Marketing Management - Basics Level Two

THE MARKETING
PLANNING PROCESS
Strategic marketing: a planning process that seeks to establish a clear
direction and unified purpose for all marketing efforts.
Its conclusions are documented in a marketing plan that is regularly updated.

WHY PLAN FOR MARKETING?
 The Marketing Planning Process focuses
business’s limited resources on opportunities
to increase market share and boost profit by
creating a sustainable competitive
advantage.

5 STEPS OF MARKETING PLANNING
The five steps in strategic marketing are:
1. Identify the mission;
2. Analyse the situation;
3. Setting objectives;
4. Develop a marketing strategy;
5. Planning for evaluation

SWOT
Analysis
Oppurtunity
Threats
Strengths
Weakness
Acronym for Strengths,
Weaknesses, Opportunities,
and Threats.
Technique is credited to Albert
Humphrey who led a research
project at Stanford University
in the 1960s and 1970s.
Planning tool used to
understand Strengths,
Weaknesses, Opportunities, &
Threats involved in a project /
business.
Used as framework for
organizing and using data
and information gained from
situation analysis of internal
and external environment.
Technique that enables a
group / individual to move from
everyday problems / traditional
strategies to a fresh
perspective.
What is SWOT Analysis?

STRENGTHS
Characteristics of the business or a team
that give it an advantage over others in
the industry.
Positive tangible and intangible
attributes, internal to an organization.
Beneficial aspects of the organization
or the capabilities of an organization,
which includes human competencies,
process capabilities, financial
resources, products and services,
customer goodwill and brand loyalty.
Examples - Abundant financial resources,
Well-known brand name, Economies of
scale, Lower costs [raw materials or
processes], Superior management talent,
Better marketing skills, Good distribution
skills, Committed employees.

WEAKNESSES
Characteristics that place the firm at a
disadvantage relative to others.
Detract the organization from its
ability to attain the core goal and
influence its growth.
Weaknesses are the factors which do
not meet the standards we feel they
should meet. However, weaknesses
are controllable. They must be
minimized and eliminated.
Examples - Limited financial resources,
Weak spending on R & D, Very narrow
product line, Limited distribution, Higher
costs, Out-of-date products / technology,
Weak market image, Poor marketing skills,
Limited management skills, Under-trained
employees.

OPPORTUNITIES
Chances to make greater profits in the
environment - External attractive factors
that represent the reason for an
organization to exist & develop.
Arise when an organization can take
benefit of conditions in its
environment to plan and execute
strategies that enable it to become
more profitable.
Organization should be careful and
recognize the opportunities and grasp
them whenever they arise. Opportunities
may arise from market, competition,
industry/government and technology.
Examples - Rapid market growth, Rival
firms are complacent, Changing customer
needs/tastes, New uses for product
discovered, Economic boom, Government
deregulation, Sales decline for a substitute
product .

!
THREATS
External elements in the environment that
could cause trouble for the business -
External factors, beyond an organization’s
control, which could place the
organization’s mission or operation at risk.
Arise when conditions in external
environment jeopardize the reliability
and profitability of the organization’s
business.
Compound the vulnerability when they
relate to the weaknesses. Threats are
uncontrollable. When a threat comes, the
stability and survival can be at stake.
Examples - Entry of foreign competitors,
Introduction of new substitute products,
Product life cycle in decline, Changing
customer needs/tastes, Rival firms adopt
new strategies, Increased government
regulation, Economic downturn.

S W
TO
To help decision makers
share and compare ideas.
To bring a clearer
common purpose and
understanding of
factors for success.
To organize the
important factors linked
to success and failure
in the business world.
To analyze issues that
have led to failure in
the past.
Aim of SWOT Analysis?
To provide linearity to
the decision making
process allowing
complex ideas to be
presented
systematically.

