APPENDIX ::: SONIC MARKETING PLAN EXERCISES. The Marketing Plan: An Introduction. The Role of Relationships

APPENDIX ::: SONIC MARKETING PLAN EXERCISES The Marketing Plan: An Introduction As a marketer, you’ll need a good marketing plan to provide direction ...
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APPENDIX ::: SONIC MARKETING PLAN EXERCISES The Marketing Plan: An Introduction As a marketer, you’ll need a good marketing plan to provide direction and focus for your brand, product, or company. With a detailed plan, any business will be better prepared to launch a new product or build sales for existing products. Nonprofit organizations also use marketing plans to guide their fundraising and outreach efforts. Even government agencies put together marketing plans for initiatives such as building public awareness of proper nutrition and stimulating area tourism.

The Purpose and Content of a Marketing Plan Unlike a business plan, which offers a broad overview of the entire organization’s mission, objectives, strategy, and resource allocation, a marketing plan has a more limited scope. It spells out how the organization’s strategic objectives will be achieved through specific marketing strategies and tactics, with the customer as the starting point. It is also linked to the plans of other departments within the organization. Suppose a marketing plan calls for selling 200,000 units annually. The production department must gear up to make that many units, the finance department must have funding available to cover the expenses, the human resources department must be ready to hire and train staff, and so on. Without the appropriate level of organizational support and resources, no marketing plan can succeed. Although the exact length and layout will vary from company to company, a marketing plan usually contains the sections described in Chapter 2. Smaller businesses may create shorter or less formal marketing plans, whereas corporations frequently require highly structured marketing plans. But to ensure correct implementation, every part of the plan must be described in considerable detail. Sometimes a company will post its marketing plan on an internal Web site, which allows managers and employees in different locations to consult specific sections and collaborate on additions or changes.

The Role of Research To develop successful strategies and action programs, marketers need up-to-date information about the environment, the competition, and the market segments to be served. Often, analysis of internal data is the starting point for assessing the current marketing situation, supplemented by marketing intelligence and research investigating the overall market, the competition, key issues, and threats and opportunities. As the plan is put into effect, marketers use advertising and other forms of

research to measure progress toward objectives and identify areas for improvement if results fall short of projections. Finally, marketers use marketing research to learn more about their customers’ requirements, expectations, perceptions, and satisfaction levels. This deeper understanding provides a foundation for building competitive advantage through well-informed segmenting, targeting, and positioning decisions. Thus, the marketing plan should outline what marketing research will be conducted and how the findings will be applied.

The Role of Relationships The marketing plan shows how the company will establish and maintain profitable customer relationships. In the process, however, it also shapes a number of internal and external relationships. First, it affects how marketing personnel work with one another and with other departments to deliver value and satisfy customers. Second, it affects how the company works with suppliers, distributors, and strategic alliance partners to achieve the objectives listed in the plan. Third, it influences the company’s dealings with other stakeholders, including government regulators, the media, and the community at large. All these relationships are important to the organization’s success.

From Marketing Plan to Marketing Action Companies generally create yearly marketing plans, although some plans cover a longer period. Marketers start planning well in advance of the implementation date to allow time for marketing research, thorough analysis, management review, and coordination between departments. Then, after each action program begins, marketers monitor ongoing results, compare them with projections, analyze any differences, and take corrective steps. Because of inevitable and sometimes unpredictable environmental changes, marketers must be ready to update and adapt marketing plans at any time. Some marketers also design contingency plans. For effective implementation and control, the marketing plan should define how progress toward objectives will be measured. Managers typically use budgets, schedules, and performance standards for monitoring and evaluating results. With budgets, they can compare planned expenditures with actual expenditures for a given week, month, or other period. Schedules allow management to see when tasks were supposed to be completed—and when they were actually completed. Performance standards track the outcomes of marketing programs to see whether the company is moving toward its objectives. Some examples of performance standards are: market share, sales volume, product profitability, and customer satisfaction.

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APPENDIX

Sonic Marketing Plan Exercises

Sample Marketing Plan for Sonic This section takes you inside the sample marketing plan for Sonic, a hypothetical start-up company. The company’s first product is the Sonic 1000, a multifunction personal digital assistant (PDA), also known as a handheld computer. Sonic will be competing with palmOne, Hewlett-Packard, and other well-established rivals. The annotations explain more about what each section of the plan should contain.

1.0 Executive Summary

The Executive Summary is for senior managers who must review and approve the marketing plan. The Executive Summary is an overview of the market opportunity and strategy for meeting needs of targeted market segments. The Executive Summary includes marketing and financial objectives and expected results.

Sonic is preparing to launch a PDA product, the Sonic 1000, in a maturing market. Despite the dominance of PDA leader palmOne, we can compete because our offering combines exclusive features at a value-added price. We are targeting specific segments in consumer and business markets, taking advantage of opportunities indicated by demand for easy-touse, wireless-enabled PDAs with expanded communications functionality. The primary marketing objectives of this plan are to achieve first-year U.S. market share of 3 percent and unit sales of 240,000. The primary financial objectives are to achieve firstyear sales revenues of $60 million, keep first-year losses to less than $10 million, and break even early in the second year.

2.0 Situation Analysis

The Situation Analysis focuses on market definition and the current capability of the company to serve the market.

Sonic, founded 18 months ago by two entrepreneurs with experience in the PC market, is about to enter the PDA market dominated by palmOne. Overall PDA sales have slowed and profitability has suffered. The emergence of multifunction PDAs and advanced cell phones has increased competitive pressures. Estimated market size for multifunction PDAs and cell phones is $63.7 billion, with 50% growth expected within 4 years. To gain market share in this environment, Sonic must carefully target specific market segments.

