The Ins & Outs of Developing An Effective Marketing Plan

1. The Ins & Outs of Developing An Effective Marketing Plan Presented by Niambi Jarvis Funded in part through a cooperative agreement with the U.S. Small Business Administration

2. What is Marketing? • The area of business that involves: • The determination of customer needs/problems • The development and offering of tailored services and/or products that have been developed to meet those needs • Capturing customers’ perceived value of product/service through optimal pricing strategies • The development and implementation of the promotional activities that are most likely to reach a business’ target market and stimulate purchase • Identifying the ideal point of contact for customers to access a business’ products and services

3. What is a marketing plan & why should I have one? • A marketing plan is a business tool that outlines how a company will attract, acquire and retain its target market(s) • An executable & effective marketing plan: • Identifies the best customer profile (i.e. those individuals who are most willing and able to purchase your products) • Identifies a business’ optimal niche market (area of specialization) • Links sales and profit goals to marketing efforts • Provides an action plan for accomplishing sales and marketing goals (e.g. brand awareness, increase in market share, product line extensions etc.) • Can substantially increase sales & company value

4. Common Marketing Myths • Everyone is our customer • Our products are so good, they sell themselves • Price is everything • All buyers are rational • We have no competition • Just make more sales calls • Good fences make good neighbors • Business is complex; therefore solutions are never easy • The future is out of our control • Follow the leader

5. Before you start… • Conduct research • Product/Service • Industry size ($) & projections • Industry trends • Major players/competitors • Market share • Target market characteristics, size, willingness & ability to pay • Research sources: • Primary research – surveys, interviews, focus groups, suggestion cards, competitive assessment etc. • Secondary research – DC SBDC, U.S. Census Bureau, www.fintel.us, bls.gov, Edgar, Third Wave research, IBIS World, Public Libraries etc.

6. Marketing Plan Snapshot • Executive Summary • Situation Analysis • Industry Analysis • Company Analysis • Customer Analysis • Competitor Analysis • Collaborators • Keys to Success • Marketing Strategy • Marketing Objectives • Financial Objectives • Target Market • Market Segmentation • Positioning Strategy • Marketing Mix • Financials • Break-even Analysis • Sales Forecast • Marketing Expense Forecast • Controls • Implementation Milestones • Marketing Organization • Contingency Planning

7. I. Executive Summary • The Executive Summary should be written LAST, and • comprise a high level synopsis of: • Company History • Mission Statement • Marketing Objectives • Industry Trends • Target Market • Target Market Need(s)/Challenges • Solutions – Your Products and/or Services • Financial Feasibility (historical sales (if existing) and projections)

8. II. Situation Analysis • Industry Analysis • Historical & projected industry sales (growth or decline) • Industry trends (e.g. market segmentation, new products, markets etc.) • Political/Legal, economic, social and technological environment • Company Analysis • Company products/services • Company history & • customers • SWOT analysis

9. II. Situation Analysis • Customer Analysis • Target market description & needs • Target market size, trends and growth • Value drivers • Competitor Analysis • Major players (include market share %) • Market position • Strengths & weaknesses • Collaborators • Subsidiaries, joint ventures, strategic alliances etc. • Keys to Success • e.g. Location, effective networking, effective branding, • increased top of mind awareness, consistent customer • follow up & feedback, customized services/products, • supplier relationships etc.

10. III. Marketing Strategy Growth Strategies

11. III. Marketing Strategy • Marketing Objectives (2012) • Increase brand awareness • Increase market share by 10% • Launch two new products • Achieve an average customer satisfaction rating of 8 out of 10 • Increase customer retention by 10% • Financial Objectives (2012) • Generate $500,000 in annual sales • Increase profit margin from 10% to 15%

12. III. Marketing Strategy • Target Market • Business to Consumer (B2C) • Demographics (age, gender, income, education, generation) • Geography (region, state, population size, density) • Psychographics (activities, interests, opinions, attitudes, values) • Behavior (usage patterns, frequency of use, benefits sought, brand loyalty) • Target Market Size & Needs • Business to Business (B2B) • Business/Organization Type, Revenue/Budget, Location, Number of Employees, Types of Services/Products Purchased, Frequency of Use • Target Market Size & Needs

13. III. Marketing Strategy • Market segmentation – involves dividing the market into groups of individual sub-markets with different needs, wants and behavior. • Each segment must be: • Identifiable: the differentiating attributes of the segments must be measurable so that they can be identified. • Accessible: the segments must be reachable through communication and distribution channels. • Substantial: the segments should be sufficiently large to justify the resources required to target them. • Unique: to justify separate offerings, the segments must respond differently to the different marketing mixes. • Durable: the segments should be relatively stable to minimize the cost of frequent changes.

14. III. Marketing Strategy • Positioning Strategy – this involves creating an image or identity in the minds of your target market (Unique Selling Proposition (USP)). • What are the first things that come to mind when you think of the following brands?

15. III. Marketing Strategy • Perceptual Map High Quality Low Price High Price Low Quality

16. III. Marketing Strategy • Marketing Mix – The 4P’s • Product/Service • Product Portfolio • Features & Benefits • Product Manufacture/Acquisition • Packaging • Unique value proposition – what sets my products/services apart from my competition?

