MODULE 3: CREATING A BUSINESS PLAN

Table of Contents
MODULE 3: CREATING A BUSINESS PLAN ......................................................................................................................1
Module Overview ..........................................................................................................................................................2
Module 3 Key Vocabulary ..............................................................................................................................................3
Lesson 1: Why Write a Business Plan? ..........................................................................................................................7
Lesson 2: Intensifiers and Degree Complements (Part 1) .............................................................................................8
Lesson 3: Intensifiers and Degree Complements (Part 2) ...........................................................................................10
Quiz: Degree Complements and Intensifiers ...............................................................................................................11
Reading Practice: Nigeria’s wecyclers work for reusable future in lagos ....................................................................12
Quiz: Reading Practice: “Nigeria’s Wecyclers for reusable future in Lagos” ...............................................................13
Discussion: Business ideas for your local community..................................................................................................13
Lesson 4: Business Description (Management and Operations) .................................................................................14
Lesson 5: Marketing Vocabulary and Concepts (Part 1) ..............................................................................................17
Lesson 6: Marketing Vocabulary and Concepts (Part 2) ..............................................................................................18
Lesson 7: Marketing Vocabulary and Concepts (Part 3) ..............................................................................................20
Lesson 8: Business Plans: The Marketing Section (Part 1) ...........................................................................................22
Lesson 9: Business Plans: The Marketing Section (Part 2) ...........................................................................................24
Quiz: The Marketing Mix .............................................................................................................................................26
Module 3 Check ...........................................................................................................................................................26

© 2021 by FHI 360. “Module 3: Creating a Business Plan” for the Online Professional English
Network (OPEN), sponsored by the U.S. Department of State with funding provided by the U.S.
government and administered by FHI 360. This work is licensed under the Creative Commons
1
Attribution 4.0 License, except where noted. To view a copy of this license, visit
http://creativecommons.org/licenses/by/4.0/
Module Overview
Welcome to Module Three of the English for Business and Entrepreneurship MOOC! In this module, we will
introduce you to business plans. We will discuss why these plans are important as well as review the basic
components of business plans.

After introducing you to a sample business we will practice composing a business plan. Throughout this unit, you
will test your knowledge of important business plan vocabulary in English. We will also introduce language that you
can use to make your business plans more persuasive. You will discuss business ideas with your classmates.

LEARNING OBJECTIVES:
By the end of this week, you will:

• Become familiar with business plans, why they are important, and their basic components.
• Develop your familiarity with new key vocabulary, and practice using that new vocabulary in writing.
• Read, watch, and listen to a variety of texts and multimedia sources. Demonstrate your understanding of
these texts and key course concepts through comprehension check quizzes and a written discussion board
response.
• Identify and practice using intensifiers and degree complements to describe competitive advantage more
persuasively.
• Write a brief business plan with the appropriate language structures for the intended professional audience

TO-DO LIST
In order to successfully complete Module 3, please do the following:

1. Review: Module 3 videos and lessons

2. Discuss: Business ideas for your local community
3. Check-In: Score at least 70% on the following quizzes:
1. Degree Complements and Intensifiers
2. The Marketing Mix

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Module 3 Key Vocabulary
Module 3 will feature the following words. These words may appear in quizzes throughout the course.

competitive analysis (n)

Binoculars by Luis Prado via the Noun Project is licensed under CC BY

direct competition (n)

competitor by Lutfi Gani Al Achmad via the Noun Project is licensed under CC BY

Direct competition happens when different products that offer the same or very
similar functions are trying to be more successful than one another.

Indirect competition (n)

rival by Nithinan Tatah via the Noun Project is licensed under CC BY

Indirect competition happens when substitutes or different products that can

provide a similar function are trying to be more successful than one another.

