Marketing and the Marketing Plan

The Four P’s Of Marketing

To answer these questions Marketing Research is necessary.
Should you pay or do your own research?

Paying to get research: Neilson’s, Marketing Research, Marketing Consultants

Do you really have to do Marketing Research?

• Do you have previous work experience that will help you with your research?
  
  • you may be taking customers with you
  • you may be starting home-based
  • networking may be enough
  • low cost base will allow time to search for new customers
  • you will have a good idea if there is high demand
  • still might be good to do some research to check whether demand will continue
• No prior experience
  • need more research done to make sure there is a market
  • 1 in 1000 products get produced and only 1 in 500 is successful
  • examples of companies started on shoe string: Eaton's Canadian Tire, Trivial Pursuit
  • market research necessary to show idea is marketable
• Buying a Business
  • Will there be continuing demand for product/service
  • the smaller and newer it is the more research
  • research will also tell how much you should pay

Who should do the research?

• if money is key you will do research
• paying research cost is like insurance
• you can decide to consult a marketing firm or consultant from time to time for $500 per time
• you could receive advice on how to proceed on your own
• doing the work yourself could give you insight
• also could consider university marketing department

Doing Marketing Research Yourself
Primary Research

• done for you- could be observational, survey, poll or focus group
• difficult, time consuming, requires thought, planning and analysis and interpretation
  

Secondary Research

• could be easier to start here
• this is research done for other people/purposes
• reports from Industry Canada/Federal,provincial government agencies
  Statistics Canada: http:/www.statcan.ca.start.html, search engine
  low cost/free, Canadian federation of Independent Business Trade
  journals ROB, Financial Post

PRODUCT

Is there Market/Product Demand? Is it a new product?

• Challenge will be to make customer recognize NEED and then stimulate Response-Purchase
  example: coin sorter
  

Is it a product category that exists?

• is product category growing? stable? declining?
  

Two Types of DEMAND
PRIMARY DEMAND: demand for product category
ex: demand for camcorders must be positive, if declining more money will be necessary for marketing promotion

SELECTIVE DEMAND: demand for a specific product (brand) within a product category
Is selective demand positive? Is it a new brand? You will need to demonstrate demand?

COMPETITIVE ADVANTAGE: what makes the product unique/desirable

How do I demonstrate competitive advantage?

a) Demonstrate Superiority-compare versus others in category
b) Product Innovation- the product has something new and unique; example vacuum seal coffee
c) Hidden Qualities- is there something else the product gives you? example Juice has Vitamin C, certs retsyn
tums-calcium
d) Lifestyle Association- Does the product fit into a desirable lifestyle?

Access COMPETITIVE ENVIRONMENT

RELATIONSHIP WITH MARKETING:UNDERSTANDING CUSTOMERS

• it is essential to analyze demographic, psychographic and geographic trends to identify and pursue market
  Company must satisfy need better than competition.
  

A. MARKET SEGMENTATION:

• the process of dividing a large market into smaller homogeneous segments based on common needs or/and lifestyles

B. APPLICATION OF SEGMENTATION--3 applications:

1. Positioning the product: The place the brand occupies in the minds of consumers; Advertising is a vehicle to secure position in mind.-favourable/lasting impression
Think fast food--Why does Burger King, McD’s come to mind?
combo marketing+advertising

2. Media Strategy--Selecting the right media; Selecting most effective reach/efficient cost to reach target; Segmentation information assists. Media Research

3. Creative Strategy--Creating the messages
Knowledge about consumers and their habits (activities, interests, opinions A.I.O s) influence the nature of the message (tone, style, mood)
What triggers response? Appeal-rational, emotional,celebrity;info from market segmentation

 

C. CONSUMER BEHAVIOUR -What precedes and determines buying?

• information re: buying habits: market research
  Who makes the buying decision? When? How? Why?
  

1. Psychological factors: needs, motives, perceptions and attitudes
--make consumer recognize need, provide stimulation to satisfy
Needs: a state of deprivation, absence of something useful through appeal, benefits
Motives: conditions which prompt action to satisfy need-purchase

Maslow's Theory of Needs and motivation has impact on marketing
Based on 2 assumptions:
1) when lower level needs satisfied, individual moves to higher level need
2) Satisfied needs do not motivate-move to other needs;

Perceptions: how individuals receive and interpret messages; varies from person to person
3 Levels of Perception:

Selective Exposure- only notice that of interest
Selective Perception- screening out messages in conflict with previously learned attitudes and beliefs
Selective Retention- Only what we want to remember
Challenge is to break through perceptual barriers in customers minds

Attitudes:

• Feelings to idea/object; should be presented in accord with prevailing attitude of target group--bad experience often can't be changed
• altering attitude risky Example:.In 80’s Super 2 flavoured milk alternative to soft drink to teen market. Bad response. Milk now repositioned
  Social Factors; from desire to fit in to reference or peer group
  Reference group: ex. coworkers, sports team, hobby group member of group i.e. wearing the right clothes to the activity
  Lifestyle--conforming to norm
  

