Writing, developing and implementing an effective and successful Marketing Plan begins with a sound market and industry analysis and finishes with a Marketing Strategy and Marketing Programs, ready for implementation. The marketing plan should not be developed and implemented independently; rather, the marketing plan is more effective if developed with your Business Plan products and services section and finally implemented with your company’s strategic and sales plan. In this article I provide an overview of what an effective marketing plan contains and how to successfuly build that marketing strategy and plan. For more information and a step by step guide on developing a Marketing Plan, see my Business Plan Book.
There is a certain approach and building-block process to developing a Marketing Plan. The place to start is analyzing your Industry: its current state; who the major participants are; changes in the industry; opportunities, economic modeling forecasts; and examining who else may enter the industry. With that completed, move on toward determining how distribution works in your industry and how technology affects its distribution systems.
After your analysis on the Industry tier is complete, it is time to differentiate your focus to analyzing and defining your Market Segments. Determinants of Market Segments are Demographics, Geographic’s, Customer Needs, Buying Patterns, Psychographics and so forth. Once your Market Segments are defined and analyzed, then for each of the Market Segments, explain how the Market Needs lead these identified groups to buy your products and services. A good Tip when analyzing and explaining Market Needs: Define your Products and Services’ Offerings in terms of Target Market Needs; focus not on what you have to sell but more importantly, on the buyer needs you satisfy. observe why customers buy from you and prepare that strategy behind your Market Segmentation.
Having determined your market segmentation strategy, it much easier to derive your Target Markets. It is important to determine what market groups are the most vital and important to your enterprise, including what Market Niches to target. It is vitally important to narrow done and finely define your target customers’ characteristics and needs. Determine what target market groups are more advantageous and potentially profitable than others.
The next step in the Marketing Plan Process is to analyze Market Trends from a Strategic point of view. Look at Market Trends as a way to get ahead of the market direction, knowing with a probability of certainty where it is going before hand. Having createed the nature and direction of Market Trends, you can now adeptly and realistically visualise your Market Growth and specific Growth Rates. Your Growth Rate Projections should identify in detail the relationship between your potential customers, sales, revenues and ultimately, profits. Now you will be able to establish a realistic projection of Return on Equity and Return on Investment, as well as, identify the finances needed to finance and sustain this growth from an internally generated source (i.e. Cash Flow) and an outwardly generated source(s) (i.e. Lenders, Venture Capital, Investors, etc).
With Market Trends and Growth rates determined, it is time to explain the Nature of your Competition, why customers choose one provider over the other and why customers will buy from your company instead of these competitors. Provide a elaborated competitive summary of your Products and Services’ Variables, ranking them in comparison to your Competition (example variables: Pricing, Sales, Trends, Positioning Clarity, Quality, Value, Reputation, Packaging, Advertising, Customer Service, Target Market Focus, Innovation, Brand Awareness and so forth).With this Competitive Analysis on a Product and Service Variable level completed, determine your Top Five Competitive Strengths and Weaknesses, as well as, identifying your top Competitive Gap Threats.
Having established your Competitive Gap Threats, you can now develop a detailed Analysis of your Competitors. You must show how you can bridge your Competitive Gaps, clearly exhibit you can effectively compete, and what areas your business is better than the Competition. It is important at this juncture to illustrate how Competitively Positioned your Company will be in the Market. Specifically, what is your Positioning Strategy and what your areas of specialization and customization? With your Company’s Competitive Positioning Strategy clearly defined and established, you can clearly explain your Company’s Competitive Edge. Competitive Edge is sustainable value which can be maintained and developed over time. As importantly, what Barriers to Entry can your Company create to sustain superior growth and keep this Competitive Edge? Things like Cost Structure, Distribution, Trade Secrets, Product Differential, Customer Integration, etc. should be analyzed to determine how you can effectively establish strong Barriers to Entry, thereby, protecting your Competitive Edge and Future Growth.
