Unit 3, Chapter 18: Marketing planning Flashcards
Define marketing plan
- A marketing plan is a detailed, fully researched written report on marketing objectives and marketing strategy to be used to achieve them
- > A marketing plan should be a part of a strategy to achieve corporate objectives
How marketing plan differs from marketing mix? (4)
Because it includes:
- The marketing objectives and how they help the business achieve its overall objectives
- The resources required to achieve marketing objectives
- The research required to achieve the marketing objectives and how the results of this research may change the objectives
- How the 4ps can be used to achieve the marketing objectives
What are the key contents of a marketing plan? (6)
- Purpose and mission
- Situational analysis
- Marketing objectives and strategy
- Marketing mix
- Marketing budget
- Executive summary and time scale
Key contents of marketing plan: Purpose and mission
-
Mission:
- Providing the audience
- e.g) potential financial investors
- Providing the audience
- The purpose of the plan - is it to prepare the business for the launch of a new product.
Key contents of marketing plan: Situational Analysis (4)
- To identify where the firm ‘is’ now: find current strengths and weaknesses, market shares and etc.
- Done through extensive market research
- Done to avoid misdirecting the plan
- 5 main areas: Current product analysis, Target market analysis, Competitor analysis, PEST analysis, SWOT analysis.
Key contents of marketing plan: Marketing objectives and strategy (1-3) (2-2)
-
Marketing objectives
• Have to be SMART to the firm
• It can be broken down into specific targets for each section
• Gives clear and measurable objectives -> gives a sense of direction and allows measurement of progress. -
Marketing strategy
• Outlines how the company intends to achieve the marketing objectives
• (Doesn’t really deal with Marketing mix) Example of things it deals with: To pursue mass marketing or niche?
Key contents of marketing plan: Marketing mix tactics
A brief:
- Product: Explains key features of the products like branding and packaging.
- Price: Making pricing decisions based on the price elasticity, costs, competitors etc.
- Promotion: Advertising, sales promotion, public relations and personal selling.
- Place: Shows distribution plan and channels and the outlets that sell the products.
- The marketing mix has to be fully integrated to be effective.
Key contents of marketing plan: Marketing budget
- The plan should lay out the spending requirements necessary to meet the plan’s overall objectives.
Key contents of marketing plan: Executive summary and timescale
- Shows the overall summary and the timescale over which it will be introduced.
Benefits of a Marketing plan (3)
- Help to convince potential financial investors that the business plan is sound and profitable.
- Reduces risks when new strategies are introduced.
- Forces marketing personnel to look at the business’s current position to provide direction for future decisions for the department and the whole organisation (because the marketing plan cannot be made in isolation from other departments).
Potential limitations of a marketing plan (4)
- Complex, costly and time consuming
- Business with lack of management expertise cannot make up the plan
- In fast changing markets, the plan may be outdated before it is published.
- Managers who have put a lot of effort into the plan may not want to change it -> inflexibility can damage business’s prospects
Types of elasticity of demand (4)
PIPC
- Price elasticity of demand (done in AS)
- Income elasticity of demand
- Promotional elasticity of demand
- Cross elasticity of demand
Def. Income elasticity of demand
- This measure the responsiveness of demand for a product following a change in consumer incomes.
- *% Change in demand / % change in consumer incomes = Income elasticity of demand**
Explain income of elasticity of demand results (3)
- Superior goods: Negative elasticity of demand (<0). Demand rises and as income falls, and vice versa. e.g. Second hand clothing.
- Normal goods: >1 elasticity of demand. As income falls, demands falls and vice versa. e.g. Branded sneakers.
- Necessity goods: Between 0 and 1. Demand usually stays the same even if consumer incomes rises or falls. e.g. salt.
Def. Promotional elasticity of demand
- This measures the responsiveness of demand for a product following a change in the amount spent on promoting it.
- % Change in demand / % change in promotional spending
Explaining promotional elasticity of demand results (2)
- Elastic if >1 => Business should spend more on promotion
- Not elastic if <1 => Business should NOT spend more on promotion
Def. Cross elasticity of demand
- This measures the responsiveness of demand for a product following a change in the price of another product.
- *% Change in demand for a good A / % Change in price of good B**
Explaining cross elasticity of demand results (2)
- Complementary goods: Negative results. Because the goods are bought together, if price of good B reduces, more people buy more both good B and A. e.g. Laptop and Microsoft operating system.
- Substitutes goods: Positive results. Because the goods are competing for consumer spending, when price of good B drops, demand for good B increases and good A decreases. E.g. PS and Xbox
Potential limitations of calculating elasticity (2)
- They are not reliable due to external factors. e.g) with promotional elasticity, the demand could have fallen due to competitors introducing a new product.
