Many small and medium businesses fail to plan their marketing activities efficiently and throw money here and there. And they reap what they sow. In contrast, firms which map out their marketing efforts intelligently can earn more success, reducing marketing costs and increasing effectiveness to a significant level.

In any business, success depends on providing value to customers; for this, it is important to decide which group of customers is to serve and how to create value for them. Marketing planning helps in answering those questions. It is is a process through which a business can analyze the business environment, decide a course of action accordingly, and implement those actions.    

What are the steps involved in the process of marketing planning? They are:

Step 1: Marketing planning
Marketing planning involves three key steps: establishing business mission, performing marketing audit and SWOT analysis.

1. Business Mission: It may be termed as a broadly defined, enduring statement of purpose of a business which distinguishes it from other businesses. It may include whom to serve, what needs to serve and how to serve those needs. Business mission includes the following:

• Purpose: It includes not only the purpose to serve the interests of the stakeholders (employee, shareholders, customers, suppliers, etc.) but also emphasizes that it is equally important to achieve the objectives of the business for its own sake.
• Strategy: It involves doing different things or doing same things in different ways that enable to create competitive advantage.
• Standards and behaviour: They refer to set of behaviour to be followed by employees.
• Values: These are standards to justify behaviour – whether they are acceptable or not acceptable. They reflect management’s personality, company’s core competencies and what behaviour is expected from employees. They encourage employees for commitment and give them a common direction.
  

2. Marketing audit: It refers to analyzing the business environment as well as the activities, objectives and strategies of a business with the view of identifying strategic issues, problem areas and strengths.

Marketing audit helps to answer the following three questions:

• Where is the business standing now?
• How has it got here?
• Where is it heading?
  

Marketing audit can be both external like macroeconomic factors, market competition, and market or internal that involves analysis of costs, sales, profit, market share, etc.

3. SWOT analysis: It is a method to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a business venture.

• Strengths: These are attributes of a business firm that can contribute significantly in achieving its objectives. Strong brand names, reputation among customers, well-established distribution networks, patents, etc. are some examples of such attributes.
• Weakness: These are attributes or absence of certain strengths of a company which are harmful to achieving its objectives. Examples of such weaknesses include a weak brand name, unfavourable cost structure, lack of distribution channels, etc. 
• Opportunities: These are external conditions those are helpful to a business to achieve its objectives. Examples of such factors include new technology, an untapped market segment, removal of trade barriers, favourable change of tax regulations, etc.
• Threats: They refer to external environmental factors which may present threats to the business in achieving its objectives. Change in consumers tastes, emergence of better substitute products, new trade barriers are some examples of threats to the firm.
  

After going through the above three steps, a business can get a fair idea about the following crucial factors:

• Where the business is standing, how the business has got here. (mission, marketing audit and SWOT analysis)
• Where is the business is heading? (marketing audit and SWOT analysis)
• Where would it like to be? (marketing objectives and strategic analysis)
• How could it get there? (core strategy, marketing mix, organization and implementation).
  

Step 2: Marketing process
The main steps involved in marketing process are identify marketing objectives, determine core strategies and determine marketing mix.

1. Marketing objectives: Setting objectives basically depends on which products to sell in which market. For a new product, objectives include building sales and market share while for an existing product, it may depend on particular competitive situation. Marketing objectives may include the following:

Increase sales

• Market expansion: Converting non-users of an existing market to users.
• Market development: Promoting new usage of an existing product or entering into a new segment with existing products.
• Market penetration: Win competitors' customers by offering low cost products, better promotion or distribution.
• Product development: Develop new products for existing markets or filling gaps in existing product lines to offer customers more options.
• Entry into new markets: Develop new products for new markets.
  

Increase profitability

• Cutting cost: By lowering investment on fixed capital (over a long period of time). Positive way to do it is by increasing capacity utilization and reducing thus fixed cost per unit. Cost can also be reduced by reducing investment in stocks, work in progress, account receivables, etc.
• Increasing prices: It needs to be justified. There should be value addition when price of a product is increased. New features, customization, better quality are some of the ways to do it. It is better, if such value addition cannot be easily copied by competitors.
• Rationalizing operations: There are three ways to do it: market segment rationalization, product line pruning and distribution rationalization. Market segment rationalization means dropping market segments to be served by the company or serving it in a cheaper way (telesales instead of personal selling). Product line pruning means dropping costly product variants or brands. Distribution rationalization means supplying only to those outlets which order a certain minimum level of order. It helps to minimize transportation cost and ordering cost.
  

