Managing a Business/ms-06


“Marketing in the performance of business activities that directs the flow of goods and services from the produces to consumers”. Discuss the above statement by taking two suitable examples of your choice.

(a) What are the various elements of marketing mix? Explain each of there elements and their importance in the marketing planning process of a consumer durable company manufacturing room air conditioner.

1.   (a) “Marketing in the performance of business activities that directs the flow of goods and services from the produces to consumers”. Discuss the above statement by taking two suitable examples of your choice.
MARKETING includes identifying unmet needs; producing products and services to meet those needs: and pricing, distributing, and promoting those products and services to produce a profit.
Philip Kotler defines marketing as ‘satisfying needs and wants through an exchange process’
Marketing consists of four general activities:
1. Identifying and selecting the type of customer that the business will cultivate, learning his needs and desires;
2. Designing products or services that the firm can sell at a profit in conformity with customers desires;
3. Persuading customers to buy at the firm’s offerings;
4. Storing, moving, and displaying goods after they leave the production site.
2.   The basis for any marketing activity is exchange. Exchange is the process by which two or more parties give something of value to each other to satisfy each party’s perceived needs. This "something of value" can be a product, service, or idea - of a person, such as an entertainer, athlete, or politician.
3.   The criteria needed for an exchange to occur:
Must have something of value to exchange
Need to be able to communicate
Must be able to exchange (under 21 drinking)
Must want to exchange
At least 2 people needed for an exchange to occur
4.   The exchange process creates Utility. Utility is the satisfaction, value, or usefulness a user receives from a good or a service. When you purchase an automobile, you give up less (in $s) than the value of the car (to you)...the ability to get you from A to B, safely, in a timely manner etc.
The marketing concept is the philosophy that firms should analyze the needs of their customers and then make decisions to satisfy those needs, better than the competition. Today most firms have adopted the marketing concept, but this has not always been the case. After World War II, the variety of products increased and hard selling no longer could be relied upon to generate sales. With increased discretionary income, customers could afford to be selective and buy only those products that precisely met their changing needs, and these needs were not immediately obvious.

Without marketing, potential customers may not be aware of the product or service your business is selling. Without customers, your business may meet its demise. Marketing plays a vital role in business because planning how you are  going to reach potential customers helps to ensure that people are aware of your product or service and that you have an opportunity to convert that awareness into paying customers.
Creates a Guide
The achievement of written goals occurs more often than goals that are not written down. Marketing planning serves as a written guide for a business to follow in promoting its products and services. Planning the marketing strategies ahead of time allows companies to be proactively involved in the success of its sales. Because the marketing plan is a portion of the overall business plan, a company can align marketing strategies during the planning stages with its overall business goals.
Integrates the Business
Planning marketing efforts involves more than the marketing manager. Marketing planning integrates all of the aspects of a business, ranging from how products and services are priced to the financials of the company. As a result, marketing planning brings upper management and the heads of departments such as finance together. Small business owners may be both the marketing manager and upper management, but marketing planning still plays the role of integrating a business requiring you to analyze your business from all of the different vantage points: finance, operations, legal and marketing.
The marketing planning process also plays a forecasting role because it requires you to estimate sales resulting from each marketing effort. A company  operations department uses sales forecasts to create a production schedule. The finance department uses these forecasts to create budgets, while the human resources department looks to sales forecasts to plan for employees. A small business also requires these forecasts to plan for other areas in the business.
Company Product/Service
An effective marketing plan takes a close look at a company  products and services and compares these to products and services from competitors in the market sector. The marketing department must review the company  products in terms of quality, customer interest and customer response, among other qualities. An appreciation of these elements helps a company develop new products and improve existing products as the company pursues its goals.
The marketing plan must keep in mind the company  pricing position for its own products and services. Marketing professionals run pricing comparisons of other company products and services within the marketing sector and then compare these prices to their own  prices. The results help the company develop a pricing plan that serves two primary purposes: enable the company to price itself strategically within the market and assist the company in reaching its own financial goals.
Planning  clearly
•   Define the objectives and priorities of your business
•   Identify your products and services, prices and the profit margins of each
•   Determine your placement, market position, industry and competition
•   Generate a unique selling proposition
•   Identify the ideal customer profile and how to locate such customers
•   Plan optimal promotional strategies and tactics
•   Identify strengths, weaknesses, opportunities and threats
•   Determine the optimal marketing budget
•   Estimate the marketing return on investment (ROI)
•   Evaluate the effectiveness of your marketing campaigns
•   Include an action list with timeframes and allocation of resources

The Marketing Plan is a highly detailed, heavily researched and, hopefully, well written report that many inside and possibly outside the organization will evaluate. It is an essential document for both large corporate marketing departments and for startup companies. Essentially the Marketing Plan:
•   forces the marketing personnel to look internally in order to fully understand the results of past marketing decisions.
•   forces the marketing personnel to look externally in order to fully understand the market in which they operate.
•   sets future goals and provides direction for future marketing efforts that everyone within the organization should understand and support.
•   is a key component in obtaining funding to pursue new initiatives.
The Marketing Plan is generally undertaken for one of the following reasons:
Needed as part of the yearly planning process within the marketing functional area.
Needed for a specialized strategy to introduce something new, such as new product planning, entering new markets, or trying a new strategy to fix an existing problem.
Is a component within an overall business plan, such as a new business proposal to the financial community.
There are many ways to develop and format a marketing plan (you can find more ideas in the KnowThis Marketing Plan topic area). The approach taken here is to present a 6-Part plan that includes:
Part 1: Purpose and Mission
Part 2: Situational Analysis
•   Product, Market Analysis
•   Distribution Analysis
•   Competitor Analysis
•   Financial Analysis
•   Other Analysis
Part 3: Marketing Strategy and Objectives
•   Financial Objectives
•   Marketing Objectives
Part 4: Tactical Programs
•   Markets
•   Product
•   Promotion
•   Distribution
•   Pricing
•   Others
Part 5: Budgets,Performance Analysis, Implementation
•   Budgeting and Analysis
•   Implementation
Part 6: Additional Considerations
This plan is aimed at individual products and product lines, however, it can be adapted fairly easily for use in planning one or more strategic business units (SBU). The page length suggested for each section represents a single-spaced typed format for a plan focused on a single product. Obviously for multi-product plans lengths will be somewhat longer.

