Chapter

The Marketing Plan

McGraw-Hill/Irwin Entrepreneurship, 7/e

Copyright 2008 The McGraw-Hill Companies, Inc. All rights reserved.

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Marketing Plan

Written Statement Of Marketing objectives, strategies and activities to be followed in Business Plan.

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Marketing Plan
` Critical element in ensuring the long-term success of any Entrepreneurial effort ` MP responds to three Q s
` Where have we been ? (When used a document for the operational plan, it should imply some company background, and SWOT analysis of the company. (the new venture which might be a staring a new product in the company) ANALYSIS ` When marketing pan is integrated in the BP it would give the background/history of the marketplace and SWOT analysis of the firm. ` Where are we going ? ( this question addresses the marketing objectives and goals for the new ventures in the next 12 months in detail and next 3 years in general). OBJECTIVES ` How do we get there ? ( this question addresses the marketing strategy such as when will it occur? who will monitor the activities? Budgets will also be determined)
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Marketing Plan
` ` ` ` ` `      Entrepreneur conduct market research to respond to these Q s. Research involves Secondary / Primary data process Helps in marketing mix ( 4 P s) & strategies Why do many plan fails? Often short of finances and lack of management is blamed but real problem may be the marketing issues. Marketing issues might include: (4 P s) Identifying the customers Defining the right product and service to meet customers need Pricing Distribution promotion
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Marketing Research for the New Venture

Who will buy the product or service ? What is the size of the potential market ? What price should be charged ? what is the most appropriate distribution channel ? What is the most effective promotional strategy to reach and inform potential customers ? ` Focus Group not expensive technique for research How to conduct MR difficult for Entr who lack knowledge in marketing- You do the research for being more knowledgeable and giving solid facts rather than talking non sense ` ` ` ` `
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Marketing Research for the New Venture (1 of 2)

` Defining the purpose or objectives
` Make a list of the information that will be needed to prepare the marketing plan. Ex: E may think there is a market for his product but is not sure who the customers will be ,so ask people what they think of the product or service and if they would buy it & background demographics ` How much potential customers would be willing to pay for the product or service ` Where the potential customers would prefer to purchase the product or service ` Where the customer would expect to hear about or learn about such a product or service
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` Gathering data from secondary sources

` Trade magazines ` Newspaper articles- names, interviewed named should be scanned to make your research more authenticated with respect to market issues ` Libraries -- Industry, competitors, trends in consumer tastes & preferences, innovation in the market ` Government agencies-suppose i want to know what is the income level of the people living in hayatabad...so rather than doing all the hard work myself,i pick up the census data and extract the info that i need ` Internet

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Marketing Research for the New Venture (2 of 2)

` Gathering information from primary sources ` Data collection procedures:
` Observation: record customers buying behaviors ` networking: experts in the field-valuable low cost method ` interviewing: telephone- Mail- personal (adv & dis-adv) ` focus groups: 10-12 potential customers ` Experimentation ` Questionnaire

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` Analyzing and interpreting the results

` Can be hand-tabulated or entered on a computer. ` Results should be evaluated and interpreted in response to the research objectives ` Data can be cross-tabulated in order to provide more focused results. ` Example: E compare results of Q by different Age, Occupation, Location- fine tuning can provide valuable insights particularly regarding the segmentation of the market. ` You will study it in research methodology.
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Understanding the Marketing Plan

` Marketing plan: written statement of marketing objectives, strategies, and activities to be followed in business plan. ` Designed to provide answers to three basic questions:
` Where have we been? ` Where do we want to go? (in the short term) ` How do we get there?

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Characteristics of the Marketing Plan

` A marketing plan should:
` ` ` ` ` ` ` Provide a strategy. Be based on facts/assumptions. Describe an organization for implementation. Provide for short-term and long-term continuity. Be simple and short. Be flexible. Specify criteria for control.

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The Marketing System

External Environment Economy Culture Technology Demand Legal considerations Raw materials Competition

Entrepreneur

Market Planning Decision

Marketing Strategies directed towards customers

Purchase decision of customers

Internal environment Financial resources Suppliers Goals and objectives Management team

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Factors Affecting the Marketing System

` Marketing system: interacting internal and external factors that affect venture s ability to provide goods and services to meet customer needs. ` Internal variables that affect the marketing plan:
` ` ` ` Financial resources Management team Suppliers Company mission

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The Marketing Mix

` Combination of product, price, promotion, and distribution and other marketing activities needed to meet marketing objectives.
Marketing Mix Variable Product Critical Decisions Quality of components or materials, style, features, options, brand name, packaging, sizes, service availability, and warranties. Quality image, list price, quantity, discounts, allowances for quick payment, credit terms, and payment period.

