Consumer Behavior, Market segmentation and

Marketing Plan
 Consumer behaviour
 Consumer behaviour is the study of how people make decisions about
what they buy, want, need, or act in regards to a product, service, or
company. It is critical to understand consumer behaviour to know how
potential customers will respond to a new product or service. It also
helps companies identify opportunities that are not currently met.
 Studying consumer behaviour also helps marketers decide how to
present their products in a way that generates a maximum impact on
consumers. Understanding consumer buying behaviour is the key secret
to reaching and engaging your clients, and converting them to purchase
from you.
Difference between Need Want Desire
 Needs” is the basic human requirements like
shelter, clothes, food, water, etc. which are
essential for human beings to survive. 
 Wants" are a step ahead of needs Wants aren’t
essential for humans to survive, but it’s associated
with needs. Eg Electronics
 Desire:
Desire is an extension of a "want", with clear
objective of filling the gap that "want" had left
with. Eg Luxury
 Nature of Consumer Behaviour
 Complex In Nature
Consumer behaviour is complex in nature as all persons differ in their needs and wants. Each individual has their
own unique needs and accordingly, they behave differently in the market.
It is a very difficult task for marketers to recognise the needs and patterns of each individual. Therefore, it
becomes an overall complex job for the business to identify each consumer’s behaviour and targets them
accordingly
 Brand loyalty :
Brand loyalty is another characteristic of consumer behaviour. Brand loyalty is the tendency of a consumer to buy
product products or services from a certain company that one likes or equates with having high quality goods and
services. For example, if Naina's first car was a Honda as a teenager and the car lasted 200,000 miles, she might
have a tendency to buy hondas again in the future due to her previous positive experience. This brand loyalty may
be so strong that she forgoes the information search all together when considering for next vehicle.
 Keeps On Changing
The consumer behaviour undergoes a change over a period of time depending upon changes in age , education and
income level etc, for example, kids may prefer colourful dresses but as they grow up as teenagers and young
adults, they may prefer trendy clothes.
Systematic Process
Consumer behaviour is a systematic process consisting of a series of steps involved in buying decisions of consumers. It is
related to how consumers make their buying decision. The buying decision of consumers involves different steps which
are: Need identification to buy product, searching for information related with the product, making list and evaluating
different options available, finally making a purchase decision and at last post-purchase evaluation done by the marketer.
Vary across regions 

The consumer behaviour vary across States, regions and countries. For instance, the behaviour of urban consumers is
different from that of rural consumers.  normally rural consumers are conservative (traditional) in their buying behaviour.
Vital For Marketers

Marketers should have perfect knowledge of their target customers buying behaviour. It will help them in understanding
their likes and dislikes and also the factors influencing their buying decisions. Marketer can take appropriate actions
accordingly to attract customers. It helps the companies in developing the products as per peoples demand by providing
information collected by them.
Result in spread effect  :

Consumer behaviour as a spread effect. The buying behaviour of one person may influence the buying behaviour of
another person. For instance, a customer may always prefer to buy premium brands of clothing, watches and other items
etc. This may influence some of his friends, neighbours and colleagues. This is one of the reasons why marketers use
celebrities like Shahrukh Khan, sachin to endorse their brands.
 Importance of Consumer Behaviour
 Increase Sales
Consumer behaviour study helps the businesses in understanding their customers. They have full
information about their customer’s likes & dislikes. This helps in satisfying the wants of their
customers properly & efficiently.
Business will offer the right product to its customers. Customers will become loyal if getting the
right product. This will increase sales & revenue for business.
 Setting Prices

Setting prices is one of the important & difficult task for any business. It directly influences the
demand for its products in the market. By understanding consumer behaviour, it becomes easy to
determine whether the customer is price concerned or quality concerned.
There are some customers in the market who buys products only because they are cheaper.
Understanding their behaviour will help companies to produce as per their price limit.
 Exploiting marketing opportunities:

