30 minutes to write a marketing plan

7; Stages in the preparation of a marketing plan 8 The marketing audit 10; The marketing environment –market research 11; What is market segmentation?. 21; The product portfolio 23; Rela

30 Minutes to Write a Marketing

Plan

John Westwood

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First published in 1997

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Kogan Page Limited

British Library Cataloguing in Publication Data

A CIP record for this book is available from the British Library.

ISBN 0 7494 2363 3

Typeset by Saxon Graphics Ltd, Derby

Printed in England by Clays Ltd, St Ives plc

What is selling? 6; What is marketing? 6;

What is marketing planning? 7; Stages in the

preparation of a marketing plan 8

The marketing audit 10; The marketing environment –market research 11; What is market segmentation? 15;Information checklist 16; How to present the figures 17;SWOT analysis 19

3 Objectives, Strategies and Action Plans 21

What is a marketing objective? 21; The product

portfolio 23; Relative market growth rate and share 23;What is marketing strategy? 28; Action plans 30

4 Distribution, Promotion and Budgets 32

The distribution plan 32; The advertising and promotionsplan 37; Costs and budgets 39; Budgeting for the cost

of a marketing plan 42

Contents list 47; Introduction 47; Executive summary 49;Situation analysis 50; Marketing objectives 54;

Marketing strategies 55; Schedule of what, where and how 56; Sales promotion 57; Budgets and the profit andloss account 57; Controls and update procedures 58

6 Presenting the Plan, Follow-up and Revision 60

Presenting the plan 60; Follow up and revision 62;

Conclusion 64

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30 Minutes to Boost Your Communication Skills

30 Minutes to Succeed in Business Writing

30 Minutes to Master the Internet

30 Minutes to Make the Right Decision

30 Minutes to Prepare a Job Application

30 Minutes to Write a Business Plan

30 Minutes to Write a Marketing Plan

30 Minutes to Write a Report

30 Minutes to Write Sales Letters

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WHAT IS MARKETING

PLANNING?

A company’s management has many important roles It setsobjectives, and develops plans, policies, procedures, strate-gies and tactics It organises and co-ordinates, directs andcontrols, motivates and communicates Planning is only one

of its roles but a vital one: the company’s corporate or ness plan guides it forward

busi-The marketing plan is an important part of this overallplan The marketing planning process therefore needs to

be carried out as part of the company planning and geting process

bud-The marketing plan sets out the marketing objectives ofthe company and suggests strategies for achieving them

It does not include all the company’s objectives andstrategies There will also be production, financial andpersonnel objectives, none of which can be set in isola-tion The plan for the company comprises a number of

sub-plans including the overall company marketing plan

1

which need to be agreed and co-ordinated into one overallbusiness plan.

In turn, the marketing plan can be broken down into anumber of smaller marketing plans for individual products

or areas, which can be prepared as and when needed.This practical book includes only as much theory as isnecessary to understand the planning process As youmake your way through, you will be shown the principles

of marketing planning in a way that will make it easy foryou to put together any type of marketing plan

Increasingly, sales and marketing personnel are having

to put together individual plans for a product or area veryquickly This book is designed with this in mind You willfind that adopting and following the formal structure of theplan (shown later) will make it easier for you to order yourthoughts and the facts logically It will be easier for:

ᔢ people to follow your arguments and to see how youreached your conclusions

ᔢ you to present a professional-looking and completedocument, even from a relatively small amount of information

What is selling?

Selling is a straightforward concept which involves suading a customer to buy a product It brings in ‘today’sorders’ However, it is only one aspect of the marketingprocess

per-What is marketing?

The dictionary definition of marketing is: ‘the provision ofgoods or services to meet consumers’ needs’ In otherwords, marketing involves finding out what the customer

wants, matching a company’s products to meet thoserequirements and, in the process making a profit for thecompany Successful marketing means having the rightproduct available in the right place at the right time andmaking sure that the customer is aware of it Unlike sell-ing, it aims to bring in ‘tomorrow’s orders’.

Bringing together the abilities of the company and therequirements of the customer occurs in the ‘real world’;the ‘marketing environment’, which is not controlled byindividuals or companies, is constantly changing and must

be monitored continuously Marketing therefore meansconsidering:

ᔢ The abilities of the company

ᔢ The requirements of the customer

ᔢ The marketing environment

The abilities of the company can be managed by its ing department They can control the four main elements of

market-a compmarket-any’s opermarket-ation, often cmarket-alled ‘the mmarket-arketing mix’ Themarketing mix, or the four Ps relate to:

ᔢ The product sold (Product)

ᔢ The pricing policy (Price)

ᔢ How the product is promoted (Promotion)

ᔢ Methods of distribution (Place)

These are four controllable variables which allow a pany to come up with a policy which is profitable and sat-isfies its customers

com-What is marketing planning?

