Effective Marketing Planning Requires a Full Research of the Marketing Environment - Essay Example

? Effective Marketing Planning Requires a Full Research of the Marketing Environment Introduction The efficacy of a marketing plandepends on how well the marketer has researched information, as well as the ability to create indicators that offer feedback with regards to the success achieved. A marketing plan has to be made on solid information with regards to the customer base and potential of outreach information. Effective marketing necessitates the identification and comprehension of a target markets. Target markets are extremely dynamic, where they expand and contract, move in new directions and emerging dynamically from where no market previously existed. An effective marketing plan requires a research on the drivers of demand in the business environment. This may entail secondary research or primary research, or both in order to investigate consumer behavior and motivation. Some of the aspects contained in an effective marketing plan are demographic and social changes that may affect sales of the company’s product, for instance a change in the lifestyles and the age structure. New technologies that may open up some markets while at the same time closing some. Economic trends that have an impact on the consumer purchase decision, as well as political environment that alters public spending due to aspects like taxation. By conducting a marketing audit, a firm is able to explore its internal capabilities (Alison, 2011, p 23). Effective marketing planning also calls for an examination of the external environment to a firm, which entails focusing on the existing marketing strategies; the company’s marketing mix, and market segmentation and segmentation, as well. Scanning and interpreting all these areas of market changes calls for knowledge and experience, and might be the source of competitive advantage. Much of the marketing planning also varies on anticipating the response of competitors. The reason is that interpreting and responding to market changes ahead of t6he competitors may result in high gains of both sales and profits. Marketing audit Marketing audit is a fundamental element of the marketing planning process, which ensures that a firm is profitable. Marketing audit considers both internal and internal influential factors. Most tools for conducting a marketing audit include the SWOT, PESTEL and the porter’s five forces (Bensoussan & Fleisher, 2008, p 23). PESTEL analysis PESTEL analysis is an examination of forces outside the business, but has an impact on firms sales and marketing. These are the political, economic, social, technological and legal aspects. The political element deals with the impacts of government policy. Government legislation also incorporates legal elements that include taxation policies and laws that govern business operations. Government regulation has the effects on privatization and deregulation policy, which have an overall effect of opening up markets to competition. Companies should not be something for companies to fear, as regulations like lowering pollution may act to spur competitive firms to innovate and lower costs to counter increasing costs of regulation. Economic factors like disposable incomes, unemployment, prevailing interest rates, recession and booms have an impact of a company’s sales. Marketers have to scan and monitor the general economic environment before making any marketing move, as this may have impacts on sales and eventual profitability in a certain time. Social-cultural factors refer to consumers’ patterns of behavior, lifestyles and preferences that affect purchase and buying behaviors (Debra, 2005, p 23). Marketers need to be ware of changes in consumer behavior as a result of change in preferences. Trending social elements affects the demand of a company’s products. Additionally, it is vital to examine the technological changes that happen in the industry, especially changes in information technology, research and development and rate of technology change. The reason is that technology changes affect costs, quality and innovation. While conducting a research, marketers also need to pay attention to environmental changes that affect the business community. At the wake of environmental sustainability, it is essential to incorporate environmental aspects into the corporate objects, as a means of corporate social responsibility, which may have a positive impact on a company’s image and profitability eventually. SWOT breakdown SWOT is a short form for strengths, weaknesses, opportunities and threats. Strengths and weaknesses are taken as internal factors in which the firm has control, whilst opportunities and threats are viewed as being external to a firm, over which the organization has essentially no control. SWOT analysis is the most famous instrument for audit and examination of the general business standing and its environment. SWOT analysis main purpose is to establish tactics that will create a company particular business model that best aligns a firm’s resources and potentials to the requirements of the surroundings in which the company runs. SWOT breakdown is the basis of examining the internal capabilities and inherent limitations, as well as the likely threats and opportunities that the external environment poses to the firm. SWOT enables a firm to identify the positive and negative elements that affect the success of the firm internally and externally (Arthur, 1995, p 13). Strengths are the qualities that help a firm attain its corporate mission. In order to plan effectively, the marketing team requires identifying the tangible and intangible strengths that a company has in order to ensure that the strengths are properly utilized. Strengths could be such as human competencies, consumer goodwill and financial resources. Weaknesses are the aspects that hinder a firm from attaining its mission, or attaining its optimum potential. The marketing team and the organization as a whole should identify weaknesses and institute measures of minimizing or eliminating them completely. A weakness like a narrow product range may hinder an organization from achieving its competitive advantage. The environment within which a business operates presents opportunities that a company can benefit from. A company’s marketers need to be on standby to identify and seize opportunities at any time they crop up. Opportunities may be brought about by the market itself, the industry, competition, technology and the government. Threats occur when situations in the external business environment endanger the steadfastness and prosperity of a firm’s business. A threat may compound the susceptibility if it relates to the firm’s weaknesses (Dibb & Simkin, 1996, p 25). Porter five forces Michael porter identified five models that help decision makers to evaluate the industry structure in their strategic decision making. Porter’s five forces vary from industry to industry, and they jointly affect a firm’s sales and long run profitability. These forces affect marketing operations in that, they shape the prices that products may be charged and the costs which may be born. The five forces include: Threats of substitute products While planning on the marketing, it is essential to establish whether there are substitute products to what a company is offering. The reason is that substitute products put a ceiling on the returns a