3
marketing (n)

marketing by ArmOkay via the Noun Project is licensed under CC BY

Marketing is the work of advertising and offering goods or services for sale,
putting the right product at the right place, at the right time.

a marketing mix (n)

mix marketing by Eucalyp via the Noun Project is licensed under CC BY

A marketing mix is the combination of actions a company uses when selling the
right product at the right price, in the right place at the right time. The 4 P's:
product, price, place, and promotion.

place (n)

Place by Hrbon via the Noun Project is licensed under CC BY

In a marketing mix, place refers to where a product will be sold.

4
price (n)

“price” by Adrien Coquet via the Noun Project is licensed under CC BY

In a marketing mix, price refers to the amount of money people will pay for a
product.

product (n)

Product by Alice Design via the Noun Project is licensed under CC BY

In a marketing mix, a product refers to a good or service and choices in design or

features including packaging.

profit (n)

Profit by akash k via the Noun Project is licensed under CC BY

Profit is the money that a business earns above what it costs to produce and sell
goods and services.

5
a profit margin (n)

Profit margin by Eucalyp via the Noun Project is licensed under CC BY

A profit margin is the amount of money that a business makes.

promotion (adj)

Promotion by monkik via the Noun Project is licensed under CC BY

In a marketing mix, promotion refers to how people learn about a product.

substitute (n)

“substitution” by Eucalyp via the Noun Project is licensed under CC BY

Substitutes are products that are different but can provide a similar function.

6
Lesson 1: Why Write a Business Plan?
In this lesson, we will describe a business plan and explain how business plans are used.

WHAT IS A BUSINESS PLAN?

A business plan is a detailed plan describing the future plans of a business. A business plan describes the future of
a business, what the entrepreneur plans to do, and how they will do it.

WHY ARE BUSINESS PLANS IMPORTANT?

Business plans can attract investors, employees, and suppliers. These three groups are essential to the success of
the new business. A well-written business plan can show that you know what you are doing. It can show them that
you are able to succeed.

1. Business plans can attract employees

We discussed earlier how new businesses are risky and can fail. As a result, it may be difficult to attract employees.
Often the most talented people already have good jobs. A well-written business plan can present a new, exciting
opportunity. The business plan can be a way to persuade talented people to quit their current job and join your
team.

2. Business plans can attract suppliers

Working with a start-up can be risky for suppliers. If the new business fails, it may not be able to pay for the
supplies it has bought. A strong business plan can help persuade a supplier to work with a new business.

3. Business plans can attract investors

We will learn more about attracting investors in Module Four.

4. Business plans help the future success of the business

Business plans take a lot of thought. They force the entrepreneur to think about many of the small details. This can
be helpful for future success. Thoughtful planning will make the business more likely to succeed.
WHAT ARE THE MAIN PARTS OF A BUSINESS PLAN?
Although business plans can have many forms, most include the following important topics:

• An executive summary
• A business description
• Marketing
• Financials

We will discuss business descriptions and marketing in this module. We will discuss financials and the executive
summary in Module Four.

SUMMARY

• A business plan is a detailed plan describing the future plans of a business.

• Business plans are important to attract investors, employees, and suppliers.
• Business plans help the future success of a business. They force the entrepreneur to think about many
important details.

Our next lesson will focus on the language you can use to make your business plan more persuasive. We will look
at intensifiers and complements. We will start to look more closely at the parts of the business plan in Lesson Four.

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Lesson 2: Intensifiers and Degree Complements (Part
1)
Hello. In this lesson, we will identify and practice intensifiers and degree complements. Focusing on this language
area can help make your business writing more persuasive.
WHY SHOULD YOU USE PERSUASIVE WRITING?
Most business writing, particularly business plans, needs to persuade the reader. The goal is for readers to believe
that their plan is a very big opportunity, bigger than what they have seen before. It might even be
the biggest opportunity they have seen in a long time. In writing a business plan, you want readers to think that
the new product is a very original idea. You want to persuade the reader to support the idea.

Let’s look at that language a little more closely.

Big, bigger, and biggest are degree complements. We use them to compare things.

