The Ins & Outs of Developing An Effective

Marketing Plan

Funded in part through a cooperative agreement with the U.S. Small Business Administration

Presented byNiambi Jarvis

What is Marketing? The area of business that involves:

• The determination of customer needs/problems

• The development and offering of tailored services and/or products that have been developed to meet those needs

• Capturing customers’ perceived value of product/service through optimal pricing strategies

• The development and implementation of the promotional activities that are most likely to reach a business’ target market and stimulate purchase

• Identifying the ideal point of contact for customers to access a business’ products and services

What is a marketing plan & why should I have one?

A marketing plan is a business tool that outlines how a company will attract, acquire and retain its target market(s)

An executable & effective marketing plan:• Identifies the best customer profile (i.e. those

individuals who are most willing and able to purchase your products)

• Identifies a business’ optimal niche market (area of specialization)

• Links sales and profit goals to marketing efforts• Provides an action plan for accomplishing sales and

marketing goals (e.g. brand awareness, increase in market share, product line extensions etc.)

• Can substantially increase sales & company value

Common Marketing Myths

1. Everyone is our customer2. Our products are so good, they sell themselves3. Price is everything4. All buyers are rational5. We have no competition6. Just make more sales calls7. Good fences make good neighbors8. Business is complex; therefore solutions are never easy9. The future is out of our control 10. Follow the leader

Before you start… Conduct research

• Product/Service• Industry size ($) & projections• Industry trends• Major players/competitors• Market share• Target market characteristics, size, willingness & ability

to pay

Research sources:• Primary research – surveys, interviews, focus groups,

suggestion cards, competitive assessment etc.• Secondary research – DC SBDC, U.S. Census Bureau,

www.fintel.us, bls.gov, Edgar, Third Wave research, IBIS World, Public Libraries etc.

Marketing Plan SnapshotI. Executive SummaryII. Situation Analysis

• Industry Analysis• Company Analysis• Customer Analysis• Competitor Analysis• Collaborators• Keys to Success

III. Marketing Strategy• Marketing Objectives• Financial Objectives• Target Market• Market Segmentation• Positioning Strategy• Marketing Mix

IV. Financials• Break-even Analysis• Sales Forecast• Marketing Expense Forecast

V. Controls • Implementation Milestones• Marketing Organization• Contingency Planning

I. Executive SummaryThe Executive Summary should be written LAST, andcomprise a high level synopsis of:

Company History Mission Statement Marketing Objectives Industry Trends Target Market Target Market Need(s)/Challenges Solutions – Your Products and/or Services Financial Feasibility (historical sales (if existing) and

projections)

II. Situation Analysis Industry Analysis

• Historical & projected industry sales (growth or decline)• Industry trends (e.g. market segmentation, new

products, markets etc.)• Political/Legal, economic, social and technological

environment

Company Analysis• Company products/services• Company history & customers• SWOT analysis

II. Situation Analysis Customer Analysis

• Target market description & needs• Target market size, trends and growth• Value drivers

Competitor Analysis• Major players (include market share %)• Market position• Strengths & weaknesses

Collaborators• Subsidiaries, joint ventures, strategic alliances etc.

Keys to Success •e.g. Location, effective networking, effective branding,increased top of mind awareness, consistent customerfollow up & feedback, customized services/products,supplier relationships etc.

III. Marketing StrategyGrowth Strategies

III. Marketing Strategy Marketing Objectives (2012)

• Increase brand awareness• Increase market share by 10%• Launch two new products• Achieve an average customer satisfaction rating of 8

out of 10• Increase customer retention by 10%

Financial Objectives (2012)• Generate $500,000 in annual sales• Increase profit margin from 10% to 15%

III. Marketing Strategy Target Market

Business to Consumer (B2C)• Demographics (age, gender, income, education,

generation)• Geography (region, state, population size, density)• Psychographics (activities, interests, opinions,

attitudes, values)• Behavior (usage patterns, frequency of use, benefits

sought, brand loyalty)• Target Market Size & Needs

Business to Business (B2B)• Business/Organization Type, Revenue/Budget,

Location, Number of Employees, Types of Services/Products Purchased, Frequency of Use

• Target Market Size & Needs

III. Marketing Strategy Market segmentation – involves dividing the market

into groups of individual sub-markets with different needs, wants and behavior.

