Introduction to Marketing Communications.

Introduction to Marketing Communications.

agarbandhu

What are marketing communications?
Marketing communications is a subset of the overall subject area known as marketing. Marketing has a marketing mix that is made of price, place, promotion, product (know as the four P's), that includes people, processes and physical evidence, when marketing services (known as the seven P's).

How does marketing communications fit in?

Marketing communications is 'promotion' from the marketing mix.

Why are marketing communications 'integrated?' Integrated means combine or amalgamate, or put simply the jigsaw pieces that together make a complete picture. This is so that a single message is conveyed by all marketing communications. Different messages confuse your customers and damage brands.

So if a TV advert carries a particular logo, images and message, then all newspaper adverts and point-of-sale materials should carry the same logo, images or message, or one that fits the same theme. Coca-Cola uses its familiar red and white logos and retains themes of togetherness and enjoyment throughout its marketing communications.

Marketing communications has a mix. Elements of the mix are blended in different quantities in a campaign. The marketing communications mix includes many different elements, and the following list is by no means conclusive. It is recognised that there is some cross over between individual elements (e.g. Is donating computers to schools, by asking shoppers to collect vouchers, public relations or sales promotion?).

Here are the key of the marketing communications mix.
The Marketing Communications Mix.
· Personal Selling.
· Sales Promotion.
· Public Relations (and publicity).
· Direct Marketing.
· Trade Fairs and Exhibitions.
· Advertising (above and below the line).
· Sponsorship.
· Packaging.
· Merchandising (and point-of-sale).
· EMarketing (and Internet promotions).
· Brands.

Integrated marketing communications see the elements of the communications mix 'integrated' into a coherent whole. This is known as the marketing communications mix, and forms the basis of a marketing communications campaign.

Lesson - Personal Selling.
Personal selling occurs where an individual salesperson sells a product, service or solution to a client. Salespeople match the benefits of their offering to the specific needs of a client. Today, personal selling involves the development of longstanding client relationships.

In comparison to other marketing communications tools such as advertising, personal selling tends to:
· Use fewer resources, pricing is often negotiated.
· Products tend to be fairly complex (e.g. financial services or new cars).
· There is some contact between buyer and seller after the sale so that an ongoing relationship is built.
· Client/prospects need specific information.
· The purchase tends to involve large sums of money.

There are exceptions of course, but most personal selling takes place in this way.

Personal selling involves a selling process that is summarised in the following Five Stage Personal Selling Process.

The five stages are:
1. Prospecting.
2. Making first contact.
3. The sales call.
4. Objection handling.
5. Closing the sale.

A Five Stage Personal Selling Process.

Stage One - Prospecting.
Prospecting is all about finding prospects, or potential new customers. Prospects should be 'qualified,' which means that they need to be assessed to see if there is business potential, otherwise you could be wasting your time.

In order to qualify your prospects, one needs to:
· Plan a sales approach focused upon the needs of the customer.
· Determine which products or services best meet their needs.
· In order to save time, rank the prospects and leave out those that are least likely to buy.

Stage Two - Making First Contact.
This is the preparation that a salesperson goes through before they meet with the client, for example via e-mail, telephone or letter. Preparation will make a call more focused.

· Make sure that you are on time.
· Before meeting with the client, set some objectives for the sales call.

What is the purpose of the call?

What outcome is desirable before you leave?

· Make sure that you've done some homework before meeting your prospect. This will show that you are committed in the eyes of your customer.
· To save time, send some information before you visit. This will wet the prospect's appetite.
· Keep a set of samples at hand, and make sure that they are in very good condition.
· Within the first minute or two, state the purpose of your call so that time with the client is maximised, and also to demonstrate to the client that your are not wasting his or her time.
· Humour is fine, but try to be sincere and friendly.

Stage Three - The Sales Call (or Sales Presentation).
It is best to be enthusiastic about your product or service. If you are not excited about it, don't expect your prospect to be excited.

Focus on the real benefits of the product or service to the specific needs of your client, rather than listing endless lists of features.

Try to be relaxed during the call, and put your client at ease.

Let the client do at least 80% of the talking. This will give you invaluable information on your client's needs.

Remember to ask plenty of questions. Use open questions, e.g. TED's, and closed questions i.e. questions that will only give the answer 'yes' or the answer 'no.' This way you can dictate the direction of the conversation.

Never be too afraid to ask for the business straight off.

Stage Four - Objection Handling.
Objection handling is the way in which salespeople tackle obstacles put in their way by clients. Some objections may prove too difficult to handle, and sometimes the client may just take a dislike to you (aka the hidden objection).

Here are some approaches for overcoming objections:
· Firstly, try to anticipate them before they arise.
· 'Yes but' technique allows you to accept the objection and then to divert it.

For example, a client may say that they do not like a particular colour, to which the salesperson counters 'Yes but X is also available in many other colours.'

· Ask 'why' the client feels the way that they do.

· 'Restate' the objection, and put it back into the client's lap. For example, the client may say, 'I don't like the taste of X,' to which the salesperson responds, 'You don't like the taste of X,' generating the response 'since I do not like garlic' from the client. The salesperson could suggest that X is no longer made with garlic to meet the client's needs.

· The sales person could also tactfully and respectfully contradict the client.

Stage Five - Closing the Sale.
This is a very important stage. Often salespeople will leave without ever successfully closing a deal. Therefore it is vital to learn the skills of closing.

· Just ask for the business! - 'Please may I take an order?' This really works well.
· Look for buying signals (i.e. body language or comments made by the client that they want to place an order).

For example, asking about availability, asking for details such as discounts, or asking for you to go over something again to clarify.

· Just stop talking, and let the client say 'yes.' Again, this really works.
· The 'summary close' allows the salesperson to summarise everything that the client needs, based upon the discussions during the call. For example, 'You need product X in blue, by Friday, packaged accordingly, and delivered to your wife's office.' Then ask for the order.
· The 'alternative close' does not give the client the opportunity to say no, but forces them towards a yes.

For example 'Do you want product X in blue or red?' Cheeky, but effective.
So this is the Five Stage Personal Selling Process. Now have a go at it yourself by completing the

lesson. : Sales Promotion.
What is sales promotion?
Sales promotion is any initiative undertaken by an organisation to promote an increase in sales, usage or trial of a product or service (i.e. initiatives that are not covered by the other elements of the marketing communications or promotions mix).

Sales promotions are varied. Often they are original and creative, and hence a comprehensive list of all available techniques is virtually impossible (since original sales promotions are launched daily!).

Here are some examples of popular sales promotions activities:
(a) Buy-One-Get-One-Free (BOGOF) - which is an example of a self-liquidating promotion. For example if a loaf of bread is priced at $1, and cost 10 cents to manufacture, if you sell two for $1, you are still in profit - especially if there is a corresponding increase in sales. This is known as a PREMIUM sales promotion tactic.

(b) Customer Relationship Management (CRM) incentives such as bonus points or money off coupons. There are many examples of CRM, from banks to supermarkets.
(c) New media - Websites and mobile phones that support a sales promotion. For example, in the United Kingdom, Nestle printed individual codes on KIT-KAT packaging, whereby a consumer would enter the code into a dynamic website to see if they had won a prize. Consumers could also text codes via their mobile phones to the same effect.

(d) Merchandising additions such as dump bins, point-of-sale materials and product demonstrations.