Benefits & Pitfalls of SWOT Analysis
Benefits of SWOT Analysis
Helps in setting of objectives for strategic planning
Besides the broad benefits, here are few more benefits of conducting SWOT
Analysis:
Provides a framework for identifying & analyzing strengths, weaknesses,
opportunities & threats
Provides an impetus to analyze a situation & develop suitable strategies
and tactics
Basis for assessing core capabilities & competencies
Evidence for, and cultural key to, change
Provides a stimulus to participation in a group experience

Benefits & Pitfalls of SWOT Analysis
Pitfalls of SWOT Analysis
Can be very subjective. Two people rarely come up with the same final
version of a SWOT. Use it as a guide and not as a prescription.
May cause organizations to view circumstances as very simple due to
which certain key strategic contact may be overlooked.
Categorizing aspects as strengths, weaknesses, opportunities & threats
might be very subjective as there is great degree of uncertainty in market.
To be effective, SWOT needs to be conducted regularly. The pace of
change makes it difficult to anticipate developments.
The data used in the analysis may be based on assumptions that
subsequently prove to be unfounded [good and bad].
It lacks detailed structure, so key elements may get missed.

Tips & Exercise
Do’s
 Be analytical and specific.
 Record all thoughts and ideas.
 Be selective in the final evaluation.
 Choose the right people for the exercise.
 Choose a suitable SWOT leader or
facilitator.
 Think out of the box
 Be open to change
Don’ts
х Try to disguise weaknesses.
х Merely list errors and mistakes.
х Lose sight of external influences and
trends.
х Allow the SWOT to become a blame-
laying
exercise.
х Ignore the outcomes at later stages of the
planning process.
TIPS

Tips & Exercise
TIPS
When
conducting a
SWOT analysis,
designate a
leader or group
facilitator.
Introduce the
SWOT method
and its purpose in
your organization
to gain
acceptance.
Discuss and record
the results. Prepare a
written summary of
the SWOT analysis to
give to participants.
Be willing to
breakaway from
traditional
methods.
While doing a
SWOT analysis
for your job,
invite someone
to brainstorm
with you.

BMW STRENGTHS
Strong brand image & equity
Strong production network
Extensive global presence
Strong R&D capabilities
Innovation
Made in Germany
First-mover in virtual ads
Product adaption

BMW WEAKNESSES
Male dominated
High advertising expenditures
Fuel-efficiency
Maintenance cost is high

BMW OPPORTUNITIES
Eco-friendly technologies
Asian markets
Global Expansion
Growing Market Segments

BMW THREATS
Increased competition in luxury automotive market
Economic changes
Environmental protection regulations
Change in oil prices
Economic/social issues
Competitors cutting manufacturing cost

HBL – SWOT ANALYSIS
 STRENGTHS
 Rich and amazing history of
being there when no other
bank existed
 Credibility and stature of a
giant organization
 High corporate Brand
Awareness
 Largest network of branches
in Pakistan
 Huge deposit base
 Largest number of employees
 Financial backup for attaining
and maintaining the market
leadership position
 WEAKNESSES
 Hazy positioning in the past,
with various isolated appeals
tried over time
 Lack of strategic coherence
among different
communications, causing
disruption in brand building
process
 Fading image with elements of
Brand Association such as
“Old”, “Outdated”, “bank of
lower segment”, “Desi”, “status
quo” and “slow” strengthening
fast (Tardy image of a
government bank)
 Has been slow in adapting
efficient processes

HBL – SWOT ANALYSIS
 OPPORTUNITY
 Customers are becoming more
adaptive of the changes and
transformations; courtesy media
and competition
 The recent growth in banking
sector
 Growing avenues in consumer
banking
 Poor differentiation between
banking brands
 THREATS
 Single-mindedly built brand by
foreign and now local banks;
continuously eroding the SOM of
other banks, who have not yet
addressed the area
 With growing competition taking
differentiated positioning, the
opportunities to own a sustainable
and distinctive place in consumer’s
minds are fading fast
 Extension of accessibility networks
by banks, which may leave the
HBL edge as unimportant
 Customers have shown high affinity
to better/new image banks

ANALYSIS OF SWOT
Brand Image Aging image with attributes like old, outdated , slow,
desi, lower segment type, conventional, unchanged
Due to:
•Very fast changing banking scenario and bank facets
•Lack of attention by HBL on this area

ANALYSIS OF SWOT
Positioning and
Focused Banding
•Lack of single-minded valuable proposition, that the
bank has been able to burn in consumer’s mind
•Past claims have often been misread and misbelieved
at consumers’ end. “The Power to Lead”
•Or have stayed invaluable and emotionally barren.
“The Bank”.
•Since a brand impacts the minds with a “single-
minded”, “believable” and “valuable” promise, which
no one else can claim, HBL has naturally suffered by
not taking the route

