Auckland Engineering plc

Harold Horne, Sales Manager for Auckland Engineering plc, a well-established engineering company in Bishop Auckland, County Durham, received the following memo from D.C. Duncan, his recently appointed Marketing Director.

Memo

To: H. Horne, Sales Manager

From: D.C. Duncan, Marketing Director

Date: 16 January 2014

Subject: Preparation of annual marketing plan

You will recall that at our series of preliminary meetings to discuss future marketing plans for the company I suggested that I was unhappy with the seemingly haphazard approach to planning. Accordingly, you will recall it was agreed between departmental heads that each would undertake to prepare a formal input to next month's planning meeting.

At this stage I am not seeking detailed plans for each product market; rather I am concerned that you give thought to how your department can contribute to the planning process. Being new to the company and its product/markets, I am not fully up to date on what has been happening to the market for our products, although as we all know our market share at 35 per cent is down on last year. I would particularly like to know what information your department can contribute to the analysis of the situation.

To help in your analysis I have summarised below what came out of our first planning meetings.

1. Business definition. It was agreed that the business needs re-defining in customer terms. An appropriate definition for our company would be: 'Solutions to engine component design and manufacturing problems.

2. SWOT analysis

Our main strengths are:

• excellent customer awareness and an image of reliability and quality;
• sales force is technically well qualified;
• manufacturing flexibility second to none - we respond quickly and effectively to individual customer needs.

Our main weaknesses are:

• prices approximately 10 per cent above industry average;
• spending higher proportion of turnover on advertising than most main competitors;
• sales force not skilled in generating new leads.

Our major opportunities are:

• some major competitors having difficulty keeping customers because of quality and delivery problems;
• recent legislation means research and development programme on new TDIX component, emphasising lower exhaust emission levels, should prove advantageous;
• recent and forecast trends in the exchange rate should help export marketing efforts;
• buyers in the industry seem prone to switching suppliers.

Our major threats are:

• our largest customer threatening to switch owing to our higher than average prices;
• apart from TDIX programme, we have not been keeping pace with rapid technological change in the industry;
• some major export markets are threatened by possibility of import restrictions.

3. Objectives

Financial:

• to increase return on capital employed by 5 per cent;
• net profit in the forthcoming year to be £4 million.

Marketing:

• sales revenue to be increased to £35 million in the forthcoming year.

4. Marketing strategy

Target markets:

• major manufacturers of diesel engines worldwide.

Positioning:

• highest engineering quality and after-sales service in supply of specialist low-volume diesel engine components.

I would welcome your comments on my analysis, together with any views on the appropriateness of the objectives I have set.

For the next meeting I suggest that as sales manager you give some thought to where the relative emphasis should be placed in our promotional effort. As I have mentioned, we seem to be spending an excessive amount on advertising compared with our competitors. Perhaps you could give me your thoughts on this, as I understand you were in favour of raising our advertising budget from 1 per cent to 2 per cent of turnover last year. As you are aware, from a limited budget, we must decide where to place the relative emphasis in our communications mix. Perhaps you can indicate what you feel are the major considerations in this decision.

Discussion questions-

1. Give a brief outline of ways that Harold Home, Sales Manager, can contribute to the marketing planning process at Auckland Engineering.

2. Looking at Duncan's analysis of the previous meeting, what issues/problems do you see that are of relevance to the activities of the sales force?

3. How would you respond to Duncan's comments on the promotional mix and in particular to his comments about the level of advertising expenditure?

4. What is the logic in conducting a SWOT analysis in this context?

Examination questions-

1. Explain the differences between marketing strategies and sales strategies.

2. What is the relationship between objectives, strategies and tactics?

3. Discuss the component parts of the communications mix.

4. What is the relationship between SWOT analysis and the TOWS matrix?

5. Select a company of your choice and conduct a SWOT analysis and a PEST analysis for that company.

6. What is meant by contingency planning and when is it required in the marketing planning process?

7. What do you understand by the setting of sales objectives in the context of the marketing planning process? Give three examples of sales objectives for an organisation of your choice.

8. Differentiate between 'push' and 'pull' strategies of promotion. Give two examples of each in the context of a large retailer and an automobile manufacturer.

2000 words (With around 500 words per question adding up to 2000 words)

4 Harvard references.