IB BUsiness MAnagement:
4.2 Marketing Planning

Marketing planning is the systematic process of devising marketing objectives and appropriate marketing strategies to achieve these goals. It requires the collection and analysis of information about a particular market, such as market research data on existing and potential consumers. The typical marketing process involves a marketing audit, marketing research and marketing objectives.

Key Learning Outcomes:

  • Apply the elements of the marketing mix to given situations
  • Discuss the effectiveness of a marketing mix in achieving marketing objectives and evaluate marketing strategies
  • Discuss the ethics of marketing
  • Explain the value of a marketing audit
  • Analyse the role of market research
  • Evaluate the different methods of market research
  • Understand segmentation, targeting and consumer profiling
  • Differentiate between niche and mass markets
  • Explain the importance of having a unique selling point
  • Discuss how organisations can differentiate themselves and their products
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Marketing is a LOT more than just effective promotion

Marketing Planning

Marketing planning: The process of formulating appropriate strategies and preparing marketing activities to meet marketing objectives.

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Effective market research precedes an effective marketing mix

The Marketing Mix - SIVA

Marketing planning begins with market research to determine PRODUCT (Solution), PROMOTION (Information), 
PRICE (Value) and PLACE (Access).  S.I.V.A.
The marketing mix is made up of seven interrelated decisions − the 7Ps. The four key ones are product, price, promotion (including advertising and packaging) and place (where and how a product will be sold to consumers).

The other 3Ps largely relate to marketing services – people, process and physical evidence.

The Marketing Mix:
  1. Consumers require the right product. This might be an existing product, an adaptation of an existing product or a newly developed one.
  2. The right price is important too. If set too low, then consumers may lose confidence in the product’s quality; if too high, then many will be unable to afford it.
  3. Promotion must be effective – telling consumers about the product’s availability and convincing them that ‘your brand’ is the one to choose. Packaging is often used to reinforce this image.
  4. Place refers to how the product is distributed to the consumer. If it is not available at the right time in the right place, then even the best product in the world will not be bought in the quantities expected.
  5. Selling services successfully requires people who can interact positively with customers and create the correct impression to encourage them to return. This is particularly relevant in the hotel and restaurant industry.
  6. The processes that a business has in place to satisfy customers’ wants reliably and consistently form an important part of marketing services. For example, banks replacing an out-of-date debit card without the customer having to ask for one.
  7. Physical evidence means allowing customers to see for themselves the quality of the service being provided. This will reduce the element of risk in buying a service as opposed to a tangible product. For example, a clean and well-presented reception area in a hotel would raise appropriate expectations in the mind of the customer.

The Marketing Plan

A marketing plan is often a formal written document which outlines in detail how the business unit intends to achieve the marketing objectives derived from the corporate objectives.

Effective market planning is nearly always based on clear awareness of market trends, competitors’ actions and consumer wants so market research is vital. The plan will then contain detailed action programmes, budgets, sales forecasts and strategies – and these strategies will be based on adaptations of the firm’s marketing mix.
Marketing mix: The key decisions that must be taken in the effective marketing of a product.
Not all of the 7Ps have the same degree of significance in every case. It is vital that these elements fit together into a coherent and integrated plan. An appropriate marketing mix will ensure that these marketing decisions are interrelated. They must be carefully coordinated to make sure that customers are not confused by conflicting messages being given about the good or service being sold.

Coordinated marketing mix: Key marketing decisions complement each other and work together to give customers a consistent message about the product.

If just one part of the marketing is inconsistent or does not integrate with the rest, it may lead to the failure of even the best marketing plan. The most appropriate marketing mix decisions will therefore be:
  • Based on marketing objectives that are affordable within the marketing budget
  • Coordinated and consistent with each other
  • Targeted at the appropriate consumers.

The Marketing Mix explained

Mind Map: Marketing Mix

Marketing Objectives

Marketing objectives: the goals set for the marketing department to help the business achieve its overall objectives.

Marketing strategy: A marketing strategy is a long-term plan established for achieving marketing objectives.
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Common marketing objectives

Marketing Objectives
- Summary Notes

Consumer Profiling

Market segment: A sub-group of a whole market in which consumers have similar characteristics.

Market segmentation: Identifying different segments within a market and targeting different products or services to them.

Consumer profile: A quantified picture of consumers of a firm’s products, showing proportions of age groups, income levels, location, gender and social class.

Segmentation is sometimes referred to as differentiated marketing. Instead of trying to sell just one product to the whole market as in mass marketing, different products are targeted at different segments. This is a form of niche marketing. To be effective, firms must research and analyse the total market carefully to identify the specific consumer groups or segments that exist within it.

Some examples of market segmentation:
Computer manufacturers, such as Hewlett Packard, produce PCs for office and home use, including games, but also make laptop models for business people who travel.
  • Coca-Cola not only makes the standard cola drink but also Diet Coke for dieters and flavoured drinks for consumers with particular tastes.
  • Renault, the car maker, produces several versions of its Mégane model, such as a coupe, saloon, convertible and ‘people carrier’ – all appealing to different groups of consumers.