Even and very are intensifiers. They strengthen and emphasize other words in the sentence.

In this lesson, we will focus on comparative adjectives. In Lesson 4, we will look at intensifiers.

COMPARATIVE ADJECTIVES
Comparatives are one type of degree complement. They are adjectives that compare two or more things.

• The earth is bigger than the moon.

• The earth is smaller than the sun.

All comparatives begin with an adjective, like big or small.

How to form a comparative adjective

Comparative follow three basic patterns:

1. If the adjective has one syllable, we add the ending "-er".

o Small, smaller
o Big, bigger

Notice that bigger has two g's. When a word ends in a vowel and consonant (like b-i-g), the consonant (g) is written
twice in the comparative (b-i-g-g-e-r).

2. If the adjective has two syllables and ends in -y, we change the "y" to "i-e-r",

Happy, happier

3. If the adjective has two or more syllables and does not end in -y, we do not add an ending. Instead, we use the
word "more" before the adjective.

expensive, more expensive

Exceptions (good and bad)

There are some exceptions to the above patterns. 1 exception is the adjective, good. You might already know that
the comparative form for good it better. Another exception is bad. The comparative form is worse.

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HOW TO FORM SUPERLATIVE ADJECTIVES
Imagine you have three cups of coffee, each a different size.

You can use a superlative adjective to talk about the one that is bigger than the other two cups of coffee. In this
example, we can say that the red cup is the biggest.

The patterns for making superlatives are very similar to those for comparatives. Let's use our examples from
before.

• big, bigger
• small, smaller
• happy, happier
• expensive, more expensive

1. If the adjective has one syllable, add the ending "-est."

• big, biggest
• small, smallest

2. If the adjective has two syllables and ends in "-y", change the "-y" to "-iest"

happy, happiest

3. If the adjective has two or more syllables and does not end in "-y," do not add an ending. Instead, use the word
most before the adjective.

expensive, most expensive

In the next lesson, we will look at how intensifiers can make business writing more persuasive.

9
Lesson 3: Intensifiers and Degree Complements (Part
2)

Degree complements can help make business writing more persuasive. In this lesson,
we will use Cricket Flour’s business plan as an example.

Look at this sentence: Cricket Flour is a healthy food product.

HOW COULD WE MAKE THIS A MORE

PERSUASIVE SENTENCE?
Option 1: Use a comparative adjective.

One way could be to compare Cricket Flour to another product like wheat flour. In
Lesson 2, we looked at using comparative adjectives in persuasive writing. Notice that
we used the word than after the comparative adjective (healthier).
© 2020 by FHI 360. "Cricket
Flour" for the Online Cricket Flour is healthier than wheat flour because it has more protein.
Professional English Network
(OPEN). This image is an
adaptation of “grasshopper”
by Iconic, “spoon” by Yazmin Option 2: Use a superlative adjective.
Alanis, and "protein" by Kiran
Shastry via the Noun Project We could also use a superlative adjective to compare Cricket Flour to other products.
under CC BY-SA. This Notice that we use the word the before the superlative adjective (the healthiest).
derivative is licensed under CC
BY-SA by FHI 360 for use in
OPEN, sponsored by the U.S.
Cricket Flour is one of the healthiest flours on the market today.
Department of State.

Option 3: Use an intensifier like very, much, or even.

Intensifiers are another way to make business writing more persuasive. These are
adverbs that make adjectives sound stronger. Some examples include very, much, and
even. Let us look at how each of the words can strengthen an adjective.

COMMON INTENSIFIERS

1. Very + adjective.

Use very before an adjective to make the sentence stronger and more persuasive.

Cricket flour will be a very good product for people who like to buy healthy food.

Much + adjective

Add much to a comparative adjective like healthier to make it sound stronger.

 Cricket Flour is healthier than other kinds of flour.

 Cricket Flour is much healthier than other kinds of flour.