(e) Free gifts e.g. Subway gave away a card with six spaces for stickers with each sandwich purchase. Once the card was full the consumer was given a free sandwich.

(f) Discounted prices e.g. Budget airline such as EasyJet and Ryanair, e-mail their customers with the latest low-price deals once new flights are released, or additional destinations are announced.

(g) Joint promotions between brands owned by a company, or with another company's brands. For example fast food restaurants often run sales promotions where toys, relating to a specific movie release, are given away with promoted meals.

(h) Free samples (aka. sampling) e.g. tasting of food and drink at sampling points in supermarkets. For example Red Bull (a caffeinated fizzy drink) was given away to potential consumers at supermarkets, in high streets and at petrol stations (by a promotions team).

(i) Vouchers and coupons, often seen in newspapers and magazines, on packs.
(j) Competitions and prize draws, in newspapers, magazines, on the TV and radio, on The Internet, and on packs.
(k) Cause-related and fair-trade products that raise money for charities, and the less well off farmers and producers, are becoming more popular.
(l) Finance deals - for example, 0% finance over 3 years on selected vehicles.

Many of the examples above are focused upon consumers. Don't forget that promotions can be aimed at wholesales and distributors as well. These are known as Trade Sales Promotions. Examples here might include joint promotions between a manufacturer and a distributor, sales promotion leaflets and other materials (such as T-shirts), and incentives for distributor sales people and their retail clients.

Public Relations(PR).
Public relations as part of the marketing communications mix.

Public Relations (PR) is a single, broad concept. It is broad since it contains so many elements, many of which will be outlined in this lesson. Public Relations (PR) are any purposeful communications between an organisation and its publics that aim to generate goodwill. Publics, put simply, are its stakeholders. PR is proactive and future orientated, and has the goal of building and maintaining a positive perception of an organisation in the mind of its publics. This is often referred to as goodwill.

Yes it is difficult to see the difference between marketing communications and PR since there is a lot of crossover. This makes it a tricky concept to learn. Added to this is the fact that PR is often expensive, and not free, as some definitions would have you believe. PR agencies are not cheap.

Below are some of the approaches that are often considered under the PR banner.
Interviews and photo-calls.
It is important that company executives are available to generate goodwill for their organisation. Many undertake training in how to deal with the media, and how to behave in front of a camera. There are many key industrial figures that proactively deal with the media in a positive way for example Bill Gates (Microsoft) or Richard Branson (Virgin). Interviews with the business or mass media often allow a company to put its own perspective on matters that could be misleading if simply left to dwell untended the public domain.

Speeches, presentations and speech writing.
Key figures from within an organisation will write speeches to be delivered at corporate events, public awards and industry gatherings. PR company officials in liaison with company managers often write speeches and design corporate presentations. They are part of the planned and coherent strategy to build goodwill with publics. Presentations can be designed and pre-prepared by PR companies, ultimately to be delivered by company executives.

Corporate literature e.g. financial reports.
Corporate literature includes financial reports, in-house magazines, brochures, catalogues, price lists and any other piece of corporate derived literature. They communicate with a variety of publics. For example, financial reports will be of great interest to investors and the stock market, since they give all sorts of indicators of the health of a business. A company Chief Executive Officer CEO will often write the forward to an annual financial report where he or she has the opportunity to put a business case to the reader. This is all part of Public Relations.

Direct Marketing.
What is Direct Marketing?
Direct marketing is a channel free approach to distribution and/or marketing communications. So a company may have a strategy of dealing with its customers 'directly,' for example banks (such as CityBank) or computer manufacturers (such as Dell). There are no channel intermediaries i.e. distributors, retailers or wholesalers.

Therefore - 'direct' in the sense that the deal is done directly between the manufacturer and the customer.

As mentioned above, 'direct' also in the sense that marketing communications are targeted at consumers by the manufacturers.

For example, a brand that uses channels of distribution would target marketing communications at wholesalers/distributors, retailers, and consumers, or a blend of all three.

On the other hand, a direct marketing company could focus upon communicating directly with its customers.

Direct marketing and direct mail are often confused - although direct mail is a direct marketing tool.
There are a number of direct marketing media other than direct mail. These include (and are by no means limited to):
· Inserts in newspapers and magazines.
· Customer care lines.
· Catalogues.
· Coupons.
· Door drops.
· TV and radio adverts with free phone numbers or per-minute-charging.
· . . . and finally - and most importantly - The Internet and New Media.

The Internet and New Media (e.g. mobile phones or PDA's) are perfect for direct marketing. Consumers have never had so many sources of supply, and suppliers have never had access to so many markets. There is even room for niche marketers - for example Scottish salmon could ordered online, packed and chilled, and sent to customers in any part of the world by courier.

Many companies use direct marketing, and a current example of its use, as part of a business model, is the way in which it is used by low-cost airlines. There is no intermediary or agent, customers book tickets directly with the airlines over The Internet. Airlines capture data that can be used for marketing research or a loyalty scheme. Information can be processed quickly, and then categorised into complex relational databases.

Then, for example, special offers or new flights destinations can be communicated directly to customers using e-mail campaigns. Data is not only collected on markets and segments, but also on individuals and their individual buyer behaviour.

Companies such as Amazon are wholesalers of books (i.e. they do not write or publish them) - so they use Customer Relationship Management and marketing communications targeted directly at individual customers - which is another, slightly different example of direct marketing.

Advertising
Advertising is an important element of the marketing communications mix. Put simply, advertising directs a message at large numbers of people with a single communication. It is a mass medium.

Advertising has a number of benefits for the advertiser. The advertiser has control over the message. The advert and its message, to an extent, would be designed to the specifications of the advertiser. So the advertiser can focus its message at a huge number of potential consumers in a single hit, at a relatively low cost per head. Advertising is quick relative to other elements of the marketing communications mix (for example personal selling, where an entire sales force would need to be briefed - or even recruited). Therefore an advertiser has the opportunity to communicate with all (or many of) its target audience simultaneously.

Advertising Media
Outdoor (Posters or transport)
Newspapers (Local and National)

New Media - Mobile devices

Television
Magazines
Radio
Cinema
Others . . .

New Media Internet - websites and search engines

Planning for advertising
Advertising agencies and their clients plan for advertising. Any plan should address the following stages:
· Who is the potential TARGET AUDIENCE of the advert?
· WHAT do I wish to communicate to this target audience?
· Why is this message so IMPORTANT to them?
· What is the BEST MEDIUM for this message to take (see some of the possible media above)?
· What would be the most appropriate TIMING?
· What RESOURCES will the advertising campaign need?
· How do we CONTROL our advertising and monitor success?

There are two key categories of advertising, namely 'above-the-line' and 'below-the-line.' The definitions owe a lot to the historical development of advertising agencies and how they charge for their services.

'above-the-line'

In a nutshell, 'above-the-line' is any work done involving media where a commission is taken by an advertising agency, and 'below-the-line' is work done for a client where a standard charge replaces commission.

'below-the-line,'

So TV advertising is 'above-the-line' since an agency would book commercial time on behalf of a client, but placing an advert in a series of local newspapers is 'below-the-line,' because newspapers tend to apply their own costing approach where no commission is taken by the agency i.e. instead the agency charges the client a transparent fee.

There are many facets and elements to advertising - too many to be covered in this short lesson.

Try some of the other lessons to build your knowledge.

