Every business, small or large, will be more successful with a business plan. One key component of a business plan is the marketing plan. A good marketing plan summarizes the who, what, where, when, and how much questions of company marketing and sales activities for the planning year:
- Who are our target buyers?
- What sources of uniqueness or positioning in the market do we have?
- Where will we implement our marketing spending plans?
- When will marketing spending plans occur?
- How much sales, spending, and profits will we achieve?
The financial projections contained in your business plan rest in large measure upon the assumptions contained in your marketing plan. It is the marketing plan that details when expenditures will be made, what level of sales will be achieved, and how and when advertising and promotional expenditures will be made.
Here are the major elements of a marketing plan:
- The situation analysis describes the total marketing environment in which the company competes and the status of company products and distribution channels.
- The opportunity and issue analysis details the major external opportunities and threats to the company and the internal strengths and weaknesses of the company, along with a discussion of key issues facing the company.
- The goals and objectives section outlines major company goals and the marketing and financial objectives.
- The marketing strategy section provides the company's marketing strategy statement, summarizing the key target buyer description, competitive market segments the company will compete in, the unique positioning of the company and its products compared to the competition, the reasons why it is unique or compelling to buyers, price strategy versus the competition, marketing spending strategy with advertising and promotion, and possible R&D and market research expenditure strategies.
- The sales and marketing plan outlines each specific marketing event or action plan to increase sales. For example, it may contain a summary of quarterly promotion and advertising plans, with spending, timing, and share or shipment goals for each program.
Effective planning requires an accurate situation analysis
The situation analysis section of a marketing plan describes what is happening in the markets in which the company competes, and analyzes the company's product and distribution trends. Information in this section provides rationale and support for the marketing objectives, plans, and strategies.
Use a simple, common-sense approach to organize and provide only relevant information. Because the situation analysis covers a wide range of topics, it should be divided into subsections. These subsections should start at the "big picture" of macroenvironment influences on your business down through total market descriptions, the competition, target buyers/end users, and, finally, product trends and your company distribution channels description. Thus, the key subsections include:
- Macroenvironment situation. The macroenvironment subsection presents information on trends that affect your company in the following areas:
- demographic
- economic
- technological
- political
- social
- cultural
- material supply
- market situation, which includes size, growth trends of total market, and key segments
- competitive situation, which provides a description of major competitors with size, goals, market share, product quality comparisons, marketing strategies, marketing spending, etc.
- target buyer or end user situation, which analyzes the identification and behavior of target buyers/end users and consumer wants and needs
- product situation, which includes sales, prices, and contribution margins; net profits of each company product line are shown
- distribution situation, which provides information on size, trends, and importance of each distribution channel for the company's products
Situation analysis begins by examining macroenvironment
The initial section of the situation analysis, the macroenvironment, sets the stage for the detailed analysis that will follow. Make sure that you capture only relevant information on macroenvironmental trends that might affect your business. Here are some aspects of key macroenvironmental forces that you should consider.
- Demographics. How will the demographic factors of your geographic locale or your target market affect demand for your goods or services in the future? For example, as the baby boomers age, the fastest growing demographic in the US is the over-65 segment. Does this have an impact on your business? For example, a home-building contractor should begin to pay closer attention to the needs of people over 65. Another example, in some areas the number of recent immigrants from non-English speaking countries is significant. Are there new products you could add to your line to attract these customers? Would having bilingual staff help your business grow?
- Economics/business conditions. No matter how depressing the economic news may be, the savvy business owner can not ignore it. Spend time getting a feel for the economic climate—not only of the nation, but of your region or city. What is relevant to your business? How does the economy affect what you will need to do to market your business and grow your revenue"
- Technology. Innovation can create or wipe out industries and businesses in less than a year. The popularity and convenience of CD players all but eliminated the sale of record players and seriously depressed the manufacture and sale of vinyl records. Are there similar disruptors facing your business? Are customer expectations—social media, 24/7 online ordering—going to affect your business model?
- Political and legal. Health care and handicapped legislation affects all businesses, large or small. Increasing costs and mandatory provisions for buildings, walkways, elevators, etc., significantly affect the overhead for a small business. For example, a new restaurant with a basement may have to have an elevator (e.g., $20,000 or more) for handicapped employees, despite the fact it is unlikely that physically handicapped employees will need to go down to a basement storage area.
- Social and cultural. Especially if you are in the consumer goods market, you need to be aware of cultural and social trends that affect your customers (and potential customers.) For example, there is a sweeping trend for Americans (and the world) to dress more casually, with function and comfort driving new clothing and shoe trends. People are cooking less and are more concerned about nutrition and fat in their diets. And today, American business people are less willing to sacrifice family life for business careers. What does this mean for your small business?
Situation analysis subsections delve into specific areas
The "Market Situation" subsection of the situation analysis provides information on the size, growth, and trends of the overall market and any relevant segments of the total market or category. Rationale should be provided for estimating the trend of the market, including key industry developments, introduction of new technology or new products, increased marketing spending by key competitors, etc. For example, a small business could include local industry sales or volume for the last five years and estimated total market for this year and the following year, with company sales and share of the market.
