What is Marketing?

Over recent weeks, I have seen a number of recruitment advertisements from small and medium-sized firms advertising roles described as marketing assistants or marketing executives. When you read the job specifications for these posts, you tend to find that the jobs contain work tasks more usually associated with graphic designers, web designers or sales representatives.
I know that distinguished marketing academics and professionals are regularly frustrated at their profession being incorrectly defined in this way.
So what is marketing?
The Oxford Dictionary of Marketing describes the function as follows:
Marketing is a formal business discipline originating in the USA at the turn of the 20th century. The profession, it is argued has gone through five stages:

  1.  The Age of Production:  This stage began shortly after marketing being formally defined and ended in the 1930s.  At this stage, marketing activity was constrained by the limitations of production.  The focus in companies was to produce as much as possible; as efficiently as possible.  Marketers focus was in ensuring the widest possible distribution of the products produced.
  2. The Age of the Product:  Marketing’s focus was not on cost leadership or distribution but on ensuring that the product itself would attract customers.  The focus was on product attributes, quality, performance and design.  Many of these concepts remain in modern marketing.
  3. The Age of Sales:  Here the focus was on pushing whatever the company had to sell.  This was the era of aggressive promotion as evidenced in the television series Mad Men.  Corporate thinking was that if you pushed any product hard enough it would sell.  Such sales tactics, the hard sell, could be risky as it could put consumers off and possibly drive them into the hands of competitors.  This developmental stage lasted until the late 1950’s.
  4. The Age of the Customer:  Some marketing academics believe we are currently coming to the end of the age of the customer which began in the 1960s.  This era places the customer at the centre of all marketing activity.  rather than making a product and then trying to find customers to buy it, products are specifically designed to meet the needs of distinct customer groups.  Critical to this era is customer segmentation and market research.
  5. The Interactive Age: This is the age of networking, massive choice, content sharing and content acquisition.  The aim is to let your customers become your marketers.  Many marketing academics we are at the start of this age with the rise of social media.  However, it must be stressed that interaction should not be only through electronic means.  It is still important that businesses interact with their target customers by more traditional methods.

Marketing is no longer the simple facilitation of commercial exchanges and transactions between producers and consumers.  Every contact a business has with its customers is a marketing dialogue, from initial sales calls to after sales service and the investigation of consumer complaints.

Marketing’s initial focus was on the producer not the customer.  It was getting the right products to the right consumer at the right price.  It was assumed that the producer controlled the market.  This assumption is no longer valid.

Take the example of the market for milk.  it is not the producer, the farmer, who controls the market for milk; it is the retailer in the form of the large supermarket chains.

Many of the advertisements for marketing jobs that I see still seem to treat marketing professionals as if they are working in the age of production or the age of sales.  Many see marketing as a subset of sales or as a subset of promotion.  In truth, sales and promotion are subsets of marketing.

Some firms, such as Hewlett-Packard see marketing not as the responsibility of a silo department but as a responsibility of everyone within the organisation, from the CEO down.

Marketing’s role is to develop a market-centric or customer-centric attitude throughout an organisation.  It is therefore imperative that marketing is closely linked to your overall business strategy and that it is central to the functionality of the senior management team.

Finally, lets look at the definition of marketing strategy.  The Oxford Dictionary of Marketing gives the following definition.

Marketing strategy is a series of planned choices about which part of the market to focus upon and how to compete within that target market.  These choices are based upon a thorough analysis of the ways and means of addressing target markets and customers.  Market segmentation and positioning are key to the development of a marketing strategy and it should put a customer focus on the overall strategic goals of an organisation.

Segmentation and positioning demand the development of a distinctive marketing mix.  Products and services must be designed with distinct customer groups rather than treating the market has homogeneous. Positioning ensures that your products are given a unique place in the minds of consumers which is distinctive from that of your competitors.

Marketing strategy is about making the most of your company’s strengths whilst exploiting the weaknesses of your competitors.

 

Planning in SMEs

Small and medium-sized enterprises have some specific problems and certain advantages when it comes to business planning.  Often they lack the skills and resources required to carry out the depth of research needed or they lack the time to develop detailed and structured corporate plans.

However, the current Chair of the Chartered Institute of Marketing has described small businesses as natural marketers and that due to their small size, they can adapt more quickly to environmental change.

