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This article has been adapted from material provided by the U.S. Small Business Administration. The areas marked "self-paced activities" are there to help you test yourself on how well you are understanding this material. The resources provided in the right hand column will further improve your knowledge base in marketing. This article should give you the following knowledge and abilities: Understand the purpose of the marketing plan
Understand what the marketing plan contains
List
Prepare a marketing plan outline Develop an effective marketing strategy
Marketing plays a vital role in successful business ventures. How well the plan you develop markets your invention, along with your management and financial management plans, will ultimately determine your degree of success or failure. The key elements of a successful marketing plan are to know your customers for your invention - their likes, dislikes and expectations, and to know your competitors (or similar inventions) - their strengths and weaknesses. By identifying these factors, you can develop a marketing strategy that will allow you to arouse and fulfill customer’s needs, better understand competitors and identify changes in the marketplace that can affect your bottom line.
The purpose of the marketing plan is to define your
market, i.e., identify your customers and competitors, to outline a
strategy for attracting and keeping customers, and to identify and
anticipate change. Your business will not succeed simply because you want
it to succeed. It takes careful planning and a thorough understanding of
the marketplace to develop a strategy that will ensure success. Again,
even if you do not wish to market your own product - having the above
knowledge will impress both potential licensees and manufacturers. Generally, the first and most important step in understanding the market is to study it through market research. First write a description of your invention that a layperson would understand. When describing your product outline what you feel are its unique aspects, and explain how or why these aspects will appeal to customers. Emphasize the special features that you feel are its selling points. These features are what you will use to convince customers to purchase your product. Next go over sales projections, determining if there is a demand for the product or what the demand has been for similar products. This will help you to better understand how the marketplace operates relative to your product, and it can help you develop the skills necessary to identify and anticipate changes in the marketplace. Start your own file on marketplace trends. Periodically review your data, looking for shifts in the market. If changes are occurring, you should modify the marketing plan to coincide with these changes. A marketing plan should answer these questions:
Review your program to ensure that it answers these questions. If your plan doesn't answer the questions, it will need to be modified, or you will need to devise a strategy that will provide a means for answering them. When you are satisfied that you understand the program, how the market operates and how to identify market shifts and trends, start writing the marketing section of your business plan. Even if you adopt a marketing program that has been developed elsewhere, it is your responsibility to promote your product by cultivating the marketplace, i.e., attracting and keeping customers. You can accomplish this aim by knowing your market, your customers, your competitors and your product. By gathering and analyzing this information, you will be better able to determine if your program is in line with your competitors, if it is in line with industry averages and what adjustments you can make to improve your overall competitiveness.
A sample "Marketing
Plan"
is provided. Study it carefully, then try to develop a similar program
for your business plan. Strategies for Researching the Market Researching your market is perhaps the easiest way to assess it. Market research does not have to be costly, nor does it have to be a complex process. It can be as simple and as easy as surveying a cross-section of your consumers (focus group) to get their opinions about the product you will be offering, or conducting a telephone or mail survey. The disadvantages of using the telephone or mail survey method are that the individuals you contact may not be interested in responding to a survey. Other market research techniques include analyzing demographic data, such as population growth/decline rate; age range, sex, income/educational level; brainstorming with family and friends, focus group interviews. Whatever method you use, your focus should be on gathering enough information to determine who your potential customers are - their needs, wants and expectations; if there is a demand for your product; who your competitors are and how well they are doing. Market research should answer questions such as:
While there are some disadvantages to market research: it's a costly, time-consuming process, builds in biases that distort information, ignores answers or lets arrogance or hostility cut off communications at some point in the marketing process. The advantages, however, outweigh the disadvantages. Don't forego this process or stop halfway because you are not getting the desired results. This may be an indication that you are going into the wrong business or that there isn't a market for your product. Don't be discouraged. You simply may need to modify your original plan. A few of the benefits of market research are outlined below.
