Unit 3, Chapter 18: Marketing planning

Question 1

Define marketing plan

Answer 1

• 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

Question 2

How marketing plan differs from marketing mix? (4)

Answer 2

Because it includes:

1. The marketing objectives and how they help the business achieve its overall objectives
2. The resources required to achieve marketing objectives
3. The research required to achieve the marketing objectives and how the results of this research may change the objectives
4. How the 4ps can be used to achieve the marketing objectives

Question 3

What are the key contents of a marketing plan? (6)

Answer 3

1. Purpose and mission
2. Situational analysis
3. Marketing objectives and strategy
4. Marketing mix
5. Marketing budget
6. Executive summary and time scale

Question 4

Key contents of marketing plan: Purpose and mission

Answer 4

• Mission:
  
  • Providing the audience
    
    • e.g) potential financial investors
• The purpose of the plan - is it to prepare the business for the launch of a new product.

Question 5

Key contents of marketing plan: Situational Analysis (4)

Answer 5

1. To identify where the firm ‘is’ now: find current strengths and weaknesses, market shares and etc.
2. Done through extensive market research
3. Done to avoid misdirecting the plan
4. 5 main areas: Current product analysis, Target market analysis, Competitor analysis, PEST analysis, SWOT analysis.

Question 6

Key contents of marketing plan: Marketing objectives and strategy (1-3) (2-2)

Answer 6

1. 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.
2. 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?

Question 7

Key contents of marketing plan: Marketing mix tactics

Answer 7

A brief:

1. Product: Explains key features of the products like branding and packaging.
2. Price: Making pricing decisions based on the price elasticity, costs, competitors etc.
3. Promotion: Advertising, sales promotion, public relations and personal selling.
4. Place: Shows distribution plan and channels and the outlets that sell the products.
5. The marketing mix has to be fully integrated to be effective.

Question 8

Key contents of marketing plan: Marketing budget

Answer 8

• The plan should lay out the spending requirements necessary to meet the plan’s overall objectives.

Question 9

Key contents of marketing plan: Executive summary and timescale

Answer 9

• Shows the overall summary and the timescale over which it will be introduced.

Question 10

Benefits of a Marketing plan (3)

Answer 10

1. Help to convince potential financial investors that the business plan is sound and profitable.
2. Reduces risks when new strategies are introduced.
3. 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).

Question 11

Potential limitations of a marketing plan (4)

Answer 11

1. Complex, costly and time consuming
2. Business with lack of management expertise cannot make up the plan
3. In fast changing markets, the plan may be outdated before it is published.
4. Managers who have put a lot of effort into the plan may not want to change it -> inflexibility can damage business’s prospects

Question 12

Types of elasticity of demand (4)

PIPC

Answer 12

1. Price elasticity of demand (done in AS)
2. Income elasticity of demand
3. Promotional elasticity of demand
4. Cross elasticity of demand

Question 13

Def. Income elasticity of demand

Answer 13

• 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**

Question 14

Explain income of elasticity of demand results (3)

Answer 14

1. Superior goods: Negative elasticity of demand (<0). Demand rises and as income falls, and vice versa. e.g. Second hand clothing.
2. Normal goods: >1 elasticity of demand. As income falls, demands falls and vice versa. e.g. Branded sneakers.
3. Necessity goods: Between 0 and 1. Demand usually stays the same even if consumer incomes rises or falls. e.g. salt.

Question 15

Def. Promotional elasticity of demand

Answer 15

• 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

Question 16

Explaining promotional elasticity of demand results (2)

Answer 16

1. Elastic if >1 => Business should spend more on promotion
2. Not elastic if <1 => Business should NOT spend more on promotion

Question 17

Def. Cross elasticity of demand

Answer 17

• 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**

Question 18

Explaining cross elasticity of demand results (2)

Answer 18

1. 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.
2. 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

Question 19

Potential limitations of calculating elasticity (2)

Answer 19

• 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.

Question 20

What does integrated marketing strategy mean? (2)

Answer 20

1. Integrated with other departments. e.g. Finance - with Marketing budget
2. 4 elements of the marketing mix to be integrated and supportive with each other.

Question 21

Def. NPD

Answer 21

• New product development is the design, creation and marketing of new goods and services.

Question 22

Why do businesses need NPD?

Answer 22

• 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.

Question 23

What are the seven stages in the process of new product development?

