the marketing plan
The information for this marketing plan was derived from many sources, including Michael Porter's book Competitive Advantage and the works of Philip Kotler. Concepts addressed include strategies for pricing, distribution, promotion, advertising and market segmentation. Factors such as market penetration, market share, profit margins, budgets, financial analysis, capital investment, government actions, demographic changes, emerging technology and cultural trends are also addressed.
A marketing plan is designed to direct company activities towards the satisfaction of customer needs; determine what the customer wants, develop a product/service to meet those needs, get the product/service to the end user and communicate with the customer - at a profit!
Introduction
There are two major components to your marketing strategy:
How your company will face the competitive marketplace
How you will implement and support your day-to-day operations.
In today's very competitive marketplace a strategy that insures a consistent approach to offering your product or service in a way that will outsell the competition is critical. It is of little value to have a strategy if you lack either the resources or the expertise to implement it.
In the process of creating a marketing strategy you must consider many factors. Of those many factors, some are more important than others. You begin the creation of your strategy by deciding what the overall objective of your enterprise should be. In general this falls into one of four categories:
If the market is very attractive and your enterprise is one of the strongest in the industry you will want to invest your best resources in support of your offering.
If the market is not especially attractive, but your enterprise is one of the strongest in the industry then an effective marketing and sales effort for your offering will be good for generating profits.
If the market is very attractive but your enterprise is one of the weaker ones in the industry you must concentrate on strengthening the enterprise.
If the market is not especially attractive and your enterprise is one of the weaker ones in the industry, you should determine the most cost effective way to divest your enterprise of this offering.
Having selected the direction most beneficial for the overall interests of the enterprise, the next step is to choose a strategy for the offering that will be most effective in the market. This means choosing one of the following strategies
a. A COST LEADERSHIP STRATEGY is based on the concept that you can produce and market a good quality product or service at a lower cost than your competitors.
b. A DIFFERENTIATION STRATEGY is one of creating a product or service that is perceived as being unique throughout the industry. The emphasis can be on brand image, technology, special features, superior service, a strong distributor network or other aspects that might be specific to your industry. In addition, some of the conditions that should exist to support a differentiation strategy include strong marketing abilities, effective product engineering, creative personnel, the ability to perform basic research and a good reputation.
A FOCUS STRATEGY: is based on the concept of serving a particular target in such an exceptional manner that others cannot compete. Usually this means addressing a substantially smaller market segment than others in the industry, but because of minimal competition, profit margins can be very high.
The Environment
Environmental factors positively or negatively impact the industry and the market growth potential of your product/service. Factors to consider include:
Government actions (current or under consideration) can support or detract from your strategy. Consider subsidies, safety, efficacy and operational regulations, licensing requirements, materials access restrictions and price controls (Boeing vs. Airbus)
Demographic changes - Anticipated demographic changes might support or negatively impact the growth potential of your industry and market. This includes factors such as education, age, income and geographic location.
Emerging technology: Technological changes that are occurring may or may not favor the actions of your enterprise (Minitel, MP3)
Cultural trends: Cultural changes such as fashion trends and lifestyle trends may or may not support your offering's penetration of the market.
The Competition
It is essential to know who the competition is and to understand their strengths and weaknesses. Each of your competitor's experience, power, market position, strength, and predictability must be evaluated.
Market Demands
Who is the competition?
What are their products/services?
What percentage of the total market does each competitor enjoy?
What are the company’s long terms plans?
Your Enterprise
An honest evaluation of the strengths of your enterprise is a critical factor in the development of your strategy. Factors to consider include:
Enterprise capacity to be leader in low-cost production considering cost control infrastructure, cost of materials, economies of scale (the Chinese price), management skills, availability of personnel and compatibility of manufacturing resources with offering requirements.
The enterprise's ability to construct entry barriers to competition such as gaining substantial benefit from economies of scale, exclusive access to distribution channels and the ability to clearly differentiate your offering from the competition.
