C HA PTE R VI

Marketing Planning, Marketing Process, Contents of Marketing Plan

Learning Objectives

Corporate & divisional strategic planning Marketing planning

Marketing process Contents of marketing plan.

Structure
6.1 Corporate And Divisional Strategic Planning
6.2 Marketing Planning
6.3 The Marketing Process
6.4 Contents of Marketing Plan
6.5 Illustration of Marketing Plan – WIPRO
6.6 Desi Delights

Introduction
A market oriented strategic planning initiative is the process of developing and maintaining a feasible
match between the objectives, skills and resources of an organization and its changing market
opportunities. Such planning guides an organization's businesses and products so as to yield
targeted profits and growth.

Strategic planning at an organization level involves three activities: Considering the business as
an investment portfolio rather than a single investment.

Assessing the strengths and weaknesses of the organization vis-à -Vis the market conditions,
competitors, etc. Developing different strategies for different businesses under the organization.

The strategic marketing plan lays out the broad objectives of marketing and strategy based on
analysis of present market situations, the tactical marketing plan defines specific marketing tactics
to be employed like advertising, merchandising, pricing, etc.

6.1 Corporate and Divisional Strategic Planning

Before undertaking any planning activity, an organization must identify what is the basic purpose of its existence,
i.e. it must define its mission and provides a guiding framework that shapes all its business plans. Different
corporate entities adopt different strategies with regard to their business units and profit goals. However, all
corporate essentially undertake the following four activities.

Defining the corporate mission

Establishment of strategic business units (strategic business units) SBU Resource allocation to each strategic
business unit
Planning of new business and exiting from older businesses Organizations need to develop mission statements
that can be understood by all levels of employees and also its customers.

A good mission statement provides employees with a shared sense of purpose, direction and opportunity. They perform
when they are guided by a vision that provides a direction for the organization for ten to twenty years. Examples of
such mission statements are:
Infosys Technologies – We will be a globally respected corporation that provides best-of-breed
software solutions delivered by best-in-class people.‖
BCG Metrics – Boston Consulting Group (BCG) metrics has 4 quadrants as follows.

Question Marks – These are businesses that operate in high-growth markets but have low market
shares. The term 'question marks' implies that firms require deciding on which business units to
invest in more than others. Business units to invest in more than others. Business units in this
segment can focus on a particular niche in the market or acquire a competitor to increase market
share. Alternatively firms can decide to sell the business to other firms or eliminate the business.

Stars: Question marks, when they become successful, qualify as stars. A star is market leader in a
high growth market. S tars have good prospects and make substantial profits. Business units in the
stars segment should invest resources to improve their product, price, promotion and distribution to
protect and increase their market share.

Cash Cows: A star progresses to a cash cow whit it has the largest market share in a market
whose annual growth rate falls to less than 10 percent.
Cash cows produce a lot of positive cash flow for the organization. They earn more profits than
are needed to maintain their market position, but they have limited prospects for growth.
Businesses with cash cows should use their profits to support growth in other parts of the
organization such as research and development of new products.

Dogs: These are businesses that have a low market share in low-growth markets. Therefore, their
profits or losses are limited. Business units with dogs can choose to specialize in a segment of the
market that they can dominate or sell the business to another firm, or eliminate the business entirely.

Fig 6.1 – The BC G Growth Matrix

S tars Question
Marks

Cash Cows Dogs

Relative Market Share

6.2 Marketing Planning

Marketing planning can be defined as, deciding in present, what to do in future. It comprise of both the
determination of a desired future and necessary steps to bring it about.

Definition: ―A marketing plan is a comprehensive document or blueprint that outlines a company's

advertising and marketing efforts for the coming year. It describes business activities involved in
accomplishing specific marketing objectives within a set time frame
 Value creation and delivery sequence

Choose the value

Communication value Pride value
Customer Market
S ales
Segmentation selection Value Service Distributing
Pricing Sourcing S ales servicing
Positioning Develop Making
Force Production
-mint
Focus

Before 2000, the companies used to follow traditional marketing planning process i.e. first
produce the product and then market it. In summery the marketers used to follow 'selling concept'
of selling own products in market andnot what market needed.

Before 2000, the companies used to follow traditional marketing planning process i.e. first
produce the product and then market it. In summery the marketers used to follow 'selling concept'
of selling own products in market andnot what market needed.

