THE WORLD OF MARKETING SECTION 2 1 MARKETING

THE WORLD OF MARKETING

SECTION 2. 1 MARKETING PLANNING Learn how to conduct a SWOT analysis. List the three key areas of an internal company analysis. Identify the factors in a PEST analysis. Explain the basic elements of a marketing plan.

THE MAIN IDEA A company looks at itself and the world around it to create a marketing plan for reaching goals.

SWOT The SWOT analysis is an assessment that lists and analyzes the company’s strengths and weaknesses. It also includes the opportunities and the threats that surround it. In other words, this analysis lists everything that can foster the business’s success and what could make it fail. The acronym for strengths, weaknesses, opportunities, and threats is also the name of this process: SWOT analysis.

INTERNAL STRENGTHS AND WEAKNESSES Strengths and weaknesses are both internal factors that affect a business’s operation. The internal analysis centers around three Cs: company, customers, and competition. It is important to review these factors objectively and fairly.

COMPANY ANALYSIS Questions that are part of a company’s internal analysis are about what a company does well (core competencies) and what areas are weak. This includes a review of the staff, the company’s financial situation, its production capabilities, and each aspect of the marketing mix (product, promotion, place, and pricing).

MARKETING MIX: PRODUCT Choosing what products to make and sell § Product development design features improvements

MARKETING MIX: PRICE What is exchanged for the product? §What are customers willing to pay? §Consumer prices versus reseller price. §What does the competition charge?

MARKETING MIX: PLACE The means of getting the product into the consumers’ hands. §Which geographic areas? §Which channels of distribution? §Sold directly or through intermediaries?

MARKETING MIX: PROMOTION How customers will be told about a company’s products. §Advertising, personal selling, sales promotions, and publicity. §The message and media selected.

CUSTOMER ANALYSIS Customers are a great source of information. Studying their buying habits reveals patterns that offer insights into product offerings and pricing strategies. These questions can be used to analyze customers.

COMPETITIVE ANALYSIS A company may find that it has certain strengths and weaknesses when compared to its competitors. A company’s market share may be greater than its competitors’, which would be a major strength. If a company loses market share to competitors, it would be a weakness.

EXTERNAL OPPORTUNITIES AND THREATS Companies must always look for opportunities to create competitive advantage due to external factors. § Competition

PEST ANALYSIS A PEST analysis is the scanning of outside influences on an organization. This is a methodical look at the world that typically includes four factors: § Political issues § Economic factors § Socio-cultural factors § Technology

PEST: POLITICAL ISSUES Political issues center around government involvement in business operations. Companies must be alert to changes in laws and regulations that affect their industries.

PEST: ECONOMIC FACTORS The current state of the economy is of interest to all businesses: If the economy is robust, businesses are more likely to invest in new products and markets. An economy that is in a recession or slowing down sends a completely different message to the company’s decision makers. § Recession § Unemployment § Currency Rates § Import Pricing § Trade Restrictions

PEST: SOCIO-CULTURAL FACTORS A socio-cultural analysis is based on customers and potential customers. Changes in their attitudes, lifestyles, and opinions provide a multitude of opportunities and threats. Socio-cultural analysis examines changes in all demographic factors, such as age, income, occupation, education level, and marital status.

PEST: TECHNOLOGY Changing technology may be a threat for one industry or company, but an opportunity for others.

WRITING A MARKETING PLAN A marketing plan is a formal, written document that directs a company’s activities for a specific period of time. It details analysts and research efforts and provides a road map for how a product will enter the market, be advertised, and sold. A marketing plan also communicates the goals, objectives, and strategies of a company’s management team.

ELEMENTS OF THE MARKETING PLAN Executive summary Situation analysis Objectives Marketing strategies Implementation Performance standards and evaluation Appendix

EXECUTIVE SUMMARY An executive summary is a brief overview of the entire marketing plan.

SITUATION ANALYSIS Situation analysis is the study of the internal and external factors that affect strategies.