Price

Use of wholesalers and/or retailers, type of wholesalers or Channels of distribution retailers, how many, length of channel, geographic coverage, inventory, and transportation. Promotion Media alternatives, message, media budget, role of personal selling, sales promotion (displays, coupons, etc.), and media interest in publicity.
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Steps in Preparing the Marketing Plan

`  `  ` `  `  Define the business situation. ( situational analysis: describe the prospects of the new venture) Define the target market: opportunities and threats. (the specific group of potential customers towards wh/ the new venture aims its marketing plan) Consider strengths and weaknesses. Establish goals and objectives. ( statements of level of performance desired by new venture) Define marketing strategy and action programs. (specific activities outlined to meet the goals and objectives)

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Defining the Business Situation

` Situation analysis: describes past and present business achievements of new venture. ` Information for a new venture:
` Describe how the product or service was developed. ` Why it was developed.

` Information after a new venture has started up:

` Present market conditions. ` Performance of the company s goods and services. ` Future opportunities or prospects.
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Defining the Target Market

` Target market: specific group of potential customers toward which venture aims its marketing plan.
` Knowledge of this provides a basis for determining the appropriate marketing action strategy.

` Market segmentation: process of dividing a market into definable and measurable groups for purposes of targeting marketing strategy.
` Allows the entrepreneur to more effectively respond to the needs of more homogeneous consumers.

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Process of Segmenting and Targeting (1 of 2)

` Decide on general market or industry to pursue. ` Divide market into smaller groups based on:
` Characteristics of the customer
` Geographic ` Demographic ` Psychographic

` Buying situation
` ` ` ` Desired benefits (e.g., product features) Usage (e.g., rate of use) Buying conditions Awareness of buying intention
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Process of Segmenting and Targeting (2 of 2)

` Select segment or segments to target. ` Develop a marketing plan integrating product, price, distribution, and promotion.

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Establishing Goals and Objectives

` Establish realistic and specific goals and objectives. It refers to the statements of level of performance desired by new venture.
` Marketing goals and objectives respond to the question: Where do we want to go? .

` Not all goals are quantifiable. ` Number of goals or objectives can be limited to between six and eight. ` Goals should represent key areas to ensure marketing success.

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Defining Marketing Strategy and Action Programs (1 of 2)

` Specific activities outlined to meet the venture s business plan goals and objectives. ` Product or service
` May consider more than the physical characteristics. ` Packaging, brand name, price, warranty, image, service, delivery time, features, style, and even the Web site.

` Pricing
` Costs ` Margins or markups ` Competition
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Defining Marketing Strategy and Action Programs (2 of 2)

` Distribution
` Provides utility to the consumer. (it makes a product convenient to purchase when it is needed) ` Must also be consistent with other marketing mix variables. (e.g high quality product not only will carry a high price but also should be distributed in outlets that have a quality image)

` Promotion
` Entrepreneur needs to inform potential consumers about the product s availability or to educate the consumer ` Methods include: print, radio, or television, Internet, direct mail, trade magazines, or newspapers.
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Major Considerations in Channel Selection

` <<Insert Table 8.7>>

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Marketing Strategy: Consumer versus Business-to-Business Markets

` Business-to-business markets
` ` ` ` Selling of products or services to another business. Usually aims at selling a large volume in one transaction. Involves a more direct channel of distribution Use trade magazine advertising, direct sales, and trade shows.

` Consumer markets
` Involve sales to households for personal consumption.

` Marketing mix for both is the same.

` Techniques and strategies within the mix of these factors vary significantly.
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Budgeting and Implementation

` Budgeting
` Costs are reasonably clear if the entrepreneur has followed the procedure of detailing the strategy and action programs. ` If assumptions are necessary, they should be clearly stated. ` Useful in preparing the financial plan.

` Implementation
` The plan is meant to be a commitment by the entrepreneur to a specific strategy. ` Entrepreneur should ensure coordination and implementation of the plan.
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Monitoring the Progress of Marketing Actions (1 of 2)

` Involves tracking specific results of the marketing effort. ` Depends on specific goals and objectives outlined in the marketing plan. ` Entrepreneur should be prepared for contingencies.
` Minor adjustments in the plan occur normally. ` Significant changes indicate a poorly prepared plan.

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Monitoring the Progress of Marketing Actions (2 of 2)

` Weaknesses in market planning due to:
` ` ` ` Poor analysis of the market and competitive strategy. Unrealistic goals and objectives. Poor implementation of the outlined plan actions. Unforeseen hazards like weather or war.

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