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Marketing Plan Defined

Marketing Plan Explained

The market planning is perhaps the most important tool or component in planning a business. Marketing is the method by which you transmit information about your business to customers. That is, you put information about your business into the market in hope of further you business interest. To do this effectively requires detailed planning. In fact, many entrepreneurs concentrated almost exclusively on planning the operational aspects of the business and spend far too little time on developing a marketing plan. The marketing plan is more than a plan for the method or tool that you will use to reach customers. It involves developing a strategic approach to what type of information you wish to provide to customers (brand), what customers to target (different segments), and how to target them (actual marketing actions). Within the marketing plan you will set goals, allocated resources to specific sales and marketing functions, track performance, and establish criteria for monitoring and controlling your marketing efforts.

Drawing Information from the Feasibility and Strategic Analyses

Much of the information that you developed in the feasibility and strategic analyses is now employed in the marketing plan. Particularly, you will need to apply the information you have developed to explain the following:

  • The strength and weaknesses of the business that relate to particular market opportunities.
  • The different customer segments.
    • Note: You will need to analyze your business message from the viewpoint of the target customers. Different customer segments will receive and respond to aspects of the business different. You will need to scope your message to accommodate the target segment
  • The current competition in the market.
    • Note: One strategic objective of marketing is to differentiate your product or service from competitors in the market. Marketing is the manner in which you deliver your differentiation message. Understanding the competitor’s business (strengths and weaknesses) will allow you to scope your message to differentiate your product.
  • Where to apply your resources.
    • Note: When conducting the SWOT analysis, you identified potential opportunities and threats in the industry. Understand where opportunities and threats exist will help you understand where to allocate your available resources.
  • Establishing goals.
    • Note: Measurable goals are a very important part of any marketing plan. This provides a metric for progress and accomplishment. In order to establish measurable goals, you have to have an understanding of the market size, operational capabilities, financial projections, etc.
  • Updating the marketing plan.
    • Note: The marketing plan, like the business plan, should be a fluid and ever-changing document. As the market evolves, so should your marketing plan. Understanding your business and the industry characteristics (see again the SWOT analysis, PESTEL analysis, and Porter’s five forces) will allow you to mold your marketing plan to meet the change market demands (opportunities).

Outline for Marketing Plan

There is no single format for an effective marketing plan. Each business will have to customize the plan to meet its particular ability, market, and industry. However, many components are common to most marketing plans. Below is an outline and description of the primary portions of the marketing plan.

  • Mission Statement – The mission statement can provide overall guidance for your business and marketing efforts. Answer the question, “What is the resounding purpose of your business.”
  • Product/Service Statement – In the simplest form possible, tell what your product or service does for the customer. This statement will provide the backbone from which you derive your market efforts.
  • Situation Analysis – In the situational analysis section you will incorporate the information that you developed when carrying out the initial feasibility analysis and the strategic analysis. Include information as follows:
    • Company Analysis
    • Competitor Analysis
    • Market Demand
  • Target Market(s)
    • Customer Segments
    • Size and Characteristics of each Segment
    • Boundaries
  • Marketing Objectives and Goals
    • Set out your long-term and short-term goals.
    • Make sure you provide quantitative or measurable goals.
  • Marketing Strategy
    • Product – What are the feature of the product that provide the value proposition to customers?
    • Price – What will you charge customers?
    • Placement (Distribution) – In what markets will you place your product?
    • Promotion – What aspects of the product will your promote and how?
    • Packaging – How do you expect your product to be delivered? (E.g., this involves the format, appearance, protection, etc.)
    • Process – What procedural aspects will you undertake to place your product in the market?
    • Physical Environment – The ambience, mood, or tone of the immediate business environment that you are trying to create.
    • People – Who will take part in and represent the business.
  • Action Program – Carrying out the strategic allocation of resources to carry out the marketing mission and objectives.
  • Budget – Allocation of costs across each marketing function.
  • Controls – Method of measuring and monitoring the effectiveness of each strategy.

Now, let’s deal with each of these aspects of the marketing plan individually.

