Marketing Planning

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

2. Agenda • Marketing Planning • Marketing Plan • 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. Good Forecasting

6. Responsibility for Planning Source: Conference Board

7. Responsibility for Approving Plans Source: Conference Board

8. Planning Horizon Source: Conference Board

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

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

11. 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

12. Planning Process

13. Planning Process

14. The Marketing Plan • Where are we now? • Where do we want to be? • How do we get there? • This is also a sales document. You are asking for money. • I have placed several examples on reserve

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

16. 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)

17. Situation Analysis • Category Analysis • Not your brand, but rather the entire category • Economic, political, technological trends, etc. • Category sales • Sales Analysis • Are your sales up or down? • Segment • Market

18. Situation Analysis • Competitor and Customer Analyses • What do the customers want? • Table of benefits by segment or perceptual map • Who provides it? • Table of benefits by competitor or perceptual map • Are there positioning gaps? • Who will rush to fill them and what are the threats?

19. 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

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

21. Strategy and Tactics • Contains • List of strategies mapped to each objective • Tactical implementation of strategies • Pricing, promotion, product and place • When, where, whom at firm • Tactics by channel and segment • Portion of plan that directs others to make the plan happen

22. Strategy and Tactics • Specificity • How many sales people? What ad budget? What allocation of trade promotions? What price?

23. 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

24. Internal Consistency

25. Pitching Your Plan

26. PharmaSim • Website linked from course page • Goal: Provide context for plan • 30% plan, 5% performance • Assignment detailed on website • Goal: More experience in decision making • “I hear and forget” • “I see and remember” • “I do and I understand”

27. 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

28. 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

29. PharmaSim Market

30. 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 (cold, cough, allergy, nasal) differs from consumer survey (cold, cough allergy) • Buying process • Awareness  Purchase Intention  In Store Attractiveness  Purchase Usage Satisfaction  Repurchase

31. PharmSim Consumers • Product Criteria • Price (MSRP, discounts, channel, promo) • Duration of relief (4 or12 Hour) • Product form (Capsule liquid or spray) • Symptoms (Congestion, allergy, aches, etc.) • Side effects (Drowsiness, gentleness, alcohol)

32. PharmaSim Channel • Through Wholesale or Direct to:

33. PharmSim Channel • Decision Criteria • Margin • Sales and inventory turns • Sales force • Co-op ads • Other promos • Channel Decisions • Shelf space • Stocking and attractiveness

34. 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)

35. 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.)

36. 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)

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

38. Other Items • No replays. • Team leader is only one who can advance decisions, though all have access to data.

39. 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.

40. 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)

41. Other PharmaSim Tips • The key idea is to break large problem into small pieces • E.g., effect of dollars on share may depend on consumer choice process, by segment • E.g., effect of share can be broken into channel and consumer • Etc. • Be prepared to cope with ambiguity, just as when you get market intelligence reports on your desk this summer / next year.

42. 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

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

44. Marketing Plan Assignment • The assignment is detailed on the website and linked to the syllabus. • First move of Pharmasim should take 5 hours. Then, about 2 hour + for the remaining 7 moves for a total of 10 hours. Harvard has run 10 moves in a 24 hour period.

45. Marketing Plan Assignment • Three parts (4 pages & Exhibits) • Situation analysis • Perspective is after period 2 • Chance to learn situation and gather information (no replays) • Marketing program and financials • Take perspective of after period 2 • Best to do plan before moves anyway • Executive summary, contingencies, and post-mortem • Note – 20-30 pages in real world (Lehmann and Winer) • 3 reports = 30% , performance = 5%

46. Marketing Plan Assignment • Please make decisions prior to class where the report is due • Notes • Marketing planning (although not handed in) should occur each period of PharmaSim! • Separate assignments does not mean separate plan.

47. Group Processes • Nightmare group dynamics – 15 hours on a case • Meetings: • First, set objectives • What is goal of the meeting? Review assumptions? • Second, set agenda • When complete with item, move to next and do not return. • Third, determine outcomes • Who does what when? • Roles: Integrator, writer, analyst, etc. • More small meetings better than one late, big one • Issues will arise that are best analyzed off-line • Research -> Meet -> More research/write -> Meet again

48. Group Processes • Expect inefficiency early • Team building requires time • Governance • How will you handle conflicts? • Never agrees on assumptions (typical v. “obstructionist”) • “I can’t meet except 2:30 AM Sun. morning” • Model 1: Consensus – nice, but a dream • Model 2: Democracy – better, time consuming • Model 3: CEO and VPs – hierarchical & fast • Model 4: Arbitration panel – compromise of 2&3

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

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