Page 77 - Marketing Management

54 PART 1 UNDERSTANDING MARKETING MANAGEMENT

Organizations, especially large ones, are subject to inertia. It’s difficult to change one part with-
out adjusting everything else. Yet, organizations can be changed through strong leadership,
preferably in advance of a crisis. The key to organizational health is willingness to examine the
changing environment and adopt new goals and behaviors.

Product Planning:The Nature and

Contents of a Marketing Plan

Working within the plans set by the levels above them, product managers come up with a market-
ing plan for individual products, lines, brands, channels, or customer groups. Each product level,
whether product line or brand, must develop a marketing plan for achieving its goals. A marketing
plan is a written document that summarizes what the marketer has learned about the marketplace
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and indicates how the firm plans to reach its marketing objectives. It contains tactical guidelines
for the marketing programs and financial allocations over the planning period. 44
A marketing plan is one of the most important outputs of the marketing process. It provides
direction and focus for a brand, product, or company. Nonprofit organizations use marketing plans
to guide their fund-raising and outreach efforts, and government agencies use them to build public
awareness of nutrition and stimulate tourism.
More limited in scope than a business plan, the marketing plan documents how the organiza-
tion will achieve its strategic objectives through specific marketing strategies and tactics, with the
customer as the starting point. It is also linked to the plans of other departments. Suppose a mar-
keting plan calls for selling 200,000 units annually. The production department must gear up to
make that many units, finance must arrange funding to cover the expenses, human resources must
be ready to hire and train staff, and so on. Without the appropriate level of organizational support
and resources, no marketing plan can succeed.
Marketing plans are becoming more customer- and competitor-oriented, better reasoned, and
more realistic. They draw more inputs from all the functional areas and are team-developed.
Planning is becoming a continuous process to respond to rapidly changing market conditions. The
most frequently cited shortcomings of current marketing plans, according to marketing executives,
are lack of realism, insufficient competitive analysis, and a short-run focus. (See “Marketing Memo:
Marketing Plan Criteria” for some guideline questions to ask in developing marketing plans.)
Although the exact length and layout varies from company to company, most marketing plans cover
one year in anywhere from 5 to 50 pages.Smaller businesses may create shorter or less formal marketing
plans, whereas corporations generally require highly structured documents. To guide implementation
effectively, every part of the plan must be described in considerable detail. Sometimes a company will
post its marketing plan on an internal Web site so everyone can consult specific sections and collaborate
on changes.A marketing plan usually contains the following sections.
• Executive summary and table of contents. The marketing plan should open with a table of
contents and brief summary for senior management of the main goals and recommendations.
• Situation analysis. This section presents relevant background data on sales, costs, the market,
competitors, and the various forces in the macroenvironment. How do we define the market,
how big is it, and how fast is it growing? What are the relevant trends and critical issues? Firms
will use all this information to carry out a SWOT analysis.
• Marketing strategy. Here the marketing manager defines the mission, marketing and finan-
cial objectives, and needs the market offering is intended to satisfy as well as its competitive
positioning. All this requires inputs from other areas, such as purchasing, manufacturing,
sales, finance, and human resources.
• Financial projections. Financial projections include a sales forecast, an expense forecast, and a
break-even analysis. On the revenue side is forecasted sales volume by month and product
category, and on the expense side the expected costs of marketing, broken down into finer
categories. The break-even analysis estimates how many units the firm must sell monthly (or
how many years it will take) to offset its monthly fixed costs and average per-unit variable costs.
A more complex method of estimating profit is risk analysis. Here we obtain three estimates
(optimistic, pessimistic, and most likely) for each uncertain variable affecting profitability,
under an assumed marketing environment and marketing strategy for the planning period. The