The Mission Statement

The mission statement lays out the overarching purpose of the business plan. It is a general answer to the question, “what do we do and why?” The answer should express your value proposition and what you hope to accomplish. You mission statement should correspond closely with the overall goals and objectives of the business. The mission statement doesn’t have to be long. Generally a single paragraph of 1-5 lines can adequately describe your mission.

Product/Service Statement

The product statement is a concise statement of what is your product and service and what makes it valuable. Like the mission statement, the product state does not have to be long. However, unlike the mission statement, it should be very detailed in laying out the value proposition that your product or service offers. It should indicate the unique characteristics that allow it to exist in the market and what differentiating features (if any) give it a competitive advantage.

  • Note: If you have multiple products, you will need to do this and each of the following steps for each product.

Situation Analysis

The situation analysis covers a mix of information uncovered in the feasibility and strategic analyses. Below is an outline of the information that should be included in the situation analysis.

Company Analysis

  • Background of Venture – Give the general background of the business or the people involved. This helps provide scope from which to derive your strengths and weaknesses.
  • (SWOT) – Incorporation the SWOT information helps you understand your business and how it fits into the market.
    • Strengths and Weaknesses of Venture
    • Market Opportunities and Threats
      • Note: Incorporate the PESTEL factors as relevant.
      • Describe any influencing factors that may affect the marketability of the product.

Competitor Analysis

  • Number – How many competitors are in the market?
  • Market Share – What share of the market do they occupy?
  • Competitive Positions – What are the key competitive strategy of your competitors? (Price, Quality, etc.)
  • Strengths – What are the outstanding strengths of each competitor?
  • Weaknesses – What are the competitor’s weaknesses? (Include personnel, operations, marketing, finances, etc.)

Market Demands

  • What is the current total market demand for the product or service?
  • How does production capability compare with demand?
  • What are the future demand levels?
  • Is current demand in any way correlated with market trends or ancillary products or services?

Target Market

The target market section of the marketing plan contains the following elements.

Customer Segments

  • Who are your primary customers?
  • Can they be grouped into a segment?
  • How much of the total company sales are they projected to occupy?
  • Who are your secondary segments? Characteristics? Percentage of sales?

Each Segment

  • Size – What is the size of each customer segment? (Give both the number of potential customers or market valuation.)
  • Priority – What is the priority level of the given segment?
    • How much effort is needed to sell to the given customer segment?
    • Is the product purchased regularly, on impulse, multiples at a time, etc.?
    • How aware of the product is the average customer?
    • Other factors that may affect purchasing habits:
      • Gifts, Seasonal buying, emotional considerations, obsolete status, price (discounts & sales), status, prestige, etc.
  • Description (Characteristics) – What are the like characteristics or preferences that make them capable of grouping and targeting with marketing efforts?
    • Types of Characteristic information:
      • Demographic information
      • Geographic Location
      • Psychographic Characteristics
      • Cultural or activity preferences
  • How the Product/Service Used – What is the type, frequency, intensity of use?
  • Value Proposition:
    • What need or want is the product meeting for this customer segment?
      • How does the customer perceive the product or service?
      • How does the product or service compare to the customer perceptions. (i.e., If perceived a reliable, is it reliable? High quality? Easy to use?
    • What is the value proposition that most appeals to the given customer segment? Examples:
      • Price
      • Convenience
      • Quality
      • Reliability
      • Customer Service
  • Requirements to Reach Each Segment
    • Each segment may have special characteristics that change the method that is most effective to reach it.
    • This may affect distribution channels as well as product features.
  • Sustainability
    • What is the expectation of durability of customer demand in this segment? (E.g., Is the customer segment part of a trend?)
    • Include any market trend reports to support this.

Boundaries

  • What are the boundaries for the market(s) that your business can presently or intend to address?
  • Break down by customer group and/or geography.

Marketing Objectives and Goals

Under the objectives and goals portion, you should be as specific as possible about your short-term and long-term goals. Here are some of the goals for which you should establish realistic, quantifiable metrics:

  • Where do we want to go? (E.g., Markets, geography, etc.)
  • Market share (E.g., increase market share by 1% over the next year.)
  • Profits
  • Sales (by territory or region)
  • Market penetration
  • Number of distributors
  • Awareness level
  • New product launching
  • Pricing policy
  • Sales promotion
  • Advertising support

Marketing Strategy

In the previous chapter we discussed the methods and procedure for developing a competitive strategy. These same strategies can be used to develop a competitive marketing strategy. Recall that the process is as follows:

  • •Identify potential strategies
  • •Undertake a SWOT analysis to determine your potential to execute any given strategy.
  • •Undertake a Porter’s Five Forces analysis to determine where you stand in the market.
  • •Use this information to develop or choose a strategy that fits your ability.