While market research may appear to be a tedious, time-consuming process, it is necessary if you want to be successful. Think of market research as simply a method of finding out what catches customers' attention by observing their actions and drawing conclusions from what you see and as an organized way of finding objective answers to questions every business owner and manager must answer in order to succeed. Market research focuses and organizes marketing information, ensuring that it is timely and that it provides what you need to:
If viewed from this standpoint, market research is an invaluable tool that can save you time, effort, and money. SELF-PACED ACTIVITY During this activity you will answer the following questions:
Many first-time business owners think that by simply placing an ad in a local newspaper or a commercial on a radio or a television station, customers will automatically flock to purchase their product or service. This is true to a certain extent. Some people are likely to learn about your invention and try it, just out of curiosity. But hundreds, even thousands, of other potential customers may never learn of your business. Just think of the money you'll lose, simply because you didn't develop an adequate marketing program! Marketing is an essential part of business operations. And, it oftentimes determines how successful your business will be. What you as a potential business owner must do is maintain a thorough understanding of the marketing program, and use it to extract advantages from the marketplace. Go over the strategies and techniques until you understand how to apply them to get the results you desire. Remember, your aim is not only to attract and keep a steady group of loyal customers, but also to expand your customer base by identifying and attracting, new customers and to reduce risks by anticipating market shifts that can affect your bottom line. To help you accomplish this aim, your marketing plan should include strategies typical of any marketing plan. The plan should especially include what marketers dub as the four P's of Marketing:
Review your plan. Make certain it contains the strategies listed below, then determine how these strategies are applied. Include a brief explanation for each strategy. Describe the target market by:
Identify and describe your customers (target market) by their age, sex, income/educational levels, profession/career and residence. Know your customers better than you know anyone - their likes, dislikes, expectations. Since you will have limited resources target only those customers who are more likely to purchase your product. As your business grows and your customer base expands, then, you may need to consider modifying this section of the marketing plan to include other customers. Identify Competition:
Identify the five nearest direct competitors and the indirect competitors. Start a file on each identifying their weaknesses and strengths. Keep files on their advertising and promotional materials and their pricing strategies. Review these files periodically determining when and how often they advertise, sponsor promotions and offer sales. Describe Product:
Try to describe the benefits of your goods from your customer's perspective. Emphasize its special features - i.e., the selling points. Successful business owners know or at least have an idea of what their customers what or expect from them. This type of anticipation can be helpful in building customer satisfaction and loyalty. Develop Marketing Budget:
Operating an effective marketing plan requires money, so you will have to allocate funds from your operating budget to cover advertising, promotional and all other costs associated with marketing. Develop a marketing budget based on the cost for the media you will use, and the cost for collecting research data and monitoring shifts in the marketplace. Describe Location (Place)
Again, try to describe the location of your business from your customer's perspective. Describe its assets -- i.e., the convenience, whether or not public transportation is accessible, the safety aspects - street lighting, well lit parking lot or facility, decor, etc. Your location should be built around your customers, it should be accessible and should provide a sense of security. Develop Pricing strategy
Although your pricing strategy may be based on the strategy devised by others, you should study this plan and the strategies used by competitors. That way you will acquire a thorough understanding of how to price your product, and you can determine if your prices are in line with competitors, if they are in line with industry averages and what adjustments you can make to bring them in line. The key to success is to have an well-planned strategy, to establish your policies and to constantly monitor prices and operating costs to ensure profits. Keep abreast of changes in the marketplace because these changes can affect your bottom line. Develop an effective Promotional Strategy
Develop a promotional strategy that uses various media for promoting your business. Monitor the different media identifying those that most effectively promote your business. Concentrate on developing material for these formats that clearly identifies your services, its location and price. Since financial institutions weigh the soundness of your marketing plan when deciding whether your business is a good risk for their money, it is important that you prepare and present credible market data that shows there is a need in the community for your business and that demonstrates your ability to compete successfully. SELF-PACED ACTIVITY During this activity you will: · Make an outline of the information a marketing plan should contain. The Advantages and Disadvantages of a Marketing Plan A well-written, comprehensive marketing plan is the focal point of all business ventures because it describes how you plan to attract and retain customers - the most crucial aspect of a business. And why are customers so important? The answer is simple. They ultimately are the means by which you will generate the income needed for daily operations, to repay debts and to turn a profit. In essence, the customers are your life line and