The term marketing planning is used to describe the ods of applying marketing resources to achieve marketingobjectives It is used to segment markets, identify market

meth-position, forecast market size, and plan viable marketshare within each market segment The marketing plan-ning process involves:

ᔢ Carrying out marketing research within and outside thecompany

ᔢ Looking at the company’s strengths and weaknesses

ᔢ Making assumptions

ᔢ Forecasting

ᔢ Setting marketing objectives

ᔢ Generating marketing strategies

ᔢ Defining programmes

ᔢ Setting budgets

ᔢ Reviewing the results and revising the objectives, gies or programmes

strate-Marketing planning will:

ᔢ Make better use of company resources to identify keting opportunities

mar-ᔢ Encourage team spirit and company identity

ᔢ Help the company to move towards achieving its goals.Marketing planning is a continuous process, so the planwill need to be reviewed and updated as it is implemented

Stages in the preparation of a marketing

plan

The stages in the preparation of a marketing plan areshown in Figure 1.1

Figure 1.1 The marketing planning process

Set corporate objectives

Carry out external marketing research

Carry out internal marketing research

Carry out SWOT analysis

Make assumptions

Set marketing objectives and estimate expected results

Generate marketing strategies/action plans

Define programmes including advertising/promotions plan

Set budgets Write plan Communicate plan Use control system Review and update

SITUATION ANALYSIS

Before you can decide on your marketing objectives andfuture strategies, you need to understand the position ofyour company and its products in the marketplace.Situation analysis can help you do this:

ᔢ It reviews the economic and business climate

ᔢ It considers where the company stands in its strategicmarkets and key sales areas

ᔢ It looks at the strengths and weaknesses of the pany – its organisation, its performance and its keyproducts

com-ᔢ It compares the company with its competitors

ᔢ It identifies opportunities and threats

Before you can start this process, you need to carry out amarketing audit

The marketing audit

The marketing audit is a detailed examination of the

2

company’s marketing environment, specific marketingactivities and internal marketing system It examines thecompany’s markets, customers and competitors in thecontext of the overall economic and political environment.

It involves carrying out marketing research and collectinghistorical data about your company and its products It is

an iterative process Only when you start to analyse yourown in-house data do you realise which external marketsectors you need to look at, and once you look at theexternal data you may notice applications that are smallfor your company, but larger in a market context andtherefore require further investigation

The marketing environment – market

col-in the context of the marketcol-ing of the products

In its simplest form, market research can be defined as acombination of in-house experience, sales force marketintelligence and marketing research From these sources, weextract marketing information which allows us to analyse,compare and evaluate Market research is used to:

ᔢ Give a description of the market

ᔢ Monitor how the market changes

ᔢ Decide on actions to be taken and evaluate the results

Market research data consists of primary and secondary data.

Primary data comes from primary sources, ie from the

marketplace and is obtained either by carrying out fieldresearch directly or by commissioning a consultant ormarket research company to do it for you

Secondary data is not obtained directly from fieldwork,

and market research based on secondary data sources isreferred to as desk research Desk research involves thecollection of data from existing sources, such as:

ᔢ Government statistics (from the Central Statistical Office)

ᔢ Company information (from Companies House or tories such as Kompass or Kelly’s)

direc-ᔢ Trade directories

ᔢ Trade associations

ᔢ Ready-made reports (from companies such as Keynote,Euromonitor, Mintel, and Frost & Sullivan)

The market research information for your marketing plan

will consist of market information and product information.

Market information needs to cover:

ᔢ The market’s size How big is it?

How is it segmented/structured?

ᔢ Its characteristics Who are the main customers?

Who are the main suppliers?What are the main products sold?

ᔢ The state of the Is it a new market?

What types of sales promotion?

ᔢ Financial Are there problems caused by

taxes or duties?

Import restrictions?

ᔢ Legal Patent situation

Product standardsLegislation relating to agentsTrademarks/copyrightProtection of intellectual property (designs/software, etc)

ᔢ Developments What new areas of the market are

developing?

What new products are developing?

Is new legislation or regulation likely?

Product information relates to your own company, your

competitors and the customers:

ᔢ Potential customers Who are they?

Where are they located?

Who are the market leaders intheir fields?

ᔢ Your own company Do existing products meet

customers’ needs?

Is product development necessary?Are completely new productsrequired?