Part of the marketing strategy necessary deals with allocating your resources efficiently to achieve your marketing function. The most common and well-known model for strategically allocating marketing resources is known as the 5 Ps (some break the plan into as many as 8 Ps). The 5 P framework assigns market attributes into one of these five categories in order to employ them in an organized manner. You will allocate your resources consistently with your business strategy.

5 Ps – Product

What product(s) will you be putting into the market? This section refers to all of the features, advantages and benefits that your customers can enjoy from buying your goods or services. When marketing your product, you need to think about the key features and benefits your customers want or need, including (but not limited to) styling, quality, repairs, and accessories. Specifically, include the following information:

  • Product lines or Variations
  • Brand Name(s) of carried products
  • Quality levels
  • Warranty or Guarantees

Price

The amount of money needed to buy products.

  • What is the consumer acceptance price range for this type of product/service?
  • How does the proposed product’s/service’s price compare?
  • Is there sufficient margin between the manufacturer’s cost and the consumer acceptance price level to provide for markups at the wholesale, distributor and retail level?
  • Does the price allow for freight, projected profit, price fluctuations in the market place and consumer interpretation of value?
  • Are coupons or discounts being considered to promote consumers to try other flavors, etc.? Product introduction.
  • What is the product cost breakdown?
    • Costs of goods sold:
      • direct labor
      • direct materials
    • Operating expenses
    • Selling expenses
    • Communications expense
    • General and administration expenses (including freight)
  • What markups are allowed at each level of distribution (markup chain and channel pricing)?
  • Are the most economical/cost efficient methods of processing and packaging utilized (including raw materials inputs) to keep product/service costs down?
  • Other Price Considerations:
    • List Price
    • Discounts
    • Bundling
    • Payment Terms and Financing Options
    • Leasing Options

General Tips

  • Review product/service costs for accuracy, including all variable and fixed expenses.
  • Be sure all products/services carry their share of overhead expenses plus provide for profit.
  • Compare prices for your products/services with similar products/services in the industry.
    • If your prices are higher, do they provide the necessary “added value” to justify the higher price?
    • If your prices are lower, do you know why they are, and is the lower price part of your marketing strategy?
  • How price sensitive is your market — in other words, how much change occurs in buying behavior when prices rise or fall?
  • Do your prices position you as “top of the line” or “bargain basement?” Are you happy with your position?
  • Does your current marketing strategy support this price position?

Promotion

How will you make your product known? Promotion regards the activities that you use to make your customers aware of your products and services, including advertising, sales tactics, promotions and direct marketing. Below if the information you should include in this section:

Advertising Plan

What percentage of each media is to be used in your overall advertising package?

  • Television
  • Radio
  • Newspapers
  • Magazines
  • Billboards
  • Public Relations
  • Co-operative advertising with wholesalers/retailers
  • Internet Marketing
  • Other

Branding – What brand image are you trying to build?

  • Brand is a promise of a repeatable experience that gives a consumer.
    • What is your current brand in the market place?
    • How do customers perceive you? Is it accurate?
    • What do you want your image to be
  • Top-of-Mind Awareness (TOMA)
    • What is the first company (product) that comes to mind when you are considering buying this?
    • Who else?
    • If you are not in someone’s mind, they won’t buy from you.

Sales Plan

  • Selling
    • What type of sales persons are to be used—food brokers, commissioned salespersons, etc.?
    • What tools are to be provided to salespersons to assist getting orders (volume discounts, purchasing shelf space, etc.)?
    • Will a sales training program be offered?
      • AIDA – Attention, Interest, Desire, Action
    • How will sales effectiveness be measured?
    • What incentives will be offered to salespersons for new accounts, achievements?
  • Sales Promotion Programs
    • What sales promotion activities are planned?
    • Point of purchase displays/sales aids
    • Samples
    • Coupons
    • What costs are associated with each?

