A business plan is the roadmap of your business and no business can survive without a viable marketing strategy. So you need to include in your business plan the marketing strategy for your product or service.
The marketing section of the business plan needs to cover: the marketing objectives of your business, the market analysis and the marketing strategy for the products/services you offer.
In order to do this, you will need to answer the following questions:
- What are the marketing objectives for our products or services?
- What are the most important key components, trends and influences on the market?
- What are the main characteristics of the potential clients and consumers of our products or services?
- How will we convince our clients to buy our products or benefit from the services we offer?
The marketing objectives
The marketing objectives derive from the general objectives of the business and you need to make sure you keep them SMART.
The marketing objectives must cover:
- The sales forecasts for the planned period, depending on the product and the market segment;
- The market share for the planned period, depending on the product and market segment.
- The profit obtained by selling the products/services.
It is mandatory that you create a market analysis if you wish to ensure the success of your company. The data gathered and the conclusions drawn during the market analysis will be the foundation of the marketing strategy and will help you fundament your marketing decisions and your entire business plan better.
There are two types of market research: primary and secondary market research.
The primary market research implies collecting your own data and can be conducted either by you or by a company specialized in conducting marketing research studies. Primary research delivers more specific results than secondary research, because it’s focused on your own informational needs. To conduct a primary study you can make use of surveys, interviews, focus-groups, etc, to discover more information about potential clients. The main disadvantage of primary research is that it is costly. Fortunately, there is a growing number of online tools that allow you to conduct primary research such as SurveyMonkey.
The secondary marketing study implies using already published information from studies previously performed by government agencies, chambers of commerce, trade associations, and other organizations. This type of information is available both online and offline, it’s rather easy to find and it is free or low-cost. For example you can find secondary market research online at different professional associations, statistics offices, governmental departments and agencies, in newspaper or magazines. The main disadvantage is that is not tailored to your own informational needs and it can be outdated.
The market analysis of the business plan should include the following aspects:
- Industry analysis
The analysis of the industry must contain a description of the sector your company will compete in. The purpose of this analysis is to help you understand the dynamic of the industry and the way you can be profitable in it.
In this section of the marketing plan you must answer the following questions:
- What is the industry you will operate in?
- What are the market segments you will compete in?
- Which are the current market trends and what is the expected evolution?
- Who are your main competitors?
- What problems/difficulties is your industry facing?
- What are the growth rates?
- What is the total number of sales in this field and the dynamic in the last five years?
- What are the economic, political, legal, technological, social factors that have a direct influence on the dynamic of the industry?
- The market analysis
This section must contain information related to the specifics of the market you will be a part of, your competitors and clients.
2.1. The target market
Identify the market segment you want to offer your product/service to and create a profile of your potential customers. If you will sell your product or service with the help of distributors, wholesalers, retailers, your analysis must contain information both about the end user and the brokers.
The size of the target market:
- Determine the size of your target market: the number of consumers, units sold, total value of transactions;
- What is the estimated growth rate over the next five years?
- Identify the main data sources for this type of information.
The market needs
Define the current needs on the market and the way in which your product or service will help you cover those needs.
2.2. The analysis of potential customers
The criteria on which you will base your market segmentation are various: age, income, gender, occupation, marital status, growth of family, education etc. Analyze the needs and expectations of your costumers and what are the consumer trends.
- Describe the target customer in accordance with the following criteria:
- Demographics (gender, age, race, education, occupation or profession, income, location, etc.);
- Geographic (the specific geographic time zone, the region type, the population density, the climate)
- Psychographics or lifestyle (attitudes, beliefs, opinions, interests, values, etc.)
- Social status
- What is your customer’s’ attitude towards your products that are already on the market? How willing are the customers to change preferences?
- How is the purchasing decision taken? Who is in charge of the buying decision? Who influences the buying decision? What is the determining factor in the purchasing decision: price, quality, added services, commodity, etc?
- How much money are customers willing to pay for your product/service?
2.3. Competition analysis
In this chapter of the market study you must analyze your competitors in a realistic and objective manner, without underestimating their influence.
Generally, a business plan must point out:
- Who are your main competitors, where are they located, what are the market segments they cover?
- What types of products or services do they offer?
- The quality and prices of products, the discounts offered to customers, guarantees, post-sales services.
- What is the market share of your competitors?
- What are your competitors’ advantages in terms of reputation, customer fidelity, distribution channels?
Create a short presentation for each competitor that will include: his activity, his position in the industry, strengths and weaknesses. Take into account the following competition types:
- Direct: companies that produce the same product/service type, but with different price, quality and design strategies.