Answer 23

1. Generating new ideas
2. Idea screening
3. Concept of development and testing
4. Business analysis
5. Product testing
6. Test marketing
7. Commercialisation

Question 24

NPD stages: Generating new ideas (5)

Answer 24

• New ideas can come from:
  • R&D department
  • Employees
  • Salespeople
  • Brainstorming in groups
  • Adaptation to competitors ideas

Question 25

NPD stages: Idea screening (1)

Answer 25

* To **eliminate the ideas** that stand the **least chance o**f being **commercially successful.**

Question 26

NPD stages: Development and testing (1)

Answer 26

* **Developing the idea** of the **products** such as it's **key features, costs, potentially consumers**, production methods and etc.

Question 27

NPD stages: Business analysis (2)

Answer 27

* 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).

Question 28

NPD stages: Product testing (2)

Answer 28

* **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.**

Question 29

NPD stages: Test marketing (Def, benefits (3) and limitations(2))

Answer 29

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** • **Easie**r to **identify** the **weakness in the product** **Limitations:** • Expensive • **Competitors** can **observe the produc**t and **launch a copy righ**t away

Question 30

NPD stages: Commercialisation

Answer 30

This refers to the **full scale launch** of the product, which **corresponds with the introduction phase** of the product life cycle.

Question 31

Def. R&D

Answer 31

Research and Development is t**he scientific research** and **technical development** of new **products** and **processes.**

Question 32

Importance of R&D

Answer 32

**Generate new product possibilitie**s which **allow** the business t**o survive and grow** in rapidly changing market places.

Question 33

Factors that influence the level of R&D expenditure by a business (4)

Answer 33

1. The **nature** of the industry***: e.g. Computer producing firms spend a lot more than hotel***s. 2. The R&D spending **plans of competitors** 3. The **risk profile** or **culture of the busines**s: ***e.g. whether shareholders are willing to invest for the long term benefits*** 4. Government policies: **whether grants are provided**

Question 34

When would products with thorough R&D fail? (4)

Answer 34

1. **Inadequate** market research 2. **Poor marketing support** 3. **Changes in technology** makes the product **outdated** 4. Competitors **release** a **product** that the consumers prefer

Question 35

Def. Sales forecasting

Answer 35

Predicting future sales levels and sales trends.

Question 36

How can different departments benefit from sales forecasting?

Answer 36

1. **Operations department** would know how many **materials to order** and **plan out stock levels** 2. **Marketing departmen**t would be **aware** of **how many** products to be distributed 3. **Human resources** can have **appropriate level of staffing** 4. **Finance** could plan **cash flows** more **accurately**

Question 37

Quantitative forecasting methods: Correlation (2 and 1 limit)

Answer 37

1. **Plot a graph** of **prices, consumer income, the weather** or etc **against sales.** 2. **Identify** whether there is a **positive or negative** **correlation**, and whether it i**s strong or weak.** • Limitation: it **fails** to **consider other factors**, such as **seasonal changes.**

Question 38

Quantitative forecasting methods: Time-series analysis (5)

Answer 38

1. This method is **based entirely on past sales data** 2. These can be **plotted** into a **graph of sales against time** 3. The **values** can be EXTRAPOLATED, meaning **extending the line** into the f**uture based** on the **past trends**. 4. This is **only effective** if **sales patterns remain stable** into the **future** (which is unlikely). 5. The values can be calculated as MOVING AVERAGES.

Question 39

What do moving averages identify? (1 and 4 sub)

Answer 39

1. Moving average i**dentify the factors** that are **expected to influence future sales.** These are: 1. The trend 2. Seasonal fluctuations 3. Cyclical fluctuations 4. Random fluctuations

Question 40

Def. the 4 factors that influence future sales

Answer 40

1. **The trend** is the **underlying movement** in a **time series** 2. **Seasonal fluctuations** are the **regula**r and **repeated variations** that occur in **sales data within a period of 12 months.** 3. **Cyclical fluctuations** are **variations in sales** that occur over **periods of time** of much **more than a year** and are due to **business cycle.** 4. R**andom fluctuations** can occur **at any time** and will cause **unusua**l and **unpredictable sales** figures.

Question 41

Explanation of how to calculate moving averages

Answer 41

Pg. 359

Question 42

Advantages (2) and Disadvantages (2) of moving averages

Answer 42

* Advantages: • Can be **accurate short term** • Identifying **seasonal fluctuations** can help with **future planning** * Disadvantages: • Quite **complex** • Is i**naccurate** for **long term** predictions