Study of consumer behaviour helps the marketers to  understand the consumers needs,
aspirations, expectations, problems etc. This knowledge will be useful to the marketers in
exploiting marketing opportunities and meeting the challenges of the market.
 Designing Sales Promotion Methods
Sales promotion activities are the different methods used for inducing customers to buy a
product. Promotion activities are effective if they present clearly the features of the product
as per customer needs.
These activities should affect the psychology of customers directly & inducing them in
buying. Understanding their behaviour will help in easy understanding of factors affecting
customers buying decisions.
 Helps In Competitive Analysis
Facing competition in today’s market is a very tough job for every business. There is a
large number of competitors available in the market offering the same products. It becomes
difficult to attract customers towards your products.
Understanding their behaviour helps in analysing the reasons for which they are going for
competitors’ products. It helps in understanding the advantages that competitors are
possessing. This help in facing the competition in a better way
 Helps In Forecasting
Consumer behaviour enables the businesses in easy forecasting of sales
& demand forecasting. If the business is able to forecast about the future
it can easily take several advantages
It helps companies in saving their resources, time & cost. They can
easily predict future demands & focus on their operations.
 Helps In Targeting & Segmentation
Segmentation & Targeting helps in serving customers properly. It
segments the customers according to their taste & class. Segmentation
helps in serving the customer better. It helps businesses to focus on
customers as per their needs.
After understanding consumer behaviour, it becomes easy to segment
different customers into different classes.
 The factors that influence consumers to say yes
 Personal Factors
Personal factors are characteristics that are specific to a person and may not relate to other people within the same group.
These characteristics may include how a person makes decisions, their unique habits and interests, and opinions. When
considering personal factors, decisions are also influenced by age, gender, background, culture, and other personal issues.
For example, an older person will likely exhibit different consumer behaviours than a younger person, meaning they will
choose products differently and spend their money on items that may not interest a younger generation.
 i. Age Age is a major factor that influences buying behaviour. The buying choices of youth differ from that of middle-
aged people. Elderly people have a totally different buying behaviour. Teenagers will be more interested in buying
colourful clothes and beauty products. Middle-aged are focused on house, property and vehicle for the family.
 ii. Income Income has the ability to influence the buying behavior of a person. Higher income gives higher purchasing
power to consumers. When a consumer has higher disposable income, it gives more opportunity for the consumer to
spend on luxurious products. Whereas low-income or middle-income group consumers spend most of their income on
basic needs such as groceries and clothes.
 iii. Occupation Occupation of a consumer influences the buying behavior. A person tends to buy things that are
appropriate to this/her profession. For example, a doctor would buy clothes according to this profession while a
professor will have different buying pattern.
 iv. Lifestyle Lifestyle is an attitude, and a way in which an individual stay in the society. The buying behaviour is highly
influenced by the lifestyle of a consumer. For example when a consumer leads a healthy lifestyle, then the products he
buys will relate to healthy alternatives to junk food .
 Psychological Factors
In daily life, consumers are being affected by many issues that are unique to their thought process. Psychological factors can
include perception of a need or situation, the person's ability to learn or understand information, and an individual's attitude.
Each person will respond to a marketing message based on their perceptions and attitudes. Therefore, marketers must take these
psychological factors into account when creating campaigns, ensuring that their campaign will appeal to their target audience.
 Motivation When a person is motivated enough, it influences the buying behaviour of the person. A person has many needs
such as the social needs, basic needs, security needs, esteem needs and self-actualization needs. Out of all these needs, the
basic needs and security needs take a position above all other needs. Hence basic needs and security needs have the power
to motivate a consumer to buy products and services.
 Perception When a customer sees advertisements, promotions, customer reviews, social media feedback, etc. relating to a
product, they develop an impression about the product. Hence consumer perception becomes a great influence on the
buying decision of consumers. 
 Attitudes and Beliefs Consumers have certain attitude and beliefs which influence the buying decisions of a consumer.
Based on this attitude, the consumer behaves in a particular way towards a product. This attitude plays a significant role in
defining the brand image of a product. Hence, the marketers try hard to understand the attitude of a consumer to design
their marketing campaigns.
 Social Factors
The third factor that has a significant impact on consumer behaviour is social characteristics. Social
influencers are quite diverse and can include a person's family, social interaction, work or school
communities, or any group of people a person affiliates with. It can also include a person's social class, which
involves income, living conditions, and education level. The social factors are very diverse and can be
difficult to analyze when developing marketing plans.
For example, how using a famous spokesperson can influence buyers.
 Family Family plays a significant role in shaping the buying behaviour of a person. A person develops
preferences from his childhood by watching family buy products and continues to buy the same products
even when they grow up
 Reference Groups Reference group is a group of people with whom a person associates himself.
Generally, all the people in the reference group have common buying behaviour and influence each other.
 Roles and status A person is influenced by the role that he holds in the society. If a person is in a high
position, his buying behaviour will be influenced largely by his status. A person who is a Chief Executive
Officer in a company will buy according to his status while a staff or an employee of the same company
will have different buying pattern. 
 Cultural factors
A group of people are associated with a set of values and ideologies that belong to a particular community. When a
person comes from a particular community, his/her behaviour is highly influenced by the culture relating to that
particular community. Some of the cultural factors are:
 Culture
Cultural Factors have strong influence on consumer buyer behaviour.  Cultural Factors include the basic values, needs,
wants, preferences, perceptions, and behaviours that are observed and learned by a consumer from their near family
members and other important people around them.
 Subculture
Within a cultural group, there exists many subcultures. These subcultural groups share the same set of beliefs and values.
Subcultures can consist of people from different religion, caste, geographies and nationalities. These subcultures by itself
form a customer segment.
 Social Class
Each and every society across the globe has form of social class. The social class is not just determined by the income,
but also other factors such as the occupation, family background, education and residence location. Social class is
important to predict the consumer behaviour.
For example, In middle east Arab countries, McDonald’s consumer can get McArabia (grilled halal chicken with Arabic
spices and bread), New menu for Vegetarian in India as some people don’t consume meat, McDonald’s tried to localize
their food menu by designing new product according to different cultures and understood consumer buying behaviour.
Economic Factors
The consumer buying habits and decisions greatly depend on the economic situation of a country or a market. When
a nation is prosperous, the economy is strong, which leads to the greater money supply in the market and higher
purchasing power for consumers. Whereas, a weak economy reflects a struggling market that is impacted by
unemployment and lower purchasing power.
Example Tata Nano car
 Personal Income When a person has a higher disposable income, the purchasing power increases
simultaneously. Disposable income refers to the money that is left after spending towards the basic needs of a
person. When there is an increase in disposable income, it leads to higher expenditure on various items. But
when the disposable income reduces, parallely the spending on multiple items also reduced.
 Family Income Family income is the total income from all the members of a family. When more people are
earning in the family, there is more income available for shopping basic needs and luxuries. Higher family
income influences the people in the family to buy more. When there is a surplus income available for the family,
the tendency is to buy more luxury items which otherwise a person might not have been able to buy.
 Consumer Credit When a consumer is offered easy credit to purchase goods, it promotes higher spending.
Sellers are making it easy for the consumers to avail credit in the form of credit cards, easy installments, bank
loans, hire purchase, and many such other credit options. When there is higher credit available to consumers, the
purchase of comfort and luxury items increases
 Savings A consumer is highly influenced by the amount of savings he/she wishes to set aside from his income. If
a consumer decided to save more, then his expenditure on buying reduces. Whereas if a consumer isn’t
interested in saving more, then most of his income will go towards buying products.
Market Segmentation
 Market segmentation is the research that determines how your organisation
divides its customers into smaller groups based on characteristics such as, age,
income, personality traits or behaviour. These segments can later be used to
optimise products and advertising to different customers
 Market segmentation is an extension of market research that seeks to identify
targeted groups of consumers to tailor products and branding in a way that
is attractive to the group. The objective of market segmentation is to minimize
risk by determining which products have the best chances of gaining a share of a 
target market and determining the best way to deliver the products to the market.
This allows the company to increase its overall efficiency by focusing limited
resources on efforts that produce the best return on investment
 How to Get Started with Segmentation
Market segmentation doesn’t need to be complicated to be effective. There are five primary steps of
segmentation.
 Conduct Preliminary Research –  Get to know your customers better by asking some initial, open-ended
questions.
 Determine How To Segment Your Market – Decide which criteria (i.e. demographics, psychographics, or
behaviour) you want to segment your market by.
 Design Your Study – Ask a mix of demographic, psychographic, and behavioural questions. Be sure to
make your questions quantifiable.
 Create Your Customer Segments – Analyse your responses either manually or with statistical software to
create your segments.
 Test and Iterate – Evaluate your segments by ensuring they are usable and helpful. If they aren’t, try
segmenting based on other criteria.
Types of Market Segmentation

