Marketers must understand the tools of their trade. Using both the textbook and Cybrary resources, research the essential marketing tools, then create a report in which you address the following questions:
1. What is the overall purpose of a marketing plan?
2. How do a marketing plan and strategic marketing plan fit together?
3. What are some legal or ethical issues you may need to consider?
4. List and describe the various components of a strategic marketing plan?. This portion of the project provides a framework for the remaining assignments in the class .
Please provide as much information as possible, including examples.
1. What is the overall purpose of a marketing plan?
Marketing is defined as 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 objectives (AMA). (2) The purpose of the marketing plan is the step-by-step plan and the things that need to be considered for the successful execution of the marketing objective.
See marketing plan components at http://www.quickmba.com/marketing/plan/
In other words, the purpose of the marketing plan, when formulated correctly, is to meet the overall aim of marketing, which is to have the right product or service
- At the right price
- At the right place
- At the right time
- With the right appeal to suit your market and product
- Brought to the attention or awareness of the target market. (1)
One of the major failings of business owners is their preoccupation with the specific product or service they have to offer. This is usually at the expense of other marketing elements that they have failed to consider. Marketing is complex; therefore the marketing plan needs to consider all marketing decisions and plans, which are based on the evaluation of all of the components affecting the product or service, including pricing, distribution and promotion. (1)
The objective of the marketing mix strategy of the marketing plan is:
- To place the right product (PRODUCT)
- At the right price (PRICE)
- In the right location (PLACE or distribution), and
- To make the right consumer aware that this product is available to satisfy their needs (PROMOTION).
The marketing mix is also known as the "4 Ps''. This marketing plan requires strategies and decisions on each of these elements. The interaction and interrelationship of all of these four elements must be considered, each factor cannot be treated in isolation. (1)
Let's look at an example to help understand the purpose of the marketing plan and how the various components meet this purpose:
Example 1: Marketing Plan
The information... was derived from many sources, including Michael Porter's book Competitive Advantage and the works of Philip Kotler. Concepts addressed include 'generic' strategies and strategies for pricing, distribution, promotion, advertising and market segmentation. Factors such as market penetration, market share, profit margins, budgets, financial analysis, capital investment, government actions, demographic changes, emerging technology and cultural trends are also addressed.
There are two major components to your marketing strategy:
- How your enterprise will address the competitive marketplace
- How you will implement and support your day-to-day operations.
In today's very competitive marketplace a strategy that insures a consistent approach to offering your product or service in a way that will outsell the competition is critical. However, in concert with defining the marketing strategy you must also have a well-defined methodology for the day-to-day process of implementing it. It is of little value to have a strategy if you lack either the resources or the expertise to implement it.
In the process of creating a marketing strategy you must consider many factors. Of those many factors, some are more important than others. Because each strategy must address some unique considerations, it is not reasonable to identify 'every' important factor at a generic level. However, many are common to all marketing strategies. Some of the more critical are described below. You begin the creation of your strategy by deciding what the overall objective of your enterprise should be. In general this falls into one of four categories:
- If the market is very attractive and your enterprise is one of the strongest in the industry you will want to invest your best resources in support of your offering.
- If the market is very attractive but your enterprise is one of the weaker ones in the industry you must concentrate on strengthening the enterprise, using your offering as a stepping stone toward this objective.
- If the market is not especially attractive, but your enterprise is one of the strongest in the industry then an effective marketing and sales effort for your offering will be good for generating near term profits.
- If the market is not especially attractive and your enterprise is one of the weaker ones in the industry you should promote this offering only if it supports a more profitable part of your business (for instance, if this segment completes a product line range) or if it absorbs some of the overhead costs of a more profitable segment. Otherwise, you should determine the most cost effective way to divest your enterprise of this offering.
Having selected the direction most beneficial for the overall interests of the enterprise, the next step is to choose a strategy for the offering that will be most effective in the market. This means choosing one of the following 'generic' strategies (first described by Michael Porter in his work, Competitive Advantage).
