BPK3013

Engineering Economics
& Entrepreneurship
TOPIC 3: Marketing Plan

Contents

Marketing Concepts

Market Size, Target Market and
Market Share.

Markets Competitors

Sales Budget

Marketing Strategies: 4Ps
2

Introduction

Marketing activities - identifying the particular
wants and needs of a target market, and try to give
services better than the competitors.

Involves a market research - analyzing customers
needs, and making strategic decisions about
product design, pricing, promotion and distribution.

The goal of a market analysis is to determine the
attractiveness of a market and to understand its
opportunities and threats as they relate to the
strengths and weaknesses of the firm.
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What is a Marketing?

Marketing is the management process that identifies,
anticipates and satisfies customer requirements
profitably - The Chartered Institute of Marketing

The right product, in the right place, at the right time,
and at the right price - Adcock et al

Marketing is the human activity directed at satisfying
human needs and wants through an exchange process -

Kotler 1980

Marketing is a social and managerial process by which
individuals and groups obtain what they want and need
through creating, offering and exchanging products of
value with others - Kotler 1991
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Marketing Concept

The philosophy that firms should analyze
the needs of their customers and then
make decisions to satisfy those needs,
better than the competition.

Adam Smith (1776) The Wealth of
Nations wrote that the needs of
producers should be considered only with
regard to meeting the needs of
consumers.
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Marketing Concept

The key questions;
 What do customers want?
 Can we develop it while they still want it?
 How can we keep our customers satisfied?

In response to discerning customers, firms

began to adopt the marketing concept, which
involves;
 Focusing on customer needs before developing the
product
 Aligning all functions of the company to focus on
those needs
 Realizing a profit by successfully satisfying
customer needs over the long term.
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Marketing Concept

Relies upon marketing research to define
market segments, their size, and their
needs.

To satisfy those needs, decisions will
then made on the controllable
parameters of the marketing mix.

What is a Marketing Plan?

The blueprint or the map you intend to
follow in order to achieve your goals.

Existing programs- plan will incorporate the
strengths of your current effort with
needed changes and improvements.

Brand new product or service - it will pull all
the elements together for an effective
start on marketing.
8

Why is marketing planning necessary?

Systematic futuristic thinking by management

Better co-ordination of a companys efforts

Development of performance standards for
control

Sharpening of objectives and policies

Better prepare for sudden developments

Component of Business Plan

 Marketing plan/ strategies
 The information of product/services
 Target market
 Market segment
 Market size (RM)
 Competitors
 Market share (%)
 Forecasted Sales
 Marketing Mix Strategy

Product/Service
Price
Distribution (Place)
Promotion

10

Marketing Process

The marketing process way to discover
customer needs and bring to market,
products that satisfy those needs.

In a sequence steps: the situation is
analyzed (to identify opportunities), the
strategy is formulated, tactical decisions
are made, implementation of marketing
plan and the results are monitored.
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The Marketing Process

Situational Analysis

Marketing Strategy

Marketing Mix Decisions

Implementation & Controls

12

The Marketing Process

-Situational Analysis

A thorough analysis serves as the basis
for identifying opportunities to satisfy
unfulfilled customer needs.

Firms must also understand its own
capabilities and the environment in which
it is operating.

Viewed as analysis of external
environment and internal analysis of the
firm itself.
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The Marketing Process

-Situational Analysis

If the analysis reveals gaps between
what consumers want and what currently
is offered to them, then there may be
opportunities to introduce products to
better satisfy those consumers.

Firm can match its own capabilities with
opportunities in order to satisfy
customer needs better than the
competition.
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The Marketing Process

-Situational Analysis

Several frameworks that can be used to
add structure to the situation analysis:
 5 C Analysis company, customers,
competitors, collaborators and climate.
 PEST Analysis - political, economic, societal
and technological factors.
 SWOT Analysis Strengths, Weaknesses,
Opportunities and Threats.
15

Situational Analysis - PEST analysis

An analysis of the external macro
environment that affects firm (beyond the
firms control) .

