Flashcards in UNIT 3. Chapter 18. Marketing planning Deck (41)
Def. Marketing plan
It is a detailed, fully researched written report on marketing objectives and the marketing strategy to be used to achieve them.
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
Providing the audience, for example potential financial investors, 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
• 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
• Have to be SMART to the firm
• It can be broken down into specific targets for each section
• Gives clear and measurable objectives which gives a sense of direction and allows measurement of progress.
• 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
• 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)
• In order 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)
• 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 of >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, is 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
They are not reliable due to external factors. For example, 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
• Four elements of the marketing mix to be integrated and supportive with each other.
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
NPD stages: Generating new ideas
New ideas can come from:
• R&D department
• Brainstorming in groups
• Adaptation to competitors ideas
NPD stages: Idea screening
To eliminate the ideas that stand the least chance of being commercially successful.
NPD stages: Development and testing
Developing the idea of the products such as it's key features, costs, potentially consumers, production methods and etc.
NPD stages: Business analysis
This stage considers the impact of the product on the organisation itself like affect on costs, sales and profits. What are the expected sales revenue and market shares, and how can the prices be set (potentially from competitors).
NPD stages: Product testing
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.
• Feedback from consumers can aid final decisions
• Reduced risks of the launch of the product
• Easier to identify the weakness in the product
• 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.