Introduction to Brands.
Brands and Branding.
Branding is a strategy that is used by marketers. Pickton and Broderick (2001) describe branding as Strategy to differentiate products and companies, and to build economic value for both the consumer and the brand owner. Brand occupies space in the perception of the consumer, and is what results from the totality of what the consumer takes into consideration before making a purchase decision .

So branding is a strategy, and brand is what has meaning to the consumer.

There are some other terms used in branding.

Brand Equity is the addition of the brand's attributes including reputation, symbols, associations and names.

Brand Value : Then the financial expression of the elements of brand equity is called Brand Value.

There are a number of interpretations of the term brand .They are summarized as follows:
· A brand is simply a logo e.g. McDonald's Golden Arches.
· A brand is a legal instrument, existing in a similar way to a patent or copyright.
· A brand is a company e.g. Coca-Cola.
· A brand is shorthand - not as straightforward.

Here a brand that is perceived as having benefits in the mind of the consumer is recognised and acts as a shortcut to circumvent large chunks of information.

So when searching for a product or service in less familiar surroundings you will conduct an information search. A recognised brand will help you reach a decision more conveniently.

· A brand is a risk reducer. The brand reassures you when in unfamiliar territory.
· A brand is positioning. It is situated in relation to other brands in the mind of the consumer as better, worse, quicker, slower, etc.
· A brand is a personality, beyond function e.g. Apple's iPod versus just any MP3 player.
· A brand is a cluster of values e.g. Google is reliable, ethical, invaluable, innovative and so on.
· A brand is a vision. Here managers aspire to see a brand with a cluster of values. In this context vision is similar to goal or mission.
· A brand is added value, where the consumer sees value in a brand over and above its competition e.g. Audi over Volkswagen, and Volkswagen over Skoda - despite similarities.
· A brand is an identity that includes all sorts of components; depending on the brand e.g. Body Shop International encapsulates ethics, environmentalism and political beliefs.
· A brand is an image where the consumer perceives a brand as representing a particular reality e.g. Stella Artois Reassuring Expensive.
· A brand is a relationship where the consumer reflects upon him or herself through the experience of consuming a product or service.
Bojourn...............!!!!!!!!!!!!!!! agarbandhu

Positioning.

Positioning.

agarbandhu

The third and final part of the SEGMENT - TARGET - POSITION (STP) process is 'positioning.'

Positioning is undoubtedly one of the simplest and most useful tools to marketers. After segmenting a market and then targeting a consumer, you would proceed to position a product within that market.

Remember this important point. Positioning is all about 'perception'. As perception differs from person to person, so do the results of the positioning map e.g what you perceive as quality, value for money, etc, is different to my perception.

However, there will be similarities.
Products or services are 'mapped' together on a 'positioning map'. This allows them to be compared and contrasted in relation to each other. This is the main strength of this tool. Marketers decide upon a competitive position which enables them to distinguish their own products from the offerings of their competition (hence the term positioning strategy).

Take a look at the basic positioning map template below.

The marketer would draw out the map and decide upon a label for each axis. They could be price (variable one) and quality (variable two), or Comfort (variable one) and price (variable two). The individual products are then mapped out next to each other Any gaps could be regarded as possible areas for new products.

The term 'positioning' refers to the consumer's perception of a product or service in relation to its competitors. You need to ask yourself, what is the position of the product in the mind of the consumer?
Trout and Ries suggest a six-step question framework for successful positioning:
1. What position do you currently own?
2. What position do you want to own?
3. Whom you have to defeat to own the position you want.
4. Do you have the resources to do it?
5. Can you persist until you get there?
6. Are your tactics supporting the positioning objective you set?
Look at the example below using the auto market.
Product: Ferrari, BMW, Kia, Range Rover, Saab, Hyundai.

Positioning Map for Cars.
The six products are plotted upon the positioning map. It can be concluded that products tend to bunch in the high price/low economy(fast) sector and also in the low price/high economy sector. There is an opportunity in the low price/ low economy (fast) sector. Maybe Hyundai or Kia could consider introducing a low cost sport saloon. However, remember that it is all down to the perception of the individual.

Bojourn..............!!!!!!!!!!!!!!! agarbandhu

Targeting

Targeting

agarbandhu

Targeting is the second stage of the segmentation "Target" Positioning (STP) process.

After the market has been separated into its segments, the marketer will select a segment or series of segments and 'target' it/them. Resources and effort will be targeted at the

The first is the single segment with a single product. In other word, the marketer targets a single product offering at a single segment in a market with many segments. For example, British Airway's Concorde is a high value product aimed specifically at business people and tourists willing to pay more for speed.

Secondly the marketer could ignore the differences in the segments, and choose to aim a single product at all segments i.e. the whole market. This is typical in 'mass marketing' or where differentiation is less important than cost. An example of this is the approach taken by budget airlines such as Go/

Finally there is a multi-segment approach. Here a marketer will target a variety of different segments with a series of differentiated products. This is typical in the motor industry. Here there are a variety of products such as diesel, four-wheel-drive, sports saloons, and so on.
Bojourn......!!!!!!!!!! agarbandhu

Segmentation

Segmentation

agarbandhu

This is the first of three lessons based upon SEGMENT - TARGET - POSITION .

To get a product or service to the right person or company, a marketer would firstly segment the market, then target a single segment or series of segments, and finally position within the segment(s).

Segmentation is essentially the identification of subsets of buyers within a market who share similar needs and who demonstrate similar buyer behavior. The world is made up from billions of buyers with their own sets of needs and behavior.

Segmentation aims to match groups of purchasers with the same set of needs and buyer behavior. Such a group is known as a 'segment'. Think of you r market as an orange, with a series of connected but distinctive segments, each with their own profile.

variables
Of course you can segment by all sorts of variables. The diagram above depicts how segmentation information is often represented as a pie chart diagram - the segments are often named and/ or numbered in some way.

Segmentation is a form of critical evaluation rather than a prescribed process or system, and hence no two markets are defined and segmented in the same way.

However there are a number of underpinning criteria that assist us with segmentation:
· Is the segment viable? Can we make a profit from it?
· Is the segment accessible? How easy is it for us to get into the segment?
· Is the segment measurable? Can we obtain realistic data to consider its potential?

ways of consideration

The are many ways that a segment can be considered. For example, the auto market could be segmented by: driver age, engine size, model type, cost, and so on.

However the more general bases include:
· by geography - such as where in the world was the product bought.
· by psychographics - such as lifestyle or beliefs.
· by socio-cultural factors - such as class.
· by demography - such as age, sex, and so on.

A company will evaluate each segment based upon potential business success. Opportunities will depend upon factors such as: the potential growth of the segment the state of competitive rivalry within the segment how much profit the segment will deliver how big the segment is how the segment fits with the current direction of the company and its vision.

Bojourn............!!!!!!!!!! agarbandhu

Marketing Audit.

Marketing Audit.

agarbandhu

How to conduct a marketing audit.
The marketing audit is a fundamental part of the marketing planning process. It is conducted not only at the beginning of the process, but also at a series of points during the implementation of the plan. The marketing audit considers both internal and external influences on marketing planning, as well as a review of the plan itself.

Tools used
There are a number of tools and audits that can be used, for example SWOT analysis for the internal environment, as well as the external environment.

Other examples include PEST and Five Forces Analyses, which focus solely on the external environment.

marketing audit clarifies opportunities and threats
In many ways the marketing audit clarifies opportunities and threats, and allows the marketing manager to make alterations to the plan if necessary.