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3. Even + comparative adjective

Add even to a comparative adjective to surprise or impress your readers.

 Cricket Flour has more protein than other health foods that athletes use.
 Cricket Flour has even more protein than other health foods that athletes use.

4. Even + verb

Use even to strengthen verbs.

 Cricket Flour contains iron.

 Cricket Flour even contains iron.

5. Even + noun

Use even to strengthen nouns.

 Children will want to try Cricket Flour

 Even children will want to try Cricket Flour.

Remember that writers usually use even when they think their reader might be surprised or impressed by an idea.

SUMMARY
In this lesson, we have reviewed degree complements and intensifiers. In Lesson 2, we learned how to form
comparatives and superlatives. We also learned how to use the intensifiers very, much, and even. We looked at
how these forms and words help entrepreneurs write more persuasively.

Quiz: Degree Complements and Intensifiers

This quiz will check your understanding of degree complements and intensifiers. Please type the answer to each
question in the blank space provided. You may refer back to Lesson 3 and Lesson 4 to help you complete the quiz.

>>>> Please note that this quiz can only be completed in Canvas. <<<<

11
Reading Practice: Nigeria’s wecyclers work for
reusable future in lagos
LAGOS—

The streets and lagoons of Africa's largest city - Lagos, Nigeria - are often clogged
with trash, almost none of which gets recycled. One company is trying to change
that.

Adeyemi Okuwoga is on the hunt for trash. Neighbors bring out bags of plastic and
aluminum waste. He weighs them and carts them off, free of charge.

Okuwoga works for Wecyclers, a company that picks up recyclables from poor
neighborhoods like Ebute Metta in Lagos.

Wecyclers co-founder and CEO Bilikiss Adebiyi-Abiola says the city produces about
10,000 metric tons of trash daily.

“So, all those trash, the black bags, the pure water sachets that clog the drains,
everything can be recycled. It’s a raw material for people that have factories. So,
© 2020 by FHI 360. "WeCyclers" for
the Online Professional English
our goal is to collect all those materials as cheaply as possible on a large scale and
Network (OPEN), sponsored by the then give them to people that can use them," said Adebiyi-Abiola.
U.S. Department of State with
funding from the U.S. Government,
At their nearby depot, Wecyclers sort and process their haul. They then sell off
and administered by FHI 360. This
image is an adaptation of their recyclables to firms that re-use them. The start-up has yet to turn a profit but
“community” by Gregor Cresnar and plans to press on and expand to also compost organic waste.
"recycling" by Nikita Kravchuk via
the Noun Project under CC BY. This
derivative is licensed CC BY-SA by FHI The company awards residents points based on the weight of what they
360 for use in OPEN, sponsored by contribute. People can cash points in for gifts including plastic bowls, generators,
the U.S. Department of State. and bicycles.

Ebute Metta resident O.O. Oladapo says her neighborhood is cleaner.

“Now that these people are working, I think they will make Lagos clean. Because Lagos is a dirty place, most
especially these cans, pure water bags and the plastic," said Oladapo.

So far, Wecyclers only works in two neighborhoods in this massive city, processing about 40 to 50 metric tons of
recyclables each month. That's not even one percent of the city’s daily waste.

__________________________

Stein, C. (2015, September 29). Nigeria's Wecyclers Work for Reusable Future in Lagos. Retrieved from
https://www.voanews.com/africa/nigerias-wecyclers-work-reusable-future-lagos

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Quiz: Reading Practice: “Nigeria’s Wecyclers for
reusable future in Lagos”
Instructions: All questions in this quiz refer to the reading "Nigeria’s Wecyclers Work for Reusable Future in
Lagos." You are allowed to refer to this reading as you answer these questions.

>>>> Please note that this quiz can only be completed in Canvas. <<<<

Discussion: Business ideas for your local community

Wecyclers is an example of a social enterprise, also known as a hybrid organization. This means that it has two
equally important primary goals: (1) to make money and (2) to help local or global communities.

