4.2 - Marketing Planning

Question 1

What is market planning

Answer 1

Marketing planning is a process where a company must decide which marketing strategies will be the proper ones to attain their corporate and strategic objectives. It requires an analysis and information about a particular market. To achieve this, we need to formulate a “marketing

Question 2

What is a market plan

Answer 2

A marketing plan is the document that outlines the firm’s marketing objectives and the marketing strategies to be used to achieve these objectives.

Question 3

What are the 4 components of a market plan

Answer 3

•Marketing objectives – they need to be SMART (i.e. increasing sales in 10% by the end of the year)

•Strategic plans – steps to be taken to achieve the objectives

•Detailed marketing actions – specific marketing activities to be carried out (i.e. pricing strategies)

•The marketing budget - funds required for the marketing strategy
Some companies also include a marketing audit in their marketing plan which is basically an examination of the current climate in which the business operates. Market research plays a key role in this investigation.

Question 4

What are 6 benefits of market planning

Answer 4

•Identifies needs and wants of consumers and determines the demand for product
•Helps in the design of products that fulfil consumers’ needs; setting SMART objectives
•Outlines measures for generating the cash for: daily operations, to repay debts and to turn into a profit.
•Identifies new and/or potential customers
•Improves coordination between departments in the firm
•Improves motivation and staff confidence

Question 5

What are 4 limitations of market planning

Answer 5

•It is time-consuming and costly
•If the firm uses improperly analysed data, it leads to faulty marketing decisions
•Creates unrealistic financial projections if information is interpreted incorrectly, this could lead to the wrong marketing decisions
•Identifies weaknesses in the firm overall business plan which might create additional problems once the marketing decision have been made.

Question 6

What is market segmentation

Answer 6

A market segment is a sub-group of consumers with similar characteristics in each market. Hence, a market segmentation is the process of dividing the market into smaller or distinct groups of consumers with the aim to meet their needs and wants.
Markets could be segmented Demographically, Geographically or Psychographic.

Question 7

Define demographic segmentation

Answer 7

refers to market segmentation according to age, race, religion, gender, family size, ethnicity, income, and education. Demographics can be segmented into several markets to help an organization target its consumers more accurately.

Question 8

What is geographic segmentation

Answer 8

happens when a business divides its market on the basis of geography. You can geographically segment a market by area, such as cities, counties, regions, countries, and international regions. You can also break a market down into rural, suburban and urban areas to identify consumers more accurately

Question 9

What is psychographic segmentation

Answer 9

it involves dividing the market into segments based upon different personality characteristics, values, attitudes, interests, and lifestyles of consumers. The advantage of this segmentation is that it allows the firm to engage in product design and marketing in a focused manner.

Question 10

What are 7 advantages of market segmentation

Answer 10

1. The firm can spot and compare marketing opportunities examining the needs of each segment and determine to what extent the current offering satisfies these needs. Segments which have low level of satisfaction from current offerings represent excellent opportunities for the firm.
2. The firm can modify its product/service since marketing appeals to suit the target segment
3. Segmentation facilitates setting up of realistic selling targets and priorities
4. Management can identify new profitable segments which deserve special attention
5. Appropriate service packages can be developed for each market segment
6. By using resources more effectively it is possible to deal with competition more effectively
7. With the knowledge about different segments, the firm can better allocate the total marketing budget. Differences in customer response to different marketing tools serve as the basis for deciding on the allocation of market funds to different customer groups

Question 11

What are 4 disadvantages of market segmentation

Answer 11

1. Segmentation increases costs. When a firm attempts to serve several market segments they produce more and hence increase their cost of production
2. Larger inventory (stock) must be maintained by both the manufacturer and the distributors
3. Promotion and distribution expenditures increase when separate programmes are used for different market segments
4. When characteristics of a market segment change, investment made already might become useless

Question 12

What is a target market

Answer 12

A target market is the market a firm wants to sell its products and/or services to. It includes a targeted set of customers for whom it directs its marketing efforts. Hence, targeting is the process of marketing to a specific market segment.

Question 13

What is an essential part of developing a market plan

Answer 13

Identifying the target market is an essential step in the development of a marketing plan. A firm can use these strategies: mass marketing (undifferentiated marketing), segmented marketing (differentiated marketing) and niche marketing (concentrated marketing)

Question 14

What is mass marketing

Answer 14

when a firm decides to ignore market segment differences and appeals to the whole market with one offer or one strategy, with the aim to reach the largest number of people possible, sell more products and hence have a larger profit. We will use the example of chocolate (i.e. Cadbury, Mars or Nestle)

Question 15

What is segmented marketing

Answer 15

is the process of dividing an entire market up into different customer segments. Targeting or target marketing then decides which potential customer segments the company will focus on. Segmented firms aim to get a stronger position in their segments (i.e. Toyota designs cars for different socioeconomic status)

Question 16

What is niche marketing

Answer 16

Where a business targets a smaller segment of a larger market, where customers have specific needs and wants. Firm can market their products more efficiently and effectively by targeting the consumers they can serve best and hence get more profit (i.e. Hotel chocolat, Roll Royce, any luxury products, M&S, etc)

Question 17

What is positing

Answer 17

Positioning is defined as an effort to influence consumer perception of a brand or product relative to the perception of competing brands or products.
It aims to simplify the overwhelming information that costumers might face when making the decision to buy a product. Therefore, marketers might plan a position that will give their products a competitive advantage in the market. The most useful tool for positioning is a position (or perception) map.