Sometimes firms only market their goods or services to one segment and deliberately do not aim to satisfy other segments. Gap is a clothing retailer that aims only at the youth market, Nike shoes are only for sports use and Coutts Bank only offers banking services to the seriously rich. These businesses make a virtue out of concentrating on one segment and developing an image and brand that suits that segment.

Market Segmentation Explained

Positioning

Before targeting a niche market, businesses often analyse consumers’ perceptions of existing brands. This is called positioning the product by using a technique such as market mapping. 
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A positioning map for brands in the clothing market

Corporate Image

Corporate image: Consumer perception of the company behind a brand.

In a competitive business climate many businesses actively work to create and communicate a positive image to their customers and other stakeholders. This helps to build a good reputation, has a positive impact on sales and makes the successful launch of new products easier to achieve. 

Segmentation and Differentiation

Marketing Segmentation

Market segmentation: The process of splitting a market into distinct groups of buyers in order to better meet their needs. 

The main methods of market segmentation are based on demographic, geographic and psychographic factors.

Market Segmentation
- Summary Notes

Consumer Segmentation

Identifying Different Consumer Groups

Successful segmentation requires a business to have a very clear picture of the consumers in the target market it is aiming to sell in. This is called the consumer profile.

The main characteristics of consumers contained in a consumer profile are income levels, age, gender, social class and region. Marketing mix decisions need to be appropriate for the consumer profile of the target market.

A well-targeted product will need less advertising and promotional support than one which does not really meet the needs of the consumers that it is aimed at.

Target market: The market segment that a particular product is aimed at. 

Markets may be segmented in a number of different ways. The three commonly used bases for segmentation are shown below:
  • Geographic differences
  • Demographic differences
  • Psychographic factors

Advanced Segmentation

Positioning explained

Unique Selling Point (USP)

Unique selling point/proposition (USP): Differentiating factor that makes a company’s product unique, designed to motivate customers to buy.

Unless a business can pinpoint what makes its product unique in a world of homogeneous competitors, its sales efforts will not be targeted effectively. Customers are often attracted towards goods or services that offer a distinctive image, service, feature or performance. Establishing a USP is about differentiating a company from its competitors.

USPs can be based on any aspect of the marketing mix. For example:
  • Product: Dyson’s vacuum cleaners offer ‘dual cyclone technology’ that is unique (and patented) and the company has become the world number two manufacturer of vacuum cleaners in just 20 years.
  • Price: ‘Never knowingly undersold’ is the classic advertising slogan for the John Lewis Partnership’s department stores in the UK. The retailer checks and matches its high street competitors’ prices regularly, both at national and local level. The company achieved 10% sales growth in the UK in 2009 despite the most severe economic recession for 60 years.
  • Place: Dell became the first computer manufacturer to focus almost exclusively on internet sales. Keeping its costs down allowed it to offer competitive prices.
  • Promotion: ‘When it absolutely, positively has to be there overnight’ (FedEx courier service) is one of the most famous promotional slogans of recent years. It helped to establish in customers’ minds the unique quality of service that this company claimed to offer.

 USP (or Value Proposition)

Niche marketing

Niche marketing: Niche marketing targets specific and well-defined market segments (i.e., niche markets). Concentrating all marketing efforts on a small but specific and well defined segment of the population. 

Niches do not 'exist' but are 'created' by identifying needs, wants, and requirements that are being addressed poorly or not at all by other firms, and developing and delivering goods or services to satisfy them. 

As a strategy, niche marketing is aimed at being a big fish in a small pond instead of being a small fish in a big pond. 

Mass Marketing

Mass marketing: Mass marketing is an attempt to appeal to an entire market with one basic marketing strategy using mass distribution and mass media. 

It is also called undifferentiated marketing because this is a strategy that ignores targeting individual market segments. Different market segments are targeted with the same blanket approach (for example, a television promotion will reach many different market segments), usually to maximise sales volume.

Most businesses have various targeting strategies, often combining mas and niche marketing strategies.

Advantages and limitations of niche and mass Marketing

The PARADOX of choice

Differentiation

Differentiation: Differentiation is the process of distinguishing a product or business from competitors in the market or industry.

Product differentiation: Product differentiation is the marketing process that showcases the differences between products. Differentiation looks to make a product more attractive by contrasting its unique qualities with other competing products. Successful product differentiation creates a competitive advantage for the seller, as customers view these products as unique or superior.

Differentiation - summary notes

Marketing Planning: Case Study I

Marketing Planning: Case Study II

Marketing 4.2 Marketing Planning:
 Summary PowerPoint notes

Good marketing planning!

If you have conducted really effective market, and used that market research to make informed strategic decisions surrounding the marketing mix, you may just be on to a winner!

Progress check - test your understanding by completing the activities below

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IB BUSINESS MANAGEMENT QUIZZES AND TWO CLASSROOM GAMES

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