After opening Indian market to world & after 2001 the traditional concept did not hold long. The
new concept of creating value through marketing emerged as a most suitable alternative. You will
notice that in this concept the starting point is 'choose the value' through customer segmentation,
market selection focus, and value positioning, which is called as segmentation, targeting and
positioning strategy. The S TP strategy should exist much before product formulation. Rather,
based on S TP strategy the product should be developed so that, since you make product 'tailor
made' and for defined customers, chances of failure are reduced.
The second step is, after understanding expectations of targeted consumers, to incorporate
appropriate product features through the strategy 'provide thevalue' and lastly it must be
communicated via proper marketing communication, either through sales force or sales
promotion or through advertising. Segmentation, Targeting and positioning (S TP) are the essence
of today's marketing planning process.

6.3 The Marketing Process

The marketing process consists of identifying & evaluating marketing opportunities,

analyzing market segments & selecting target markets, designing marketing strategies,
preparing a formal marketing plan, organizing, implementing and controlling the
marketing efforts or marketing plan, establishing interrelationships among planning,
implementing &control.

i) Marketing opportunities to be identified through situation analysis by conducting marketing

research. For example, exporting 10 gm. Jewellery fetch R s 3 lacs; whereas domestic sale
might generate R s 15000 – Rs 18000.

ii) Market or product segments can be analyzed by projecting sales for each segment & shortlisting
most attractive segments.

iii) Developing Marketing strategies can be initiated through researching on value delivery
sequence like Renold Pen, Nokia Mobile, Vicks.

iv) Preparation of a formal marketing plan is discussed in next point i.e 6.4

v) Planning marketing programme means develop marketing mix, communication mix and marketing
budget.to deliver the value.
 Managing marketing efforts – It can be achieved through

a. Sales Expenditure control

b. Profitability targets and

c. Marketing Audit.

(vii) Marketer has to establish a feedback mechanism to relate & improve allthe steps mentioned
above.

6.4 Contents of Marketing Plan

Every marketer needs to develop a marketing plan for its product line, brands for achieving
marketing goals. The marketing plan is one of the most important outputs of the marketing process.
The contents of a marketing plan look like as follows:
i. Executive Summery- Brief note on marketer and industry.
ii. Current marketing situation comprising of
i) Market size ii) Product situation.
iii. Competitive situation comprises of major competitors, their market shares, product quality etc.
iv. Distribution situation – The distribution system i.e. network of stockiest and retailers followed by
key players.
v. Macro environmental situation deals with society and product.
vi. Opportunity/Threat Analysis.
vii. Strength & Weakness Analysis.
viii. Financial objectives like R OI & NP
ix. Marketing objectives like sales price, sales revenue and NP.
x. Marketing strategy – IT deals with target market, positioning, product line and prices, as well
distribution, sales force size, service, promotion strategy and R & D.
xi. Action plan: Proposed marketing and promotion action plan at least for
forthcoming 1-2 years.

6.5 Illustration of Marketing Plan - WIPRO

EXECUTIVE SUMMARY
Wipro has started its operation in 1985 in Mysore. However, due to tax exemption provided by the government. It shifted
its operation to Pondichery. Later on, the company studied the market behavior and found that Market Shift was more
towards MNC Product. It happens mainly because import duties were going down. So manufacturing computers were no
more lucrative. It stopped its operation for two years in 1996 — 97. After two years we again realized that there is again
market pull for the brand and Wipro tied up with 'AC E R ' on Low and segment for 'Desktop'. Wipro started. Research
and Development programme for its product. It had been done mainly because of reason like existing customer, demand
for services. Secondly, because if customer, pull and lastly because gray market got stabilized and also we concentrated
on offer sales service and maintenance support to our customer. We improved our supply chain management system.

