Unit 4.

2 Marketing Planning

Marketing Planning

Marketing planning is the process of formulating marketing objectives and devising appropriate
marketing strategies to meet those objectives. It is all detailed in a document called marketing
plan.

Marketing departments must plan and prepare themselves to face the competition in the market.

Marketing Plan

The Marketing Plan is a detailed document about the marketing strategies that are developed in
order to achieve a company’s marketing objectives, derived from the corporate objectives.

The Marketing Plan should include the following components:

● Marketing objectives: That are SMART; for example, increasing sales by 10% next year.
● Key strategic plans: which are the steps that provide an overview on how the marketing
objectives will be achieved. For example, plans on how to sell new products in existing
markets.
● Detailed marketing actions: providing information on the specific marketing activities
that are to be carried out. For example, which pricing strategies will be used and how
products will be distributed.
● The marketing budget: including the finance required to fund the overall marketing
strategy.

Benefits of marketing planning:

● It helps the firm to identify potential problems and seek solutions to them
● Setting SMART objectives improves your chances of success for a firm’s marketing
strategy.
● Sharing the marketing plan with other departments improves coordination and provides
the whole organization with a clear picture of where it is heading.
● Devising a marketing budget ensures that resources are not wasted on unprofitable
activities.
● A clearly spelled-out plan could improve employees’ motivation and inspire confidence
about the organization’s future.

Limitations of a marketing plan:

● Marketing plans may become outdated if organizations are not quick to consider changes
in market conditions.
● The process may consume considerable resources in terms of time, expertise, and money
in designing the plans.
● Failure to prioritize marketing objectives may make it difficult for firms to tell whether
they are meeting them.

The 4 P’s of the Marketing Mix

 ● Product: it is a good or service that is offered in a market. A good such as a computer is
tangible, while a service, such as a haircut or health insurance, are intangible.

● Price: the amount of money the customer will be charged when they buy the product.

● Place: it refers to the product’s location or the channels of distribution used to get to the
consumer.

● Promotion: This refers to the various ways consumers are informed about and persuade to
buy the product.

Market Segmentation

A market segment refers to a sub-group of consumers with similar characteristics in a given

market.

Market segmentation is the process of dividing a market into smaller or distinct groups of
consumers in order to meet their needs or wants. Segmenting a market means that marketing
activities are focused on people who are more likely to buy, meaning they are more cost effective
and less likely to be a waste of time.

The business should be able to determine the different consumer groups in the market. To have a
clear picture of the type of consumers in a given market, the business must come up with a
consumer profile. Consumer profile refers to a quantified picture of consumers for a firm’s
products. Thus the consumers can be grouped according to age, income levels, gender, social class,
religion and region.

Markets can be segmented in the following ways:

● Demographic segmentation: Considers the varying characteristics of the human
population in a market, which include
○ Age: Babies will need diapers while teenagers want smartphones
○ Gender: There is a higher demand of personal care products for women than for
men
○ Religion: It might be difficult for a business to sell animal products in a country
where people are discouraged to eat them.
○ Family characteristics: Young singles, married couples without children, married
couples where both spouses work and two children, etc)
○ Ethnic grouping: some radio stations in Africa broadcast in languages that are
geared towards particular ethnic groups.
● Geographic segmentation: the market is divided into different geographical sectors and
considers factors such as:
○ Regions: for example, there may be more demand for office products in the city,
and for agricultural products in rural areas.
○ Climatic conditions: for example, there will be greater demand for thick jackets in
Tibet than in Botswana.
● Psychographic segmentation: Divides the market based on people’s choices or personality
characteristics, such as:
○ Social and economic status: some high-income-earning individuals belong to
luxury clubs that exclude people who have not attained a specified wealth status.
 ○ Values: people’s morals and beliefs are considered here. For example, customer
values regarding recycling of products or animal testing.

Benefits of Market Segmentation:

● Increased sales since products are produced for a specific group of consumers
● Enables the business to identify consumer needs and wants which are not currently
satisfied, new opportunities
● Enables small firms to avoid competition from big firms by targeting a specific group of
customers
● Enables the business to implement price discrimination to increase revenue and profits
● Money and time is not wasted in trying to sell products to the whole market

Disadvantages of Market Segmentation:

● Firms may appeal to segments that are too small to be profitable
● Firms may not be able to use certain media due to the small size of the segment
● Costly and extensive market research is needed
● Firms may misinterpret consumer similarities and differences
● Promotional costs might be high as different advertisements and promotions might be
needed for different segments

Targeting

● Target Market: A group of consumers with common needs or wants that a business
decides to serve or sell to.

● Targeting: The process of marketing to a specific market segment.

