7.2 - Marketing Planning Part 1

7.2 - Marketing Planning Part 1 

Let's start with the stereotype of marketing: people sitting in a conference debating what colors or taglines to use for their next campaign, what celebrities or influencers to contact, hosting glamorous events to attract customer attention. If these are the images that first come to your mind after thinking “marketing”, congratulations you are too (like most of us) victims of successful marketing planning. Yes, marketing requires a lot of numbers, data crunching, surveys, etc. And it is all part of a process: marketing planning.

Marketing planning is the process of formulating appropriate strategies and preparing marketing activities to meet marketing objectives. A market plan is often a formal written document which outlines in detail how the company intends to achieve marketing objectives derived from the broader corporate objectives. Effective market planning consists of a clear awareness of market trends, competitors’ actions and customers’ demands. Then, it details actions programmes, budgets, sales forecasts and strategies. 

A simple rule of thumb to approach marketing planning is the 7Ps (a longer version of the 4Ps you might already heard about). 

Product

A right product answering the consumer’s demand. It can be a new one, an existing product  or an adaptation of an existing product.

Price

Finding the right middle ground so that the product remains affordable while not appearing too cheap which can lead the consumer to think it is a low quality product. All this while ensuring profit of course.

Promotion (advertising and packaging) 

This is about reinforcing the brand image and convincing the consumers your product is the right one to buy. 

Place (where/how the product will be sold to consumers)

How the product is distributed to the consumers, where and when should a company make its product available in order to sell more effectively.

The other 3Ps are largely related to marketing services 

People

You can think about this as the relationship between the company/product with the consumers. Selling services requires a positive interaction with the consumer: this is particularly important to the tertiary industry where customer service and experience allows for the brand to maintain a stable clientele. 

Process

These are automatic processes in place to satisfy customers’ wants reliably and consistently. An example is banks replacing out-of-date debit cards without the consumer having to ask. 

Physical evidence 

Transparency, allowing the customer to see the quality of the service being provided, will reduce the “risk factor” in the customer, leading them more prone to buy the service. For example, a polished reception area in a hotel would raise appropriate expectations and attraction in the mind of the customer. 

In order to assess how to answer the 7Ps accordingly, the company must do research. Moreover, they must assess which of the Ps may need more attention to depending on their target audiences or the product being sold. This is called a marketing mix: key marketing decisions complement each other and work together to give customers a consistent message about the product. 

1. The value of marketing audit 

A regular review of the cost and effectiveness of a marketing plan including an analysis of internal and external influences. Its purpose is to alert management to the progress being made so that changes may be made in the marketing mix if necessary. The marketing audit consists of three features: 

• analysis of business’s internal strengths and weaknesses, their progress/fallbacks since the last audit

• analysis of external opportunities and threats, their progress since the last audit (new entry of a rival product?)

These first two stages require SWOT (strengths, weaknesses, opportunities, threats) and PEST (political, economic, social, technological factors) analyses. 

• review progress of the current marketing plan, including:

• market share— compare with  objectives set at the beginning of the plan 

• actual sales performance compared with the original sales budgets

• whether the company is achieving its SMART objectives (aka objectives that are specific, measurable, achievable, relevant and time-bound). 

Some theoretical framework: PORTER’S FIVE FORCES ANALYSIS

Michael Porter suggested a framework that analyses an industry as being influenced by 5 forces. He suggested that management, attempting to establish competitive marketing over rivals, can use this framework to understand the industry context in which the business operates and take appropriate action. In other words, this can be used for market analysis. 

The following figure details the factors when each threat is greatest. 

1. threat of entry: the ease with which other firms can join the industry and compete with existing businesses.

2. Buyer power refers to the influence customers have over producers in determining prices and terms. According to an article by the Stanford Institute for Economic Policy Research, the rise of large retailers like Wal-Mart has highlighted how powerful buyers can use their market position to pressure suppliers into lowering prices, often below competitive levels. This happens in markets where few buyers (oligopsony) dominate many smaller sellers. This kind of buyer power can shift profits away from suppliers and raises questions about fair competition, much like monopoly power does on the selling side. Historically, firms like A&P have faced antitrust action for using such power unfairly, and regulators like the FTC continue to investigate similar behavior in sectors like e-commerce, healthcare, and retail. In short, buyer power becomes significant when buyers are large and concentrated enough to influence the terms of trade, raising concerns for competition authorities about its impact on markets and suppliers.

https://siepr.stanford.edu/publications/working-paper/buyer-power-and-economic-policy

3. supplier power: vendor's ability to dictate terms to buyers, influence pricing, limit supply, or exert pressure that can affect an organization's purchasing decisions and profitability

4. threat of substitutes: substitutes products in other industries, in other words companies outside the industry offer more attractive and/or lower cost products. 

5. competitive rivalry: the sum up of the 4 previous forces, determining the level of competition within the industry.