The Lehmann and Winer article contains an outline of a Marketing Plan. Other examples of Marketing Plans will be distributed in class. One of your key responsibilities as a product or brand manager will be to draft a Marketing Plan. Typically these documents are based on years of data and analysis and run 30 pages or more, plus exhibits. The objective of the plan is to architect a strategy to build brands (thus creating profits), and to provide a vehicle for others in the firm to have input into that strategy.

Note that your marketing core lecture notes could be an invaluable asset in the construction of the marketing plan, so you may desire to retrieve them from the dust mill!

The marketing planning outline below is an adapted form of the Lehmann and Winer outline that is abridged to reflect the information available in the PharmaSim simulation. Chapter 4 of the PharmaSim manual details the information available to the marketing planner in the PharmaSim world.

The Marketing Plan

Your marketing plan will consist of six key sections:

1. Executive Summary
2. Situation Analysis
3. Marketing Objectives
4. Marketing Strategy and Programs
5. Financial Documents
6. Monitors and Controls

As noted in Lehmann and Winer, senior management will have scores of plans to review. How well yours fares depends upon whether or not you can engage their interests in less than a page. If the financials look good, the strategy is sound, and the fit with other businesses is strong, you have a winner.

Although this is the first section, it is always written last. It is a topline summary of all items that follow.

Although Lehmann and Winer list an exhaustive array of items to consider, our Pharmasim world is more focused than the real world. Accordingly, the situation analysis you will draft is somewhat more manageable. It consists of the following sections:

Overall Category Analysis Here you will review the relevant trends affecting your brand and the category. These might indicate the category is stagnant or, alternatively, a great opportunity. You should include

1. market trends (current and future size of the market, overall category penetration and usage, changes in share, growth rate of population and sales, etc.);
2. category marketing activity (distribution channels, pricing across channels, how brands in general are marketed);
3. sales, price, and cost data on one’s own products (variable and fixed costs and their impact on your pricing);
4. environmental factors (number of persons getting ill, seasonality issues, inflation, manufacturing and product technology changes, regulatory issues, etc.)
5. Porter’s five forces (e.g., new-product entry prospects, rivalry, power of suppliers and customers, threat of substitutes)

Sales Analysis The sales analysis is an assessment of the brand’s performance to date – an opportunity to evaluate your historic performance. A sales analysis might reveal, for analysis, that California sales are down (indicating, perhaps, a new competitor). You should address questions such as

1. how well is your brand performing vis a vis other brands in the company
2. sales costs and profit trends for your products; break even analysis
3. how well your distributors are performing (sales, margins, marketing support)
4. break down of performance by segment, product, channel, etc.

Competitors By analyzing competitors, it is often possible to exploit there weaknesses or anticipate potential problems (e.g., a merger leads to new resources for a competitor). For each key competitor, consider

1. their share, product attributes, financial resources, production capabilities, marketing programs
2. their strengths and weaknesses relative to your own firm
3. likely future strategies

Customers An analysis of customers is perhaps the most important aspect of the marketing plan. One might learn of impending problems such as a shift of sales to the web or opportunities such as new features. Things to consider in your analysis of customers include:

1. who are the customers?
2. do they differ? can they be segmented by their needs or purchase behaviors? how do the segments differ?
3. why do customers need the product?
4. how do they choose?
5. are they aware of the brand, how do they perceive it, have they tried it, and are they loyal?
6. where and when do they buy?
7. who influences the buyer?
8. summarize the customer analysis

Company An analysis of an organization’s ability to market products can also help in assessing the factors impeding or abetting a product’s success. For example, a company may have no distribution network or may market products that overlap. Things to consider include:

1. marketing organizational design and responsibilities (optional)
2. fit of existing and planned products and services to manufacturing capabilities, managerial expertise, distribution channels, marketing capabilities, etc.
3. financial resources

Planning Assumptions This section formalizes assumptions that you need to make for purposes of writing the subsequent sections of the marketing plan. If the strategy is highly sensitive to these assumptions, then your plan may include more market research.