Market Summary includes size, needs, growth, and trends.

2.1 MARKET SUMMARY Sonic’s market consists of consumers and business users who need to conveniently store, communicate, and exchange information on the go. Segments being targeted during the first year include professionals, students, corporations, entrepreneurs, and medical users. Exhibit 1 shows how the Sonic 1000 addresses the needs of targeted consumer and business segments. PDA purchasers can choose between models based on two different operating systems created by Palm and Microsoft. Sonic licenses the market-dominant Palm system because thousands of software applications and hardware peripherals are compatible with this sys-

Description of targeted segments provides context for the marketing strategies and action programs discussed later in the plan.

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EXHIBIT 1

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Needs and Corresponding Features/Benefits of Sonic PDA

Targeted Segment

Customer Need

Corresponding Feature/Benefit

Professionals (consumer market)

■ Stay in touch while on the go

■ Wireless e-mail to conveniently send and receive messages

Students (consumer market)

from anywhere; cell phone capability for voice communication from anywhere ■ Record information while on the go

■ Voice recognition for no-hands recording

■ Perform many functions without

■ Compatible with numerous applications and peripherals

carrying multiple gadgets ■ Express style and individuality

for convenient, cost-effective functionality ■ Case wardrobe of different colours and patterns allows

users to make a fashion statement Corporate users (business market)

■ Input and access critical data on the go

■ Compatible with widely available software

■ Use for proprietary tasks

■ Customizable to fit diverse corporate tasks and networks

Entrepreneurs (business market)

■ Organize and access contacts, schedule

■ No-hands, wireless access to calendar and address book

Medical users (business market)

■ Update, access, and exchange medical

details records

to easily check appointments and connect with contacts ■ No-hands, wireless recording and exchange of information

to reduce paperwork and increase productivity

APPENDIX

Sonic Marketing Plan Exercises

tem. Product proliferation and increased competition have resulted in lower prices and lower profit margins. Lower prices are helping sales of PDAs in the lower end of the consumer market, but at the expense of gross margins. Customers with first-generation PDAs are reentering the market by buying newer, high-end multifunction units. 2.2 STRENGTHS, WEAKNESSES, OPPORTUNITIES, AND THREAT (SWOT) ANALYSIS Sonic has several powerful strengths on which to build, but our major weakness is lack of brand awareness and image. The major opportunity is growing demand for multifunction PDAs that deliver communication-specific benefits. We also face the threat of ever-greater competition and downward pressure on pricing. Strengths Sonic can build on three important strengths: 1. Innovative product. Sonic 1000 includes a voice recognition system that simplifies usage and allows hands-free operation. It also offers features such as built-in cell phone functionality, wireless communication, and MP3 capabilities. 2. Compatibility. Our PDA can work with the hundreds of Palm-compatible peripherals and applications currently available. 3. Pricing. Our product is priced lower than competing multifunction models—all of which lack voice recognition—which gives us an edge with price-conscious customers. Weaknesses By waiting to enter the PDA market until the initial shakeout and consolidation of competitors has occurred, Sonic has learned from the successes and mistakes of others. Nonetheless, we have two main weaknesses:

Market trends must be considered as the company develops its marketing strategies.

Strengths are internal capabilities that can help the company reach its objectives.

Weaknesses are internal elements that may interfere with the company’s ability to achieve its objectives.

1. Lack of brand awareness. Sonic has not yet established a brand or image in the marketplace, whereas palmOne and other rivals have strong brand recognition. This is an area we will address with promotion. 2. Heavier weight. To accommodate the multifunction features, the Sonic 1000 is slightly heavier than most competing models. To counteract this, we will emphasize our multifunction features and value-added pricing, two important competitive strengths. Opportunities Sonic can take advantage of three major market opportunities: 1. Increasing demand for multiple communication methods. The market for wireless Web-enabled PDAs with cell phone functionality is projected to grow faster than the market for nonwireless models. There are more users with PDAs in work and educational settings, which is boosting primary demand. Also, customers who bought entry-level models are now trading up. 2. Add-on peripherals. More peripherals, such as digital cameras and global positioning systems, are available for the Palm operating system. Consumers and business users who are interested in any of these peripherals will see the Sonic 1000 as a value-priced device able to be conveniently and quickly expanded for multiple functions. 3. Diverse applications. The wide range of Palm-compatible software applications available for home and business use allows the Sonic PDA to satisfy communication and information needs. Threats We face three main threats at the introduction of the Sonic 1000: 1. Increased competition. More companies are entering the U.S. PDA market with models that offer some but not all of the features and benefits provided by Sonic’s PDA. Therefore, Sonic’s marketing communications must stress our clear differentiation and value-added pricing. 2. Downward pressure on pricing. Increased competition and market-share strategies are pushing PDA prices down. Still, our objective of seeking a 10% profit on second-year sales of the original model is realistic, given the lower margins in the PDA market. 3. Compressed product life cycle. PDAs seem to be reaching the maturity stage of their life cycle more quickly than earlier technology products. We have contingency plans to keep sales growing by adding new features, targeting additional segments, and adjusting prices.

Opportunities are areas of buyer need or potential interest in which the company might perform profitably.

Threats are challenges posed by an unfavourable trend or development that could lead to lower sales and profits.

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Competition identifies key competitors, describes their market positions, and provides an overview of their strategies.