Question 18

What is a position map

Answer 18

this is a visual representation of how the customer perceives a product in relation to other similar competing ones.
It is important to remember that this is all about ‘perception’ and perception differs from person to person, so do the results of the positioning map (i.e. what one person perceives as quality, value for money, etc, is different to someone else’s perception but there will be similarities)

Question 19

What is mapped on a positioning map

Answer 19

Products or services are ‘mapped’ together on a positioning map. This allows them to be compared and contrasted in relation to each other.

Question 20

What is the strength of a positioning map

Answer 20

This is the main strength of this tool. Marketers decide upon a competitive position which enables them to distinguish their own products from the offerings of their competition.
The marketer would draw out the map and decide upon a label for each axis. They could be price and quality or comfort and price or fashion and price. The individual products are then mapped out next to each other and any gaps could be regarded as possible areas for new products.

Question 21

What is niche marketing

Answer 21

focuses on a small group of people who have specific needs and wants (i.e. gluten free products - crisps).

Question 22

What is mass marketing

Answer 22

focusses on a large and broad part of the market where there are many similar products on offer. Consumers, in this case are less specific about their needs (i.e. just crips!).

Question 23

What is the purpose of mass and niche marketing

Answer 23

The purpose of determining niche or mass markets is to target our “marketing” to those specific groups.

Question 24

How do you mass market

Answer 24

For a mass market, however, we need to use “mass marketing”. How can we market any brand of crisps? . Since this is not “specific” for customers we can use TV adds, Billboards, flyers etc.

Question 25

What is a unique selling point

Answer 25

refers to any aspect of a business, product or brand that makes it stand out from the competition.
The concept of a USP is one of the basics of effective marketing that has stood the test of time. It could be a lower price, a smaller version of the product, offering extra functions, or even simply producing a standard product in a range of colours or designs.
A business needs to look at its USPs compared to competitors. If it doesn’t have any, the business will probably struggle to make the product seem attractive to customer

Question 26

What should a business do if customers are leaving there brand

Answer 26

If a business finds that its customers are switching to competitors or buying purely on price, it should be asked whether the business has identified the USPs for its products and services. Moreover, if the firm is accurately communicating their USP to their customers.

Question 27

What are 3 examples of unique selling points in brands

Answer 27

1. Patagonia’s USP isn’t a product, a quality, or feature, but their reason for existing (its mission) - “We’re In Business To Save Our Home Planet.” This mission establishes the company as more than just a clothing brand, with 1% of its sales revenues being pledged to the preservation and restoration of the planet.
2. Ikea - “To create a better everyday life for the many people.” The Swedish company’s global USP is its ability to maximise economies of scale to offer high-quality furniture at low prices - arguably the ultimate benefit any business can provide for its customers.
3. TOMS Shoes - “Shoes for Moving Forward”. Despite being a for-profit company, the American firm was one of the first shoe companies in the world to use a “buy one, gift one model”. For every pair of TOMS shoes sold, the company gifts another pair to a child in need, helping to make customers feel good about their purchases.

Question 28

What should you not confuse USP (unique selling point) with

Answer 28

Do not confuse USP with business slogans or with mission statements (although they can be directly linked). Having a catchy slogan or a memorable mission statement does not, on their own, automatically give a business a unique selling proposition**

Question 29

Define differentiation

Answer 29

Differentiation refers to the process of distinguishing an organization’s products from those of other firms in the same industry. In other words, what makes the product or service “different” or “stand out” from the competition?
Businesses can sue different strategies for Differentiation

Question 30

What are the 6 types of differentiation strategies

Answer 30

1. Product differentiation
2. Service differentiation
3. Price differentiation
4. Distribution differentiation
5. Relationship differentiation
6. Image differentiation

Question 31

What is product differentiation

Answer 31

refers to physical differences in a product. For example, durability, reliability, performance, etc. This, however, could be a “short-term” strategy since product features can be easily copied by the competition (pattens, copyrights, etc. have a limited durability and some business choose not to use them!)

Question 32

What is service differentiation

Answer 32

refers to the “non-physical” differences a business has. For example, customer service, delivery, installation, training etc.

Question 33

What is price differentiation

Answer 33

when determining pricing strategy, the business must be able to recognize that costumers are willing to pay different prices for a product. This, of course, depend on many factors. Price differentiation offers different prices to different customer segments based on factors like location, demographics, and buying behaviour. Examples range from ticket prices (child vs adult) to BOGOF, train times charging different prices a different times to charging a high price in an affluent area compared to a poorer one.

Question 34

What is distribution differentiation

Answer 34

this refers to the path the product takes to get to the customer. With the developments of e-commerce online distribution is a good example of this type of differentiation. However, not every business can take advantage of this since for certain products “online delivery” is not an essay option (i.e. large manufacturing machinery).

Question 35

What is relationship differentiation

Answer 35

this has to do with “people” and how the relationships between the employees and customers develop. Hence, this type of differentiation is closely related to service. Customer want to be able to trust the business and employees have a big role in building that trust .

Question 36

What is image/reputation differentiation

Answer 36

when a business has a good reputation (image) in the market it makes it more difficult for other businesses to enter it. However, this Reputation is not easy to have or maiming. Aspects, like quality, good customer service, performance of the product contribute to the companies’ reputation and image.
However, it is important to mention that a business reputation or image is not automatically achieved, is “earned” and hence maintaining this is of upmost importance.
Companies that want to maintain a good image or reputation, normally require large marketing budgets.