- Indirect: companies that offer various products/services that cover the same need.
- Future: companies with the potential to tap into the market you activate in.
The business plan must demonstrate that can be profitably served by your company and show why it is not and will not be taken over by competitors. Moreover, you should foresee the reaction of the competition regarding you entering the market and present a strategy that will allow you to manage the situation.
Identify your main competitors: their names and addresses (direct and indirect competitors, similar products). Moreover, determine the market conditions, the marketing strategy, their products, the headquarters of the company, their financial situation and their relationship with their key suppliers.
Your advantage over the competition
By creating the aforementioned analysis, you are able to determine the advantages and disadvantages of your company in comparison with your competition.
- Will you offer better services or products?
- Will you deliver them faster, cheaper and if so, why and how?
- What strategies from your competition could you adopt?
Most of the information that will be included in the market analysis will be derived directly from the SWOT analysis that was performed early on in the business planning process.
- The marketing strategy
Start with the fundamental elements of the marketing plan: the target market you want to enter, how you intend on doing this and how long it will take before you reach the set objectives. Focus on the marketing mix: product, price, promotion and distribution.
3.1. Product/Service strategy
In this section you must offer answers for the following questions:
- What products/services do you offer?
- What are the main characteristics and benefits of your products/services?
- Describe the way in which the product or service was designed and tailored to meet the needs and expectations of your clients?
- How will you compete on the market?
- What other services will you offer your customers? Technical support, training, repair, warranty, etc?
- Why are your products/services different from that of your competitors?
- What are the strengths of your products/services? How about the weaknesses?
All these elements must be included in the SWOT analysis as well.
3.2. Price strategy
The price strategy is a part of the market positioning strategy. When setting the price for your products or service you must take into account several factors such as: market constraints, competitors pricing strategies and production costs.
Determine the price strategy after reviewing all the information you have from the market so you will adjust your price in order to make it more attractive for costumers.
When determining and adopting the pricing strategy you must take into account the following aspects:
- The direct and indirect costs;
- The profit margin for each product/service;
- The credit policy;
- The investment profitability;
- What are the financial possibilities of potential clients;
- How do they perceive the additional benefits;
- What types of savings are interesting for potential clients?
3.3. Promotion strategy
The manner in which the promotion of your products/services is made is essential to attracting clients and gaining market share. Having a great product or service is not enough because if your clients aren’t aware of it, they won’t buy it. Thus, your business doesn’t exist. Your main role is to promote the service/product and to inform potential clients of its existence and the benefits and advantages it brings.
In this section of the marketing plan you must take into account the following aspects:
- What are the objectives related to the promotion of the product/service?
- How will you promote your product/service?
- What communication channels will you use?
- What is the message you want to send to your customers?
- What is the visual identity of your product/service?
- What kind of a connection do you wish to create with your customers?
- How do you want to be perceived by your clients?
- What is the budget you intend on investing in promoting the product/service?
3.4. Distribution strategy
In this section of the marketing plan you must offer details on how your product or service is going to get to the customer.
Find out which are the proper distribution channels for your company (direct sale, sales through intermediaries) taking into account the analyses conducted in the previous chapters regarding the market specifics and the customer profile.
In this section you need to offer details related to the following aspects:
- What geographical areas do you want to cover?
- What is the shortest channel from you to the client?
- What is the most advantageous distribution channel?
- As far as suppliers go, the analysis must determine if:
- It offers promotion for your product;
- It offers transport;
- If they practice profit margins and how much they charge;
- Any other details considered to be relevant;
- Sales strategy
The way in which you create your sales strategy is another crucial aspect that will take your company one step closer to success. Why? Because this is the way through which your product will be purchased by clients.
In this section you must describe the way in which the sale of your product or service will happen while answering the following questions:
- What are the sales objectives?
- How is the sales process going to take place? Direct? By phone? By means of TV programs?
- Who will sell it? Will you have an internal sales force or an external one?
- Who will handle the sales force?
- How will you hire, train and pay your sales people?
- How will you encourage and sustain the sales efforts?
- The marketing plan budget
This section of the marketing plan is often paid very little importance despite the fact that it is a necessary element, because it offers some clear benchmarks in terms of monitoring and evaluating the actual costs versus the estimated costs.
The budget must be detailed and divided based on the types of activities and actions. Moreover, it should include all aforementioned and presented details in the marketing plan: the product strategy, promotion strategy, distribution strategy and sales strategy.
Remember that the marketing plan, just like the business plan is only useful if used and it must be constantly checked and rewritten based on the results obtained through monitoring and evaluation.