Part 1: Purpose and Mission
Part 1 of the plan is designed to provide the reader with the necessary information to fully understand the purpose of the marketing plan. This part also includes organizational background information, which may be particularly important if the audience for the plan is not familiar with the company, such as potential financial backers. Some of the information, in particular the mission statement, may require the input of upper-management. The information in this part will prove useful later in the plan as a point of reference for material that will be introduced (e.g., may help explain pricing decisions). In cases in which there are separately operated divisions or SBU, there may also be mission statements for each. (Length: one page or less)
1. Purpose of the Marketing Plan
•   Offer brief explanation for why this plan was produced
•   e.g., introduce new product, enter new markets, continue growth of existing product, yearly review and planning document, etc.
•   Suggest what may be done with the information contained in the plan
•   e.g., set targets to be achieved in the next year, represents a departmental report to be included in larger business or strategic plan, etc.

2. Mission Statement
For larger firms this may already exist in a public way (e.g., found in annual report, found on corporate website) but for many others this may need to be formulated.
The mission statement consists of a short, finely-honed paragraph that considers the following issues:
•   Identifies a stable (i.e., not dramatically changing every year), long-run vision of the organization that can answer such questions as:
•   Why is the company in business?
•   What markets do we serve and why do we serve these markets?
•   In general terms, what are the main benefits we offer our customers?
•   e.g., a low price software provider may state they offer “practical and highly affordable business solutions”
•   What does this company want to be known for?
•   What is the company out to prove to the industry, customers, partners, employees, etc.?
•   What is the general corporate philosophy for doing business?
•   What products/services does the company offer?
•   In developing the vision presented in the mission statement consider:
•   Company History
•   How company started and major events of the company, products, markets served, etc.
•   Resources and Competencies
•   Consider what the company currently possesses by answering the following:
•   What are we good at?
•   What is special about us compared to current and future competitors (in general terms do not need to mention names)?
•   What do we do that gives us a competitive advantage?
•   Consider the questions above in term of:
•   people, products, financial position, technical and research capabilities, partnership/supply chain relations, others
•   Environment
•   Consider the conditions in which company operates including:
•   physical (e.g., facilities), equipment, political regulatory, competitive, economic, technological, others
Part 2: Situational Analysis
The situational analysis is designed to take a snapshot of where things stand at the time the plan is presented.
This part of the Marketing Plan is extremely important and quite time consuming. For many, finding the numbers may be difficult, especially for those entering new markets
The situational analysis covers six key areas: product, target market, distribution, competitors, financial and other issues.
1. Current Product Analysis
(May be able to skip this section if plan is for a new product and no related products exist.) Provide detailed analysis of the company’s product(s). (Length: 1-2 pages).
•   Describe the company’s current product(s) offerings in terms of:
•   Product Attributes
•   Describe the main product features, major benefits received by those using the product, current branding strategies, etc.
•   Pricing
•   Describe pricing used at all distribution levels such as pricing to final users and to distributors, incentives offered, discounts, etc.
•   Distribution
•   Describe how the product is made accessible to final users including channels used, major benefits received by distributors, how product is shipped, process for handling orders, etc.
•   Promotion
•   Describe promotional programs and strategies in terms of advertising, sales promotion, personal selling and public relations, how product is currently positioned in the market, etc.
•   Services Offered
•   Describe support services provided to final users and distributors before, during and after the sale

Part 2: Situational Analysis
2. Describe the Current Target Market(s)
Examine in detail the company’s current target market(s). Obviously to do this section correctly takes a great deal of customer-focused research. (Length: 2-3 pages).
•   Describe the target market approach:
•   What general strategy is used to reach targeted customers? Generally approaches include:
•   mass market – aim to sell to a large broad market
•   segmentation approach – aim to selectively target one (niche) or more markets
•   Describe demographic/psychographic profile of the market:
•   Profile criteria may include:
•   gender, income, age, occupation, education, family life cycle, geographic region, lifestyle, attitudes, purchasing characteristics, etc.
•   Describe the following characteristics of targeted customers:
•   Needs/benefits sought by market
•   Product usage
•   Consider answers to these questions related to customers using the product such as:
•   who is using the product?
•   why do they use the product?
•   when do they use the product?
•   how is the product used?
•   Product positioning
•   Evaluate how customers perceive the product in relation to competitor’s products or to other solutions they use to solve their problems
•   Attitudes
•   What is the target market’s attitude regarding the company’s product?
•   What is the target market’s attitude regarding the general product category?
•   i.e., exam the general attitude regarding how products from all companies serve the target market’s needs
•   Describe the purchasing process:
•   How does the target market make their purchase?
•   What does the decision-making process involve?
•   What sources of information are sought?
•   What is a timeline for a purchase (e.g., impulse vs. extended decision-making)?
•   Who makes the purchase?
•   Does user purchase or is other party responsible (e.g., parent purchasing for children)?
•   Who or what may influence the purchase?
•   Provide market size estimates:
•   Keep in mind these are estimates for the market not for a specific product
•   Provide size estimates for the potential market
•   What is the largest possible market if all buy?
•   Provide estimates of size for the current target market
•   What percent of the potential market actually purchased?
•   Provide estimates of future growth rates
•   At least through the timeframe for the plan (e.g., 1 year) but most likely longer (e.g., 3-5 year projections)