D. DEMOGRAPHIC SEGMENTATION (target market on age, gender, income, occupation, education, marital status, household formation, cultural mix)

TRENDS:

Age:
traditional target 18-34 but now aging population, boomers
By 1996 28% of pop over 50-- different than previous-health conscious, retaining spending patterns-expect new product+ product repositioning
Gender:
Increasing economic power of women (workers)
example:car market targeting women as buyers BMW specifically aimed at women Cabriolet
Income, Occupation, Education
Higher degree of affluence
-dual income, healthier lifestyle average household income Canada 1990--$57,000 ---white, blue collar and professional
example:Older healthier Light products, fat free
Marital Status/ Household formation
-delay of marriage, divorce,$5% children will see divorce, single parent-- common law;% in family shrinking 83% versus 87% 20 years ago
family cycle also who is dominant purchaser
Singles market growing
Cultural Mix
me generation-->yuppies value changes
birth rate declining--> immigrants will account for growth--Ethnic diversity
Population in cities more cosmopolitan --Culture role

E. PSYCHOGRAPHIC SEGMENTATION

• psychographic segmentation is examination of lifestyle based on activities, interests, opinions (AIOs)--explains why two identical demographic consumers differ in buying
  Personality of product matches personality of product
  
  hippies of 60s--> Me generation of 70s-->yuppies of 80s-- -->middle-aged boomers moving from satisfy me to environmentally conscious 80s hedonistic--> 90s practical-solid values;working less and accepting less rewards
  
• Goldfarb Consultants divides Canadian Population into 2 groups: Traditionalists and Non-Traditionalists
  

  Goldfarb's lifestyle segments in Canada

  
  

  TRADITIONALISTS:	NON-TRADITIONALISTS
  Day-to-Day Watchers --24% watching world pass by- dislike fast pace family versus individual-security, loyalty, familiar; brand loyal influence by authority, quality, promotion They watch a lot of TV	Joiner Activists--16% idealist looking for self-improvement-reject status quo; motivated by information appeal to rationality quality service, dependability use variety: TV, radio, newspapers, magazines
  Old-Fashioned Puritans--18% prefers simpler times- family important but individual ethics dominate; firm believers in Gov.’t, law, social order;shop for value at established stores motivated by value, reasonable price and good quality purchase large sizes, respond to coupons Station wagon, Mini Van--The Bay-Chain Stores	Bold Achievers--15% -aggressive, confident set high goals to have power, authority, and responsibility motivated on emotional appeal-status, success based premium price, expensive packaging, exclusivity--Trendy Sports Cars
  Responsible Survivors--12% frugal--insecure about spending and shop for lowest price--have money but don't enjoy spending motivated by price- generic brand--TV important Walmart	Self-Indulgents_-14% me first-resents authority- self gratification price not factor self gratification--impulsive Carefully planned -short to point Holt Renfrew-upscale

  
  
  To do an interesting psychographic survey online to determine your "type" click here: Business Intelligence: VALS Survey online (you must enable cookies on your browser to do the survey
  
  
  
• One's personality and other external influences impact on psychographic profile.
• Mental conception of self is a factor influencing personality
  • 4 components of SELF
    1. Real self- you as you really are
    2. Self-image How you see yourself ( may not be reality)
    3. Looking-glass self--How you think others see you projected image
    4. Ideal self- How you would like to be -aspirations
• Advertisers focus on components that make people feel better about themselves. Many decisions based on looking glass and ideal self--ie. Aspiring to group not yet reached--image appeal
  Psychographic info enhances demographic info-- people individuals
  

F. GEOGRAPHIC SEGMENTATION: dividing Market into distinct geographic regions Canada: Atlantic, Quebec, Ontario, Prairies, BC

• you can't necessarily send Ontario message across Canada-- Quebec--regional
  urban (75%), suburban, rural

G. BEHAVIOUR-RESPONSE SEGMENTATION

• divides buyers on 4 variables
  1. Occasion for Use (why they need it) situations presented to optimize consumption
  ex. milk at time other than dinner-- flowers at Valentines
  
  2. Benefits Desired--appeal to rational or emotion of consumer depending on advertisers knowledge of consumer
  rational-quality, price, dependable, emotional-sex, fear, love
  3. Usage rate--Knowledge of heavy users ( demographics and Psychographics) provides info to attract more, similar users ; 80/20 Rule-- 80% of product volume from 20% heavy users
  product positioned to attract heavy user-- may also go after light/ medium user
  4. Loyalty Response--Knowledge of brand loyal customers provides input to secure users with similar profiles and behaviours (Research on Brand Loyal) defensive technique Coupon in package, contest for multiple purchase
  To switch trial-samples
  

H IDENTIFYING AND SELECTING TARGET MARKETS

Target marketing involves 3 steps:
1. Identifying Market Segments--developing a consumer profile based on demographics, psychographics, geographics Who is Primary User-- Secondary User?
2. Selection of Opportunity Targets--determining which segments have best potential to pursue
Where is perceived profit potential greatest?
3. Positioning Strategies to appeal to Target--developing a product to meet needs and then an image to instill in the minds of consumers. Advertising plays a key role in positioning.

