Promotional Materials Clearinghouse

Creating the Marketing Plan

The final stage of the strategic market planning process is marketing planning, or the systematic process of assessing market opportunities and resources, determining marketing objectives, defining marketing strategies, and establishing guidelines for implementation and control of the public transit organization’s marketing program. The outcome of this process is a formal, written document that outlines and explains all the activities necessary to implement specific marketing strategies. The marketing planning cycle is illustrated in Figure 2.

Marketing plans vary with respect to the time period involved. Generally, short-range plans are for one year or less and moderate-range plans for two to five years. Both types of plans are usually quite detailed. Long-range plans cover periods of more than five years, perhaps up to fifteen years, and are usually not as specific. For most public transit systems, it is beneficial to form strategic marketing plans covering short-range, moderate-range, and long-range operations of the organization.

Developing clear, well-written marketing plans, though time-consuming, are important. The time-based marketing plans are used internally among employees for communication purposes. It covers the assignment of responsibilities, tasks, and schedules for implementation purposes. It also presents objectives and specifies how resources are to be allocated in order to achieve these objectives. Finally, it helps marketing managers to monitor and evaluate the performance of a specific marketing strategy implemented by the public transit system. The following components are included in a basic marketing plan.

Executive Summary
The executive summary is a synopsis of the entire marketing plan (often only one or two pages in length). The summary includes an introduction, an explanation of the major aspects of the marketing plan, and a statement about the costs of implementing the plan. As such, the executive summary provides an overview of the plan (as opposed to detailed information) to highlight key issues pertaining to their roles in the planning and implementation process. The executive summary is an important component of the marketing plan because it is often shared with people outside the organization. For example, the executive summary may be useful to the public transit organization’s funding agents when it becomes involved in the financial aspects of the marketing plan. In addition, suppliers and investors may be given access to the executive summary if they play key roles in implementing the plan.

Environmental Analysis
The environmental analysis provides information about the public transit organization’s current situation with respect to the marketing environment, the target market, and the organization’s current objectives and performance. The first issue in the environmental analysis is an assessment of the environmental forces in the marketplace. Both internal and external forces are at play and should be considered. The internal forces that relate to the operations of the public transit organization include the organization’s current political environment, the availability and deployment of human resources, the age and capacity of equipment or technology (e.g., public transit vehicles), and the availability of financial resources. The organization must also assess the external forces affecting its operations. These forces include:

* Competitive forces refer to transit organizations that are marketing offerings that are similar to or can be substituted for a particular public transit organization’s offerings in the same geographic area.
* Economic forces refer to general economic conditions that affect the public transit marketplace (i.e., the overall state of the economy), but also to the buying power and willingness on the part of the customers to spend resources on public transit offerings.
* Political, legal, and regulatory forces of the marketing environment are closely interrelated. Legislation is enacted, legal decisions are interpreted by courts, and regulatory agencies are created and operated, for the most part, by elected or appointed officials. As such, legislation and regulations (or the lack thereof) reflect the current political outlook and, therefore, have the potential to influence marketing decisions and strategies of public transit organizations.
* Technological forces refer to the application of knowledge and tools to solve public transit problems and perform tasks more efficiently. A public transit organization has to institutionalize a procedure for anticipating the effects of new products and processes on the organization’s public transit offerings.
* Sociocultural forces are the influences in society and its culture(s) that bring about changes in attitudes, beliefs, norms, customs, and lifestyles. Profoundly affecting how people live, these forces help determine what, where, how, and when people use public transit systems. For example, the use of public transit systems as a means of transportation in many European countries and larger U.S. cities is accepted at all income levels in society, while in many smaller U.S. cities the use of "public transportation" is considered an indicator of being poor.

Strengths and Weaknesses
This section of the marketing plan introduces the SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis into the document. The analysis of the strengths and weaknesses focuses on internal factors that give the public transit organization certain advantages and disadvantages in meeting the needs of its target markets. These factors are derived from the environmental analysis. In addition, strengths and weaknesses should be analyzed relative to the market needs and competition to allow the organization to determine what it does well and what it needs to improve.

* Strengths refer to competitive advantages or distinctive competencies that give the public transit organization an advantage in meeting the needs of its target market.
* Weaknesses refer to any limitation that a public transit organization might face in marketing strategy development or implementation. Weaknesses should also be examined from the customers perspective since the customers often identify weaknesses not readily identifiable to the organization.

Opportunities and Threats
The second section of the SWOT analysis (i.e., strengths, weaknesses, opportunities, and threats) examines the opportunities and threats that exist in the public transit marketing environment. It focuses on factors that are external to the organization. While both opportunities and threats exist independently of the organization, they can affect the organization’s operations significantly. An easy way to differentiate a strength or weakness from an opportunity or threat is to ask the question:

* Would this issue exist if the public transit organization did not exist?