CHOOSE ONE TOPIC BELOW AND RESPOND:

1. Can you think of a business idea that can also help your local community? OR
2. Is there a social enterprise already working in your local community or region? What type of work do they do?
How do they make money and help the community at the same time?

Share your ideas with your fellow participants in the discussion board below. Then, read other participants'
responses. Do you see an idea that might work in your local community?

>>>> Please note that this discussion can only be completed in Canvas. <<<<

13
Lesson 4: Business Description (Management and
Operations)

Here is a simple outline for a business plan. There are four main sections. We will add to this outline as we explore
the different sections. New additions will be highlighted in yellow.

Business Plan Outline

1. Executive summary
2. Business description
3. Marketing
4. Financials

The executive summary summarizes the other three sections. People usually write the executive summary last
after they have written the other three sections. Most entrepreneurs begin by writing the business description. We
will look at the executive summary in more detail in Module 4.

A business description describes two things: the new product(s) and the plan for operations and management.

Business Plan Outline

1. Executive Summary
2. Business Description
1. Product Description
2. Management and Operations
3. Marketing
4. Financials

PRODUCT DESCRIPTIONS
We discussed writing a simple product description in Module 1. Do you remember which information to include in
a product description?

A product description should include the product name, the type of product, the target market, and the general
function.

Business Plan Outline

1. Executive Summary
2. Business Description
1. Product Description
1. Type of product
2. Target market
3. General function(s)
2. Management and Operations
3. Marketing
4. Financials

Visuals can also improve the product description in a business plan. You can include pictures or videos of goods or
people using services. Adding intensifiers and complements can make simple product descriptions even more
persuasive.

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Here is an example with Cricket Flour:

Cricket Flour is a very new food ingredient made out of crickets that will
help healthy people get even more protein, iron, and calcium in their
diet.

© 2020 by FHI 360. "Cricket Flour" for the Online Professional English Network (OPEN). This image is an adaptation of “grasshopper” by Iconic,
“spoon” by Yazmin Alanis, and "protein" by Kiran Shastry via the Noun Project under CC BY-SA. This derivative is licensed under CC BY-SA by FHI
360 for use in OPEN, sponsored by the U.S. Department of State.

Here is an example with Wecyclers:

Wecyclers is a newer recycling service that will help people in

communities with too much trash exchange their recycling for points
and clean the streets at the same time.

© 2020 by FHI 360. "Wecyclers" for the Online Professional English Network (OPEN), sponsored by the U.S. Department of State with funding
from the U.S. Government, and administered by FHI 360. This image is an adaptation of “community” by Gregor Cresnar and "recycling" by
Nikita Kravchuk via the Noun Project under CC BY. This derivative is licensed CC BY-SA by FHI 360 for use in OPEN, sponsored by the U.S.
Department of State.

MANAGEMENT AND OPERATIONS

The management and operation section of a business plan explains just that. It describes how the business will be
managed and operated. This is helpful information for investors, employees, and suppliers. They want to be sure
that entrepreneurs know how many people and resources are needed to run the business.

Detailed business plans may include specific information about each employee. They may include pictures of the
store or office space.

A simple plan may only include the number of managers and employees. It might also include a general description
of the organization.

Business Plan Outline

1. Executive Summary
2. Business Description
1. Product Description
1. Type of product
2. Target market
3. General function(s)
2. Management and Operations
1. Number of managers and employees
2. Description of the organization
3. Marketing
4. Financials

15
Sample sentence structure for explaining the number of managers and
employees:

• Cricket Flour will have two managers and five employees.

• Wecyclers will have one manager and three employees.

Sample sentence structure for a general description of operations:

• Cricket Flour will buy crickets from a supplier, process the crickets into flour, and sell the product in local
stores and online.
• Wecyclers will collect and weigh recycling from local neighborhoods, give families points to trade for needed
products, and sort and process the recycling for re-use in other locations.

