Marketing Plan

Why this section of the Business Plan is important:

Located after the Products and Services section, the Marketing Plan provides an outline for your intended marketing strategy. After all, it really doesn’t matter how amazing your product or service is; the business simply cannot succeed without a meticulous marketing plan. You should never suppose that you already know all there is about your intended market. Markets are extremely fickle—fads are always changing, and it can make or break your business. Make sure you are prepared for any market ups or downs.

How to do it:

There are two kinds of market research: Primary and Secondary.

Primary market research means you gather the information yourself. Doing traffic counts at a considered location, identifying competitors, and doing surveys on your product or service. It can be expensive, and definitely time consuming, but there are many helpful books on the subject.

Secondary research is using research that has already been published, like industry profiles, newspapers, trade journals, census data, and demographic profiles. This information can be found in public libraries (start here), industry associations, chambers of commerce, city vendors, and government agencies.

Try to be as specific as possible in your marketing plan by providing numbers, stats, and source references. The marketing plan will be the foundation of the sales projection.

 Economics

Important facts about your industry:

What is the size of your intended market?

What percent share of the market will you hold? (Irrelevant unless you are the major factor in the market.)

Current demand in the targeted market— including trends in growth, consumer preferences, and product development.

Potential growth and opportunity for a business your size.

What kinds of obstacles do you face upon entering this market? List typical barriers:

•  High costs of capital, production or marketing.
•  Consumer acceptance and brand recognition
•  Training and skills
•  Novel technology and patents
•  Union
• Shipping costs
• Tariff barriers and quotas

How will you overcome those obstacles?

How could a change in technology, government regulations, economy, or your industry affect your company?

 Product

Earlier, you briefly described your products and services in the Products and Services section. Now describe them from the viewpoint of your intended customers.

Features and Benefits

List all of your major products or services. For each one, describe the most important features and benefits. What is so special about it? What can it do for the customer?

Think about the differences between a “feature” and a “benefit.” Example: a table. What are the benefits of having a table? (What can you do with it or what can it do for you?) What are the features of the table? (What does it look like? What is it made out of? Etc)

Do you offer any after-sale services? Examples include delivery, warranty, service contracts, support, follow-up and refund policies.

Identify who your targeted customers are and their demographics. (This means the geographical location of your customers- where are they coming from?)

This section will depend on if you plan to sell to businesses or directly to customers. You may also have more than one customer group. Identify each one and create a demographic profile. It looks like this:

• Age
• Gender
• Location
• Income level
• Social class and occupation
• Education
• Other (specific to your industry)
• For business customers, it may look like this:
• Industry (or portion of)
• Location
• Size of firm
• Quality, technology, and price preferences
• Other (specific to your industry)

Determine what products or companies will compete with you and list them. Will they compete with you in all aspects, or just certain locations, products, and customers? Will you have any indirect competitors? (Companies that, although a different market, can draw business from you.)

How will your product or service compare with the listed competition?

Use the Competitive Analysis table to compare your company with two of your most important competitors. The first column contains key competitive factors. In the column labeled Me, honestly share how you imagine customers will view you. Determine whether it will be a strength or a weakness and check the boxes. It can be hard to acknowledge your own weaknesses. If it is better for you, have a disinterested stranger evaluate it for you.

Remember: you cannot please everyone. Many businesses have failed because they tried to be so diverse that they stretched themselves too thin. Don’t be vague—have a definite target and hit it.

Now analyze each major competitor and briefly state how they compare.

In the last column, rate the importance of each factor to the customer.

1=critical; 5=not very important.

Table 1: Competitive Analysis

After you’re finished write a short paragraph about your competitive advantages and disadvantages.

By now you should have an idea of what your “specialty” is, or niche, in the business world. Write a short paragraph about what makes your business different from the others and explain your niche.

Strategy

Using the information you’ve gathered, develop a marketing strategy based on what your niche is.

Promotion

Decide how you plan on getting the word out to customers.

Advertising- what type of media, and why, how often?

Identify any low-cost ways to advertise to get the most out of your promotional budget.

Do you plan on using any other methods besides paid advertising, such as trade shows, catalogs, dealer incentives, word of mouth, and network of friends or professionals? How?

What is the image you want to project? How do you want customers to view you and your company?

Another way to advertise is with a logo. Do you have any plans for graphic image support? This can include logos on cards, letterheads, brochures, signs, and interior design.

Is there any way to identify repeat customers so you can contact them routinely?

How much did you spend on the Strategy section?

Before startup? (these numbers will go into your startup budget)

Ongoing? (these numbers will go into your operating plan budget)

Describe how you plan on setting prices. In owning a small business, you may find that having the lowest prices is not always the best idea. It will deprive you of needed profit margin, and honestly, customers probably won’t care about the price as much as you think. Large corporations are able to have lower prices, so instead focus on quality and service. You may find that most people won’t mind paying a little more for higher quality and service with a smile.

Does your pricing strategy compliment your competitive analysis?

Compare your prices with your competition. Are they higher, lower, or equal to yours? Why?

How important do you think price is as a competitive factor? What are the odds that your intended market will chose quality and service over price?

Determine customer service and credit policies.

If you do not already have a location for your business, now is the time to do so. Think about what you want and need in the ideal business location. If you do not find one immediately, don’t worry. Many startups run smoothly from home for a while.

In the Operational Plan section you will describe your ideal business location. Here, analyze the location and how it will affect your customers.

Is the location important to your customers? If so, how?

If customers come to the location: is it convenient? Is there sufficient parking? Interior spaces? Is the location far away from town (or hot spots)?

Does the location reflect the image you’re going for?

Where is your competition located? Is it better for your business to be closer to them or farther away?

How do you intend on selling your products or services? There are many different ways to choose from:

Retail or Wholesale

Your own sales force

Agents or Independent representatives

Bid on contracts

Sales Forecast

You have described your products, services, customers, markets, and the marketing plan, now it’s time to come up with the numbers. Using a sales forecast spreadsheet, arrange a month-by-month projection based on historical sales, marketing strategies described, market research, and industry data (if available).

Helpful Tip:

You may want to do two forecasts. The first one can be an honest “best guess” of what you really expect, and the second one can be a cautious “worst case scenario” that you are sure you can still reach no matter what. It’s good to play it safe.

Be sure to keep notes on your research as you create the forecast, and include all subsequent spreadsheets in the plan. This will be important if you plan on presenting it to banks and other lenders for funding.

Next section in the business plan: Operational Plan