A marketing plan is usually a written document that shows how the company assesses the current market situation and its further development, what goals it pursues, and with which strategies and marketing tools it wants to achieve the goals. In addition, there are key figures for monitoring progress and success as well as suggestions for reacting to (unavoidable) deviations of the actual from the planned development. A marketing plan is usually created for a product, a product group, a strategic business unit, or the entire company. A marketing plan is a basis for a business plan that includes the planning of supporting functions. This includes, for example, the production, financial, personnel and procurement plan as well as the planning of research and development and innovations.
Significance and Areas of Application
The most important areas of application and reasons for creating a marketing plan can be summarized as follows:
- Investment: The introduction of new or improved products or services as well as investment decisions sometimes require considerable financial resources. In these cases, the responsible persons usually have to convince a panel of experts that these investments are sensible (profitable) – the invested funds flow back with a certain surplus (profit). In such cases, the marketing plan is the most important basis for discussion for critically reviewing the assumptions about framework conditions, trends and the expected purchasing behaviour of potential customers.
- Responsibility: Once an employee takes responsibility for a product, product group or business unit as part of their professional development, they must demonstrate their contribution to the long-term success of the company and show that they can handle assets or financial and human resources responsibly. To do this, they usually need a marketing plan.
- Qualification acquisition: About two-thirds of all managers have a technical or scientific education. As soon as they want to qualify to take on management tasks, they need basic business knowledge, and this includes a marketing plan to apply this knowledge.
- Performance appraisal: Most larger companies are organized by strategic business units. The performance of the responsible employees is usually measured by economic success, and this requires professional planning. The marketing plan is the heart of the business plan. In this context, success means that those responsible not only incur costs but can also generate revenue.
- Target agreement: The marketing plan or elements thereof are the basis of target agreements at almost all hierarchical levels (for example, agreement of marketing goals). And the ability of a manager to translate goals into measurable results is one of the most important prerequisites for professional success.
- Business start-up: When founding a company, investors, banks or funding institutions want to be convinced of the meaningfulness and prospects of success of the business idea. Again, you need a marketing plan as the core of the business plan.
Building a Marketing Plan
A marketing plan consists of the following components:
- Strategic analysis,
- Setting qualitative and quantitative targets,
- Selection of suitable strategies for achieving goals,
- Budgeting of the operational implementation with the marketing mix and
- Monitoring the success of progress, results and milestones.
At the beginning of the marketing plan, there is usually a management summary of the five elements.
We have taken the illustration from How to write a marketing plan that gets everyone on the same page for explaining to the readers. We are not associated with their products.
The marketing plan begins with a strategic analysis. It consists of market, customer and competition analysis. The market analysis provides information about the market potential (the possible demand expected in the future in quantity and value units), the market volume (the actual quantity sold at given prices, the market shares of the main suppliers and the forecast of further market growth). The customer analysis begins with the most precise possible definition of the target groups, their buying habits, needs and expectations. Customers may be end-users (consumers) or other companies. Important data of the customer analysis are customer satisfaction and loyalty, attitudes, purchase motives and expectations about the nature of the relationship with the provider. Competitive analysis is primarily about assessing the most important goals, strengths and weaknesses of relevant competitors because this is the only way to formulate competitive advantages to be sought within the framework of strategic planning. It is about the core question: What do we have to do better to become a preferred provider in the perception of the target group? The results of competitive analysis can be represented in a so-called strengths-weaknesses profile. A widely used tool for this is the SWOT analysis.
The objective requires certain key figures. Typical goals are, for example, sales growth, market share or return on investment (financial targets). These key figures are so-called late indicators. The problem with this is that if, for example, sales are already falling, countermeasures are hardly possible and usually require great human and financial efforts. The principle is that today’s turnover is the result of decisions (or omissions) made three to five years ago. In other words, what you have missed strategically can usually no longer be healed surgically. For this reason, in recent years the focus has shifted to key figures that can serve as leading indicators. Examples of such early indicators are customer satisfaction, innovative ability, customer orientation of the organization, commitment and satisfaction of employees, acquisition of new customers or image of the company (market and customer-related goals). When setting goals, the so-called SMART principle is particularly important: S stands for specific, M for measurable, A for attainable, R for realistic and T for time-bound. Goals should therefore be specific, measurable, achievable, ambitious and time-related. Consequently, the marketing plan includes short- and long-term as well as qualitative and quantitative goals. All objectives must be coordinated with each other and must not contradict each other as far as possible.
A strategy can be defined as a bundle of measures that seem suitable to go from A (actual state) to B (target state), i.e. to realize goals. Strategies can essentially be divided into four groups: competitive, positioning, portfolio and innovation strategies. Competitive strategies provide an answer to the question: How can those responsible for the marketing plan achieve a competitive advantage? There are three main sources of competitive advantage: superior (attractive) products, superior (efficient) processes or superior customer relationships (loyalty and trust). Competitive advantages can be achieved by focusing on quality and service (differentiation), by a price advantage (cost leadership) or by specializing in market niches. Through a positioning strategy, a company designs its offer in such a way that it occupies a special, valued and set apart place in the consciousness of the target customers. Portfolio analyses are intended to help plan the product range in such a way that the company has as many high-yield products as possible in growing, attractive markets.
Strategy implementation with the marketing mix
The implementation of the strategy usually requires extensive human and financial resources. These are planned as part of the marketing budget. The central question is how to divide the marketing budget between the marketing instruments and what contribution these instruments (product, price, communication and distribution policy) should make to the efficient achievement of goals. An essential task of the product and price policy is to determine the price-performance ratio in such a way that it appears attractive in the eyes of the customers. The task of the communication policy is to inform customers about the offer and to persuade them to buy. In the marketing plan, it is, therefore, necessary to determine which means of communication (for example, advertising, personal sales, public relations, sales promotion or direct marketing) are best suited for this in which combination. Accordingly, the financial resources must be planned.
The marketing plan ends with the success control (progress and profitability) mainly in three areas. On the one hand, it is necessary to regularly check the extent to which the marketing instruments make the expected contribution to the implementation of the goals. This is the only way to take corrective action. On the other hand, successful control of the acting persons (who implement the marketing plan) must be carried out about their contribution to the success of the marketing plan. This is the only way to develop the personal skills of the specialists and managers concerned and to use them efficiently depending on their strengths. In the case of possible sanctions, the principle applies that they should only come into play if the persons acting are not carefully prepared for business-unavoidable deviations from the plan, especially since it is not possible to predict the future (principle of forward-looking planning). In the third area, key figures on the profitability of products, markets, segments, customers, distribution channels, etc. must be defined so that opportunities for improvement and adaptation requirements can be derived at an early stage (a basic prerequisite for corporate management).