Reference no: EM131250136

Market Environment

Using what you have learned from your reading this week, research REI and develop a profile of its marketing environment. Use the REI Marketing Environment Worksheet to develop your analysis. Submit your worksheet to the assignment area.

How To Write a Marketing Plan

The Marketing Plan is a highly detailed, heavily researched and, hopefully, well written report that many inside and possibly outside the organization will evaluate. In many respects, the Marketing Plan is the most important document produced by marketers as it not only helps to justify what has occurred in the past, but is critical for explaining where a company intends to go in the future.

The Marketing Plan is widely used by both large large corporate marketing departments and also by small startup companies. It is particularly important for marketers who seek funding for new projects or to expand existing products or services.

Essentially the Marketing Plan:

• forces the marketing personnel to look internally in order to fully understand the results of past marketing decisions.
• forces the marketing personnel to look externally in order to fully understand the market in which they operate.
• sets future goals and provides direction for future marketing efforts that everyone within the organization should understand and support.
• is a key component in obtaining funding to pursue new initiatives.

The Marketing Plan is generally undertaken for one of the following reasons:

1. Needed as part of the yearly planning process within the marketing functional area.

2. Needed for a specialized strategy to introduce something new, such as new product planning, entering new markets, or trying a new strategy to fix an existing problem.

3. Is a component within an overall business plan, such as a new business proposal to the financial community.

There are many ways to develop and format a marketing plan. The approach taken here is to present a 6-Part plan that includes:

1. Purpose and Mission
2. Situational Analysis
3. Marketing Strategy and Objectives
4. Tactical Programs
5. Budgets, Performance Analysis and Implementation
6. Additional Consideration

This plan is aimed at individual products and product lines, however, it can be adapted fairly easily for use in planning one or more strategic business units (SBU). The page length suggested for each section represents a single-spaced typed format for a plan focused on a single product. Obviously for multi-product plans lengths will be somewhat longer.

It is assumed that anyone developing a Marketing Plan possesses a working understanding of marketing principles. If you do not, it is suggested you spend considerable time learning about basic marketing through the previous sections of the Principles of Marketing Tutorials.

Part 1

Part 1 of the plan is designed to provide the reader with the necessary information to fully understand the purpose of the marketing plan. This part also includes organizational background information, which may be particularly important if the audience for the plan is not familiar with the company, such as potential financial backers.

This part of the plan contains two key components:

1. Purpose of the Marketing Plan
2. Organization Mission Statement

Some of the information, in particular the mission statement, may require the input of upper-management. The information in this part will prove useful later in the plan as a point of reference for material that will be introduced (e.g., may help explain pricing decisions). In cases in which there are separately operated divisions or SBU, there may also be mission statements for each.

The main body of the Marketing Plan often starts with the planner providing the rationale for the plan. The tasks associated with this section are to (Length: 1 paragraph):

1. Offer brief explanation for why this plan was produced

• e.g., introduce new product, enter new markets, continue growth of existing product, yearly review and planning document, etc.

2. Suggest what may be done with the information contained in the plan

• e.g., set targets to be achieved in the next year, represents a departmental report to be included in larger business or strategic plan, etc.

1. Identifies a stable (i.e., not dramatically changing every year), long-run vision of the organization that can answer such questions as:

• Why is the company in business?
• What markets do we serve and why do we serve these markets?
• In general terms, what are the main benefits we offer our customers?

o e.g., a low price software provider may state they offer "practical and highly affordable business solutions"

• What does this company want to be known for?
• What is the company out to prove to the industry, customers, partners, employees, etc.?
• What is the general corporate philosophy for doing business?
• What products/services does the company offer?

2. In developing the vision presented in the mission statement consider:

• Company History

o How company started and major events of the company, products, markets served, etc.

• Resources and Competencies

o Consider what the company currently possesses by answering the following:

- What are we good at?
- What is special about us compared to current and future competitors (in general terms do not need to mention names)?
- What do we do that gives us a competitive advantage?

o Consider the questions above in terms of:

- people, products, financial position, technical and research capabilities, partnership/supply chain relations, others

• Environment

o Consider the conditions in which company operates including:

- physical (e.g., facilities), equipment, political regulatory, competitive, economic, technological, others

Part 2

The situational analysis is designed to take a snapshot of where things stand at the time the plan is presented. It covers much of the same ground covered in the Preparing a Market Studytutorial, so those preparing a Marketing Plan should check this out as well.

