IB Business Management 4.2 Marketing Planning (Including introduction to the four P’s)

Learning Outcomes The elements of a marketing plan The role of marketing planning The four Ps of the marketing mix An appropriate marketing mix for a particular product or business The effectiveness of a marketing mix in achieving marketing objectives The difference between target markets and market segments Possible target markets and market segments in a given situation The difference between niche market and mass market How organizations target and segment their market and create consumer profiles A product position map/perception map The importance of having a unique selling point/proposition (USP) How organizations can differentiate themselves and their products from competitors

The Role of Market Planning “The process of formulating marketing objectives and devising appropriate marketing strategies to meet these objectives” THE PLANNING PROCESS: Marketing Audit – Where are we now? Marketing objectives – Where do we want to be? Marketing strategies – How will we get there? Monitoring & review – Are we on track? Evaluation – Did we succeed?

Marketing Objectives Marketing objectives should not be set in isolation They should be compatible with the firm’s mission statement Often set by directors of the company They will also need to consult other business functions (finance and production for example) Aligning objectives with the organizations mission requires leadership. Consultation with production to ensure they can meet projected increased demand, Finance to secure financing for the new capacity and Human Resources to hire, train and retain needed labor associated with increased demand.

How will the marketing department meet these objectives CORPORATE OBJECTIVES What the firm as a whole is trying to achieve to support the mission/vision MARKETING OBJECTIVES What the marketing function needs to do to fulfil the corporate objective MARKETING STRATEGY How will the marketing department meet these objectives

Types of Marketing Objectives Increasing sales (By volume, By value) Increasing market share To enhance the brand image To reposition the brands image Raising brand awareness Increasing brand loyalty Improving corporate image Student examples from company research? Reposition brand image = CVS to CVS Health and not selling cigarettes.

Setting Marketing Objectives Marketing Objectives must be SMART S mart M easurable A greed R ealistic T imed E.g. To increase market share by 5% in the next 2 years

Marketing Strategy Marketing Strategy is the plan for how the Marketing Objectives are going to be achieved Inclusion and emphasis depends on many factors including industry, firm size, Corporate objectives, customer preferences, external factors, etc.

What marketing strategies might be used to help achieve the following types of objectives? Increasing sales (By volume, By value) Increasing market share To enhance the brand image To reposition the brands image Raising brand awareness Increasing brand loyalty Improving corporate image How might a business’ marketing mix differ when trying to implement these strategies?

Reasons why marketing objectives are not achieved Internal Constraints Financial Personnel Unrealistic objectives External Constraints Competition The economy Tastes and fashions Student examples?

The marketing Mix (The Four P’s)

The Marketing Mix? “The key elements of a marketing strategy that ensure the successful marketing of a product”

The Marketing Mix- Product A product can be a good or a service It must meet the wants or needs of customers Product design decisions can include: Function – light bulbs vs LED’s Features – determined using product or market oriented techniques? Design – consumer vs industrial use? Quality – surgeon or cafeteria knife? Branding – local, regional or national?

The Marketing Mix- Price Pricing is one of the hardest decisions in the marketing mix. Why? What if the product is over-priced? What if the product is under-priced? What information might businesses need to know when setting their prices? Pair and share

Pricing Decisions depend on: Demand and Supply Consumer perceptions (Rolex vs Timex) Business objectives (market share vs profits) Competition (Barriers to entry e.g. Boeing) Costs of production Corporate image (Luxury vs value) Student examples from their company

The Marketing Mix- Place Place is about making the product available to customers in the right place and at the right time. Place decisions: Distribution channels Location Logistics Starbucks vertical integration + CSR with small farmers.

The Marketing Mix - Promotion Promotion is all of the activities involved in informing customers about a product and in persuading them to buy it What could this involve?

An Appropriate Marketing Mix Will: Ensure consumers needs and wants are met “Right product, at the right price, available at the right place and communicated through the right promotion channels (media)” Discuss as a class. Some of our companies are in healthier positions than others. To what extent does this affect the blend of the mix? Do the companies we have chosen have an appropriate marketing mix?