Some small businesses do not adequately plan.  If business plans or marketing plans are prepared, they are too often a means of placation to bank managers or peer-to-peer lenders.  Plans are prepared for external stakeholders not to outline the future direction of the business or to achieve stated goals.

Whittington (2001) described four approaches to strategy that he saw as prevalent in small business planning:

  1. Classical:  This approach relies on rational planning methods and environmental analysis as the basis for decision-making and long-term planning.
  2. Evolutionary:  This approach assumes survival of the fittest.  It is the law of the jungle.  Correct strategies develop over time and in reaction to environmental changes.  Ad hoc responses are given to environmental challenges.  Under the evolutionary model of small business planning, long-term plans are not feasible.
  3. Process:  Strategy is subservient to existing and fallible business processes (of both the business and its market).  Strategy is a ‘bottom-up’ process where staff react to environmental change.  Senior management may not be in control of business procedures.
  4. Systematic:  The ends and means of strategy are closely linked to the local social systems in which it takes place.  Companies follow processes dictated by local social restraints rather than strict business considerations.

Given these four approaches, it is clear that many small firms see themselves as emergent and profit-maximising.  The operate on the basis of survival of the fittest and they fail because they cannot adapt to environmental challenges or the actions of competitors.

Statistics vary but the latest set of figures I have seen show that 91% of small businesses survive their first year but that only forty percent of those businesses last  for five years.

I have also seen worrying statistics that 60% of small businesses have no business or marketing plan and 80% of those that do only plan 12 months in advance.  Planning should not be an annual chore; it shouldn’t be a  tick box exercise.  Whittington rejects the toolbox format prevalent in so many business texts found in high street bookshops.  Planning processes should be organised to meet the business’s culture and to fit within its resource base.

The differences between the four approaches to planning really matter.  Each approach will offer strikingly different solutions to the same set of variables.  This means managers of small businesses may be offered radically different choices and outcomes.

Weak planning processes mean that many small companies are at the mercy of their environment and they are not in a suitable position to plan for the long-term.  this doesn’t mean that there is no strategy at play; just that the strategy has developed in reaction to environmental change.

An often quoted and possibly apocryphal mantra is “there are no small businesses, only businesses that haven’t got big yet”.  Business is about growth.  Whether it is about growth of earnings and profitability, growth geographically or growth in terms of scale.

If you want your small business to grow and be sustainable in the long-term, it is important that you develop appropriate and robust strategic planning processes.

Assessing Market Risk

A crucial part of strategic marketing planning is the assessment of risk.

Marketing risk can be broken down into five sub-components:

  1.  Product Category Risk – Is your chosen product category large enough to support your business and to provide sufficient earnings?  Many of the businesses pitching on Dragon’s Den are rejected for this very reason.  This risk is high for novel products and low for existing product categories.
  2. Market Existence Risk – Is your target market smaller than planned?  I have a business presentation based on a company supplying three Michelin star catering for private jets; a firm which is yet to make a profit.  It is clear that in setting up the business, the proprietor overestimated the number of potential customers.
  3. Sales Volume Risk – Are sales lower than planned?  This risk is higher if you make assumptions about your customers and competition. It is lower if you carry out appropriately detailed market research.  Beware that you are not entering a ‘fad’ market or product category.  A fad can show massive market and sales growth which can disappear almost overnight.
  4. Forecast Risks – The market grows slower than forecast.  Expected growth fails to appear.  Orders are In excess of production expectations.  The latter risk is currently affecting Tesla who have obtained orders far in excess of their planned production levels.  This has led to a significant drop in tesla’s share price as consumers are not receiving vehicles on time.  Having too many orders can be as bad as having too few especially if you do not receive payment for stock made significantly after it has been produced.
  5. Pricing Risk – Pricing levels in the market are lower than planned.  This obviously affects margins, return on investment and profitability.

If you develop a strong marketing strategy and plan, there is a high probability of delivering your desired market share.  A weak strategy and plan will result in weak market performance.

Marketing risk can be placed under two headings; market risk and profit risk.

