will pursue that direction

2: Assessing the competitors current strategies by

understanding the strategies used by competitors in pursuit of
their goals and objectives, the firm can identify opportunities and
threats arising from competitor actions

3: Assessing competitors resources the asset and

capability profile of competitors shows what they are currently
able to do. Those resources may not be fully deployed at present,
but can give further clues as to how the competitor will move in the
future.

4: Predicting competitors future strategies by

combining the above analysis, the firm can begin to answer what is

17
the firm likely to do in the future?

17
 Cost covers the cost of investment, variable costs and
expenditure associated with the channel
Coverage how well the channel performs in achieving sales, or
market share, or penetration of the market
Continuity how loyal the various channel members are and the
length of time they have been in the channel
Control how well the organisation is able to control the
marketing programmes within the channel; this can be of
particular concern where long international channels are involved
Characteristics compatibility of the channel with the
organisations desired positioning for the product

18
There are two basic approaches to monitoring the external
environment proactive and reactive.

Proactive organisations will undertake regular market sensing,

gathering data and inputting into a marketing information system.
This process will also include monitoring leading indicators e.g.
weather for travel agents, interest rates for home improvements
and so on. The culture of the organisation will be responsive,
flexible and adaptable to changes opportunities and threats in
the external environment allowing them to exploit opportunities as
they arise. They will take either a prospectors (take risks if the
returns are high), or analysers (accept some risk for high returns),
which requires a learning organisation one where there is a lack of
a blame culture and freedom to fail. A market orientation will be
required to ensure that the organisation remains customer centric.
If they take this approach to the external environment, they are
more likely to find themselves able to adopt a blue ocean strategy
(see next slide).

Conversely, reactive approaches have opposite characteristics and

approaches. Limited research/customer insight gathered on an ad-
hoc basis; a culture more akin to a sales orientation; risks are not

19
managed merely defended (dont take risks), or only reacted to when
they arise. As a response they can end up with unrealised strategies due
to being unable to respond to changes in the external environment. This
can result in strategic drift pursuing a strategy which is not aligned to
the external conditions, and reducing strategic options to Red Ocean
(highly competitive). We will look at Red/Blue ocean strategies in more
detail next

19
Picking up the outcomes from approaches to monitoring the
external environment a Red Ocean is described above.
A Blue Ocean Strategy is more of an aim than an actual strategy.
It illustrates what organisations should seek to achieve by their
strategy. However, the points within it can be very useful in helping
you to develop an understanding of market dynamics, key factors
and the areas to consider when developing potential new strategies
that might help in achieving more of a Blue Ocean position. The key
to success of a blue ocean strategy is in having a comprehensive
understanding of the market.
For more detail on Kim & Mauborgnes Red Ocean/Blue Ocean
strategies, go to the Strategic Marketing site on Oxcom Learning,
Session 2 articles and case studies, and download Blue Ocean
four action framework

21
The four actions reduce, eliminate, raise and create have the
potential to move an organisation from a Red Ocean to a Blue
Ocean. To do this effectively a thorough analysis of the industry
sector must be undertaken.

22
The external environment contains factors which are entirely, or
largely, outside of the control of the organisation. As seen
previously, these factors may present opportunities, or threats to
the organisation. Analysing the external environment will enable
organisations to identify these, but also assess both opportunities
and threats for the risks associated with them.

Some organisations (and sectors e.g. charities) are risk averse

and therefore may miss out on growth opportunities which may have
risk associated with them as Chapman and Ward point out above
(p.75 BH Course Book PMiM), a zero risk project or zero risk
opportunity is not worth pursuing. In addition, if the organisation
only pursues opportunities with a zero risk associated with them,
then the likelihood is that their competitors are doing likewise,
meaning they are constantly operating in a Red Ocean. To achieve a
Blue Ocean, organisations ideally need to be prospectors (Miles &
Snow 2003 more later), or analysers.

23
We will look at resources in more detail in the following session.
Here is simply a list of the resources that organisations need in
order to analyse the external environment effectively.

Information systems when we say systems, we automatically think

of technology based systems e.g. CRM, MkIS however a system is
simply a means of doing something. Information systems available
to us to gather data on the external environment, analyse and
interpret, come in three major types technology based (as
previous), human simply asking people colleagues, sales, customer
service, customers, suppliers, intermediaries and (possibly)
competitors and paper-based. The last one is a secondary source
of information may not be entirely relevant to your organisation;
may be out of date; any analysis may have been done with an
agenda leading to bias, and so on.

In addition to information/data you will need financial and human

resources to complete the analysis, plus precious time resource. In
some (usually large) organisations, there will be a
department/function or team specifically tasked with this role, but
for the majority of us, any analysis is part of the day job and
needs to be undertaken within existing resources.

24
A final factor is crucial even if the organisation has the capacity to
analyse the external environment (enough resources) does it have the
capability (skills and competences) to do so? Both are required to conduct
an effective external audit which adds value to the organisation through
delivering information which contributes towards defining a robust
strategy which will deliver on corporate and marketing objectives.

