(tested - Excellent) Marketing.management.overheads

Marketing Management

“A discipline focused on creating, developing, and maintaining profitable relationships between customers and the organization.”

Developing a Marketing Plan Corporate Capabilities • • • • Customer Analysis • • • • •

Objectives Finance Operations Human Resources

Product Price Place Promotion

Who? What? How? Where? When?

Environmental Analysis • • • •

Political Economic Social Technological

Competitive Analysis • • • • •

Who? (Direct and Indirect) Relative size/Power Strengths and Weaknesses Potential Risks and Opportunities Industry Statistics

NEEDS TO BE A GOOD FIT ALL AROUND

Marketing Report — Evaluation

Your report will be evaluated on the following 3 criteria:

Ö Your ability to define the marketing challenge (problem).

Ö The depth to which you have properly applied the marketing tools learnt in class to analyze the problems in the case.

Ö The effectiveness of the decision and action plan you have committed to.

Marketing Report — General Comments

Ö To do well, I have to believe that your decision is appropriate and that your action plan will work. ª This will not come through in your language, it will come through in your ability to link your analysis to your decision and action plan.

Ö This is not a case write-up, it is a report. ª Do not give me role, constraints and considerations, etc. ª Take on the role — do not be afraid of the words “I” or “me” or “we” or “us”.

Marketing Report — Executive Summary

Ö A ONE page summary of your report (located at the beginning of your report) that should include the following: ª An identification of the marketing challenge being faced. ª A brief review of the analysis undertaken to reach a decision. ª The main recommendations of your report.

Ö It should be able to stand on its own. ª Ask yourself, “If I were to write only one page about my report, what would I put on it?”

Marketing Report — Writing Style

Ö Although grammar, punctuation and diction do not “count” in the mark, poor grammar will kill the impact of your report.

Ö PROOFREAD, PROOFREAD, PROOFREAD! ª Get the logic errors out first, then worry about the grammar.

Customer Analysis

Ö Marketing is about deciding what to do for whom

Ö Marketers examine the customer in-depth, not to uncover interesting facts, but instead, to find actionable ideas

Ö People differ — they should be divided into groups of similar people so that marketers can work more effectively to influence their behaviour (market segmentation)

Ö It is virtually impossible to be all things to all people — specifying a target market enables a marketer to focus on the most attractive segment of the market

Customer Analysis

WHO Are they?

WHAT Do they want/need?

Customer Group Ö Identify and describe potential customers ª Demographics ª Size of the segment Ö Describe their needs in a product/ service ª Physical characteristics ª Package of benefits

HOW Ö Determine the reasons why they Are they purchase motivated to ª Psychological component purchase? ª Convenience, impulse, etc. WHERE Do they purchase?

Ö Identify the places where they purchase ª Location ª Distribution

WHEN Do they purchase?

Ö Describe their purchase pattern ª Time of year, month, day ª Point in their life ª Frequency

Competitive Analysis

Ö Marketers assess how successful the competitors are and look for exploitable differences in their offerings

Ö Effective marketers capitalize on these opportunities by attempting to influence customers perceptions

Ö Marketers must attempt to anticipate changes in the competitive environment

Competitive Analysis

STRENGTHS

Competitor (Direct/Indirect) Ö What do they do well?

WEAKNESSES

Ö In what areas are they lacking?

RISKS

Ö Possible competitive reactions

OPPORTUNITIES Ö Potential areas to exploit

Marketing Arithmetic

Cost (Recurring)

Variable

Investment (One-time)

Fixed

Cost Classification Ö Variable Cost (VC) ª A cost which changes directly and proportionately with changes in volume

$

Volume

Ö Fixed Cost (FC) ª A cost which does not change despite changes in volume

$

Volume

Marketing Arithmetic Ö Unit Contribution (UC) ª Selling Price — Variable Costs Ö Contribution Margin Ratio (CMR) ª Unit Contribution ÷ Selling Price Ö Break Even (B/E) ~ Units ª Fixed Costs ÷ Unit Contribution ª Profit Target Break Even Ö Break Even (B/E) ~ Sales $ ª Fixed Costs ÷ Contribution Margin Ratio ª Profit Target Break Even Ö Market Share Break Even ~ Units or Sales $ ª Break Even ÷ Total Market ª Relevant Market Share Break Even Ö Return on Investment (ROI) ª Profit ÷ Investments

Sensitivity Analysis

Ö By being able to quickly determine whether a new plan will yield a profit, we can easily test other scenarios

Ö We could change: ª the selling price, ª the variable costs, ª the fixed costs, or ª the profit target

Mark-up vs. Margin Ö Mark-up ª A percentage is added to the cost of a product to determine its selling price EXAMPLE: A retailer purchases a product from its supplier for $10.00 and wishes to add a mark-up of 20% $10.00 2.00 $12.00

Wholesale Selling Price 20% Mark-up ($10.00 × 20%) Retail Selling Price

Ö Margin ª The cost represents a percentage of the selling price as determined by 1 – margin % EXAMPLE: A retailer wishes to set a selling price that allows for a 20% margin $12.50 10.00 $ 2.50

Retail Selling Price (RSP × 80% = WSP) Wholesale Selling Price (80%) Margin (20%)

Pricing Strategies Skimming Strategy Ö The tendency to price very high in the hopes of making a substantial profit in a short amount of time. Often used when a firm is the first to enter the market and wants to make a profit quickly before it can be copied or imitated.

Penetration Strategy Ö The tendency to price very low in the hopes of gaining a large market share quickly and retaining that market share in the long run. Often used when a market has growth potential and firms competing in the market want to discourage new competitors from entering the market.

Pricing

Ö Prices should be set based on what customers think the product or service is worth (perceived value).

Ö In setting a price, consider your positioning and your competition. Your price sends a big signal to your customers about how they should perceive your product/service relative to your competitors.

Ö In setting your price, you must be completely aware of your cost structure. Know your marketing math to determine whether or not you will be profitable.

Distribution

Ö There are many ways to get a product/service to the end customer.

Ö Deciding which distribution channel(s) to use is a major marketing decision. ª it cannot be made independently of other marketing decisions ª it cannot be changed quickly

Ö Identifying “who does what for whom” enables marketers to recognize the implications of their company’s power and control over the marketing efforts of other channel members.

Ö An alert marketer seeks channels that make sense for their target market.

Marketing Communications

Ö Often the most visible aspect of marketing, marketing communications is but one piece of the overall marketing plan. Ö There are many communication methods available to marketers, including: ª advertising ª promotion ª point-of-purchase displays ª direct mail ª telemarketing ª packaging ª personal selling ª trade incentives ª publicity Ö In general, marketers can use a combination of the following two communications strategies. ª PUSH strategy ª PULL strategy

Push vs. Pull Strategy

Ö Push Strategy ª the communications effort is directed towards members of the distribution

channel

Producer

Distributor

Retailer

Customer

Ö Pull Strategy ª the communications effort is directed towards the end customer

Producer

Distributor

Retailer

Customer

Social Marketing Ö All marketing efforts begin by defining the marketing challenge. ª the challenge for a social marketer is rarely one of profit maximization ª the challenge often focuses on creating awareness within a target group of a social problem/need, with the goal of changing that group’s behaviour

Ö Not all people in the target group have the same level of awareness, knowledge or acceptance. It is important that a consistent message be given to all individuals in the group (integrated marketing communications plan).

Ö Social marketers must often deal with highly sensitive/controversial issues. They must attempt to overcome any social resistance in their communications strategy.