There are five market risk criteria:

  1. Target Market Risk –  This is where your strategy only works with some of your target customer segment.  It may not work at all.  This risk is higher for heterogeneous groups and lower for homogenous groups.
  2. Proposition Risk – Your offer doesn’t appeal to some or all of the target customer group.  This is higher if you make the same offer to all customers; lower if a specific offer is made to each customer segment.
  3. SWOT Risks – This risk occurs when you do not leverage your strengths; or you ignore threats; or you don’t improve weaknesses; or you fail to act on opportunities.
  4. Uniqueness Risk – Your strategy fails because you are competing head on with other market suppliers and your offer to consumers is identical to that of your competitors.
  5. Future Risk – Your strategy fails because prior to its launch a major change has occurred in the marketplace.

There are also five criteria in measuring Profit Risk:

  1.  Profit Pool Risk – Profits are lower than planned because of competitors reaction to your strategy.  Often, higher profitability comes at the expense of your competitors and s they react to your strategy.  This risk is higher if your market is mature and static and lower if there is room for market growth.
  2. Profit Sources Risk – Profit is less than planned once again to competitors reacting to your strategy.  This risk is lower if there is growth in the overall profit pool of the market.  It is higher if the source of profits comes from taking customers from your competitors.
  3. Competitor Impact Risk – This occurs where there is a single large competitor in your market and they react to defend their large market share.  This risk is high if your strategy affects that large competitor directly and low if the threat is spread over numerous competitors.
  4. Internal Gross Margin Risk – Profits are reduced because production costs are higher than planned or the costs of providing services are higher than planned.  For example, the Brexit referendum caused a significant drop in the value of the pound compared to the US dollar.  Companies producing goods which rely on raw materials traded in dollars suddenly faced far higher raw material prices yet they were reluctant to pass those cost increases on to consumers.  The result was lower profit margins and less cash for productivity investment.
  5. Other Cost Risks – The costs of promotion, customer service and other ancillary functions are higher than planned and therefore affect profitability.

The risk of not delivering the required level of profit margin is highest when profit margins in the market are shrinking,  your strategy impacts a single powerful competitor and when you make optimistic cost assumptions.

The risk of not obtaining required market share is highest when you treat customers as identical and you do not develop discreet offers to clearly identifiable market segments.

Clearly, if you make plans based solely on assumptions you face higher risk than if you carry out appropriate and robust market research and strategic planning.

The psychology of marketing communications

Over the years, psychologists and researchers have carried out numerous studies into how advertising works.  All recognised that for a marketing message to work, it must be meaningful to its recipients.  Messages must be targeted at the right audience; be capable of gaining their attention; be understandable; be relevant; and be acceptable.

With this in mind, researchers set out to develop an agreed model of the advertising process.  Unfortunately, no single model has been agreed and there are a number of  theories which compete to have prominence.

Petty and Cacioppo (1983) developed the elaboration likelihood model which has helped to explain how cognitive processing, persuasion and attitude change occur when different levels of audience involvement are present.  Elaboration refers to the extent that the recipient has to develop and refine the information they receive for decision-making to occur.  If the message recipient is highly motivated or has a high level of ability to process the information, elaboration is said to be high.  If the recipient’s ability to process information is poor or their motivation is weak, elaboration is said to be low.

Thus the ELM model identifies two cognitive processes in the minds of recipients; a central route where the recipient is active and involved and a peripheral route where the recipient is passive and unengaged.

With the central route, a message will persuade using the quality of the argument proposed.  For example, when you buy a house or a car, you will be highly involved. In such a situation consumers would be expected to read brochures and reviews prior to purchase.  They may want an opportunity to try out the product e.g. a test drive of a car.

Under the peripheral route, the recipient should not be expected to process complicated information or to engage in significant cognitive processing.  Communications using the peripheral route should use cues to attract the attention of recipients.

Peripheral cues could involve the use of a celebrity to advertise products.  For example, Walker’s use of Gary Lineker to sell their crisps or Nespresso using George Clooney to advertise their coffee machines.  The aim is that when consumers see Lineker, they think crisps; they see Clooney, they think coffee.

In high involvement transactions the presence of a celebrity is at best of minor significance to the consumer’s decision to purchase.

So the first decision of an advertiser is to choose a form of promotion which matches the level of cognitive processing expected of consumers.

An advertisement which seemed to break the rules of the ELM model was Jaguar’s use of Tom Huddleston, Sir Ben Kingsley and Mark Strong to advertise their cars.  Purchasing a car is a highly involved process, clearly using these celebrities would have little impact in the consumer’s decision to purchase a Jag.