Notice that the operation is simply described with three actions. Each action is expressed with a verb phrase that
explains a step in the operation.

SUMMARY

• The business description section of a business plan should include a description of the product as well as
management and operations.
• In a simple, brief plan, there is less detail and explanation.
• In a more complicated, longer plan, entrepreneurs include much more information.
• When you have finished writing the business description, the next step is the marketing section.

In Lessons 5 and 6, we will review some basic marketing concepts. In Lesson 7, we will prepare the marketing
section of the business plan.

16
Lesson 5: Marketing Vocabulary and Concepts (Part 1)
In this lesson, we will explore the role of marketing in business and in a business plan.
We will also define and review the concept of a marketing mix.

In a business plan, the marketing section is important. It shows that the entrepreneur
has a plan for communicating with the target market. We will look at the marketing
section of a business plan in more detail in Lesson 8. First, let's review some important
marketing concepts.

a marketing mix
Focus Group by Eucalyp via the
Noun Project is licensed under
CC BY.
Marketing is the work of advertising and offering goods or services for sale. It allows a
business to communicate with potential customers about a product. Good marketing
puts the right product at the right price in the right place at the right time.
A great new product that presents a good opportunity and a market is not enough.
Entrepreneurs and businesses must also plan how to market their products.

A marketing mix is the combination of actions a business uses when selling the right product for the right price, at
the right place, at the right time. These are often described as the 4 P's. Product, price, place, and promotion.

1. Product - Do customers like the product?

2. Price - Are customers happy with the price?
3. Place - Can customers find or get the product?
4. Promotion - Do customers feel they need the product?

If the answer is no to any of these questions, the product will not sell.

Product describes any choices in design or features. This includes packaging, how the product is wrapped or boxed.

The possibilities for design or features are different for a good or a service. Consider the following examples of
paperclips (a good) and a taxi company (a service).

Example 1: Paperclips (a good)

• Product sizes: Will the paperclips be small, large or both sizes?

• Product colors: Will they be sold in one color or many colors?
• Product styles: Regular shape or something different?
• Product features: Made from a different material? Able to do something different?

Example 2: Taxi Company (a service)

• Product size: small, mid-size, or large car?

• Product color: what color car? (colors?)
• Product style: a luxury car or a regular car?
• Product features: extra services (free drinks or snacks? different ways to pay?)

In the next lesson, we will review price, place, and promotion.

17
Lesson 6: Marketing Vocabulary and Concepts (Part 2)
Welcome to Part 2 of Marketing Vocabulary and Concepts. In this lesson, we will look at the second "P" of
the marketing mix: price.
THE MARKETING MIX: THE 4 PS

• Product - Do customers like the product?

• Price - Are customers happy with the price?
• Place - Can customers find or get the product?
• Promotion - Do customers feel they need the product?

WHAT ROLE DOES PRICE PAY IN THE MARKETING MIX?

aPrice describes the amount of money that people will pay for a product. For many
products, the price people pay is related to what it costs for the business to provide that
product.

The difference between the price and the cost is profit. Profit is money that a business
earns above what it costs to produce and sell goods and services.

price
“price” by Adrien
Coquet via the Noun
Project is licensed under CC
BY
A profit margin is the amount that a business makes after the costs have been
subtracted. Profit margin is usually expressed as a percent.
For example, let's imagine there is a shoe store that wants to earn a 40% profit margin on
each pair of shoes.
The cost of producing each pair of shoes is $15. This includes materials, manufacturing,
employees, and other expenses.

Cost: $15

Let's say the business charges $25 for each pair of shoes.

Price: $25

The profit is the price, $25, minus the cost, $15, which equals $10.

Price: $25 - Cost: $15 = Profit: $10

The profit margin for a pair of shoes is the profit $10 divided by the price $25, which is
40%.

