Business Plan – Part IV & V

Marketing and Sales of a business

PART VI – Marketing Plan

Marketing research is the most important part of any business plan since it determines not only
potential demand and the target market but also expected sales levels, future opportunities in the
market, how many employees will be needed etc. In essence, the marketing plan is the foundation
of a good business plan.

This section will discuss how your market should be segmented, and that you have the ability to sell
and deliver your product or service effectively to the right targets. This is the place to show why
customers will buy from your company.

The term "segmentation" refers to the division of a market into sections, or parts, that are
identifiable, approachable, actionable, profitable, and have the potential for expansion. In other
words, due to time, expense, and effort constraints, a business would be unable to target the entire
market. It must have a "definable" segment - a large group of people who can be recognized and
targeted with reasonable effort, expense, and time.

The following outlines some of the things, which should be included:

Target Market: Identify your target market(s). It is important to segment and targets the market
properly - something that new companies frequently overlook. Concentrating your resources on the
needs of a specific segment and carving out a niche may mean the difference between success and
failure.

Target market/segment characteristics:

You can profile your target market/segments using four categories:
Geographic: eg: location, population size or climate
Demographic: eg: age, gender, family size, family life cycle or income
Psychographic: eg: social class, lifestyle, motivation or personality
Behavioural: eg: product benefits, frequency of use or brand loyalty

Your Marketing Plan section has four sub-sections as follows:

1 – Products & Services
In this section, you need to thoroughly describe your product or service, along with any proprietary
features and future development plans. Describe your proposed products or services (technical
specifications, drawings, photos, sales brochures, and other bulky items belong in Appendices).
For each product or service:

• Describe the most important features. What is special about it?

• Describe the benefits. That is, what will the product do for the customer?

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What factors will give you competitive advantages or disadvantages? Examples include the level of
quality or unique or proprietary features.

 I. Product Levels

• The core,
• Facilitating, and
• Supporting product.

II. Product considerations

• Atmosphere,
• Customer interaction with the service delivery system,
• Customer interaction with other customers, and
• Customer coproduction

2 – Pricing
Detail your pricing here. In particular, discuss how your pricing relates to competition. For example,
are you the premium brand? Or the low-cost brand?

For most small businesses, having the lowest price is not a good policy. It robs you of needed profit
margin; customers may not care as much about price as you think, and large competitors can
underprice you anyway. Usually, you will do better to have average prices and compete for quality
and service.

 Explain your method or methods of setting prices.

 Compare your prices with those of the competition. Are they higher, lower, the same? Why?
How important is the price as a competitive factor?

 Do your intended customers really make their purchase decisions mostly on price?

 What will be your customer service and credit policies?

 Explain markup policies.

 Discuss the pricing strategy and policy for your product or service. Show how your pricing
approach will enable you to: penetrate the market, maintain and increase market share in a
competitive environment, and make a profit.

Pricing methods and strategies

I. Pricing Methods:
II. Pricing Strategies:
1) Cost-based pricing. 1) Prestige pricing.
2) Break-even pricing or target profit pricing. 2) Market-skimming pricing.
3) Competition-based pricing. 3) Marketing-penetration pricing.
4) Discounts based on time of purchase.
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 5) Promotional pricing.

Explain your method of setting prices in your business

3 – Place: Proposed Location

Probably you do not have a precise location picked out yet. This is the time to think about what you
want and needs in a location. Many startups run successfully from home for a while.

 Analyze your location criteria as they will affect your customers.

 Is your location important to your customers? If yes, how?

 If customers come to your place of business: Is it convenient? Parking? Interior spaces? Not
out of the way? Is it consistent with your image?

 Where is the competition located? Is it better for you to be near them (like car dealers or fast-
food restaurants) or distant (like convenience food stores)?

One of the most important aspects of distribution for hospitality organizations is location. i.e.,
the business must be conveniently located. Hotel sites are evaluated on the attractiveness of
their location to persons coming to that destination. Each firm has its own set of location
evaluation characteristics

3.1 Distribution Plan

Your Distribution Plan outlines the ways in which customers can buy from you. In many cases, they
can only buy directly from you, perhaps at your physical location or web address. In other cases, you
might have distributors or partners who sell your products or services. In such a case, detail this
structure.

 How do you sell your products or services?