Part 2: Situational Analysis
3. Describe Current Distributor Network (if appropriate)
Evaluate how the company’s product(s) is distributed. Clearly marketing plans for a service company may not have much detail here but this section will most likely have some relevance even for service firms (e.g., package delivery services, online legal service, etc,). (Length: 2 pages).
•   Describe the channels/supply chain employed to sell and deliver the product: (Note: internal sales force discussion should appear under company promotion in Current Product Analysis above.)
•   Options may include:
•   direct to customer
•   indirect via a distributor
•   combination of both
•   What are the needs/benefits sought by distributors?
•   Describe the product’s role within the distributor network:
•   How is this product used within the distributor’s business?
•   How important is product within the distributor’s strategy?
•   How is product positioned?
•   e.g., how does distributor view product in relation to competition
•   Attitudes and perceptions about company's product(s)
•   Purchase process
•   How does distributor network make their purchase?
•   Who or what influence distributor’s purchases?
•   Demographics
•   Who makes up the distributor network?
•   types
•   size
•   geographic region
•   markets served

Part 2: Situational Analysis
4. Competitive Analysis
Examine the main competitors serving the same target market.
Describe direct competitors in terms of:
•   Target markets served
•   Product attributes
•   Pricing
•   Promotion
•   Distribution including the distributor network
•   Services offered
•   Discuss competitor’s strengths and weaknesses:
•   May need to consider much more than just marketing issues such as:
•   financial standing
•   target market perception
•   R & D capabilities
•   Discuss competitive trends:
•   May need to include discussion of future competitive threats

Part 2: Situational Analysis
5. Financial Analysis for Product or Product Line
Much of this information can be handled within a graphical format, such as tables and graphs, though a paragraph explanation of each is generally required. Make sure to include total dollar (or other currency) amounts as well as percentage market share. For more detailed marketing plans or for plans for seasonal products, providing monthly or even weekly sales figures may be required. Provide a spreadsheet-style layout showing detailed breakdown of marketing revenues and expenses. (Length: 2-4 pages).
•   Current Sales Analysis
•   Overall industry sales and market share (for at least the last year)
•   total market sales
•   total for company’s product(s)
•   total for competition
•   By segments/product categories
•   total for segments/product categories
•   total for company’s product(s)
•   total for competition
•   By Channels of Distribution
•   total for each channel
•   total for company’s product(s) by channel
•   total for competition by channel
•   By Geographic Region
•   total for each region
•   total for company’s product(s) by region
•   total for competition by region
•   Profitability Analysis
•   Revenues
•   For highly detailed plans break out into categories as shown above in the Current Sales Analysis section.
•   Marketing Expenses
•   Types:
•   Direct – those expenses that can be tied to the product
•   Indirect or Proportional – generally administrative or broad marketing expenses that may be assigned to a product based on some established criteria (e.g., a product’s percentage of overall company sales) Note: not all companies follow this approach
•   For highly detailed plans break out into categories as shown above in the Current Sales Analysis section.

Part 2: Situational Analysis
6. Environmental Problems and Opportunities
Describe trends, events, conditions that are external (usually uncontrolled by the company) that may impact the company’s product(s) or the market. (Length: 1-2 pages)
•   Areas of consideration:
•   social and cultural
•   demographic
•   economic
•   technological
•   political
•   legal, regulatory, ethical
7. Product/Market Analysis Tools
In an effort to provide an easy to visualize summary of the product(s) consider using one or more of the following commonly used product/market analysis tools. (Length: 1 page)
•   Product Life Cycle Analysis
•   Boston Consulting Group Growth/Share Matrix
•   General Electric Market Attractiveness Matrix

8. Summary of Current Situation
Summarize all information in the Situational Analysis. (Length: 1 page)
•   Provide a SWOT analysis for the company’s product(s) that includes:
•   strengths
•   weaknesses
•   opportunities
•   threats

Part 3: Marketing Strategy and Objectives
Those reading a marketing plan need a clear picture of the direction the product will take. Also, they want to see that some accountability has been built into the plan so that the plan is not just fluff but results in measurable actions. The best way to provide this information is through a section devoted to identifying the key strategies and objectives for the product(s).
This section consists of three major issues:
•   Marketing Strategy
•   Financial Objectives
•   Marketing Objectives
1. Marketing Strategy
In this section identify the general marketing strategy under which this plan is being developed. It is very possible that a product will follow more than one strategy (e.g., sell more of same product to current customers but also find new customers in new markets). Plan developers may get some guidance and also rationale for strategy by examining results from the Situational Analysis. In particular, planners may look to strategies that are suggested within the scope of Product/Market Analysis Tools. Additionally, planners should refer to the Mission Statement in Step 1 to insure strategies are in line with how the company views itself. (Page length: less than 1 page)
Strategies generally fall under one of the following (or in some cases more than one) ideas:
•   Market growth  
•   Higher market penetration
•   Sell more to same market (i.e., get current customers to buy more or buy more frequently)
•   If overall market is growing this may not necessarily mean a growth in overall market share
•   If overall market is not growing this means a growth in overall market share
•   Find new markets
•   Sell to markets or market segments not previously targeted
•   Develop new products for existing customers
•   Develop new products for new customers
•   Market stability
•   Techniques to keep the status quo
•   Primarily used in times of economic decline or market decline
•   Generally requires the taking of market share from others in the industry
•   Cost control
•   Techniques to contain costs or operate more effectively
•   Can work in combination with market growth or market stability
•   Market exit
Techniques to depart a market

Part 3: Marketing Strategy and Objectives
2. Financial Objectives
For many organizations the ultimate goal of the marketing plan is the effect it will have on the bottom line. Measures reflect income statement items and common ratios. (Page length: less than 1 page)
•   Customer sales
•   by volume and growth percentage
•   by segments
•   Channel sales
•   by volume and growth percentage
•   by channel
•   Margins
•   Profitability
•   Ratios
•   use common financial ratios and other metrics associated with marketing in the industry