2.3 COMPETITION Increased entry of established computer and cell phone companies has pressured industry participants to continually add features and cut prices. Competition from specialized devices for text and e-mail messaging, such as Blackberry devices, is also a factor. Key competitors: ■ palmOne has had financial struggles because of the need to reduce prices for competitive reasons. Its acquisition of Handspring boosted its product development strength and expanded its product mix. As the best-known maker of PDAs, palmOne has achieved distribution in nearly every channel, including distribution by U.S. cell phone service carriers. At present, palmOne products lack some of the voice recognition software standard in the Sonic 1000.

Hewlett-Packard targets business markets with its iPAQ Pocket PC devices, many with wireless capabilities to accommodate corporate users. For extra security, one model allows access by fingerprint match as well as by password. HP enjoys excellent distribution, and its products are priced from below $300 to more than $600.



Garmin’s iQue 3600 was the first PDA with built-in global position system (GPS) capability. Priced at $589, its mapping software and verbal commands eliminate the need for an automotive device. Garmin’s PDA uses the Palm operating system and has other unique functions, such as a digital voice recorder for brief memos.



Dell’s PDA model is priced starting at $199. However, this product is larger than competing palmOne products, and it lacks wireless functionality as a standard feature. New, slimmer models are expected at regular intervals from this low-cost competitor, which markets directly to customers.



Samsung is one of several manufacturers that have married cell phone capabilities with multifunction PDA features. Its i500 uses the Palm operating system, provides speedy e-mail and MP3 downloads, plays video clips, and offers PDA functions such as address book, calendar, and speed dial.



Despite strong competition, Sonic can carve out a definite image and gain recognition among targeted segments. Our licensing arrangement with Cellport Systems allows us to provide the exclusive feature of voice recognition for hands-off operation, a critical point of differentiation for competitive advantage. Exhibit 2 shows a selection of competitive PDA products and prices. Product Offering summarizes main features of the company’s products.

| EXHIBIT 2 |

2.4 PRODUCT OFFERING The Sonic PDA 1000 offers the following standard features: ■

Voice recognition for hands-free commands and communication



Built-in cell phone functionality



Wireless Web access and e-mail capabilities



MP3 music downloading and player capabilities



Full organization and communication functions, including calendar, address book, memo pad, Internet browser, e-mail program, and text and instant messaging programs



Connectors to accommodate all palmOne-compatible peripherals

Selected PDA Products and Pricing

Competitor Model

Features

PalmOne

Tungsten C

PDA functions, wireless capabilities, colour screen, tiny keyboard, wireless capabilities

palmOne

M130

PDA functions, colour screen, expandable functionality

Handspring Treo 270

PDA and cell phone functions, colour screen, tiny keyboard, speakerphone capabilities; no expansion slot

Samsung

i500

PDA functions, cell phone functions, MP3 player, colour screen, video capabilities

Garmin

iQue 3600

PDA functions, global positioning system technology, voice recorder, expansion slot, MP3 player

Dell

Axim X5

PDA functions, colour screen, e-mail capable, voice recorder, speaker, expandable

Sony

Clie PEG-NX73V

PDA functions, digital camera, tiny keyboard, games, presentation software, MP3 player, voice recorder

Price $499 $199 $499 $599 $589 $199 $499

APPENDIX



Ability to run any palmOne-compatible application



Large colour display



Keyboard for input



Cradle for synchronizing data with PC



Interchangeable case wardrobe of different colours and patterns

Sonic Marketing Plan Exercises

First-year sales revenues are projected at $60 million, based on sales of 240,000 Sonic 1000 units at a wholesale price of $250 each. During the second year, we plan to introduce the Sonic 2000 as a higher-end product with the following standard features: ■

Global positioning system (GPS) for identifying locations, obtaining directions



Built-in digital camera

Translation capabilities to send English text as Spanish text (other languages to be offered as add-on options)



2.5 DISTRIBUTION Sonic-branded products will be distributed through a network of select store and nonstore retailers in the top 50 U.S. markets. Among the most important channel partners being contacted are:

Distribution describes each channel used by the company for this product and mentions new developments and trends.

■ Office supply superstores. Office Depot and Staples will both carry Sonic products in stores, in catalogues, and on Web sites. ■

Computer stores. Gateway stores will carry Sonic products.



Electronic specialty stores. Circuit City and Best Buy will carry Sonic PDAs.

■ Online retailers. Amazon.com will carry Sonic PDAs and, for a promotional fee, will give Sonic prominent placement on its home page during the introduction.

Distribution will initially be restricted to the United States. We plan to expand into Canada and beyond. We will emphasize trade sales promotion in the first year.

3.0 Marketing Strategy 3.1 OBJECTIVES We have set aggressive but achievable objectives for the first and second years of market entry. First-year Objectives We are aiming for a 3 percent share of the U.S. PDA market through unit sales volume of 240,000.



The marketing and financial objectives should be defined in specific terms so management can measure progress and take corrective action to stay on track.

■ Second-year Objectives Our second-year objectives are to achieve a 6 percent share based on sales of two models and to achieve break-even early in this period.

An important objective will be to establish a well-regarded brand name linked to a meaningful positioning. We will have to invest heavily in marketing to create a memorable and distinctive brand image projecting innovation, quality, and value. We also must measure awareness and response so we can adjust our marketing efforts if necessary.

This section describes issues that might affect the company’s marketing strategy and implementation.