PEST is an acronym for:
Political factors
Economic factors
Social factors
Technological factors
16

PEST analysis - Political/Legal

Political stability
Environmental protection laws
Taxation policy
Employment laws
Government policy
Legislation
Trade regulation and tariff
17

PEST analysis - Economic Factors

Inflation/interest rate
Employment (labour costs, skill level of workforce)
Economic growth rate
Discretionary income
Infrastructure quality
Efficiency of financial markets
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PEST analysis Social factors

Demographics
Distribution of income
Social mobility
Lifestyle changes
Consumerism
Levels of education
Culture
19

PEST analysis - Technological

New discoveries and innovations

Speed of technology transfer

Rates of obsolescence
Internet
Information technology
Impact on value chain structure
Technologys impact on product offering

20

Marketing Concept

Relies upon marketing research to
define market segments, their size, and
their needs.

To satisfy those needs, decisions will
then made on the controllable
parameters of the marketing mix.

21

Marketing Research
the systematic gathering,
recording and analysing of data
about problems relating to the
marketing of goods and
services
American Marketing Association
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The Marketing Research Process

Set objectives

Define research Problem

Assess the value of the research

Construct a research proposal

Specify data collection method

Specify techniques of measurement

Select the sample

Data collection

Analysis of results

Present in a final report
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Terminology of Marketing Research

Primary data - collected firsthand

Secondary data - already exists, desk research

Quantitative research - statistical basis

Qualitative research - subjective and personal

Sampling - studying part of a population to learn
about the whole

24

Marketing Research Techniques

Interviews
 Face-to-face
 Telephone
 Postal questionnaire

Attitude measurement
 Cognitive component (know/believe about an act/object)
 Affective component (feel about an act/object)
 Cognitive component (behave towards an object or act)
25

Marketing Research Techniques

Group discussion and focus group

Diary panels - sources of continuous data
Telephone research
Observation (home audit, direct observation)
In-store testing

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The Marketing Process

-Marketing Strategy

A strategic plan for pursuing the
opportunity.

Market research will provide specific
market information that will permit the
firm to select the target market
segment and optimally position the
offering within that segment.

The result is a value proposition to the
target market.
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The Marketing Process

-Marketing Strategy

Market groups of consumers or
organizations that is interested in the
product, has the resources to purchase
the product, and is permitted by law and
other regulations to acquire the product.

The market definition begins with the
total population and progressively
narrows to penetrated market.
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The Marketing Process

-Marketing Strategy

29

The Marketing Process

-Marketing Strategy

Total Population

Potential Market those in the total population who have
interest in acquiring the physical products and services.

Available Market - those in the potential market who
have enough money to buy the products and services.

Qualified Available Market those in the available
market who legally permitted to buy the products and
services.

Target Market the segment of the qualified available
market that the firm has decided to serve (the served
market)

Penetrated Market those in the target market who
have purchased the products or services.
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Market Size and Market Share.

Market Size
 The size of the market is the present sales and on
potential sales of the product/services.
 It is represented in a form of RM.
 Source of information source in determining the
market size:

Government data,

Trade association,

Financial data from major players,

Customers survey and etc.

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Market Size and Market Share

Market Share
 The percentage or proportion of the total
available market or market segment that is
being serviced by a company.
 It can be expressed as

company's sales revenue (from that market)
divided by the total sales revenue available in
that market.

company's unit sales volume (in a market) divided
by the total volume of units sold in that market
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Target Market - Market Segmentation

Target market - the market segment
to which a particular good or service is
marketed. It focuses on a subgroup of
people or organizations sharing one or
more characteristics that cause them
to have similar product needs.

Market segment

Consumer market

Business/corporate market
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Market Competition

Competitors - Identifying the existing
competitors in the target market. It
can be tabulated as following:
Competitors
name

Expected
sales

%Market
share

Estimated Sales
Loss
Because of You

Shadira

RM120,000

40%

RM70,000

Felisa

RM90,000

30%

RM60,000

Others

RM90,000

30%

RM50,000

TOTAL

RM300,000
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Forecasted Sales
Quantity

Average price/

Total sales

*Average Cost/

Total Cost

Gross Profit

(customer) (1)

Quantity(RM)(2)

(1)x(2)

Quantity(RM)

(1x4)

(3-5)

30

100

3,000

52

1,560

1,440

20

100

2,000

52

1,040

960

50

100

5,000

52

2,600

2,400

70

100

7,000

52

3,640

3,360

80

100

8,000

52

4,160

3,840

90

100

9,000

52

4,680

4,320

90

100

9,000

52

4,680

4,320

90

100

9,000

52

4,680

4,320

90

100

9,000

52

4,680

4,320

10

90

100

9,000

52

4,680

4,320

11

100

100

10,000

52

5,200

4,800

12

100

100

10,000

52

5,200

4,800

TOTAL

900

100

90,000

52

46,800

43,200

Month

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Marketing Concept

Relies upon marketing research to define
market segments, their size, and their
needs.