Competing with the ELM model are eclectic models of advertising.  Four eclectic models have been developed each of which has a digital and an analogue component.  These four models represent the four key ways in which advertising works.

  1.  The Persuasive Framework – Analogue – this framework assumes that advertising works rationally and that a ‘brand works harder for you’.  This framework assumes that consumers purchase items using a rational sequential decision-making process such as AIDA (Awareness, Interest, Desire, Action).  Consumers are persuaded to purchase through the development of unique selling propositions (USPs).  The persuasive framework is used heavily in the promotion of blockbuster movies.  Studios raise awareness of coming releases by using press interviews, film festivals and conventions.  They create interest by releasing videos of stars on location filming and through releasing teaser trailers.  They create desire through the release of longer trailers, star-studded premieres and star interviews.  Finally they issue a call to action through television advertising which encourages consumers to book cinema seats in the weeks before a film is released.  The onset of digital media has added a further element to the persuasive framework; that of encouraging consumers to search for further information e.g. the use of scanning codes in advertisements, e.g. Shazam, so that if the consumer scans the advertisement with their mobile phone, they are directed to the products website.
  2. The Involvement Framework – Analogue – Involvement-based advertisements work by drawing the audience into the product by eliciting emotional forms of engagement. A consumer’s passage to the brand occurs because ‘it means more to them’.  This could involve the use of shared values, aspirational values or by personalisation the brand e.g. the use of celebrities.  The digital element of the involvement framework encourages people to play.  This is about content creation and giving the impression that consumers are helping to control the brand.  So Brompton Bikes allow consumers to effectively design their own folding bicycle by offering 1200 different product options which can be combined to individualise their cycles.  The involvement digital framework also includes opportunities such as blogs, social media and crowd-sourcing.
  3. The Salience Framework – Analogue – This part of the model relies on advertisements being different and therefore standing out from that of competitors. There is a danger that being too different can actually put consumers off.  For example, some consumers are put off by the Go Compare advertisements (with the fat tenor) because they find them annoying. The Digital element of the salience framework is to attempt to create viral content which is shared and discussed by consumers.
  4. The Sales Promotion Framework – This element only has an Analogue element and works in that consumers believe that they will be rewarded by their purchase. Advertisements are aimed at generating sales and shifting product.  Sales promotion advertisements are invitations to consumers to engage in price promotions or to get additional benefits (e.g. free servicing on a car).

Jones, Macdonald and Ehrenberg (1991) advocate a strong and weak theory of advertising.

The strong theory of advertising assumes that messages work in that they are capable of affecting a degree of change in the knowledge, attitudes, beliefs and behaviours of consumers.  This theory argues that advertising can persuade a consumer to buy a product which they have never previously purchased and that long-run purchasing behaviour can be developed.  The strong theory operates through the use of psychological techniques which alter the behaviour of passive consumers.  Often this involves a hierarchy of effects model.

Increasingly, academics looking at the psychological effects of advertising are finding that the strong theory of advertising does not reflect consumer practice – despite the fact that it is so prevalent in modern advertising practice.  Ehrenberg (1997) argues that consumer purchasing works on the basis of an Awareness – Trial – Reinforcement framework.  That for a consumer to purchase, they must be aware of he product, to repeat purchase they must have tried the product and that to get them to continually purchase you must reinforce the consumer’s decision to purchase.  In recent years, a further step has been added to this model: Nudge.  This is the use of cues to nudge consumers into a certain form of activity.  One nudge example is the promotion of Five a Day, the government programme to encourage consumers to eat five portions of fruit and vegetables a day to increase the amount of roughage they consume.  Therefore for nudge to work, advertisements should increase the level of reinforcement to get habitual consumers to increase their consumption.

This is the Weak Theory of Advertising.  it agrees with the strong theory that advertising is capable of improving people’s knowledge of products.  However the weak theory argues that consumers are not passive and only respond to advertisements where they have some prior knowledge of the product.  Consumers need to have some awareness of a products characteristics before they respond to advertising.  Therefore that amount of information which is actually communicated is limited.  There simply isn’t enough time in the standard television advertisement (lasting roughly 30 seconds) to impart lots of information.  For example, who actually reads the statutory small print in a television advertisement for unsecured loans?