The enterprise's ability to sustain its market position is determined by the potential for competitive imitation, resistance to inflation, ability to maintain high prices, etc.
The competence of the management team
The adequacy of the enterprise's infrastructure in terms of organization, employee benefit programs, customer support facilities and logistical capabilities.
The freedom of the enterprise to make critical business decisions without influence from distributors, suppliers, unions, creditors, investors and other outside influences.
Important questions
WHO
is the company, principals, employees, and community?
WHAT
is the product/service, what is the company's goal?
WHERE
is the plant to be established
HOW
Does the company intend to meet its objectives, production levels, and sales volumes?
WHY
was the product/service developed, what are its attributes or qualities, and how is it superior to existing products?
Target
What is the company's initial proposed market?
Local
National
Regional
International, global
Define the proposed target market.
Describe the targeted user groups by age, gender, lifestyle, values (major customer groups).
Define the company's sales level objectives and what percentage of total market share they represent.
Describe how planned production capability compares to proposed market demand.
Outline any outside influencing factors which may affect the marketability of the product, and how they can be overcome:
Packaging/labeling regulations
Buyer preferences (health food vs. junk food)
Technology changes to production
Describe when the product/service is usually purchased; on impulse or as a regular grocery shopping item. Does the proposed marketing strategy address these trends?
Who usually does the purchasing of the product/service? Who makes the purchasing decision? Is the marketing strategy properly directed to this group?
Describe the varieties of the product available:
By flavor
By size of package
Other
Where is the product normally purchased?
Supermarkets
Grocery stores
Convenience stores
Vending machines
Schools
Other
Are the marketing efforts properly targeted to these locations?
The Product (Service)
Factors to consider include:
The benefits the customer will derive from the use of the offering.
The extent to which the offering is differentiated from the competition.
The extent to which common introduction problems can be avoided such as unavailability of materials, poor quality control, regulatory problems and the inability to explain the benefits of the offering to the customer.
The potential for product obsolescence as affected by the enterprise's commitment to product development, the ongoing potential for product improvements, the ability of the enterprise to react to technological change and the likelihood of substitute solutions to the customer's needs.
Pricing
A pricing strategy is mostly influenced by your requirement for net income and your objectives for long-term market control. There are 3 basic strategies you can consider.
A SKIMMING PRICING STRATEGY: If your offering has enough differentiation to justify a high price and you desire quick cash, then you set your prices very high.
A MARKET PENETRATION STRATEGY: If near term income is not so critical and rapid market penetration for eventual market control is desired, then you set your prices very low.
A COMPARABLE PRICING STRATEGY (on-going rate): In this case you can price your offering comparably to those of your competitors.
What is the consumer acceptance price range for this type of product/service?
Is there sufficient margin between the manufacturer's cost and the consumer acceptance price level to provide for markups at the wholesale, distributor and retail level?
Are coupons or discounts being considered to promote consumers to try other flavors, etc.?
Promotion
To sell an offering you must effectively promote and advertise it. There are two basic promotion strategies, PUSH and PULL.
The PUSH STRATEGY maximizes the use of all available channels of distribution to "push" the offering into the marketplace. This usually requires generous discounts to achieve the objective of giving the channels incentive to promote the offering, thus minimizing your need for advertising.
The PULL STRATEGY requires direct interface with the end user of the offering. Use of channels of distribution is minimized during the first stages of promotion and a major commitment to advertising is required. There are many strategies for advertising an offering. Some of these include:
Product Comparison advertising (Tele 2)
Product Benefits advertising: This is especially beneficial when you have introduced a new approach to solving a user need and comparison to the old approaches is inappropriate (Henkel: new detergent)
Corporate advertising: When you have a variety of offerings and your audience is fairly broad, it is often beneficial to promote your enterprise identity rather than a specific offering (ACCOR)
Describe the company's "communications package"
Advertising
Selling
Sales promotion
Publicity
How much is budgeted in Year 1 in each category?