 Geographic Segmentation- The where

While typically a subset of demographics, geographic segmentation is typically the
easiest. Geographic segmentation creates different target customer groups based on
geographical boundaries. Because potential customers have needs, preferences, and
interests that differ according to their geographies, understanding the climates and
geographic regions of customer groups can help determine where to sell and
advertise, as well as where to expand your business.
An example of geographic segmentation is an ice cream company segmenting a
country by how hot different regions are and targeting those specific areas that are
hottest and therefore more likely to buy ice cream.
 Demographic Segmentation- The who
Demographic Segmentation sorts a market by demographic elements such as age, education,
income, family size, race, gender, occupation, nationality, and more. Demographic
segmentation is one of the simplest and most commonly used forms of segmentation because
the products and services we buy, how we use those products, and how much we are willing
to spend on them is most often based on demographic factors.
 Example
Age is one of the most common demographic segmentation elements. Every age group has its
peculiar characteristics and needs. Generally, teenagers might be more inclined towards the
latest, good looking cars, but working professionals would require a vehicle that caters to
his/her family and fits a particular budget. Every age group has a specific requirement, which
will be extremely different from the other age groups
Family segmentation A lot of families have one or multiple children while some are child-
free and straight. Child-free families will never purchase products related to children, such as
baby lotion, toys, or diapers. A multinational organization that is into developing these
products will conduct demographic examples based on the type of family.
 Psychographic Segmentation- The why
Psychographic Segmentation takes into account the psychological aspects of consumer
behaviour by dividing markets according to 
1.Personality traits 2.Hobbies 3.Life goals 4.Values Beliefs 5.Lifestyles
Compared to demographic segmentation, this can be a harder set to identify. Good
research is vital and, when done well, psychographic segmentation can allow for
incredibly effective marketing that consumers will feel speaks to them on a much more
personal level.
For example If a shoe manufacturer intends to design shoes for various sections of the
market such as athletes, office-goers, students, etc. Dividing groups according to
customers whose lifestyle revolves around cycling or running, those individuals who
prefer Sports shoes, and similar other segmentation. This way, the manufacturer can
produce shoes the cater to every lifestyle, i.e. likes or dislikes, and which in turn will help
in building a brand that develops shoes for every market segment on the basis of lifestyle
 Behavioural segmentation- The how
Behavioural segmentation  is possibly the most useful of all for e-commerce businesses. As with psychographic
segmentation, it requires a little data to be truly effective – but much of this can be gathered via your website
itself. Here we group customers with regards to their:
 Spending habits
 Purchasing habits
 Browsing habits
 Interactions with the brand
 Loyalty to brand
 Previous product ratings
Example  For instance, younger buyers may tend to purchase body wash, while older consumer groups may lean
towards soap bars. Segmenting markets based off purchase behaviours enables marketers to develop a more
targeted approach.
Importance of Segmentation
 Knowledge of marketing opportunities
 Knowledge of customer needs
 Adopting effective marketing programme
 Proper allocation of resources
 Adjustments in products
 Increasing sales volume
 Effective advertising appeals
Benefits of segmentation
 More effective marketing
This is the biggest and most obvious benefit to well-implemented market segmentation. By
better recognizing the needs of your customers, you can identify more effective tactics for
reaching them and improving their interactions and experience with your business. Making
your marketing efforts even more effective.
 Higher Rate of Success
Market segmentation means to study your market, to be more precise it helps to divide a
bigger market into smaller modules and lets the marketers know the potential of the
market/consumers which reduces the risk of loss and thus there are higher chances of success
for the business.
 More efficient spending
After all, your targeted marketing is going to allow for better returns on investment,
and you’ll waste less money on marketing that reaches the wrong audience.
 Increases Profitability
Market segmentation is a very effective process for business and it helps the business to
target particular segments of the market and thus helps to find better business opportunities
pertaining to that particular market segment. The marketers can thus, strategize their
campaigns as per the chosen market segment needs and requirements and helps to increase
the business profitability. This technique lets the companies focus on one particular segment
rather than the whole market which in return gives increased profit.
 Retention of Customer
Retaining customers is very crucial for the business and market segmentation helps in
customer retention. Once the business knows the consumers, their needs can be catered well
and the customer’s experience with the market brand will help to connect with the
product/service like the hospitality sectors. Consumers mostly prefer the products/services
they have experienced especially in the cases of airlines and hospitals.
 Limitation of Segmentation
 Limited Production: In each specific segment, customers are limited. If the chosen
segment is too small then you will not have the proper turnover which in turn will affect
the total margins and the viability of the business Therefore, company cannot take
advantages of scale production; scale of economy is not possible. Product may be costly
and affect adversely to the sales.
 Expensive Production: Market segmentation is expensive in both production and
