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Over 250 scholarly pieces of research have proven the link between effective marketing planning and corporate success, yet it remains one of the most elusive processes to master. This video captures over 25 years of experience by Professor McDonald working with many of the world's most successful companies and explains in a no-nonsense way where to start, how to do it and how to benefit from marketing planning. Professor McDonald, in his usual style, makes it both interesting and exciting and provides lots of actionable propositions.
Professor Malcom McDonald shares us his 25 years of experience of working with international companies regarding the role of world class strategic marketing planning. The objectives of this marketing planning course cover the challenges that world class companies deal with, their need for marketing planning and the starting point of implementing the marketing strategy. Companies are asked to identify their key target markets , their marketing objectives and their resources to create differential advantages against competitors. In essence, marketing planning teaches us how to plan the use of these resources to achieve the marketing objectives.
What are the main components of a strategy? How much of the net profit growth comes from market growth or from market share? How much of the net profit growth comes from price increase or productivity improvement? We need to be able to answer these questions in order to produce money when we are not in a growth market and when elements such as markets, customers and segments must be considered more carefully. The video analyses the house market plunge which is a good example of a difficult market situation and how it should be handled.
The strategic marketing plan represents an ample set of questions regarding the list of key target markets, the quantitative and qualitative values required by each of the key target markets and how does our organization create this value in each of these key target markets. Companies face different challenges across time starting with market maturity, globalization and eventually increasing customer power. In these conditions, the overall purpose of strategic marketing planning is to identify and create a sustainable competitive advantage. The first step in marketing planning refers to the definition of markets. Then customers needs are quantified within these markets and finally value propositions are put together and delivered to meet these needs. Thus the value proposition is at the base of the sustained competitive advantage.
As we have seen, all companies deal with challenges sooner or later but successful world class companies manage to overcome them due to a set of unique characteristics including strong products and services, competitive benchmarking, high motivation of their employees and deep understanding of the marketing theory and practice. This session covers the description of the provider-customer-consumer value chain and the design of a marketing plan that sells the product directly to consumers. A marketing plan should answer a series of general questions regarding the purpose, the market, the customer, the products, the companys objectives and resources. Once we have clarified these main elements, we can design strategies on what new products should the company develop, what price should they apply, how should they communicate with target markets and how can the effectiveness of this plan be measured.
A very well-known marketing tool, first published in 1957 in Harvard Business Review, the Ansoff Product/Market Growth Matrix is used by marketers to elaborate market growth strategies for their product. These strategies can apply both for new or existing products in new or existing markets thus resulting four types of combinations. We start with market penetration which represents the growth strategy focused on selling existing products in existent markets. This is the least risky growing strategy since it focuses on the already existent resources and skills of the company and its objectives refer to the maintenance or growth of the market share, driving away competitors and increase the loyalty of existing customers. Market development on the other hand includes expansion to other market segments. New markets could mean new geographic segments, new demographic segments or new institutional segments; also new sales channels could be used. Next we have product development which consists in introducing new products into existing markets. This strategy implies the development of new products or modification of existing ones which usually responds to the needs of the market. Finally we have diversification strategy when new products are launched into new markets. Comparing to the first three strategies that implied using the companys existing resources and experience, diversification requires a company to achieve new skills and techniques and therefore presents a high degree of risk. After examining all four strategies we can see that market penetration can help companies explore their productivity and discover new means of growth. If there are no other resources to further grow, then they can use product development which is less risky than market extension. Diversification however should be considered the last solution due to its extreme risk. Further on, the video provides strategic planning exercises (gap analysis) for revenue and for profit which analyze the gap between the objectives and forecasts of the organization. We must pay attention to productivity, market penetration, market development and product development boxes and think them in terms of revenue and profit to see how much can the company grow if these are increased and if the gap still persist then a final solution would be diversification. In the end we can have a marketing planning process in three phases: goal setting, situations review, strategy formulation and resources allocation. The next column comprises the output process which is the plan itself and next to it we find attached the diagnostic marketing and financial tools that were used to elaborate the output. Therefore we can have in the end a more clear and complex view on what strategies is best to use and their level or risk.
The marketing planning strategy is usually designed on a three years period of time and it usually includes the purpose statement, the financial summary in terms of revenue and profit, market overview, SWOT analyses, portfolio summary, assumptions, objectives and strategies and budget. Some of these elements are very important such as market overview with its means of functioning and key decision points and this video provides different marketing planning examples to support this theory. As we can see, correct market definition and segmentation are crucial for share and growth measurement, to identify target customers and relevant competitors and to formulate a marketing strategy.
Another important tool in auditing the external and internal environment of the organization is represented by the SWOT analysis. Strengths and weaknesses are internal environmental factors while external environmental factors are expressed through opportunities and threats. Basically the SWOT analysis should be helpful in assessing the resources, capabilities and also vulnerable points which need improvement in order to develop competitiveness. It can also provide a framework to review the strategy or direction of a company. However, SWOT Analysis should be more than the basic enumeration of strengths, weaknesses, opportunities and threats because most organizations have the same, common sense type of threats such as competitors, technological changes, regulation and deregulation or weaknesses such as high price but these are all very general, hard to control elements so its utility is quite limited. As Professor Malcom McDonald puts it, real SWOTS should be more concise and more specific. First of all they should be applied to a specific segment of the market and afterwards analyze what factors do people take into consideration when they decide to buy a specific product-the so called Critical Success factors-and how much does each individual item weight in terms of importance. Therefore, the final score is the result of a strengths/weaknesses analysis from a customer perspective and shows the status of our company and other competitors. Once strengths and weaknesses are established, the impact of threats is easier to asses and new opportunities can be explored. To understand this improved type of SWOT analysis, further tools are provided such as McDonalds version of the directional policy matrix applied on Cranfield organization. This instrument helps us understand products, brands and services in terms of market attractiveness and business strengths which are the main axis of the matrix. We can see examples of how some educational segments of Cranfield organization have developed and moved across the matrix on a 25 years period of time. The conclusion is the companies should apply a different policy for each type of market and several guidelines are suggested for different positioning of markets on the directional policy matrix. Changing a market position must not be assessed in terms of profitability but in terms of improved competitiveness.
Nowadays the language of promotion has changed a lot into a more interactive dialogue, an exchange of information and value. Promotion can be done through several channels such as internet, mobile telephony, television, call center, personal selling and advertising and differs for each segment of customers. Therefore in order to use promotion to its full potential we need a clear segmentation of the market. We can start with a clear and unambiguous definition of the market and a clear mapping showing flows of products and services and total volumes and values. Segments of the market refer to the groups of customers with the same or similar needs and differentiation of companies are expressed by how well the company satisfies these needs compared to competitors and also includes clarification of threats and opportunities for each segment.