Transcript Chapter 9
Chapter 9 Marketing Strategy Chapter 9 Financial Assessment and Marketing Control Chapter 9 The Financial Assessment Process Contribution Analysis Response Analysis Systematic Planning Models Chapter 9 Contribution Analysis • Contribution analysis attempts to determine the amount of outp (revenues) that can be expected from a given set of inputs (costs – A type of contribution analysis, breakeven analysis, is used to determine amount of revenue necessary to cover both variable and fixed costs. – Contribution analysis can also be used to demonstrate the ability of a marketing plan to increase gross margin, which is calculated by subtractin cost of goods sold and all marketing costs from sales volume in dollars. – Four different factors figure into this form of contribution analysis: expec sales in dollars, fixed costs, variable costs, and the gross margin objective Required sales = volume in units Total fixed costs ($) + desired gross margin ($) Gross margin contributed per unit or (Unit selling price - variable costs per unit) Chapter 9 Response Analysis • The goal of response analysis is to estimate accurate response coefficients that can be used to predict the change in sales volum based on a change in one or more elements of the marketing mi – With the exception of price, most other marketing mix elements would b expected to have positive response coefficients, whereby increased spend would be expected to result in increased sales volume. Price and sales v should vary inversely, with the exception of certain prestige products or products with totally inelastic demand. • Several sources of information are usually available to determin response coefficients. – Historical relationships could be calculated. – Trade association figures may also be used to estimate response coefficie – The firm may conduct primary research to better understand relationship • It would be rare for a marketing plan to call for the modification single marketing mix element. Chapter 9 Systematic Planning Model - I • 1. Industry sales for the product – This figure should be expressed in units, not dollars, because dollars are closely tied to the price variable. – Industry sales in units can then be used to develop a forecast for the planning period. • 2. The firm's market share – This can be expressed as the number of units sold by firm divided by the total units sold in the industry. – This figure is then used to forecast market share for planning period. Chapter 9 Systematic Planning Model - II • 3. Response coefficients are estimated for each element of the new marketing strategy. – Calculating a group of coefficients for a strategy is complex, as interactions between marketing mix elements may produce a combined effect that is different from each coefficient if estimated independently. – Both the positive and negative effects for the various elements are combined into an aggregate rate of sale change for the new marketing mix. – This is referred to as the combined market response impact. Chapter 9 Systematic Planning Model - III • 4. Modified market share is calculated by multiplyi the projected share (step 2) by the combined market-response impact (step 3). The result indicate the relative merits of continuing the old strategy ve adopting the new one. • 5. modified market share is multiplied by the projected total market in units (step 1). The result is unit sales prediction for the brand. • 6. Now add the unit's sales price • 7. Multiplied unit sales price by the unit sales prediction to get projected brand sales in dollars. Chapter 9 Systematic Planning Model - IV • 8. The cost of the new marketing mix is subtrac from projected brand sales volume. • 9. The result is the gross margin predicted for th brand under the new marketing strategy. – Gross margin is generally chosen as the outcome because it is a good targeted improvement area. – With slight modifications, the model could produce whatever outcome is being considered by top management. Chapter 9 Evaluating Marketing Activities • A firm's intended marketing strategy often differ from the realized strategy. • Typically, there are three possible causes for this difference: – The marketing strategy was inappropriate or unrealis – The implementation was inappropriate for the strateg or was simply mismanaged. – The internal or external environments changed substantially between the development of the market strategy and its implementation. Chapter 9 Formal Marketing Control - I • Any actions taken prior to the implementation of the marketing plan are referred to as input control mechanisms. – The premise of input control is that the marketing plan canno implemented unless the proper tools are in place for it to succ – One of the most important input control mechanisms is the recruiting, selection, and training of employees. – Other examples of input controls include resource allocation decisions (manpower and financial), capital outlays for neede facilities and equipment, or increased expenditures on researc and development. Chapter 9 Formal Marketing Control - II • Process control mechanisms include activities that oc during the implementation of the marketing plan and th are designed to influence the behavior of employees so they will support the marketing plan and its objectives. – One of the most important process control mechanisms is the system used to evaluate and compensate employees. – Another important control issue is the amount of authority an empowerment granted to employees. – Internal communication programs are another type of process control. – The process control mechanism that stands out above all othe management commitment to the marketing plan. Chapter 9 Formal Marketing Control - III • Output control mechanisms are designed to ensure that the outcomes of marketing activities in line with anticipated results. – 1) Set Performance Standards – 2) Implement the Marketing Plan – Conduct a Marketing Audit – 3) Compare Actual vs. Planned Performance – 4) Take Corrective Action, if Necessary Chapter 9 Set Performance Standards • The primary means of output control is the setting of performance standards against which actual performance can be compared. – All performance standards should be based on the marketing objectives to ensure an accurate assessment of marketing activities. – Standards should reflect the uniqueness of the firm and its resources, as well as the critical activities needed to impleme the marketing plan. – In setting performance standards, it is important to remember that employees are always responsible for implementing marketing activities, and ultimately the marketing plan. Chapter 9 Implement the Marketing Plan • One of the best methods of evaluating whether performance standards have been achieved is to use a marketing audit to exam the firm's marketing objectives, strategy, and performance systematically. – The primary purpose of the marketing audit is to identify problems in ong marketing activities and to plan the necessary steps to correct those probl – The marketing audit should be used in concert with the actual implement of marketing activities—not just when problems arise. – The audit should aid the marketing manager in evaluating marketing activ – The information in a marketing audit is often based on a series of questionnaires given to employees, managers, customers, and/or supplier – Marketing audits are usually quite beneficial for the firms that use them. Chapter 9 Informal Marketing Controls • Informal marketing controls are unwritten, employee based mechanisms that subtly affect the behaviors of employees, both as individuals and in groups. – The premise is that some aspects of employee behavior cannot be influenced through formal mechanisms and therefore must be controlled informally through individu and group mechanisms. – There are three basic types of informal control: • Employee self-control • Social control • Cultural control Chapter 9 Types of Informal Marketing Controls • Through employee self-control, employees manage the own behavior by establishing personal objectives and monitoring their results. • Social control deals with the standards, norms, and eth that are found within work groups within the organizati • Cultural control is very similar to social control, only much broader level.