Let’s pause and see what has been accomplished so far in this Marketing Plan Development Process:
- Industry and Market Analysis
- Market Segmentation
- Target Markets
- Strategic Market Trends
- Market & Company Growth Rates
- Competitive Analysis & Gaps
- Competitive Positioning & Edge
Two parts remain in the Marketing Plan: the Marketing Programs and Marketing Strategy. These two vital parts are very closely linked together as the marketing program is the implementation platform of the marketing strategies.
Remember that the term “marketing” is defined as the broad effort to generate sales leads on a larger scale basis and it entices customers to look and consider a company’s products and services. Some important components to consider include products and services, unique company aspects, positioning, and atracting and maintaining a certain market.
This is further developed in the core components of the Marketing Strategy.
— Positioning Statements: Strategic Focus on the most important Target Markets; the Market’s most important Needs; and how your Products and Services meet those Needs. State the Main Competition; how your Products and Services are better.
— Pricing Strategy: Provide a Price Breakdown of your Products and Services and relate your Pricing Determinants and Strategy to your overall Marketing Strategy. Consider things like: What your Products and Services cost you to produce and sell; what your Margins will be; Discount Policies & Strategies; Dealer and Distributor Margins; Recouping R & D costs; Possibility of Pricing Wars; Critical Supply and Demand factors; How Pricing will change over time, etc.
— Promotion Strategy: This component of your Marketing Strategy will answer how you spread the word about your Company to future Customers, and how you will Promote your Products and Services. Elements to consider: Advertising, Public Relations, Trade Shows, Events, Direct Mail, Internet Strategies, Seminars, Sales Literature, Expected Response Rates, Promotion Costs, Name identification, Brand Loyalty, Advertising Budgets, Incentives; Advertising Message, Theme and Vehicles; Customer Communications and so forth. It is important to determine the Marketable Differences in your Products and Services over your Competition.
— Distribution Strategy: How will you / who will distribute your Products and Services? What is Unique in your Distribution Strategy compared to the Competition? What are your Distribution Strengths? Types and numbers of Sales People? Sales People Compensation Structure? Sales Territories? These are some of the questions you should be asking while developing your Marketing Strategy’s Distribution System.
Your Marketing Strategy should conclude with determining the Changes over the next three to five years which would impact most on your Marketing Strategies. What potential changes can harm your market and bring advantage in your market? How can you devise for these changes? A Marketing Strategy is never stagnant, it is always developing and adjusting to Market Conditions, Trends and Changes.
With your Marketing Strategy fully developed, you can now assemble your Marketing Strategy Profit & Loss Statement. This Marketing P&L Statement is less about Sales Forecasting, which is developed in more detail in the subsequent Strategic Planning Process, and more about a general indication of whether the Marketing Strategy will be successful.
An Example Marketing Strategy Profit & Loss Statement Format
Proposed Estimated Actual
— Percent Increase
Cost of Goods
Sales & Distribution Expenses
Advertising & Promotion Costs
The last Section of your Marketing Plan deals with your Marketing Programs. Areas to consider include:
- Defining Marketing Programs
- How the Marketing Strategy will be implemented
- Identify specific Marketing Plans
- State Market Gaps and how they will be met
- How implementation of your Marketing Programs will be measured and quantified
- How your Target Markets relate
- How you will capture Markets others are competing for
The Marketing Programs put your Marketing Strategy into action, bringing “life” to your Marketing Plan.
Your Marketing Analysis and Plan are developed in concert with your Products and Services Development, resulting in a Marketing Strategy and implemented through the Marketing Programs. These Marketing Strategies and Programs are then assimilated into your Company and executed through your Company’s Strategic and Sales Plan. A Flow Chart outlining this inter-relationship follows below:
Products and Services Development => Market Analysis => Marketing Strategy => Marketing Programs => Marketing Plan => Strategic Plan => Sales Plan = Happy Customers and Business Success
About the Author
Frank Goley is a Business Consultant for ABC Business Consulting and has been helping companies to succeed for many years. He is an expert in developing business plans, marketing plans, funding plans, strategic plans, turnaround plans and project specific business plans. Frank is also a business coach and business turnaround consultant . Frank is author of The Comprehensive Business Plan Workbook – A Step by Step Guide to Effective Business Planning, and he writes the Business Success Strategies blog.