25 Marketing Planning

Rajwant Kaur

1. Learning Outcome:

After completing this module, the students will be able to:

Understand the concept of marketing planning
Explain the process of marketing planning
Understand the significance of marketing planning
Describe the essentials of effective marketing planning

2. Meaning

Planning is necessary for all marketing activities. A firm cannot survive without considering changing business environment and planning its efforts accordingly to suit the changes and ensure business success. The change and growth bring new opportunities but they also bring various risks. Planning helps in minimizing risk while taking advantage of opportunities.

Marketing planning is the instrument used to attain the desired marketing objectives through optimum use of limited resources. Marketing planning involves decision making which makes use of detailed information collected through internal records and surveys or market research. It results into detailed and systematic programme of actions to achieve marketing goals and objectives.

Marketing planning means deciding in advance what to do, when to do, how to do and who will do a particular marketing task. It is a managerial function of determining the future course of action of marketing department by assessing marketing environment, internal environment, past events and establishing a plan for total marketing programme to facilitate execution and control for better achievement of marketing objectives. The success of brands like Amul butter, Dettol, Colgate toothpaste is the result of marketing planning organized successfully. Marketing planning is important for success in today’s environment.

3. Marketing Planning Process

The process of marketing planning is complex and includes following steps :

(i) Analysing marketing environment: To start with any planning, it is necessary that first of all the prevailing external environment is assessed. The goods produced are to be offered to the consumers or buyers and they are part of external environment. The study of their preferences, tastes, buying motives, willingness to buy, paying capacity and desire for credit will help in formulating a realistic marketing plan. There is also a need to assess the intensity of competition which may emerge from existing firms, new entrants and firms dealing in substitute products. Competitors’ marketing strategies and policies should be assessed. It will provide direction for effective planning. Apart from this, political, economic, social, cultural, technological, legal, demographic and ecological factors must be analysed. This analysis will reveal opportunities or threats for the firm. It will also give clue about potential demand. On the basis of this analysis, the firm can prepare itself with effective marketing plans and programmes to act as early beginners for availing opportunities or protect from threats emerging from the environment. The firm, thus, prepares the customers profile, suppliers profile, industry profile, market profile and competitor profile for better assessment of environment.

(ii) Assessing the internal environment : The firm assesses the internal environment to determine its own strengths and weaknesses. It may be its production capacity, product, manpower, technology, financial resources or marketing capabilities. Outdated technology, inadequate working capital, high cost of production, less trained workers or low productivity could be weaknesses of some firms. However firm’s better technology, large network of distributors, innovative product, large product range, high quality, large market base or large production capacity could be its strengths (all or some of these mentioned variables) which may be used to counter competitive moves and cover its weaknesses.

(iii) Setting marketing objectives: Objectives are the end results to be achieved. It is necessary to lay down marketing objectives first so as to channelise all marketing activities towards achievement of these objectives. Marketing efforts will get a direction when objectives are established. Marketing objectives should be set in the light of firm’s overall objectives. Marketing manager sets marketing objectives or targets which may be financial or non-financial. Financial marketing objectives are specific rate of return on investment, gross profit to sales, sales revenue or certain market share. Non-financial marketing objectives are utilization of production capacity, building corporate image, creating awareness about product etc. The marketing objectives should be clear, specific and realistic.

(iv) Framing marketing policies: Policies are the general statements which provide guidance to managers in their decision making. These act as guide to thinking. Marketing policies define boundaries within which decisions can be taken and directed towards the attainment of marketing objectives. Various marketing policies are formulated keeping in mind marketing objectives. These may relate to product, price, distribution or promotion.

(v) Developing marketing strategy : Strategy is a competitive policy. It aims at counteracting the market changes. Marketing strategy is a comprehensive and integrated plan of action designed to achieve marketing objectives. For formulating marketing strategy, a firm first decides target market by analysing the market and selecting some segments as it thinks appropriate i.e. market segmentation is done and target market is selected. The customers’ profile, characteristics, buying behaviour or motives in target market are studied which will help in finalizing marketing mix. Further product positioning and product differentiation is decided. After this, an appropriate marketing mix is developed. The relative weightage of each component i.e. product, price, promotion and distribution in total marketing programme is decided and the impact of uncontrollable factors on this marketing mix is determined. Various product, price, distribution and promotion strategies are decided for the target market. Different strategies are co-ordinated for developing overall marketing strategy.