OBJECTIVES Objectives let everyone know what the marketing plan will accomplish. An objective must be: § Single-Minded- has only one topic § Specific-provides enough detail that there can be no misunderstanding. § Realistic-goal can actually be achieved by the company. § Measurable-includes a way to measure or evaluate the results. § Time Framed-a specific end date by which the objective must be achieved

OBJECTIVES CONT’D A company’s mission statement provides the focus for a firms goal’s with its explanation of the company’s core competencies, values, expectations, and vision for the future. Marketing objectives must be in line with the organization’s goals and mission.

MARKETING STRATEGIES A marketing strategy identifies target markets and sets marketing mix choices that focus on those markets. An effective marketing strategy should be focused on the key point of difference. § Quality of product § Superior distribution § More creative ad campaign § More competitive pricing structure.

IMPLEMENTATION Implementation is putting the marketing plan into action and managing it. This part of the marketing plan outlines a schedule of activities, job assignments, sales forecasts, budgets, details of each activity. § Sales forecast- the projection of profitable, future sales in units or dollars.

EVALUATION AND CONTROL In the evaluation section of the marketing plan, measures that will be used to evaluate the plan are discussed. § It is important to explain exactly how a specific objective will be measured and who will be responsible for providing that evaluation.

PERFORMANCE STANDARDS AND EVALUATION A performance standard is an expectation for performance that reflects the plan’s objectives.

APPENDIX The appendix is the section of the marketing plan that includes supplemental materials such as financial statements, sample ads, and other materials that support the plan.

MARKET SEGMENTATION

EQ’S Explain the concept of market segmentation. Analyze a target market. Differentiate between mass marketing and segmentation.

THE MAIN IDEA The key to marketing is to know your customer or target market. Market segmentation helps identify the target market.

IDENTIFYING AND ANALYZING MARKETS Market Segmentation- the process of classifying people who form a given market into even smaller groups. Once the market is “segmented” or broken down into smaller groups a company must decided “Which of these segments should we target? ”

GATHERING DATA Private Researc h Government Data Gatherin g Data Compan y Researc h Trade Associations

TYPES OF SEGMENTATION Demographic Geographic Psychographic Behavioral • • • • Age Gender Income Marital Status • Ethnic Background Local State Regional National Global Attitudes Opinions Interests Activities Personality Values • Shopping patterns • Decisionmaking process

TYPES OF SEGMENTATION Demographic- Statistics that describe a population in terms of personal characteristics such as age, gender, income, marital status, and ethnic background. Geographic- Segmentation of the market based on where people live.

Psychographics- Grouping people with similar attitudes, interests, and opinions, as well as lifestyles and shared values. Behavioral-Segmenting the market based on purchasing-related behavior involves analyzing your customers with regard to sales generated, shopping patterns, and purchase decision-making processes.

DEMOGRAPHICS Age - Marketers can easily use age to segment the market by creating age ranges. Gender Income § Disposable income is the money left over after taking out taxes. § Discretionary income is the money left after paying for basic living necessities such as food, shelter, and clothing.

DEMOGRAPHICS Marital Status Ethnic Background § The U. S. population is becoming more multicultural and ethnically diverse, mainly due to increased immigration. The Caucasian population is declining relative to African. American, Hispanic, and Asian-American populations. It is essential for marketers to be aware of the multicultural nature of the modern United States.

GEOGRAPHICS Local State Regional National Global

PSYCHOGRAPHICS Attitudes and opinions § Consumers’ attitudes and opinions are often created by changing times and personal experiences. Marketers study trends that evolve from these shared attitudes Interest and activities

BEHAVIORAL Companies classify their customers according to the percentage of sales each group generates. Many businesses find that the 80/20 rule applies. The 80/20 rule means that 80 percent of a company’s sales are generated by 20 percent of its loyal customers. Astute marketers study consumer shopping patterns to determine usage rates.

MASS MARKETING VS SEGMENTATION Mass marketing involves using a single marketing strategy to reach all customers. Advantages Disadvantages • Economies of scale • Competitors can identify Companies can produce unmet needs and wants more products at lower and then steal customers costs because their product, promotion, pricing, or distribution does not change. • Simplified marketing plan

MASS MARKETING VS SEGMENTATION Niche marketing narrows and defines a market with extreme precision, which increases the chances of a product’s success. Advantages Disadvantages • Extremely precise • Cost – Research • Increased chance for – Production success – Packaging – Advertising