What would be the potential of anew product?

How is your company perceived inthe market?

ᔢ Your competitors Who are they?

How do they compare with yourcompany in size?

Where are they located?

Are they owned by key potentialcustomers?

Do they operate in the samemarket sectors as you?

What products do theymanufacture/sell?

How does their pricing comparewith your own?

What sales/distribution channels

to get relevant statistics from the Central Statistical Officeand obtain UK competitors’ annual accounts fromCompanies House

Figure 2.1 shows the type of information that a pany could produce, using information from these sourcestogether with its knowledge of its own sales

com-Internal market research

As well as external market research, your company has awealth of data that is invaluable in the preparation of amarketing plan There is likely to be so much data that youcannot easily see which information is the most important.Often data is not available in the right form You may haveoverall sales data, but not data itemised for individualproduct lines or market segments

The relevant historical data is basically sales/order dataseparated and analysed in such a way that it reflects thekey market segments into which you sell your products

What is market segmentation ?

Different customers have different needs They do not allrequire the same product or product benefits, and not allcustomers will buy a particular product for the same rea-sons Market segmentation allows you to consider themarkets you are actually in and the markets you should be

in It is useful to split your customer base up into groups ofcustomers who all have similar needs Each of thesegroups constitutes a market segment

For consumer goods and services, it is usual to definemarket segments by using methods of classification whichseparate consumers by socio-economic group, age, sex,occupation or region

The marketing of industrial goods and services is ent, because the customer is usually another company or agovernment department The number of customers is likely

differ-to be closer differ-to 10,000 than 10 million and may only be afew hundred in the case of suppliers to power stations,coal mines, etc The main ways of defining market seg-ments here are:

ᔢ By industry or industry sub-sector

Information checklist

It is useful to prepare an information checklist for a keting plan before you start to collect data The exact detailwill vary depending on the scope of your plan, but itshould include details of the segmentation that you wantfor sales, the split of your customer base and competitoractivity/market shares

Also unit sales:

ᔢ Numbers of units by model/size

2 Customers

Total number of customers by:

ᔢ Sales area

ᔢ Products bought

ᔢ Industry sector, eg food/water/chemicals

ᔢ Key customers, ie top 40 by sales turnover

3 Competition

ᔢ Who are the competitors for each product group?

ᔢ What are the market shares for each product for eachcompetitor?

How to present the figures

Depending on the scope of the plan, the sales data may besplit into separate tables geographically, by product, byindustry or under all of these categories

The figures can be easily prepared on computer sheets such as Lotus 1–2–3 or Excel, which allow the dataentered into the spreadsheet tables to be displayed graphi-cally as well It is usual when producing tables of historicaldata on a spreadsheet to extend the form layout to includecolumns for the years which the marketing plan will cover.Collect and present information going back two or three fullyears together with this year’s sales You should show mar-gin information relating to those sales where it is available.You should also adjust figures for inflation and have themavailable in both their actual and adjusted forms Thecolumns for future years will remain blank for now as the

spread-current task is to record historical and spread-current sales data,but it makes it easier later on to project sales figures so thatcomparisons can be made and trends can be analysed.Examples of how the figures could be presented areshown in Figures 2.2 and 2.3.

The profitability of sales is very important It is therefore

vital also to show the margins being made on the sale ofdifferent products This is shown in Figure 2.4

This should be broken down to provide more detailedinformation for each of the main geographical areas This information could also be displayed graphically

The Equipment Manufacturing Company: Sales

SWOT analysis

The key process used in situation analysis is SWOT sis SWOT stands for:

analy-‘Strengths and Weaknesses as they relate to our

Opportunities and Threats in the marketplace.’

The strengths and weaknesses refer to the company and itsproducts, whereas the opportunities and threats are usu-ally taken to be external factors over which your companyhas no control SWOT analysis involves understanding andanalysing your strengths and weaknesses and identifyingthreats to your business as well as opportunities in themarketplace You can then attempt to exploit yourstrengths, overcome your weaknesses, grasp your oppor-tunities and defend yourself against threats SWOT analysisasks the questions that will enable you to decide whetheryour company and the product will really be able to fulfilyour plan and what the constraints will be

The Equipment Manufacturing Company: Sales

In carrying out SWOT analysis it is usual to list thestrengths, weaknesses, opportunities and threats on thesame page This is done by dividing the page into foursquares and entering strengths and weaknesses in the topsquares and opportunities and threats in the bottomsquares.

