CREATING A MARKETING PLAN
A Marketing Plan is a road map for the marketing activities of an organization for a specified future period of time, such as one year or five years. The specific format for a marketing plan depends on:
1. The Target Audience and Purpose.
a. The target audience
* A Marketing Plan for an internal audience seeks to point the
direction for future marketing activities in the organization and
is sent to all individuals who must implement or are affected by
the plan.
· A Marketing Plan for an external audience, such as friends, banks,
venture capitalists, or investors.
b. The Purpose
* Is an important sales tool to raise capital
* Contains the following elements: strategic plan/focus, organizational
structure, biographies of key personnel; and detailed financial in-
formation.
2. The kind and complexity of the organization. Different Marketing Plans are developed based on whether the business has a local, national, or international scope.
a. A Marketing Plan for a local business is relatively simple and
directed at serving customers in a local market.
b. For national or international organizations, there may be a
hierarchy of marketing plans where the level of detail is based
on the organization, business unit, or product line levels.
3. The industry. Dictates the extent to which competitors, market segments, and planning time horizons are used:
a. Both local businesses and national or international organizations
analyze competition.
b. However, the time periods for their marketing plans are different:
· Local businesses are shorter-term (e.g. 1 year)
· National or International organizations are longer-term (e.g. 5 years) due to longer product development cycles.
A Business Plan is a road map for the entire organization for a specified future period of time, such as one year or five years.
1. A key difference between a marketing plan and a business plan is
that the business plan contains details on the research and develop-
ment (R&D), operations, and manufacturing activities of the
organization.
2. For manufacturing firms, the marketing plan is probably 60 to
70 percent of the entire business plan.
The Most-Asked Questions by Outside Audiences
Lenders and prospective investors who read a business or marketing plan are tough audiences to satisfy. Their most-asked questions include:
1. Is the business or marketing idea valid?
2. Is there something unique or distinctive about the product or service
that separates it from substitutes or competitors?
3. Is there a clear market for the product or service?
4. Are the financial projections realistic and healthy?
5. Are the key management and technical personnel capable, and do
they have an industry track record?
6. Does the plan clearly describe how those providing capital will get
their money back and make a profit?
MARKET SEGMENTS AND TARGETS
A business firm segments its markets to respond more effectively to the wants of groups of potential buyers to increase sales and profits.
· Market segmentation involves aggregating prospective buyers into groups that (1) have common needs and (2) will respond similarly to a marketing action.
· Market segments are relatively homogeneous groups of prospective buyers that result from the market segmentation
Process. Each market segment is similar in terms of its consumption behavior.
· Different market segments cause firms to use product differentiation, a marketing strategy that involves a firm’s using different marketing mix activities, such as product features and advertising, to help consumers perceive the product as being different and better than competing products.
· A business will go to the trouble and expense of segmenting its markets when this will increase its sales, profit, and return on investment.
· When expenses are greater than the potentially increased sales from segmentation, a firm should not segment its market.
STEPS IN SEGMENTING AND TARGETING MARKETS
There are five basic steps:
1. Group Potential Buyers into Segments
2. Group Products to be Sold into Categories
3. Develop a Market-Product Grid and Estimate Size of Market
4. Select Target Markets
5. Take Marketing Actions to Reach Target Markets
Step 1. Group Potential Buyers into Segments
Criteria in Forming Segments:
· Potential for Increased profit
· Similarity of needs of potential buyers within a segment
· Difference of needs of buyers among segments
· Potential of a marketing action to reach a segment
· Simplicity and cost of assigning potential buyers to segments
Ways to segment Consumer Markets
A. Customer Characteristics
Geographic - Consists of region, city, size and metropolitan Statistical area (MRA)
Demographic - Consists of gender, age, race, and household size
Psychographic - consists of lifestyle and personality
B. Buying Situations
Benefits sought -consists of product features, quality, service and warranty
Usage rate - the quantity consumed or patronage - store visits - during a specific period and varies significantly among different customer groups. 80/20 Rule - suggests 80 percent of a firms sales are obtained from 20 percent of its customers.
Frequency of purchase - how often is product/service purchased
Ways to segment Organizational Markets
A. Customer Characteristics
Geographic - consists of region, statistical area, density
Demographic - consists of NAICS, number of employees, sales, etc.
B. Buying Situations
Benefits sought - consists of product features
Nature of Good - consists of kind, where used, etc.
Buying condition - consists of purchase location, who buys, type of buy, etc.
Step 2 Group Products into Categories.
A firms products must be grouped into meaningful categories so customers can relate to them. i.e. supermarkets, department stores
Step 3. Develop a Market-Product Grid and Estimate Size of markets
A market-product grid is a framework to relate the market segments of potential buyers to products offered. In a complete market-product grid analysis each cell in the grid can show the estimated market size of a given product sold to a specific market segment.
Step 4. Select Target Markets
A firm must take care to choose its target market segments
If it picks too narrow a set of segments it may fail to reach the volume of sales and profits it needs. If it selects too broad a set of segments, it may spread its marketing too thin so the extra expense are more than the increased profits and sales.
Criteria to use picking the target segments
a. Market Size
b. expected growth
c. competitive position
d. cost of reaching the segment
e. compatibility with the organizations objectives and resources
Step 5. Take Marketing Actions to Reach Target Markets
Positioning the Product
Product Positioning refers to the place an offering occupies in consumers minds on important attributes relative to competitive products.
A perceptual map is a means of displaying or graphing in two dimensions the location of products or brands in the minds of consumers to enable a manager to see how consumers perceive competing products or brands relative to its own.