3.2 TARGET MARKETS Sonic’s marketing strategy is based on a positioning of product differentiation. Our primary consumer target is middle- to upper-income professionals who need one portable device to coordinate their busy schedules and communicate with family and colleagues. Our secondary consumer target is high school, college, and graduate students who need a multifunction device. This segment can be described by age (16–30) and education. Our primary business target is mid- to large-sized corporations that want to help their managers and employees stay in touch and input or access critical data on the go. This segment consists of companies with more than $25 million in annual sales and more than 100 employees. A secondary business target is entrepreneurs and small-business owners. We are also targeting medical users who want to reduce paperwork and update or access patients’ medical records.

All marketing strategies start with Segmentation, Targeting and Positioning.

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Target segments must be defined before positioning can be done, since positioning requires identification of competitive positions available to the company as potential points of difference. Positioning identifies the brand, customer benefits, and point(s) of difference and parity for this product or product line. Product Strategy calls for coordinated decisions on product mixes, product lines, brands, packaging and labelling, and warranties.

Pricing strategy includes policy, objectives, and action programs to set initial prices and for adapting prices in response to opportunities and challenges from competitors. Distribution strategy includes selection and management of channel relationships required to deliver value to customers.

Marketing Communications strategy includes management of all efforts to communicate value to customers, potential customers, and channel members.

The marketing mix includes the tactics and programs that support each marketing strategy. These programs should be specific and measurable, with a name, a responsible person, milestone dates, and a budget. Programs should be coordinated with the resources and activities of other departments that contribute to the creation, delivery, or communication of customer value for this product.

Each of the four marketing-mix strategies conveys Sonic’s differentiation to the target market segments identified above. 3.3 POSITIONING Using product differentiation, we are positioning the Sonic PDA as the most versatile, convenient, value-added model for personal and professional use. The marketing strategy will focus on the voice-recognition system as the main feature differentiating the Sonic 1000. 3.4 STRATEGIES Marketing strategies need to be broken down into strategies in specific areas such as product, pricing, distribution, and marketing communications. Product The Sonic 1000, including all the features described in the Product Review section, will be sold with a one-year warranty. We will introduce a more compact, more powerful high-end model (the Sonic 2000) during the following year, with GPS functionality and other features. Building the Sonic brand is an integral part of our product strategy. The brand and logo (Sonic’s distinctive yellow thunderbolt) will be displayed on the product and packaging, and reinforced by its prominence in the introductory marketing campaign. Pricing The Sonic 1000 will be introduced at $250 wholesale, $350 estimated retail price per unit. We expect to lower the price of this first model when we expand the product line by launching the Sonic 2000, to be priced at $350 wholesale per unit. These prices reflect a strategy of (1) attracting desirable channel partners and (2) taking market share from palmOne. Distribution Our channel strategy is to use selective distribution to have Sonic PDAs sold through well-known stores and online retailers. During the first year, we will add channel partners until we have coverage in all major U.S. markets and the product is included in the major electronics catalogues and Web sites. We will also investigate distribution through cellphone outlets maintained by major carriers such as Cingular Wireless. In support of our channel partners, Sonic will provide demonstration products, detailed specification handouts, and full-colour photos and displays featuring the product. We will also arrange special trade terms for retailers that place volume orders. Marketing Communications By integrating all messages in all media, we will reinforce the brand name and the main points of product differentiation, especially our exclusive voice-recognition feature. Research about media consumption patterns will help our advertising agency choose appropriate media and timing to reach prospects before and during product introduction. Thereafter, advertising will appear on a pulsing basis to maintain brand awareness and communicate various differentiation messages. The agency will also coordinate public relations efforts to build the Sonic brand and support the differentiation message. To attract market attention and encourage purchasing, we will offer as a limitedtime premium a leather carry-case. To attract, retain, and motivate channel partners for a push strategy, we will use trade sales promotions and personal selling to channel partners. Until the Sonic brand has been established, our communications will encourage purchases through channel partners rather than from our Web site. 3.5 MARKETING MIX The Sonic 1000 will be introduced in February. Here are summaries of action programs we will use during the first six months to achieve our stated objectives. January We will initiate a $200,000 trade sales promotion campaign to educate dealers and generate excitement for the product launch in February. We will exhibit at the major consumer electronics trade shows and provide samples to selected product reviewers, opinion leaders, and celebrities as part of our public relations strategy. Our training staff will work with sales personnel at major retail chains to explain the Sonic 1000’s features, benefits, and competitive advantages.



February We will start an integrated print/radio/Internet campaign targeting professionals and consumers. The campaign will show how quickly Sonic PDA users can accomplish tasks using voice recognition. This multimedia campaign will be supported by point-of-sale signage as well as online-only specials.



March As the multimedia advertising campaign continues, we will add consumer sales promotion tactics such as giving away leather carry-cases as a premium. We will also distribute new point-of-purchase displays to support our retailers.



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Sonic Marketing Plan Exercises

April We will hold a trade sales contest offering prizes for the salesperson and retail organization that sells the most Sonic PDAs during the 4-week period.



May We plan to roll out a new national advertising campaign this month. The radio ads will feature celebrity voices using the voice-recognition system to operate their Sonic PDAs. The print ads will show these celebrities holding their Sonic PDAs.



June Our radio campaign will add a new voice-over tag line promoting the Sonic 1000 as a graduation gift. We will also exhibit at the semiannual electronics trade show and provide channel partners with new competitive comparison handouts as a sales aid. In addition, we will tally and analyze results of customer satisfaction surveys for future promotions and to provide feedback for product and marketing activities.