● Mass Marketing:
A large or broad market that ignores specific market segments. A mass marketing strategy
would involve communicating to the largest possible audience, for example, a TV
commercial. It focuses on capturing a wide customer base with the aim of finding the
highest number of potential customers. It involves selling the same products to the whole
market with no attempt to target separate groups. Mass marketing produces a product
that appeals to the whole market, so that everyone becomes a customer, no matter what
their age, job, income, wealth or gender. Mass markets consists of a large number of
customers for a standardised product such as markets for food and grocery. Goods are
produced in large quantities which may help the company achieve economies of scale.

● Niche Market:
A narrow, smaller, or more specific market segment. A niche market focuses on a small
group of consumers who have interests that align with the product of a specific
organization. It aims to capture a moderate number of buyers in the market. For example,
gluten-free products providers, or vegan products, or organic food. So it involves
identifying and exploiting one segment of a larger market. This segment can be one that
has not been identified and filled by competitors. It is a very small section of the market
and that section has got specific requirements e.g the market for professional divers’
watches or high status products. It is suitable for small firms and the goods are produced
 in small quantities.

● Consumer profile:
The characteristics of consumers of a particular product in different markets based on
their gender, age and income levels, among other characteristics.

TARGETING STRATEGIES:

● Mass Marketing: It is undifferentiated marketing, a strategy where a firm ignores the

differences in the specific market segments and targets the entire market. Example:
Walmart, Coca-Cola, Samsung.

● Segmented Marketing: It is differentiated marketing, a strategy that targets several market

segments and develops appropriate marketing mixes for each of these segments. For
example: Toyota designs cars for different socio-economic groups of people around the
world. By doing this, firms can gain a stronger position in each of their segments,
increasing their sales and market share.

● Niche Marketing: It is concentrated marketing, a strategy that appeals to smaller and

more specific market segments.

Unique Selling Point

USP: A product’s feature that differentiates it from either competing products in the market. The
differentiating factor is what makes the product unique and helps to explain why consumers
choose one product over another.

IMPORTANCE OF HAVING A USP:

● Helps establish a firm’s competitive advantage in its product offering, and attract more
customers
● Leads to customer loyalty as consumers can identify something special about the product
in comparison to rival products
● Leads to improved revenue as customers buy a product that meets their needs. Some
customers can pay top prices for a reputable brand that they view as being high quality.
● Makes the product easy to sell.

Differentiation

Differentiation enables an organization to provide superior value to its customers and boost
profitability and viability. There are several differentiation strategies:

● Product Differentiation:
This is a physical or perceived difference in a product; differences in its features:
durability, performance, reliability, or other criteria. This can be a short-term strategies
because many innovations can be easily duplicated. Some companies decide to protect
their products by patenting them, but in practice it may not be very effective. Examples:
Starbucks claims that the quality of their products is superior and charges a higher price
for them.
● Service Differentiation:
This includes customer service, delivery, and supporting business elements like
installation and training. It could be that the company offers an environment that is
attractive, such as hotel decors; or customer service, fast and friendly (like McDonald’s).

● Price Differentiation(or price discrimination):

A successful price differentiation strategy recognizes that every customer is willing to pay
a different price for a product. Through segmentation and differentiation, a company can
maximize its potential revenue by offering a differentiated product at a differentiated price
in each of its market segments. It is important to remember that the value of a product
can be subjective and vary by consumer. Examples: Apple offering their computers to
students at a discounted price; of Microsoft Office being free for education. Another
example is Amazon, they are constantly adjusting prices to match their competitors.

● Distribution Differentiation:
The path that the product follows until it reaches the end consumer, is an effective means
of differentiation. For example, making it easy to order the product, or offering high levels
of technical service, or even having fast delivery, are all ways of distribution
differentiating. If a manufacturer has an excellent relationship with its distributor, it can
be very time consuming and expensive for a competitor to duplicate the company’s level
of differentiation. Example: Pepsi has managed to differentiate itself by having a wide
range of retail outlets, providing its product close to its consumers. Or Nespresso with its
coffee boutiques, designed to make you feel you are buying a premium product.

● Relationship Differentiation: This is differentiating through the organization’s personnel,

including employees or team members with customer links. This close relationship builds
trust, leading to better business performance. This is closely related to service
differentiation, but its main focus is on people. Example: Fiverr (freelancers platform).

● Image or Reputation Differentiation:

Its created through other forms of differentiation (such as high product quality, great
service, or superior performance). A company can only do this by mastering all
departments such as product quality, customer service, product performance, etc. New
business trying to access a market can find it difficult to compete with reputable
companies with exemplary images. To succeed in this way of differentiation, a company
must have a considerable budget