(vi) Formulating functional plans and programmes : Next, for the success of marketing strategy, detailed functional plans are prepared. These are the sub-plans and include:

Sales-force plan
Pricing plan
Sales and profit plan
Product mix plan
Distribution channels plan
Sales promotion plan
Cash flow plan
Advertising plan

The functional plans are activity related plans. These plans or sub programmes are consolidated into marketing programme. Programme is a sequence of activities designed to implement policies and achieve objectives. Programme establishes the time schedule. Thus various sub-programmes as well as overall marketing programme are prepared which chalk out sequence of activities and time schedule.

This comprehensive marketing programme becomes the marketing plan.

(vii) Preparing secondary plans: After preparing marketing plan, there is need to determine the resources required i.e. physical, financial and human resource to implement the plan. Physical resources mean warehousing or material handling equipment. Financial resources mean amount or finance required to carry out various marketing operations and human resources mean manpower required to implement the plan.

(viii) Implementing the plan: The marketing plan designed and resources arranged are executed to achieve the defined marketing objectives. However, for effective planning, it is essential that planning is properly monitored and controlled.

4. Marketing plans

Marketing planning involves decision making that is reflected through marketing plan/plans. Marketing plan is a document of future course of action specifying in detail the marketing objectives of firm and the way marketing manager is going to use marketing mix components for achieving marketing objectives.

4.1 Types of marketing plans

Marketing plans can be classified as structural or functional plans and time based plans.

Structural plans are based on the functions of marketing department. These plans are sales-force plan, pricing plan, advertising and sales promotion plan, physical distribution plan, distribution channel plan, marketing research plan or product mix plan. These specific plans are made and on the basis of these plans, a well integrated marketing plan is designed.

Time based plans are the plans which show the time dimensions for marketing plans. There are short term marketing plans and long term marketing plans. Short term marketing plans are normally for a period of upto one year. Such marketing plans relate to advertising, sales-force recruitment, product pricing, distribution channel etc.

Long-term plans are of more than one year and may extend to 5 or 10 years. These plans relate to entering new markets, developing new products or following vertical or horizontal marketing systems.

5. Types of Marketing Planning

Marketing planning is a process and can be classified on the basis of level of management at which it is initiated. It can be of three types such as:

Strategic Planning: Strategic planning is the process of determining how to attain firm’s marketing objectives with the help of available resources. It is done at top level and involves the assessment of strengths and weaknesses of firm. It has a wider scope. Strategic planning involves a longer perspective for eight or ten years. The things are assessed in terms of their long term consequences. The strategic plan of the firm can be widening the market base.
Tactical Planning: Tactical planning is done to meet specific requirements and its duration is small. It is undertaken by middle level management to evaluate the performance of a particular product or market.
Operational Planning: It relates with planning of routine marketing activities. This is done at lower level of management i.e. by supervisory staff. Operational planning has narrow scope. It is done for a short period. For example, operational planning may relate to improvement in present period sales of one product.

6. Importance of Marketing Planning

Marketing planning has assumed an important role in the survival and growth of firm. It helps in foreseeing the opportunities and devising ways to take advantage of them. Marketing planning is important as it provides numerous benefits such as:

Helps to foresee the future: Planning is the process of thinking before doing. It involves assessing the past performance and predicting the future. Marketing manager foresees the future and plans the things in best possible manner. Efforts are made to identify the likely future events and designing a course of action to meet market needs.
Optimum utilization of resources: The physical, finance and human resources are assessed and course of action is planned accordingly. An effective marketing mix is developed as per organisation’s resources and prevailing external environment. The resources are allocated in a way that firm will get maximum market share. The activities are co-ordinated well which reduces uncertainties and wastages. Product is developed as per customer need, realistic prices are set, effective distribution channel is employed, best promotional tools are used which ensure a complete package with assured returns.
Helps in knowing opportunities and threats : Marketing planning involves scanning of environment i.e. political, social, cultural, legal, demographic factors etc. Such scanning reveals opportunities or threats prevailing in the environment. Course of action is planned in advance to make best possible use of probable opportunity. Plans are made to reduce the impact of probable events representing threat to firm’s existence. Firm is prepared with better action plans to minimize the impact of dreadful events likely to occur in near future. There will be no need of crisis management.
Co-ordinated efforts : Marketing programme is prepared by giving due weightage to each component of marketing mix. An integrated plan is developed with right mixture of price, product, promotion and distribution activities. An organized and well co-ordinated marketing programme is chalked out for successful implementation of marketing strategies. Thus, marketing planning helps in synchronizing various marketing activities and achieving marketing objectives through co-ordinated efforts.
Management by objectives is possible: In marketing planning, marketing objectives are set and communicated to everyone concerned. These objectives act as standards against which performance of marketing manager and other marketing staff is measured. Everyone remains conscious and focused. Periodic meetings are conducted to see the smooth implementation of marketing programme. At the end of a definite period, performance is assessed in terms of marketing objectives achieved. Thus, management by objectives is possible with the help of marketing planning.
Management by exception is possible: Top management has very little time to devote in day to day functioning of marketing department. In market planning, marketing objectives are laid down, marketing policies and strategies are framed and detailed marketing programme is prepared. Thus, middle level and lower level management is clear about each and every aspect. They do not need clarifications and direction time and again from top management. Thus, top management is free to devote much time for strategic planning. It needs to interfere only in exceptional matters. There is no need to interfere in routine matters if everything is going well. Similarly, marketing manager will be able to spare more time for co-ordination and control as the marketing programme is chalked out properly. The authority can be delegated to subordinates for proper execution, thus, making management by exception also possible for marketing manager.
Facilitates control : Control means determining the actual performance, measuring it with standards or expected performance, finding out deviation and taking corrective measures. In marketing planning, marketing objectives act as standards against which performance of marketing department is evaluated, deviation from standards is ascertained, reasons for such deviation are studied and corrective action, if needed, is taken. Without planning, control is not possible. Marketing planning sets objectives which are used as standards.

7. Limitations of marketing planning

Marketing planning cannot be effective for every firm. There are few limitations or obstacles to effective planning which are described below:

Inaccurate data : Marketing planning is based on detailed information collected from various sources. It will be effective when data is scientifically collected and estimates and forecasts are logically made. If data is not reliable, then decisions taken on the basis of this data will be unreliable. In such cases, marketing planning will lose its value.
Resistance to change: In some organisations, marketing personnel do not like changes. Their passive outlook to new ideas makes marketing planning ineffective. It becomes difficult to achieve marketing objectives. Sometimes, in a firm, planning may require frequent changes for some period but non-co-operation of marketing staff to make changes becomes a problem.
External Factors: Economic, political, legal, social and demographic factors sometimes reduce the utility of marketing planning. In case these important external variables are not assessed properly, the whole process of making market plan will prove futile.
Expensive: The time and cost involved in collecting reliable information is significant. Small firms sometimes avoid detail surveys due to cost constraints. Planning in such situations will not be effective.
Loss of initiative: The better ways of doing work may be explored when free hand is given to employees and the way of doing things is left to their judgement. When objectives are set, employees become focused and try to do things as per plans. They do not think beyond these plans. This restricts innovation in marketing operations.

8. Essentials of Effective Marketing Planning

The various benefits of marketing planning will accrue only when it is effectively initiated and implemented. For this, the following factors are essential:

Support of top management : The planning is effective when it is initiated at the top level. First of all, corporate objectives should be set at top level and then marketing objectives should be laid down. Proper resources should be allocated by top management for achieving corporate objectives as well as marketing objectives. The involvement of top management will encourage marketing department to execute marketing plans effectively.
Participation : Participation of subordinates in marketing planning will help in its effective execution. They will be more committed to achieve marketing objectives.
Focus on short term and long term planning : Short term planning in necessary to meet current situation. Long term marketing planning is necessary for firm’s survival and expansion. Both the planning should be given equal attention. Long term planning will set ultimate goals which should be achieved through short term planning.
Communication: Marketing plans should be communicated to those who are responsible to execute them. Lack of communication will reduce effectiveness of marketing planning. Marketing plans should be clear to everyone.
Reliable data: It is necessary that accurate information is collected as far as possible. Estimates should be based on scientific calculations. It will make marketing planning meaningful and effective.
Realistic marketing objectives: Marketing objectives should be laid down in a way that these could be achieved in reality with sincere efforts.
Co-ordination: Marketing Planning can be successful only when all sub plans are integrated well and an organized, comprehensive marketing plan is designed.
Flexibility: Marketing planning should never be rigid. If the situation demands, necessary changes should be made in plans as per the organizational and market need.

If the above mentioned factors are given due consideration, the marketing planning will bring desired results.

Summary

Planning is necessary for all marketing activities. Marketing planning is the instrument used to attain the desired marketing objectives through optimum use of limited resources. Marketing planning involves decision making which makes use of detailed information collected through surveys or market research. It results into detailed and systematic programme of actions to achieve marketing goals and objectives. The process of marketing planning is complex and includes certain steps such as (i) Analysing marketing environment (ii) Assessing the internal environment (iii)Setting marketing objectives (iv) Framing marketing policies (v) Developing Marketing strategy (vi) Formulating functional plans and programmes (vii) Preparing secondary plans (viii) Implementing the plan. Thus, marketing planning involves decision making that is reflected through marketing plan/plans. Marketing plan is a document of future course of action specifying in detail the marketing objectives of firm and the way marketing manager is going to use marketing mix components for achieving marketing objectives. Marketing plans can be classified as structural or functional plans and time based plans. Structural plans are based on the functions of marketing department. Time based plans are the plans which show the time dimensions for marketing plans. There are short term marketing plans and long term marketing plans.

Marketing planning is a process and can be classified on the basis of level of management at which it is initiated. It can be of three types such as Strategic Planning, Tactical Planning and Operational Planning.

Marketing planning has assumed an important role in the survival and growth of firm. It is important as it provides numerous benefits. It is helpful in foreseeing the future, making optimum utilization of resources, knowing opportunities and threats, pursuing co-ordinated efforts, making possible management by objectives and management by exception and facilitating control. However, marketing planning cannot be effective for every firm. There are few limitations or obstacles to effective planning such as inaccurate data, resistance to change, external factors, expensive and loss of initiative. The various benefits of marketing planning will accrue only when it is effectively initiated and implemented. Support of top management, participation, focus on short term and long term planning, communication, reliable data, realistic marketing objectives, co-ordination and flexibility will help in achieving desired results.

Learn more

Few important sources to learn more about marketing planning:

Baker,J.Michael (2000). Marketing Strategy and Management, Macmillan Press Ltd., London
Bearden, Ingram, Laforge (1995). Marketing: Principles and Perspectives, Irwin Inc.
Blois Keith (2000). The Oxford Textbook of Marketing, Oxford University Press Inc., New York
Bose,S. Biplab (2010) Marketing Management, Himalaya Publishing House, Mumbai.
5.Cannon, Tom. Basic Marketing: Principles and Practice, 3rd Edition, A.I.T.B.S. Publishers, Delhi.
Dalrymple and Parsons. Marketing Management: Text and Cases, 6th Edition, John Wiley & Sons, Inc.
Gandhi,C J (1998). Marketing- A Managerial Introduction, Tata McGraw Hill, New Delhi.
Kotler, Philip (2002). Framework for Marketing Management, Pearson Education (Singapore) Pte. Ltd., Indian Branch, Delhi.

Points to Ponder

Marketing planning is the instrument used to attain the desired marketing objectives through optimum use of limited resources.
Marketing planning involves decision making which makes use of detailed information collected through surveys or market research.
Marketing planning is helpful in foreseeing the future, knowing opportunities and threats, pursuing co-ordinated efforts and facilitating control.
Inaccurate data, resistance to change and external factors may make marketing planning ineffective.