Each segment must be:Identifiable: the differentiating attributes of the segments must be

measurable so that they can be identified.Accessible: the segments must be reachable through communication and

distribution channels. Substantial: the segments should be sufficiently large to justify the

resources required to target them.Unique: to justify separate offerings, the segments must respond

differently to the different marketing mixes.Durable: the segments should be relatively stable to minimize the cost of

frequent changes.

III. Marketing Strategy Positioning Strategy – this involves creating an image

or identity in the minds of your target market (Unique Selling Proposition (USP)).

What are the first things that come to mind when you think of the following brands?

III. Marketing Strategy Perceptual Map

High Quality

High Price

Low Price

Low Quality

III. Marketing Strategy Marketing Mix – The 4P’s

Product/Service • Product Portfolio• Features & Benefits• Product Manufacture/Acquisition• Packaging• Unique value proposition – what sets my

products/services apart from my competition?

III. Marketing Strategy Marketing Mix – The 4P’s continued

Price •Price listing•Discounts, payment terms, bundling etc.•Cost factors and mark-up•Pricing Strategy & logic (penetration, skimming,competitive value-based)

Penetration - Setting the price low in order to attract customers and gain market share; the price will be raised later once this market share is gained

Skimming - Selling a product at a high price, sacrificing high sales to gain a high profit, therefore ‘skimming’ the market; usually employed to reimburse the cost of investment of the original research into the product (commonly used in electronic markets)

Competitive Pricing - Setting the price based upon prices of similar competitor products

Value-Based Pricing - Pricing a product based on the perceived value and not on any other factor

III. Marketing Strategy Marketing Mix – The 4P’s continued

Promotions• Determine Promotional Budget & Mix based on

marketing objectives• Determine 3 Ms - Message, Media and Measurement

Promotional Mix

III. Marketing Strategy Remember – Connect marketing objectives to promotional strategyAdvertising - build general awareness/inquiries/traffic, encourage product

trial, shift awareness (e.g. change attitude), response to competitor promotion, increase use or purchase rate, support other market decisions (e.g. support sales force), general corporate/product image building, etc.

Sales promotion - build inquires, increase product trial, encourage

repurchase, build traffic, support other promotions

Personal selling - new account development, account support/maintenance, increase product trial, encourage purchase/repurchase, build traffic, support other promotions

Public relations - build general awareness/inquiries/traffic, encourage product trial, shift awareness (e.g., change attitude), respond to negative news/perception, image building, prepare markets for future activity (e.g. new product)

III. Marketing StrategyConcepts to remember when developing promotional

strategies:• Integrated Marketing Communications –

Ensure that all aspects of the promotional mix such as advertising, sales promotion, public relations, and direct marketing work together as a unified force, rather than allowing each to work in isolation

III. Marketing Strategy Concepts to remember when developing promotional strategies:

• Customer Relationship MarketingInvolves developing and maintaining long-term relationships with customers so that they will keep coming back to make repeat purchases.

Small companies have an advantage over their larger rivals at relationship marketing.

Requires a company to make customer service an all-encompassing part of its culture.

III. Marketing Strategy Concepts to remember when developing

promotional strategies:

• Developing a Competitive Edge Focus on the customer

Devotion to quality

Attention to convenience

Concentration on innovation

Dedication to service and customer satisfaction

Emphasis on speed

III. Marketing StrategyWhy develop a customer centric approach to

business?

• 67% of customers who stop patronizing a business do so because an indifferent employee treated them poorly.

• 96% of dissatisfied customers never complain about rudeor discourteous service to the company, but...

• 91% will not buy from that business again.• Treating customers indifferently or poorly costs the

average company 15% to 30% of gross sales!• 100% will tell their “horror stories” to at least nine other

people.• 13% of those unhappy customers will tell their stories to

at least 20 other people.

