Feeding the Marketing Management and Planning Process - Literature review Example

Feeding the Marketing Management and Planning Process CONSIDERATIONS INVOLVED WHEN DECIDING ON MARKETING OBJECTIVES Before settling on the ideal marketing objectives to use in any organization, the marketers need to understand what the objectives really are, and their role in the marketing activities. According to McDonald (2007, p. 275), marketing objectives quantify the products or services that an organization markets, and also highlight the market targeted with the product. Without clear marketing objectives therefore, marketers would be operating in an environment where the strategies to be taken are not clear. According to McDonald (2007, p. 276) setting clear objectives for marketing operations enables a firm to identify existing opportunities, threats and conditions that are likely to affect the business in future. This thought is shared by Stapleton and Thomas (1998, p. 79) who observe that marketing objectives make it possible for a firm to develop marketing strategies that stand a higher chance of succeeding in a given market scenario. These authors recommend the “Strengths, Weaknesses, Opportunities and Threats (SWOT)” analysis as one of the ideal ways that a firm can establish the nature of its internal and external environments. Used together with a marketing audit, a SWOT analysis “enables the management to formulate its marketing objectives” (Stapleton & Thomas, 1998, p. 81). But what exactly is a SWOT analysis in relation to marketing? Well, a company’s strength is represented by internal factors which may include skills, market dominance, superior brands or dedicated workforce among other advantages that a form has over its competitors. Weaknesses on the other hand are internal inadequacies that disadvantage the firm in relation to its competitors in the market. A firm that lacks the financial capabilities required to launch a wide marketing campaign can for instance classify financial limitations as one of its key weaknesses. Opportunities give the firm a favourable environment to excel. They may come from technological advancement, regulatory changes and a change in the firm’s relations among other things. Marketers understand that the swiftness of their actions in response to the opportunities determines whether they will make something out of it or not (Stapleton and Thomas, 1998, p. 79). Threats on the other hand are defined by Lorat (2009, p.10) as unfavourable developments in a given market, which can affect the firm adversely. Some of the common threats that marketers experience on a regular basis include new market entrants, technological changes, regulations, and increased supplier or buyer bargaining powers among others. Having established the opportunities, threats and other conditions that would affect the marketing plans of a firm, one can easily assume the setting objectives would be an easy process. As noted by McDonald (2007, p. 276) however, “objective setting is more complex that at first it would appear to be”. Indeed, the author argues that more logic would need to be used in a firm so that the broader and more general nature of the business is considered first, while the narrower and more specific aspects of the business are considered last. Among the broad considerations would involve fitting the firm’s mission statement into the marketing plans. The marketing planners would also need to translate the firm’s broad objectives into “key result areas” as noted by McDonald. Finally, the marketing planners would need to create sub-objectives, which should be vital in accomplishing the broad objectives (McDonald, 2007, p. 276). Overall however, deciding on the marketing objectives to be adopted by a company requires firm-wide consultations. This is especially because different management levels have different concerns they would like addressed by the marketing objectives. As noted by McDonald (2007, p. 276), the top level managers are usually concerned about the firms potential for long-term profitability. Lower ranking managers on the other hand are usually concerned with sustaining short-term profitability through improved sales, acquiring new market share or improving product penetration in the existing market. Managers in other branches may be concerned about creating awareness about a product or changing consumer attitudes. Planners in the marketing department therefore have a responsibility to consider all the concerns by various managers as well as the general workforce before deciding what the marketing objectives will be, and how to prioritize them. Nokia’s change of its marketing plan in the early 2000s is an example of how difficult the task of setting marketing objectives can be. Nokia, a mobile phone manufacturer based in Finland was a relatively small firm compared to the likes of its competitor’s Motorola, Sony-Erickson and Alcatel in the late 1990s. In a case study conducted by Carrall and Kajanto (2008, pp. 25-32), it is revealed that Nokia’s excellence over its competitors in the 2000s was as a result of a shift in its marketing objectives. However, the shift from what the managers and the workforce in the firm was used to, and convinced would work in the future, to new strategies proposed by the in-house analysts commissioned by the firm to study the mobile phone market was not an easy process either. According to Carall and Kajanto (2008, p. 27), the market analysts in Nokia had in 1998 predicted that there would be a slow-down in mobile phone sales in about two to three years, about which time the mobile phone market would be saturated. As such, the company suggested a need to change the marketing objectives from the provision of ‘ordinary’ mobile hand sets just like their competitors were doing, to the provision of ‘more innovative’ mobile devices. The reasoning behind this was that as the market slowed down, the number of people purchasing mobile phones for the first time would dwindle (a significant number had already bought mobile phones in the 1990s), while an increase in mobile-phone replacement purchasers would increase. Notably, this forecast was not received well in Nokia as “people were thinking of how to grow