4.2 market planning

Marketing Planning

The systematic process of formulating marketing objectives and devising appropriate marketing strategies to meet those objectives.

Marketing Plan

A document outlining a firm's marketing objectives, budget, target market, and the marketing mix (Ps) required to achieve them.

Elements of a Marketing Plan

Marketing objectives, budget, details of the target market, market research findings, and the tactical marketing mix (4 Ps / 7 Ps).

Benefits of Marketing Planning

Coordinates different business functions, prevents resource waste, provides clear employee targets, and ensures the marketing mix is coherent and integrated.

Limitations of Marketing Planning

Can be expensive and time-consuming to produce, may make the business too rigid to change, and can quickly become obsolete in dynamic markets.

Market Segmentation

The process of dividing a broad, diverse market into distinct, smaller groups of consumers with common needs or characteristics.

Geographic Segmentation

Dividing a market based on regional factors such as country, climate, region, or urban/rural density.

Demographic Segmentation

Dividing a market based on measurable population characteristics such as age, gender, income, occupation, and education level.

Psychographic Segmentation

Dividing a market based on lifestyle, values, personality traits, interests, and social status.

Behavioural Segmentation

Dividing a market based on consumer knowledge, attitudes, loyalty, usage rate, and purchase occasion.

Target Market

The specific segment or segments of a market that a business directs its marketing strategies and products toward.

Mass Market (Undifferentiated Marketing)

Devising a single marketing mix to target the entire market, ignoring differences between segments (e.g., utility products).

Niche Market (Concentrated Marketing)

Targeting a highly specialized, narrow segment of a larger market with a tailored product and marketing mix.

Advantages of Niche Marketing

Lower competition, ability to charge premium prices, and highly focused consumer loyalty.

Disadvantages of Niche Marketing

High risk due to small market size, limited opportunities for economies of scale, and vulnerability to market changes.

Product Positioning

How a product is defined by consumers on important attributes relative to competing products.

Positioning Map (Perceptual Map)

A visual tool that plots consumer perceptions of different brands or products based on two variables (typically price and quality).

Strategic Value of Positioning Maps

Helps identify market gaps, analyze competitors' positions, and inform rebranding or product development strategies.

Unique Selling Point (USP)

Any distinct feature or aspect of a business, product, or brand that clearly sets it apart from all competitors.

Differentiation

The process of distinguishing a product or service from competitor offerings to make it more appealing to a specific target market.

Common Methods of Differentiation

Differentiating through product design/features, pricing strategy, unique promotional branding, selective distribution (place), or customer service.

Benefits of Differentiation

Creates a sustainable competitive advantage, allows the firm to charge premium prices, builds brand loyalty, and reduces price elasticity.

Risks of Differentiation

High development and promotional costs, the threat of competitors copying unique features, and the risk of over-differentiating beyond customer interest.

Sales Forecasting (HL Only)

A quantitative technique used to estimate a firm's future sales volume and value over a specific period.

Moving Average (HL Only)

A forecasting method that calculates arithmetic means of data subsets to smooth out short-term fluctuations and identify long-term trends.

Three-Part Moving Average (HL Only)

A calculation that averages three consecutive data points (e.g., years or quarters) to identify the central trend.

Four-Part Moving Average (HL Only)

A calculation using four data points, requiring a second step called "centering" to align the moving average with the actual time periods.

Extrapolation (HL Only)

The practice of extending an identified historical trend line into the future to predict upcoming sales.

Seasonal Fluctuations (HL Only)

Short-term, predictable patterns in sales that repeat regularly within a single year (e.g., peak toy sales during holidays).

Cyclical Fluctuations (HL Only)

Medium-to-long-term variations in sales influenced by the macroeconomic business cycle (e.g., recessions vs. booms).

Random Fluctuations (HL Only)

Unpredictable, erratic changes in sales caused by sudden, non-repeating events (e.g., natural disasters or pandemics).

Benefits of Sales Forecasting (HL Only)

Enhances financial budgeting, coordinates inventory/supply chain management, and improves workforce planning.

Limitations of Sales Forecasting (HL Only)

Highly reliant on the assumption that past trends will continue, susceptible to external shocks, and less reliable for new or fast-changing markets.