Publicity

  • Endorsements
  • Testimonials
  • Referrals
  • Truck signs

Public Relations Plan

  • Networking Events
  • Conferences
  • Charity Events (Sponsorships)

Budget

  • How much is budgeted for year 1 in each category?
  • Determine break-even point for any additional spending.
  • Projected results of the promotional programs?

Placement

Where and through what methods are the products or service sold?

Locations

  • Local, National, International,
  • Internet-based, physical locations.
  • Logistics, including transportation, warehousing, and order fulfillment

Distribution Channels

  • How does the company plan to get the product/service to the end user?
  • What channel of distribution is to be used?
    • Direct—manufacturer to consumer.
    • One stage—manufacturer to retailer to consumer.
    • Traditional—manufacturer to wholesaler to retailer to consumer.
    • Multi-stage—manufacturer to broker to wholesaler to retailer to consumer.
  • Who or what company will carry out the distribution?
  • How will you motivate the distribution channel?
    • What will the distributor profit margins look like?
    • Are commissioned salespersons to be used?
  • What are the costs associated with the proposed distribution channels?
  • Criteria for evaluation distributors?
  • How do these channels affect delivery/production time frames?
  • What are delivery terms?

Degree of Directness of the Channel

  • Marketing Conditions – Are end users concentrated (direct) or dispersed (indirect) in market.
  • Product Attributes – Is product large (direct) or small (indirect), bulky (direct), perishable (direct), hazardous (direct), expensive (direct).
  • Cost Benefits – Considers the cost benefits in selection of channel members; many benefits (indirect) minimal or no benefit (direct).
  • Venture Attributes – Financial strength, size, channel experience, and marketing strategy of venture.

Number of Channels

  • Intensive – As many retailers, wholesales, etc., as possible.
  • Selective – Small number of channel members based on some set of criteria or requirements
  • Exclusive – Select only one wholesaler and/or retailer.

Criteria in Selection of Channel Members

  • Reputation
  • Services Provided

Number of Channels

  • One channel for on target market or multiple target markets.
  • Multiple channels for one target market or multiple target markets.

5 Ps – Packaging

  • How the product will be protected?
  • Are the packaging and labeling regulations met?
  • How are products to be packaged for shipping, end-user display? What physical handling is required?
  • Are display aids (clip racks, bins, etc.) to be provided to retailers?
  • Does packaging meet regulatory agency requirements (labeling, seals, etc.)?
  • Is packaging eye appealing, complementary to product, portraying universal labeling, coded, priced?

5 Ps – Process

The Value-added services that differentiate the product from the competition (e.g. after-sales service, warranties)

  • Is there a method for feedback on customer satisfaction, quality control?
  • What minimum shipping orders are required? (cost efficient)
  • What minimum inventory levels must be maintained to ensure no loss of sales due to late deliveries, back orders, split shipments?
  • What system is to be used for processing orders, shipping, billing?
  • What trade terms will be offered?

Action Plan

The action program includes the procedural steps necessary to carry out the marketing strategy (strategic use of resources) laid out above. The action plan is generally constructed as a table of activities that assign various tasks, functions, deadlines, responsibilities, and cost to each activity. In any event, you must match the feasibility of programs against availability of resource restraints.

 

Activity

Tool

Responsibility

Deadline/Hrs

Cost

SEO

WordPress; Blogging; backlinking

Jim, Intern

3 hrs daily

$20/hr

Budget

When calculating your marketing budget, make sure you start by aligning your marketing goals with your company’s strategic goals and vision for growth. If you plan to grow by 20%, but only want to invest enough in marketing to get new business cards for everyone in your company, you’re probably going to be disappointed with the results of your investment!

It’s important to develop a written marketing strategy that is agreed upon by the executive team, the sales team, and the marketing team. Make sure everyone is driving their activities in the same direction.

Setting Your Marketing Budget

Once you’ve aligned your company goals with your marketing goals, you’ll need to identify your marketing budget so you can develop a more detailed marketing plan to support your strategy.