marketing. In order to satisfy different groups/segments of buyers, producers have to
produce products of various models, colours, sizes, etc., that result into more production
costs. In the same way, the producers are required to maintain large inventory for
different styles, colours, and sizes of products.
 Consumers are misinterpreted –  The right product to the wrong customers. What if
your market research says that your customers want a new soap and you come out with a
new facial cream. The concept is same, cleanliness. But the concept is completely
different.
 Costing is not taken into consideration –  Targeting a segment is ok but you also need
to know how much you will have to spend to target a particular segment. If it is a Sec A
segment and you do not have the budget to be present in the places the Sec A customer
visits, then your segmentation strategy is a failure.
 Difficulty in Distribution: Company needs to make the separate arrangement for each
of the products demanded by different classes of customers. Company has to maintain
separate channels and services for satisfying varied customer groups.
 Consumer are confused –  If the consumer himself doesn’t know whether he will be
interested in a particular product or not, than that’s a sign that you need to get out of that
segment / product.
Factors affecting Segmentation
 Nature of demand
A commodity having wide demand the extent and size of the market will be large and
contrary to it the size and extent of the market will be Limited.
 Durability
Perishable goods like vegetables, eggs, milk, bread, and butter have a limited market while
durable goods namely T.V., radio, vehicles, gold, silver have a wide market.
 Substitutes
A commodity having substitutes in the market will have a limited market while no substitute
commodity will be widely used and the size and extent of the market are widened.
 Adequate Supply
The goods and services having a flexible supply market will be widened and the goods
having inadequate supply will have a limited market.
 Banking and Financial System
In a country where there is well developed organized money credit, banking and
financial system are in existence the market is widened because payments are
quickly finalized. On the other hand, if the banking and financial system is not well
developed and organized the markets Limited.
 Government Policy
Domestic and foreign trade is affected by government policy relating to exports and
imports, license, protection, taxes, etc.
If these policies are restricting the trade then the market will be Limited and when
there are liberal policies the market is widened.
Marketing Planning
Planning is the first and the foremost function of management. Planning precedes all the
functions. Marketing planning is the starting point of all marketing and business activities of
an enterprise. Because of the dynamism of the environment, the role of marketing planning
has increased a lot.
Planning is deciding in advance what to do, how to do it, when to do it and who is to do it.
Planning is simply a rational approach to accomplish an objective. It bridges the gap from
where we are & where we want to go. Planning is the first management function to be
performed in the process of management. It governs survival, growth and prosperity of any
enterprise in a competitive and ever changing environment.
Marketing planning is the process – Marketing planning is a process that consists of
analysing current situation and information about marketing opportunities, forecasting and
establishing planning premises, selecting target market(s), determining marketing
objectives, designing and developing marketing strategy or courses of action for achieving
these objectives and allocating resources to the ingredients of marketing effort i.e. marketing
mix and developing procedure and policies.
 Planning is an analytical process which covers:
1.The first step in marketing planning process is setting down marketing
objectives(increase sale, customer relation, retension,brandawarness) and policies.
2. The second step is designing the marketing system. In the marketing system, a
company has to design/define each function with its contribution.
3. The third step is to develop separate objectives, programmes, and strategies of
each function, so that they can be assessed for the target purpose and the broad
objectives. If any function cannot meet its objectives, have to be modified for that
functional area.
4. The fourth step is drawing of detailed plans for each function for a shorter period,
i.e., a quarter, half a year or a year. It will be helpful in defining responsibilities,
timing and costs needed to achieve the short-term objectives.
Why is Marketing planning essential
Marketing planning can benefit any business by ensuring a response to changes in the
external environment and understanding internally the strengths and weaknesses of the
business. The planning process will be unique to every business and will serve to achieve
the business’s corporate objectives through a set of coordinated and carefully planned
activities.
Marketing planning is essential in the following ways
 As a key management tool: To ensure consistent information about products or services
are delivered from top management.
 A guide/roadmap for all core functions: To ensure that all departments understand the
key objectives/goals surrounding your product or service offering.
 An internal communication tool: To ensure that the plan is communicated consistently
and you’re Unique Selling Point’s become an integral part of the business.
 Allocation and direction of key planned activities: To ensure that the planned
activities are given ownership and explained to the relevant stakeholders.
 Enable cross-functional resource allocation: To ensure that training is given to
all employees who are dealing with customers on a daily basis.
 Enable performance measurement: To ensure that continual monitoring and
reviews can take place and the necessary refinements and adjustments can be
implemented in the future.
 Preparation & evaluation of a product level marketing plan

