MKTG 2100 Principles of Marketing

Lecture 2 1. Marketing Strategies & Planning 2. The Marketing Environment

Lecturer: Dr Doreen Kum MKTG 2100: page 1

What is Marketing?

A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others (Kotler et al 2006, p. 7) Involves companies, customers & society What is the process? How do we do it?

Lecturer: Dr Doreen Kum

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1. Marketing Strategies and Planning

Lecturer: Dr Doreen Kum

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The Marketing Process

Learning Objective 1

Is a cycle of activities that fits with the organisations strategic plan The cycle involves Analysing marketing opportunities Selecting target markets Developing the marketing mix (7Ps) for those selected markets Implementing & controlling marketing efforts
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Lecturer: Dr Doreen Kum

Strategic Planning
Most organisations operate according to formal plans Managers are often too busy & have no time for planning

Especially in smaller firms

Planning can help make sense of changing environment The need for flexibility has led to a resurgence in the process of scenario planning
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Lecturer: Dr Doreen Kum

What is Strategic Planning?

The process of developing and maintaining a strategic fit between the organisations goals & capabilities in the light of changing marketing opportunities It relies on developing a clear:

Company Mission Objectives Sound Business Portfolio Coordinated Functional Strategies

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Lecturer: Dr Doreen Kum

The Strategy Hierarchy

Corporate Level Corporate Strategy Mission and vision Objectives Business portfolio strategy Resource development Corporate values

Strategic Business Unit Level

SBU Strategy

Functional Level of SBU

Marketing Strategy Marketing Objectives Product/markets strategies Lecturer: Dr Doreen Kum

SBU Strategy Business definition Objectives Product market portfolio Competitive strategy Resource allocation and management

SBU Strategy

R&D Strategy Technology Product development

Production and operation strategy

Finance and administration Strategy

Human resources Strategy MKTG 2100: page 7

(Kotler et al, 2006, Fig 2.1, p. 42)

Hierarchy of Objectives
Company Objectives Business Unit Objectives Functional Objectives

3M
Adhesives

Production

Finance

Marketing

HR

R&D

Marketing Objectives

Product

Place

Promotion

Price

Promotion Objectives
Lecturer: Dr Doreen Kum

Personal Selling

Advertising

Sales Promotion

PR

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The Marketing Process & its Relationships

Analysis
Planning Develop strategic plans

Implementation Carry out the plans

Control Measure results

Develop marketing plans (roadmap)

Evaluate results

Take corrective action

Lecturer: Dr Doreen Kum

(Kotler et al, 2006, Fig 2.2, p. 47)

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Marketing or Business Plan?

Marketing planning procedures & content vary considerably among companies The plan may be called a business plan, a marketing plan or an operating plan There are differences between business plans and marketing plans The business plan incorporates the plans of all functions

Production, R&D, finance, HRM, IT & marketing

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Whereas the marketing plan

Lecturer: Dr Doreen Kum

More on the marketing plan

Focuses on the resources required for customer acquisition & retention Includes specific marketing functions

Advertising, promotion, selling & market research

Typically cover one year & are about 10 pages

Some cover several years & are more detailed

Frequently cited shortcomings of marketing plans are:

Lack of realism Insufficient market and competitive analysis A short-run focus Inadequate measurement of contribution to profit
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Lecturer: Dr Doreen Kum

Marketing Plan Contents

Section I. Executive Summary II.Current Situation III. SWOT Analysis IV. Objectives V. Marketing Strategy VI. Action Programs VII. Projected P&L VIII. Controls
Lecturer: Dr Doreen Kum

Learning Objective 2

Description Brief overview of the proposed plan Background data on the market, product, competition, distribution and macro environment Identifies main strengths, weaknesses (internal), and opportunities, threats (external) facing the product line Defines financial objectives, eg sales volume, cash flow; and marketing goals, eg, change in market share, average price Presents broad marketing approach (the overall game plan) that will be used to achieve the plans objectives (positioning) Present special marketing programs designed to achieve the business objectives (7Ps what, when, who, how much?) Forecasts the plans expected financial outcomes (sales volume and costs) Indicates how the plan will be monitored (budgets, reporting)
(Kotler et al, 2006, Table 2.1, p. 48)
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Marketing Plan Contents

1. Executive

Summary

A brief summary of the plan Is aimed at senior management

To enable them to grasp quickly the plans major thrust, its goals & recommendations

Should be no more than one page long

(it is usually written after the rest of the plan is completed)

Lecturer: Dr Doreen Kum

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Marketing Plan Contents

2. Current

marketing situation

Relevant background data on the

Target market Product Competition Distribution Macro-environment

Data are drawn from the product managers product fact book or database
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Lecturer: Dr Doreen Kum

Marketing Plan Contents

3. Opportunity

& issue analysis

Identifies the major:

Opportunities & threats Strengths & weaknesses Issues analysis

Internal External
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Marketing Plan Contents

4.

