Introduction to Marketing - Duke University

Introduction to Marketing - Duke University

Marketing Planning Professor Carl Mela BA 460 Product Management Fuqua School of Business Brand Management System On Building A Brand Managing Across Brands Marketing Plan Agenda Marketing Planning

PharmaSim Marketing Plan The Purpose of Planning Planning is everything, plans are nothing. General Eisenhower Planning is to a large extent the job of making things happen that would not otherwise occur. Marketing Plan Obstacles to Planning

Good Forecasting Time Lack of Process Lack of Management Commitment Marketing Plan Responsibility for Planning Industrial Consumer Service Products Products Firms Marketing managers or

directors Vice President mktg or similar Product/brand managers General managers, division heads Sales, advertising, mktg research Planning titles Committee or team Source: Conference Board 34% 17% 36%

25 29 12 15 23 0 11 8

36 6 9 0 9 13 1 4 8 4 Marketing Plan Responsibility for Approving Plans Industrial Consumer Service

Products Products Firms President, chairman, CEO General division manager Vice Presidentmarketing Group head Committee Executive (or senior VP) Other Source: Conference Board 38%

44% 48% 22 14 8 12 12 9 11 11 4

4 0 16 4 3 13 3 24 0 Marketing Plan Planning Horizon

< 1 year 1 year 1 year + reference to later years 1 year + longer term plan > 1year Source: Conference Board Industrial Consumer Service 1% 6% 0% 18% 23% 14%

44% 40% 58% 18% 19% 16% 15% 0% 28% Marketing Plan

Top Down v. Bottom Up Bottom Up Closer to implementation, motivated by control, better forecasts Top Down More vision at the top, more coordination Marketing Plan Planning Process

Set Deadlines / Initiate Process Gather Data Analyze Data / Situation Assessment Make Plans & Forecasts Refine Plan Management Approval Disseminate, Monitor & Control Marketing Plan Assess Situation Consider Company Goals Set Measurable Objectives Develop Strategies, Action Plans, Responsibility Assignments, and Due Dates

Evaluate Programs Against Objectives Attainable Unattainable Draft Marketing Plan Compare Programs to Resources Feasible Infeasible Submit Plan for Approval Approved Go Source: Conference Board Not Approved

The Marketing Plan Where are we now? Where do we want to be? How do we get there? Marketing Plan 1 Marketing Plan Executive Summary

Situation Analysis Marketing Objectives Strategy and Tactics Monitors and Controls Financial Documents Marketing Plan 1 Situation Analysis Review of Status and Future Outlook Not just data, but implications Brevity, prioritization of information

Diagnostic, not descriptive Contains: Category Analysis and Forecast Trends Sales Analysis 3 C Analysis Planning Assumptions Summary (Problems and Opportunities) Marketing Plan 1 Objectives

If you dont know where you want to go, any road will take you there Precise, with dates and numbers Sales, profits, share, etc. Measurable and achievable Subsequent strategy and tactics must demonstrate compliance with objectives Marketing Plan 1 Strategy and Tactics Strategy is means to accomplish goal, e.g., awareness goal will be met by advertising Tactics pertains to the implementation, e.g., media schedule, agency, message, etc.

how to, by whom, by when, with what resources Marketing Plan 1 Monitors and Controls 74% of consumer product firms have explicit sales promotion tactics Only 36% monitor 69% of industrial firms have explicit sales tactics Only 46 % monitor Only 1 in 4 firms has a contingency plan Both good and bad events (e.g., competitor merges or leaves) What ifs and appropriate trigger points

Source: Conference Board Marketing Plan 1 PharmaSim Goal: Provide context for plan 20% plan, 5% performance Assignment detailed on website Goal: More experience in decision making More brand oriented than Markstrat More promotion and advertising decisions, less production Play against pc, not classmates Marketing Plan 1

PharmaSim Overview of Market 250MM Persons (1% Growth /Year) 2% GNP Growth Moderate Inflation 80% of Population Suffers from Colds OTC Market is $2BB Growth 4% / Yr Manufacturer Sales = $1.5BB