3.6 MARKETING RESEARCH Using research, we will identify specific features and benefits our target market segments value. Feedback from market tests, surveys, and focus groups will help us develop the Sonic 2000. We are also measuring and analyzing customers’ attitudes toward competing brands and products. Brand awareness research will help us determine the effectiveness and efficiency of our messages and media. Finally, we will use customer satisfaction studies to gauge market reaction.

Marketing Research is used to support development, implementation, and evaluation of strategies and action programs.

4.0 Financials Total first-year sales revenue for the Sonic 1000 is projected at $60 million, with an average wholesale price of $250 per unit and variable cost per unit of $150 for unit sales volume of 240,000. We anticipate a first-year loss of up to $10 million. Break-even calculations indicate that Sonic 1000 will become profitable after the sales volume exceeds 267,500, early in the product’s second year. Our breakeven analysis assumes per-unit wholesale revenue of $250 per unit, variable cost of $150 per unit, and estimated first-year fixed costs of $26,750,000. Based on these assumptions, the breakeven calculation is: 26,750,000  267,500 units $250 - $150

5.0 Controls 5.1 IMPLEMENTATION We are planning tight control measures to closely monitor quality and customer service satisfaction. This will enable us to react very quickly in correcting any problems that may occur. Other early warning signals that will be monitored for signs of deviation from the plan include monthly sales (by segment and channel) and monthly expenses. 5.2 MARKETING ORGANIZATION Sonic’s chief marketing officer, Jane Melody, holds overall responsibility for marketing strategy and direction. Exhibit 3 shows the structure of the eightperson marketing organization. Sonic has hired Worldwide Marketing to handle national sales campaigns, trade and consumer sales promotions, and public relations efforts.

Financials include marketing budgets and sales forecasts to plan for expenditures, scheduling, and operations related to each action program. Breakeven Analysis includes estimated revenues, relevant fixed costs, and variable costs for the product for the time period covered by the marketing plan. Controls help management measure results and identify problems or performance variations that need correction.

The Marketing Organization may be organized by function, as in this example, or by product, customer, or some combination of these.

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| EXHIBIT 3 |

Sonic’s Marketing Organization Jane Melody, Chief Marketing Officer

Tony Calella, Sales Manager

Tiffany White, Regional Sales

Amelia Howard, Advertising Manager

Carlos Dunn, Advertising Analyst

Ron Hall, Promotion Manager

Kate McConnell, Promotion Analyst

Viktor Chenkov, Regional Sales Sources: Background information and market data adapted from: Pui-Wing Tam, “Palm Unveils palmOne Name, after Breakup,” Wall Street Journal, August 18, 2003, p. B4; Elaine C.Y. Chen, “Lean, Mean Multimedia Machine,” Laptop, August 2003, p. 20; Michael V. Copeland, Om Malik, and Rafe Needleman, “The Next Big Thing,” Business 2.0, July 2003, pp. 62–69; Steve Hamm, “Tech Comes Out Swinging,” Business Week,June 23, 2003, pp. 62–66; “Dell Rides Wireless Wave,” eWeek, July 7, 2003, http://www.eweek.com; Stephen H. Wildstrom, “Wi-Fi Handhelds? Not for the Footloose,” Business Week, June 16, 2003, p. 24; Bob Brewin, “Palm to Buy Handspring to Bolster Hardware Unit,” Computerworld, June 9, 2003, p. 12; “PDAs with Phones,” PC Magazine, May 6, 2003, p. 108; “Handheld Market Declines in 2002,” Health Management Technology,March 2003, p. 6; Bob Brewin, “Palm Slashes Pricing to Match the Competition,” Computerworld, February 10, 2003, p. 36.

Sonic PDA Marketing Plan Chapter Assignments Chapter 2 Developing Marketing Strategies and Plans Every marketing plan must include the company mission, analysis of strengths, weaknesses, opportunities and threats and state the marketing and financial objectives for the plan period. As shown in the sample marketing plan on pages A1–A7, Sonic is a start-up company that will soon introduce a new multi-function personal digital assistant (PDA) to compete with established products made by Palm, Hewlett Packard, Sony and others. As an assistant to Jane Melody, Sonic’s chief marketing officer, you have been assigned to: ■

Draft a mission statement for Sonic’s senior management to review.



Prepare a summary of strengths, weaknesses, opportunities and threats (SWOTs).

List the marketing and financial objectives the company has for the new PDA being developed by Sonic.



As your instructor directs, enter Sonic’s mission statement, SWOTs, and financial and marketing objectives in a written marketing plan, or type them into the Mission, SWOT, and Objectives sections of Marketing Plan Pro.

Chapter 3 Gathering Information and Scanning the Environment Marketing information systems, marketing intelligence systems, and marketing research systems are used to gather and analyze data for various parts of the marketing plan. These systems help marketers examine changes and trends in markets, competition, customer needs, product usage, and distribution channels. Some changes and trends may turn up evidence of opportunities or threats.

APPENDIX

Sonic Marketing Plan Exercises

Sonic has developed information about the competition and competitive situation, but Jane Melody believes more information is needed in preparation for launching the first PDA. Based on the marketing plan contents discussed in Chapter 2, how can you use MIS and marketing research to support the marketing planning for the new PDA: For which sections of the plan will you need secondary data? Primary data? Why do you need information for each section?



Where can you find secondary data that will be useful? Identify two Internet sources and two non-Internet sources. Describe what you plan to draw from each source, and indicate how you will use the data in your marketing plan.



