Marketing Plan  $7,999.00 to $ 35,000.00

Notes on Preparation:

Market research: Why?

You spend so much time on marketing-related matters — customers, competitors, pricing, promotion, and advertising — that it is natural to assume that you have little to learn. However, every small business can benefit from doing market research to make sure it is on track. Use the business planning process as your opportunity to uncover data and to question your marketing efforts. It will be time well spent.

Market research: How?

There are two kinds of market research: primary and secondary.

Secondary research means using published information such as industry profiles, trade journals, newspapers, magazines, census data, and demographic profiles. This type of information is available from public libraries, industry associations, chambers of commerce, vendors who sell to your industry, and government agencies. 

Start with your local library. Most librarians are pleased to guide you through their business data collection. You will be amazed at what is there. There are more online sources than you could possibly use. Your chamber of commerce has good information on the local area. Trade associations and trade publications often have excellent industry-specific data. 

Primary market research means gathering your own data. For example, you could do your own traffic count at a proposed location, use the yellow pages to identify competitors, and do surveys or focus group interviews to learn about consumer preferences. Professional market research can be very costly, but there are many books that show small business owners how to do effective research.

In your marketing plan, be as specific as possible; give statistics, numbers, and sources. The marketing plan will be the basis, later on, of the all-important sales projection.

The Marketing Plan:

Economics

• Facts about your industry
• Total size of your market
• Percentage share of the market you have. (This is important only if you are a major factor in the market.)
• Current demand in target market
• Growth history
• Trends in target market — growth trends, trends in consumer preferences, and trends in product development
• Growth potential and opportunity for a business of your size
• What barriers to entry keep potential new competitors from flooding into your market?
  • High capital costs
  • High production costs
  • High marketing costs
  • Consumer acceptance/brand recognition
  • Training/skills
  • Unique technology/patents
  • Unions
  • Shipping costs
  • Tariff barriers/quotas
• How could the following affect your company?

• Change in technology
• Government regulations
• Changing economy
• Change in your industry

Products

In the Products and Services section, you described your products and services as you see them. Now describe them from your customers’ point of view.

Features and Benefits

List all your major products or services.

For each product or service, describe the most important features. That is, what does the product do? What is special about it?

Now, for each product or service, describe its benefits. That is, what does the product do for the customer? 

Note the differences between features and benefits, and think about them. For example, a house gives shelter and lasts a long time; those are its features. Its benefits include pride of ownership, financial security, providing for the family, and inclusion in a neighborhood. You build features into your product so you can sell the benefits.

What after-sale services are supplied? For example: delivery, warranty, service contracts, support, follow-up, or refund policy.

Customers

Identify your customers, their characteristics, and their geographic locations; that is, demographics.

The description will be completely different depending on whether you sell to other businesses or directly to consumers. If you sell a consumer product, but sell it through a channel of distributors, wholesalers, and retailers, you must carefully analyze both the end user and the intermediary businesses to which you sell.

You may have more than one customer group. Identify the most important groups. Then, for each consumer group, construct a demographic profile:

• Age
• Gender
• Location
• Income level
• Social class/occupation
• Education
• Other

For business customers, the demographic factors might be:

• Industry (or portion of an industry)
• Location
• Size of firm
• Quality/technology/price preferences
• Other

Competition

What products and companies compete with you? List your major competitors, including their names and addresses.

Do they compete with you across the board, just for certain products, certain customers, or in certain locations?

Use the following table to compare your company with your three most important competitors.

In the first column are key competitive factors. Because these vary with each market, you may want to customize the list of factors.

In the cell labeled "Me," state honestly how you think you stack up in customers' minds. Then decide whether you think this factor is a strength or a weakness for you. If you find it hard to analyze yourself this way, enlist some disinterested party to assess you. This can be a real eye-opener.

Now analyze each major competitor. In a few words, state how you think they stack up.

In the last column, estimate how important each competitive factor is to the customer. 1 = critical; 5 = not very important.

Niche

Now that you have systematically analyzed your industry, your product, your customers, and the competition, you should have a clear picture of where your company fits into the world.

In one short paragraph, define your niche, your unique corner of the market.

Marketing Strategy

Now outline a marketing strategy that is consistent with your niche.

Promotion: How do you get the word out to customers?

Advertising: What media do you use, why, and how often? Has your advertising been effective? How can you tell?

Do you use other methods, such as trade shows, catalogs, dealer incentives, word of mouth, and network of friends or professionals?

If you have identifiable repeat customers, do you have a systematic contact plan?

Why this mix and not some other?

Promotional Budget

How much will you spend on the items listed above?

Should you consider spending less on some promotional activities and more on others?

Pricing

What is your pricing strategy? For most small businesses, having the lowest prices is not a good strategy. Usually you will do better to have average prices and compete on quality and service. Does your pricing strategy fit with what was revealed in your competitive analysis?

Compare your prices with those of your competition. Are they higher, lower, the same? Why?

How important is price as a competitive factor?

What are your payment and customer credit policies?

Location

You will describe your physical location in the Operational Plan section of your business plan. Here in the Marketing Plan section, analyze your location as it affects your customers.

If customers come to your place of business:

• Is it convenient? Parking? Interior spaces? Not out of the way?
• Is it consistent with your image?
• Is it what customers want and expect?

Where is the competition located? Is it better for you to be near them (like car dealers or fast-food restaurants) or distant (like convenience food stores)?

Distribution Channels

How do you sell your products or services?

• Retail
• Direct (mail order, World Wide Web, catalog)
• Wholesale
• Your own sales force
• Agents
• Independent reps

Has your marketing strategy proven effective?

Do you need to make any changes or additions to current strategies?

Sales Forecast

Now that you have described your products, services, customers, markets, and marketing plans in detail, it is time to attach some numbers to your plan. Use a forecast spreadsheet to prepare a month-by-month projection. Base the forecast on your historical sales, the marketing strategies that you have just described, your market research, and industry data, if available.

You may want to do two forecasts: 1) a "best guess," which is what you really expect, and 2) a "worst case" low estimate that you are confident you can reach no matter what happens.

Remember to keep notes on your research and your assumptions as you build this sales forecast and all subsequent spreadsheets in the plan. Relate the forecast to your sales history, explaining the major differences between past and projected sales. This is critical if you are going to present it to funding sources.