• People. A huge range of people will be involved in devising and implementing marketing plans. The objectives of these people will determine the targets set in the plan. Also the skills and abilities of those people working for a firm will determine whether targets can be met.
• Finance. Firms can set themselves ambitious marketing goals. However, unless finance is available to fund plans, such goals are unlikely to be achieved. This is discussed later in this unit under the heading `Marketing Budgeting'.
• Production processes. Any marketing plan must take into account whether the firm can produce the product. There is little point in planning to increase market share unless enough of the product can be produced to achieve this. Similarly, a firm cannot plan to launch a new product if it cannot manufacture it.
External factors An analysis of the external influences on a business usually involves a consideration of PEST factors. These are the political, economic, social and technological factors which affect a business's performance.
• Political. There is an increasing amount of legislation and regulation that may affect the marketing plans of a business. It can vary from controls on the ingredients of products to restrictions on price changes of the privatised utilities, such as water and gas. Much of the new legislation affecting the UK is from the European Union.
• Economic. A wide range of economic factors may affect a business's marketing plans. A buoyant economy, for example, may lead to increased demand for products, higher uicomes and the possibility of price increases. Growing unemployment may lead to a fall in future levels of demand. Marketing plans should also take into account the pricing, promotion, distribution and product policies of rival businesses (r , unit 18).
• Social. Changes in society can have consequences for marketing planning. The decline of the so-called nuclear family and the changing role of women may influence how a business promotes its products. The ageing of the population may influence the types of products which are developed and the channels of distribution used to deliver products to customers.
• Technological. Changes in technology can affect marketing plans in a variety of ways. It may snake it possible for businesses to manufacture products that were previously thought to be too costly. It may also lead to greater obsolescence and shorter product life cycles. New technological developments such as interactive television and the internet may change the promotional methods that a business uses
Businesses should be careful to consider how each of the above factors affects consumers and their buying behaviour. Changes in external factors can cause changes in the wants and needs of consumers. An effective plan should anticipate these changes as well as any other issues affecting consumers' needs.
• The main benefit of marketing planning is that it ensures a business takes time to reflect upon its marketing activities. In today's competitive environment it is not enough for businesses to carry on doing what they have done successfully in the past. They must constantly evaluate and develop their marketing policies. The marketing plan allows them to do this and can be seen as a means of ensuring the survival of the business.
• The marketing plan co-ordinates the various aspects of marketing. It takes a holistic view of a business's marketing activities. This should lead to better coordination and integration of the different elements of marketing. It should also allow all employees and all areas of the business to be aware of marketing objectives, helping to ensure that they `pull in the same direction:
• The marketing plan makes sure that human and financial resources are used where they are most needed. It will also make sure resources will not be wasted on unprofitable activities.
• Businesses will set marketing objectives and targets in their marketing plan. Management, as a result, will have a clear set of criteria against which they can evaluate the success of products.
• Marketing plans may encourage greater employee motivation. Employees are likely to be more prepared for changes in company policy and in the climate of trading. They should therefore be able to act in a more confident and informed manner. They are also likely to feel more secure in the knowledge that the business has planned for the future.
• A marketing plan should make banks feel more confident about offering loans to a firm. Shareholders may also be more confident about buying shares in a business.
Problems with marketing planning
For many businesses the main problem with marketing plans lies in their confusion as to what marketing actually is. Marketing plans often concentrate upon issues such as product development or increasing sales, but ignore customers' needs. Satisfying consumers' needs should be at the forefront of any marketing plan. A plan which centres round the expected success of a new advertising campaign,
for example, is unlikely to be successful unless consumers' needs are satisfied. British Airways, Dunlop, and Woolworths are all companies which have won awards for advertising campaigns in the past. It is arguable whether these campaigns directly led to any improvement in sales. Many businesses in the UK are organised into personnel, finance, production, and marketing departments. The success of the marketing plan will depend upon each of these areas being prepared to put aside their own goals to satisfy consumers' needs. This can be difficult, especially in a large business, where loyalty to the department can override more important goals. One suggested way of solving this problem is for businesses to be organised around customer groups rather than `functions' Marketing plans often include too much information for them to be useful to managers. In order to overcome this problem, plans should be brief and concentrate upon key factors.
Evaluating marketing plans
It is essential that businesses evaluate the success of their marketing plans. This will provide them with information on which to base future plans. Businesses also need to know whether or not planned activities were carried out in the manner which was planned.
The evaluation of marketing plans can take place both during the period of time in which the plan is being carried out and at the end of the time period (often one year) that the plan covers. Evaluation which takes place during the period of implementation may allow managers and directors to better control marketing activities.
It is important that marketing plans are evaluated against clear, measurable criteria. 7 o do this, clear performance targets must be agreed and set during the process of marketing planning. Such performance targets are often time specific. This means that they are expected to be achieved by a certain date during the implementation of the plan. For example, a plan may require a 5 per cent growth in market share by the end of the first six months. A business may use a number of methods to evaluate a marketing plan.
How to calculate Market Profit
Marketing profit = sales revenue of a product (quantity sold x price) - marketing costs (marketing research, advertising,etc.)
Thus a product with high revenue and relatively low marketing costs will be highly profitable. In contrast a product with low sales revenue and relatively high marketing costs will be less profitable.
The main benefit of calculating marketing profitability is that it can highlight some of the most and least profitable markets. Take the example of a business seeking to increase sales of a particular product by moving into two new markets A and B. In market A, an increase in sales of 10 per cent can be achieved with additional marketing costs of 5 per cent. In market B an increase in sales of 45 per cent can be achieved with additional marketing costs of 5 per cent. This business may wish to focus upon the more profitable market B.
The MARKETING BUDGET
The MARKETING BUDGET specifies and sets out clearly the financial elements of the marketing plan. Like budgets for other aspects of business activity.