Positioning is strategy based on competition -a product distinguished from competition

What Image for product?
I. POSITIONING AND ADVERTISING
Positioning involves designing and marketing a product to meet the needs of a target market, and creating appropriate appeals (usually through advertising) to make the product stand out from the competition.

HOW CAN I TEST FOR A MARKET OF MY PRODUCT

• Show your product to 20 people who are not family or friends; you are seeking objectivity
• ask:
  • What do you think of product/service?
  • How much would you pay for such a product/service?
  • If you saw the item available would you
    a) buy it for sure?
    b) possibly buy it
    c) not buy it?How many times per year would you buy?
    Does it replace a current product/service?
    Are you happy with your present product/service?
    What age group?
    What income level?
    Marital status?
    Occupation?
  • Would you invest in company?

PRICE
From test sample you may have some idea
Set an interim price
If you are selling product to store, both have to make a profit
BREAK EVEN CALCULATION: How much business do you have to do to break even?
1. What is your monthly cost of operation?
2. What is your profit per unit?
3. Divide profit per unit into Monthly cost to determine how many units you need to sell to break even
4. Now multiply number of units by selling cost of each unit to determine total sales needed to break even

Marketing Test For Stores
Will your product sell in stores? To do this you will have to spend to produce product and then do a test in store.
Will be difficult to get big store to help-try smaller type and set up display in a couple of locations- get friends and family to help. Get feedback on product, cost, reaction. Write down all comments

PLACE
Where do you locate product and how do you get it there?
Initial Order: if you get an initial order, you must set delivery date that gives you time to produce/deliver goods
Size of Order:you will have to pay for the initial order without having any assurance of sales, yet must be enough in case there is demand
How do you reach your target market?

THE MARKETING PLAN

• a planning document prepared on an annual basis. Containing:
  • review of market, product, competitive activity
  • identification of problems/opportunities
  • a positioning statement
  • specific marketing objectives, strategies, tactics
  • budget and other financial info
    sample marketing plan model :
    two sections -background analysis
    -actual marketing plan

THE MARKETING PLAN
Positioning Statement, marketing objectives, marketing strategies and tactics-budget allocation-financial summary-calendar details Positioning Statement: the concept that motivates purchase-image
-should be realistic, specific, uncomplicated
example -Ruff dog food (dry) the only dry dog food that combines four flavours in every package and offers complete balanced nutrition

Marketing Objectives: statements identifying what product will accomplish in year
-should be specific, quantifiable, accountable
-objectives consider problems and opportunities from first section
example:
Sales Volume: to increase 15% over last year to 100 000 units
Market Share: to increase to 20% up 2 points
Distribution: to improve level in Quebec from 50% to 60%
Product: to test new product in BC in 3rd quarter

Marketing Strategies:

• master plan to achieve market objectives target Market, Marketing Strategies, Budget
  Target Market--based on profile of target market in analysis find Primary and secondary targets according to objectives
  example :age:25-49 ;sex: M,f ;Income: 50 000+
  occupation: business/professional ;Education:college/university;Location: cities 100 000 plus pop; Lifestyle: progressive thinker, risk taker, experiments with new product. Interest in arts, entertainment, vacation travel
• strategy statements show how objectives will be achieved-outline mix elements and how important--provide framework for specific action plans (tactics)
  considerations
  1. Product strategy
  --Need for product improvement?--Need cost-saving program?
  --Does research show need for change? New product?
  2. Pricing strategy
  --consider
  a) innovation and uniqueness
  b) nature and degree of competition
  c) profits-objectives
  3. Distribution strategy--direct or indirect channel? how to improve
  4. Promotion strategy-identify role of each sub strategy
  What role creative, media advertising, sales promotion, events, sponsorships, personal selling
  Budget
  -budget and rationale in strategy section-15-
  