The number of individual SWOTs will depend on thescope of your plan First, carry out a SWOT on your com-pany and its organisation Then do the same for your maincompetitors and for your products, geographical areas andthe market segments covered by your plan An example of

a SWOT analysis is shown in Figure 2.5

Now we are ready to move on to setting objectives anddeciding strategies

Strengths Weaknesses

– Part of large UK group – Low level of sales in UK

– Good image – quality company – Thought of as ‘old fashioned’ – Good resources – financial – Few marketing staff

– technical – High level of export sales

– Parent company is investing – Low-priced products from

in new marketing department the Far East

– New group R & D facility – Low-priced products from – To develop new products the USA

– To open low cost factory in Asia

Figure 2.5: Company SWOT analysis

STRATEGIES AND ACTION PLANS

Having carried out your situation analysis, you are in aposition to set your marketing objectives This is the mostimportant part of preparing a marketing plan

What is a marketing objective?

Objectives are what we want to achieve; strategies are how we get there.

A marketing objective concerns the balance between

prod-ucts and their markets: it relates to which prodprod-ucts we want to sell into which markets The means of achieving

these objectives, using price, promotion and distribution,are marketing strategies At the next level down there will

be personnel objectives and personnel strategies, ing objectives and advertising strategies, etc Further down

advertis-3

still there are tactics, action plans and budgets – all toenable us to achieve our objectives Marketing objectivesrelate to any of the following:

ᔢ Selling existing products into existing markets

ᔢ Selling existing products into new markets

ᔢ Selling new products into existing markets

ᔢ Selling new products into new markets

Marketing objectives should be definable and quantifiable

so that there is an achievable target at which to aim Theyshould be defined so that, when your marketing plan isimplemented, actual performance can be compared withthe objective They should be expressed in terms of values

or market shares, and avoid vague terms such as increase,improve or maximise

The following are examples of marketing objectives:

ᔢ To increase sales of the product in the UK by 10 per centper annum in real terms each year for the next threeyears

ᔢ To increase sales of the product worldwide by 30 percent in real terms within five years

ᔢ To increase market share for the product in the USAfrom 10 to 15 per cent over two years

All plans should include marketing objectives for the lowing:

fol-ᔢ Sales turnover for the period of the plan by product andmarket segment

ᔢ Market share for the period of the plan by product andmarket segment

ᔢ Gross profit on sales

The product portfolio

Since marketing objectives relate to products and markets,

it is important to understand your present position withregard to both before setting the objectives of your market-ing plan The growth and decline of all products follows alife-cycle curve which can be represented as in Figure 3.1

Ideally, your company will have a portfolio of products all

at different stages in their life-cycle, so that balancedgrowth can be achieved and risks minimised

Relative market growth rate and share

In any market the price levels of the major players tend to

be broadly similar and in a stable market they will ally converge This does not mean that all these companieswill make the same level of profit If one company has a

Figure 3.1: Product life-cycle curve

very large market share, it will benefit from economies ofscale and will have lower costs and so is likely to have thehighest profit margin It is therefore more able to with-stand a price war Its market share also indicates its ability

to generate cash

Market share is very important and your aim should be to achieve market dominance wher- ever possible.

Cash flow is the most important factor in considering your

product portfolio, and your company’s ability to generatecash will be dependent to a large extent on the degree ofmarket dominance that you have over your competitors.Some years ago the Boston Consulting Group developed amatrix for classifying a portfolio of products based on rela-tive market shares and relative market growth rates TheBoston Matrix is now widely used by companies inanalysing their product portfolio

The products are colourfully described as:

Relative market share is the ratio of your market share tothe market share of your biggest competitor This indicatesthe level of market dominance that you have over yourcompetitors

Stars – high market share/high market growth (cash

neutral)

Cash cows – high market share/low market growth

(cash generation)

Question marks – low market share/high market

growth (cash drain)

Dogs – low market share/low market growth (cash

neutral)

Market growth rate is important for two reasons In afast-expanding market sales can grow more quickly than in

a slow-growing or stable market In increasing sales, theproduct will absorb a high level of cash to support increas-ing advertising, sales coverage, sales support and possiblyeven investment in additional plant and machinery For thepurposes of marketing planning, high market growth isnormally taken as 10 per cent per annum or more

The products are entered into the quadrants of a matrix

Figure 3.2: Ideal product development sequence

Question marks can be either newly-launched products

which have not yet fulfilled expectation, or products thatare declining and need further evaluation as to their long-term viability

Dogs have low market share and are generally

unprof-itable These products are the ones you should considerdropping from the product portfolio

Stars incur high marketing, research and development

costs, but also contribute considerably to profits They are,broadly speaking, neutral from the point of view of cashgeneration