Advertising
What percentage of each media is to be used in your overall advertising package?
Television
Radio
Newspapers
Magazines
Billboards
Co-operative advertising with wholesalers/retailers
Other
Sales Promotion
What sales promotion activities are planned?
Point of purchase displays
Samples
Coupons
What costs are associated with each?
Publicity
How does the company plan to support the introduction of the product using publicity?
Endorsements
Testimonials
Consistent visual theme
Distribution
You must also select the distribution method(s) you will use to get the offering into the hands of the customer. These include:
1. Direct Sales involves the sale of your offering using a direct, in-house sales organization that does all selling through the Internet, telephone or mail order contact.
2. Wholesale Sales involves the sale of your offering using intermediaries or "middle-men" to distribute your product or service to the retailers.
3. Self-service Retail Sales involves the sale of your offering using self-service retail methods of distribution (Auchan)
4. Full-service Retail Sales involves the sale of your offering through a full service retail distribution channel (Renault)
Distribution Channels
How does the company plan to get the product/service to the end user?
What channel of distribution is to be used?
Direct - manufacturer to consumer
One stage - manufacturer to retailer to consumer
Traditional - manufacturer to wholesaler to retailer to consumer
Multi-stage - manufacturer to broker to wholesaler to retailer to consumer
Who/what Company will carry out the distribution?
Are commissioned salespersons to be used?
What are the costs associated with the proposed distribution channels? What are delivery terms?
How are products to be packaged for shipping, end-user display? What physical handling is required?
Does the packaging meet regulatory agency requirements (labeling, etc.)? Is packaging eye appealing, complementary to product?
Is there a method for feedback on customer satisfaction, quality control?
What minimum shipping orders are required? (Cost efficient)
What minimum inventory levels must be maintained to ensure no loss of sales due to late deliveries, back orders, split shipments?
What system is to be used for processing orders, shipping, and billing?
Of course, making a decision about pricing, promotion and distribution is heavily influenced by some key factors in the industry and marketplace. These factors should be analyzed initially to create the strategy and then regularly monitored for changes. If any of them change substantially the strategy should be reevaluated.
Marketing/Sales
The marketing and sales organization is analyzed for its strengths and current activities. Factors to consider include:
Experience of Marketing/Sales manager including contacts in the industry (clients, distribution channels, media), familiarity with advertising and promotion, personal selling capabilities, general management skills and a history of profit and loss responsibilities.
The ability to generate good publicity as measured by past successes, contacts in the press, quality of promotional literature and market education capabilities.
Sales promotion techniques such as special pricing and contests.
The effectiveness of your distribution channels as measured by history of relation, financial stability, reputation and access to clients.
Advertising capabilities including media relationships, advertising budget, past experience, how easily the offering can be advertised and commitment to advertising.
Sales capabilities including availability of personnel, quality of personnel, location of outlets, relationship with distributors, ability to demonstrate the benefits of the offering and necessary sales support capabilities.
The appropriateness of the pricing of your offering as it relates to competition.
Selling
What type of sales persons are to be used?
Will a sales training program be offered?
How will sales effectiveness be measured?
What incentives will be offered to salespersons for new accounts, achievements?
Customer Services
The strength of the customer service function has a strong influence on long-term market success. Factors to consider include:
Experience of the Customer Service manager in the areas of similar offerings and customers, quality control, technical support, product documentation, sales and marketing.
The availability of technical support to service your offering after it is purchased.
One or more factors that causes your customer support to stand out as unique in the eyes of the customer.
Accessibility of service outlets for the customer.
The reputation of the enterprise for customer service.
Production
You should review your enterprise's production organization with respect to their ability to cost effectively produce products/services. The following factors are considered:
Total costs
Technology and production experience
The ability of the enterprise to limit suppliers bargaining power.
The ability of the enterprise to control the quality of raw materials and production.
Adequate access to raw materials.