Creating a strong marketing plan is an important part of planning for your

destination’s year-to-year growth. Writing such a plan should be a
collaborative team effort, pooling your team’s knowledge and resources to
make sure everyone is on the same page and everyone’s ideas are heard.
Breaking down the plan into actionable steps can help a large document
seem more approachable. Whether you are finalizing your vision or just
starting out, here are 7 steps in creating a marketing plan
THE NATURE AND CONTENTS OF MARKETING PLAN

 Marketing managers follow a marketing process to carry out their responsibilities

effectively. Working within the plans set up by the top management product managers come
up with a marketing plan for individual products, lines, brands, channels, or customer
groups. Each product level must develop a marketing plan for achieving its goals.
 A marketing plan is a written document that summarizes what the marketer has learned
about the marketplace and indicates how the firms plan to reach its marketing objectives. It
contains tactical guidelines for the marketing programs  Tactics include, digital marketing,
social media, websites, public relations, Other tactics include conferences, email marketing,
word of mouth, direct sales, and lead generation. These are all the things that you will do in
order to accomplish your objectives. This section includes a tactical implementation
strategy and/or timeline. This section needs to include your marketing budget and you will
need a detailed budget for each tactic
 Marketing plans are becoming more customer- and competitor-oriented and better reasoned
and more realistic than in the past. Planning is becoming a continuous process to respond to
rapidly changing market conditions.
 Executive Summary:
The marketing plan should open with a brief summary of the main goals and recommendations. The executive
summary permits senior management to grasp the plans major thrust. A table of contents that outlines the rest of
the plan and all the supporting rationale and operational detail should follow the executive summary.
 Situational Analysis:
It consider what is happening in the world around your organization, trends, current issues, competitors and the
competitive environment when preparing your plan This section presents relevant background data on sales, costs,
the market, competitors, and the various forces in the macro environment. How is the market defined, how big is
it, and how fast is it growing? What are the relevant trends affecting the market? What is the product offering and
what are the critical issues facing the company? Pertinent historical information can be included to provide
context. All this information is used to carry out a SWOT analysis.
 Marketing strategy:
Here the product manager defines the mission and marketing and financial objectives. The manager also defines
those groups and needs that the market offerings are intended to satisfy. The manager thus establishes the product
line All this is done with inputs from other organizational areas, such as purchasing, manufacturing, sales,
finance, and human resources, to ensure that the company can provide proper support for effective
implementation. The marketing strategy should be specific about the branding strategy and customer strategy that
will be employed.
 Financial Projections:

