MGT 330F – Introduction to Marketing

October 23, 2003

Marketing Plans

Lecture Overview

• Marketing in the News

• Video segments and discussion

• Marketing Plans

Marketing in the News

Video Segments and Discussion

Marketing Plans

• Each product and service requires a marketing plan for measuring performance: product, marketing, sales, etc.

• The development of a marketing plan is an important process and the final output (plan) is key to success

• It contains discussion of analysis of a number of marketing concepts and steps

Contents of the Marketing Plan

I. Executive Summary and Table of Contents

II. Current Marketing Situation

III. Opportunity and Issue Analysis

IV. Objectives

V. Marketing Strategy

VI. Action Programs

VII. Projected Profit-and-Loss Statement

VIII. Controls

Executive Summary

• A brief summary of the plan’s main goals and recommendations

• Allows senior management to grasp the plan’s major thrust

Current Marketing Situation

• Market Situation– Relevant background data on the

microenvironment– Size and growth of the market– Customer needs and buying-behaviour trends– Information taken from marketing manager’s

product ‘fact book’

Current Marketing Situation

• Product Situation– Discuss sales, prices, margins, profits

Variable Rows 20031 Industry Sales in Units 2,000,000 2 Company Market Share 0.033 Average Unit Price ($) 200 4 Variable Cost per Unit ($) 120 5 Gross Contribution Margin per Unit ($) (3-4) 80 6 Sales Volume in Units (1*2) 60,000 7 Sales Revenue ($) (3*6) 12,000,000 8 Gross Contribtuion Margin ($) (5*6) 4,800,000 9 Overhead ($) 2,000,000

10 Net Contribution Margin ($) (8-9) 2,800,000 11 Advertising and Promotion ($) 800,000 12 Sales Force and Distribution ($) 700,000 13 Marketing Research ($) 100,000 14 Net Operating Profit ($) (10-11-12-13) 1,200,000

Current Marketing Situation

• Competitive Situation– Identify major competitors

Perceived Added-Value

of Product

Price

X

Z

Y

W

A

Perceived Added-Value of Competitors

Current Marketing Situation

• Distribution Strategy– Data on the size and importance of each

distribution channel

• Macroenvironment– Describe broad trends (e.g., demographics,

economy, technology, etc.)

Opportunity and Issue Analysis

• SWOT Analysis– Strengths – focus on the product– Weaknesses – focus on the product– Opportunities – focus on the business– Threats – focus on the business

• Issues facing the product line– Use the S/W to identify the main issues that

the plan must address

Objectives

• Identify the Financial and Marketing Objectives– Financial: Specified Rates of Return, Cash

Flow or Net Profits– Marketing: Translate financial objectives into

marketing objectives

Marketing Strategy

• The “game plan” used to accomplish the plan’s objectives

• In developing the plan, the marketing manager must consult with others in the company:– Production and Manufacturing– Sales– Finance

Marketing Strategy

– Target Market– Positioning– Product line– Price– Distribution Outlets– Sales Force

– Service– Advertising– Sales Promotion– Research and

Development– Marketing Research

Example of a marketing ‘game plan’:

Action Programs

• Identify the broad marketing programs to achieve objectives

• Answer the following questions:– Who, What, When, How…Why?

• Create a timeline for broad marketing activities

Action Programs

Timeline for Broad Marketing Activities

Demo Video X X

Posters and Ads X X

Sales Training X

Trade Shows X X

Magazine Ads X X

In-store Promo X X

Video on Web X X

Magazine Ads X X

Sales Support X X X

Dates June 03

July 03

Aug. 03

Sept. 03

Oct. 03

Nov. 03

Dec. 03

Jan. 03

Feb. 03

Mar. 03

Profit and Loss Statement

• Action plans lead to a budget

• Revenues…projected sales

• Expenses…estimated costs…granularity

• The difference is projected profit

Simple Profit-and-Loss Statement

Sales $60,000 Less: Cost of Goods Sold 39,000

Gross Margin $21,000 Expenses

Salaries $9,300 Rent 3,000 Supplies 3,500

15,800 Net Profit $5,200

Step 1: Identify ‘Functional’ Expenses

Mapping ‘Natural’ Expenses into Functional Expenses Natural

Accounts Total Selling Advertising Packing and

Delivery Billing and Collecting

Salaries $9,300 $5,100 $1,200 $1,400 $1,600 Rent 3,000 0 400 2,000 600 Supplies 3,500 400 1,500 1,400 200 15,800 5,500 3,100 4,800 2,400

Step 2: Assigning Functional Expenses to Marketing Activities

Bases for Allocating Functional Expenses to Channels Channel Type Selling Advertising Packing and

Delivery Billing and Collecting

Hardware 200 50 50 50 Garden Supply 65 20 21 21 Department Stores 10 30 9 9 Total # of units 275 100 80 80 Functional Expense $5,500 $3,100 $4,800 $2,400 Divided by # of units 275 100 80 80 Equals $20 $31 $60 $30

Step 3: Preparing P&L for each Channel

Profit and Loss Statement for Hardware Channel Hardware Sales $30,000 Cost of Goods Sold 19,500

Gross Margin $10,500 Expenses

Selling (at $20 per call) $4,000 Advertising (at $31 per advertisement)

1,550

Packing and Delivery ($60 per order)

3,000

Billing ($30 per order) 1,500 Total Expenses $10,050 Net Profit or Loss $450

Controls and Contingency

• An outline of how the plan will be monitored

• Goals are spelled out on a monthly or quarterly basis

• Managers and senior management review the performance

• Contingency plans are specific plans to deal with anticipated ‘adverse’ developments in the market (e.g., price war)