Cash cows are mature products with a high market

share but low market growth They generate high profitsand require only a small amount of marketing investmentand no research and development spending to keep themwhere they are

Figure 3.3 shows an example of a product portfoliomatrix

The Type S filters and ball valves are both cash cows,

but ball valves are declining in both relative market share

and becoming less and less profitable Packages are

ques-tion marks, but will become stars if they continue to grow

relative market share as the market for them expands

Type A and Type K filters are both moving into the star

sec-tor, with Type A a little ahead of Type K

Setting objectives for a marketing plan is not an easytask Figures for sales turnover or market share cannot just

be selected at random It is an iterative process wherebyobjectives are set, strategies and action plans are developedand it is then decided whether the planned objectives areimpossible, achievable or easy The objectives are then reap-praised and, should they be changed, the strategies andaction plans would also need to be re-examined

We can use gap analysis to decide how realistic ourobjectives are

The gap is broken down into its constituent parts.Inflationary growth (price increase) and volume growth If youare looking for growth of £500,000 a year and know that price

increase will contribute £200,000, you will need to have anumber of objectives which will generate another £300,000 ofvolume growth Your objectives should close the gap and alsoleave something in reserve, since not all strategies and actionplans will bring in the full return that we expect from them.

What is a marketing strategy?

Marketing strategies are the means by which marketingobjectives will be achieved It is important to understand

what strategy is and how it differs from tactics Strategies

are the broad methods chosen to achieve specific tives and describe the means of achieving these objectiveswithin the required time-scale They do not include thedetail of the individual courses of action that will be fol-

objec-lowed on a day-to-day basis: these are tactics.

Marketing strategies relate to general policies for the following:

ᔢ Products – changing product portfolio/mix

– dropping, adding or modifying products– changing design, quality or performance– consolidating/standardising

ᔢ Price – changing price, terms or conditions for

particular product groups in particular market segments

– skimming policies– discount policies

ᔢ Promotion - changing selling/salesforce organisation

– changing advertising or sales promotion– changing public relations policy

– increasing/decreasing exhibition coverage

ᔢ Distribution – changing channels

– improving service

There are a number of different types of strategy:

A useful way of looking at the types of strategy available is

to use a matrix developed by Ansoff, as shown in Figure 3.4

It can be seen from this matrix that the least risky way to try

to expand your business is in the areas you know best, ieusing your existing products within your existing markets

Pricing strategies

Of the many types of pricing strategies and tactics that can

be considered, most can be broadly classified as eitherskimming or penetration policies

Defensive strategies, designed to prevent loss of

exist-ing customers

Developing strategies, designed to offer existing

cus-tomers a wider range of your products or services

Attacking strategies, designed to generate business

through new customers

Expand existing market with existing product

Sell present product in new markets

High risk New product

Develop new products for existing markets

Develop or acquire new products to sell into new markets

Figure 3.4: Ansoff Matrix – the risks of various strategies

Skimming – This involves entering the market at a high

price level and ‘skimming’ off as much profit as possible

As competition enters the market, the price level would beadjusted as necessary

Penetration.The opposite of skimming: a company

delib-erately sets the price low A penetration policy encouragesmore customers to purchase the product, which increasesthe company’s sales turnover and also its market share

Action plans

Once you have selected the outline strategies and tactics toachieve your marketing objectives, you need to turn thesestrategies into programmes or action plans that will enableyou to give clear instructions to your staff Each actionplan should include:

ᔢ Current position – where you are now

ᔢ Aims – what to do/where do you want to go?

ᔢ Action – what you need to do to get there

ᔢ Person responsible – who will do it?

compo-Each action could be broken down into a number ofparts For example, in the preparation of the brochurethere would be a number of stages, including:

ᔢ Having photographs taken

ᔢ Preparation of technical information by engineeringdepartment

ᔢ Preparation of preliminary layout

to be communicated to those who have to carry them out.

Action plan Department: sales

Current

Aim position Action By Start Finish Cost

Carry out Mailing list out Update list ILH 1.1.X6 1.3.X6 £200 mail shot of date

No standard Prepare JDT 1.2.X6 1.3.X6 £25 letter letter

No brochure Prepare NBF 1.11.X5 1.3.X6 £3000

new brochure Send out ILH 1.3.X6 1.4.X6 £500

Figure 3.5: Presentation of an action plan

The distribution plan

The physical distribution of goods is only one aspect ofdistribution as defined by marketing planners Distributioninvolves:

ᔢ Marketing channels

ᔢ Physical distribution

ᔢ Customer service

4