24
The skills (capability/competency) required are listed above. Many
of these are specialist, and organisations may opt to outsource data
gathering in order to achieve information goals.

The challenges with any information search are:

Availability (is the information readily available if not this may

result in a number of possible outcomes need for more time
(cost), specialist skills, outsourcing or if not available, the need
to make assumptions in the absence of data the assumptions
themselves present a risk to the organisation)

Reliability/credibility (if research is available who conducted

the research? Are they reliable? Do they regularly
conduct/produce research which is credible? Do they have an
agenda? And so on)

Can you obtain enough information of the required quality?

Is it current/relevant? For example, an industry report written

25
 1 year ago may be current and relevant to pharmaceuticals or defence
but less so in IT or Telecoms due to the rapidly changing nature of the
industry.

Gathering data is time consuming management will often resist

allocating resources to research, not least due to the fact that the end
result the marketing audit is a snapshot in time.

From the moment it is collected, it starts to go out of date.

25
Now attempt activity 3 this will help you to start thinking about
the issues and challenges you will face when you start putting
together the strategic audit for your marketing plan. Retain all the
information here to use for your marketing plan.

26
So far we have focussed on issues related to analysing the external
environment and challenges of information gathering. Before we
move onto the internal environment in Session 3, these last two
slides take a brief look at the barriers to effective marketing
planning overall not just the audit.

McDonald identified 10, then helpfully (next slide) identified 10

ways to overcome each one. Most of these are self-explanatory
what you need to consider before the marketing planning workshop
session, is which, if any, of these applies to your own organisation.
Identify the relevant ones, and look at the next slide to see what
McDonald proposes in terms of overcoming those barriers.

If you identify any other barriers (in addition to the 10 above) to

effective marketing planning in your organisation, do post these on
the Discussion Forum.

27
1. So for example if you identified that your organisation tends
to focus on tactics e.g. operational, day-to-day activities with
possibly the odd monthly meeting to track progress towards
some short term goal, then McDonald proposes that the
organisation needs to adopt a strategic approach to operations
basing tactics on strategies, building annual operational plans to
meet the requirements of a 3-5 year strategic plan. And so on.
2. Situate marketing within operations marketing and sales should
report to the same person, putting marketing as close as
possible to the customer
3. Marketing is a management process whereby the resources of
the whole organisation are utilised to satisfy the needs of
selected customer groups in order to achieve the objectives of
both parties. Marketing, then, is first and foremost an attitude
of mind rather than a series of functional activities confined to
the marketing department. However, use the expression
market-led or customer driven to describe the philosophy, not
marketing driven.
4. If silos are an issue e.g. functions/SBUs are reluctant to work
together/share information etc., then McDonald proposes that
the organisation be re-structured around markets e.g.
geographical, customers to integrate functions within
structures and develop collaborative working

28
5. Self explanatory and covered in detail in this session.
6. Information is the foundation on which a marketing plan is built. From
information (internal and external) comes intelligence for decision
making. A SWOT delivers intelligence in an effective way and should
be focused on each specific segment; be a summary emanating from
the marketing audit; be brief, interesting and concise; focus on key
issues only; list differential strengths and weaknesses vis--vis
competitors, focussing on competitive advantage; List key external
opportunities and threats only; Identify and pin down the real issues;
Enable the reader to grasp instantly the main thrust of the business,
even to the point of being able to write marketing objectives; follow
the implied question which means? to get to the real implications; not
over-abbreviate.
7. Ensure that those tasked with the job have the necessary skills e.g.
information gathering; techniques of segmentation, targeting,
positioning, product life cycle analysis, portfolio management, and the
marketing mix more on this in the following sessions.
8. Organisations should adopt a common process and format for
marketing planning to ensure consistency and effectiveness
9. Objectives need to be prioritised to reflect their impact on the
organisation and their urgency, to ensure that resources are allocated
accordingly
10. Marketing planning will only be effective with active support and
participation of culture leaders in the organisation.

So there you have it The role and importance of analysing the external
environment, and the challenges and barriers you may face when
undertaking your analysis of your own organisations external environment
now attempt the homework.

28
As you will see, this homework is designed to get you started on the
marketing plan required for your assessment. At this stage it is
simply an information gathering exercise retain your findings for
session 6.

To help you develop the skills required and understand how to

overcome the challenges, do submit the 1 side A4 to homework to
receive feedback and guidance from the team. Good luck

29
The bibliography includes all the text books used to develop the
slides for session 2. Where specific quotes have been used, page
numbers have been included. They are listed to conform with
Harvard Referencing; however, the course texts from the CIM
reading list are indicated by a red*. You do not need to buy all the
books on this list many of them will only be used for this session,
and other will be available on the CIM/elibrary site.

Hope you enjoyed session 2 lots of material to take in here, new

tools and techniques to learn and use any problems/queries, dont
forget to post these on the SM discussion forum on Oxcom
Learning enjoy!

30