As the time allotted to such advertising is short; and because consumers can switch off their cognitive ability to import information; advertising should be used to reinforce existing attitudes.

Those advocating the weak theory of advertising argue that the strong theory is wrong to assume that consumers are passive.  Under the weak theory, consumers should be treated as active participants in the message and that they are capable of high levels of cognitive processing.  They argue that the strong theory of advertising assumes consumers are unintelligent and apathetic.

As you can see, there are a number of competing psychological theories as to how advertising works in the minds of consumers.  I think the most prominent thing to take out of this research is that you must match your promotional activity to the type of product you are trying to sell.  If you are selling cars of mortgages, a focus on technical specifications may be appropriate, the use of a film star to promote them may be a waste of time and money.  If you are selling snack foods or leisure goods, you need advertising which is either fun or glamorous.

A Key Marketing Activity

Business leaders and academics are agreed that the correct definition of a business’s market, followed by careful market segmentation are key to successful marketing planning, the development of sustainable competitive advantage and the creation of stakeholder value.

The following ingredients  must be combined to create world-class marketing functionality:

  • A deep understanding of the market in which you operate
  • Correct marketing segmentation
  • Careful product development, positioning and branding based on that segmentation activity
  • Effective marketing planning processes
  • Long-term, integrated marketing plans
  • Institutionalised creativity and innovation
  • Total supply chain management
  • A market-driven organisational structure
  • Careful recruitment, training and career management
  • Rigorous line management implementation

All these activities rely heavily (or in part) on an organisation correctly defining the market within which it operates.

Lets take the example of a businessman who runs an Italian restaurant.  How should he define his market; who is he competing against?

It is unlikely that he views his business as just being in competition with other Italian restaurants.  It is likely that he will view his business as in competition with other types of restaurant e.g. Chinese, Indian or Thai.

But is that sufficient?  Should that restaurateur be looking at the wider food industry for competitors?

The correct way to define the market in which you operate is to assess your competitors as all those businesses which satisfy the same need.

Our restaurateur may feel that  this definition is met best by considering all leisure activities which compete for a consumers disposable income.  He isn’t competing in the restaurant business but the evening leisure and entertainment sector.  He isn’t just competing against restaurants but also pubs, clubs, cinemas, theatres and sports venues.

Take as an example a pension provider.  A pension is a financial services product, not a market.  Pension providers do not consider themselves as competing only against one another.  They are also competing against other forms of post-work income provision such as equity release firms, investment brokers, financial advisors and investment trusts.

Pension funds compete against a wide range of financial products, not just other pension suppliers.

An important element in defining your market is to draw a market map.  Ask yourself:

  • Who are your competitors?
  • Who are the market distributors?
  • Who are the market resellers?
  • Who are the customers?
  • Who are the end users?
  • What distribution channels are there?

Then assign values to:

  • The market as a whole
  • Each layer of the market
  • Each distribution option
  • Each market player

You therefore create a map which displays the distribution and value chains that link suppliers with end users and which takes into account buying mechanisms and the part played by ‘influencers’.  For example, in financial services, independent financial advisors are likely to be considered market influencers.

Delia Smith, the celebrity cook, could be considered a market influencers.  When she includes particular ingredients in her recipes, cookery fans will rush to buy them and often there are shortages on supermarket shelves.  Grocery suppliers therefore keep a close watch on Ms Smith’s recipes to look for the next fashionable ingredient.

A marketing map also allows you to identify leverage points. These are parts of your market where your organisations attributes, your market power and your marketing mix can be used to impact consumers purchasing decisions.

If you are in business, any business, a clear understanding of the environment in which you operate is crucial to sustained success and developing a market map is the crucial step in developing that understanding.

Defining your position

A critical element in the planning of marketing mix strategies, including promotional communications, is the management of your market position.

Market positions operate in relation to two dynamics:

  1. who is the target audience – i.e. your chosen market segments; and,
  2. how that audience views your offering – either through their understanding of how the product works or through their understanding of your communications. i.e. how their minds interpret your message.

One of the roles of marketing professionals in a business is to research these two dynamics and to develop a position which maximises the offering in relationship to them.