2. CURRENT MARKET SITUATION

i) Market Size : (1) 4,800/- crores (In terms of value)

(2) 10, 00,000/- (In terms of volume)

Growth Rate : (1) 15% for next financial year Target Market :
 (1) SOHO
(2) SME
(3) HIGH END COMPUTING &
CORPORATE SEGMENT

ii) Product Situation

iii) Competitive situation

Market is divided into : 1. Low End

2. Mid Ranger
3. High End
1. Low End

Organized Sector (40% S hare) UN-Organized Sector (60% S hare)

HP + Compaq GID (Genuine Intel Dealer)

DE L IBM HC L
ZENITH C MC

Wipro has 5% share in Low End Segment

2. MID Range Segment

3. High End Segment

4. Distribution Strategy

Wipro have two fold Distribution Strategy

1) Direct S ale 40% through 150 customer companies
2) Channels and Franchise 60% sale

5. Micro Environment

Wipro as a company is very much accepted in society. Everyone thinks Wipro as Ethical and Home Grown
Company with social commitment. But for computer as a product there is a mixed reaction.

6. Opportunities and Threats

Opportunities:
 1. By virtue of its services and technical skills Wipro dominates in high end segment.
2. Financially sound.
3. Home Grown Company not bothered about Import Duties.

Threats:

1. Address the High End Segment with their US partners. Multi distribution strategy of their US
partners is a threat for Wipro.
2. Tariff Structure

7. Strength and Weaknesses Strength:

Strength

1. High system integration skills hence they can handle large and mega projects.
2. World Class R & D Setup.
3. Financially very sound.

Weakness:
1. doesn’t actually have their own brand for High End Segment.
2. Relatively Low ASP budget.

8. Financial Objectives

1. To achieve above financial objectives

2. To increase advertisement budget from 2% to 3%

3. To enter into A pack and Middle East
4. to Concentrate on High End Segment

10. Marketing Strategy

Their fundamental strategy is to use product as a vehicle to expand and penetrate the market and use value added
services on the product.

a) Target Market : Low End

MID Range
High End

b) Positioning : Service Based value Position

c) Product Line High End : Enterprise Server and High Power Computing Server
MID Range : Work Group Server
Low End : Desktop and Lap Top

d) Price Range for Product Line

 High End MID Range Low End

MRP 1 to 3 Cr (100) 3 To 80 lakh 3 To 3 Cr lakh

Stockist 8% (92)

Retailer 4% (96)

Illustration

6.5 HLL's Pepsodent / Marketing Plan

1) Executive Summary

Hindustan Lever Limited's (H.L.L.) Pepsodent toothpaste is a late entrant in the Indian market. Along with Close-
up, toothpaste from H.L.L., Pepsodent was entrusted with the job of creating a dent in Colgate- Palmolive's India
Ltd. (C.P.I.L.) market.

The strategy adopted by H.L.L. was potentially devastating for C.P.I.L. For decades, oral care in India has been a
single-product market with Colgate's White paste offering the twin benefits of dental hygiene and bad breath
prevention. Rivals such as Promise toothpaste did not try to change the market's basic rules but they only tried to
hew out riches for themselves.

But in 1980's, H.L.L. decided to change the market dynamics. It moved aggressively to segment the market into
two distinct areas with exclusive brands for each viz, (Close-up, a gel paste, for conveyable fresh breath (targeted
mainly at youth) and Pepsodent for strong gums and healthy teeth. In less than two decades,
H.L.L. has grabbed C.P.I.L. market share. C.P.I.L. market share has dropped from 80% to 49.6% as on April
2002.

With both the companies having excellent product quality, the deciding factor in the future could well be defined
by understanding of the consumer psychology better. Along with constant increase in distribution network, Rural
Development Programmes, and also increased focus on important segment attain 25% market share by 2006.
 With increased Rural Marketing, where tremendous market potential can be seen, Pepsodent should increase its
market share by 2% taking the total to 18% in 2002-03 & 25% by the end of March 2006. This requires a raise in
advertisement and promotional activities and thus increases in costs. But with effective cost control techniques,
H.L.L. can achieve a net profit of 5% to 8% in the Pepsodent Division alone in the next three years.

The Comparison of current cost to the future cost is as follows:

Cost Reduction 100gm

While preparing the Marketing plan, few assumptions have been made such as:

a) The market share of 50gm, 100gm and 250 gm. Pepsodent toothpaste is in the ratio of 40:40:20.
b) The average cost 80% of Stock List Price.

2) Current Marketing Situation

(i) A) Market Size – 1200 C r.

B) Target Growth R ate – 4% p.a.
C) Target Market – General Public
(ii) Product Situation:
3) Competitive Situation:

Indian Toothpaste Market

90000 tonnes 1200 C r.

