2. Marketing planning

1. 2. Marketing planning • After carefully studying this chapter, you should be able to: • Explain why information is important to management; • Explain marketing’s need to plan; • Plan in the short-, medium, and long-term; • Write SMART objectives; • Describe Management and Marketing Information Systems; • Describe a system of budgetary control.

2. Preface • Why do we need to plan? • If you don’t take a step you will spend your life standing on one leg. • If you don’t know where you are going, any wind is favourable. • Failing to Plan is Planning to Fail.

3. 2.1 Information and data • Information overload • We don’t need everything available; we need what we want. • Data • The mass of facts. • It may or may not contain useful information. • Information • What we need to know at any one time. • Sorted data.

4. 2.2 Information: an aid to management • Managers have to: • Analyse • Analysis is the examination of detailed facts. • Plan • Planning is making decisions that guide future action. • Implement • Everyone needs to know the decision and be given the authority to take actions. • Control • Progress must be checked; plans must be revised (see next page)

5. Plans are not made once-and-for-all: • A plan is an intention. It’s what one expects to achieve. • But, the future cannot be known. • What happens may not be what was expected. • Plans must be changed to deal with new situation.

6. Information is needed for planning • The quality of the decisions will be seen by the results. • Decision quality rests on information quality. • Calculated risk • Every fact has been taken into consideration. • The information gaps are filled with assumptions based on experience.

7. 2.3 Management and Marketing Information Systems • Managers need to kinds of information: • Planning information • Control information

8. Planning information • Focused on the future: It helps managers to analyse what is likely to happen. • Long-term: Managers need to look as far into the future as they can. • Managers need planning information on: • The environment • Competitors • Their own organisation

9. Control information • Focused on the immediate past: It reports what has happened. • Short-term: It deals with day to day results. • Managers need planning information: • From marketing research • From the organisation • From finance …feedback…

10. 2.3.1 Information systems • Information system and database are needed: • To obtain and communicate information. • Managers need feedback on results in time for any changes to be of benefit. • It is possible to set up the system so that each manager and staff automatically gets the key information he or she needs, when it is needed.

11. Two types of information system • MIS (Management Information System) • Provides information for all the managers in an organisation. • MkIS (Marketing Information System) • Provides only marketing information. • Every MIS has a MkIS inside it, but a MkIS can operate on its own if there is no MIS.

12. 2.4 Long-, medium-, and short-term planning • Long-term plans • Deal with the overall position the organisation should have in the market. • Depending on the industry plans may be as long as 100years or as short as 10. • Plans are made in general terms. It is impossible to be specific about a time so far into the future.

13. Medium-term plans • The medium-term is as far forward as it is reasonable to look. • It also varies by type of organisation. • E.g. an aircraft manufacturer has about 10 years as its medium term. A retailer about 3 years.

14. Short-term plans • These are always the operational plans. The one in actual use. • They are detailed and usually run for a year. • Allow managers to set up daily sales and production figures, etc. • Form the basis of the control system.

15. 2.5 Sales forecasts • Managers use information from the MIS (or MkIS) to help them work out what the sales force is going to be able to sell. • Sales forecasts usually show how much product will be sold. This allows everybody to work from actual volume. • It is easy to convert product sales to revenue by multiplying the price by the volume.

16. Product is used rather than price because: • Prices can change through the year. • Production and distribution are only interested in the volume they must make and ship. • International organisations can quickly work out total volume, and don’t need to convert from currencies. • Marketing and finance can easily convert volume to revenue using actual prices when they need to. Graphs, see p.28 – 29.

17. 2.6 Objectives • An objective must set out what is to be achieved. • written as either Quantity or Quality against Time. • Quantity or quality? • To achieve sales of 100 in the week of 2 March. • To produce 45 units of X each day through June. • To design a comfortable sofa by 1 August. • To select a color scheme for the new office by Friday.

18. SMART objectives • Specific • Measurable • Achievable • Realistic • Timed

19. 2.7 Budget • The set of plans that allows a whole year’s activities to be planned, in detail, in advance. • Each function’s recommendations are brought together and the financial director calculates the expected financial results. • If not acceptable, the process has to be done over again. • If acceptable, then each manager knows what he/she has to achieve.

20. 2.7.1 Budget achievement • The budget is controlled through the MIS. • Every function must focus on achieving its budget because many are interdependent. • It is not always possible to achieve budget. • If there is a problem, the budgetary system must change all the budgets that depend on the one that is having a problem.

21. 2.8 Management • There are two key ways in which the way forwards is established and managed: • Management by objectives (MBO) • Management by Exception (MBE)

22. Management by objectives (MBO) • Objectives are set and recorded as part of the MIS. • Everyone knows exactly what he or she is required to achieve. • MBO works well when all agree on the objectives.

23. Management by exception (MBE) • Reports only exceptions to the objectives and all variances from plan. • Each manager will receive a variance statement which lists areas that are falling short or exceeding the objective. • Then actions have to be taken to deal with the problems found.