faster… [convinced they had] great products, customer-service focus… and a speedy response to growth” (Carrall and Kajanto, 2008, p. 28). With such resistance, advising top managers (who were convinced that the firm was on the right foot to profit making) to adopt new marketing objectives in light of the slowdown forecast was not an easy thing to do. Being a relatively small firm compared to its competitor’s, it is obvious that the market analysts in the company had realized that the only lifeline for the company, if indeed the forecast was to become a reality, was to make maximal use of the opportunity to develop more technologically advanced mobile handsets, which would resonate well to the mobile-phone replacement buyers. Notably, the market analysts had sought to understand the industry dynamics then assessed the firm’s position on the same based on firm’s strengths and weaknesses. The greatest success in Nokia (see figure 1) is however credited to the fact that after a 12-month communication process, the analysts were finally able to convince the management that changes in the marketing objectives were necessary for the firms’ future prosperity (Carrall and Kajanto, 2008, p. 29). This means that the marketing objective at Nokia changed from gaining market penetration through marketing, to boosting mobile sales through the marketing and distribution of new, innovative mobile phones with colour screens and multi-media services. Figure 1: Mobile Phones sales by different manufacturers Source: Carral and Kajanto (2008, p. 30). MARKETING AUDIT According to the Business Dictionary (2010), a market audit is the “analysis and evaluation of a firm’s marketing approach, activities, aims and results”. Simply put, the marketing audit is essential part of the marketing planning process. According to Kotler, Gregor and Rodgers III (2005, p. 1), the marketing audit needs to be done at the beginning of the marketing planning process, and should also be conducted in different stages during the implementation phase of the plan. Notably, the audit is used by marketers to establish the internal and external factors that affect marketing plans. An audit is also carried out on the marketing plan itself in order to establish its viability in a given market scenario (Kotler, Gregor and Rodgers III, 2005, p. 6). As has been noted by Lorat (2009, p .9), a SWOT analysis can be used as an audit tool specifically to gauge the situation in a firm’s internal environment. Other tools that can be used in an audit include the five forces analysis: “threat of new entrants, bargaining power of buyers, threat of substitute products , bargaining power of suppliers and competitive rivalry”, and the Political, Economic, Socio-cultural and Technological factors (PEST) analysis. These two are specifically essential in auditing a firm’s external environment. The purpose of a marketing audit can simply be stated as evaluation of existing processes adopted by an organization for the delivery of value to the consumer market. According to Nijssen and Frambach (2000, p. 74), a marketing audit evaluates an organization’s resources and potential to deliver value to the consumer market distinctively and efficiently. This is done by evaluating the marketing functioning and indicating areas that need to be improved in order for the firm to attain maximum performance. Areas that are given specific focus in a marketing audit include the resources allocated to the marketing effort, marketing capabilities within the firm, and marketing activities carried out by the marketers. In addition, Nijissen and Frambach (2000, p. 74) note that an effective marketing audit must address contents of a marketing strategy, the marketing mix, and how the marketing task is implemented. This means that the audit looks into the operational and tactical decisions made in relation to the marketing plan, as well as the organization that directs how the marketing plan is to be implemented. Without a schematic guideline in conducting a marketing audit, marketers can easily carry out a descriptive rather than an analytical audit. As such, Nijjssen and Frambach (2000, p. 74) recommend that a marketing audit instrument requiring marketers to look into their marketing strategy, the marketing mix, and how the marketing function is implemented should be used. In regard to auditing the content of the marketing strategy, the market segmentation and company situation should be analysed. Also, an analysis on the portfolio situation, marketing objectives of the company as well as the marketing plan performance in relation to beating completion and satisfying customers should be done. In a hypothetical Nokia marketing audit, the mobile phone manufacturer would start by analyzing its internal marketing environment. Here, the auditors would look at the firm’s resources, which include the labour force/skills, finances, equipment, times and the factors of production. Next, the firm would look at the organization, efficiency and effectiveness of its marketing team. The analytical phase would on the other hand start with gauging how the marketing team fits and compliments the internal functions in the firm. In addition, the audit would include an analysis of customer relations management, the state of the marketing plan, and the accuracy and validity of the marketing planning information. The marketing audit would also identify the status if the new products developed in the firm, in addition to establishing if indeed the product portfolio is profitable. Other factors that would be considered in the marketing audit include the nature of pricing, distribution and marketing communications are being implemented. In relation to the external marketing environment, a marketing audit by Nokia would seek to identify the consumer needs and gauge if the firm is meeting their needs. Other factors that would be included in the audit include consumer behaviour, their perceptions towards the Nokia brand, the segmentation of the market and customer values that the firm must meet using its products. By understanding the external environment, Nijssen and Frambach (2000, p. 74) note that a firm is able to come up with marketing strategies that targets the consumer market more