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Marketing Plan

A sound marketing plan is key to the success of your business. It should include your market research, your location, the customer group you have targeted, your competition, positioning, the product or service you are selling, pricing, advertising, and promotion.

"You're in business to serve a customer need," says Derek Hansen, founder of American Capital Access. "If you're not sensitive to customers, don't know who your customers are, how to reach them and, most of all, what will convince them to buy your product or service, get help."

Effective marketing, planning and promotion begins with current information about the marketplace. Visit your local library, talk to customers, study the advertising of other businesses in your community, and consult with any relevant industry associations. This interactive tool will help you assess your marketing strengths and weaknesses.

Once you have all the necessary information, write down your plan:

1: Define your business

* Your product or service
* Your geographic marketing area - neighborhood, regional or national
* Your competition
* How you differ from the competition - what makes you special
* Your price
* The competition's promotion methods
* Your promotion methods
* Your distribution methods or business location

2:Define your customers

* Your current customer base: age, sex, income, neighborhood
* How your customers learn about your product or service - advertising, direct mail, word of mouth, Yellow Pages
* Patterns or habits your customers and potential customers share - where they shop, what they read, watch, listen to
* Qualities your customers value most about your product or service - selection, convenience, service, reliability, availability, affordability
* Qualities your customers like least about your product or service - can they be adjusted to serve your customers better?
* Prospective customers whom you aren't currently reaching

3:Define your plan and budget

* Previous marketing methods you have used to communicate to your customers
* Methods that have been most effective
* Cost compared to sales
* Cost per customer
* Possible future marketing methods to attract new customers
* Percentage of profits you can allocate to your marketing campaign
* Marketing tools you can implement within your budget - newspaper, magazine or Yellow Pages advertising; radio or television advertising; direct mail; tele-marketing; public relations activities such as community involvement, sponsorship or press releases
* Methods of testing your marketing ideas
* Methods for measuring results of your marketing campaign
* The marketing tool you can implement immediately

The final component in your marketing plan should be your overall promotional objectives: to communicate your message, create an awareness of your product or service, motivate customers to buy and increase sales, or other specific targets. Objectives make it easier to design an effective campaign and help you keep that campaign on the right track. Once you have defined your objectives, it is easier to choose the method that will be most effective.

For more detailed information, review the following guide: “Marketing Your Business for Success.”

Executive Summary
Current Situation
Competitor and Issue Analysis
What do you want to achieve? - Marketing Objectives
How will you get there? - Strategizing with "The 4 Ps"
Your "to do" list - Action Programs
How much will everything cost? - Your Budget

Source:
http://www.sba.gov/starting_business/marketing/plan.html

Competitive Analysis

Business takes place in a highly competitive, volatile environment, so it is important to understand the competition. Questions like these can help:

1. Who are your five nearest direct competitors?
2. Who are your indirect competitors?
3. Is their business growing, steady, or declining?
4. What can you learn from their operations or from their advertising?
5. What are their strengths and weaknesses?
6. How does their product or service differ from yours?

Start a file on each of your competitors including advertising, promotional materials, and pricing strategies. Review these files periodically, determining how often they advertise, sponsor promotions, and offer sales. Study the copy used in the advertising and promotional materials, and their sales strategies.

What to address in your competitor analysis

* Names of competitors - List all of your current competitors and research any that might enter the market during the next year.
* Summary of each competitor's products - This should include location, quality, advertising, staff, distribution methods, promotional strategies, customer service, etc.
* Competitors' strengths and weaknesses - List their strengths and weaknesses from the customer's viewpoint. State how you will capitalize on their weaknesses and meet the challenges represented by their strengths.
* Competitors' strategies and objectives - This information might be easily obtained by getting a copy of their annual report. It might take analysis of many information sources to understand competitors' strategies and objectives.
* Strength of the market - Is the market for your product growing sufficiently so there are enough customers for all market players?