Financial projections include a sales forecast, an expense forecast, and a break-even

analysis. On the revenue side, the projections show the forecasted sales volume by month
and product category. On the expense side, the projections show the expected costs of
marketing, broken down into finer categories. The break-even analysis shows how many
units must be sold monthly to offset the monthly fixed costs and average per-unit variable
costs
 Control
The last section of the marketing plan outlines the controls for monitoring and adjusting
implementation of the plan. Typically, the goals and budget are spelled out for each month
or quarter so management can review each period results and take corrective action as
needed. A number of different internal and external measures must be taken to assess
progress and suggest possible modification
Here we have discussed in detail how the marketing managers go about planning their
marketing strategies to overcome competition, increase market share and attract more
customers for their products.
Marketing Evaluation and Control
 Evaluating the marketing plan means looking at the data and examining whether
or not the company achieved its strategy objectives from the implementation
phase. If it did, the steps can be replicated for future success. If not, changes can
be made to improve performance and results
 Controls are necessary for the evaluation phase. Controls established during the
creation of the marketing plan provide benchmarks to assess how well the plan
accomplished its goals. Controls are like goals; they give the company something
to aim for when enacting the plan. Controls may include measures such as the
marketing budgets and market share
 It refers to the measurement of the company’s marketing performance in terms of
the sales revenue generated, market share captured, and profit earned. Here, the
actual result is compared with the standard set, to find out the deviation and make
rectifications accordingly.
THE EVALUATION AND CONTROL PROCESS
 Determine what to measure : Top managers and operational managers need to
specify what implementation process and results must be capable of being
measured in a reasonably objective and consistent manner. The focus should be
on the most significant element in a process the ones that account for highest
proportion of expense or the greatest number of problems. Measurement must be
found for all important areas, regardless of difficulty.
 Establish a standard of performance: If appropriate means are available for
measuring the performance and if the standards are set in the right manner,
strategy evaluation becomes easier. Setting control standards, which can be
quantitative or qualitative, helps, determine how you will measure your goals and
appraise improvement. The measurement must be done at the right time else
evaluation will not meet its purpose.
 Measure Actual Performance: Once standards are set, the next step is to measure
your performance. Measurement helps compare actual performance with standards.
Measurement must be made at predetermined times. Measurement can then be
addressed in monthly or quarterly review meetings. For measuring the performance,
financial statements like – balance sheet, profit, and loss account must be prepared
on an annual basis.
 Compare actual performance with the standard: If actual performance results are
within the desired tolerance range, the measurement process should be stopped here.
Competitive benchmarking can help you find out if any gaps between targets and
actuals are normal for the industry, or are signs of an internal problem. The
organization can use both quantitative and qualitative criteria for a comprehensive
assessment of performance. It helps to find out deviations.
 Take corrective action:
Once you’ve determined why performance deviated from standards, you’ll decide
what to do about it. If actual performance results fall outside the desired tolerance
range then, actions must be taken to correct the deviation. If the strategists discover
that the organizational potential does not match with the performance requirements,
then the standards must be lowered. Depending on the cause of each deviation,
you’ll either decide to take action to correct performance, revise the standard, or
take no action. If the performance is consistently less than the desired performance,
the strategists must carry a detailed analysis of the factors responsible for such
performance
So, these are the various steps of strategic evaluation and control. It determines
whether the performance standards are acceptable or not. If it is not acceptable then
corrective action steps may be taken
Annual Plan Control

 As the name suggests, the plans which are determined for one year for the control
of operational activities through the successful implementation of management
by objectives is termed as annual plan control.Such programs are usually framed
and controlled by the top management of the organization.
 Annual planning can be defined as the process of defining a business roadmap
for your company and your employees. It help to carry the plan forward through
several tasks that lead to a broader vision of where the company aims to be by
the end of the year. 
 Companies must hold planning sessions to review last year’s performance, as
well as specific goals and achievements. These sessions will help to analyze
expectations and results from the previous year in order to create an annual plan
that gives everyone in the organization a sense of where they’re headed, and
where they want to be twelve months from now. 
What Is Included in an Annual Plan?