III. Marketing Strategy• Customer retention:

Companies that are successful at retaining their customers constantly ask themselves (and their customers) these four questions:

1. What are we doing right?2. How can we do that even better?3. What have we done wrong?4. What can we do in the future?

III. Marketing Strategy Marketing Mix – The 4P’s continued

Place/Distribution• Location, location, location (accessibility, foot traffic, importance to customer, proximity to competition, parking, size, image)

• Types of channels usedo Direct (retail store, sales force, internet etc.)o Indirect (retailers, wholesalers, agents etc.)o Combination

• Distribution costs (e.g. shipping, transportation, distributorship fee)

• Sales Strategy (e.g. sales approach, based on geography)

• Production & inventory capacities

• Cyclical fluctuations or seasonal demands

IV. FinancialsBreak-even Analysis

• Break-even Point is the level of sales in which a business’ revenue equals its expenses

• Break-even Formula = Total Fixed Costs for a Single Selling Price per unit –

Variable Cost per unit Product

• Break-even Formula = Total Fixed Costs for Services or 1– (Total Variable

Costs/Projected Sales) Multiple Products

Important Definitions:Fixed Costs – Costs that remain the same regardless of sales volume

e.g. rent, insurance, advertising etc.)Variable Costs – Costs that are directly related to sales (e.g. salescommissions, inventory costs, direct labor etc.)

IV. FinancialsSales Forecast

• List assumptions/sales logic (e.g. seasonality, growth, increased capacity)

• Estimated sales per product/service offering• Estimated sales per market segment

2012 2013 2014

Sales

Individuals $103,710 $262,527 $327,424

Families $150,304 $380,474 $474,528

Total Sales $254,014 $643,001 $801,952

Direct Cost of Sales 2001 2002 2003

Individuals $46,669 $118,137 $147,341

Families $67,637 $171,213 $213,538

Subtotal Direct Cost of Sales $114,306 $289,350 $360,879

Sigmund’s Gourmet Pasta Sales Forecast Example

IV. FinancialsMarketing Expense Forecast

• List assumptions/expense logic (e.g. outdoor ads during summer, sales promotions during slower months, advertising vehicle proportion)

• Estimated marketing expense per product/service offering• Estimated marketing expense per market segment

Sigmund’s Gourmet Pasta Marketing Expense Forecast ExampleMarketing Expense Budget

2012 2013 2014

Direct mail $5,267 $5,605 $5,421

Banner ads $11,704 $12,455 $12,047

Other $7,022 $7,473 $7,228

------------ ------------ ------------

Total Sales and Marketing Expenses

$23,993 $25,533 $24,696

Percent of Sales 9.45% 3.97% 3.08%

V. ControlsImplementation Milestones

Promotional Mix

Objective Vehicle Target Market

Budget Timeline Expected Revenue

Executor Measurement

Advertising Increase brand awareness

Washingtonian Magazine

*Segment I

$5,000 1/1/2011 – 1/3/2011

$10,000 William Carter

Customer surveys, % of expected readership

Sales Promotion

Increase product trial

Coupons *Segment II

$3,000 5/1/2011 – 6/1/2011

$5,000 Debbie Allen

Coupons redeemed

Personal Selling

Increase product trial

Sales team *Segment III

$100,000

8/1/2011 – 12/1/2011

$300, 000

Richard Clark

Sales closes

Direct Marketing

Encourage purchase/repurchase

E-mail campaign I

*Segment II

$2,000 2/1/2011 – 4/30/2011

$20,000 Lucy Smiles

E-mail click through rate

V. ControlsMarketing Organization

•Describe primary marketing roles and qualifications & background of individuals in these roles

•Outsourcing

Contingency Planning• Increase/decrease in demand•Customer price sensitivity•Channel issues (e.g. with manufacturers, suppliers, distributors, retailers)

•Competitive retaliation (price wars, product imitation)•Diminished return on marketing investment•Location challenges (construction, new residents etc.)•Product quality/recall

Thank You!Please Contact the DC SBDC for Consulting:

DC Small Business Development CenterGADGET Center, Howard University

2801 Georgia Ave., NWWashington, DC 20001Office: 202.319.1393Twitter: @dcsbdc

Facebook: \dcsbdc