Ideas for gathering competitive information

* Internet - The internet is a powerful tool for finding information on a variety of topics.
* Personal visits - If possible, visit your competitors' locations. Observe how employees interact with customers. What do their premises look like? How are their products displayed and priced?
* Talk to customers - Your sales staff is in regular contact with customers and prospects, as is your competition. Learn what your customers and prospects are saying about your competitors.
* Competitors' ads - Analyze competitors' ads to learn about their target audience, market position, product features, and benefits, prices, etc.
* Speeches or presentations - Attend speeches or presentations made by representatives of your competitors.
* Trade show displays - View your competitor's display from a potential customer's point of view. What does their display say about the company? Observing which specific trade shows or industry events competitors attend provides information on their marketing strategy and target market.
* Written sources:
General business publications
Marketing and advertising publications
Local newspapers and business journals
Industry and trade association publications
Industry research and surveys
Computer databases (available at many public libraries)

For More Information on This Topic:

SBDC Net Industry Information

Source:
http://www.sba.gov/starting_business/marketing/analysis.html

Marketing Research

What is Marketing Research?

According to the American Marketing Association, marketing research is the systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services.

Every small business owner-manager must ask the following questions to devise effective marketing strategies:

* Who are my customers and potential customers?
* What kind of people are they?
* Where do they live?
* Can and will they buy?
* Am I offering the kinds of goods or services they want - at the best place, at the best time and in the right amounts?
* Are my prices consistent with what buyers view as the product's value?
* Are my promotional programs working?
* What do customers think of my business?
* How does my business compare with my competitors?

Marketing research is not a perfect science. It deals with people and their constantly changing feelings and behaviors, which are influenced by countless subjective factors. To conduct marketing research you must gather facts and opinions in an orderly, objective way to find out what people want to buy, not just what you want to sell them.
Why do it?
It is impossible to sell products or services that customers do not want. Learning what customers want, and how to present it attractively, drives the need for marketing research. Small business has an edge over larger concerns in this regard. Large businesses must hire experts to study the mass market, while small-scale entrepreneurs are close to their customers and can learn much more quickly about their buying habits. Small business owners have a sense their customers' needs from years of experience, but this informal information may not be timely or relevant to the current market.

Marketing research focuses and organizes marketing information. It ensures that such information is timely and permits entrepreneurs to:

* Reduce business risks
* Spot current and upcoming problems in the current market
* Identify sales opportunities
* Develop plans of action

How to do it
Without being aware of it, most business owners do market research every day. Analyzing returned items, asking former customers why they've switched, and looking at competitor's prices are all examples of such research. Formal marketing research simply makes this familiar process orderly. It provides a framework to organize market information.
Market Research - The Process
Step One: Define Marketing Problems and Opportunities

Step Two: Set Objectives, Budget, and Timetables

Step Three: Select Research Types, Methods, and Techniques

Step Four: Design Research Instruments

Step Five: Collect Data

Step Six: Organize and Analyze the Data

Step Seven: Present and Use Market Research Findings
Define the Problem or Opportunity
The first step of the research process, defining the problem or opportunity, is often overlooked - but it is crucial. The root cause of the problem is harder to identify than its obvious manifestations; for example, a decline in sales is a problem, but its underlying cause is what must be corrected. To define the problem, list every factor that may have influenced it, then eliminate any that cannot be measured. Examine this list while conducting research to see if any factors ought to be added, but don't let it unduly influence data collection.
Assess Available Information
Assess the information that is immediately available. It may be that current knowledge supports one or more hypotheses, and solutions to the problem may become obvious through the process of defining it. Weigh the cost of gathering more information against its potential usefulness.
Gather Additional Information
Before considering surveys or field experiments, look at currently held information: sales records, complaints, receipts, and any other records that can show where customers live and work, and how and what they buy. One small business owner found that addresses on cash receipts allowed him to pinpoint customers in his market area. With this kind of information he could cross-reference his customers' addresses and the products they purchased to check the effectiveness of his advertising.

Customers' addresses tell much about them. Lifestyles - and buying habits - are often correlated with neighborhoods.

Credit records are an excellent source of information, giving information about customers' jobs, income levels, and marital status. Offering credit is a multifaceted marketing tool with well-known costs and risks.