What primary research will Sonic need to support its marketing strategy, including product management, pricing, distribution, and marketing communication? What questions or issues should Sonic seek to resolve using primary data?



What technological, demographic and/or economic changes can potentially affect PDA development, buyer acceptance of PDAs, and development of substitute or enhanced products?



Enter your answers about Sonic’s use of marketing research in a written marketing plan or in the Marketing Research, Market Analysis, and Market Trends sections of Marketing Plan Pro.

Chapter 4 Conducting Marketing Research and Forecasting Demand Sonic has developed a sales forecast for its new PDA for the next two years. Jane Melody wants to review estimates of industry demand for PDAs. She also wants to develop an approach for measuring the effectiveness of Sonic’s marketing efforts. She has asked you to: Determine, from available secondary data, estimates of total demand for PDAs for the next two years. She understands you will have to do Internet searches and determine industry trade association sources for such data.



Look at the various ways to evaluate marketing effectiveness and recommend to her the best way that Sonic can determine the effectiveness of its marketing efforts.



Enter the answers to these questions in a written marketing plan or into the Sales Forecasting and Controls sections of Marketing Plan Pro.

Chapter 5 Creating Customer Value, Satisfaction, and Loyalty Sonic has decided to focus on total customer satisfaction, since studies have shown that customers who are “completely satisfied” with the product or service are much more likely to buy more from the company than customers who report they are “satisfied.” You have been asked by Jane Melody to: ■

Recommend how Sonic should measure total customer satisfaction.

Review the possible ways to gain customer satisfaction information and write the recommended approach in a marketing plan or into the Positioning section of Marketing Plan Pro.

Chapter 6 Analyzing Consumer Markets Every company has to study customer markets and behaviour prior to developing a marketing plan. Marketers need to understand who constitutes the market, what and why they buy, who participates in and influences the buying process, and how, when and where they buy. You are responsible for researching and analyzing the consumer market for Sonic’s PDA. These are the questions Sonic needs to answer: What cultural, social, personal, and psychological factors have the most influence on consumers buying PDAs?



What research tools will help you better understand the effect of these factors on buyer attitudes and behaviour?



What consumer buying roles and buying behaviours are particularly relevant for PDA products?



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What kind of marketing activities should Sonic plan to coincide with each stage of the consumer buying process?



Document your findings and conclusions in a written marketing plan or type them into the Market Demographics and Target Markets sections of Marketing Plan Pro.

Chapter 7 Analyzing Business Markets Business-to-business marketers have to understand their markets and the behaviour of members of the buying centre in order to develop appropriate marketing plans. Jane Melody has defined the business market at Sonic as mid- to large-sized corporations that need to help their workforces stay in touch and input or access important data from any location. She has asked you to find out: ■

What specific types of businesses appear to fit the business market definition used at Sonic?



What needs could Sonic’s PDA address for these businesses?



Who would participate in and influence the purchase of PDAs for use in these businesses?

Which environmental, interpersonal, and individual influences are likely to be most important to business buyers of PDA products—and why?



Report your findings and conclusions in a written marketing plan or type them into the Market Demographics and Target Markets sections of Marketing Plan Pro.

Chapter 8 Identifying Market Segments and Targets Market segmentation is an important part of any marketing plan. It is the first step in the STP process that precedes any marketing strategy: Segmentation, Targeting, and Positioning. The purpose of STP is to identify and describe distinct market segments, target-specific segments, and then pinpoint the differentiating benefits to be stressed in marketing. In your role as Jane Melody’s assistant, you are responsible for market segmentation and targeting for Sonic’s PDA product. Look at the SWOT analysis, Market Description, and Competitive Review sections and then answer: ■

Which variables should Sonic use to segment its consumer markets?



Which variables should Sonic use to segment its business markets?



How can Sonic evaluate the attractiveness of each identified segment?

Should Sonic pursue full market coverage, market specialization, product specialization, selective specialization, or single-segment concentration? Why?



Summarize your conclusions in a written marketing plan or enter them in the market Demographics and Target Markets sections of Marketing Plan Pro. Note any additional research you may need in the Marketing Research Section of Marketing Plan Pro.

Chapter 9 Creating Brand Equity Decisions about branding are critical for any marketing plan. During the planning process, marketers must consider issues related to brand strategies and brand equity. Sonic’s PDA is a new brand name entering the market. Sonic begins with zero brand equity. Brand equity is built via choices with brand elements and marketing activities and programs. A strong brand has awareness and a positive brand image. Sonic begins with no meaning. Jane Melody has asked you to: Suggest what Sonic 1000 with its distinctive yellow thunderbolt might mean for attributes and benefits levels of meaning.



Determine what strategies and action programs should be used to build brand equity for Sonic 1000.



Summarize your ideas in a written marketing plan or type them into the Marketing Mix section of Marketing Plan Pro. Also indicate in the Marketing Research section what studies you will need to support decisions about managing the brand equity for Sonic 1000.

APPENDIX

Sonic Marketing Plan Exercises

Chapter 10 Crafting the Brand Positioning The third part of STP is to select and communicate an effective positioning to differentiate your offering from competitors’ offerings. The marketer must also plan for appropriate marketing strategies for each stage of the product life cycle. As you continue your work to develop Sonic’s marketing plan for launching Sonic 1000, consider these questions about positioning and life-cycle strategies: Which of the differentiation variables related to product, services, personnel, channels, and image are best suited for Sonic’s situation, strategy, and marketing objectives? Why?