efficiently through proper product positioning. An external environment analysis by Nokia would also include gauging the competition in the market, which would include gauging their profitability levels, concentration in the market, strengths and weaknesses, as well as the marketing strategies. The culture, demographics, economic conditions and the political and legal environment in the market would also make part of the marketing audit. Finally, a marketing audit would be incomplete without a review of the existing marketing plan. Such a review would include a critical analysis of the prevailing marketing objectives and strategies in a firm. The application of the marketing mix and the control of the marketing process would also have to be reviewed. According to Lorat (2009, p. 9), determining whether the marketing team is implementing a marketing plan well is also part of the marketing audit. Depending on the results of the review, the marketing audit team can recommend a change in staffing or the development of training programmes in order to better equip the marketing team. PRINCIPAL DECISIONS TO BE MADE WHEN PREPARING A MARKETING PLAN Once information has been gathered through a marketing audit, and an analysis done on the same, Stapleton and Thomas (1998, p. 5) note that three kinds of decisions must be made in the marketing planning process. They include decisions on marketing targets, marketing mix and marketing budgets. The culminating action after decisions on all three aspects have been made is a marketing plan. Market target decisions Based on the information collected either through primary or secondary research, a firm needs to make decisions regarding its target market. This includes the potential buyers of its products or services. Before deciding on the market target however, managers and other people involved in the decision-making process must consider several things. First, Kalb (1996, p. 12) notes that the decision-makers must “establish and match customer profiles”. This means that existing customers are analysed and their profiles constructed. Oftentimes, marketers believe that potential future customers will resemble existing customers. The second step involves establishing the product capabilities in relation to their potential in satisfying customer needs (Kalb, 1996, p. 12). After this, decisions regarding how best to match the market prospects with the firm’s expertise, and how best to identify the consumers whose needs are yet to be met are made. Marketing mix decisions The second type of principal decisions that must be made in the course of preparing a marketing plan are related to the marketing mix. According to Ennew and Waite (2007, p. 172), making decisions about the marketing mix is essential for the creation of a “clear competitive position in the markets for the organisation’s products and services, that is consistent with the nature of the overall marketing strategy”. Decisions about the marketing mix are especially critical to a marketing plan because it is through the 4-Ps “Product, price, promotion and Place” that the marketing strategy is actualised. As noted by Ennew and Waite (2007, p. 172), decisions made in respect to the marketing mix must cover both tactical and strategic dimensions. Regarding marketing mix’s strategic dimensions, decisions are made regarding the relative importance of the 4-Ps. On the tactical front however, decisions are made regarding the general approach that will be used in specific marketing tools. For example, if promotion has been identified as the main tool to be used in enhancing product penetration, then decisions regarding where, how, when and by whom must be made on the tactical front. Marketing budgets decisions When preparing a marketing plan, decisions about financial budgets are vital because, in addition to being one of the limited resources available to marketers, budget allocation can also be a complex process that may inhibit a good plan from being implemented. According to Lancaster and Withey (2006, p. 62), a marketing plan usually has different marketing activities, all which require some financial allocations. Considering that each manager with an agenda to drive in the marketing plan vies for a share of the marketing budget, decisions must be made based on several considerations. First, the objectives and target of each marketing activity must be defined. Second, the resources and activities necessary to achieve them are then identified. Third on the list, the marketing plan budget must fall within what the company can reasonably afford. Lancaster and Withey (2006, p. 62) also argue that the views, arguments and feelings expressed by the various managers in the marketing departments (sales, advertising, product-group and distribution) must be considered before the final budget allocation decisions are made. Main criteria for the successful implementation of a marketing plan Without proper implementation, a marketing plan, however good it maybe remains just a piece of written work. To have any effect on a firm therefore, a marketing plan would need to be implemented. According to Nijssen and Frambach (2000, p. 133), implementation of a marketing plan involves “the allocation of means and mobilizing of resources in accord with the corporate of business plan made.” To succeed however, the implementation process must be supported by willing, motivated and competent people in the organisation. Since the organisation is made of people working under collective organisation objectives but different personal objectives, the management has a role to ensure that the personal objectives are only subordinate to the collective organisational objectives. As observed by Nijjsen and Frambach (2000, p, 133), consistency within an organisation is essential for the successful implementation of a marketing plan. As such, the managers should work together to ensure that the low-ranking workers supports the marketing plan and strategies through joint action. Some of the identified things that would make this easy to achieve milestone include fostering open communication in the organisation, motivating workers through making clear and well thought-out decisions and encouraging team work. Meldrum (1996, p. 34) also proposes that facilitating the adoption of shared values and culture in an organisation would work to ease the implementation of a marketing plan. Using the Nokia case as documented by Carrall and Kajanto (2008, pp. 25-33), it is evident that the analysts who first realised the need to change the marketing plan in the company in order to introduce more innovative products in anticipation for a slowdown in sales, had to convince the managers of the probability of their forecast first. Although it took an entire 12 months before their message was understood and marketing plans changed to factor in different but innovative mobile handsets, the managers had to summon the support of lower-ranking staff members working in the firm, by convincing them that the forecasted slowdown was probable. This was necessary in order to encourage every one in the firm to work in the new marketing plan as a team. Once everyone in the firm was convinced drastic action was needed to avoid suffering which reduced sales when the market eventually hit a slow-down, the implementation process was easy and successful as evident in the first record in the sales of Nokia phones in the 2000s. THE PROS AND CONS OF STANDARDISING THE MARKETING MANAGEMENT PROCESS According to Chawla (2003, p. 1), the marketing management process requires a firm to analyze its market opportunities, research and select the target markets. The firm also needs to develop marketing strategies that it deems fit, plan the appropriate marketing tactics, and implement and control its marketing efforts in order to effectively meet its objectives. When deciding on the marketing management process to adopt however, most firms especially those operating on a global scale, become confused on whether to use the standardise process or use a process that is uniquely adjusted to fit their target markets. a standardised marketing management requires the use of a single and similar strategy in all target markets that a company seeks to sell its products (Vrontis, Thrassou & Lamprianou, 2009, p. 479). This means that a firm fails to consider factors that make one market segment different from another when designing a marketing process for a specific market. Considering that the globalisation has permeated every corner of the society, standardising the marketing management process enables firms to save on costs, which would otherwise be used in analysing, designing, and marketing different products for different markets. According to Dicken (1998, p. 67) consumers are today living in a globalised world where cultures are homogenised. As such, the consumer’s tastes and preferences are easily satisfied through the provision of standardised products. Levitt (1983, p. 97) supports this view by asserting that as opposed to customising items to using customised marketing management processes, standardised management marketing management processes are less costly for a firm, are reliable since they have been tested by other firms, and are usually more advanced and functional. Levitt (1983, p. 98) further argues that instead of concentrating on finding out the details of what every consumer may like, long-term marketing plans can be more successful if they focus on what every consumer wants. This observation supports the observations made by Professor Stephen Brown, whose case scenario underlies this essay. Other advantages of using the standardised marketing management process as identified by Papavassiliou and Stathakopoulos (1997, p. 506) include the fact that companies working on the international market are able to establish a brand identity and a consistent image in all the target markets. Consumers who travel from one market to another also suffer less or no confusion, and also allow companies operating in international markets to use one tactical approach in all the markets. The disadvantages of standardisation of the marketing management processes are best laid out by Jain (1989, p. 71) who argues that “standardisation is at best difficult and at worst, impractical”. The author argues that applying the same marketing management processes everywhere makes it hard for even multinational companies to market their products effectively. Considering the above arguments, a standardised process would appear to have more benefits in a company pursuing a national marketing strategy, rather than a company pursuing a global marketing strategy because the market in the former may share more common values in relation to culture, political, social, and economic factors as opposed to the latter. References Business dictionary, 2010, market audit, viewed 29 October 2010, < http://www.businessdictionary.com/definition/market-audit.html> Carral, R. & Kajanto, M 2008, ‘Nokia: a case study in managing industry downturn,’ Journal of Business Strategy, vol. 29, no. 1, p. 25-33. Chawla, A 2003, ‘Marketing management’, viewed 29 October 2010, < http://www.hindustanstudies.com/files/marketmanage.pdf> Dicken, P 1998, Global Shift, Transforming the World Economy, 3rd ed., Paul Chapman, London. Ennew, C. & Waite, N 2007, Financial Services marketing: an international guide to principles and practice, Butterworth-Heinemann, London. Kalb, I.S 1996, Zero-budget marketing, K&A Press, Los Angeles, CA. Kotler, P., Gregor, W. T., & Rodgers III, W. H 2005, The marketing audit comes of age, Sloan management review classic reprint, pp. 1-30, viewed 29 October 2010 < http://academics.eckerd.edu/instructor/trasorrj/MN%20373/The%20Marketing%20Audit%20Comes%20of%20Age.pdf> Lancaster, G. & Withey, F 2006, CIM course book 06/07 marketing fundamentals, Butterworth-Heinemann, London. Levitt, T 1983, ‘The globalization of markets,’ Harvard Business Review, Vol. 61 pp.92-102. Lorat, N 2009, Market audit analysis, Grin Verlag, Munich. McDonald, M 2007, Marketing plans: how to prepare them, how to use them, Butterworth-Heinemann, London. Meldrum, M 1996, ‘Critical issues in implementing marketing,’ Journal of Marketing practice: applied marketing science, vol.2, no.3, pp. 29-43. Nijssen, E. J & Frambach, R. T 2000, Creating customer value through strategic marketing planning: a management approach, Springer, London. 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