TARGET MARKETS & Market Segmentation

Market Segmentation Most businesses can’t sell their products to everyone Instead they break the market down into smaller pieces and then try and sell to these smaller groups The smaller groups are called market segments They consist of customers who buy similar products These consumers are known as the target market for a product

Definition “The process of splitting a market into distinct groups of buyers to better meet their needs. It is normally based on demographic, geographic and/or psychographic factors”

Demographic Factors Demography is the study of the characteristics of the human population. Demographic variables include: Age Gender Race and Ethnicity Marital status Religion Language Income and Socioeconomic class

European Socio-Economic Groupings Description A Higher managerial, administrative or professional e.g. surgeon or company director B Intermediate managerial, administrative or professional e.g. teachers, solicitors C1 Skilled non-manual e.g. sales assistants, shop floor supervisors C2 Skilled manual e.g. electrician, plumber D Semi skilled e.g. assembly line workers, cleaners E Unskilled, pensioners and unemployed

Geographic Factors Geographic factors can have a huge influence on demographic factors such as race, religion, language. Geographical factors include: Location Climate Example: Varying dialects of language based on geographic location in Spain.

Psychographic factors Emotions and Lifestyle Values Status Culture Hobbies and Interests Go Pro, Organic food, Starbucks, ethnic food, various

Developing a Consumer Profile The demographic/ psychographic details of the average user of a product Businesses use this knowledge to help them to identify customers needs and identify growth strategies (Ansoff’s Matrix)

Task Look at the products on the following slides and see if you can identify who the target market is What do you think their consumer profile would be?

How Customers Differ Market segmentation is needed because customers are not all the same! They differ in their needs and wants. For example, customers of shampoo differ in the… Benefits they want from the product Amount they are able to or willing to pay The media they see Quantities they buy (industrial e.g. hotel vs consumer) Time and place that they buy

Benefits of Segmentation Businesses are successful when they provide things that customers want Segmentation allows businesses to develop products that more closely meet customer needs A range of products can be made to appeal to different market segments Also allows promotional spending to be targeted more effectively E.g. adverts not put in the wrong kind of newspaper or magazine Sales promotions (e.g. price discounts) not offered to customers who don’t respond to them

Difference Between A Niche and Mass Market Strategy

Niche Market: “ A narrow, smaller or more specific market segment within a larger market”

“A large or broad market that ignores specific market segments” Mass Market: “A large or broad market that ignores specific market segments”

Market Positioning

Look at this perceptual map Sweet Mild Taste Strong Taste Savoury

Task Copy the market map from the previous slide onto a piece of paper. Look at the different foods on the next slide and see if you can put them in the correct place on the axis according to whether they are sweet or savoury and whether they are mild or strong tasting

Milk Chocolate Bread Salted Crisps Big Mac Blue Cheese Raw Onion Vanilla Ice Cream Honey Pasta Apple Coffee Tea Mango Juice Tuna Walnut

How does this relate to business??? Perception maps can be used by businesses to analyze competition within an industry This is known as market mapping or perceptual mapping It is used to help with market positioning

What is a market map A market map is a tool used by businesses when they are considering entering a new market or launching a new product A market map allows the business to examine the existing competitors/products in a market They can see which areas of the market are overcrowded or spot potential gaps In order to construct a market map the company decides on 2 key factors of the market

Example market map – female clothes retailers High Price Burberry Karen Millen French Connection classic fashion Top Shop New Look H&M Low Price Primark

Choosing the right factors Each market will have different key features. Examples could be: High Price/Low Price Youthful/Older Modern/Traditional Masculine/Feminine Fashion/Classic Aesthetic/Functional Luxury/Everyday

Task As a class we are going to construct a market map of restaurants. 1. Brainstorm a list of restaurants in your local area 2. Copy the axis on the next slide into your notes 3. Position the competitors on the map

Market Map for Restaurants High Price Everyday Special Occasion Low Price

What could these pictures be referring to?

Unique Selling Point (U.S.P.) “A product’s feature(s) that differentiate it from other competing products” Importance of having a USP: Creates a competitive advantage Can attract more customers  higher sales Promotes customer loyalty  increased sales Can create barriers to entry to deter potential competitors What is the USP of your business?

Developing a USP Businesses can use the marketing mix as a way to create USP’s. For example: Product – features, quality, design, (Apple products) Price – Low to undercut or high for superior product Place – distribution channels, locations, outlets Promotion – slogans, advertising, sponsorship, endorsements, brand image,

In pairs share In pairs discuss at least one example of how your business has developed a USP. Also consider: Has it worked? Why did the business choose to differentiate in this way? Do you think it could be better – how and why?

Is it the best strategy in your opinion? Company Research For your business, analyse how they differentiate themselves and their products from competitors? Is it the best strategy in your opinion?