Price: $10 / Price: $25 = 40%

For this example business, the price of shoes is set to provide a 40% profit margin.

profit margin
Profit margin by
Eucalyp via the Noun
Project is licensed under
CC BY
Businesses might also consider how much people are willing to pay for their products.
They might also look at the price their competitors are charging for the same products.
Usually, the more competitors there are in a market, the lower the prices will be for a
product. Examples of this depend on where you live in the world. Oil may cost less in
some markets because there is a lot available. In another market, water may cost less,
because there is a lot available.

18
The reverse is also true. When there are no competitors offering a product, and many people want the product, a
business can charge a higher price and make more profit. We will learn more about competitive analysis in the
next lesson.

SUMMARY
When choosing a price for a product, consider the cost, competitor, prices, and market need. In other words, think
about how much people are willing to pay for the product.

19
Lesson 7: Marketing Vocabulary and Concepts (Part 3)
Welcome to Part 3 of Marketing Vocabulary and Concepts. In this lesson, we will look at the third and fourth "P’s"
of the marketing mix: place and promotion.
THE MARKETING MIX: THE 4 PS
Product - Do customers like the product?
Price - Are customers happy with the price?
Place - Can customers find or get the product?
Promotion - Do customers feel they need the product?
WHAT ROLE DOES PLACE PLAY IN A MARKETING MIX?

Place by Hrbon via the Noun Project is licensed under CC BY

The third P, place, describes where a product will be sold. When entrepreneurs and businesses are planning to sell
a new product, they must make several decisions. They need to identify where the target market would want to
buy the product. They also need to consider how the product will get to the target market. Should they sell the
product directly through their own stores or offices? Or should the product be sold by other businesses who will
then sell to the target market?

In making this decision, businesses consider the needs of their target market. They think about where and how
people in their target market buy similar products. They also think about the costs of selling directly to the target
market or through other businesses.

WHAT IS THE ROLE OF PROMOTION IN A MARKETING MIX?

Promotion by monkik via the Noun Project is licensed under CC BY

The final P, promotion, describes how people will learn about the product.

Entrepreneurs and businesses must decide how to communicate with the market about the new product. This
includes:

• advertising
• special pricing like sales and discounts
• other strategies to persuade people to try the product.

20
Entrepreneurs and businesses choose promotions by understanding their target market. They design
communications that are likely to be successful with that group of people.

SUMMARY

• Marketing is an important part of selling any new product.

• Choosing a marketing mix will help you communicate clearly and effectively with the target market.
• Effective communication with the target market creates the best chance of success for the new product.

In the next lesson, we will review the marketing section of a business plan.

21
Lesson 8: Business Plans: The Marketing Section
(Part 1)
As we reviewed in Module 2, market research is an important step in new product development. Market research
is also important for the marketing section of a business plan.

In this lesson, we will review the marketing section. The marketing section generally consists of three parts: market
research, competitive analysis, and a marketing plan. First, we will look at research and competitive analysis. We
will look at the marketing plan in Lesson 9.

Business Plan Outline

1. Executive Summary
2. Business Description
1. Product Description
1. Type of product
2. Target market
3. General function(s)
2. Management and Operations
1. Number of managers and employees
2. Description of the organization
3. Marketing
1. Market research
2. Competitive analysis
3. Marketing plan
4. Financials

MARKET RESEARCH

Market research data can show that the new product presents an opportunity in a market. If possible, it can also
show information about the target market.

As discussed earlier, a target market is the group of people who are most likely to buy a product.

Let's look at two of our simple product descriptions from Module 1.

• A paperclip is a tool that will help teachers and office workers hold papers together. Here the target
market is teachers and office workers.
• A taxi is a travel service that will help people in cities move from place to place. In this description, the
target market is people in cities.

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COMPETITIVE ANALYSIS

aAnother component of the marketing section of a business plan is competitive

analysis.