If the answer is yes, then the issue should be considered external to the organization. The externally-focused opportunities and threats are derived from the environmental analysis. Similar to the strengths and weaknesses, opportunities and threats should be analyzed relative to the public transit market needs and capabilities of competitors.

* Opportunities refer to favorable conditions in the environment that could produce rewards for the public transit organization if acted upon properly.
* Threats refer to conditions or barriers that may prevent the public transit organization from reaching its objectives.

Marketing Objectives
This section of the document describes the marketing objectives that underlie the public transit organization’s marketing plan.

* A marketing objective states what is to be accomplished in the broad scope of the operations of the public transit organization through marketing activities.

The marketing objective(s) should be based on a careful study of the SWOT analysis and should contain objectives related to matching strengths to opportunities and/or the conversion of weaknesses or threats. Marketing objectives for a public transit organization can be stated in terms of product introduction, product improvement or innovation, sales volume, profitability, market share, pricing, distribution, advertising, or employee training activities.

Marketing Strategies
Marketing strategies are a means to achieve the marketing objectives outlined earlier, but also a means for the public transit organization to achieve a competitive advantage vis-a-vis the competition and perhaps identify a sustainable competitive advantage (i.e., a competitive advantage that cannot be copied by the competition).

* Marketing strategy refers to how the public transit organization will manage its relationships with customers so that it gains an advantage over the competition. In more detailed terms, however, this means that the public transit organization has to develop and maintain both a target market and an appropriate marketing mix (i.e., product, distribution, promotion, and price) to satisfy the needs of this target market.

Target markets are developed by segmenting the existing and potential public transit market via the use of a series of:

* Demographics variables (e.g., age, gender, race, ethnicity, income, education, occupation, family size, family life cycle, and social class).
* Geographic variables (e.g., region, urban/suburban/rural, city size, county size, state size, market density, and climate).
* Psychographic variables (e.g., personality attributes, motives, and lifestyles).
* Behavioristic variables (e.g., usage frequency, benefit expectation, brand loyalty, and price sensitivity).

Figure 3 illustrates the typical market segmentation process. The target markets are then maintained by consistently providing the customers with public transit offerings that satisfy their needs and that meet their expectations. This is done via the use of the marketing mix variables (i.e., product, distribution, promotion, and price). The marketing mix variables were defined earlier in this document, but it may be beneficial to re-iterate this discussion here, followed by a more detailed discussion of the components of each marketing mix variable (see Figure 4).

* A product is a good, service or idea. In the case of the public transit system, the product is a combination of all three in that the “public transit offering” received by the customers includes (1) the physical element of the bus (product), (2) the application of human efforts that provide intangible benefits to the customers (service), and (3) the image of the public transit offering received by the customers (idea). Five elements of the public transit offering should be examined:
- Product life cycles refers to the progression of the public transit offering through four stages: introduction stage (the initial stage of the public transit offering - its first appearance in the marketplace - when sales are zero and the profits are negative), growth stage (the stage of the public transit offering when sales rise rapidly and profits reach a peak and then start to decline), maturity stage (the stage of the public transit offering when the sales curve peaks and starts to decline as profits continue to decline), and decline stage (the stage of the public transit offering when sales fall rapidly, signaling the time for the organization to revise its offerings to the customers).
-Product differentiation refers to the process of creating and designing public transit offerings so that consumers perceive them as different from the competing offerings. Important elements of differentiation are: the overall quality of the public transit offering, the design and features of the public transit offering, and the support services of the public transit offering.
- Public transit offering positioning and repositioning refer to the decision and activities that create and maintain a certain concept of the public transit organization’s offering in customers’ minds.
- Organizing to manage public transit offerings based on the traditional functional form of organization - in which managers specialize in business functions such as advertising, sales, and distribution - often does not fit a public transit organization’s needs. As such, the public transit organization has to find an organizational approach that can accomplish the tasks necessary to develop and manage its offerings.
- The unique characteristics of public transit offerings involve several elements that are quite different than other products and need to be specifically addressed in the marketing plan. These are: intangibility (being unperceivable by the senses), inseparability of production and consumption (being produced and consumed at the same time), perishability (cannot be stored for future use), heterogeneity (variation in quality may be more apparent than in other products), client-based relationships (interactions that result in satisfied customers who repeatedly use the public transit system over time), and customer contact (interaction between provider and customer needed to deliver the public transit offering).
* The distribution component of the marketing mix refers to the availability of the public transit system when the customers need it and in the form they want it vary. In other words, the customers do not want to wait for the bus to show up at their stop. In addition, they want to feel safe on the bus (e.g., driving safety and general safety related to serving areas).
- Intensity of market coverage refers to the broad availability of the public transit system when, where, and in the form the customers want it (e.g., number of covered routes and frequency of pick-ups).
- Relationships with other public transit organizations to offer an integrated and possible larger cover area that is possible by one organization (i.e., similar to many of the airline partnerships throughout the world).
* Promotion refers to communication between the public transit organization and its customers to facilitate satisfying exchange relationships. Oftentimes, this means that the customers have to be convinced that public transit is a good alternative to driving their own car or commuting with a friend or colleague. Within the promotional mix, four elements can be used to communicate with the customers.
- Advertising is a paid nonpersonal communication about the public transit organization and its offerings that is transmitted to a target audience through a mass medium such as television, radio, newspapers, magazines, direct mail, public transit vehicles, or outdoor displays.
- Public relations is free nonpersonal communication activities used to create and maintain favorable relations between a public transit organization and its publics.
- Personal selling is a personal, paid communication that informs customers and persuades them to use the organization’s public transit system (this form of promotion is used sparingly by public transit organizations).
- Sales promotion is an activity and/or material meant to induce the consumers to use the organization’s public transit system (rebates, buy a one-way ticket and get a free return).
* The price refers to the value (usually monetary) exchanged for the products in a marketing exchange. Obviously, the most common form of value for a public transit system is money, and the product received is the use of the public transit system to get to a specific location. More importantly, however, is the way in which price is used in the marketing mix (i.e., a high price leads to the expectation of a higher quality public transit system while a more modest price may simply place the focus on getting from point A to point B).
- Factors affecting pricing decisions include organizational and marketing objectives, pricing objectives, costs, other marketing mix variables, organizational partners’ expectations, customers’ perceptions, competition, and legal and regulatory issues.
- Pricing involves (1) development of pricing policies, (2) assessment of target market’s evaluation of price, (3) determination of demand, (4) analysis of demand, cost, and profit relationships, (5) evaluation of competitors’ prices, (6) selection of a pricing policy, (7) selection of a pricing method, and (8) determination of a specific price.