- A COST LEADERSHIP STRATEGY is based on the concept that you can produce and market a good quality product or service at a lower cost than your competitors. These low costs should translate to profit margins that are higher than the industry average. Some of the conditions that should exist to support a cost leadership strategy include an on-going availability of operating capital, good process engineering skills, close management of labor, products designed for ease of manufacturing and low cost distribution.
- A DIFFERENTIATION STRATEGY is one of creating a product or service that is perceived as being unique "throughout the industry". The emphasis can be on brand image, proprietary technology, special features, superior service, a strong distributor network or other aspects that might be specific to your industry. This uniqueness should also translate to profit margins that are higher than the industry average. In addition, some of the conditions that should exist to support a differentiation strategy include strong marketing abilities, effective product engineering, creative personnel, the ability to perform basic research and a good reputation.
- A FOCUS STRATEGY may be the most sophisticated of the generic strategies, in that it is a more 'intense' form of either the cost leadership or differentiation strategy. It is designed to address a "focused" segment of the marketplace, product form or cost management process and is usually employed when it isn't appropriate to attempt an 'across the board' application of cost leadership or differentiation. It is based on the concept of serving a particular target in such an exceptional manner, that others cannot compete. Usually this means addressing a substantially smaller market segment than others in the industry, but because of minimal competition, profit margins can be very high.
having defined the overall offering objective and selecting the generic strategy you must then decide on a variety of closely related operational strategies. One of these is how you will price the offering. A pricing strategy is mostly influenced by your requirement for net income and your objectives for long term market control. There are three basic strategies you can consider.
- A SKIMMING STRATEGY
If your offering has enough differentiation to justify a high price and you desire quick cash and have minimal desires for significant market penetration and control, then you set your prices very high.
- A MARKET PENETRATION STRATEGY
If near term income is not so critical and rapid market penetration for eventual market control is desired, then you set your prices very low.
- A COMPARABLE PRICING STRATEGY
If you are not the market leader in your industry then the leaders will most likely have created a 'price expectation' in the minds of the marketplace. In this case you can price your offering comparably to those of your competitors.
To sell an offering you must effectively promote and advertise it. There are two basic promotion strategies, PUSH and PULL.
- The PUSH STRATEGY maximizes the use of all available channels of distribution to "push" the offering into the marketplace. This usually requires generous discounts to achieve the objective of giving the channels incentive to promote the offering, thus minimizing your need for advertising.
- The PULL STRATEGY requires direct interface with the end user of the offering. Use of channels of distribution is minimized during the first stages of promotion and a major commitment to advertising is required. The objective is to "pull" the prospects into the various channel outlets creating a demand the channels cannot ignore.
There are many strategies for advertising an offering. Some of these include:
- Product Comparison advertising
In a market where your offering is one of several providing similar capabilities, if your offering stacks up well when comparing features then a product comparison ad can be beneficial.
- Product Benefits advertising
When you want to promote your offering without comparison to competitors, the product benefits ad is the correct approach. This is especially beneficial when you have introduced a new approach to solving a user need and comparison to the old approaches is inappropriate.
- Product Family advertising
If your offering is part of a group or family of offerings that can be of benefit to the customer as a set, then the product family ad can be of benefit.
- Corporate advertising
When you have a variety of offerings and your audience is fairly broad, it is often beneficial to promote your enterprise identity rather than a specific offering.
You must also select the distribution method(s) you will use to get the offering into the hands of the customer. These include:
- On-premise Sales involves the sale of your offering using a field sales organization that visits the prospect's facilities to make the sale.
- Direct Sales involves the sale of your offering using a direct, in-house sales organization that does all selling through the Internet, telephone or mail order contact.
- Wholesale Sales involves the sale of your offering using intermediaries or "middle-men" to distribute your product or service to the retailers.
- Self-service Retail Sales involves the sale of your offering using self service retail methods of distribution.
- Full-service Retail Sales involves the sale of your offering ...
This solution explains the overall purpose of a marketing plan, how a marketing plan and strategic marketing plan fit together and some legal or ethical issues to consider. It also describes the components of a strategic marketing plan. Examples are provided.