  • Lean Plan: 1 – 2% of your top-line revenue. Engage and retain current customers with simple tools and strategies. This is ideal for companies that are looking to maintain their market position, and don’t have ambitious growth goals.
  • Target Plan: 3 – 4% of your top-line revenue. Attract new prospects and retain current customers with advanced tools and strategies. This is ideal for companies that are looking to increase their market share and have moderate growth goals (10 – 15% annual growth).
  • Stretch Plan: 5% or more of your top-line revenue. Accelerate your results by applying more resources focused on driving leads, conversion, and sales. Use complex marketing strategies and cutting-edge tools. Ideal for companies who have ambitious plans to grow and increase market share (20% or more annual growth).

Allocating Your Marketing Budget Dollars

Armed with your goals and a budget, you can now get into the nitty-gritty of developing a tactical plan to transform your marketing dreams into reality! The complexity of your plan will depend on the marketing budget you have identified, but you should also consider including tactical plans related to SEO, Social Media, Paid Advertising, Content Offers, Blogging, Email Marketing, Lead Conversion and Nurturing, Integration with Sales Activities, Trade Shows, and Print/Traditional Advertising.

Determine how much of your marketing budget should be allocated to each aspect of your plan. The chart below is based on a 2011 survey of over 900 companies. It displays the percentage of their marketing budget that was allocated to each area of their marketing plan. You may decide to spend more or less based on what your direct competitors are spending, what industry you are in, and your specific goals.

  • Step 1 – Create a list of the different segments of your marketing efforts. Include research, testing, creative production, communications and tracking.
  • Step 2 – Estimate the costs involved in gathering market research. Market research includes efforts such as developing a customer profile and examining your competitors. Include administering surveys, buying research studies and hiring a consultant.
  • Step 3 – Estimate the costs of testing different marketing strategies. Include product giveaways, focus groups, creating different versions of your product, selling new items in limited locations and follow-up surveys.
  • Step 4 – Estimate the costs of a communications campaign. Include the costs of creative design for packaging, ads, websites and other collateral materials. Calculate the costs for your desired media buys, such as print ads, website banners and TV and radio commercials. Include expenses for direct mail, trade shows, public relations, contests, promotions and the cost of building and maintaining a website.
  • Step 5 – Estimate the costs of tracking and monitoring your communications efforts. This might include the purchase of a website statistics package, visiting retailers who sell your product or conducting customer mail or telephone surveys.
  • Step 6 – Add up the total estimated costs. Determine whether you can afford the total price of your marketing plan. If not, review each category to see where you can cut back.
  • Step 7 – Create a spending formula that ties your marketing budget to a percentage of sales. If your marketing plan is working, then the more you sell with it, the more you should consider spending on your marketing efforts. If your sales drop, a spending plan tied to sales will put in a place a brake that will alert you to reexamine each aspect of your marketing plan.

Marketing Controls

To maximize the return on a marketing plan, there need to be controls in place to monitor the plan’s progress. As a marketing plan moves along, the controls are constantly analyzed to determine how the plan’s actual performance compares to the projections. Any changes that need to be made are done based on the analysis of marketing controls.

Control involves measurement, evaluation, and monitoring. Resources are scarce and costly so it is important to control marketing plans by setting measurable standards for evaluation and monitoring. The marketing manager will than compare actual progress against the standards. Corrective action (if any) is then taken. Understanding what the controls in a marketing plan are will help you develop effective performance measurement indicators.

Below are some common types of marketing plan controls:

  • Customer Feedback
    • Marketing is designed to persuade consumers to purchase a product or invest in a service. One control put into place in any marketing plan is the monitoring of customer feedback through polls and surveys. You can reach customers indirectly by hosting online polls on the Internet that ask specific questions about your latest marketing plan. Conversely, surveys can be done with marketing groups or via individual interviews by phone or in person. Adjust your marketing plan according to the results of your research. For example, if your marketing campaign includes a new company mascot and customer feedback indicates that the mascot is not popular, then the mascot should be removed from the marketing plan.
  • Target Market Sales
    • Sales can be measured in units sold, revenue generated or profit amount. Each marketing plan sets out to determine the effect of the plan on the target market. Once again, this is done through market surveys or at the point of sale with the assistance of retail partners. Actual sales in the target market are compared to the marketing plan projections to see if any changes need to be made. For example, if the target market for a marketing plan is males ages 15 to 21, then the target market sales reports would monitor sales made to that group. If sales are down, then further market research needs to be done to see why the target audience is not responding to the marketing. In some cases, analyzing a demographic breakdown of sales may indicate that the initial target market was inaccurate and a new target market may emerge based on sales data.
  • Budgeting
    • A marketing budget is a balance between the cost of generating the advertising materials and the revenue created by the marketing plan. There are several controls in place that can be used to monitor a marketing budget, including print advertising expenses, travel expenses for trade shows, the cost of market research studies and internal personnel costs for the company’s marketing department. All of these costs need to be closely monitored to minimize spending and maximize profitability. By examining expenses, you are able maintain your budget and see exactly where spending increases come from.
  • Market Share
    • Market share is that percentage of consumer sales dominated by your product. For example, you may have several competitors in a particular industry, with your product sales making up 15 percent of all products sold into that marketplace. In most cases, market share is broken down by product to get a comprehensive look at consumer patterns. A marketing plan outlines the market share of a product before the plan is in place, and then projects the changes to the marketplace when the plan is over. For example, your marketing plan may call for increasing market share of your newest product from 10 percent of all products sold to 15 percent. During the plan’s timeline, there will be milestone percentages you will want to reach on your way to the 5 percent increase. For example, you may want to see a 3 percent market share increase at the halfway point of the marketing plan. If your analysis does not show a 3 percent increase by that point, then you need to analyze why the plan is falling short and what can be done to correct it.

Traditional Marketing

  • Television
    • Advertisement
    • Infomercial
    • Public Relations Events
  • Radio
    • Advertisement
    • Public Relations
  • Newspapers
    • Print Ads
    • Classifieds
  • Magazine
    • Select Industry
    • Readership
  • Signage
    • Billboards
    • Vehicle signs
    • Other signage
  • Co-operative advertising with wholesalers/retailers
    • In-store advertising
    • Store catalogs
  • Publicity
    • Endorsements
      • Celebrities
      • Other Businesses
    • Testimonials
      • Customer Reviews
      • BBB and Angie’s List
      • Websites
    • Referrals
      • Word-of-mouth
      • Customer incentive referrals
  • Public Relations Plan
    • Networking Events
    • Conferences
    • Charity Events (Sponsorships)
  • Other
    • Swag (Notebooks, bags, pens, pencils, pads, sticky notes)

Internet Search Marketing?

  • Internet
    • Traditional advertising models
      • Purchase space on popular websites.
    • Pay-Per-Click
      • Google
      • Facebook
    • Search Engine Optimization
  • Social Media
    • Internet form of word-of-mouth
    • Any channel of social influence

What is a website and blog?

  • Overview

Search Engines

  • How do they work?

How do Search Engines Make Money

  • Pay-Per-Click (PPC)

Advertising on Popular Websites

  • PPC
  • Fixed fee

Search Engine Optimization (SEO)

  • In-bound
  • Out-bound links
  • Key Words
  • Geography (Google Places)

Content as a Marketing Tool

  • Blog content
    • Changes in Website
    • Key words (Optimization – Density)
    • Scheduled Posts
  • Links
    • In-Bound
      • Other sites value your content
    • Out-Bound
      • Key influencer websites
      • Reciprocal

Social Media Marketing

  • Facebook
    • Business Page
    • Likes and Subscriptions
    • Not searchable
    • Instagram
  • LinkedIn
    • Personal & Business Page
      • Good source for business member bios
      • Other professionals will follow you
    • Professional Groups
      • Ready Audience
      • Conversational
  • Twitter:
    • Twitter handle
    • Mass publication of data: Business News Real
    • Hash tags (ex. #startup)
    • Conversational: Tweeting at People.
    • Vime
  • Pinterest
    • Interesting Pictures
  • YouTube/Vimeo
    • Videos
  • Digg
    • Internet Stories
  • Reddit
    • Submit link or post and registered users vote it up or down.
  • Tumblr
    • Short-form blog on a group social networking site.

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