Part 3: Marketing Strategy and Objectives
3. Marketing Objectives
Marketing success can be measured on several non-financial market metrics. These measure are important since these often shed light on underlying conditions and circumstances facing the company that are not easily seen within financial measures. For instance, a company may report strong sales for a product but market share information may suggest the product is losing ground to competitors. The marketing objectives section will indicate targets to be achieved across several marketing decision areas. To add additional strength to this section include marketing metrics where possible. (Page length: less than 1 page)
•   Target market objectives
•   market share
•   total
•   by segments
•   by channel
•   customers
•   total
•   number/percentage new
•   number/percentage retained
•   purchases
•   rate of purchases
•   size/volume of purchases
•   Promotional objectives
•   level of brand/company awareness
•   traffic building
•   (e.g., store traffic, website traffic)
•   product trials
•   (e.g. sales promotions, product demonstrations)
•   sales force
•   (e.g. cycle time, cost per call, closing rate, customer visits, etc.)
•   Channel objectives
•   dealers
•   total
•   number/percentage new
•   number/percentage retained
•   order processing and delivery
•   on-time rate
•   shrinkage rate
•   correct order rate
•   Market research objectives
•   studies initiated
•   studies completed
•   R&D objectives
•   product development
•   Other objectives
•   partnerships developed


Part 4: Tactical Marketing Programs
This is the heart of the marketing plan. It contains descriptions of detailed tactics to be carried out to achieve the objectives and goals established in Step 3. It is typically the longest section of the plan, often representing 50% or more of total page count.
In this section details and timetables are presented for six key decision areas:
•   Target Markets
•   Product
•   Promotion
•   Pricing
•   Distribution
•   Other Areas
Preferably this section includes a brief summary of current marketing decisions (see Situational Analysis) so readers of the plan can easily compare what was planned to what is planned.

Part 4: Tactical Marketing Programs
1. Target Market Issues
If the target market remains the same as what was identified in the Situational Analysis then identifying the market will be relatively easy though justification for continuing with this market is required. For new markets a more detailed discussion is needed. This section also includes the sales forecast which is the driving force for all financial forecasts. Depending on the depth of detail sought in the marketing plan, it may be a good idea to include likelihood scenarios, such as best case, worst case, and probable case, when developing the sales forecast. (Length: 1-2 pages)
•   Target market description:
•   Brief summary of current target market
•   Identify planned changes:
•   Summarize changes:
•   Describe using profile (e.g., demographic, psychographic, behavioral, etc. )
•   Describe how it will be accomplished
•   Justify planned changes:
•   Due to results
•   Due to research
•   Due to competition
•   Others
•   Describe target market tactics:
•   Objectives
•   Methods used change target market
•   Profile the target marketing
•   Product positioning:
•   Brief summary of product postition
•   How does target market view product in relation to competitor’s products?
•   Identify planned changes:
•   Summarize changes in product positioning
•   Justify planned changes:
•   Due to results
•   Due to research
•   Due to competition
•   Others
•   Describe tactics to carryout changes
•   Objectives
•   e.g. what is desired position?
•   Methods used to change position
•   Sales forecast for each product:
•   Brief summary of current sales
•   Identify changes
•   Summarize changes in forecast
•   Justify forecast (i.e., figures determined based on what information?)
•   Describe forecast
•   Objectives
•   Methods used to carry out
•   Numerical estimates
•   Categories:
•   Total
•   By segment(s)
•   By distribution channel
•   Others
•   consider likelihood scenario analysis

Part 4: Tactical Marketing Programs
2. Product Issues
In this section discuss the decisions to be made for existing or new products and services. Make sure to consider all aspects of product decisions (branding, labeling, packaging) and not just the product itself. Also, keep in mind product decisions can also impact distributors (e.g., distributor’s response to packaging used to ship the product). (Length: 1-3 pages)
•   Brief summary of current product decisions for users and distributors in terms of:
•   General description
•   e.g., category of product, product line information
•   Features/attributes offered
•   list key features
•   main benefits target market receives
•   Branding
•   Packaging
•   Labeling
•   Identify planned changes:
•   Summarize changes
•   For new products
•   How was product developed?
•   Stage in development process
•   Timetable for availability
•   Justify changes:
•   Due to results
•   Due to research
•   Due to competition
•   Others
•   Describe planned changes:
•   Identify changes directed to the targeted user market:
•   Objectives:
•   e.g., modify existing products, extend existing product line, develop new products, develop new uses/benefits for existing products, delete current product, etc.
•   Features/attributes offered
•   Branding
•   Packaging
•   Labeling
•   Identify changes to the distributor network:
•   Objectives:
•   e.g., improve distribution, improve protection, lower cost of handling, gain distribution, etc.
•   Features/attributes offered
•   Branding
•   Packaging
•   Labeling