April 2002

4) Distribution Situation:
 5) Macro-Environment Situation:

Toothpaste is a Daily Use Product and has thus become a necessity. To gain market share
Toothpaste manufacturers are offering discounts, freebies like extra toothpaste for less, 'G-I joe' etc. which can
prove to be a disaster in the long run.

6) A) Opportunities:

1. Per Capita Consumption 82 Gms.

2. Dentist to population ratio 1:35000
3. 40% of world's Oral cancer patients in India
4. Traditional methods of Oral Care.
5. Less than 15% brush twice day.
6. Strong Equity in North (7th), thus opportunity to reach interiors.
7. Weak Equity in other parts, thus opportunity to grow.
8. No Exclusive product targeting above 40's.
9. Rural area:

6) B) Threats:

1. Short term brand loyalty in economy segment.

 2. Colgate Brand loyalty high in Top-end & regular segments.
3. New & Cheap Alternatives like Meswak being introduced.

Strengths:
1. Huge Distribution Network.
2. Huge portfolio of products. Hence Small Retailers prefer H.L.L products.
3. Huge capacity to advertise & Deep Pockets.
4. Huge product line with parent company to choose from.
5. Strong Brand presence in North of India.

Weakness:
1. Lower Brand Equity than Colgate, which is synonymous with toothpastes in India.
2. No Low-price toothpaste for lowest income segment.

8) Financial Objectives:

1. Rate of return – 15 % over next 3 years.

2. Net profit– 5 to 8% over next 3 years
3. Market share – 25 % by 2006.

9) Marketing Objectives

A) Sales:

B) Increase Consumer Awareness Level and due to Freebies, Advt. & Promotion Cost – increase from 4% to
8% of S ales.

C) Enter Small Sachet Market for travel oriented customer & launch 30 gm. packs for rural & low price
toothpaste for both urban & rural area.

D) Increase Distribution Network, R .D.P's, & increase reach to Doctors. E) Increase in market share. H.L.L.
Equals Colgate by 2008.

10) Marketing Strategy:

B) Positioning – 'Child-focused' Advertisement 'Strong & Healthy Teeth, Whitening, Germ – free' being the theme.

C) Product Line:

15 gm. – Travel Specific 30 gm. – Rural areas

50 gm., 100 gm., 250 gm. – According to purchasing power

D) Distribution – Reach from 15 lakh retailers by 2006 (include all types of

retailers like panwalas, Chemist, Grocery stores, General Stores, Supermarkets, internet stores, railway kiosks, etc.)
More focused on Rural Market.

E) Sales Force – 'Rural Market' Specific training

F) Service – 1. Reduce delivery Time to stockists from 15 days to 7 days.

2. Delivery to Key stockists twice a week.
3. Advance Payment benefit increased – 0.5% to 0.7% (15 days – Credit period to remain constant)

G) Promotion and Advertising –

1. Dealer& Retailer promotions through various Schemes.
2. End-user promotion. Through various modes of advt. Like T.V. advs. On children specific programs like
'Disney Hour'.

H) Action Plan

2008 – April to June – Growth 5.4 % as against industry 4%July to Sept. – 40,000 to 50,000 villages, focus on R
.D.Ps.
Oct. to Dec. – Revise Add Campaign

2009 – Jan to March – Drive to increase dealer network April to June – Introduce specific products according to
marketing objectives.

6.6 DESI DELIGHTS

Mc Donald's

Both Yum! And McDonald's have already laid the foundation for their extensive expansion in India. McDonald's,
for instance, set up its supply chain by investing R s. 300-R s 400 crore even before the first outlet opened up, ensuring it
had backward linkages up to the farm level to get a good grip on quality. "Having our own handle on the supply chain
 helped us manage our costs better as we moved forward," ex- plains Amit Jatia, MD & J V partner, McDonald's
India (West & South). It also started its training programmes in India built on international models and has, through its
design and advertising, built the image of a family restaurant. Yum! for its part, has incorporated a mix of international
and local design for KF C and Pizza Hut outlets. The company has also tried to make customers "feel yum when you
come to Pizza Hut" through programmes like 'Wheel of Fortune' and 'Pizza Hut Birthday Rap'.