 Goals. Before you can look forward it’s important to look back. For this, it’s a
great idea to review your SMART (Specific, Measurable, Attainable, Relevant,
Time-Bound) goals, they can help to clarify ideas, focus efforts and ensure
resources are being used in the most productive manner. Remember, your annual
plan should also hold a strong connection to your company’s strategic goals.
 Budget. Financial elements are key to annual planning, so it’s important to take
into consideration projections for the upcoming 12 months. These projections will
help you plan resources, cash flow, and decide the best course of action and timing
for individual projects. 
 Timelines. When measuring performance it’s important to understand how
successful your company has been in terms of achieving goals within their
deadlines. Split your goals into tasks and set deadlines. 
 Expectations, responsibilities, and clear Objective and Key Results. Goals need to
be clearly specified, indicating which teams, individuals, or departments will be
responsible for carrying out tasks. Expectations must be exceptionally clear for
collaborators. Also, working with well-defined OKRs can help to keep teams on track
because they help to provide visibility into what other teams and individuals are
working on. It’s all about maintaining the workforce motivated and crystal clear
regarding who’s in charge of what. 
 Contingency plans. A well-formulated annual plan will also consider emergencies. It’s
always a good idea to think of alternate scenarios, such as what would happen if
suddenly your cash flow would become compromised? 

 Values and mission. It’s also instrumental to keep your company’s aspirational future
vision in mind when working on your annual plan.
Tools used under the annual plan control
 Sales Analysis :The first one is the sales analysis, where the manager determines
whether the sales target of the organization have been achieved or not. For this
purpose, the actual sales are compared with the desired sales and deviation is
computed.
 Marketing Expense to Sales Analysis Sometimes the firms spend much on the
marketing of products, which diminishes their profit margin or increases the product
price. Therefore, a marketing expense to sales ratio is calculated to know the
percentage of sales value paid off as a marketing expense.
 Financial Analysis: The management needs to handle its finances well. It should
examine the reasons and factors which influence the rate of return and financial
leverage and return on assets in the organization through financial analysis tools.
Importance of Annual Report

 Annual planning generates efficiency because it circles around

performance.
 It helps to define what is critical to achieving over the year.
 It
delivers clear leadership to employees and it helps to keep the
workforce united.
 Employees gain a clear sense of direction in their departments and
roles. 
 An annual plan can rally an entire organization around goals. It can
also provide a stronger connection to the company’s strategic plan.
Profitability control
 Profitability control refers to the ability of a company to measure the profitability
of various products, regions, customer groups, distribution channels and order
sizes to help managers decide which products or marketing activities should be
expanded, contracted or cancelled. Profitability control is generally carried out
by the company's internal marketing chief who is responsible for monitoring
marketing expenditures and activities. It aims to determine the profitability of
different products, different sales regions, different customer groups, different
sales channels and orders of different sizes. It includes the analysis of the
marketing cost control of each marketing channel, the net profit and loss of each
marketing channel and the analysis of the gross revenue (sales revenue-variable
expenses) contributed by the marketing activities, as well as the inspection of
indicators reflecting the level of corporate profitability.
• The first step is to understand the functional expenses, i.e., selling,
distribution, administrative and advertising expenses incurred while carrying out
the marketing function of a territory or marketing channel.
• The second step is to segregate the non-marketing expenses from the
marketing overheads and then to associate these pure marketing expenses to the
marketing entities (like apportioning the building rent into marketing function).
• Lastly, to compile everything systematically and to ascertain the profit or loss
incurred on carrying out the particular marketing activity, an individual profit
and loss account is prepared for each operation.
Efficiency Control