Most marketers use the following process to develop distinct market positions:

  1. Examine the positions of a business’s competitors.  This usually involves the development of perceptual maps taken from customer market research.  Perceptual mapping helps determine consumer attitudes and perceptions.
  2. They then determine the position of the focus brand.  This is the process of finding gaps in the market which are commercially viable or where competitors are seen as vulnerable.
  3. You then determine the positioning strategy for your brand.  Where in the market do you want to be.
  4. The next stage is critical.  You must determine whether that market position is viable in terms of the competition and your budgetary constraints.  I do a presentation on strategic marketing planning which includes a section on positioning.  I use the example of a private jet catering company.  Despite being in existence for a number of years, the company has never made a profit.  The owner of the firm believed he had identified a clear position in the market which was not being catered for (sorry bad pun) by his competitors.  However, it was clear why his competitors had not filled that market gap – there wasn’t enough income to be generated to cover the high costs of the segment.  In choosing a market position, it must be viable in the long-term.
  5. Once an appropriate market position has been chosen, you should develop an appropriate marketing mix which will maximise opportunities.
  6. You then need to continually monitor the market position; to defend against entrants to the segment and to adjust your offering to account for changing consumer tastes.

You need to develop a position which your intended customers can relate to and understand.   This means developing distinct brand attributes and values.

There are numerous approaches to developing marketing positions based upon factors in the market, customer profiles at through brand redefinition e.g.

  • Product features:  For example, mobile phones are sold on features such as software apps, storage capacity and the quality of the built-in camera.
  • The price/quality ratio:  Price is often a strong signifier of quality.  You don’t get cheap designer watches or clothes.  For many years Stella Artois lager was sold using the strapline “reassuringly expensive’.
  • The product class association: Dove is not a soap, it is a ‘beauty bar’.  Head and Shoulders began its life as an anti-dandruff shampoo, not it is sold as the UK’s favourite shampoo.  Listerine began life as a multi-purpose household detergent, now it is sold as a mouth wash to prevent bad breath.
  • The product use: A few years ago, Kellogg’s ran a highly successful advertising campaign where their cereals were redefined not simply as breakfast food but as snack foods to be eaten at any time of the day.  They also ran a campaign advertising their cereals to people dieting to lose weight where they replaced either lunch or dinner with a bowl of cereal.  Kellogg’s Corn Flakes were originally sold as a health food.  The original formulation of Coca Cola was sold as a medicinal tonic, not a soft drink.  Lucozade was a drink for invalids but its use was successfully re-interpreted as a drink for sportsmen and sportswomen.
  • The User:  Products which are designed for carefully chosen consumer groups.  This is common in the market for fragrances.  Firms such as Unilever and Estee Lauder develop perfumes with pop stars such as Britney Spears and One Direction to specifically target their fan base.
  • The Competitor:  For many years Tesco and Sainsbury’s battled to be the UK’s top supermarket chain.  They would watch each others activities closely and develop very similar offerings in terms of own brand products and specialist ranges.  Before their demise, Saab competed with Volvo as to who produced vehicles with the highest level of safety features.
  • Benefit: Sensodyne toothpaste is marketed as the toothpaste for people who suffer from porous tooth enamel.   Daewoo for many years marketed the fact that you could buy their cars directly without a dealer as a middle man.  Eliminating the dealer was seen as a benefit as it reduced vehicle costs and increased the consumer’s power in the deal.
  • Heritage or cultural symbol:  A unique aspect of heritage in the UK is the display of Royal warrants, the fact that your firm supplies goods and services to the Queen and Royal family.  It is no accident that Universities are marketed using their coat of arms.  Firms proudly display that they were ‘established in 1803’ and there are brands such as Kronenbourg 1663 lager which use a date as an indication of longevity and quality.

Whatever the position chosen for a brand or product, it must be relevant to the target customer group and have a consistent marketing mix.  It must be believable and credible to consumers and supply chain partners.  It must be developed for the long-term.  It must be adaptable to account for changing market conditions and customer tastes.

If you are looking to reposition an existing brand or product (such as Listerine) you should do so not from your own perceptions but from the viewpoint of consumers.  You need promotional and marketing activities which suppress the old market position so that the consumer dissociates the product with its existing position.  You also need to promote the new position so that consumers are educated about the change.  It is important that these two activities are complimentary i.e.  the activities which weaken the old market position should strengthen the new market position.

 

Why Planning is Needed.