This lesson considers the basics of the marketing audit, and introduces a marketing audit checklist. The checklist is designed to answer the question, what is the current marketing situation?

Lets consider the marketing audit under three key headings:
· The Internal Marketing Environment.

· The External Marketing Environment.

· A Review of Our Current Marketing Plan.

1.The Internal Marketing Environment.
What resources do we have at hand? (i.e. The FIVE 'M's):
· MEN (Labor/Labour).
· MONEY (Finances).
· MACHINERY (Equipment).
· MINUTES (Time).
· MATERIALS (Factors of Production).
· How is our marketing team organised?
· How efficient is our marketing team?
· How effective is our marketing team?
· How does our marketing team interface with other organisations and internal functions?
· How effective are we at Customer Relationship Management (CRM)?
· What is the state of our marketing planning process?
· Is our marketing planning information current and accurate?
· What is the current state of New Product Development? (Product)
· How profitable is our product portfolio? (Product)
· Are we pricing in the right way? (Price)
· How effective and efficient is distribution? (Place)
· Are we getting our marketing communications right? (Promotion)
· Do we have the right people facing our customers? (People)
· How effective are our customer facing processes? (Process)
· What is the state of our business's physical evidence? (Physical Evidence)

2. The External Marketing Environment.
As a market orientated organisation, we must start by asking - What is the nature of our 'customer?' Such as:
· Their needs and how we satisfy them.
· Their buyer decision process and consumer behaviour.
· Their perception of our brand, and loyalty to it.
· The nature of segmentation, targeting and positioning in our markets.
· What customers 'value' and how we provide that 'value?.'

What is the nature of competition in our target markets?
· Our competitors' level of profitability.
· Their number/concentration.
· The relative strengths and weaknesses of competition.
· The marketing plans and strategies of our competition.

What is the cultural nature of the environment(s)?
· Beliefs and religions.
· The standards and average levels of education.
· The evolving lifestyles of our target consumers.
· The nature of consumerism in our target markets.

What is the demography of our consumers? Such as average age, levels of population, gender make up, and so on. How does technology play a part?
· The level of adoption of mobile and Internet technologies.
· The way in which goods are manufactured.
· Information systems.
· Marketing communications uses of technology and media.

What is the economic condition of our markets?
· Levels of average disposable income.
· Taxation policy in the target market.
· Economic indicators such as inflation levels, interest rates, exchange rates and unemployment.

Is the political and legal landscape changing in any way?
· Laws, for example, copyright and patents.
· Levels of regulation such as quotas or tariffs.
· Labour/labor laws such as minimum wage legislation.

3. A Review of Our Current Marketing Plan
· What are our current objectives for marketing?
· What are our current marketing strategies?
· How do we apply the marketing mix? (Including factors covered above in (a))
· Is the marketing process being controlled effectively?
· Are we achieving our marketing budget?
· Are we realising our SMART objectives?
· Are our marketing team implementing the marketing plan effectively?
· Levels of staffing.
· Staff training and development.
· Experience and learning.

What is our market share? (total sales/trends/sales by product or customer or channel) Are we achieving financial targets? (profit and margins/ liquidity and cash flow/ debt: equity ratio/ using financial ratio analysis)

Bojourn.......... !!!!!!!!!!!!!!!!! agarbandhu

Marketing Plans

Marketing Plans - Lesson.

agarbandhu

Marketing plans are vital to marketing success. They help to focus the mind of companies and marketing teams on the process of marketing i.e. what is going to be achieved and how we intend to do it. There are many approaches to marketing plans.

key stages of the plan :AOSTC

Marketing manager usually focusses upon the key stages of the plan. It is contained under the popular acronym AOSTC.
-ANALYSIS.
-OBJECTIVES.
-STRATEGIES.
-TACTICS.
-CONTROLS.

Stage One - Situation Analysis (and Marketing Audit).
· Marketing environment.
· Laws and regulations.
· Politics.
· The current state of technology.
· Economic conditions.
· Sociocultural aspects.
· Demand trends.
· Media availability.
· Stakeholder interests.
· Marketing plans and campaigns of competitors.
· Internal factors such as your own experience and resource availability.
Also see tools for internal/external audit:
· SWOT.
· PEST.
· Porter's Five Forces.
· Marketing Environment.

Stage Two - Set marketing objectives.
SMART objectives.
· Specific - Be precise about what you are going to achieve.
· Measurable - Quantify you objectives.
· Achievable - Are you attempting too much?
· Realistic - Do you have the resource to make the objective happen (men, money, machines, materials, minutes)?
· Timed - State when you will achieve the objective (within a month? By February 2010?).
If you don't make your objective SMART, it will be too vague and will not be realized. Remember that the rest of the plan hinges on the objective. If it is not correct, the plan may fail.

Stage Three - Describe your target market
· Which segment? How will we target the segment? How should we position within the segment?
· Why this segment and not a different one? (This will focus the mind).
· Define the segment in terms of demographics and lifestyle. Show how you intend to 'position' your product or service within that segment. Use other tools to assist in strategic marketing decisions such as Boston Matrix , Ansoff's Matrix , Bowmans Strategy Clock, Porter's Competitive Strategies, etc.

Stage Four - Marketing Tactics.
Convert the strategy into the marketing mix (also known as the 4Ps). These are your marketing tactics.
· Price Will you cost plus, skim, match the competition or penetrate the market?
· Place Will you market direct, use agents or distributors, etc?
· Product Sold individually, as part of a bundle, in bulk, etc?
· Promotion Which media will you use? e.g sponsorship, radio advertising, sales force, point-of-sale, etc? Think of the mix elements as the ingredients of a 'cake mix'. You have eggs, milk, butter, and flour. However, if you alter the amount of each ingredient, you will influence the type of cake that you finish with.

Stage Five - Marketing Controls.
Remember that there is no planning without control. Control is vital.
· Start-up costs.
· Monthly budgets.
· Sales figure.
· Market share data.
· Consider the cycle of control.

Finally, write a short summary (or synopsis) which is placed at the front of the plan. This will help others to get acquainted with the plan without having to spend time reading it all. Place all supporting information into an appendix at the back of the plan.

Bojourn...............!!!!!!!!!!!! agarbandhu

4P Model: Concept of Marketing Mix.

4P Model: Concept of Marketing Mix.
agarbandhu

What is the marketing mix?
The marketing mix is probably the most famous marketing term. Its elements are the basic, tactical components of a marketing plan. Also known as the Four P's, the marketing mix elements are price, place, product, and promotion. Read on for more details on the marketing mix.
The concept is simple. Think about another common mix - a cake mix. All cakes contain eggs, milk, flour, and sugar. However, you can alter the final cake by altering the amounts of mix elements contained in it. So for a sweet cake add more sugar!

It is the same with the marketing mix. The offer you make to you customer can be altered by varying the mix elements. So for a high profile brand, increase the focus on promotion and desensitize the weight given to price. Another way to think about the marketing mix is to use the image of an artist's palette. The marketer mixes the prime colours (mix elements) in different quantities to deliver a particular final colour. Every hand painted picture is original in some way, as is every marketing mix.

Some commentators will increase the marketing mix to the Five P's, to include people. Others will increase the mix to Seven P's, to include physical evidence(such as uniforms, facilities, or livery) and process (i.e. the whole customer experience e.g. a visit the Disney World). The term was coined by Neil H. Borden in his article The Concept of the Marketing Mix in 1965.