Part 4: Tactical Marketing Programs
3. Promotion Issues
Describe the decisions related to how the product will be promoted. In general, promotion consists of four major areas – advertising, sales promotion, public relations and personal selling – though not all may be used. Timetables for promotion are important since certain types of promotions (e.g., magazine ads, trade shows) require long lead times. Most information in this section can be shown in tables and graphs. Each of the four promotion areas is separated out, however, some planners find it easier to combine the areas. For instance, the promotional areas could be combined within special promotion programs, such as Holiday Promotion Program, Summer Promotion Program, etc. (Length: 1-4 pages)
•   Brief summary of current promotional decisions for users and distributors in terms of:
•   General description for four promotional areas:
•   advertising
•   sales promotion
•   personal selling
•   public relations
•   Message/theme
•   Methods used:
•   Summarize methods used
•   Summarize spending for each method
•   Interrelation of four promotional areas
•   e.g., explain how advertising supports sales promotion
•   Identify planned changes:
•   Summarize changes
•   Justify changes:
•   Due to results
•   Due to research
•   Due to competition
•   Others
•   Describe planned changes:
•   Identify changes directed to the targeted user market:
•   General description for four promotional areas:
•   Objectives
•   Advertising - e.g., build general awareness/inquiries/traffic, encourage product trial, shift awareness (e.g., change attitude), response to competitor promotion, increase use or purchase rate, support other market decisions (e.g., support sales force), general corporate/product image building, etc.
•   Sales promotion - e.g., build inquires, increase product trial, encourage repurchase, build traffic, support other promotions
•   Personal selling - e.g., new account development, account support/maintenance, increase product trial, encourage purchase/repurchase, build traffic, support other promotions
•   Public relations - e.g., build general awareness/inquiries/traffic, encourage product trial, shift awareness (e.g., change attitude), respond to negative news/perception, image building, prepare markets for future activity (e.g., new product)
•   Methods and message:
•   type and media used: e.g., ad type (e.g., television spots, Internet banner ads, roadside billboards, direct mail, etc.) , sales promotion type (e.g., coupons, demonstrations, etc.), selling type (e.g., sales force, call center), pr type (e.g., press release, pitch to magazines, etc.)
•   message conveyed
•   Spending and timetables
•   total
•   sub-divided by:
•   type
•   e.g., ad spending, sales force compensation
•   media used
•   targeted users
•   Identify planned changes directed to the distributor network:
•   General description
•   Objectives
•   Advertising - e.g., build general awareness/inquiries, encourage product handling, shift awareness (e.g., change attitude), response to competitor promotion, increase purchase rate, support other market decisions (e.g., support sales force), general corporate/product image building, etc.
•   Sales promotion - e.g., build inquires, encouraging inventory building, support other promotions, encourage handling of new products, obtain distributor assistance
•   Personal Selling - e.g., new account development, account support/maintenance, encourage purchase/repurchase/inventory building
•   Public Relations - e.g., build general awareness/inquiries/traffic, encourage distribution trial, shift awareness (e.g., change attitude), respond to negative news/perception, image building, prepare markets for future activity (e.g., new product)
•   Methods and message
•   type and media
•   message conveyed
•   Spending and timetables
•   total
•   sub-divided by:
•   type
•   media used
•   targeted distributor network

Part 4: Tactical Marketing Programs
4. Distribution Issues
This marketing tactics section lays out the distribution plan for the product or service. Distribution is a broad concept that includes all activities and entities (e.g., value chain partners) responsible for getting the product or service to the customer. Distribution costs can represent a high portion of the overall cost of the product so an efficient distribution system may be critical for marketing success. (Length: 1-3 pages)
•   Brief summary of current distribution network/value chain decisions:
•   Types of channels used
•   direct - e.g., direct via sales force, Internet, etc.
•   indirect - e.g., retailers, wholesalers, agents
•   combination
•   Level of market coverage
•   intensive - e.g., mass availability
•   selective - e.g., wide availability
•   exclusive - e.g., restricted availability
•   Outlets handling product
•   types
•   number/level of penetration
•   geographic location
•   Perceived product positioning
•   in relation to competitors
•   Distribution costs
•   Identify planned changes:
•   Summarize changes
•   Justify changes:
•   Due to results
•   Due to research
•   Due to competition
•   Others
•   Describe planned changes:
•   Objectives
•   e.g., account development, gain distributor support, account maintenance, account penetration
•   Types of channels employed
•   Level of market coverage
•   Outlets handling product
•   Product positioning
•   Distribution costs

Part 4: Tactical Marketing Programs
5. Pricing Issues
Pricing decisions can be a complicated undertaking that requires knowledge of the market, competitors, economic conditions and, of course, customers. For this section it is not necessary to provide extensive financial evaluation of the pricing decision since most of this will take place in Part 5 Budgeting and Implementation, however, the use of tables and graphs may be helpful in showing pricing trends and pricing decisions within various categories. (Length: 1-2 pages)
•   Brief summary of current pricing decisions:
•   Describe pricing decisions by:
•   model/product
•   segment
•   channel
•   geography
•   other
•   Adjustments and Allowances
•   Discounting
•   Payment terms
•   Identify planned changes
•   Summarize changes
•   Justify changes:
•   Due to results
•   Due to research
•   Due to competition
•   Other
•   Describe planned changes:
•   Objectives
•   e.g., return on investment, market share, profit level, price leadership, match competition, etc.
•   Factors affecting price setting
•   Cost factors
•   Fixed costs to be covered
•   Variable costs
•   Customer expectations
•   Company expectations
•   e.g., margins, ROI
•   Demand Considerations
•   market elasticity
•   position on product life cycle
•   Competition
•   Economic conditions
•   Legal/regulatory considerations
•   Pricing Options
•   list, preferred or suggest pricing
•   adjustments and allowances
•   sub-divided by:
•   product/model
•   customer
•   channel
•   other

Part 4: Tactical Marketing Programs
6. Other Areas (optional)
In this section include a discussion of other marketing decision areas. Two additional areas – customer support service and marketing research – are provided though it is possible others exist. (Length: 1 page or less)

•   Customer Support Services
•   Brief summary of current customer support services decisions:
•   types offered:
•   e.g. call center, online, service desk, walk-up, on-site
•   customers being serviced:
•   e.g., current customers, potential customers, distributor network
•   service delivery method:
•   e.g., internally managed, contracted, partnership arrangement
•   Identify planned changes
•   Summarize changes
•   Justify changes:
•   Due to results
•   Due to research
•   Due to competition
•   Other
•   Describe planned changes
•   Objectives
•   e.g., availability, response time, satisfaction level
•   Types offered
•   Customers being serviced
•   Service delivery method
•   Spending and timetables
•   Market Research
•   Brief summary of current market research efforts
•   Projects
•   e.g., completed, in process, under consideration
•   Research responsibility
•   e.g., internally managed, contracted, partnership arrangement
•   Identify planned changes
•   Summarize changes
•   Justify changes:
•   Due to results
•   Due to research
•   Due to competition
•   Other
•   Describe planned changes
•   Objectives
•   e.g., customer analysis, market analysis, competitor analysis, exploratory
•   Projects
•   Service responsibility
•   Spending and timetables

Part 5: Budgeting, Performance Analysis and Implementation
In many ways this part of the marketing plan is the area that will ultimately “sell” the plan to those who have the power to give final approval. This step consists of three key topics:
•   Marketing Budget - presents a clear picture of the financial implications of the plan
•   Performance Analysis - presents the expected results of the plan including its financial impact
•   Implementation Schedule - shows timelines and identify those responsible for performing tasks