Employees may be the best source of information about customer likes and dislikes. They hear customers' minor gripes about the store or service - the ones customers don't think important enough to take to the owner. Employees are aware of the items customers request that you do not stock. They can often supply good customer profiles from their day-to-day contacts.
Outside Data
Secondary Research

Secondary research exploits published sources like surveys, books, and magazines, applying or rearranging the information in them to bear on the problem or opportunity at hand. A tire sales business owner might guess that present retail sales of tires is strongly correlated with sales of new cars three years ago. To test this idea, it's easy to compare new car sales records with replacement tire sales three years later. Done over a range of recent years, this should prove or disprove the hypothesis and help marketing efforts tremendously.

Localized figures tend to provide better information as local conditions might buck national trends. Newspapers and other local media are often quite helpful.

There are many sources of secondary research material. It can be found in libraries, colleges, trade and general business publications, and newspapers. Trade associations and government agencies are rich sources of information - GALES' Directory is available at any public library.

Sources of Secondary Research

ASAE Directory of Associations Online
Ask a Librarian - U.S. Library of Congress
Bureau of Labor Statistics
Business Research Lab
Center for Business Women's Research
Economic Statistics & Research
Fedstats.gov
Internet Public Library
Population & Demography Resources

Primary Research

Primary research can be as simple as asking customers or suppliers how they feel about a business or as complex as surveys conducted by professional marketing research firms. Direct mail questionnaires, telephone surveys, experiments, panel studies, test marketing, and behavior observation are all examples of primary research.

Primary research is often divided into reactive and non-reactive research. Non-reactive primary research observes how real people behave in real market situations without influencing that behavior even accidentally. Reactive research, including surveys, interviews, and questionnaires, is best left to marketing professionals, as they can usually get more objective and sophisticated results.

Those who can't afford high-priced marketing research services should consider asking nearby college or university business schools for help.

For More Information on This Topic:

Missouri SBDC's "Market Research Workbook"
Inc. Magazine Market Research Articles

Source:
http://www.sba.gov/starting_business/marketing/research.html

Marketing Basics

To succeed, entrepreneurs must attract and retain a growing base of satisfied customers. Marketing programs, though widely varied, are all aimed at convincing people to try out or keep using particular products or services. Business owners should carefully plan their marketing strategies and performance to keep their market presence strong.
What is Marketing?

Marketing is based on the importance of customers to a business and has two important principles:

1. All company policies and activities should be directed toward satisfying customer needs.
2. Profitable sales volume is more important than maximum sales volume.
To best use these principles, a small business should:

* Determine the needs of their customers through market research
* Analyze their competitive advantages to develop a market strategy
* Select specific markets to serve by target marketing
* Determine how to satisfy customer needs by identifying a market mix

Market Research

Successful marketing requires timely and relevant market information. An inexpensive research program, based on questionnaires given to current or prospective customers, can often uncover dissatisfaction or possible new products or services.

Market research will also identify trends that affect sales and profitability. Population shifts, legal developments, and the local economic situation should be monitored to quickly identify problems and opportunities. It is also important to keep up with competitors' market strategies.
Marketing Strategy
A marketing strategy identifies customer groups which a particular business can better serve than its target competitors, and tailors product offerings, prices, distribution, promotional efforts, and services toward those market segments. Ideally, the strategy should address unmet customer needs that offer adequate potential profitability. A good strategy helps a business focus on the target markets it can serve best.
Target Marketing

Owners of small businesses usually have limited resources to spend on marketing. Concentrating their efforts on one or a few key market segments - target marketing - gets the most return from small investments. There are two methods used to segment a market:

1. Geographical segmentation - Specializing in serving the needs of customers in a particular geographical area. For example, a neighborhood convenience store may send advertisements only to people living within one-half mile of the store.
2. Customer segmentation - Identifying those people most likely to buy the product or service and targeting those groups.
Managing the Market Mix

Every marketing program contains four key components:

* Products and Services
* Promotion
* Distribution
* Pricing

These are combined into an overall marketing program.

