Role and purpose of planning in marketing

Planning means looking into the future. It is looking ahead to where we want to go, what we want to do, and what obstacles we are likely to encounter. In this sense, planning is not new. In one way or another, most business men have planned since it first became necessary to exchange surplus goods.
In early days, planning was relatively simple and the risk involved was correspondingly small. As markets expanded and mass production grew, it became necessary to plan better in order to reduce the risk of the uncertainty.
We have seen that, in recent years, more people are at work selling and servicing things, than making them. One of the direct consequences of this change has been the need for better long-range planning, particularly sales planning. The greater the market, the greater the chance for a wrong guess. The greater the surplus production, the greater the need for more successful marketing.
We also saw that, with increased income and a wider distribution of income, the discretionary buying power of the public has increased. A greatly increased number of families are now able to buy more than the bare necessities. With an almost incredible multiplication of products available, the choice open to the consumer is multiplied many times.
The chances for failure of any one product, therefore, are great. The risk involved is great. Management cannot afford business by trial and error. The only way to minimize risk is to plan ahead.
But planning involves more than simply avoiding or minimizing the risk involved in business. Planning gives direction to the action of the company and its departments. It seeks to anticipate company and departmental requirements. In this sense, planning becomes a matter of matching means and ends. We have certain tools and means at our disposal, and we want to accomplish certain things. By planning, we provide the facilities for the future requirements as we anticipate they will be. We plan the plants, tools, supplies, and people we shall need for future periods in order to market the products we expect to sell during those periods. We provide a definite plan of activity to put plants, ma¬chines and people to work to accomplish our objectives.
The purpose of planning, therefore, becomes that of directing the over-all action of the company and of each department to achieve the most effective balance between what we put into the effort, and the results we get from this effort. In management theory, this is known as the "input-output theory." By analyzing each element of the effort (each input) we can determine how much we need to do to accomplish a given result. If we want to change this result (to get more out of it), we then know what we have to do (what we have to put in) to get that much more out.
It is obvious that planning calls for study and research. Planning calls for determining, as accurately as possible, the climate in which we shall be doing busi¬ness and how much business we can reasonably expect to be doing.
Since all company income comes from sales, it is very important that we anticipate sales income. If we make proper forecasts, the total anticipated sales can become our target. We then know what we need to reach the target—how many more machines, what kind and where, how many and what type of people, and how much money. We see, therefore, that the basis of planning is a good sales forecast.