ANALYSIS OF SWOT
Sustainable
Competitive
Advantage
•HBL, to its advantage, has
•The largest network
•Highest number of employees
•Highest number of customers
•Oldest history
•However, these have not been translated into
customers’ advantage
•These have not been used to create a sustainable
edge over competition; and edge, which also offers
value to the customer
•If not addressed, soon some of these will eventually
erode

PRODUCT PORTFOLIO ANALYSIS
 Product portfolio analysis is looking at the
range of products a business offers.
 Its purpose is to ensure that it has products
that are performing well and generating a
profit, in addition to new products in the
pipeline to replace existing products once
they reach the decline phase of the product
life cycle.

Business Portfolio
 Collection of businesses (SBUs) and products that
make up a company
 Should fit the company’s overall strengths and
weaknesses
Autos Motorcycle Jet Skis ATV Lawn
Snow
Blowers
Accord
Civic
Insight
Odyssey
Pilot
Standard
Touring
Sport
Cruiser
Moto-X
Aqua
Trak
Utility
Sport
Lawn
mower
Trimmer
Tiller
Wheel-
drive
Track-drive
Light-
weight
Honda’s Portfolio

THE BOSTON CONSULTING GROUP (BCG) MATRIX
 The BCG Matrix is the most common tool for
business to analyze their product portfolios.
 It was developed by the Boston Consulting
Group in the 1970s to help businesses
decide where to best devote their scare
resources of time and money.

BCG Growth-market Matrix
High
High
Low
Low
Market
Growth
Market Share
CASH
COWS
QUESTIO
N MARKS
STARS
DOGS

REQUIREMENTS OF THE BCG MATRIX
 The BCG matrix requires two pieces of
information – how much market share a product
has and how quickly the whole market is
growing.
 Based on this, a product can be classified into
one of four categories.
 Cash Cow
 Star
 Question Mark or Problem Child
 Dog

BCG MATRIX
CASH COW
 A cash cow is a product with a high market share and
low market growth.
 Cash cows are to be milked.
 The fact that the market share is high means that the
product is strong in that market and the business may
be able to charge a high price for it.
 A cash cow reputation allows it to get by on relatively
little marketing expenditure as the market is not
growing (mature).
 This means that increased market share is hard to
come by as it can’t be gained from new customers, but
must be taken from competitors.
 Cash cows are very profitable to have in the portfolio.

BCG MATRIX
STAR
 A star has a high market share and high market
growth.
 Stars are the dominant product in a market, but
they must work much harder to retain that lead in
market share.
 This is because the market is growing quickly and
rival businesses can gain share by attracting the
new customers who are entering the market.
 As a result, rising stars require high levels of
marketing expenditure to retain their status.
 If they manage to do so, the benefits will come as
they will be the cash cows once the market
matures.

BCG MATRIX
QUESTION MARK OR PROBLEM CHILD
 This of product has low market share and high market
growth.
 Question marks pose a problem for businesses.
 Although many will fail to break through and earn high
profits, the potential exists for them to become the stars of
the future.
 This is because market growth is rapid, offering a business
the possibility of growing its market share through new
customers, which is far easier than trying to tempt them
from a rival.
 If a business wants to develop a question mark, it will need
to spend very large sums on marketing and even then it
may not succeed.
 Businesses should selectively choose which `question
marks` to develop, spending on the ones with the best

BCM MATRIX
DOG
 A product classified as a dog has low market
share and low market growth.
 Very few businesses want dogs in their
product portfolios.
 Not only do these products not have much
market share, the chances of them gaining a
greater market share are very limited as the
market itself is not growing.
 Businesses tend to get rid of dogs (divest)
unless the products have secondary benefits,
such as being a necessary party of product
line that is profitable overall.

APPLYING CIRCLES TO THE BCG MATRIX
 In order to represent different products on a
BCG matrix, we can draw circles of different
sizes to indicate the relative importance of the
product to group sales.
 Therefore the largest circle on our diagram, will
be the leading products in respect to overall
group sales.
 The smallest circle on the diagram will be a
product that is of least importance to group
sales.

The BCG
Matrix with
circles to
reflect the
relevant
importance
of the
product to
group sales.
Product B is
the most
important
and Product
E is the least
important.