 The management and the marketers are regularly involved in finding out ways to improve the task
performance in the organization. These improvements bring in efficiency and perfection in marketing
operations.
 The three essential mechanisms used under efficiency control are as follows:
 Sales Force Efficiency Indicators
The competence of the sales team can be determined by evaluating the various factors. It includes acquisition of
new customers, customer turnover, average cost incurred on each sales call, return on time invested on the
prospective customers, market share lost to the competitors, average sales made by each person per day, etc.
 Advertising Efficiency Indicators
To know the effectiveness of the advertising activities, the marketers analyze the various advertising functions
on different grounds. For this purpose, it finds out the brand awareness, cost incurred on each enquiry, media
cost to reach per thousand customers, advertising campaign reach, etc.
 Distribution Efficiency
The performance of the distribution channels in comparison to the cost incurred on channel partners and
distribution of products can be analyzed through the distribution efficiency control.
It includes the measurement of the channel member’s market reach, cost incurred on operating a particular
channel and the contribution of each channel member in selling the brand’s products
Strategic controls
 Strategic controls are intended to steer the company towards its long-term strategic direction.
 After a strategy is selected, it is implemented over time so as to guide a firm within a rapidly changing environment.
Strategies are forward-looking, and based on management assumptions about numerous events that have not yet
occurred.
 Strategic control is concerned with tracking the strategy as it is being implemented, detecting problems or changes in
the premises and making necessary adjustments.
 In contrast to post- action control, strategic control is concerned with controlling and guiding efforts on behalf of the
strategy as action is taking place. It control is also focused on the achievement of future goals, rather than the
evaluation of past performance
 The purpose of control at the strategic level is not to answer the question:' 'Have we made the right strategic choices
at some time in the past?" but rather "How well are we doing now and how well will we be doing in the immediate
future for which reliable information is available?" The point is not to bring to light past errors but to identify needed
corrections to steer the corporation in the desired direction. And this determination must be made with respect to
currently desirable long-range goals and not against the goals or plans that were established at some time in the past.
 Strategic control is related to that aspect of strategic management through which an organization ensures whether it
is achieving its objectives contemplated in the strategic action. If not, what corrective actions are required for
strategic effectiveness.
 Importance Steps
Setting Performance Standards:
Every function in the organizations begins with plans which specify objectives or targets to
be achieved. In the light of these, standards are established which are criteria against which
actual results are measured. For setting standards for control purposes, it is important to
identify clearly and precisely the results which are desired.
After setting the standards, it is also important to decide about the level of achievement 
which will be regarded as good or satisfactory. The desired level of performance should be
reasonable and feasible.
Measuring Actual Performance:
The measurement of performance against standards should be on a continuous basis, so that
deviations may be detected in advance of their actual occurrence and avoided by appropriate
actions. Appraisal of actual or expected performance becomes an easy task, if standards are
properly determined and methods of measuring performance can be expressed explicitly.
 Analysing Variance:
The third major step in control process is the comparison of actual and standard
performance.  When the standards are achieved, no further managerial action is
necessary and control process is complete. When the variation between standard and
actual performance is beyond the prescribed limit, an analysis is made of the causes
of such a variation.  For controlling and planning purposes, because such analysis
helps management in taking up proper corrective actions.
 Taking Corrective Actions:
This is the last step in the control process which requires that actions should be
taken to maintain the desired degree of control in the system or operation
Four different types of strategic controls
Premise control Strategies are usually founded on certain assumptions about
the forces and factors which affect the organization. These factors include internal
factors like the employees, profitability, product, etc. And external factors like
customers, shareholders, competition, nature, etc. Some of these forces are very
sharp, and any deviation in them affects the strategy greatly. Therefore premise
control is necessary to identify and keep track of all those changes to be assessed.
The objective is to assess their impact on strategy and its implementation in the
organization. There could be many factors like changing government policies,
rising or decreasing market competition
Therefore, premise control is used to continually test all these assumptions and
determine if they are valid or they need to be modified.  This helps the strategy
farmers to implement necessary and corrective action at the right time rather than
just being with a particular strategy for a long time.
Implementation control When the strategy is chosen, it has to be
implemented The entire purpose of implementation control is to confirm and
ascertain that these programs and projects help the organization achieve its goals.
If it is seen that the commitment of resources has a predefined plan or a program
is not getting as many results as expected, then a matching revision should be
done. Therefore, implementation control is nothing but strategic rethinking to
avoid different wastes.
One way of implementing control is to identify and monitor different throb points
like confirming new product marketing’s success after the pre-test phase.
In the first scenario, the company should evaluate and analyze if the new product
launch will benefit or be dropped forever for another program. In the second
scenario, implementation control is used to confirm if the diversification move
will be successful or not.
Products that failed in diversification
Strategic surveillance
Strategic surveillance is more generalized than the premise and implementation
controls, which are more specific by nature. Strategic surveillance aims to
monitor a wide range of events both outside and inside the organization.
They usually are the ones who threaten the strategy of the company. Such
strategic surveillance can be performed by a broad-based and general monitoring
based on different selected information sources. The objective is to uncover
events that are likely to affect the organizational strategy.
Special Alert control
This is a special alert based on an immediate reassessment of the strategy when
an unexpected event hits and stops it. This special alert can be implemented by
formulating contingency strategies and assigning different responsibilities for
unforeseen events.
These incidences can be unexpected events like pandemic outbreaks, sudden
change or fall of government at Centre or state, industrial disaster, terrorist attack
or unforeseen natural calamity like floods, fire, earthquake, etc.
Marketing Audit
 Like accounting audits, marketers carry out marketing audit to get
a clear picture of the company’s performance while executing the
various marketing operations.
 Itis a systematic record which periodically examines the problem
areas and provides for the means of rectification, to overcome the
weakness by utilizing the organizational strength and grab the
current opportunities.
The four characteristics of a successful audit are:
1.They should be performed on a regular basis, rather than when a
business finds itself in a marketing crisis.
2. The audit should apply to all of the company’s marketing activities
3. An effective marketing audit examines the business’s strategies,
goals, internal marketing system(s), marketing activities, and marketing
environment, in a consistent step-by-step process.
4. Audits should be performed by marketing experts from within the
company, though they are considered more credible and honest if
conducted by an independent consultant.
The basic steps of a marketing audit are as follows :
 Identify your marketing channels/strategies/activities
 Identify your goals and objectives
 Gather data
 Make a comparison
 Identify issues and gaps
 Create an action plan
 Repeat