Most new products have some kind of competition in the market. For example,
consumers often have a choice of more than one kind of toothpaste at their local
store. The different toothpaste products all compete against each other.

competitive analysis
Binoculars by Luis Prado via
the Noun Project is licensed
under CC BY
Competition in a market means that people have choices. They can choose which
products they will buy. If people already have a lot of product choices, it is usually
more difficult for a new product to succeed. It is important for entrepreneurs to
examine their market for competition. This is called competitive analysis. Competitive
analysis looks at both direct and indirect competition.
Direct Competition comes from businesses that offer similar products. These are
products that have the same function or a very similar function. For example, What
would be direct competition for paper clips? Other paper clip products. Direct
competition for a taxi service would be from other taxi service companies.

Indirect competition often comes from substitute products. These are products that are different but can provide a
similar function.

For example, indirect competition for paperclips would be from staplers, string, and tape. These are other goods
that could help hold papers together. Indirect competition for a taxi service would be bicycles, buses, subways, and
personal cars. These are all other forms of transportation.

COMPETITIVE ANALYSIS: SAMPLE STRUCTURE

Here is a sample structure for a simple competitive analysis.

1. Start with a simple clear sentence describing the competition.

This should be a specific number of direct competitors and indirect competitors in the local market.

2. Follow with information about:

• Direct competitor's price. In a simple business plan, one sample competitor price works well here. When
there are many competitors, an average price or the most common price may also be used.
• Indirect Competition. This includes a short list of substitute products.

Example competitive analysis for a new paperclip product:

Paperclips have three direct competitors and three indirect competitors in the local market.

• Direct competitor's price, $1 per box of 100.

• Indirect competition from staples, string, and tape.

In the next lesson, we will look at the final component of the market section, the marketing mix.

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Lesson 9: Business Plans: The Marketing Section
(Part 2)

Finally, entrepreneurs usually include information about a marketing mix in their business plan. A marketing mix
shows a thoughtful approach to selling the right product at the right price, in the right place, at the right time. It
shows that the entrepreneur has a good plan for communicating with the target market and that means a good
plan for selling the new product.

Business Plan Outline

1. Executive Summary
2. Business Description
1. Product Description
1. Type of product
2. Target market
3. General function(s)
2. Management and Operations
1. Number of managers and employees
2. Description of the organization
3. Marketing
1. Market Research
2. Competitive Analysis
1. Clear description of direct and indirect competition
2. Direct competitor’s price
3. Indirect competition
3. Marketing Mix
1. Product
2. Price
3. Place
4. Promotion
4. Financials

Here is a simple marketing mix for paperclips. As you can see, this information can be presented in chart form with
short lists and phrases.

For products, there is information related to size, color, packaging, and materials. Every product is different, so
other products could have more or fewer details than this.

The price is listed as $1 per box, which is similar to competitors.

For place, the chart says local stores where teachers and office workers shop. This means the paperclips will be
sold through other stores. They won't be sold directly to customers.

The promotion will be free samples of the paperclips to schools and local offices at the beginning of the school
year. The sample will include information about saving the environment and where people can buy the paperclips.

A more detailed marketing mix would also include deeper explanations about each part of the marketing mix. It
would also have more details on the overall marketing strategy.

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SUMMARY
The marketing section of a business plan has several goals:

1. To show that the new product presents an opportunity in a market, particularly for a specific target market.
2. To show that the entrepreneur knows about the competition.
3. To show that the entrepreneur has a thoughtful plan for successfully communicating with the target market.
They have a plan to get the right product, at the right price, in the right place, at the right time.

This is the last lesson in Module 3. We will look at the financial section of a business plan in Module 4.

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Quiz: The Marketing Mix
For each of the three companies, determine which phrase describes the product, price, place, and promotion.

>>>> Please note that this quiz can only be completed in Canvas. <<<<

Module 3 Check
Please answer one question to verify that you have completed all activities in Module 3.
You must choose "Yes" in order to move on in the course.

This quiz will count as 1 point toward your grade.

>>>> Please note that this quiz can only be completed in Canvas. <<<<

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