Price

There are many ways to price a product. Let's have a look at some of them and try to understand the best policy/strategy in various situations.

Pricing Strategies.
There are many ways to price a product. Let's have a look at some of them and try to understand the best policy/strategy in various situations. See also eMarketing Price.

Premium Pricing.
Use a high price where there is a uniqueness about the product or service. This approach is used where a a substantial competitive advantage exists. Such high prices are charge for luxuries such as Cunard Cruises, Savoy Hotel rooms, and Concorde flights.

Penetration Pricing.
The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom and Sky TV.

Economy Pricing.
This is a no frills low price. The cost of marketing and manufacture are kept at a minimum. Supermarkets often have economy brands for soups, spaghetti, etc.

Price Skimming.
Charge a high price because you have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply. Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost, other marketing strategies and pricing approaches are implemented.

Premium pricing, penetration pricing, economy pricing, and price skimming are the four main pricing policies/strategies. They form the bases for the exercise. However there are other important approaches to pricing.

Psychological Pricing.
This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis. For example 'price point perspective' 99 cents not one dollar.

Product Line Pricing.
Where there is a range of product or services the pricing reflect the benefits of parts of the range. For example car washes. Basic wash could be Rs. 150, wash and wax Rs. 400, and the whole package Rs. 700.

Optional Product Pricing.
Companies will attempt to increase the amount customer spend once they start to buy. Optional 'extras' increase the overall price of the product or service. For example airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other.

Captive Product Pricing
Where products have complements, companies will charge a premium price where the consumer is captured. For example a razor manufacturer will charge a low price and recoup its margin (and more) from the sale of the only design of blades which fit the razor.

Product Bundle Pricing.
Here sellers combine several products in the same package. This also serves to move old stock. Videos and CDs are often sold using the bundle approach.

Promotional Pricing.
Pricing to promote a product is a very common application. There are many examples of promotional pricing including approaches such as BOGOF (Buy One Get One Free).

Geographical Pricing.
Geographical pricing is evident where there are variations in price in different parts of the world. For example rarity value, or where shipping costs increase price.

Value Pricing.
This approach is used where external factors such as recession or increased competition force companies to provide 'value' products and services to retain sales e.g. value meals at McDonalds.

Place
Another element of Neil H.Borden's Marketing Mix is Place.

Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer.

Place, distribution, channel, or intermediary.
A channel of distribution comprises a set of institutions which perform all of the activities utilised to move a product and its title from production to consumption.

There are six basic 'channel' decisions:
· Do we use direct or indirect channels? (e.g. 'direct' to a consumer, 'indirect' via a wholesaler).
· Single or multiple channels.
· Cumulative length of the multiple channels.
· Types of intermediary (see later).
· Number of intermediaries at each level (e.g. how many retailers in Southern Spain).
· Which companies as intermediaries to avoid 'intrachannel conflict' (i.e. infighting between local distributors).

Selection Consideration - how do we decide upon a distributor?
· Market segment - the distributor must be familiar with your target consumer and segment.
· Changes during the product life cycle - different channels can be exploited at different points in the PLC e.g. Foldaway scooters are now available everywhere. Once they were sold via a few specific stores.
· Producer - distributor fit - Is there a match between their polices, strategies, image, and yours? Look for 'synergy'.
· Qualification assessment - establish the experience and track record of your intermediary.
· How much training and support will your distributor require?

Types of Channel Intermediaries.
There are many types of intermediaries such as wholesalers, agents, retailers, the Internet, overseas distributors, direct marketing (from manufacturer to user without an intermediary), and many others.

The main modes of distribution will be looked at in more detail.
1. Channel Intermediaries - Wholesalers
· They break down 'bulk' into smaller packages for resale by a retailer.
· They buy from producers and resell to retailers. They take ownership or 'title' to goods whereas agents do not (see below).
· They provide storage facilities. For example, cheese manufacturers seldom wait for their product to mature. They sell on to a wholesaler that will store it and eventually resell to a retailer.
· Wholesalers offer reduce the physical contact cost between the producer and consumer e.g. customer service costs, or sales force costs.
· A wholesaler will often take on the some of the marketing responsibilities. Many produce their own brochures and use their own telesales operations.

2. Channel Intermediaries - Agents
· Agents are mainly used in international markets.
· An agent will typically secure an order for a producer and will take a commission. They do not tend to take title to the goods. This means that capital is not tied up in goods. However, a 'stockist agent' will hold consignment stock (i.e. will store the stock, but the title will remain with the producer. This approach is used where goods need to get into a market soon after the order is placed e.g. foodstuffs).
· Agents can be very expensive to train. They are difficult to keep control of due to the physical distances involved. They are difficult to motivate.
3. Channel Intermediaries - Retailers
· Retailers will have a much stronger personal relationship with the consumer.
· The retailer will hold several other brands and products. A consumer will expect to be exposed to many products.
· Retailers will often offer credit to the customer e.g. electrical wholesalers, or travel agents.
· Products and services are promoted and merchandised by the retailer.
· The retailer will give the final selling price to the product.
· Retailers often have a strong 'brand' themselves e.g. Ross and Wall-Mart in the USA, and Alisuper, Modelo, and Jumbo in Portugal.
4. Channel Intermediaries - Internet
· The Internet has a geographically disperse market.
· The main benefit of the Internet is that niche products reach a wider audience e.g. Scottish Salmon direct from an Inverness fishery.
· There are low barriers low barriers to entry as set up costs are low.
· Use e-commerce technology (for payment, shopping software, etc)
· There is a paradigm shift in commerce and consumption which benefits distribution via the Internet

Product
For many a product is simply the tangible, phsysical entity that they may be buying or selling. You buy a new car and that's the product - simple! Or maybe not. When you buy a car, is the product more complex than you first thought?
The Three Levels of a Product . .
For many a product is simply the tangible, phsysical entity that they may be buying or selling. You buy a new car and that's the product - simple! Or maybe not. When you buy a car, is the product more complex than you first thought? In order to actively explore the nature of a product further, lets consider it as three different products - the CORE product, the ACTUAL product, and finally the AUGMENTED product.
These are known as the 'Three Levels of a Product.' So what is the difference between the three products, or more precisely 'levels?'

The CORE product is NOT the tangible, physical product. You can't touch it. That's because the core product is the BENEFIT of the product that makes it valuable to you. So with the car example, the benefit is convenience i.e. the ease at which you can go where you like, when you want to. Another core benefit is speed since you can travel around relatively quickly.

The ACTUAL product is the tangible, physical product. You can get some use out of it. Again with the car example, it is the vehicle that you test drive, buy and then collect.
The AUGMENTED product is the non-physical part of the product. It usually consists of lots of added value, for which you may or may not pay a premium. So when you buy a car, part of the augmented product would be the warranty, the customer service support offered by the car's manufacture, and any after-sales service.

Another marketing tool for evaluating PRODUCT is the Product Life Cycle (PLC).

Product Life Cycle (PLC).

The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline).
In theory it's the same for a product. After a period of development it is introduced or launched into the market; it gains more and more customers as it grows; eventually the market stabilises and the product becomes mature; then after a period of time the product is overtaken by development and the introduction of superior competitors, it goes into decline and is eventually withdrawn.