the marketing plan is the pipeline that allows you access to them -- i.e., to fulfill their needs and expectations. The marketing plan is essential to any successful business. It is the heart of the business, the basis from which all other operational and management plans are derived. Marketing offers you a wealth of information that if applied correctly virtually can ensure your success. Therefore, it is important that you, as a first-time business owner, develop a comprehensive, effective marketing plan. If you need assistance in accomplishing this task, contact your local SBA office. Consult the local telephone directory under "U.S. Government" for the telephone number and address of the office nearest you. An effective marketing plan will certainly boost your sales and increase your profit margins, which is the goal of every business owner. It is a milepost down the road to success and, as such, care and time should be put into its development. You must be able to convince customers that you have the best product or service for them at the best possible price. If you cannot convince potential customers of this, then you are wasting your time and money. This is where the marketing plan comes into play, and this is why it is so important. There are numerous advantages you can extract from the marketplace if you know how. And the marketing plan is an excellent tool for identifying and developing strategies for extracting these advantages. A few of the advantages are outlined below. The marketing plan:
Some of the disadvantages of the market plan are:
The marketing plan offers numerous advantages; however, as you can see, there can be drawbacks. Remember, however, the advantages outweigh the drawbacks, you can seek professional assistance when you are developing the marketing section of your business plan. It may be worth the investment. SELF-PACED ACTIVITY During this activity you will:
Elements of a Marketing Plan
Making an Effective Marketing Plan How well your advertisements and promotions draw customers will ultimately determine how effective your marketing strategy is. It becomes your responsibility to cultivate your designated market, if you decide to market your invention yourself. One of the ways to do this is through advertising and promotions. Remember the aim of the advertising and promotional strategy is to create awareness of your product, to arouse customers' needs and expectations to the point of consumption and to create a loyal stream of satisfied customers who continue to patronize your business. Effective Advertising and Promotions Techniques Perhaps, the first step in developing an effective advertising and promotional strategy is to understand the difference between the two concepts. Most people think that advertising and promotions are one in the same; there is, however, a distinction between the two. While both advertising and promotions use the different media formats - print, radio, and television - as a way of conveying a message, promotion encompasses much more. It is the method of advertising and can entail community involvement. For example, this could mean sponsoring a Youth Organization, allowing non-profit organizations to use your facility, such as, letting the high school drama club use your parking lot for a car wash fund raiser, sending an underprivileged child to day camp or involvement in any type of positive community activity that will bring attention to your business. While advertising is a way of keeping your business is the public's eye, promotions are a way of signaling that you are concerned and committed to the welfare of the community and its residents. This commitment may be one of the most effective techniques for building customer loyalty. People tend to be more supportive of businesses and organizations that give something to the community rather than those that just take from the community, never giving anything in return. Now, let's look at how to develop an effective advertising program and promotional program for your business. The Key to a Successful Advertising and Promotional Plan Advertising Advertising plays an important role in successful business ventures. It entails identifying and selecting the media that provide the greatest amount of exposure for your business and developing effective, yet appropriate materials for each medium. It is more than running an ad in a local newspaper, on a radio or television station or just simply hanging a sign outside your business and waiting for the customers to purchase your product. It requires that you know your product - that is, the selling points - and that you develop literature that can arouse the customers' consciousness levels to the point that they are curious enough to investigate it, and then raises their need or desire levels to the point that they are willing to purchase it. Advertising keeps your product or service in the public's eye by creating a sense of awareness. Yet this awareness alone will not ensure the success of your business. Thus, advertising not only has to be effective, it also has to be a continuous process. It may be a good idea to mix the different media formats that you use. For example, design a brochure that describes your product, emphasizing its selling points (special features). Place copies of the brochure in strategic locations of your business to use as customer handouts. Or, devise a customer survey. The survey should focus on whether customers like the product, the quality of the product, ways to improve it, the quality of service provided by staff - their friendliness and courtesy. Place the survey with a self-addressed, stamped envelope near the check-out counter and ask customers to mail in or return the survey when they come back. Review their comments with staff and implement those suggestions that are practical, cost efficient and can improve the overall quality of service your business provides. Other media formats to use are: Newspaper, radio, or television ads (newspaper advertising is the least expensive and television advertising is the most expensive of these formats). You probably will need professional advice and assistance when developing ads for these media formats.