company or an industry can achieve, whilst at the same time setting a boundary on the prices that a firm may charge for its products in the industry. Other variables held constant, the less the number of close substitutes, the higher the opportunity for firms to raise their product prices, and earn better returns. Bargaining power of consumers/ buyers Buyers are the end users of a company’s product. Buyers pose a high threat to sales and profit margins, if their bargaining power is high. Consumers’ threats are usually high in an industry or firm if substitutes exist. Buyers may also pose threats of increasing costs by demanding and emphasizing on quality products. Bargaining power of suppliers Suppliers are the providers of input to the firm or industry. When suppliers have a high bargaining power, the costs of inputs goes up. Decision makers have to ascertain whether suppliers have high switching costs, and their significance input to the end product (Pride, Hughes & Kapoor, 2010, p 65). Threats of new entrants Before taking any research, a firm needs to explore the possibilities of potential competitors, who are not presently competing in the industry and have the capability to enter the industry. New entrants increase competition for the existing market share. Several factors influence entry into an industry, which include brand loyalty, economies of scale, cost advantage and government regulation. Marketing decision makers must establish whether there are barriers of entry or not before making a marketing move (Pride, Hughes & Kapoor, 2011, p 254). Rivalry among existing competitors Existing competitors pose a serious threat in any company, since rivals compete for the same market share. Where consumers do not incur any switching costs, competitors pose a serious threat as dissatisfied consumers just cross over to purchase from a company’s rivals (Management Study Guide, 2012, para 6). The external marketing environment marketing plan Marketing strategies Targeting, segmenting and positioning Whilst carrying on effective market planning, it is essential to identify the market segment, target and position. Effective marketing planning needs a company to seek and establish its target consumer market. Market segmentation refers to efforts to establish and categorize customer groups in accordance to similar characteristics. Every market segment will act in response to a particular marketing mix strategy, and each segment offers an alternative growth and return opportunity. Segmentation may be prepared on the basis of psychographics, demographics, geographic and behavior (Dibb & Simkin, 2008, p 112). Demographic segmentation centers on consumer characteristics such as age, gender, cultural foundation and income bracket. Psychographics classifies consumers depending on lifestyles. Segmentation is founded on social classes, opinions and lifestyles. Behavioral segmentation divides consumers on modes of buying behavior such as online shoppers, prior purchasers and brand preference. Geographical segmentation divides customers according to location (University of Southern California, 2010, para 5). Targeting is the next step after segmentation, where marketers need to identify targets for different segments, since no single approach will fit all customer groups. Targeting is the evaluation of segments and centering marketing efforts on a region or population groups that have potential to respond. Several segmenting strategies may be used. Undifferentiated targeting; which sees the market as a single grouping that has no particular segments. This single marketing strategy suits firms facing little or no competition. Concentrated targeting, which centers on deciding on a specific market niche where all marketing efforts are directed. Multi segment targeting, which centers on two or more perfectly distinct, and then developing various strategies for the segments (University of Southern California, 2010, para 4). However, firms should first carry out a cost benefit examination, so as to ascertain the best targeting policy to suit them. Positioning involves advancing a product and brand reputation in consumers’ minds. It may also entail enhancing the perception of consumers on the experience they will enjoy if they opt for the company’s product and service. Effective positioning has to positively impact the acumen of the selected consumer base through tactical promotional actions and by vigilantly classifying the company’s marketing mix. It also entails an excellent comprehension of competitors’ goods and benefits customers look for in a product (Porter, 2008, p 23). Marketing mix Marketing mix is the to the 4 P’s (price, promotion, product and place), which are the set of tools that assist companies achieve competitive merit. Effective marketing planning necessitates that the 4 P’s put in their suitable place so as to maximize a firm’s potential. In determining the right product to make or sell, marketers have to comprehend customers’ problems and make a product that solves it. The product must also have the features and benefits unique to the market. Price is another element of marketing mix that must be critically examined throughout the purchase process. Promotion entails selling the product using various tools like advertising and web promotion. Place is the last element that specifies where the product will be sold and at what price. A firm must have an alternative that sets out an exit strategy in case the product does not perform well, as well as finding for an alternative channel of sales. Marketing mix seeks to satisfy the needs of both the vendor and the consumer (University of NOTRE DAME, 2013, para 3). Budgeting After the above has been carried out, it is essential to plan for a budget to carry out various activities like promotion. Finances may also be necessary to carry out research and development, development of existing product, public relations and training sales personnel. Review and implications After internal and external marketing environment have analyzed, a firm needs to evaluate the existing marketing plan to establish whether the SMART goals are being met. The use of balance score card is essential in determining the successes made so far, and what ought to be done. The balance score card has four main tenets; customer knowledge, internal business processes, learning and growth and financial performance. The balance score card acts as the feedback tool to assess the progress made. Brand loyalty and increased number of customer may be used to evaluate customer knowledge. An indicator of internal business process could be reduction in operational costs. Learning and growth may be evaluated through innovations and new products development, while financial performance will be evaluated in terms of overall market share, increased return on investments, revenues and profitability. If the selected indicators reveal divergences, it calls for more research and analysis in order to streamline the strategies to fit what the organization wants to achieve (Rajeev, 2012, p 19). Reference list: Alison J. P. (2011) Effective Business Planning: A Structured Approach: A Guide for Entrepreneurs. New England Journal of Entrepreneurship.14 (2), 21-34  Arthur A. et al. (1995) Rural CPA Marketing: Tools, Uses and Perspectives. Journal of Business and Entrepreneurship.7 (2), 8-41. Bensoussan, B.E & Fleisher, C.S. 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