Write the positioning statement for Sonic 1000.

Knowing the stage of the product life cycle for Sonic 1000, what are the implications for the marketing mix, product management strategy, service strategy, and R&D strategy?



Record your answers in a written marketing plan or type them in the Positioning section of Marketing Plan Pro. Note any additional research you may need in the Marketing Research section of Marketing Plan Pro.

Chapter 11 Dealing with Competition Competitive strategy analysis is an important part of two areas within the marketing plan. First, in assessing the Current Situation, businesses need to identify key competitors and learn about each rival’s strengths and weaknesses. Second, competitive intelligence and analysis shapes the competitive strategy, which is supported by the marketing mix. Sonic is a new entrant in an established industry which has competitors with relatively high brand identity and strong market positions. As you assist Jane Melody in development of the Sonic marketing plan, consider the following key issues that will affect Sonic’s ability to introduce a new PDA successfully: ■

What is the strategic group for Sonic?



Which firm is the market leader, and what are its objectives, strengths, weaknesses?

What additional competitive intelligence is needed to answer the question about the market leader more completely, and how should Sonic go about getting the information?





Which competitive strategy should be most effective for Sonic?

Enter your answers in a written marketing plan or enter them into the Competition, SWOT Analysis, and Critical Issues sections of Marketing Plan Pro.

Chapter 12 Setting Product Strategy Decisions about products are critical elements of any marketing plan. During the planning process, marketers must consider issues related to product mix and product lines. Product marketers distinguish five levels of product, each adding more customer value: core benefit, basic, expected, augmented, and potential. In assessing product strategy: ■

How would you define the core benefit for Sonic 1000?

How would you define the augmented product for Sonic 2000, the second product to be launched by Sonic next year?



Write your answer to the questions in a written marketing plan or enter it in the Product Offering and Marketing Mix sections of Marketing Plan Pro.

Chapter 13 Designing and Managing Services All marketers need to develop a service strategy when preparing their marketing plans. Marketers of intangible products must consider how to manage customer expectations and satisfaction. Marketers of tangible products must create suitable support services. You are planning product support services for Sonic’s PDA. The following questions will help you map your service strategy: What support services do buyers of PDA products want and need? Consider what Sonic’s competitors are doing in this area.



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APPENDIX

Sonic Marketing Plan Exercises

How can Sonic identify and manage gaps between expected and perceived service to satisfy customers?





What post-sale services must Sonic make available to customers who buy the Sonic PDA?



What internal marketing does Sonic need to do to implement its service strategy?

Summarize your recommendations in a written marketing plan or enter the information in the Marketing Mix section of Marketing Plan Pro.

Chapter 14 Developing Pricing Strategies and Programs Pricing is a critical element in any company’s marketing plan, because it directly affects revenue and profit goals. Effective pricing strategies must consider costs as well as customer perceptions and competitor reactions, especially in highly competitive markets. You are in charge of pricing Sonic’s first PDA. Review your SWOT Analysis and Competition Analysis. Also think about the markets you are targeting and the positioning you want to achieve. Then, answer the following questions about pricing: ■

What should Sonic’s primary pricing objective be? Why?

Are PDA customers likely to be price-sensitive? Is demand elastic or inelastic? What are the implications of the answers for pricing decisions?



What price adaptations such as discounts, allowances, and promotional pricing should Sonic include in its marketing plan?



Document your pricing strategies and programs in a written marketing plan or type them into the Marketing Mix section of Marketing Plan Pro.

Chapter 15 Designing and Managing Value Channels and Marketing Networks Manufacturers need to pay close attention to their marketing channels. By planning the design, management, evaluation, and modification of their marketing channels, manufacturers can ensure their products are available when and where customers want to buy. At Sonic, you have been asked to develop a channel strategy for Sonic 1000. Based on the information you previously gathered and the decisions you have already made about the target market, product, and pricing, answer the following: What decisions must Sonic make to develop the five marketing flows (physical product, title, payment, information, and promotion) for Sonic 1000?



How many levels would be appropriate for the consumer and business markets you are targeting for Sonic 1000?





Should you plan for exclusive, selective, or intensive distribution?

What decisions must Sonic make to develop the five service outputs (lot size, waiting time, spatial convenience, product variety, and service back up) for Sonic 1000?



Document your recommendations about marketing channels and strategy in a written marketing plan or type the recommendations into the Marketing Mix section of Marketing Plan Pro.

Chapter 16 Managing Retailing, Wholesaling, and Logistics Retailers and wholesalers play a critical role in marketing strategy because of their relationships with the final consumer. Manufacturers need to manage their connections with these channel intermediaries. You are responsible for channel management for Sonic’s PDA. Based on your previous strategic choices, respond to the following questions about wholesaling and retailing strategy: What types of retailers will be most appropriate for distributing Sonic 1000? What are advantages and disadvantages of selling through these types of retailers?





What role should wholesalers play in Sonic’s distribution strategy? Why?



What market logistics issues must Sonic consider for the launch of its first PDA?

Summarize your answers in a written marketing plan or type them into the Marketing Mix section of Marketing Plan Pro.

APPENDIX

Sonic Marketing Plan Exercises

Chapter 17 Designing and Managing Integrated Marketing Communications Every marketing plan must include a section showing how the company will use marketing communications. The question is not whether to communicate, but rather what to say, to whom, how to say it, how often, and which promotional tools to use. You are responsible for planning integrated marketing communications for Sonic’s new PDA. Review the strategies you previously documented in the marketing plan for the targeting, positioning, branding, product management, pricing, and distribution of the Sonic 1000. Now use your knowledge of communications to answer these questions: ■

What audience(s) should Sonic target in its integrated marketing communications plan?