Objectives
After the product manager has summarised the issues involved with the product line
Must decide on the plans objectives

Two types of objectives must be set:

Financial Marketing

Lecturer: Dr Doreen Kum

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Marketing Plan Contents

5. Marketing Strategy Outlines the broad marketing strategy or game plan to be used to achieve the plans objectives Is often presented in list form after the inclusion of a positioning strategy statement Is made of the marketing tools (Ps) & how they are used to achieve desired positioning Positioning is how customers perceive your offering relative to the offerings of competitors
Lecturer: Dr Doreen Kum MKTG 2100: page 17

Marketing Plan Contents

6.

Action programs

Must specify the broad marketing programs designed to achieve the business objectives Each marketing-strategy element must now be elaborated to answer:
What will be done? When will it be done? Who will do it? How much will be spent?

Lecturer: Dr Doreen Kum

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Marketing Plan Contents

7. Projected

profit-and-loss statement

Action plans allow the product manager to build a supporting budget On the revenue side, shows

the forecast sales volume in units & the average price the cost of production, physical distribution & marketing broken down into finer categories.

On the expense side, it shows

The difference between revenues & sales is the projected profit

Lecturer: Dr Doreen Kum

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Lecturer: Dr Doreen Kum

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Marketing Plan Contents

8. Controls

The controls for monitoring the plans progress

Typically, the goals and budget are spelled out for each month or quarter.

Can review the results of each period

Identify businesses that are not attaining their goals

Lagging businesses must explain what is happening & actions they will take to improve plan fulfillment A contingency plan outlines the steps that management would take in response to specific adverse developments

Encourages thinking about difficulties that might lie ahead

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Lecturer: Dr Doreen Kum

Controlling & evaluating performance

Marketing control: the process of measuring & evaluating the results of marketing strategies & plans, and if necessary, taking corrective action to meet
objectives

Strategic control: checking that the companys basic strategies are well matched to its opportunities Marketing audit: is a comprehensive, periodic examination of a companys strategies & activities, performed by an independent and

objective outsider

Learning Objective 4
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Lecturer: Dr Doreen Kum

The Control Process

Set goals What do we want to achieve? Measure performance What is happening? Evaluate performance Why is it happening? Take corrective action What should we do about it?

Marketing control is a sub-set of overall management. It reflects the steps in any action-oriented control cycle.
(Kotler et al, 2006, Fig 2.6, p. 65)

Lecturer: Dr Doreen Kum

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Marketing Plan Contents

9. Analysing

market opportunities

Requires a reliable marketing information system (see Ch. 4) Includes market research to gather information about the marketing environment (macro & micro) Requires understanding of consumer markets (see Ch.5) Requires close attention to competitors

Lecturer: Dr Doreen Kum

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Implementing the Marketing Plan

Implementation is a process that turns marketing strategies & plans into marketing actions in order to accomplish strategic

marketing objectives

Involves day-to-day, and month-to-month activities Whilst marketing planning addresses the:

What and why of marketing activities,

Implementation addresses the:

Who, where, when & how

Lecturer: Dr Doreen Kum

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Factors to foster successful implementation

Learning Objective 3

An action program that provides internal information A simple, flexible organisation structure

One that can adapt quickly to change

Decision & operating procedures that guide planning and budgeting (that is, it is resourced) Reward systems that provide incentives & recognition at appropriate times to employees Human resources planning for skills & attitudes Marketing strategies that fit company culture

You cannot compete on service if it is not expected, supported & rewarded in the company
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Lecturer: Dr Doreen Kum

In summary, the marketing plan integrates activities & skills; it requires:

A reliable marketing information system (Ch 4), including market research Understanding of consumer markets (Ch 5) and business markets (Ch 6) Close attention to competitors, and decisions about how to position the product (Ch 7) Developing the elements in the marketing mix (Chs 8-14) Acceptable corporate and individual ethics (Ch 15)

Lecturer: Dr Doreen Kum MKTG 2100: page 27

Step 1. Ask Where Are We Now?