The 3 V’s Approach to Marketing

The 3 V’s Approach to Marketing - TCS

PEST Analysis
Political
Economi
c
Social
Technolo
gical

Objective
Learning Objectives
Explain the Importance of PEST Analysis
Describe each of the PEST Factors
Describe other factors affecting a Business
List the Key Points to Remember for PEST Analysis
Explain what is PEST Analysis
Describe the steps to Conduct a Good PEST Analysis

Introduction
Look at the news that made headlines in all the leading newspapers across
the world.
Click on the newspaper
to magnify the news.

Introduction
• • •
You can see
that the
external
environment is
very important
for the success
of any
business.
Hence, it is crucial that
an organization
considers its
environment to
develop its marketing
process. In fact,
environmental
analysis should be
continuous and feed
all aspects of
planning.
One such business
analysis model that
is used by strategy
consultants to scan
the external macro-
environment in
which a firm
operates is PEST
Analysis.
Let us now
learn about
PEST
Analysis.
•

Objective
Example text
Go ahead and replace it with
your own text. This is an
example text.
Learning Objectives

What is PEST Analysis?
It helps to provide a
quick understanding of
the external pressures
facing a business and
their possible constraints
on its strategy.
PEST Analysis
examines the
external
environment and
the global factors
that may affect a
business.
PEST analysis is a
business analysis
model.

PEST analysis is also known as:
STEP Analysis
PESTEL Analysis
PESTLE Analysis
PESTE Analysis
PESTLIED Analysis
SLEPT Analysis
STEEPLE Analysis
STEEPLED Analysis
LE PEST C Analysis
LEPEST Analysis

Every organization's marketing environment is made up of the
following three:
The internal environment
Example: Staff, internal
customers, office
technology, wages and
finance, etc.
The micro-environment
Example: external customers,
distributors, suppliers, agents,
competitors, etc.
The macro-environment
Example: Political forces,
Economic forces, Socio-
cultural forces, and
Technological forces.

PEST Analysis targets the macro-environment of a business.
Thus, PEST stands for and analyses the four external influences on a
business –
PEST
Analysis
PT
S E
Political
EconomicSocial
Technological

PEST Analysis is a framework that
strategy consultants use to scan
the external macro-environment in
which a firm operates.
This analysis is essential for an
organization to design an effective
marketing strategy.
It’s a way of working out what is
going on ‘out there’ so that
businesses can then respond to it.
It is important to note here that PEST Analysis
can be performed and is relevant for any type
of business whether large, small or medium.
Also, you should keep in mind that the macro-
economical factors can differ per continent,
country or even region, so normally a PEST
analysis should be performed per country.

Objective
Example text
example text.
Learning Objectives

Importance of PEST Analysis
PEST Analysis is crucial in designing a
marketing strategy for the business. PEST
Analysis helps:
• In the value creation opportunities of a
strategy.
• To assess the market including
competitors from the stand point of a
particular business.
• To evaluate the impact of the external
environment on a firm’s objectives and
strategy.
• To make contingency plans for threats.
• To prepare business and strategic
plans.
• To understand market growth or decline,
business position, potential and
direction for operations.

Importance of PEST Analysis
PEST Analysis is crucial in designing a
marketing strategy for the business. PEST
Analysis helps:
• To align company’s performance
positively with the powerful forces of
change that are affecting business
environment.
• To successfully launch business
operations into new markets and new
countries.

Objective
Example text
example text.
Learning Objectives

The ‘Political Factors’ studied under
PEST Analysis help to find how
political development, locally,
nationally, internationally affect the
strategy of a business.
Hence, it helps to put forward the
Government views of certain
business activities, including local,
national or international
government.
Political Factors
PT
S E
P
PEST
Analysis
Political Factors

Political Factors
Political factors are the most
important influence on the
regulation of any business as it is
the political system which is
responsible for law making which
affect any business.
The political arena has a huge
influence upon the regulation of
businesses, and the spending
power of consumers and other
businesses.

