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How Marketing Plans Work
by Lee Ann Obringer
Photo courtesy Newstream.com
Yahoo! Internet-connected billboard in Times Square
Planning your company's marketing program is a process much like the one you go through as a young person deciding what you want to do with your life. You go through phases of:
- learning and discovery of the world around you
- development and self-realization of skills, strengths and weaknesses
- goal setting based on those strengths and weaknesses
- setting strategies for achieving your goals
- planning your attack
- working through that plan to make it happen
What is Marketing?
According to the Dictionary of Marketing Terms, marketing is "the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational goals."
What does that mean to you? It means marketing encompasses everything you have to do in coming up with a needed product or service, making potential customers aware of it, making them want it, and then selling it to them.
So then, is sales considered "marketing"? Is advertising "marketing"? Often, you'll hear sales functions referred to as "marketing," but really sales is just a part of the larger marketing process, as is advertising. In the olden days (back 30 or 40 years), marketing did consist primarily of sales. Rather than having marketing departments, companies had sales departments with an advertising manager and someone who did market research. Sometimes they added a promotions manager or hired an agency to handle advertising and promotions.
Things began changing as some companies grew larger and larger and began offering many product lines that warranted having their own brand managers, market segment managers and many more specialized positions that addressed and mulled over the needs of their particular markets. The need for a marketing department began to be seen as a vital part of business. The marketing department also takes most of the blame if a product (or company) isn't successful, regardless of whether or not the fault actually lies there.
Everyone is Responsible for Marketing
The thing to remember is that, in reality, the marketing department crosses over into the entire company. Everyone in your company should be aware of the marketing message, visions, and goals of the company, and should reflect that message in everything they do that is related to the product and your customers. This is referred to as Integrated Marketing Communications, and means that every contact with customers and potential customers, whether it's through advertising, personal contact, or other means, should carry a consistent message about the company and product. In effect, every employee is a sales person, and every employee is a customer service representative. If they give mixed messages about what your business is, then your customers and potential customers will have a distorted picture.
Any bad experience a customer has with your company can affect future sales from that customer, as well as the people they tell about the experience. This bad experience can be anything from a rude receptionist, to poor packaging of a product. There are so many variables that effect whether a potential customer becomes a customer, or a current customer remains a customer, that the marketing department shouldn't always be held accountable for the total success of a product. But in many companies, that is the case.
What is the Marketing Department's Role?
The marketing department must act as a guide and lead the company's other departments in developing, producing, fulfilling, and servicing products or services for their customers. Communication is vital. The marketing department typically has a better understanding of the market and customer needs, but should not act independently of product development or customer service. Marketing should be involved, and there should be a meeting of the minds, whenever discussions are held regarding new product development or any customer-related function of the company.
Don't get the idea that marketing should make these plans and recommendations alone. It is very important that the marketing department get input from many people within the company. Not only does providing input help the rest of the company understand and support the marketing efforts, it also provides some invaluable insights into what customers want and new ideas that may have slipped past the rest of the company. For example, your service technicians and your customer service reps will have great insights into customer opinions and needs. Get everyone involved and you'll have a more cohesive effort.
Because the goals and guidelines set by the marketing department should, by design, be in line with the vision and mission of the company, upper management should be involved in and endorse cooperation by all departments in following and implementing the plan and integrating a consistent message into all communication channels. If this isn't the case, the efforts to market the company's products will fail. It's that simple.
Reinforce the idea among your employees that marketing is a team effort. Individuals may have their own goals and priorities, but if they don't also consider the goals and greater need of the company, they may hinder efforts and make your carefully planned marketing efforts fail.
To illustrate this, assume a company has implemented a direct mail program and has placed key codes on the mailing labels to track the source of the mailing lists from which customers who place orders are coming. If the employees who take the orders don't ask for and record those codes, then the marketing department has no way of knowing which lists are working and which lists are bombing. Cooperation among departments and support of upper management to enforce necessary procedures is often critical.