Outline your competitive landscape and challenges
In the "Competitive Situation" subsection of the situation analysis section you provide succinct and relevant information about key competitors:
- description of key competitors and their market positioning
- size of key competitors in units/dollars
- market shares of key competitors
- sales trends of key competitors
- strengths and weaknesses of key competitors compared to your company's product or services
- perceived marketing strategies of key competitors and their probable impact on your company
Describe your target buyer or end user
You provide actionable information on your target buyers, as well as information on the ultimate end users if necessary, in the "Target Buyer" subsection of the your situation analysis. Key questions answered in this subsection include:
- description of target buyers or end users in demographic, psychographic, and lifestyle terms
- target buyer/end user wants, needs, attitudes, and perceptions of category products and services
- where target buyers/end users are located and how to reach them
- which segments of the total market or category are growing or declining and why
Capture key metrics about your business and products
The "Product Situation" subsection of your situation analysis section provides company information on:
- sales
- profit
- product trends
- cost-of-goods history (five years)
- marketing spending history (five years of advertising, promotion, PR spending)
- distribution trends and developments
- description of the sales organization (for example, company or brokers)
Detail distribution channels and costs
The "Distribution" subsection of the situation analysis section describes each distribution channel and its relative importance to the company in terms of:
- percent of company sales
- company volume
- cost to distribute products and services
- growth potential
- competitive status
Marketing plans should define issues, opportunities and goals
The "Opportunity and Issue Analysis" section of your marketing plan analyzes the major external opportunities and threats to the company and the internal strengths and weaknesses of the company, along with a discussion of key issues facing the company.
- External opportunities and threats to the company should be described with possible programs to capitalize on the opportunities, and possible solutions to potential threats to the company.
- Internal strengths and weaknesses of the company should be described in a competitive context.
- Key issues addresses decisions to be made by the company, based upon the analysis of these external opportunities and threats and internal company strengths and weaknesses, and helps to determine objectives, strategies, and tactics.
External opportunities may be seen in an analysis of the macro environment the company operates in. Other factors affecting your company may come from the market situation or the competitive situation that your company faces.
Marketing goals and objectives are the heart of your plan
The "Marketing Goals and Objectives" section of your marketing plan outlines major company goals, marketing, and financial objectives. All objectives should be carefully quantified, where possible, especially in terms of an achievable time or date. Objectives should be reasonable and attainable.
Major company goals could include both short- and long-term goals. For example:
- company definition (e.g., "to be a manufacturer of 100 percent all-natural snack food products")
- market definition (e.g., "to attain leadership in dollar market share and volume for the healthy, all-natural snacks segment of the salty snacks category")
- technology (e.g., "to become known in the industry as the leading developer of new vegetable protein products")
Financial objectives are generally described in quantitative terms for at least three years in the future:
- gross sales (increase)
- cost-of-goods (decrease)
- gross margin (increase)
- net income (increase)
- return on investment
- return on income
Businesses seeking outside funding and capital should provide a minimum of five years of projected income statements, although these are usually located in the financial section of the business plan rather than the marketing section.
Marketing objectives are quantitative translations of the company's financial objectives, in marketing terms. For example:
- sales dollars
- sales units
- market share
- distribution levels/channel
- advertising awareness
- key account distribution
Well-articulated marketing strategy focuses valuable time, resources
Every business owner should develop a written guideline that sets forth the business's marketing strategy. This document is used to judge the appropriateness of each action that the business takes. If a company has to take an action that is off-strategy, it may indicate a temporary emergency action prompted by competition or other factors beyond normal management control. Or it may indicate the need to change or revise the company's marketing strategy.
A good marketing strategy provides specific goals and can include:
- a description of the key target buyer/end user
- competitive market segments the company will compete in
- distribution channels
- the unique positioning of the company and its products versus the competition
- the reasons why it is unique or compelling to buyers
- price strategy versus competition
- marketing spending strategy with advertising and promotion
- possible research and development
- market research expenditure strategies.
An overall company marketing strategy should also:
- define the business
- position the business as a leader, challenger, follower, or niche player in the category
- define the brand or business personality or image that is desired in the minds of buyers and end users
- define life cycle influences, if applicable
Use the following checklist to help create your own marketing strategy.
Marketing strategy checklist
- define what your company is
- identify the products or services that your company provides
- identify your target buyers/end users
- establish the marketing category (e.g., fast food purveyor, high-end audio equipment sales, etc.)
- determine whether your company will be a market category leader, follower, challenger, or niche player
- describe the unique characteristics of your products or services that distinguish them from the competition.
- define whether your pricing will be above, below, or at parity with your competitors and establish whether you will lead, follow, or ignore changes in competitors' pricing
- identify the distribution channels through which your products/services will be made available to the target market/end users
- describe how advertising and promotions will convey the unique characteristics of your products or services
- describe any research and development activities or market research plans that are unique to your business
- describe the image or personality of your company and its products or services
Test drive your strategy statements
If the statements in your strategy are measurable and actionable and work to differentiate your company and products apart from the competition, congratulations! If they are not measurable and actionable and do not differentiate your company from the competition, revise them until they are.
A good working marketing strategy should not be changed every year. It should not be revised until company objectives (financial, marketing, and overall company goals) have been achieved or the competitive situation has changed significantly, e.g., a new competitor comes into the category or significantly different or new products emerge from existing competitors.
Conclude plan with sales and marketing action plan
This section of the marketing plan outlines each marketing event or action planned to increase sales. The plan will generally cover a calendar year, broken down by month or by quarter. For example, it may contain a summary of quarterly promotion and advertising plans, with spending, timing, and share/shipment goals for each program.
Sales and marketing plans should be a logical outgrowth of short- and long-term company objectives and your marketing strategy. In the business plan, the sales and marketing plans provide an outline of each marketing event for the year, covering the following information:
- description of each event vehicle (for example, media, promotion, trade, sales)
- timing of each event
- event goals and objectives (for example, volume, share gains)
- cost of each event