Both have also, Indianised their menus while McDonald's launched the McVeggie and McAloo Tikki burgers,
Pizza Hut claims to have introduced the tandoori pizza, besides creating" a separate menu called Great Indian Treat. KFC
, formerly Kentucky Fried Chicken, has introduced thalis, and an extensive vegetarian menu. Lots of non-veg customers
turn to veg on Tuesdays, Thursdays and Saturdays. Our positioning is around taste, not chicken," says Arvind Mediratta,
C MO, and Yum! Restaurants.

Pricing has also been tinkered to suit Indian consumers' value perceptions. According to an - AT Kearney 2006
survey, the average spending per head in a quick service restaurant (QSR ) outlet is low at R s 75-R s 100 across different
cuisine formats, and hence high volume is the key for higher profitability. McDonald's has kept its Happy Price menu at R
s20 for the last 3 years. Pizza Hut offers value meals at R s 75, while the thalis at KFC is priced at R s 50, and full-fledged
meals are offered at Rs 99. Medira atta, however, believes that giving customers' value means abundance of food and
variety at a decent price point, and not necessarily a low-cost price point.
6.7 CASE STUDY - BHARAT BIJLEE

Bharat Bijlee has shown significant growth over the past three years. Its sales doubled during the period, while net
profit rose by around 19 times. However, some part of the gain in net profit is due to extraordinary income. The company
currently trades at a price-earnings (PIE) multiple of about 19. It has good growth prospects, with the thrust on
distribution sector reforms generating good business. The reforms are moving slowly, but if they pick up pace, things
could be even better in the next 12 months.

Business: The Company manufactures transformers and electric motors. These two products accounted for about 54% and
33% of its F Y 06 sales, respectively. The company commissioned a production facility in March '06, which has doubled
its capacity and is expected to contribute more to sales. The increased capacity can generate additional revenues of R s
150-200 crore. However, the company doesn't manufacture high-end high-voltage power transformers. The transformer
segment has gained the most from the increased focus on the power sector. The demand for transformers comes- from
generation and transmission capacity addition - mostly in the form of new demand - and from the distribution sector as
replacement demand. As a thumb rule, 1 mw of new generation capacity requires 7 MVA of transformer capacity to
deliver power at the consumption centre. With the target of adding another 100,000 mw of generation capacity, about
700,000 MVA of transformer capacity will be required in the next 5-6 years. This will result in an annual demand of about
140,000 MVA.

Apart from this, there is significant demand from the replacement market. Again this, the total current production is about
90,000 MVA. Clearly, there is enough room for growth in the medium term. In line with the industry trend, the company
plans to increase its capacity manufacture 8,000 MVA per annum.

Financial: For the half year ended September'06, the company reported net sales of R s 181 crore-an increase of 61 % over
H106. However, growth at the operating profit level was low due to significant increase in raw material cost. Net profit
growth was even lower due to higher tax provisions S and extraordinary items. Excluding extraordinary items, net profit
rose 41 % to Rs13.1 crore giving a net margin of 7.2%. The company's operating margins have risen from about 6% to
more than 15% during the past four years.

Valuations: Bharat Bijlee's prospects are quite good, with increased investments in the power sector, particularly in the
distribution sector. Further, the current upturn in the economy should maintain momentum for the next 3-4 years. Another
important feature of the company is that it has significant investment in quoted equity, as permits latest annual report.
 The investment has a current market value of about R s 50 crore. If we exclude this amount from its current
market capitalization, the PIE from core operations comes down to less than 18, which is quite attractive.

Bharat Bijlee's Financials

Source: Powers (Rs. Crore)

6.8 SUMMARY

Before developing any strategy, a firm needs to first develop a corporate mission statement which explains the
business of the firm& its customers. If a firm has many products to offer, it is better to set up a strategic business unit. A
strategic business unit (S BU) is a separate &self sufficient business unit operating in the market. Resource allocation is
done by differentiating company's businesses according to their potential & identifying whether they are profitable. The
techniques used for this purpose is Boston Consulting Group Matrix.

Marketing planning involves the development of a logical process for establishing marketing goals &plans to achieve
those goals. Marketing process involves identifying marketing opportunities, evolving suitable marketing strategies &
implementing it contents of marketing plan are – executive summary, current marketing situation, competitive situation
etc.