At the end of each year, regional managers are at their busiest, juggling performance sprints, sales collections, staff incentives, and next year's marketing plans. Of course, the top priority for every regional manager is to sprint towards completing or surpassing this year's sales targets, as it directly affects personal interests—bonuses, red envelopes, promotions, and so on. The author has been a regional manager and knows well that the pressure of sales targets is heavier than Mount Tai. However, if a regional manager wants to develop further, especially towards roles involving market work such as brand manager, marketing department manager, or marketing manager, performance alone is far from sufficient. The year-end marketing plan is the true test of a regional manager's potential for growth; if the year-end performance sprint is about fighting for current survival and immediate interests, the annual marketing plan is about planning for the company's and one's own future development!
Theoretically, a complete marketing plan includes the following: market environment and analysis (industry, competitor, consumer analysis, SWOT analysis, etc.), market positioning, marketing objectives (sales targets and market goals), the 4P strategy mix (product, pricing, place, promotion; promotion is further divided into advertising, consumer promotions, trade promotions, wholesale promotions, personal selling, public relations, etc.), marketing personnel management structure, marketing expense budget, and action timeline. However, in reality, it is neither necessary nor possible for a regional manager to produce such a lengthy and cumbersome marketing plan.
The author has been a regional manager but more often held senior marketing management positions at companies like Wahaha, Strong, and Beingmate, having done multiple annual marketing plans and reviewed and analyzed many regional managers' plans. Now, I will share some insights on sales forecasting and expense estimation in marketing plans, hoping to help regional managers who are confident and aspire to move up to marketing management. (Special note: The regional manager referred to in this article is a regional marketing manager who is responsible for both sales business and market planning and promotion, not a regional sales manager who only has sales responsibilities without market planning and promotion duties.)
- Sales Forecast Issues Forecasting next year's sales is one of the primary tasks for every regional manager. The company's marketing headquarters generally requires each region to report its forecasted sales, which are then statistically aggregated. They also use mathematical statistical analysis methods (such as linear regression, moving averages) or market share forecasting analysis to calculate sales and make comprehensive judgments. If the company's marketing policies and competitive environment do not change significantly, and the regional manager has sufficient market sensitivity and analytical ability, the forecast deviation for next year's sales should not be too large. However, in reality, even under the above rational forecasting assumptions, regional managers often deliberately underestimate sales. Let's analyze the motives behind why regional managers underestimate sales: A) To secure higher sales commissions. Many companies base commissions on the percentage of target completion; the lower the target, the higher the completion percentage, and thus the higher personal income. B) Fear of being pushed harder. By reporting lower sales, there is room to bargain with headquarters. If they overestimate or estimate accurately, headquarters may increase the sales target. The fundamental reason most regional managers underestimate sales is the mindset of personal gain and gaming with headquarters.
In fact, from the headquarters' perspective, there is no need for regional managers to underestimate sales. Indeed, the marketing department typically makes a relatively reasonable assessment of each region based on per capita consumption, market size × estimated market share, linear regression, and other statistical analysis methods. The sales figures reported by regions are only reference data. Assuming both headquarters and regional managers make rational forecasts, the two sides' sales forecasts should basically align. Usually, the marketing headquarters will have a favorable impression of regional managers who forecast sales accurately, leaving a deep impression—such managers have promising promotion prospects. Because accurate market analysis and forecasting ability is one of the basic skills of senior marketing managers. When I was at Wahaha in 1996 with sales of 1 billion yuan, I accurately predicted sales of 2 billion for 1997, and in 1997 I accurately predicted 3.2 billion for 1998. This was one of the reasons Wahaha's senior management highly recognized me. Similarly, at Strong and Beingmate, I demonstrated a certain level of skill in forecasting future sales of many products, thereby building a foundation of trust as a marketing expert.
Based on my personal experience, objectively and accurately forecasting next year's sales is one of the fundamental skills for a regional manager's future growth.
