Marketing Planning

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

2. Agenda • Marketing Planning • PharmaSim

3. The Purpose of Planning • “Planning is everything, plans are nothing.” • General Eisenhower • Planning is to a large extent the job of making things happen that would not otherwise occur.

4. Obstacles to Planning • Good Forecasting • Time • Lack of Process • Lack of Management Commitment

5. Responsibility for Planning Source: Conference Board

6. Responsibility for Approving Plans Source: Conference Board

7. Planning Horizon Source: Conference Board

8. Top Down v. Bottom Up • Bottom Up • Closer to implementation, motivated by control, better forecasts • Top Down • More vision at the top, more coordination

9. Planning Process • Set Deadlines / Initiate Process • Gather Data • Analyze Data / Situation Assessment • Make Plans & Forecasts • Refine Plan • Management Approval • Disseminate, Monitor & Control

10. Assess Situation Consider Company Goals Set Measurable Objectives Develop Strategies, Action Plans, Responsibility Assignments, and Due Dates Evaluate Programs Against Objectives Attainable Unattainable Draft Marketing Plan Compare Programs to Resources Feasible Infeasible Submit Plan for Approval Approved Not Approved Go Source: Conference Board

11. The Marketing Plan • Where are we now? • Where do we want to be? • How do we get there?

12. Marketing Plan • Executive Summary • Situation Analysis • Marketing Objectives • Strategy and Tactics • Monitors and Controls • Financial Documents

13. Situation Analysis • Review of Status and Future Outlook • Not just data, but implications • Brevity, prioritization of information • Diagnostic, not descriptive • Contains: • Category Analysis and Forecast Trends • Sales Analysis • 3 C Analysis • Planning Assumptions • Summary (Problems and Opportunities)

14. Objectives • “If you don’t know where you want to go, any road will take you there” • Precise, with dates and numbers • Sales, profits, share, etc. • Measurable and achievable • Subsequent strategy and tactics must demonstrate compliance with objectives

15. Strategy and Tactics • Strategy is means to accomplish goal, e.g., awareness goal will be met by advertising • Tactics pertains to the implementation, e.g., media schedule, agency, message, etc. • how to, by whom, by when, with what resources

16. Monitors and Controls • 74% of consumer product firms have explicit sales promotion tactics • Only 36% monitor • 69% of industrial firms have explicit sales tactics • Only 46 % monitor • Only 1 in 4 firms has a contingency plan • Both good and bad events (e.g., competitor merges or leaves) • What ifs and appropriate trigger points Source: Conference Board

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

18. PharmaSim • Overview of Market • 250MM Persons (1% Growth /Year) • 2% GNP Growth • Moderate Inflation • 80% of Population Suffers from Colds • OTC Market is $2BB Growth 4% / Yr • Manufacturer Sales = $1.5BB • Five companies • Capacity adjusts automatically to demand

19. PharmaSim Market • Competition • Four competitors (B, C, D, and E) • Four Trade (not Consumer) Categories • Cold, nasal, cough, and allergy • Brands Have Five Attributes • Symptoms relieved, side effects, form (capsule, liquid, spray), duration of relief, and price

20. PharmaSim Market

21. PharmaSim Consumers • Buying behavior varies with • Illness/symptom (cold, cough, allergy), age, and usage occasion (day or night, work or home) • Thus, can segment by illness, age, or usage • Note: mfg. sales study (pre-defined category)  consumer survey (usage) • Buying process • Awareness  Purchase Intention  In Store Attractiveness  Purchase Usage Satisfaction  Repurchase

22. PharmaSim Channel • Through Wholesale or Direct to:

23. PharmaSim Decisions • Pricing • MSRP • Trade • <250 Units, <2500 Units, >2500 Units • Wholesale • Salesforce Size • Direct (By Channel) • Indirect (Wholesale, Merchandisers - Retail Sales Support, Detailers for M.D.’s)

24. PharmaSim Decisions • Advertising • Targeting • Segments (By Age and Usage) • Agency • Budget • Message • Message (primary demand, benefits, competitive comparison, or reminder message) • Benefits (e.g., aches, congestion, etc.)

25. PharmaSim Decisions • Trade Promotions • Allowances (% of MSRP by channel) • Co-op Ads (total $ and which channels) • Consumer and Trade • POP ($ and which channels) • Trial Size ($) • Coupons ($ and face value)

26. PharmaSim Decisions • Product • Reformulation - before decision 2 • Line extension - before decision 4 • New product - before decision 5 • Your own product - before decision 8

27. PharmaSim Tips • Please review tips on website (link from syllabus) • Read pages 5-66 carefully. E.g., buried on page 66 is the statement that FC continue when product is dropped. Important, but easily missed. Other examples abound.

28. Other PharmaSim Tips • Think analytically • Sales = Share * Market Size • Share = f (marketing $ and quality, value/price, synergies among marketing activities, fit with segments selected, positioning relative to competition) • Size = f(population, needs, available product benefits, industry marketing $ and quality, product life cycle)

29. More Tips • Marketing $ can interact • Deals more effective with ads • Stockpiling is possible • Understand the role of channel and how to motivate • Think about the ramifications of your strategies • A leading brand (Allround) should never run comparison ads against a niche brand (Coughcure) • Line extensions do not need the same marketing $ as new brands • Allocate marketing $ to area with highest returns • Key opportunity is chance to introduce new product into a market with a real need (e.g., Allright Allergy). • Shift resources to new product

30. One Last Tip • Cost dynamics, margin management, value based pricing, and capacity utilization are essential to profitability.

31. Marketing Plan Assignment • The assignment is detailed on the website and linked to the syllabus. • First move of Pharmasim should take 2 hours. Then, about 1 hour + for the remaining 7 moves for a total of 10 hours. Harvard runs 10 moves in 24 hours period.

32. Marketing Plan Assignment • Three parts (4 pages & Exhibits) • Situation analysis • Marketing program and financials • Executive summary, contingencies, and post-mortem • 3 reports = 20% , performance = 5% • Please turn in copy of diskette and administrator report with the first two parts • Note: marketing planning (although not handed in) should occur each period of PharmaSim!

33. Marketing Plan Assignment • Marketing plans represents 20-30% of what you will do. • Daily product management is the other 70-80%. • This Assignment aligns with both.

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