So, the marketing department studies the market and the customers, determines the best way to reach those customers, and works with the rest of the company to help determine the new product needs of the market and represent the company in a consistent voice.
Next, we'll begin going over the steps for putting together your marketing plan. This process involves four stages of action:
- Researching and analyzing your business and the market
- Planning and writing the plan
- Implementing the plan
- Evaluating the results
The research and analysis stage of your planning process is very important. On the following pages, we'll go over the steps you need to follow in order to build your plan. It is important to understand that each step builds upon the previous step.
You'll build your plan layer by layer. For example:
- Research and analysis are critical because they lead you to identifying your product's target audience, as well as its strengths, weaknesses, threats and, most importantly, opportunities.
- Knowing the threats and opportunities your product faces helps you more realistically set your sales goals and objectives.
- Knowing your opportunities, target audience, and sales goals will give you the information you need to set your marketing goals to take advantage of the opportunities and meet the sales goals.
- Knowing your marketing objectives will give you the information you need to set your positioning, pricing, distribution, and other marketing strategies.
- Having your strategies set will give you the road map to set up the tactical elements of your marketing plan, such as advertising, promotions, branding, packaging, etc. -- all of those things you have to tailor to your market.
- Once your tactical elements are determined, you can determine your creative element, budgets, and calendar.
The Business Review
What is the scope of your business? In other words, what business are you in? What is the essence of what your business does or what your product provides? Is it helping people lower their stress levels by helping them organize their daily lives (as in Day-Timers, PDAs, reminder services)? Is it helping businesses save money, improve working conditions and increase the safety of their employees (as in safety consulting and training services)? Is it helping kids learn to read and so have a greater chance in succeeding in school and their careers (as in educational television, educational computer games, or personal tutoring)?
What is your business's philosophy and mission? Are you really on track with what you set out to do initially? Revisit your vision and mission statements.
In order to put together a good plan for marketing, you have to have a thorough knowledge of your product. Perform an exhaustive review of :
- features
- benefits
- life cycle stage
- safety
- reliability
- appearance and packaging
- technology level (if applicable)
- sales history
- seasonality
- pricing history
- distribution history
- promotion history
- other areas specific to your product
- the size of the market
- the segments of the market
- who your primary competitors are
- what your competitors' strengths are
- what your competitors' weaknesses are
- who your target audience is, and
- what their needs are
- what their desires are (yes, this is different)
- what their tastes are
- what their buying patterns are
- their preferred distribution method
- their opinion of your competitors' product
- their opinion of your product
- features they would like to see in your product
- the seasonality of the market
- the market growth, shrinkage, or flattening
See How Market Research Works for more information on conducting your research or finding secondary research sources.
Now it's time to cover some important planning elements commonly referred to as SWOT and PEST.
PEST
PEST stands for Political factors, Economic factors, Social factors, and Technology factors. These are all elements that may have an effect on your future business. Make a list of all factors that may be either beneficial or detrimental to the success of your marketing efforts or business.
Political factors include regulatory issues that affect your product line (e.g. ergonomics issues and the current regulatory rulings), legal aspects such as patents and copyrights, or just the current political climate.
Economic factors include current financial forces on your target market. Is there currently a recession? Is the stock market falling or rising?
Social factors include changes in social trends, fads, or demographic groups as they affect your target market and its current opinions. This could include changes in shopping habits, such as the increase in online shopping or the super-mall trend. It could also include the aging of your current target market, or the population increase in the over-50 group.
Technology factors include everything that affects your product, its market, or information-gathering efforts of your market that come as a result of changes in technology. This would include the Internet, wireless communications, handheld electronic devices, and anything else technology-driven that is affecting your product or service.
All of the PEST factors will tie into and possibly have an effect on the strengths, weaknesses, opportunities, and threats you identify for your product and market.