Whatever media format you use, be willing to invest the money needed to develop an effective ad campaign. Promotions As discussed earlier, promotion entails more than just selecting the media format to market your business. It can, and oftentimes does, encompass community involvement. This involvement can range from sponsoring a Boy or Girl Scout troop to hosting a charity ball for senior citizens or allowing non-profit organizations to use your facilities. Your approach to promoting your business should encompass more than creating a sense of awareness about your business. It should include a commitment to community involvement - the desire to give something back to the community and its residents. An excellent way to foster this type of involvement is to meet with community leaders to find out how you can help, and what events are forthcoming that could or will require your assistance. Keep in mind that community leaders can be an excellent networking tool, especially if they feel your involvement is genuine. Examples of community programs you can sponsor or take part in are:
Other inexpensive ways of promoting your business that doesn't encompass community involvement are:
While it is impossible for you to participate in every event or program in the community, you should at least get involved in one or two activities, even if it's only on a part-time basis. People tend to be more supportive of businesses, organizations or individuals who give something to the community. And, this is the image you especially want to project in your promotional activities. No plan that anyone provides will show you how to promote or advertise your business. These are techniques that you, yourself, will have to develop. Talk it over with your family and community leaders, then decide which activities you can afford to sponsor and have the time to commit to before becoming involved. Involvement in the community doesn't necessarily have a price tag attached. Find a project that you can afford, that you have time for and is of interest to you. For ideas on how to develop an effective advertising and promotional strategy, see "Marketing Tips, Tricks & Traps". A sample Marketing Plan also is included to assist you in developing an effective marketing strategy for your, business. SELF-PACED ACTIVITY During this activity you will:
Marketing Plan Extras PRICE / QUALITY MATRIX SALES APPEALS
MARKETING PLAN - TIPS, TRICKS & TRAPS 1. Marketing Steps
2. Marketing Positioning
3. Sales Strategy Use Customer-Oriented Selling Approach - By Constructing Agreement Phase One: Establish Rapport with Customer - by agreeing to discuss what the customer wants to achieve. Phase Two: Determine Customer Objective and Situational Factors - by agreeing on what the customer wants to achieve and those factors in the environment that will influence these results. Phase Three: Recommend a Customer Action Plan - by agreeing that using your product will indeed achieve what customer wants. Phase Four: Obtaining Customer Commitment - By agreeing that the customer will acquire your product. Emphasize Customer Advantage Must be Read: When a competitive advantage can not be demonstrated, it will not translate into a benefit. Must be Important to the Customer: When the perception of competitive advantage varies between supplier and customer, the customer wins. Must be Specific: When a competitive advantage lacks specificity, it translates into mere puffery and is ignored. Must be Promotable: When a competitive advantage is proven, it is essential that your customer know it, lest it not exist at all. 4. Benefits vs. Features The six "O's" of organizing Customer Buying Behavior
Convert features to benefits using the "...Which Means..." Transition Sales Maxim: "Unless the proposition appeals to their INTEREST, unless it satisfies their DESIRES, and unless it shows them a GAIN--then they will not buy!" Quality Customer Leads: Level of need Ability to pay Authority to pay Accessibility Sympathetic attitude Business history
One-source buyer Reputation (price or quality
buyer)
CONVERT FEATURES INTO BENEFITS THE "...WHICH MEANS..." TRANSITION
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