Five companies Capacity adjusts automatically to demand Marketing Plan 1 PharmaSim Market Competition Four competitors (B, C, D, and E) Four Trade (not Consumer) Categories Cold, nasal, cough, and allergy Brands Have Five Attributes Symptoms relieved, side effects, form (capsule, liquid, spray), duration of relief, and price Marketing Plan 1

PharmaSim Market 119.1 126.1 Cold Cough 366.4 879.7 Allergy Nasal Marketing Plan 2 PharmaSim Consumers

Buying behavior varies with Illness/symptom (cold, cough, allergy), age, and usage occasion (day or night, work or home) Thus, can segment by illness, age, or usage Note: mfg. sales study (pre-defined category) consumer survey (usage) Buying process Awareness Purchase Intention In Store Attractiveness Purchase Usage Satisfaction Repurchase Marketing Plan 2 PharmaSim Channel Through Wholesale or Direct to: 4%

9% 22% Independent Drugstores Chain Drugstores Grocery Stores Convenience Stores 37% 28% Mass Merchandisers Marketing Plan 2 PharmaSim Decisions Pricing

MSRP Trade <250 Units, <2500 Units, >2500 Units Wholesale Salesforce Size Direct (By Channel) Indirect (Wholesale, Merchandisers - Retail Sales Support, Detailers for M.D.s) Marketing Plan 2 PharmaSim Decisions Advertising Targeting Segments (By Age and Usage) Agency

Budget Message Message (primary demand, benefits, competitive comparison, or reminder message) Benefits (e.g., aches, congestion, etc.) Marketing Plan 2 PharmaSim Decisions Trade Promotions Allowances (% of MSRP by channel) Co-op Ads (total $ and which channels) Consumer and Trade POP ($ and which channels) Trial Size ($)

Coupons ($ and face value) Marketing Plan 2 PharmaSim Decisions Product Reformulation - before decision 2 Line extension - before decision 4 New product - before decision 5 Your own product - before decision 8 Marketing Plan 2

PharmaSim Tips Please review tips on website (link from syllabus) Read pages 5-66 carefully. E.g., buried on page 66 is the statement that FC continue when product is dropped. Important, but easily missed. Other examples abound. Marketing Plan 2 Other PharmaSim Tips Think analytically Sales = Share * Market Size Share = f (marketing $ and quality, value/price, synergies among marketing

activities, fit with segments selected, positioning relative to competition) Size = f(population, needs, available product benefits, industry marketing $ and quality, product life cycle) Marketing Plan 2 More Tips Marketing $ can interact Deals more effective with ads Stockpiling is possible Understand the role of channel and how to motivate Think about the ramifications of your strategies A leading brand (Allround) should never run comparison ads against a niche brand (Coughcure) Line extensions do not need the same marketing $ as new brands

Allocate marketing $ to area with highest returns Key opportunity is chance to introduce new product into a market with a real need (e.g., Allright Allergy). Shift resources to new product Marketing Plan 2 One Last Tip Cost dynamics, margin management, value based pricing, and capacity utilization are essential to profitability. Marketing Plan 3 Marketing Plan Assignment The assignment is detailed on the website

and linked to the syllabus. First move of Pharmasim should take 2 hours. Then, about 1 hour + for the remaining 7 moves for a total of 10 hours. Harvard runs 10 moves in 24 hours period. Marketing Plan 3 Marketing Plan Assignment Three parts (4 pages & Exhibits) Situation analysis Marketing program and financials Executive summary, contingencies, and post-mortem 3 reports = 20% , performance = 5% Please turn in copy of diskette and administrator report with the first two parts

Note: marketing planning (although not handed in) should occur each period of PharmaSim! Marketing Plan 3 Marketing Plan Assignment Marketing plans represents 20-30% of what you will do. Daily product management is the other 7080%. This Assignment aligns with both. Marketing Plan 3 Summary Marketing Plan

Executive Summary Situation Analysis Marketing Objectives Strategy and Tactics Monitors and Controls Financial Documents PharmaSim is Vehicle for Plan Marketing Plan 3

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