However, most products fail in the introduction phase. Others have very cyclical maturity phases where declines see the product promoted to regain customers.

Strategies for the differing stages of the Product Life Cycle.
The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product are available in few channels of distribution.

Growth.
Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilise.
Maturity.

Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilise. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of media.

Decline.
At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.

Problems with Product Life Cycle.
In reality very few products follow such a prescriptive cycle. The length of each stage varies enormously. The decisions of marketers can change the stage, for example from maturity to decline by price-cutting. Not all products go through each stage. Some go from introduction to decline. It is not easy to tell which stage the product is in. Remember that PLC is like all other tools. Use it to inform your gut feeling.

The Customer Life Cycle (CLC)

The Customer Life Cycle (CLC) has obvious similarities with the Product Life Cycle (PLC). However, CLC focuses upon the creation of and delivery of lifetime value to the customer i.e. looks at the products or services that customers NEED throughout their lives.
It is marketing orientated rather than product orientated, and embodies the marketing concept. Essentially, CLC is a summary of the key stages in a customer's relationship with an organisation. The problem here is that every organisation's product offering is different, which makes it impossible to draw out a single Life Cycle that is the same for every organisation.

Let's consider an example from the Banking sector. HSBC has a number of products that it aims at its customers throughout their lifetime relationship with the company. Here we apply a CLC. You can start young when you want to save money. 11-15 year olds are targeted with the Livecash Account, and 16-17 year olds with the Right Track Account. Then when (or if) you begin College or University there are Student Loans, and when you qualify there are Recent Graduate Accounts.

When you begin work there are many types of current and savings account, and you may wish to buy property, and so take out a mortgage. You could take out a car loan, to buy a vehicle to get you to work. It would also be advisable to take out a pension. As you progress through your career you begin your own family, and save for your own children's education. You embark upon a number of savings plans and schemes, and ultimately HSBC offer you pension planning (you may want to insure yourself for funeral expenses - although HSBC may not offer this!).
This is how an organization such as HSBC, which is marketing orientated, can recruit and retain customers, and then extend additional products and services to them - throughout the individual's life. This is an example of a Customer Life Cycle (CLC).

CLC is made up many shorter CLC's

Another important point is that a lifetime CLC is made up many shorter CLC's. So, for example, Volkswagen Cars retains a customer for many years and one can predict the products that meet a customers needs throughout his or her family lifetime. However the purchase of each car, will in itself be a CLC with many Customer Touch Points. The consumer may need a bigger vehicle as his or her family expands - so they visit VW's website and register.

The customer reviews models and books a test-drive with her or his local dealer. He or she decides to buy the car and arranges finance. The car is then delivered from the factory, and returns every year for its annual service. Then after three years, the customer decides to trade in his or her car, and the cycle begins again. The longer-term life cycle is simply the shorter-term life cycles viewed consecutively.

CRM is a term that is often referred to in marketing. However, there is no complete agreement upon a single definition. This is because CRM can be considered from a number of perspectives. In summary, the three perspectives are:
· Information Technology (IT) perspective
· The Customer Life Cycle (CLC) perspective
· Business Strategy perspective

Promotion
Another one of the 4P's is promotion. This includes all of the tools available to the marketer for 'marketing communication'. As with Neil H.Borden's marketing mix, marketing communications has its own 'promotions mix.' Think of it like a cake mix, the basic ingredients are always the same. However if you vary the amounts of one of the ingredients, the final outcome is different.
'promotion' includes all of the tools available to the marketer for 'marketing communication'. As with Neil H.Borden's marketing mix, marketing communications has its own 'promotions mix.' Think of it like a cake mix, the basic ingredients are always the same. However if you vary the amounts of one of the ingredients, the final outcome is different. It is the same with promotions. You can 'integrate' different aspects of the promotions mix to deliver a unique campaign.

The elements of the promotions mix are:
· Personal Selling.
· Sales Promotion.
· Public Relations.
· Direct Mail.
· Trade Fairs and Exhibitions.
· Advertising.
· Sponsorship.

promotions mix are integrated to form a coherent campaign

The elements of the promotions mix are integrated to form a coherent campaign. As with all forms of communication. The message from the marketer follows the 'communications process' as illustrated above.

For example, a radio advert is made for a car manufacturer. The car manufacturer (sender) pays for a specific advert with contains a message specific to a target audience (encoding). It is transmitted during a set of commercials from a radio station (Message / media).

The message is decoded by a car radio (decoding) and the target consumer interprets the message (receiver). He or she might visit a dealership or seek further information from a web site (Response). The consumer might buy a car or express an interest or dislike (feedback). This information will inform future elements of an integrated promotional campaign. Perhaps a direct mail campaign would push the consumer to the point of purchase. Noise represent the thousand of marketing communications that a consumer is exposed to everyday, all competing for attention.

The Promotions Mix.
Let us look at the individual components of the promotions mix in more detail. Remember all of the elements are 'integrated' to form a specific communications campaign.

1. Personal Selling.
Personal Selling is an effective way to manage personal customer relationships. The sales person acts on behalf of the organization. They tend to be well trained in the approaches and techniques of personal selling. However sales people are very expensive and should only be used where there is a genuine return on investment. For example salesmen are often used to sell cars or home improvements where the margin is high.

2. Sales Promotion.
Sales promotion tend to be thought of as being all promotions apart from advertising, personal selling, and public relations. For example the BOGOF promotion, or Buy One Get One Free. Others include couponing, money-off promotions, competitions, free accessories (such as free blades with a new razor), introductory offers (such as buy digital TV and get free installation), and so on. Each sales promotion should be carefully costed and compared with the next best alternative.

3. Public Relations (PR).
Public Relations is defined as 'the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and its publics' (Institute of Public Relations). It is relatively cheap, but certainly not cheap. Successful strategies tend to be long-term and plan for all eventualities. All airlines exploit PR; just watch what happens when there is a disaster. The pre-planned PR machine clicks in very quickly with a very effective rehearsed plan.

4. Direct Mail.
Direct mail is very highly focussed upon targeting consumers based upon a database. As with all marketing, the potential consumer is 'defined' based upon a series of attributes and similarities. Creative agencies work with marketers to design a highly focussed communication in the form of a mailing. The mail is sent out to the potential consumers and responses are carefully monitored. For example, if you are marketing medical text books, you would use a database of doctors' surgeries as the basis of your mail shot.

5. Trade Fairs and Exhibitions.
Such approaches are very good for making new contacts and renewing old ones. Companies will seldom sell much at such events. The purpose is to increase awareness and to encourage trial. They offer the opportunity for companies to meet with both the trade and the consumer. Expo has recently finish in Germany with the next one planned for Japan in 2005, despite a recent decline in interest in such events.

6. Advertising.
Advertising is a 'paid for' communication. It is used to develop attitudes, create awareness, and transmit information in order to gain a response from the target market. There are many advertising 'media' such as newspapers (local, national, free, trade), magazines and journals, television (local, national, terrestrial, satellite) cinema, outdoor advertising (such as posters, bus sides).

7. Sponsorship.
Sponsorship is where an organization pays to be associated with a particular event, cause or image. Companies will sponsor sports events such as the Olympics or Formula One. The attributes of the event are then associated with the sponsoring organization.

The elements of the promotional mix are then integrated to form a unique, but coherent campaign.

To be continued...........