SWOT Analysis

Strengths

Internal

Competencies? Sustainable Competitive Advantages? Unique Selling Points?

External

Weakness Opportunities Threats

Lecturer: Dr Doreen Kum

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SWOT should result in information about:

Firm itself Trends in industry Competitors Customers

Need to translate into action plan

Lecturer: Dr Doreen Kum

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Step 2: Ask Where Do We Want To Go?

Objectives:

Make a profit Develop the organization Be socially useful

Company objectives affect marketing objectives

Objectives must be compatible Coy resources may limit opportunities

Financial strength, marketing strength, production capability and flexibility

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Lecturer: Dr Doreen Kum

Step 3: Segment, Target, Position

Market Segmentation

Identify buyers 1) with common needs, and 2) will respond similarly Select a segment and focus efforts and resources on it
How consumers see your product Points of difference, company philosophy etc 4Ps plan
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Targeting

Positioning

Marketing Mix Strategy

Lecturer: Dr Doreen Kum

Steps 4 - 7

Forecast profit and loss Action plans for implementation

Obtain resources Organize the team Develop schedules Working with other departments Executing plan

Implement Control

Steer to stay to plan Steps 4 & 5: Iterative process May need update of 4P strategies
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Lecturer: Dr Doreen Kum

2. The Marketing Environment

Lecturer: Dr Doreen Kum

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Micro vs Macro Environments

Micro-environment

The forces close to the organisation that affect its ability to serve its customers
The organisation Market channel firms Customer markets Competitors & publics

Macro-environment

The larger societal forces that affect the whole microenvironment

Demographic Economic, natural Technological, political i.e. PEST

Lecturer: Dr Doreen Kum

Learning Objective 1

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Actors in Microenvironment

Company Suppliers Marketing Intermediaries Customers

Competitors

Publics

Learning Objective 2
Lecturer: Dr Doreen Kum

(Kotler et al, 2006, Fig 3.1, p. 77)

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1. The company

Senior management sets the organisations

Mission & objectives Broad strategies & policies

Marketing managers must make decisions within the seniormanagement plans Companies have complex internal structures

Other groups are often influential

e.g. accounting, purchasing

(Kotler et al, 2006, Fig 3.2, p. 78)
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Lecturer: Dr Doreen Kum

2. Suppliers

Those companies that provide inputs (materials, parts, payroll services, recruitment companies They are a critical link in the organisations overall customer value delivery system because

supply affects availability and therefore can cause delays in production when rising supply costs force price increases, less may be sold, and lower sales volume affects efficiency and inventory costs suppliers directly affect company costs and therefore customer price the quality of supplier goods/services influences customer responses

All of the above can damage customer satisfaction Lecturer: Dr Doreen Kum

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3. Marketing intermediaries
These firms help an organisation to promote, sell and distribute its goods to final buyers:

Physical distribution firms

Stock & move goods from origin to destination

Resellers help the organisation find customers or make sales to them, e.g. retailers Financial intermediaries

Finance transactions or provide insurance Help the firm target & promote its products to the right markets e.g. market research companies, advertising agencies, media firms
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Marketing services agencies

Lecturer: Dr Doreen Kum

4. Customers: Customer Markets Types

Lecturer: Dr Doreen Kum

(Kotler et al, 2006, Fig 3.3, p. 79)

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5. Competitors
Marketing successfully means that an organisation provides greater customer value & satisfaction than its competitors Competitors: all players in the relevant industry

Defined subjectively by the firm Shown by the sphere of operations in which the firm wishes to compete (water, soft drinks, ice-cream)

Competitors influence the perception & behaviour of the marketplace

New products can impact existing product perceptions

No single competitive marketing strategy is best

Each firm must consider its own size & industry position
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Lecturer: Dr Doreen Kum

Competitive Forces

Alternatives that can satisfy consumers needs Marketing myopia Affects the number and types of competitors Competitor analysis Avoid head-on competition Consider barriers to entry

Lecturer: Dr Doreen Kum

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6. Publics

Any group that has an actual or potential interest in, or impact on, a firms ability to achieve its objectives

Lecturer: Dr Doreen Kum

(Kotler et al, 2006, Fig 3.4, p. 80)

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The Macro-environment

Learning Objective 3
Lecturer: Dr Doreen Kum

(Kotler et al, 2006, Fig 3.5, p. 81)

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The Need for Environmental Scanning

Environments change Need to anticipate, identify, interpret, and respond to trends