This part of the Marketing Plan is extremely important and quite time consuming. For many, finding the metric needed in this section may be difficult, especially for those entering new markets. Anyone in need of numbers should look the Data Collection: Low-Cost Secondary Research tutorial, which may offer ideas for inexpensively locating the numbers Marketing Plan writers may need. For those who can afford to spend to locate marketing metrics, the Data Collection: High-Cost Secondary Research tutorial will also be of value.

The situational analysis covers the following key areas:

• Current Products
• Current Target Market
• Current Distributor Network
• Current Competitors
• Financial Analysis
• External Forces

1. Product Attributes

• Describe the main product features, major benefits received by those using the product, current branding strategies, etc.

2. Pricing

• Describe pricing used at all distribution levels such as pricing to final users and to distributors, incentives offered, discounts, etc.

3. Distribution

• Describe how the product is made accessible to final users including channels used, major benefits received by distributors, how product is shipped, process for handling orders, etc.

4. Promotion

• Describe promotional programs and strategies in terms of advertising, sales promotion, personal selling and public relations, how product is currently positioned in the market, etc.

5. Services Offered

• Describe support services provided to final users and distributors before, during and after the sale

1. Describe the target market approach:

• What general strategy is used to reach targeted customers? Generally approaches include:

o mass market - aim to sell to a large broad market
o segmentation approach - aim to selectively target one (niche) or more markets

2. Describe demographic/psychographic profile of the market:

• Profile criteria may include:

o gender, income, age, occupation, education, family life cycle, geographic region, lifestyle, attitudes, purchasing characteristics, etc.

3. Describe the following characteristics of targeted customers:

• Needs/benefits sought by market
• Product usage

o Consider answers to these questions related to customers using the product such as:

- who is using the product?
- why do they use the product?
- when do they use the product?
- how is the product used?

• Product positioning

o Evaluate how customers perceive the product in relation to competitor's products or to other solutions they use to solve their problems

• Attitudes

o What is the target market's attitude regarding the company's product?
o What is the target market's attitude regarding the general product category?

- i.e., exam the general attitude regarding how products from all companies serve the target market's needs

4. Describe the purchasing process:

• How does the target market make their purchase?

o What does the decision-making process involve?
o What sources of information are sought?
o What is a timeline for a purchase (e.g., impulse vs. extended decision-making)?

• Who makes the purchase?

o Does user purchase or is other party responsible (e.g., parent purchasing for children)?

• Who or what may influence the purchase?

5. Provide market size estimates (keep in mind these are estimates for the market not for a specific product)

• Provide size estimates for the potential market

o What is the largest possible market if all buy?

• Provide estimates of size for the current target market

o What percent of the potential market actually purchased?

• Provide estimates of future growth rates

o At least through the timeframe for the plan (e.g., 1 year) but most likely longer (e.g., 3-5 year projections)

Feeling The Heat. Authors:Clark, KenSource:Chain Store Age. Jun2000, Vol. 76 Issue 6, p60. 2p. 2 Color Photographs. Document Type:ArticleSubject Terms:*RETAIL stores

SPORTING goodsGeographic Terms:UNITED StatesCompany/Entity:RECREATIONAL Equipment Inc.

SPORTS Authority Inc. DUNS Number: 175391242 Ticker: TSANAICS/Industry Codes:414470 Amusement and sporting goods merchant wholesalers

451110 Sporting Goods Stores

423910 Sporting and Recreational Goods and Supplies Merchant Wholesalers

339920 Sporting and Athletic Goods Manufacturing

452999 All other miscellaneous general merchandise stores

453998 All Other Miscellaneous Store Retailers (except Tobacco Stores)

236220 Commercial and Institutional Building Construction

453999 All other miscellaneous store retailers (except beer and wine-making supplies stores)Abstract:Looks at the efforts of sporting goods retailers in the United States to remain competitive. Status of the sporting goods business; Actions taken by Recreational Equipment Inc. to build excitement among shoppers; Trends in sporting goods retailing; Store concept implemented by the Sports Authority; Impact of computers on the sporting goods business.Full Text Word Count:1456ISSN:1087-0601Accession Number:3207650Section: COMPETITION
Sporting-goods retailers stand up to market forces

In a recent episode of "The Sopranos," the HBO television show, a sporting-goods retailer strapped with gambling debts loses his store to the long arm of organized crime. It's pure fiction. But the idea that sporting-goods merchants are wrestling with powerful, unforgiving forces rings true in many real-world ways.