Part 5: Budgeting, Performance Analysis and Implementation
1. The Marketing Budget
This section should lay out spending requirements necessary for meeting the plan’s objectives. It is expected that several tables and graphs will be presented along with narratives explaining important budget issues. (Length: 2-3 pages)
•   Outline spending requirements for each tactical marketing decision
•   Breakdown each tactical category
•   e.g., types of advertising, types of services offered, marketing research expense, etc.
•   Show detailed spending timetable by:
•   Month
•   Year
•   Show spending by:
•   Product (if plan is for more than one)
•   Segment/Geographic area
•   Distribution Network/Channel
2. Performance Analysis
This section should contain financial implications of the plan in terms of contributions to the company’s bottom line. HOWEVER, as was stated in the beginning of the Marketing Plan tutorial, the marketing plan is generally a component of a larger business plan. We do not cover a full financial discussion such as a full balance sheet, income statement, detailed ratio analysis, etc., though these could be included if necessary. Again, numerous tables and graphs should be presented. (Length: 2-3 pages)
•   Marketing Contribution
•   Show revenue versus expenses for marketing decisions
•   Revenue should follow sales forecasts (see Part 4)
•   Show expenses by category (e.g., advertising) and sub-category (e.g., types of advertising)
•   Breakdown by:
•   Product
•   Segment/Geographic area
•   Distribution Network/Channel
•   Breakeven Analysis:
•   Primarily for plans that involve the sale of tangible products, the breakeven analysis indicates the level of sales (generally described in terms of number of units sold) required before the company realizes positive marketing contribution.
•   Requires understanding of:
•   Fixed costs – cost that occur no matter level of sales
•   Variable costs – cost that may change as level of sales varies
•   Present as both graph and chart
•   Show breakeven point over level of sales volume
•   From zero through best scenario sales level
•   Show breakeven over time
•   Ratio Analysis
•   Limit to important marketing ratios that are common to the industry
•   e.g., sales cycle, advertising-to-sales, conversions from trial to purchase, website traffic-to-search engine marketing, etc.

Part 5: Budgeting, Performance Analysis and Implementation
3. Implementation
Provide a discussion of how and by whom the plan will be carried out. (Length: 1-2 pages)
•   Detailed schedule of tasks and those responsible:
•   Breakdown by important tactical marketing decisions
•   Best presented in a Gantt chart format.
•   Identify those responsible for each important task:
•   If unsure leave generic
•   e.g., advertising agency, web hosting company, distributors, etc.

Part 6: Additional Considerations
The final major section in the Marketing Plan prepares the reader for potential situations that may affect the plan. In this way the reader is provided with a somewhat more balanced picture of what the company may face as it attempts to implement the plan. (Length: 2-3 pages)
1. Internal Factors
•   Discuss company factors that may affect the plan
•   e.g., loss of funding sources, loss of key personnel, current plan is linked to success to other products that may not reach their goals, production problems, etc.
2. External Factors
•   Discuss outside factors that may affect the plan
•   e.g., supply chain problems, competitor reaction, technological developments, legal environment, societal changes, economic issues, governmental concerns, etc.
3. Research Limitations
•   Discuss problems that may exist with the research information on which assumptions are being made
•   e.g., difficult to find solid data on a certain subject

2.  (a) What are the various elements of marketing mix? Explain each of there elements and their importance in the marketing planning process of a consumer durable company manufacturing room air conditioner.   

Marketing your business is about how you position it to satisfy your market’s needs. There are four critical elements in marketing your products and business. They are the four P’s of marketing.

1. Product. The right product to satisfy the needs of
your target customer.
2. Price. The right product offered at the right price.
3. Place. The right product at the right price available
in the right place to be bought by customers.
4. Promotion. Informing potential customers of the
availability of the product, its price and its place.
Each of the four P’s is a variable you control in creating the marketing mix that will attract customers to your business.
Your marketing mix should be something you pay careful
attention to because the success of your business depends on it. As a business manager, you determine how to use these variables to achieve your profit potential. This publication introduces the four P’s of marketing and includes worksheets that will help you determine the most effective marketing mix
for your business.

“Product” refers to the goods and services you offer to your customers. Apart from the physical product itself, there are elements associated with your product that customers may be attracted to, such as the way it is packaged. Other product attributes include quality, features, options, services, warranties,
and brand name. Thus, you might think of what you
offer as a bundle of goods and services. Your product’s
appearance, function, and support make up what the customer is actually buying. Successful managers pay close attention to
the needs their product bundles address for customers.
Your product bundle should meet the needs of a particular
target market. For example, a luxury product should create
just the right image for “customers who have everything,”
while many basic products must be positioned for price conscious consumers. Other important aspects of product may\ include an appropriate product range, design, warranties, or a brand name.
Customer research is a key element in building an effective marketing mix. Your knowledge of your target market and your competitors will allow you to offer a product that will appeal to customers and avoid costly mistakes.
If you are considering starting a new business or adding a
new product, then make sure the product bundle will fit your business’s strengths and weaknesses, and that it will provide an acceptable risk/return tradeoff. For instance, if your business is very good at timely response to customers, then timely
service should be an important part of your product bundle.
Think long term about your venture by planning for the ways you can deepen and broaden your product bundle. For instance, you may be able to take advantage of opportunities
to add value through processing, packaging, and customer
service. Other future growth may allow you to offer your
product to different customers. Start-up businesses are most successful when they concentrate their efforts on one product or one market, like a restaurant or a car service center does.
Later growth may occur in the same location or may be in
different geographic regions.
A different type of growth would be a diversification of
products, with your business offering related products.
Offering a whole range of products is most successful if the raw materials, production processes, and distribution methods
are similar, which means you do not have to acquire new
suppliers, skills and equipment, and distribution methods.