First a couple of quotes:

“Vision requires strategy; strategy requires a plan.”

“If you fail to plan, you plan to fail.”

The second of these quotes is often attributed to Winston Churchill but in truth no one really knows its origin (some believe it was first said by Benjamin Franklin).

It must be recognised that planning takes time and often staff and middle managers see it as an inconvenient distraction from other, seemingly more profitable activities.  Production managers want to produce and sales managers want to sell.

But planning is essential in business.  In fact often the process of developing plans can be more valuable to the business than the actual plans which are the end product of that process.

Planning makes managers set aside thinking time.  They need to think about what has happened, what is happening and what might happen.

Managers then need to set goals and have those goals accepted by stakeholders.  Those goals need to be communicated.  Progress towards goals needs to be assessed and measured.  Corrective actions need to be prepared in case plans do not come to fruition as planned.

In short planning is an intrinsic part of good management.

So what types of marketing plans should an organisation develop?

Philip Kotler, the respected marketing academic describes six types of marketing plan:

  1. Brand Marketing Plans:  These are plans in respect of individual brand names and product lines
  2. Product Category Plans:  These provide the assumptions, forecasts and goals which drive the planning at individual brand level.  In their final form, they are the aggregation of individual brand marketing plans for a particular product classification e.g. detergents or cosmetics.
  3. New Product Plans:  New products need detailed development and launch plans.  You need to define, refine and test the product concept all of which requires careful planning.  Product launches need extremely detailed planning.
  4. Market Segment Plans:  If you follow a differentiated marketing strategy, you will need different marketing plans for different market segments.  If you only operate in certain segments of a market, a niche strategy, you will require specific plans for specific niches.
  5. Geographic Marketing Plans: You will need different marketing strategies and plans if you operate in different geographic markets.  You need to match your offer to meet the cultural, economic and societal expectations of those markets.  How you market your products in a country like Italy may be totally inappropriate in a market like Saudi Arabia.
  6. Customer Plans:  In recent blog entries the concept of key account management has been discussed.  These are the most important and valuable customer accounts in your business.  You will need separate marketing plans to meet the needs of these customers.

With each of these forms of marketing plan, you will need a long-term strategic plan and a short-term plan.  The timescale of plans will vary on your industry.  In fashion and high technology businesses, long-term plans may only look to prepare a business for two or three years.  Short term plans may only apply for a few weeks or months.  For instance, the fashion industry operates in seasons so a particular clothing range may only be suitable for a maximum of six months.  However, in other industries, such as utilities, a long-term strategic plan may last for as long as twenty years.  In local and national government annual plans are common and long-term planning may reflect the election cycle.

Long-term strategic plans must be adaptable.  They shouldn’t be set in concrete and there must be the ability to reformulate these plans if the environment changes.  It was once said of Marshall Foch, a French military commander during World War One, “After losing each battle, he redoubled his effort”

In assessing whether a marketing plan is appropriate, ask yourself:

  • Does the plan list exciting new opportunities and does it properly recognise threats?
  • Does the plan clearly define marketing segments and their relative potential?
  • Will customers in each target segment see the offer provided as superior?
  • Do the strategies seem coherent? Are the right tools being applied?
  • What is the probability that the plans will meet their stated objectives?
  • What would be omitted if the plan was allocated only 80% of the requested resources?
  • What would be added if you gave the plan 120% of the requested resources?

In assessing the state of marketing planning within your organisation, ask the following questions:

  1. Do managers in your organisation see planning as a useful tool or as a hindrance?  Do they see the process as an annual ritual or as a waste of time?  If so, how do you improve the status of planning in your organisation?
  2. Does your planning format contain clear sections on situation analysis, objective setting, strategy, actions and goals?  Can different levels of management access plans?
  3. Is your brand management system operating effectively? Do brand managers give appropriate attention to long-term strategic plans?  Who has the power, brand managers or product category managers?
  4. Do you have sufficient staffing levels amongst segment and area managers?  Can they respond to differences in the market?
  5. Is there seamless cooperation between managers from different business functions or does office politics and empire-building play an overriding role in your organisation?  If so, how do you improve the situation?
  6. How smooth are relationships between marketing and other functions within your business? Is marketing central to your business or is it seen as an outlying silo? Worse, is marketing just seen as an sub-function of your sales team with no role other than lead development?