Bojourn............. !!!!!!!!!!!!!! agarbandhu

The Marketing Environment.

The Marketing Environment.

agarbandhu

What is the marketing environment?
The marketing environment surrounds and impacts upon the organization. There are three key perspectives on the marketing environment, namely the 'macro-environment,' the 'micro-environment' and the 'internal environment'.

micro-environment
This environment influences the organization directly. It includes suppliers that deal directly or indirectly, consumers and customers, and other local stakeholders. Micro tends to suggest small, but this can be misleading. In this context, micro describes the relationship between firms and the driving forces that control this relationship. It is a more local relationship, and the firm may exercise a degree of influence.

The macro-environment
This includes all factors that can influence and organization, but that are out of their direct control. A company does not generally influence any laws (although it is accepted that they could lobby or be part of a trade organization). It is continuously changing, and the company needs to be flexible to adapt. There may be aggressive competition and rivalry in a market. Globalization means that there is always the threat of substitute products and new entrants. The wider environment is also ever changing, and the marketer needs to compensate for changes in culture, politics, economics and technology.

The internal environment.
All factors that are internal to the organization are known as the 'internal environment'. They are generally audited by applying the 'Five Ms' which are Men, Money, Machinery, Materials and Markets. The internal environment is as important for managing change as the external. As marketers we call the process of managing internal change 'internal marketing.'

Essentially we use marketing approaches to aid communication and change management.
The external environment can be audited in more detail using other approaches such as SWOT Analysis, Michael Porter's Five Forces Analysis or PEST Analysis.

Internal Marketing - Lesson
Internal marketing is an important 'implementation' tool. It aids communication and helps us to overcome any resistance to change. It informs, ands involves all staff in new initiatives and strategies. It is simple to construct, especially if you are familiar with traditional principles of marketing.

If not, it would be valuable to spend some time considering marketing plans. Internal marketing obeys the same rules as, and has a similar structure to, external marketing. The main differences are that your customers are staff and colleagues from your own organization.

Managing the implementation of internal marketing
In previous lessons, you will have seen that the process of marketing follows a familiar pattern for which we use the acronym AOSTC - Analysis, Objectives, Strategies, Tactics, and Control. In the diagram above, Jobber (1995) uses a similar approach as a structure for the implementation of internal marketing. The process is straightforward.
· Set objectives for internal marketing e.g. to persuade 100 staff to join a new Performance Related Pay (PRP) scheme.
· Your strategy is 'internal marketing.'
· Tactics would include an internal application of the marketing mix, and could include staff forums, presentations, an intranet, away days, videos, personal visits by company directors or newsletters.
· Evaluation would consider the take up of PRP against your objectives, attendees at away days, visits to an intranet page, and so on..

Let's have a look a closer look at the practicalities of internal marketing.
At this stage internal marketing meets traditional 'change management.' Firstly you should identify your internal customers. As with your external customers, they will have their own buyer behavior, or way of 'buying into' the changes which you are charged to implement. The similarities in differing groups of internal customers allows you to segment them. As Jobber (1995) explains, you can target three different segments namely 'supporters,' neutral,' and finally 'opposers.' Each group requires a slightly different internal marketing mix in order that your internal marketing objectives can be achieved.

For example, if the change was that a company was to relocate closer to its market, you could target 'supporters' with a tailor-made relocation video explaining about the lower property prices in the new location; 'neutral' internal customers could be targeted with incentives such as pay increases; and 'opposers' could be coerced, or forced to accept the change regardless.

How do we plan for a change program?
· Always make sure that you have thought through your approach before starting the implementation.
· Make sure that you have created a cultural climate that is willing to accept change.
· Appoint a change agent, or champion for change that will help to ease your changes through.
· Audit the skills and capabilities of your team. Train and develop as necessary.
· Your team must be built around you with the objective as the focus for you all.
· The change must be correctly marketed to your target audience using an approach such as Jobbers.'
· Decide what the change will be. Give it boundaries.
· Decide upon the plan.
· Work out a realistic budget and stick to it.
· Try to anticipate the arguments against change, and decide how to counteract them positively.

SWOT Analysis: Lesson
Strengths, Weaknesses, Opportunites and Threats (SWOT).
SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.
At the bottom of this page are FREE SWOT examples - so please read on.
In SWOT, strengths and weaknesses are internal factors.

For example:A strength could be:
· Your specialist marketing expertise.
· A new, innovative product or service.
· Location of your business.
· Quality processes and procedures.
· Any other aspect of your business that adds value to your product or service.

A weakness could be:
· Lack of marketing expertise.
· Undifferentiated products or services (i.e. in relation to your competitors).
· Location of your business.
· Poor quality goods or services.
· Damaged reputation.

In SWOT, opportunities and threats are external factors. For example: An opportunity could be:
· A developing market such as the Internet.
· Mergers, joint ventures or strategic alliances.
· Moving into new market segments that offer improved profits.
· A new international market.
· A market vacated by an ineffective competitor.

A threat could be:
· A new competitor in your home market.
· Price wars with competitors.
· A competitor has a new, innovative product or service.
· Competitors have superior access to channels of distribution.
· Taxation is introduced on your product or service.

A word of caution, SWOT analysis can be very subjective. Do not rely on SWOT too much. Two people rarely come-up with the same final version of SWOT. TOWS analysis is extremely similar. It simply looks at the negative factors first in order to turn them into positive factors.

So use SWOT as guide and not a prescription.

Simple rules for successful SWOT analysis.
· Be realistic about the strengths and weaknesses of your organization when conducting SWOT analysis.
· SWOT analysis should distinguish between where your organization is today, and where it could be in the future.
· SWOT should always be specific. Avoid grey areas.
· Always apply SWOT in relation to your competition i.e. better than or worse than your competition.
· Keep your SWOT short and simple. Avoid complexity and over analysis
· SWOT is subjective.

Once key issues have been identified with your SWOT analysis, they feed into marketing objectives. SWOT can be used in conjunction with other tools for audit and analysis, such as PEST analysis and Porter's Five-Forces analysis. So SWOT is a very popular tool with marketing students because it is quick and easy to learn. During the SWOT exercise, list factors in the relevant boxes. It's that simple. Below are some FREE examples of SWOT analysis - click to go straight to them

Do you need a more advanced SWOT Analysis?
Some of the problems that you may encounter with SWOT are as a result of one of its key benefits i.e. its flexibility. Since SWOT analysis can be used in a variety of scenarios, it has to be flexible. However this can lead to a number of anomalies. Problems with basic SWOT analysis can be addressed using a more critical POWER SWOT.

SWOT Analysis Examples
A summary of FREE SWOT analyses case studies are outlined as follows (those in the table above are far more detailed and FREE!):

Example 1 - Wal-Mart SWOT Analysis. Strengths - Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store.Weaknesses - Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.Opportunities - To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region. Threats - Being number one means that you are the target of competition, locally and globally.

Example 2 - Starbucks SWOT Analysis. Strengths - Starbucks Corporation is a very profitable organisation, earning in excess of $600 million in 2004.Weaknesses - Starbucks has a reputation for new product development and creativity. Opportunities - New products and services that can be retailed in their cafes, such as Fair Trade products. Threats - Starbucks are exposed to rises in the cost of coffee and dairy products.