“Price” refers to how much you charge for your product or
service. Determining your product’s price can be tricky and
even frightening. Many small business owners feel they must absolutely have the lowest price around. So they begin their business by creating an impression of bargain pricing.
However, this may be a signal of low quality and not part of the image you want to portray. Your pricing approach should reflect the appropriate positioning of your product in the market and result in a price that covers your cost per item and includes a profit margin. The result should neither be greedy
nor timid. The former will price you out of the market;
pricing too low will make it impossible to grow.
As a manager, you can follow a number of alternative pricing
strategies. In the next column are eight common pricing
strategies. Some price decisions may involve complex
calculation methods, while others are intuitive judgments.
Your selection of a pricing strategy should be based on your product, customer demand, the competitive environment,
and the other products you will offer.
• Cost-plus: Adds a standard percentage of profit
above the cost of producing a product. Accurately
assessing fixed and variable costs is an important part
of this pricing method.
• Value-based: Based on the buyer’s perception of
value (rather than on your costs). The buyer’s
perception depends on all aspects of the product,
including non-price factors such as quality,
healthfulness, and prestige.
• Competitive: Based on prices charged by competing
firms for competing products. This pricing structure is
relatively simple to follow because you maintain your
price relative to your competitors’ prices. In some
cases, you can directly observe your competitors’
prices and respond to any price changes. In other
cases, customers will select vendors based on bids
submitted simultaneously. In those cases, gathering
information will be more difficult.
• Going-rate: A price charged that is the common or
going-rate in the marketplace. Going-rate pricing is
common in markets where most firms have little or
no control over the market price.
• Skimming: Involves the introduction of a product at
a high price for affluent consumers. Later, the price is
decreased as the market becomes saturated.
• Discount: Based on a reduction in the advertised
price. A coupon is an example of a discounted price.
• Loss-leader: Based on selling at a price lower than
the cost of production to attract customers to the store
to buy other products.
• Psychological: Based on a price that looks better,
for example, $4.99 per pound instead of $5.00 per
After you decide on your pricing strategy, the amount of
money you will actually receive may be complicated by other
pricing aspects that will decrease (or increase) the actual
amount of money you receive. You will also have to decide
how to determine:
• Payment period: Length of time before payment is
• Allowance: Price reductions given when a retailer
agrees to undertake some promotional activity for
you, such as maintaining an in-store display.
• Seasonal allowances: Reductions given when an
order is placed during seasons that typically have low
sales volumes to entice customers to buy during slow
• Bundling of products/services: Offering an
array of products together.
• Trade discounts (also called “functional
discounts”): Payments to distribution channel
members for performing some function such as
warehousing and shelf stocking.
• Price flexibility: Ability of salesperson or reseller to
modify price.
• Price differences among target customer
groups: Pricing variance among target markets.
• Price differences among geographic areas:
Pricing variance among geographic regions.
• Volume discounts and wholesale pricing:
Price reductions given for large purchases.
• Cash and early payment discounts: Policies to
speed payment and thereby provide liquidity.
• Credit terms: Policies that allow customers to pay
for products at a later date.
The methods discussed here should be a base from which to construct your price. Your options will vary depending on how
you choose to sell your product. For instance, if you make a product but don’t sell it directly to the customer, then you will want to know who sets the retail price and what margin they will require. Tracing the path of your product from production
to final purchase is a useful exercise to discover this
information. The research needed to understand the pricing along the distribution path will be more than worth the time it takes.
Whatever your price may be, ultimately it must cover your
costs, contribute to your image by communicating the
perceived value of your product, counter the competition’s
offer, and avoid deadly price wars. Remember, price is the one
“P” that generates revenue, while the other three “P’s” incur costs. Effective pricing is important to the success of your business.
“Place” refers to the distribution channels used to get your
product to your customers. What your product is will greatly influence how you distribute it. If, for example, you own a
small retail store or offer a service to your local community,
then you are at the end of the distribution chain, and so you
will be supplying directly to the customer. Businesses that
create or assemble a product will have two options: selling
directly to consumers or selling to a vendor.

Direct Sales
As a producer, you must decide if supplying direct is appropriate for your product, whether it be sales through retail, door -to-door, mail order, e-commerce, on-site, or some other
method. An advantage of direct sales would be the contact you gain by meeting customers face to face. With this contact you can easily detect market changes that occur and adapt to them. You also have complete control over your product
range, how it is sold, and at what price.
Direct sales may be a good place to start when the supply of your product is limited or seasonal. For example, direct sales
for many home-produced products can occur through homebased sales, markets, and stands.
However, direct sales require that you have an effective retail interface with your customers, which may be in person or
electronic. If developing and maintaining this retail interface
is not of interest to you or you are not good at it, you should
consider selling through an intermediary.

Reseller Sales (Sales Through
an Intermediary)
Instead of selling directly to the consumer, you may decide to sell through an intermediary such as a wholesaler or retailer
who will resell your product. Doing this may provide you with a wider distribution than selling direct while decreasing the pressure of managing your own distribution system. Additionally,
you may also reduce the storage space necessary for
inventory. One of the most important reasons for selling
through an intermediary is access to customers. In many
situations, wholesalers and retailers have customer connections that would not be possible to obtain on your own.
However, in selling to a reseller you may lose contact with
your end consumer. In some cases, you may also lose some of your company identity. For example, your distributor may
request that your product be sold under the reseller’s brand name.
One factor that may influence whether you can find an
intermediary to handle your product is production flow.
Wholesalers want a steady year-round supply of product to distribute. If you can deliver a steady year-round supply that is
of consistent quality, then selling through an intermediary
may be a good strategy for you.