Summary It is important to note that it is not sufficient to merely restate the key situational factors affecting your brands (although that is important). Rather, you need to flush out the implications (this trend could hurt product x) and the opportunities that arise (e.g., a new formulation could be introduced). What was learned from the situation analysis. Which factors have the greatest impact and why?

The situation analysis and summary should highlight a number of planning objectives. These will include i) quantity (sales, share, and profit by segment), ii) direction (e.g., increase/decrease), iii) time frame, and iv) rationale. The objectives should be specific and measurable (e.g., increase share from 25% to 30% within one year). Your performance will, in part, be measured by these objectives. One note of "real world" caution: if objectives are too ambitious, you will fail to meet them and will not make bonus, or worse. In contrast, if objectives look too unambitious, it is unlikely any resources will be forthcoming. This, too, can hurt your performance.

Given the objectives, the marketing strategy outlines how the objectives will be achieved. For example, sales might be increased by increasing the awareness (which was found in the situation analysis to be exceedingly low relative to competitors). Another strategy to increase sales might be targeting a new segment that has not yet been captured, or stealing a certain competitor’s share. The section commences with a brief list of these alternatives and a concludes with a rationale for selecting a set of these strategies.

It is imperative that the marketing programs (the 4P’s) be consistent with the objectives and the ensuing strategy along two dimensions. First, if one’s strategy is to increase awareness, it is not clear how a price cut will accomplish this. Thus, the marketing program for this strategy should center around promotion. Second, if one’s goal is to increase share from 10% to 20%, the marketing program should provide some sense of how this level of share increase will be achieved. The marketing program discussion should include:

1. pricing (MSRP, discounts)
2. advertising (media expenditures, message, agency)
3. promotion (trade v. consumer, allowances, etc.)
4. distribution (channels to target, use of wholesalers)
5. sales (budget, allocation)
6. product (add products, delete products, change products)
7. service and support
8. market research
9. affordability of these programs
10. organizational design necessary to implement new strategies (optional)
11. likely competitive reaction

The financial section of the document is generally of the greatest interest to senior management and also reflects your "performance contract" with the firm. Be sure of the analysis – it will come back to haunt you if things do not work according to plan. But meeting the financial commitments year after year will have you quickly ascending the corporate ladder as a proven winner. In the end, it is all about the stock price of the firm, and that is directly reflected by the sum of the contributions of the various marketing managers in the firm. Some interpretation of these figures is also desirable (e.g., what especially will help or hurt earnings). PharmaSim manages much of this information for you and includes

1. income statements
2. product contribution statements

Plans often go awry. Accordingly, the prudent product manager constantly monitors progress against plan. It is my experience that damage control is best begun early, before problems spin out of control (remember the rogue trader Nick Leeson in Singapore who bankrupted the venerable Barings Bank! Thus, decide early what figures you will monitor and have back up plans ready in case things are not proceeding according to plan. Note, you can also learn from things that went better than plan. Decide whether to monitor:

1. sales information
2. market share
3. net income, etc.

List, also, any contingent plans that you might have, or at least a process that you will engage if things do not go according to plan (who should know, what new planning should be done, what information should be gathered, etc.)

After the PharmaSim is done, it will be useful to conduct a brief "post-mortem" and outline what you learned and what you would do differently if you had the benefit of full hindsight.

You will hand these sections in phases.

IMPORTANT: You are also to hand in a copy of your PHARMASIM diskettes with Assignments 1 and 2. With Assignment 1, please turn in a copy of your diskette with decisions made for at least periods 1 - 2. With Assignment 2, please turn in a copy of your disk with all of the decisions made through period 3-8. With the last assignment, there is no need to turn in your disk. Please ensure that all of your email addresses are listed on the diskette!

As noted above, one of your key responsibilities in product management is to draft a marketing plan that will enable you to build your brand. This assignment is the only opportunity you have at Fuqua to gain practice in this important exercise. Thus, I believe this will be a very beneficial assignment to you. Please note that this assignment is merely an introduction to marketing planning, many detailed books on the subject are available at Amazon.com (search under Marketing Plan).