Example 3 - Nike SWOT Analysis. Strengths - Nike is a very competitive organisation. Phil Knight (Founder and CEO) is often quoted as saying that 'Business is war without bullets.'Weaknesses - The organisation does have a diversified range of sports products. Opportunities - Product development offers Nike many opportunities. Threats - Nike is exposed to the international nature of trade.

SWOT Analysis - POWER SWOT.
Marketing Teacher's Approach to SWOT Analysis.
Why is there a need for an advanced approach to SWOT Analysis?
SWOT analysis is a marketing audit that considers an organization's strengths, weaknesses, opportunities and threats. Our introductory lesson gives you the basics of how to complete your SWOT as you begin to learn about marketing tools. As you learn more about SWOT analysis, you will become aware of a number of potential limitations with this popular tool. This lesson aims to help you overcome potential pitfalls.

Some of the problems that you may encounter with SWOT are as a result of one of its key benefits i.e. its flexibility. Since SWOT analysis can be used in a variety of scenarios, it has to be flexible. However this can lead to a number of anomalies. Problems with basic SWOT analysis can be addressed using a more critical POWER SWOT. POWER is an acronym for Personal experience, Order, Weighting, Emphasize detail, and Rank and prioritize. This is how it works.
P = Personal experience.
How do you the marketing manger fit in relation with the SWOT analysis? You bring your experiences, skills, knowledge, attitudes and beliefs to the audit. Your perception or simple gut feeling will impact the SWOT.

O = Order - strengths or weaknesses, opportunities or threats.
Often marketing managers will inadvertently reverse opportunities and strengths, and threats and weaknesses. This is because the line between internal strengths and weaknesses, and external opportunities and threats is sometimes difficult to spot. For example, in relation to global warming and climate change, one could mistake environmentalism as a threat rather than a potential opportunity.

W = Weighting.
Too often elements of a SWOT analysis are not weighted. Naturally some points will be more controversial than others. So weight the factors. One way would be to use percentages e.g. Threat A = 10%, Threat B = 70%, and Threat C = 20% (they total 100%).

E = Emphasize detail.
Detail, reasoning and justification are often omitted from the SWOT analysis. What one tends to find is that the analysis contains lists of single words. For example, under opportunities one might find the term 'Technology.' This single word does not tell a reader very much. What is really meant is:

'Technology enables marketers to communicate via mobile devices close to the point of purchase. This provides the opportunity of a distinct competitive advantage for our company.'
This will greatly assist you when deciding upon how best to score and weight each element.

R = Rank and prioritize.
Once detail has been added, and factors have been reviewed for weighting, you can then progress to give the SWOT analysis some strategic meaning i.e. you can begin to select those factors that will most greatly influence your marketing strategy albeit a mix of strengths, weaknesses, opportunities and threats. Essentially you rank them highest to lowest, and then prioritize those with the highest rank

e.g. Where Opportunity C = 60%, Opportunity A = 25%, and Opportunity B = 10% - your marketing plan would address Opportunity C first, and Opportunity B last. It is important to address opportunities primarily since your business should be market oriented. Then match strengths to opportunities and look for a fit. Address any gaps between current strengths and future opportunities. Finally attempt to rephrase threats as opportunities (as with global warming and climate change above), and address weaknesses so that they become strengths. Gap analysis would be useful at this point i.e. where we are now, and where do we want to be? Strategies would bridge the gap between them.

Five Forces Analysis
Analyzing the environment - Five Forces Analysis
Five Forces Analysis helps the marketer to contrast a competitive environment. It has similarities with other tools for environmental audit, such as PEST analysis, but tends to focus on the single, stand alone, business or SBU (Strategic Business Unit) rather than a single product or range of products. For example, Dell would analyse the market for Business Computers i.e. one of its SBUs.
Five forces analsysis looks at five key areas namely the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry.

The threat of entry.
· Economies of scale e.g. the benefits associated with bulk purchasing.
· The high or low cost of entry e.g. how much will it cost for the latest technology?
· Ease of access to distribution channels e.g. Do our competitors have the distribution channels sewn up?
· Cost advantages not related to the size of the company e.g. personal contacts or knowledge that larger companies do not own or learning curve effects.
· Will competitors retaliate?
· Government action e.g. will new laws be introduced that will weaken our competitive position?
· How important is differentiation? e.g. The Champagne brand cannot be copied. This desensitises the influence of the environment.

The power of buyers.
· This is high where there a few, large players in a market e.g. the large grocery chains.
· If there are a large number of undifferentiated, small suppliers e.g. small farming businesses supplying the large grocery chains.
· The cost of switching between suppliers is low e.g. from one fleet supplier of trucks to another.

The power of suppliers.
The power of suppliers tends to be a reversal of the power of buyers.
· Where the switching costs are high e.g. Switching from one software supplier to another.
· Power is high where the brand is powerful e.g. Cadillac, Pizza Hut, Microsoft.
· There is a possibility of the supplier integrating forward e.g. Brewers buying bars.
· Customers are fragmented (not in clusters) so that they have little bargaining power e.g. Gas/Petrol stations in remote places.

The threat of substitutes
· Where there is product-for-product substitution e.g. email for fax Where there is substitution of need e.g. better toothpaste reduces the need for dentists.
· Where there is generic substitution (competing for the currency in your pocket) e.g. Video suppliers compete with travel companies.
· We could always do without e.g. cigarettes.

Competitive Rivalry
· This is most likely to be high where entry is likely; there is the threat of substitute products, and suppliers and buyers in the market attempt to control. This is why it is always seen in the center of the diagram.

PEST Analysis.
What is PEST Analysis?
It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning.

The organization's marketing environment is made up of:
1. The internal environment e.g. staff (or internal customers), office technology, wages and finance, etc.
2. The micro-environment e.g. our external customers, agents and distributors, suppliers, our competitors, etc.
3. The macro-environment e.g. Political (and legal) forces, Economic forces, Sociocultural forces, and Technological forces. These are known as PEST factors.

Political Factors.
The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. You must consider issues such as:
1.How stable is the political environment?
2.Will government policy influence laws that regulate or tax your business?
3.What is the government's position on marketing ethics?
4. What is the government's policy on the economy?
5. Does the government have a view on culture and religion?
6. Is the government involved in trading agreements such as EU, NAFTA, ASEAN, or others?

Economic Factors.
Marketers need to consider the state of a trading economy in the short and long-terms. This is especially true when planning for international marketing. You need to look at:
1. Interest rates.
2. The level of inflation Employment level per capita.
3. Long-term prospects for the economy Gross Domestic Product (GDP) per capita, and so on.

Sociocultural Factors.
The social and cultural influences on business vary from country to country. It is very important that such factors are considered. Factors include:
1.What is the dominant religion?
2.What are attitudes to foreign products and services?
3.Does language impact upon the diffusion of products onto markets?
4.How much time do consumers have for leisure?
5.What are the roles of men and women within society?
6.How long are the population living? Are the older generations wealthy?
7.Do the population have a strong/weak opinion on green issues?

Technological Factors.
Technology is vital for competitive advantage, and is a major driver of globalization. Consider the following points:
1. Does technology allow for products and services to be made more cheaply and to a better standard of quality?
2.Do the technologies offer consumers and businesses more innovative products and services such as Internet banking, new generation mobile telephones, etc?
3.How is distribution changed by new technologies e.g. books via the Internet, flight tickets, auctions, etc?
4.Does technology offer companies a new way to communicate with consumers e.g. banners, Customer Relationship Management (CRM), etc?

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