Political Factors
Stability of the
political environment
Government’s policy
on the economy
Influence of the
Government Policy /
Law on your business
Government’s view on
culture under religion
Is the government involved
in trading agreements such
as EU, NAFTA, ASEAN?
Government’s position
on Marketing Ethics
The various aspects or issues to be considered are:

Political Factors
Environmenta
l Protection
Law
Controls, if any, on
Marketing
Strategies
Consumer laws
and regulation
Control on
Pricing
Role of
Public
Sector
Role of
Private
Sector

Political Factors
Advertising
standards
Competition
regulation
Role of
Joint
Sector
Immediate laws which affect
any business in general such
as Central Excise, Sales Tax/
VAT, Corporate Income Tax &
Service Tax

The ‘Economic Factors’ studied
under PEST Analysis help to find
how economic factors existing in the
country and around the world may
affect the business.
Economic Factors
PT
S EE
PEST
Analysis
Economic Factors

Economic Factors
It is crucial to consider the short
term as well as long term state of
economy especially in case of
planning for international
marketing.
Therefore, marketers need to
consider the state of a trading
economy in the short and long-
terms.

Economic Factors
Interest Rates
Consumer activities,
such as spending
patterns
The changes in
production and labour
market
Inflation
Employment Law
Economic
Growth

Economic Factors
Bank
Financing
Restrictions for
Imports
Exchange Rate
Mechanism
Government policies,
such as fiscal, monetary,
exchange rates, etc.
Level of
Governmen
t Spending
Labour
Policies

Economic Factors
Role of
the
Regulator
Avenues for
Capital
Creation
Business
Cycles
Incentives for
Exports
Cost of
Energy
Energy
Availability

Economic Factors
Type of the
Instruments
Nature of
the
Investors
Size of
the
Capital
Market
Health
and
Safety law
Taxation
international
trade

The ‘Social Factors’ studied under
PEST Analysis help to find what
competitive advantage a business
may gain by social changes.
Social Factors
PT
S E
PEST
Analysis
S
Social Factors

Social Factors
The social and cultural influences
on business vary from country to
country.
It is very important that such
factors are considered to
understand the socio-cultural
environment of the country in
which the business has to
prosper.

Social Factors
Aging
population trend
Birth rate
increase
Security
condition
Demographics
Pressure groups, such as
environmental groups, local
community groups, etc.
Distribution
of Income

Social Factors
Social
Mobility
Life Style
Changes
Consumerism
Division and Attitudes to
work and leisure of
population - Male / Female
Educational
Levels
Dominant
religion

Social Factors
Reach of the
media to the
population
Attitudes to foreign
products and
services
Fashion
and
Fads
Age Group of
the
Population
Health
and
Welfare
Joint living
and nuclear
families

Social Factors
Roles of men
and women
within society
Living
conditions
Opinion of
population on
green issues

The ‘Technological Factors’ studied
under PEST Analysis help to find
how new technologies might affect
the business activities.
Technological Factors
PT
S E
PEST
Analysis
T

Technology is vital for
competitive advantage, and is a
major driver of globalization.
Technological changes can have
several effects on a business such
as a replacement of the product
by new products or a change in
its production methods due to
the current production method
becoming obsolete or old.

The
development of
IT
The wide use
of Internet
New Discoveries
& Innovations
The rate of
technological
change
The creation of new
materials for production
Advantage of
Technological
Updates

Speed & Cost of
Technology
Transfer
Innovative
products
and services
Change in
distribution by new
technologies
Prospect of better quality
and cheaper products
Offer of a new way
to communicate with
consumers
Changes in
physical
sciences

Energy use and
costs
Government
spending on
research
Internet
Government and
Industry focus on
technology

Objective
Example text
example text.
Learning Objectives

Other Factors
Apart from the Political, Economic, Social and Technological
factors, there are various other external factors that can be included
in a PEST Analysis.
Some of the other factors that affect a business are:
Insurance
System
Communicatio
n
Banking
System
Infra
Structure
Regulatory
System
Transportation
Legal
Factors

Other Factors
Internationa
l trade
barriers
Employment
law
Health and
Safety
Other
regulations
Strength of
the rule of
law
Taxation both
corporate and
consumer
Environment
al Factors
Other

Objective
Example text
example text.
Learning Objectives
Describe the steps to Conduct a Good PEST AnalysisDescribe the steps to Conduct a Good PEST Analysis

How to Conduct a Good PEST Analysis
You have seen that PEST analysis involves
looking at four perspectives, political,
economic, social and technological to provide
a logical structure and clear presentation for
discussions and proactive decision-makings.
Hence, in
conducting a good
PEST Analysis, it is
crucial that the
subject of the PEST
Analysis should be
clearly defined.
A clear subject is
crucial so that
people, contributing
to the analysis, and
those interpreting
the results from
PEST analysis,
could understand
the purpose of the
PEST assessment
and its implications.