SWOT
SWOT stands for Strengths, Weaknesses, Opportunities and Threats and is critical to your marketing plan. As mentioned before, your marketing plan builds upon itself, and one of the anchoring steps is the identification of SWOT. By completing the review of your business and your market, you should be armed with the information necessary to identify your SWOTs and PESTs.
Your strengths and weaknesses are determined by internal elements, while opportunities and threats (OT) are dictated by external forces. Sometimes it is recommended to identify your opportunities and threats first in order to more quickly bring to light the product strengths or weaknesses that should be considered first. For example, if you discover that your competitor is losing an exclusive distribution contract in the next two months, you could use this information to quickly fill that gap in the market. However, many of your threats will be based on weaknesses you've discovered.
Regardless of which you cover first, you need to understand what to look for. To come up with your OT, ask yourself these questions. Were any problems or opportunities identified in your:
- company's philosophy or mission?
- product features, benefits or quality?
- product's competitive advantage? (Is there a competitive advantage?)
- distribution methods or distributor satisfaction?
- pricing structures? Is it priced much higher or lower than the competition?
- target market's awareness of your product?
- target market's attitudes toward the product (or its category)?
- target market's brand loyalty?
- competition's activities? (new product launches, price changes, new companies, etc.)
- overall market? (shifts in needs, trends, behaviors, etc.)
- Problem solving - What problems do customers currently have with the product that aren't necessarily bad enough to warrant not using it or even complaining, but could benefit from improvement? For example, interviewing a customer might bring to light a statement like, "My potato chips always get crushed in the grocery bags on the way home from the store." Enter Pringles brand potato chips. New packaging might just give your product or service an advantage in the market.
- Product use cycle - What steps does the buyer go through to purchase, use, and dispose of the product? This method might bring to light new product ideas (or just enhancements or packaging ideas), services, or other value options.
- Ideal scenarios - Sometimes customers' "I wish..." statements can lead to whole new spin on a product. For example, someone at some point probably said "I wish I could check my e-mail from anywhere!" Enter the wireless communications addition to the PDA line.
Now identify strengths and weaknesses. Strengths can be defined as any available company resource that you can use to improve your market share or financial performance. Weaknesses are any company resource that may cause you to lose a competitive advantage, position or financial state. Rate your product (or company) strengths in these categories on a scale of one to five. You can also rate each by importance. Remember, many of your weaknesses will be based on the threats you identified above.
External - Market-oriented
- Company/product reputation
- Market share
- Company's/product's ability to meet the needs and trends of the market
- Value your company brings to the market
- Quality of your product
- Quality of your customer service and support (or other area of service)
- Quality/effectiveness of past promotions and other marketing efforts
- Pricing
- Distribution
- Geographical advantages
- Operational leadership
- Financial strength
- Manufacturing capabilities
- Responsiveness of workforce
Also keep in mind that, often, a threat can also be an opportunity, and a strength can also be viewed as a weakness, all depending upon the viewer's perspective. For example, you may see your large selection of products as a strength, while your customers may consider it confusing and see it as making it difficult to find what they need. Put yourself in the consumer's shoes and be objective when making your determinations.
Be sure to check out the SWOT Worksheet found on the Marketing Tools page.
The Marketing Plan Outline
Just as you discovered if you've ever written a business plan, there are many, many variations in the format and outlines for marketing plans. Study examples you see on the Internet and from other sources, and modify this outline as you see fit. Typically, however, your written marketing plan should include the following sections:
- Executive Overview
- Market Review
- Trends overview
- Market segments
- Target market
- primary
- secondary
- Competitive Review
- Product and Business Review
- Strength, Weaknesses, Opportunities, Threats
- Goals and Objectives
- Sales objectives
- Marketing objectives
- Strategies
- Positioning
- Product
- Pricing
- Distribution
- Communications/Promotion
- Action Plan and Implementation
- Media plan
- Budget
- Schedule
- Assignments
- Evaluation
- Lead tracking systems
- Sales reviews