For instance, according to retailers and analysts, there's the force of oversupply and demand--too many sporting-goods stores chasing too few dollars. Computer games and Internet activity are taking kids out of Little League lineups. While retailers in categories such as music and videos get hot new rifles every week, sporting-goods chains haven't had a new hit since the in-line skating craze of the early 1990s. And then there's the weather.

All told, it's a business climate about as gentle as Mafia kingpin Tony Soprano himself. The Sporting Goods Manufacturer's Association reported flat sales growth last year, up 2% from 1998. Bloodletting has been a result, particularly at Fort Lauderdale, Fla.-based The Sports Authority, which suffered "extremely challenging years" in 1998 and 1999, according to chairman and CEO Marty Hanaka. The 192-store chain and early pioneer of big-box retailing posted a loss of $161 million last year. That's an extreme exam. pie, but others are straggling as well. Oshman's Sporting Goods, Houston, reported a loss of $3.6 million last year. Even profitable Sport Chalet, Los Angeles, watched comp-store sales drop 5.5% in the last three months of 1999--the ski-oriented company blamed unseasonably warm weather.

"The ability to stand out from the crowd is what everyone is after," says Alvin Lubetkin, CEO of 56-store chain Oshman's. "There are too many sporting-goods stores today. If you only get your fair share, that's not enough."

While this summer will find the sports-marketing machine of the Olympic Games at full speed in Sydney, Australia, few chains are relying on the spirit of athletic competition alone to lift sales. Chains are staking claims on their own little comer of the World Wide Web. But they're also building excitement in their Stores the old-fashioned way--with value, service and fun-to-shop environments.

One of the leaders in store excitement is Seattle-based Recreational Equipment Inc., better known as REI, with 54 stores in 23 states. "We call it 'edutainment,'" says Devony Hastings, a spokeswoman for the company. "It's providing different ways for the customer to learn about the product." As a monument to that concept, the company features an indoor climbing rock at its flagships and select other stores. Most recently, REI's Denver store, which opened in April, features a "cold room," where shoppers can test high-performance parkas or sleeping bags by cranking down the temperature and cranking up the windchill. (See story on page 144.)

Do REI stores get shoppers who are there just to play for free? "We probably do," says Hastings. "But part of what we do is get people excited about the outdoors."

At Oshman's, CEO Lubetkin describes a company in transition. What used to be a traditional chain of 10,000-sq.-ft, stores has become a "unique and fun shopping environment," with 42 SuperSports USA megastores, he says. Like REI, Oshman's is more and more encouraging shoppers to play around in the store. Basketball courts, tennis courts, batting cages--it's part of an overall strategy to create excitement.

"Naturally, we have a good selection of merchandise, but so do my competitors," Lubetkin says. "We want people to have a good time when they shop."

There are signs that the strategy is working. While Oshman's comp-store sales increased less than 1.0% in 1999, January saw comps grow 8.9%, and they increased 6.7% in February.

The Sports Authority is hoping for that kind of upswing as well. The chain isn't going to stray from its strategy of becoming the one-stop mecca for sporting goods, but it has learned a thing or two from the rough years of the late '90s, says George Mihalko, executive VP and CFO. "The big-box concept worked well for us through the late '80s and early '90s," he says. "But the landscape changed."

Specifically, the athletic look fell out of favor as stores such as Abercrombie & Fitch, Kohl's and Gap grabbed a bigger piece of the apparel pie. Also, the warehouse approach was losing ground to the trend toward more sophisticated merchandising.