 Retail Direct (mail order, Web, catalogue)

 Wholesale

 Your own sales force

 Agents

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  Independent representatives

Notes

4 – Promotional Plan
Your promotions plan details the tactics you will use to attract new customers. For example, you
might choose radio advertising, or online ads, or press releases, and so on. In this section, detail each
form of promotions you will use.

 How will you get the word out to customers?

 Why this mix and not some other?

 Have you identified low‐cost methods to get the most out of your promotional budget?

 Advertising: What media, why, and how often?

 Social media?

1) Identify the target audience.

2) Choose the media through which to send the message.
3) Establishing Marketing Communications Budget
4) Factors in setting the promotion mix
5) Managing integrated marketing communications

a) Advertising 
b) Personal Selling
c) Sales Promotion
d) Public Relations
e) Direct Marketing

How will you get the word out to customers?

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5. People
Think about the people who sell your product or service and are involved in its delivery. Your people
strategy is not just about your internal staff, it also covers associates and strategic partners, channel
partners and suppliers.

Customers make judgments about service provision and delivery based on the people
representing your organisation. This is because people are one of the few elements of the
service that customers can see and interact with. E.g., praise received by the volunteers
(games makers) for the London 2012 Olympics

6. Process
Your process strategy is concerned with the planning, development, implementation, documentation
and review of the systems that help you achieve the other aspects of your marketing strategy. If you
have the right processes you’ll have the right product, in the right quantity to the right place at the
right time.

This element of the marketing mix looks at the systems used to deliver the service.
E.g., walk into Burger King and order a Whopper Meal; you get it delivered within 2 minutes.
What was the process that allowed Burger King to obtain an efficient service delivery?

7. Physical Evidence
This refers to the way your product, service, and everything about your company, appears from the
outside.  Decisions need to be made about the size, shape, colour, material, and label of the
packaging.  It should fall in line with your other product offerings as well.  Packaging involves the
visual layout, practical setup, and when needed for products, clear and precise installation
instructions. Physical Evidence can also refer to the people within your company and how they dress
and act.  It can refer to how your office is set up, the professionalism of your staff, nice brochures,
how you interact with your customer base, and every single visual element about your company.

Physical evidence is about where the service is being delivered from. This element of the
marketing mix will distinguish a company from its competitors.

Physical evidence can be used to charge a premium price for a service and establish a positive
experience.

8. Sales Plan
 Discuss how and where you plan to sell and distribute your product or service.

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  Will you use a direct sales force? How many salespeople do you need? Will they be
compensated by salary or by commission? What education and experience will you require,
and how will you find and attract good salespeople?

 What degree of sales efficiency can you expect? How many sales calls will it take to get an
order, and how large will an average order be?

Discuss how and where you plan to sell and distribute your product or service.

PART V – Operational & Management Plans

Your Operations Plan section has three sub-sections as follows:

1 – Key Operational Processes

Your Key Operational Processes are the daily functions your business must conduct. In this
section, you will detail these functions. For example, will you maintain a Customer Service
department? If so, what specific role will it fill? By completing this section, you’ll get great
clarity on the organization you hope to build.

2 – Milestones
Under this section of your business plan, list the key milestones you hope to achieve in
the future and the target dates for achieving them. Here is where you set goals for
specific and critical undertakings, such as when a new product will be created and
launched, by when you plan to execute new partnerships, etc.

3 – Management Team
This section details the current members of your management team and their
backgrounds. Particularly if you’re a startup venture, you will have gaps in your team;
roles that you’d like to fill later. Identify such roles here, and the qualifications of the
people you will seek later to fill them.

 4 – Other details include Prospective suppliers, Employee details, Inventory,

Technology etc. must be discussed.

Reference:
Brian Hill, Demand Media (2014), What Is a Harvest Strategy in a Business Plan? [Online] Available from
http://yourbusiness.azcentral.com/harvest-strategy-business-plan-12399.html. Accessed on 15 April 2020

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Dave Lavinsky (2013), Business Plan Outline - 23 Point Checklist for Success, [Online] Available from
http://www.forbes.com/sites/davelavinsky/2013/12/03/business-plan-outline-23-point-checklist-for-success/2/. Accessed on 09 April
2020

Edward E. Williams & Salvatore E Manzo (2012), Business Planning for the Entrepreneur, [Online] Available from
https://entrepreneurship.hbs.edu/Pages/default.aspx. Accessed on 04 April 2020

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