Essential to marketing success

Lecturer: Dr Doreen Kum

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1. Demographic Environment
Demography is the study of human populations in terms

of size, density, location, age, gender, race & occupation

Ageing populations

Key Demographic Trends

Growing ethnic diversity

Changing family & household structures

Lecturer: Dr Doreen Kum

Geographic population shifts

Higher levels of education

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2. Economic Environment

Economic Development

Key Economic Concerns for Marketers

Changes in Income

Major concerns: Changes in Consumer Spending Patterns

Lecturer: Dr Doreen Kum

Buying power

Spending patterns
See Table 3.2
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Economic Forces

Affects cost of running a business and what consumers can afford Foreign exchange rates Interest rates Unemployment rate consumer income, wages Savings rate Stock market? ..etc
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Lecturer: Dr Doreen Kum

3. Natural Environment

Concerns resources needed as inputs

or resources that are affected by marketing activities

Key Areas of concern for marketing are

Shortages of raw materials Increased costs of energy Increased pollution Government intervention
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Lecturer: Dr Doreen Kum

4. Technological Environment
Fast pace of change High R & D budgets

Issues in the Technological Environment

Focus on minor improvements

Lecturer: Dr Doreen Kum

Increased regulation
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Technological Forces

Technology changes affect:

The marketspace How businesses are conducted Obsolescence Opportunity or Challenge? How consumers assess value

Show this 0011B @ TOPSHOP, TOPMAN & WAREHOUSE to enjoy 20% off. Wisma Atria

Lecturer: Dr Doreen Kum

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5. Political environment
e.g. deregulation of airline, retail industries

Legislation

Key Trends in the Political Environment

Enforcement

e.g. control of advertising by TPC (Australia)

e.g. ban on liquor & cigarette sponsorship

Lecturer: Dr Doreen Kum

Greater Concern for Ethics

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Regulatory Forces

Consumer Protection (Fair Trading) Act

1 March 2004 Gives consumers the right to sue suppliers for unfair practices and cancel certain types of contracts Blacklists of retailers posted on brochures, maps, website Star Retailers Program

STBs efforts to protect tourists

Lecturer: Dr Doreen Kum

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Product Registration Regulations

E.g., Health Sciences Authority

Advertising Restrictions

http://www.sph.com.sg/newspapers/vetting_guid elines.html Mandatory disclaimer clauses Prohibition of advertising of certain products Substantiation of claims, etc

Lecturer: Dr Doreen Kum

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6. Cultural environment

Institutions & other forces that affect

societys basic values, perceptions, preferences & behaviours e.g. cultures, subcultures, families, peers

Closely related to demographic forces Can be viewed as social trends

Examples

more more more more more

women in the workforce single-person households convenience-oriented consumers health consciousness concern about the environment
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more acceptance of minority groups and their rights

Lecturer: Dr Doreen Kum

Cultural & Social Forces

Affects how and why consumers behave the way they do Demographics

Income, education levels, birth rates, age distribution Cohort analysis (Gen X, Gen Y, etc)
Attitudes towards marriage, sex, nudity, etc Roles of men and women Materialism What food we eat, what clothes we wear
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Culture

Lecturer: Dr Doreen Kum

How Macro-environment Changed Forces Affect Actors in the Micro-environment

Macro force e.g. a demographic change

Effects on actors in micro-environment

e.g. customers, channel members, competitors Changes in marketing plan (strategy) e.g. growth in new target market

Action plan for changes.. How we do it?

e.g. What (product)? Where (place)? How (promotion, price, place, personal service)?
Lecturer: Dr Doreen Kum

Learning Objective 4

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Lecture 2 (Part 1) Objectives

Marketing Strategies and Planning 1. Describe the marketing process and explain its relationship to strategic planning 2. Identify the sections of a marketing plan and specify the contents of each section 3. Describe factors that are likely to foster successful implementation of marketing strategy 4. Explain the ways in which organisations control and evaluate their marketing performance

Lecturer: Dr Doreen Kum

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Lecture 2 (Part 2) Objectives

The Marketing Environment 1. Explain the meaning of the terms micro-environment and macro-environment of a marketing organisation 2. List the six major actors in the micro-environment, and outline the importance of each one 3. Discuss, with examples, at least three different elements of the macro-environment 4. Explain how a changed force in the macro-environment affects the actors in the micro-environment, for example,
4a. 4b. 4.c the demographic shift of the ageing population the technological development of MP3s and iPods the cultural emergence of the metrosexual
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Lecturer: Dr Doreen Kum