Marketing Implementation
Marketing implementation is the "how?" of marketing strategy. This process has several components, all of which must be integrated if the implementation is to succeed.

* Marketing implementation is the process of putting marketing strategies into action. Components that are important in implementation include: (1) marketing structure, (2) marketing strategy, (3) leadership, (4) human resources, (5) organizational resources, and (6) organizational systems. These components function as determinants of the shared goals of the public transit organization. To properly address these components, three areas of marketing implementation need to be assessed in this stage of the marketing plan:
- Marketing organization refers to the structure and relationships of a marketing unit, including lines of authority and responsibility that connect and coordinate individuals, strongly affect marketing activities. A marketing-oriented organization concentrates on discovering what the public transit customers want and providing it in such a way that it achieves its objectives. This type of an organization focuses on customer analysis, competitor analysis, and the integration of the organization’s resources to provide customer value and satisfaction, as well as long-term profits.
- Activities and responsibilities are planned and organized by marketing managers who provide purpose, direction, and structure for marketing activities. Understanding the issues associated with marketing implementation, as well as selecting an overall approach, sets the stage for the implementation of specific marketing activities. The bottom line is that the collective efforts of individual people within the organization are ultimately responsible for implementing the public transit organization’s marketing strategy.
- An implementation timetable is a necessity for the effective implementation of selected marketing activities. Successful marketing implementation requires that employees know the specific activities for which they are responsible and the timetable for completing each activity. Establishing an implementation timetable involves several steps: (1) identifying activities to be performed, (2) determining the time required to complete each activity, (3) separating the activities that must be performed in sequence from those that can be performed simultaneously, (4), organizing the activities in the proper order, and (5) assigning the responsibility for completing each activity to one or more employees, teams, or managers.

Evaluation and Control
To achieve marketing as well as general organizational objectives, marketing managers must effectively control marketing efforts. The marketing control process consists of establishing performance standards, evaluating actual performance by comparing it with established standards, and reducing the differences between desired and actual performance (Figure 5).
In following the marketing control process, performance standards, financial controls, and monitoring procedures (audits) have to be established.

* Performance standards refer to the effectiveness of the public transit organization in meeting its stated objectives. The objectives should be stated in the marketing plan in terms of profits, sales, costs, or communication standards. The use of sales figures to evaluate a public transit organization’s current performance (e.g., revenue generated via public transit ticket sales) is a common way of evaluating performance standards.
* Financial controls are often established via a marketing cost analysis that breaks down and classifies costs to determine which costs are associated with specific marketing activities.
* Monitoring procedures (audits) involve the systematic examination of the public transit organization’s marketing objectives, strategies, organization, and performance.