To satisfy those needs, decisions will
then made on the controllable
parameters of the marketing

mix.
36

The Marketing Process

Marketing Mix Decisions

37

The Marketing Process

Marketing Mix Decisions

Its elements are the basic, tactical
components of a marketing plan. Also
known as the Four P's, the marketing
mix elements are:





Product
Price
Place (Distribution)
Promotion
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The Marketing Process

Marketing Mix Decisions

Product/Service - Products refer to
tangible product as well as services.
Product decisions can be made on:

Brand name
Functionality
Styling
Safety
Packaging
Repairs and support/warranty
Accessories and services
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The Marketing Process

Marketing Mix Decisions

Price - Some examples of price
decisions to be made include:

Pricing Strategy
Suggested retail price
Volume discounts and wholesale pricing
Cash and early payment discounts
Seasonal pricing
Price flexibility

40

The Marketing Process

Marketing Mix Decisions

There are many methods of establishing prices. E.g:
 Cost-plus pricing is pricing method whereby a standard




profit margin is added to the estimated cost of the

products. It is calculated by dividing a total cost of
production (fixed and variable cost) to a total number of
units to be produced per year. Once the cost per unit is
determined the profit margin will be mark-up to obtain the
selling price of a product.
Demand pricing: the price is determined based on demand.
This may because the different type of cost and materials
used for the product.
Competitive pricing. This method is used by companies that
are entering a market where there is already an established
price and it is difficult to differentiate one product from
another.

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The Marketing Process

-Implementation & Controls

Place (Distribution) - Distribution is about
getting the products to the customer. Some of the
more common distribution channels include:

Direct sales. Direct sales is a distribution
channel where the product will be directly
sold to the end-user.

Manufacturers representatives. This channel
will appoint salespeople who operate out of
agencies that handle the selling of
manufacturers products.

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The Marketing Process

-Implementation & Controls
 Wholesale distributors. a manufacturer sells to a
wholesaler, who in turn sells it to a retailer or other
agent for further distribution through the channel
until it reaches the end user.
 Brokers: Third-party distributors who often buy
directly from the distributor or wholesaler and sell to
retailers or end users
 Retailers: the business can distribute their product to
the retailers/business who will sell the products to the
end users. It is important if the end user of a product
is the general consuming public.
 Direct mail: this channel is done by selling to the end
user using a direct mail campaign.
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The Marketing Process

-Implementation & Controls

Promotion - communication of information about the

product with the goal of generating a positive customer
response. Marketing communication decisions include:

Advertising. Advertising can be done via electronic
media and non-electronic media. It delivers a creative
messages and try to persuade potential customers to
purchase a particular brand of product or service.

Packaging. Packaging includes labels, trademarks or
service of a company. It protects a products for
distribution, storage, sale, and use

Sales promotions: Establishes the strategies used to
support the sales message. This includes a description
of a schedule of planned promotional activities such as
special sales, coupons, contests and premium awards.

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The Marketing Process

-Implementation & Controls

Public relation and publicity: A complete
account of the publicity strategy including
a list of media that will be approached as
well as a schedule of planned events.

Personal selling and sales force

Promotional media:
 Printing/Publication/Broadcasting (newspaper, TV, Radio),
Out of home/Internet marketing, Digital Marketing,
Word of mouth and etcetera

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Implementation and Control

Marketing plan has been developed and the
product has been launched.

Result of marketing effort should be
monitored closely.

As the market changes, the marketing mix can
be adjusted to accommodate the changes (e.g.
changing in advertising message, product
redesign, new product etc)

The marketing process does not end with
implementation continual monitoring and
adaptation is needed to fulfill customer needs
consistently over the long-term.
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