Expense Estimation Issues Contrary to the psychology of underestimating sales, regional managers often overestimate marketing expenses, hoping to receive rewards for cost savings or to use as a bargaining chip with headquarters. In fact, this is even more unnecessary. Sales forecasting is indeed quite difficult, but estimating marketing expenses such as personnel salaries and bonuses, travel and entertainment, entry fees, display fees, returns, and entertainment expenses is relatively easier (as for advertising and promotion expenses in marketing expenses, they are generally decided by the company headquarters). I once encountered a regional manager who, when making the annual expense estimate, reported an expense ratio as high as 50% (the ratio of estimated expenses to estimated sales). After several rounds of negotiation, with the estimated sales unchanged, the marketing expense ratio dropped to 30%, and later the marketing expenses were indeed controlled within 30%. While we admire the regional manager's ability to control sales expenses, we also regret why he initially reported such a high expense ratio of 50%. This indicates that when he made the marketing plan, he did not consider the company's standpoint. Such a regional manager is suitable for the role of regional manager but would find it difficult to become a marketing manager at headquarters who must have a global perspective and put the company's interests first.
Completeness of the Marketing Plan As a regional manager, it is neither necessary nor possible to produce a very complete marketing plan like the company's marketing department manager, such as objective economic analysis in environmental analysis, product development, positioning, and pricing in the 4Ps, which are not within the regional manager's decision-making power. However, the regional market environment analysis (consumer environment, competitor environment, channel structure analysis, etc.) and product market position analysis in the regional manager's marketing plan are highly valued by the marketing headquarters.
As the marketing headquarters considers overall and directional issues, it is far less familiar with the competitive environment of specific regions than regional managers. The marketing headquarters always hopes that regional managers will analyze the local market competitive environment as thoroughly as possible, such as target consumer purchasing behavior, competitive strategy focus, strengths and weaknesses analysis, and product market share analysis.
However, in reality, such marketing analysis work must be based on detailed market research and requires a professional marketing knowledge structure for regional managers to write. Many regional managers consciously or unconsciously avoid these points in their annual marketing plans. On the one hand, it is because of the many tasks at year-end and lack of energy; on the other hand, it may be due to lack of knowledge. For some regional managers who are used to "charging and fighting," writing market analysis plans is more difficult than climbing to the sky. I do not emphasize the completeness of the regional manager's marketing plan, but I do emphasize the logical reasoning in its content (i.e., the market competition analysis part). It is my sincere hope that regional managers on the front lines, to achieve career development, especially in marketing, should pay attention to cultivating market analysis skills.
- Information Asymmetry Issues The marketing headquarters, backed by professional market research and internal data and intelligence systems, considers next year's product development, promotion investment, and other macro strategies that directly affect sales growth from a global and overall perspective. It hopes that regional managers will mainly provide the above three points (sales targets, expense estimates, and regional market and competitive environment analysis), especially the regional market and competitive environment analysis, which is crucial for the marketing headquarters' final decision-making. Because if every regional manager can provide relatively objective and in-depth marketing analysis reports, then by synthesizing reports from across the country, the marketing headquarters may summarize commonalities and individualities, and formulate a marketing mix that combines universality and differentiation, greatly increasing the success rate of the marketing plan.
As a regional manager, on the one hand, you should understand the importance of the regional market competitive environment to the company and try your best to provide it; on the other hand, you should communicate more with the marketing headquarters in a timely manner to understand the company's product development, new product launches, advertising and promotion plans for next year, so as to coordinate the overall and the partial, the universal and the regional differences. The marketing plan you write should not only conform to the company's marketing strategy direction but also adapt to local conditions and the regional market. Such an annual regional marketing plan has a greater chance of success.
Information asymmetry between headquarters and regions exists in any company. The overall and regional marketing plans often go through several rounds of communication over months before finalization. If a regional manager rationally recognizes the impact of information asymmetry on the marketing plan, consciously and purposefully understands information and incorporates it into the plan, and remains rational in estimating both sales targets and marketing expenses—neither underestimating sales targets nor overestimating marketing expenses—I believe the plan is more likely to pass on the first try and may even be praised by the marketing headquarters. If all goes well and the plan achieves the expected results, then the regional manager is about to be promoted.
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