2. Core Strategy: It refers to determining how to achieve the business objectives. The process involves three important steps:

• Determine target market: Target markets refer to the group of customer which is attractive to a business to choose to serve. While doing this, a business needs to analysis its capability. Moreover, when target customers' needs are changed, the business has to adapt its marketing mix accordingly.
• Identify competitors' target: It is important to determine how a business will take on its competitors. Weak competitors are easy prey and stronger competitors may be major cause of concern for a business.
• Competitive advantage: For a business to be successful, it is important to determine and achieve some edge over its competitors. This edge or competitive advantage can be achieved by combination of the following elements:
• Better quality products or service
• Anticipating and responding to customer needs faster than competitors
• Establishing closer long term relationship with customers than the competitors
• Lowest cost that can be translated into lowest price.
  

3. Marketing mix decisions: Marketing mix is the combination of product, price, promotion and place (distribution). While determining marketing mix, it is important to decide what type of combination of these elements will endow a business with competitive advantages over its competitors. It is however not possible to outsmart a competitor in all areas.

STEP 3: Marketing plan implementation
Now the question is how to implement a marketing plan into a business. The way of implementation varies according to the objective a business wants to achieve. For example, a firm may try to increase revenue and profit, or only to maintain market share, or to increase profit at the expense of market share. Based on these objectives, there are the following implementation strategies:

1. Build objective: It is a good strategy for a growth market where overall sales are growing and all players can achieve higher sales. In a mature market, sales of one player can grow only at the expense of other. However, if a mature market offers exploitable weaknesses, build objective can be applied; or when the company has exploitable competitive strength or extensive experience, this strategy can be applied.

How build objective can be achieved?

• Merger or acquisition: Instead of engaging in a costly battle with competitors, merger or acquisition helps a company to gain strength and increase sales, especially when the merged companies operate in the same market.
• Strategic Alliance: Another way instead of merger is strategic alliance when two companies reach some agreement which may be in terms of R&D, long term purchasing or supply agreement, licensing agreement, joint venture, etc.
• Market expansion: Market expansion can be done by creating new users, new uses of products or increasing frequency of purchase of existing customers.
• Winning market share: It refers, unlike market expansion, winning of competitors market share which can be done in different ways, like: Frontal Attack (attacking  the main market of the market leader by launching a product with similar or superior marketing mix), Flanking attack (attacking weakly guarded market segments, Encirclement attack (attacking every segment of the competitor), bypass attack (changing the rule of the game, usually by technological leap forging), etc. 
  

2. Hold Objectives: It is about defending a company’s current position against eminent competition. Usually the classic situation for applying this strategy is in a mature or declining market.

How hold objectives can be achieved? It can be done in two ways:

• Monitor competition: When there is competitive stability, everyone is playing fair getting satisfaction from what they have. A company needs to constantly monitor whether this stability is there or not so that it can strategize accordingly.
• Confront competition: It can be done in by position defense (building fortification around a company product with competitive pricing, good quality, better branding, patent, etc. so that a competitor cannot easily attack its market), flanking defense (defending the hitherto unprotected segments so that a competitor can use it to gain ground in the main market), preemptive defense (attacking competitors first before they attack or doing the same or superior what the competitor is doing).
  

3: Niche objectives: It is pursuing a small market or even a small segment. It is better for a company which has a small budget and strong competitors are dominating the main market. It depends of attractiveness of the niche, capability fo the company. Small company can do better R&D with focused efforts

4. Harvest objective: it is better in mature or declining market since they loss money or make a little profit but has to use valuable resource and time for that. In harvesting only essential expenditures are done, R&D is eliminated, products are rationalized, ad and promotion are eliminated.

5. Divest objective: A company decides to divest itself from a business or product. Loss making products are eliminated if it is not contributing to sales of other products.

STEP 4: Marketing control
This is the final step of the marketing planning process. At this stage, the results of the marketing plan are evaluated so that corrective actions can be taken and objectives can be achieved effectively. Such measures include sales, profit, cost, cash flow, etc. However, long term perspective is important while evaluating marketing planning activities.

Marketing planning is all about creating a roadmap for a company's marketing activities, which is, needless to say, vital for succes. For a small and medium business, marketing can be expensive, wasteful, and ineffective unless it acts smart.