The subject should clearly define which type of the market is being addressed,
such as:
A brand in relation to its market
A company looking at its market
1
2
3
4
5
6
7
8
A product looking at its market
A potential partnership
A local business unit
A strategic option, such as
entering a new market or
launching a new product
A potential acquisition
An investment opportunity
1

Step 1:
Brainstorm the
relevant factors
that apply to the
company or to its
business
environment.
Step 2:
Identify the
information
that applies to
the relevant
factors.
Step 3:
Draw
conclusions
from the
identified
information. It
is, important
not only to
describe
factors, but to
think what they
mean and how
they impact the
business.
Step 4:
Conduct the
PEST analysis by
considering
each PEST
factor (Political,
Economic,
Social, and
Technological)
as they all play
a part in
determining the
overall business
environment.
Step 5:
Identify the key
trends against
each PEST
factor
Step 6:
Analyze the
potential each
trend has to
affect or disrupt
the way the
company does
business.
Step 7:
Determine how
and how much
the factors that
the firm picks
out influence
the nature of
competition.
The following are the steps for conducting a good PEST Analysis:

Finding Information for PEST Analysis
To conduct a good PEST Analysis, it
is important to understand what kind
of environment the company may
compete in the near future. Thus, it
requires understanding of the forces
that will shape the change.
Information for PEST analysis can be
collected from various secondary
data source of current events and
projected future trends.

Finding Information for PEST Analysis
You can use the following resources to find information for PEST
Analysis:
Industry Analysts
Financial Analysts
Periodicals
Analyst Reports
Government Agencies
Trade Organizations
Current Books
Newspapers

Objective
Example text
example text.
Learning Objectives

Key Points to Remember for PEST
Analysis
Some of the key points to keep in mind while conducting a PEST
Analysis are:
• Avoid trying to conduct a single analysis that tries to cover
the entire history of a firm and an industry.
• Keep the analysis of past developments separate from that
of the present situation and future trends.
• While analyzing PEST factors in the present, make it clear
why the present is different from the past, and how the
industry may need to change.
• Do not worry a lot about whether a particular item is
political, economic, social and technological in nature.
• Keep in mind that many important factors go past the
simple PEST categories.
• It is allowed to leave some categories empty while using a
checklist in PEST rather than trying to find factors that do
not exist.
• Remember that the factors that influence a business the
most depends upon the type of business. Hence, for some
manufacturing and service businesses the most powerful
force will be customers; for others it may be competition.

Case Study
XLS Inc. is a pioneer of baby
healthcare products. It has had
a strong market presence and
has carved a niche for itself in
the baby products market in
North America and Europe.
After successful business
operations for over three
decades, the new President
(Operations) has decided that
XLS Inc. should venture into
new markets. He is looking at
expanding the business in the
Asian market including
countries like India, China,
Japan, etc.
1. Conduct a brief PEST
Analysis for XLS Inc.
Include all the major
trends that would affect
the decision to venture
into the Asian Market
for XLS Inc. with respect
to the four PEST factors.
2. Which of the four PEST
factors, do you think,
will have the maximum
influence for deciding
the new marketing
strategy for venturing
into Asian Market for
XLS Inc.?

Summary
In this module you learnt that:
PEST analysis is a business analysis model.
PEST Analysis examines the external environment and the global factors that may
affect a business. It helps to provide a quick understanding of the external pressures
facing a business and their possible constraints on its strategy.
PEST analysis is also known as: STEP, PESTEL, PESTLE, PESTE, PESTLIED, SLEPT,
STEEPLE, STEEPLED, LE PEST C and LEPEST analysis.
PEST stands for and analyses the four external influences on a business:
• Political Factors
• Economic Factors
• Social Factors
• Technological Factors
PEST Analysis can be performed and is relevant for any type of business whether
large, small or medium.

Marketing Management - Basics Level Two

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