17. III. Marketing Strategy • Marketing Mix – The 4P’s continued • Price • Price listing • Discounts, payment terms, bundling etc. • Cost factors and mark-up • Pricing Strategy & logic (penetration, skimming, • competitive value-based) • Penetration - Setting the price low in order to attract customers and gain market share; the price will be raised later once this market share is gained • Skimming - Selling a product at a high price, sacrificing high sales to gain a high profit, therefore ‘skimming’ the market; usually employed to reimburse the cost of investment of the original research into the product (commonly used in electronic markets) • Competitive Pricing - Setting the price based upon prices of similar competitor products • Value-Based Pricing - Pricing a product based on the perceived value and not on any other factor

18. III. Marketing Strategy • Marketing Mix – The 4P’s continued • Promotions • Determine Promotional Budget & Mix based on marketing objectives • Determine 3 Ms - Message, Media and Measurement • Promotional Mix

19. III. Marketing Strategy • Remember – Connect marketing objectives to • promotional strategy • Advertising - build general awareness/inquiries/traffic, encourage product trial, shift awareness (e.g. change attitude), response to competitor promotion, increase use or purchase rate, support other market decisions (e.g. support sales force), general corporate/product image building, etc. • Sales promotion - build inquires, increase product trial, encourage repurchase, build traffic, support other promotions • Personal selling - new account development, account support/maintenance, increase product trial, encourage purchase/repurchase, build traffic, support other promotions • Public relations - build general awareness/inquiries/traffic, encourage product trial, shift awareness (e.g., change attitude), respond to negative news/perception, image building, prepare markets for future activity (e.g. new product)

20. III. Marketing Strategy • Concepts to remember when developing promotional strategies: • Integrated Marketing Communications – • Ensure that all aspects of the promotional mix such as advertising, sales promotion, public relations, and direct marketing work together as a unified force, rather than allowing each to work in isolation

21. III. Marketing Strategy • Concepts to remember when developing promotional • strategies: • Customer Relationship Marketing • Involves developing and maintaining long-term relationships with customers so that they will keep coming back to make repeat purchases. • Small companies have an advantage over their larger rivals at relationship marketing. • Requires a company to make customer service an all-encompassing part of its culture.

22. III. Marketing Strategy • Concepts to remember when developing promotional • strategies: • Developing a Competitive Edge • Focus on the customer • Devotion to quality • Attention to convenience • Concentration on innovation • Dedication to service and customer satisfaction • Emphasis on speed

23. III. Marketing Strategy • Why develop a customer centric approach to business? • 67% of customers who stop patronizing a business do so because an indifferent employee treated them poorly. • 96% of dissatisfied customers never complain about rude • or discourteous service to the company, but... • 91% will not buy from that business again. • Treating customers indifferently or poorly costs the average company 15% to 30% of gross sales! • 100% will tell their “horror stories” to at least nine other • people. • 13% of those unhappy customers will tell their stories to at least 20 other people.

24. III. Marketing Strategy • Customer retention: • Companies that are successful at retaining their customers constantly ask themselves (and their customers) these four questions: • 1. What are we doing right? • 2. How can we do that even better? • 3. What have we done wrong? • 4. What can we do in the future?

25. III. Marketing Strategy • Marketing Mix – The 4P’s continued • Place/Distribution • Location, location, location (accessibility, foot traffic, • importance to customer, proximity to competition, • parking, size, image) • Types of channels used • Direct (retail store, sales force, internet etc.) • Indirect (retailers, wholesalers, agents etc.) • Combination • Distribution costs (e.g. shipping, transportation, distributorship fee) • Sales Strategy (e.g. sales approach, based on geography) • Production & inventory capacities • Cyclical fluctuations or seasonal demands

26. IV. Financials • Break-even Analysis • Break-even Point is the level of sales in which a business’ revenue equals its expenses • Break-even Formula = Total Fixed Costs • for a Single Selling Price per unit – Variable Cost per unit • Product • Break-even Formula = Total Fixed Costs • for Services or 1– (Total Variable Costs/Projected Sales) • Multiple Products • Important Definitions: • Fixed Costs – Costs that remain the same regardless of sales volume e.g. rent, insurance, advertising etc.) • Variable Costs – Costs that are directly related to sales (e.g. sales • commissions, inventory costs, direct labor etc.)

27. IV. Financials • Sales Forecast • List assumptions/sales logic (e.g. seasonality, growth, increased capacity) • Estimated sales per product/service offering • Estimated sales per market segment Sigmund’s Gourmet Pasta Sales Forecast Example

28. IV. Financials • Marketing Expense Forecast • List assumptions/expense logic (e.g. outdoor ads during summer, sales promotions during slower months, advertising vehicle proportion) • Estimated marketing expense per product/service offering • Estimated marketing expense per market segment Sigmund’s Gourmet Pasta Marketing Expense Forecast Example

29. V. Controls • Implementation Milestones

30. V. Controls • Marketing Organization • Describe primary marketing roles and qualifications & background of individuals in these roles • Outsourcing • Contingency Planning • Increase/decrease in demand • Customer price sensitivity • Channel issues (e.g. with manufacturers, suppliers, distributors, retailers) • Competitive retaliation (price wars, product imitation) • Diminished return on marketing investment • Location challenges (construction, new residents etc.) • Product quality/recall

31. Thank You! Please Contact the DC SBDC for Consulting: DC Small Business Development Center GADGET Center, Howard University 2801 Georgia Ave., NW Washington, DC 20001 Office: 202.319.1393 Twitter: @dcsbdc Facebook: \dcsbdc