It is often felt that one cannot afford the luxury of planning in companies these days, because of the inherent uncertainties. Yet, the very vagaries of the marketplace mean that it is useful to have some kind of a blueprint as to where we are headed.
No document so completely captures the business intentions of a company or product as does the annual marketing plan. When written down, it forms not just a reference for the whole year for the people concerned, but also an action document that helps keeps one’s efforts focussed in the right direction. Formally written and approved plans for each brand have been a long standing practice in multinational companies such as Unilever for nearly half-a-century. It is of more recent origin in other businesses, especially intermediate and industrial products. The main reasons for the delayed adoption of this tool of management is the decades of limited supplies and low levels of competition and customer choice that prevailed till the last decade. The advent of international players and the emergence of open markets worldwide have now made it imperative that companies formalise this plan and revise it every year.
Typically, the plan is closely linked with the annual budgeting cycle. Certainly, the top line cannot be any different from the turnover value target for the coming year. It is therefore customary for the plan to be prepared towards the end of the calendar year, for the next fiscal year.
It is often felt that one cannot afford the luxury of planning in companies these days, because of the inherent uncertainties. All businesses are linked, in some way, with the imponderables of the world commodity prices and currency markets, which can impact both sales and margins. Yet, the very vagaries of the marketplace mean that it is useful to have some kind of a blueprint as to where we are headed. It can help, above all, to integrate the various points of view about the business and the way it ought to be run, which are bound to exist in the different functional departments of the company. In this respect, a well-thought through marketing plan is a huge blessing to managers. Of course, the plan can be for the whole company or a division, but the important aspect is the relevance to the marketplace.
Where does one begin? Naturally the opening sentences should deal with the starting point of the plan — the goal setting process. However, it goes a little bit further than ambitious thrusts and man-on-the moon kind of mission statements. Immediately upon setting out the overall growth in the top line, the core question of the plan is tackled: where will the growth come from?
In my view, no question is more important in planning than this one. The greater depth there is in the depth to this discussion within the company, the better prepared it will be to face the future confidently. Every function can contribute to this answer. In the main, the issue is how much we depend on the current products being sold to current consumers — more of the same, and to what extent we propose to break away into other territories and new product or service offerings. Which segments are we strong in, where are we weak? The definition of segments, as always, ought to be in terms relevant to the particular market and its consumers. A segment can be geographic (say, the Northern region), demographic (younger users) or client groups in the case of services (newcomers to the market) or organisations in the case of industrial products (multinational companies, utilities, public sector) and so on.
Each year’s plan has a major emphasis that says, for example, ‘this year we shall try very hard to win back the initiative in a particular customer or segment’. Or, it could be that one might want to trim the customer list and cut out some very unproductive ones that do not contribute to the profits and take up a lot of management time. The approach to the plan for the year should obviously reflect these priorities. This assumes, of course, that the planners have assimilated all the knowledge of where the market is heading during the current year so that the objectives for sailing in the coming year are set with the favourable wind direction in mind.
As will be apparent, a marketing plan cannot exist in isolation. Nor can it be prepared solely by those who have the adjective marketing in their designation. Many minds are involved. To begin with, there is the link to the current year’s performance. Then there are obvious dependencies and links to several other functions and departments of the business. Manufacturing might chip in with some limits on what can be produced in a week or a single shift, time it takes to change over a line from one model to another. Cost accounting provides the vital information on what it takes to produce one unit of each SKU (stock keeping unit) and the contribution after the direct or variable costs — which can be very useful in product-wise and model-wise pricing, and therefore determine the volumes that can be sold. Similarly, the human resources and vendor management functions have a part in determining the availability of people and material and so on. So it is clear that a marketing plan is, in fact, almost a business plan. No wonder famous authorities such as Peter Drucker have practically equated marketing with business.
In the next article, we shall see the elements of the marketing plan.