Market Coverage
No matter whether you sell your product direct or through a reseller, you must decide what your coverage will be in
distributing your product. Will you pursue intensive, selective,
or exclusive coverage?
Intensive distribution is widespread placement in as
many places as possible, often at low prices. Large businesses
often market on a nationwide level with this method.
Convenience products—ones that consumers buy regularly
and spend little time shopping for, like chewing gum—do
better with intensive (widespread) distribution.
Selective distribution narrows distribution to a few
businesses. Often, upscale products are sold through retailers
that only sell high-quality products. With this option, it may
be easier to establish relationships with customers. Products
that people shop around for sell better with selective distribution.
Exclusive distribution restricts distribution to a single
reseller. You may become the sole supplier to a reseller who, in
turn, might sell only your product. You may be able to
promote your product as prestigious with this method, though
you might sacrifice sales volume. Specialty products tend to
perform better with exclusive distribution.
Other Place Decisions
Product characteristics and your sales volumes will dictate
what inventories to maintain and how best to transport your
products. Additionally, the logistics associated with acquiring
raw materials and ensuring that your final product is in the
right place at the right time for the right customers can
comprise a large percentage of your total costs and needs
careful monitoring.
You may decide to have a combination of all the distribution
methods. Whatever you decide, choose the method which you
believe will work best for you.
“Promotion” refers to the advertising and selling part of
marketing. It is how you let people know what you’ve got for
sale. The purpose of promotion is to get people to understand
what your product is, what they can use it for, and why they
should want it. You want the customers who are looking for a
product to know that your product satisfies their needs.
To be effective, your promotional efforts should contain a
clear message targeted to a specific audience reached via an
appropriate channel. Your target audience will be the people
who use or influence the purchase of your product. You
should focus your market research efforts on identifying these
individuals. Your message must be consistent with your
overall marketing image, get your target audience’s attention,
and elicit the response you desire, whether it is to purchase
your product or to form an opinion. The channel you select
for your message will likely involve use of a few key marketing
channels. Promotion may involve advertising, public
relations, personal selling, and sales promotions.
A key channel is advertising. Advertising methods to promote
your product or service include the following.
• Radio: Radio advertisements are relatively
inexpensive ways to inform potential local customers
about your business. Mid-to-late week is generally the
best time to run your radio ad.
• Television: Television allows access to regional or
national audiences, but may be more expensive than
other options.
• Print: Direct mail and printed materials, including
newspapers, consumer and trade magazines, flyers,
and a logo, allow you to explain what, when, where,
and why people should buy from you. You can send
letters, fact sheets, contests, coupons, and brochures
directly to new or old customers on local, regional, or
national levels.
• Electronic: Company Web sites provide useful
information to interested consumers and clients.
Password-protected areas allow users to more
intimately interact with you. Advertisements allow
broad promotion of your products. Direct e-mail
contact is possible if you have collected detailed
customer information.
• Word of Mouth: Word of mouth depends on satisfied
customers (or dissatisfied customers) telling their
acquaintances about the effectiveness of your products.
• Generic: Generic promotion occurs when no specific
brand of product is promoted, but rather a whole
industry is advertised. For instance, generic advertising
is commonly found for milk, beef, and pork.
Public relations (PR) usually focuses on creating a favorable
business image. Important components of a good public
relations program include being a good neighbor, being
involved in the community, and providing open house days.
News stories, often initiated through press releases, can be
good sources of publicity.
Personal selling focuses on the role of a salesperson in your
communication plans. Salespeople can tailor communication
to customers and are very important in building relationships.
While personal selling is an important tool, it is costly. So you
should make efforts to target personal selling carefully.
Sales promotions are special offerings designed to encourage
purchases. Promotions might include free samples, coupons,
contests, incentives, loyalty programs, prizes, and rebates.
Other programs might focus on educating customers through
seminars or reaching them through trade shows. Your target
audience may be more receptive to one method than another.
Additional sources of promotion may be attending or participating
in trade shows, setting up displays at public events, and
networking socially at civic and business organizations.
Final Comment
The four P’s—product, price, place, and promotion—should
work together in your marketing mix. Often, decisions on one
element will influence the choices available in others.
Selecting an effective mix for your market will take time and
effort, but these will pay off as you satisfy customers and
create a profitable business. The worksheets that follow will
help you construct your marketing plans.
Once you have a good marketing mix—the right product at
the right price, offered in the right place and promoted in the
right way—you will need to continue to stay on top of market
changes and adopt your marketing mix as necessary.
Marketing is a part of your venture that will never end.



1.This product  faces  competition  from

2.This product -owing  to newness  in  technology,
must  develop  the  market --convert  non users  into usership.

3.This product  must  also  ''penetrate''   the  market  with
the  potential  users,  who  can  afford.

Market  Development is the outcome of
marketing mix elements  IN  THE  PRODUCT  LIFE  CYCLE.

The  marketing   strategy  is   usually  built  around
the  4Ps
The  marketing  strategy  must  respond  to  the  nature
of  the  product / market  situation.  
The  marketer  would use different weightages for   the  4Ps
as  per  the situations.





-High Costs

-Inefficient Production Levels

-Cash Demands  HIGH

-Few or No Competitions

-Limited Product Awareness and Knowledge

-Limited Demand

-Stimulate Demand

-Establish High Price

-Offer Limited Product Variety

-Increase Distribution

Market Penetration Strategies.


Sharper product differentiation.

Finding other products' uses.

Increasing promotional effort.

Increasing the units of sales.

(Special price packages/cross selling products)

Reduction in price.

Price incentive for increased use.

Improving communication with present customers.

Promotion aiming at existing customers.

Understand reasons for losing customers.


Concentrating on distribution channels reaching most profitable segments.

Offering total customer service at higher price.




-Smoothing Production

-Lowering Costs

-Operation Efficiencies

-Product Improvement Work

-Expanding Markets

-Expanded Distribution

-Competition Strengthens

-Prices Soften a Bit

-Cultivate Selective Demand

-Product Improvement

-Strengthen Distribution

-Price Flexibility

New Market  Development Strategies.



Being flexible in pricing.

Seeking other distribution channels.

Advertising in other media.

National market expansion.

Regional market expansion.

Export market expansion.


Managing a Business

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Leo Lingham


In Managing a business, I can cover all aspects of running a business--business planning, business development, business auditing, business communication, operation management, human resources management , training, etc.


18 years of working management experience covering such areas
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24 years of management consulting which includes business planning, strategic planning, marketing, product management, training, business coaching etc.




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