  • example Benny’s Hamburgers in Calgary
    Marketing Objectives:
    1. achieve a 10% share of market in first full year based on opening 5 new outlets
    2. Appeal to the young -adult segment 18-34 single/married
    Marketing Strategies
    1. Promotion strategies
    a) To position Benny’s as a unique eating experience based on quality and variety of international recipes served in upscale art-deco environment, friendly, efficient service
    b) to extend media advertising throughout year using radio and print
    c) to utilize promotion oriented advertising during a two week period in each quarter to build volume-encouraging store traffic and trial purchase
    2. Pricing Strategy
    a) to establish a premium-price menu, based on quality of ingredients (100% grade A beef) slightly larger portions than competition and fresh condiments
    3. Distribution Strategy
    a) to locate each outlet in high traffic areas, close to transit, shopping malls, major thoroughfares
    b) to decorate each outlet in art-deco furniture, modern artwork, hanging plants to reflect contemporary image.
    4. Research Strategy
    a) to conduct consumer research during media campaign to measure impact and awareness of Benny’s advertising marketing Tactics (Activity Plans)
    -tactics are extension of strategies and outline timing, costs,personnel responsible to implement
  
  Product Activity Plans
• details on product testing,r&d. financial impact re change, timing and cost of new activities
  -price increases timing and amount effect and risk
• PROMOTION summary-devised from advertising plan developed by agency
  --each section (creative, media, sales promotion )has objectives strategies and tactics
  --tactics to improve profit --tactics to accomplish distribution objectives
• Financial Summary
  -statistical presentation of product performance indicators
  -sales volume, market share, gross profit, marketing budget, net profit current and projected year
  Marketing Budget -all activity in each area--media, consumer promotion, trade promotion, marketing research then sub divided accordingly
  Promotional Calendar--illustrated chart showing planned activities summarizing media, consumer, trade activities, markets timing

Marketing Plan Background Analysis
BACKGROUND ANALYSIS
purpose :

• identify problems and opportunities for product/ service by analyzing market, product, competitor performance in specific market
• provide input for development of marketing objectives, strategies, and technical plans, based on conditions in marketplace
• provide senior level planners with adequate info so they can understand what contributions marketing (& advertising) will make in achieving corporate objectives
  1. Market Analysis
  Market size and growth: recent trends--5 yr perspective
  -estimate for current year, and projection for year of plan --2002 plan prepared early in 2001
  Regional market Importance--identify key regions--promising areas/problem areas--make development indexes showing regions of strength and weakness for product category within market. or brand within product category
  Market segment analysis--segments analyzed in terms of volume importance and growth rates--determine areas of priority based on growing/declining segments
  example Dog food: Canned v Soft-moist v Dry Food
  -from Nielson Retail Index-volume, share trends, distribution, pricing
  Seasonal Analysis--trends in year soft drinks up in summer and Xmas ex, When to advertise?
  Consumer Data --target market profile based on demographics, psychographics, geographics
  Category and brand loyalty- are current customers very loyal? somewhat loyal? switchers? What is it about brand loyal?
  Pack-size trends--which size is popular? least popular? Where is growth? regular, single, family, economy?
  -or on other trends format deodorant-aerosol, stick,roll-on
  Media Expenditures-trends in product category and individual brand --share
  
  2. Product Analysis--performance of product in market
  Shipments-volume -trends how has product performed? historical summary-estimate for current year--projected volume year being planned
  Market Share--past performance of brand national? regional?
  Where is it strong? weak?
  Distribution-- brand performance in terms of distribution
  What is national, regional distribution? city?rural?
  chain store? independent? re trade promotion
  New product Activity--success/failure of new products in last years -new sizes, flavours, formats and what effect?
  Profit Improvement--which activities had positive effect?
  -price increases, cost-saving programs
  Creative-reviews creative of last years-recommendation re current or new strategy based on consumer research, background factors
  Media--new direction? consider advertising share (media spending as a percentage of total product media spending-- also media usage patterns--How much spent on TV, radio, mags, seasonal spending
  Sales Promotion--consumer and trade promotion in past year
  Marketing Research--product comparison tests, product evaluations, creative testing
  3. Competitive Analysis
  --competitors identified and their performance analyzed to see affect in market
  --to give direction
  Market Share-review share in year/past years to see who is trending up/down--look at their market activity
  Segmentation Trends--where are competitors weak/strong in product segments-ex cereal groups 1))unsweetened 2)sweetened 3) granola -Post strong in category 2, yet has small market share of total --strength may vary segment to segment
  Regional Share Trends--analyze competitors to see strengths -and weaknesses-some brand prominent only locally
  Assessment of Competitive Marketing Activity--any marketing mix areas 4P’s
  Competitive Innovations-new product competition--new packaging? What effect/ any shift in competition strategy? new creative? pricing? media switch?
  4. Problems and Opportunities
  -in list format -what are problems and opportunities in next year? to give direction in objectives,strategies and tactics
  -content depends on analysis of given market
  example
  * New markets to pursue demographic, psychographic, geographic
  * Potential product activities-improvement, new product, package
  * Pricing alternatives
  * Channels of distribution --how to expand or develop
  * Budget allocations-new direction for funds/
  * Promotion activities--change in creative/media
  * Marketing research-role of research in future
  

I wanna go HOME