What image should Sonic seek to create for its first PDA product?



What objectives are appropriate for Sonic’s initial communications campaign?

What message design and communication channels are likely to be most effective for the target audience?





Which promotional tools would be most effective in Sonic’s promotional mix? Why?



How should Sonic decide the amount to allocate to its marketing communications budget?

Summarize your answers in a written marketing plan or type them into the Marketing Mix section of Marketing Plan Pro.

Chapter 18 Managing Mass Communications: Advertising, Sales Promotions, Events, and Public Relations Advertising, sales promotion, and public relations are among the most visible outcomes of any marketing plan. These mass communications tools provide support for branding, product, pricing, and distribution strategies. At Sonic, you are starting to plan promotional support for launching the new PDA. After reviewing your earlier marketing mix decisions and your current situation as a new player in the PDA market, respond to the following questions about your promotion strategy: Should Sonic use advertising to support the PDA introduction? If so, what advertising goals will you set, and how will you measure your results?



What message(s) do you want to communicate to your target audience? What media are most appropriate, and why?





Should you use consumer or trade promotion or both?

Should you use public relations to promote Sonic and its products? If so, what objectives will you set for your public relations program(s)?



Summarize your answers in a written marketing plan or type them into the Marketing Mix section of Marketing Plan Pro.

Chapter 19 Managing Personal Communications: Direct Marketing and Personal Selling Many marketers have to consider sales force management in their marketing plans. The high cost of maintaining a direct sales force and the need to establish multiple channels of distribution have led some companies to include online, mail, and telephone sales for some of their personal selling efforts. In your marketing role at Sonic, you are planning a sales strategy for the new PDA. After reviewing your decisions about other marketing mix activities, answer these questions about personal selling: Does Sonic need a direct sales force, or can it sell through agents and outside representatives?





Toward whom should Sonic’s selling activities be focused?



What kinds of sales objectives should Sonic set for its sales personnel?

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APPENDIX

Sonic Marketing Plan Exercises



What role should e-marketing play in the new PDA launch?



What training will sales representatives need to sell the Sonic 1000?

Summarize your answers in a written marketing plan or type them into the Marketing Mix, Marketing Organization, and Sales Forecast sections of Marketing Plan Pro.

Chapter 20 Introducing New Market Offerings Product strategy is based on the choices companies make as they select target segments and create a distinctive positioning for their brand and products. With this foundation, a marketer is ready to plan for new product development and management. Now that you have developed the marketing plan for Sonic 1000, you are considering new product options for the Sonic 2000. Answers to the following questions will help you narrow the options for the second Sonic PDA product: What specific needs of the targeted customer segments should Sonic seek to satisfy with a second PDA product?



Working alone or with other students, generate at least four new ideas for new PDA products, and indicate the criteria Sonic should use to screen these ideas.



Develop the most promising idea into a product concept and explain how Sonic can test this concept.



Assuming the most promising idea tested well, develop a marketing strategy for introducing the new product, including: 1. description of the target market(s), 2. product positioning, 3. objectives for sales, profit, and market share for first year, 4. channel strategy, and 5. marketing budget for first year.



Into which of the six categories of new products identified by Booz, Allen, and Hamilton does Sonic’s first PDA product fit? Into which of these categories does the suggested second PDA product fit? What are the implications of the answers to this question for Sonic’s marketing plan for the second PDA?



Summarize your answers to these questions in a written marketing plan or enter the answers into the Marketing Mix, Marketing Research, Breakeven Analysis, Sales Forecast, and Milestone sections of Marketing Plan Pro.

Chapter 21 Tapping into Global Markets Global marketing offers a way for companies to grow by expanding the customer base beyond the domestic market. However, the complexities of global marketing demand careful planning and implementation. As Jane Melody’s assistant, you are researching markets outside the United States for Sonic’s first PDA product. Review the recommendations you have made for Sonic’s marketing plan. Then answer these questions about how Sonic can approach global marketing: Should Sonic use licensing, joint ventures, direct investment, or exporting to enter the Canadian market? To enter other markets?



If Sonic wants to start marketing a PDA in other countries, which of the five international product strategies (straight extension, communication adaptation, product adaptation, dual adaptation, product/forward invention) is most appropriate? Why?



Identify one international market that seems most promising for Sonic. Why did you select this international market as most promising?



Summarize your answers in a written marketing plan or enter the answers in the SWOT, Critical Issues, Marketing Strategy, and Marketing Research sections of Marketing Plan Pro.

Chapter 22 Managing a Holistic Marketing Organization The last step in completing a marketing plan is to provide for organizing, implementing, evaluating, and controlling the total marketing effort. In addition to measuring progress

APPENDIX

Sonic Marketing Plan Exercises

toward financial targets and other objectives, marketers need to plan how to audit and improve their marketing activities. Sonic has asked you to plan the management of the marketing effort for the PDA product. Look back at the objectives, strategies, and programs you have developed. Then answer these questions: ■

What is the most appropriate organization for Sonic’s marketing and sales departments?



What control measures should Sonic incorporate into its marketing plan?



What can Sonic do to evaluate its marketing?



How can Sonic evaluate its level of ethically and socially responsible marketing?

Summarize your answers in a written marketing plan or enter the answers in the Marketing Organization and Implementation sections of Marketing Plan Pro.

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