Today, the company is responding with a "specialty-store-within-a-full-line-store" concept, Mihalko says. Departments --for instance, footwear, fitness equipment and water sports--are much more clearly delineated than in the past. "We're trying to give the customer a more defined departmentalization in our stores, supported by better signage," he says. "It's a more easily shopped store." The strategy so far has taken shape at new stores in Clifton and Hazlet, N.J.; Sanford, Fla.; and in a remodeled store in Fort Lauderdale, Fla.

The Sports Authority and Oshman's are making a move on the Web, as well, which brings up another interesting sporting-goods question: Do people prefer to buy their sporting goods from a Web site? The jury is still out.

There are some clear warning signs. For instance, pure-play Interact sporting-goods retailer Fogdog Inc. of Redwood City, Calif., lost $14.7 million in the first quarter ended March 31. Also, in a recent Ernst & Young survey of 1,200 Interact users, sporting goods ranked at or near the bottom as a "favorite on-line shopping category" for men (only 19% of respondents considered it among their favorite) and women (12%).

"People like to swing the bat and slap their fist into the baseball glove before they buy," says Lubetkin. "I have some reservations about the potential of business on the Interact." Still, Lubetkin and others say it wouldn't make any sense to ignore Web sales. The company is one of several that has turned to King of Prussia, Pa.-based Global Sports, which develops and operates e-commerce sporting-goods businesses for traditional sporting-goods retailers. Other Global Sports clients include The Athlete's Foot, Sport Chalet, MC Sports and Dunham's Sports.

Another virtual partnership of note involves Plainfield, Ind.-based sporting-goods retailer Galyan's Trading Co., which became the bricks-and-mortar backbone of high-profile e-commerce site MVP.com.

All sporting-goods retailers, regardless of their Web involvement, are going up against some focused on-line competition in many categories, particularly fishing and golf.

"The sporting-goods category is kind of an artificial category," says Amax Goel, president and founder of Chipshot.com, a Sunnyvale, Calif.-based pure play focusing exclusively on golf merchandise. "It's comprised of a whole bunch of different categories--like golf, fishing and footwear--that are thrown together."

Consider, he says, that a typical home-improvement-category shopper is probably interested in all of the aisles of The Home Depot. ("It's not as if someone would say, 'I like to build decks, but I don't like other handiwork,'" he says.) But a sporting-goods-store shopper is more likely to focus only on his or her specific area of interest, Goel says.

Research conducted by Chipshot.com shows that after golf, customers ape most interested in "movies and barbecues," Goel says.

But the biggest competition to any single sporting-goods store may be coming from beyond the world of sports and hobbies--computers. Kids are opting for mouse pads instead of knee pads.

"The allure of the computer is a threat," says Mike May, director of communications for the Sporting Goods Manufacturers Association, pointing to the quadruple threat of video games, e-mail, Web surfing and chat rooms. "Three hours can go by, and you didn't do a thing but click a finger. The sport ing-goods industry isn't a case of Nike vs. Rawlings. It's a case of everybody against the computer industry."

Sports Authority CFO Mihalko believes it's not just the sporting-goods retailers that should be worried about computer-induced inactivity among the nation's youth. "The phenomenon transcends sporting goods and is something that causes concern in all corporations," he says. "What happens to restaurants, movies? It's something that can change our society."

Hope springs eternal in sports and sporting goods, and there's plenty of optimism to go around. The 2000 Summer Games are expected to lift the awareness of sports in general. Footwear fashion tastes are swinging back to the athletic look, as opposed to the brown, casual look. And even Ramsey Outdoor Sports of Paramus, N.J., the real-life store that starred as the ill-fated franchise in "The Sopranos," expects a good year ahead, despite a lingering winter in the Northeast.

"Of course, we're optimistic," says Stuart Levine, owner of the three-store chain that dates back to the 1950s. "[But] we have to do a better job of teaching the youth about the outdoors."

PHOTO (COLOR): REI's Seattle flagship includes a massive indoor rock-climbing wall.

PHOTO (COLOR): Galyan's Trading Co.'s 80,000-sq.-ft. store in Buffalo, N.Y., has been up and running since April.

By Ken Clark

https://www.rei.com
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