The marketing portion of a business plan addresses four main topics: product, price, promotion, and place.
A business plan is a blueprint for taking an idea for a product or service and turning it into a commercially viable reality. The marketing portion of the business plan addresses four main topics:
- Product: What is the good or service that your business will offer? How is that product better than the competition? Why will people buy it?
- Price: How much can you charge? How do you balance sales volume and price to maximize income?
- Promotion: How will your product or service be positioned in the marketplace? Will your product carry a premium image with a price to match? Will it be an inexpensive, no-frills alternative to similar offerings from other businesses? What type of advertising will you use? When will ads be run? How will the product be packaged?
- Place: Which sales channels will you use? Will you sell by telephone or will your product be carried in retail outlets? Which channel will let you economically reach your target audience?
The marketing portion of a business plan addresses how you will get people to buy your product or service in sufficient quantities to make your business profitable. It consists of:
- Market analysis, which assesses the market environment in which you compete, identifies your competitors and analyzes their strengths and weaknesses, and identifies and quantifies your target market.
- Marketing strategy, which explains how you will differentiate your business from your competitors' businesses and what approach you will take to get customers to buy from you.
- Marketing and sales plans, which specify the nature and timing of promotional and other advertising activities that will support specific sales targets.
Market analysis
How do you determine if there are enough people in your market willing to purchase what you have to offer at the price you need to charge to make a profit? The best way is to conduct a methodical analysis of the market you plan to reach. The market analysis presents your conclusions regarding external market factors that will affect your business. It examines the totality of the business environment in which you will compete.
Topics addressed in the market analysis include the existence and type of competitors, the characteristics of your target customers, market size, distribution costs, trends in your industry, and in the market in general. Much of the information that will be included in the market analysis will be derived directly from the SWOT analysis that you performed early on in the planning process. The purpose of the market analysis is to set the stage for presenting your marketing strategy. That strategy sets forth your plan for successfully competing in your selected market.
Marketing strategy
The marketing strategy portion of your business plan presents the approach you plan to take to provide products or services to your customers. It explains, at a high level, what you are going to do to get your customers to buy in the desired quantities. Someone who reads your market strategy should come away with a "big picture" view of how your business will present itself to the market segment in which you will compete. You should assess both the merits and the risks of your enterprise in the marketing strategy.
In the marketing strategy section of your plan, you'll address issues such as:
- Identification of your target buyers.
- The market segment in which you'll compete.
- The reasons why the product or service you offer is unique.
- Your pricing philosophy.
- Your plans for market research.
- Your ongoing product or service development plans.
You'll find it useful to keep in mind the 4 Ps of marketing (product, price, promotion, and place) as you define the scope of your marketing strategy. Be sure to stress what is unique about your business.
Marketing and sales plans
Your marketing and sales plan explains how you will reach your targeted customers and how you will effectively market your product or service to those customers. For example, the marketing plan specifies the types of advertising you will use and the timing of those advertisements. In essence, the marketing plan takes the marketing strategy that you developed to a tactical level. It sets forth the specific steps you will take to sell your product or service and provides a timetable for those actions to occur.
For example, how will you advertise your business? If you decide on radio ads, which stations will you choose, and at what times of day will you run ads? Can you afford enough repetition of the ad to make it memorable? How will you assess whether you're getting your money's worth from the radio spots?
The marketing and sales plan usually includes a calendar that ties marketing and sales activities to specific operational events. For example, an advertising campaign may begin some months before a new product is ready to be sold. As the date of the new product introduction approaches, the ad campaign would be stepped up. Once the new product hits the market, additional advertising is used to support specific sales objectives.
Sales plans. An integral component of any business plan is a strategy for getting your product or service to your targeted customers. There are many ways to reach your customers. One challenge in developing your business plan is selecting the sales channel that is most effective. For instance, if you're in a business where you provide services personally, your participation in the sales process can be extensive.
Many good home improvement contractors make all their sales pitches in person, and they count on referrals from satisfied customers to generate new sales prospects. It would be difficult to rely on a separate sales organization when the essence of the job includes creating estimates and selling the prospective customer on your ability to deliver what the customer wants.
In contrast, if your business deals in the sale and production of large quantities of product with little associated service, you will face a different challenge. Customers may not know or care who you are.
A coffee distributor roasts and grinds coffee for resale to a number of local convenience stores. The stores brew and sell the coffee by the cup. The people who buy and drink the coffee are the end-users of the product. But the convenience stores are the target market for the distributor's product. The sales plan must address how to reach them, as intermediaries between the producer and the end-user.
Sales plans are based on the particular mix of goods and services that you plan to offer and on the way you intend to reach potential customers. If you are going to have a sales force of some kind, be sure you know what you will expect them to do. When making hiring decisions, do your best to find people who can do what you want. If you will be the entire sales force, try to quantify the activities and time involved.
For example, a remodeling contractor won't spend all of the time actually working on houses. In addition to back-office tasks, the contractor will also spend time meeting with potential customers, discussing the job, preparing and submitting bids or estimates, etc. These are vital sales activities and are essential to keeping work lined up.