Products and Services - Product strategies may include concentrating on a narrow product line, developing a highly specialized product or service, or providing a product-service package containing unusually high-quality service.

Promotion - Promotion strategies include advertising and direct customer interaction. Good salesmanship is essential for small businesses because of their limited ability to spend on advertising. Good telphone book advertising is also important. Direct mail is an effective, low-cost medium available to small business.

Price - The right price is crucial for maximizing total revenue. Generally, higher prices mean lower volume and vice-versa; however, small businesses can often command higher prices because of their personalized service.

Distribution - The manufacturer and wholesaler must decide how to distribute their products. Working through established distributors or manufacturers' agents generally is easiest for small manufacturers. Small retailers should consider cost and traffic flow in site selection, especially since advertising and rent can be reciprocal: A low-cost, low-traffic location means spending more on advertising to build traffic.

The nature of the product or service is also important in siting decisions. If purchases are based largely on impulse, then high traffic and visibility are critical. On the other hand, location is less a concern for products or services that customers are willing to go out of their way to find. The recent availability of highly segmented mailing lists, purchased from list brokers, magazines, or other companies, has enabled certain small businesses to operate from any location yet serve national or international markets.
Marketing Performance

After implementing a marketing program, entrepreneurs must evaluate its performance. Every program should have performance standards to compare with actual results. Researching industry norms and past performance will help to develop appropriate standards.

Entrepreneurs should audit their company's performance at least quarterly. The key questions are:

1. Is the company doing all it can to be customer-oriented?
2. Do employees ensure the customers are satisfied and leave wanting to come back?
3. Is it easy for the customer to find what he or she wants at a competitive price?

Source:
http://www.sba.gov/starting_business/marketing/basics.html

Writing the Plan

What goes in a business plan? The body can be divided into four distinct sections:

1) Description of the business
2) Marketing
3) Finances
4) Management

Addenda should include an executive summary, supporting documents, and financial projections.
Although there is no single formula for developing a business plan, some elements are common to all business plans. They are summarized in the following outline:

Elements of a Business Plan

1. Cover sheet
2. Statement of purpose
3. Table of contents
I. The Business
A. Description of business
B. Marketing
C. Competition
D. Operating procedures
E. Personnel
F. Business insurance

II. Financial Data
A. Loan applications
B. Capital equipment and supply list
C. Balance sheet
D. Breakeven analysis
E. Pro-forma income projections (profit & loss statements)
Three-year summary
Detail by month, first year
Detail by quarters, second and third years
Assumptions upon which projections were based
F. Pro-forma cash flow

III. Supporting Documents
Tax returns of principals for last three years Personal financial
statement (all banks have these forms)
For franchised businesses, a copy of franchise contract and all
supporting documents provided by the franchisor
Copy of proposed lease or purchase agreement for building space
Copy of licenses and other legal documents
Copy of resumes of all principals
Copies of letters of intent from suppliers, etc.

Sample Plans

One of the best ways to learn about writing a business plan is to study the plans of established businesses in your industry.

Review examples of real business plans.

For Additional Information:
See
SBA's Startup Guide
Business Plan Workshops

Source:
http://www.sba.gov/starting_business/planning/writingplan.html

Using the Plan

A business plan is a tool with three basic purposes: communication, management, and planning.
As a communication tool, it is used to attract investment capital, secure loans, convince workers to hire on, and assist in attracting strategic business partners. The development of a comprehensive business plan shows whether or not a business has the potential to make a profit. It requires a realistic look at almost every phase of business and allows you to show that you have worked out all the problems and decided on potential alternatives before actually launching your business.

As a management tool, the business plan helps you track, monitor and evaluate your progress. The business plan is a living document that you will modify as you gain knowledge and experience. By using your business plan to establish timelines and milestones, you can gauge your progress and compare your projections to actual accomplishments.

As a planning tool, the business plan guides you through the various phases of your business. A thoughtful plan will help identify roadblocks and obstacles so that you can avoid them and establish alternatives. Many business owners share their business plans with their employees to foster a broader understanding of where the business is going.
Sample Business Plans