- However, if the results obtained are being consistent, than the date is useful to base future decisions on.
What does integrated marketing strategy mean? (2)
- Integrated with other departments. e.g. Finance - with Marketing budget
- 4 elements of the marketing mix to be integrated and supportive with each other.
Def. NPD
- New product development is the design, creation and marketing of new goods and services.
Why do businesses need NPD?
- There’s a constant need for development of new products in a fast changing markets in order to keep up to date. E.g. of such firms: technology, pharmaceutical industry, or industrial products.
What are the seven stages in the process of new product development?
- Generating new ideas
- Idea screening
- Concept of development and testing
- Business analysis
- Product testing
- Test marketing
- Commercialisation
NPD stages: Generating new ideas (5)
- New ideas can come from:
• R&D department
• Employees
• Salespeople
• Brainstorming in groups
• Adaptation to competitors ideas
NPD stages: Idea screening (1)
- To eliminate the ideas that stand the least chance of being commercially successful.
NPD stages: Development and testing (1)
- Developing the idea of the products such as it’s key features, costs, potentially consumers, production methods and etc.
NPD stages: Business analysis (2)
- This stage considers the impact of the product on the organisation itself like affect on costs, sales and profits.
- Analyse what are the expected sales revenue and market shares, and how can the prices be set (potentially from competitors).
NPD stages: Product testing (2)
- Concerns the performance of the product and whether it would meet the consumer’s expectations
- Methods for testing are: developing a prototype, testing under typical conditions, using focus groups.
NPD stages: Test marketing (Def, benefits (3) and limitations(2))
Test marketing is the launch of the product on a small scale market to test consumers’ reactions to it.
Benefits:
• Feedback from consumers can aid final decisions
• Reduced risks of the launch of the product
• Easier to identify the weakness in the product
Limitations:
• Expensive
• Competitors can observe the product and launch a copy right away
NPD stages: Commercialisation
This refers to the full scale launch of the product, which corresponds with the introduction phase of the product life cycle.
Def. R&D
Research and Development is the scientific research and technical development of new products and processes.
Importance of R&D
Generate new product possibilities which allow the business to survive and grow in rapidly changing market places.
Factors that influence the level of R&D expenditure by a business (4)
- The nature of the industry: e.g. Computer producing firms spend a lot more than hotels.
- The R&D spending plans of competitors
- The risk profile or culture of the business: e.g. whether shareholders are willing to invest for the long term benefits
- Government policies: whether grants are provided
When would products with thorough R&D fail? (4)
- Inadequate market research
- Poor marketing support
- Changes in technology makes the product outdated
- Competitors release a product that the consumers prefer
Def. Sales forecasting
Predicting future sales levels and sales trends.
How can different departments benefit from sales forecasting?
- Operations department would know how many materials to order and plan out stock levels
- Marketing department would be aware of how many products to be distributed
- Human resources can have appropriate level of staffing
- Finance could plan cash flows more accurately
Quantitative forecasting methods: Correlation (2 and 1 limit)
- Plot a graph of prices, consumer income, the weather or etc against sales.
- Identify whether there is a positive or negative correlation, and whether it is strong or weak.
• Limitation: it fails to consider other factors, such as seasonal changes.
Quantitative forecasting methods: Time-series analysis (5)
- This method is based entirely on past sales data
- These can be plotted into a graph of sales against time
- The values can be EXTRAPOLATED, meaning extending the line into the future based on the past trends.
- This is only effective if sales patterns remain stable into the future (which is unlikely).
- The values can be calculated as MOVING AVERAGES.
What do moving averages identify? (1 and 4 sub)
- Moving average identify the factors that are expected to influence future sales. These are:
- The trend
- Seasonal fluctuations
- Cyclical fluctuations
- Random fluctuations
Def. the 4 factors that influence future sales
- The trend is the underlying movement in a time series
- Seasonal fluctuations are the regular and repeated variations that occur in sales data within a period of 12 months.
- Cyclical fluctuations are variations in sales that occur over periods of time of much more than a year and are due to business cycle.
- Random fluctuations can occur at any time and will cause unusual and unpredictable sales figures.
Explanation of how to calculate moving averages
Pg. 359
Advantages (2) and Disadvantages (2) of moving averages
- Advantages:
• Can be accurate short term
• Identifying seasonal fluctuations can help with future planning - Disadvantages:
• Quite complex
• Is inaccurate for long term predictions
