Analyzing Your Market Situation

The first section of a marketing plan provides a snapshot view of your marketing arena. It presents what you know about the size and
growth trends of your market, what you face in terms of competition, and what critical issues will affect your ability to sell your products
for better or worse.
MBA-types call this overview a situation analysis because it analyzes the situation you face as you launch your marketing plan.

Getting a handle on your market

Anyone who reads your marketing plan or the summary of it in your business plan wants to know that your ideas are grounded in
reality. So start with a fact-packed summary of the market your business serves, including who will buy your offering and whether the
number of prospects are growing, holding steady, or shrinking. Make sure to cover the following points:

Your customer description: Define your customers in geographic terms (where they live), demographic terms (facts such as
age, gender, race, education level, marital status, income level, and household size), and psychographic terms (lifestyle
characteristics, including attitudes, beliefs, and behaviors that affect customer-purchasing patterns).

How customers divide into market segments: Market segments are comprised of unique groups of consumers that share
similar characteristics. For example, women may buy from your company very differently than men do, and buyers from one
geographic area may have different product interests than customers from another. Midweek customers may be decidedly
different than weekend customers.

Here are a few ways that companies may divide their consumers into market segments:
Companies selling to consumers may segment customers by gender, age, income, location, or buying pattern.
Business-to-business companies may segment clients by size or type of company, nature of client relationship (contract business
versus one-time purchase, for example), or product interest.
Companies using a number of distribution channels (retail outlets, direct-mail catalogs, and e-commerce, for example) may find that
customers arriving via each channel share similarities that make them very different in terms of product interest and buying
patterns from customers that arrive via other channels.

The size of your market and the growth trends you see: Indicate size and growth information for your overall market and
for the various market segments your company serves. For example, if teenagers represent a sizeable segment of your clientele,
include facts about the size and growth trends of the teenage population in your market area.

Don't base your projections on a hunch. Cite experts, refer to census data, excerpt industry analyses, present findings compiled by
media organizations that serve your customers, or show a recap of your sales history to prove market momentum. Offering proof for
what you say about market size and growth is important because this proof is the claim on which you stake your marketing plan and
budget.

Assessing your competition

To grow your business, you need to gain market share (commonly known as your slice of the market pie) by drawing customers and
purchases away from competing companies. In this portion of your marketing plan, you summarize what kind of competition your
company faces, including

Direct competitors: These competitors are companies that your customers consider when they think about buying. Describe
each one, along with what you know about the threats they pose to you.

Indirect or stealth competitors: These competitors are companies that go after your customers in different and unexpected
ways. For example, cable television, satellite services, movie rentals, and low-priced DVD purchase offers are all indirect
competitors to movie theaters.

Competition creates threats and provides opportunities, and how you handle both is a determining factor in the success of your
company:

Competitive threats and opportunities: Examples of threats include new competitors, improved or expanded offerings from
old competitors, and new options that let prospects fill the need that your product addresses in a whole new way such as online
buying, do-it-yourself solutions, or new technologies that replace the need for your offering altogether. Opportunities include
changes that weaken your competitors or the closure of longtime competitors.

How you plan to protect against threats and capitalize on opportunities: Now you're conducting a strengths,
weaknesses, opportunities, and threats (SWOT) analysis.

Forecasting your business climate

The final step in your situation analysis involves looking at how outside forces may affect your company's success. For example,
changing economic conditions can crimp or expand your customers' abilities to purchase your product or service (like rising fuel costs
for companies in the travel industry). Consider some other factors:

Increasing labor or supply costs that can impact your pricing

New rules or regulations

Emerging technologies that change how you or your competitors do business

Social trends or shifting consumer preferences

Scheduled construction that may affect your customers' ease of access

Regional or industry events or promotions that can impact visibility for and interest in your offerings

In your written business plan, include highlights of your situation analysis, touching on the following key points:

The market for your product or service, including facts about the number of prospective customers and whether that group is
growing or shrinking
Market segments that provide the best opportunities for growth and why

Competitive threats and opportunities and how you plan to counter or take advantage of each
Market trends and business forces that will affect your company, along with your plans for overcoming threats and capitalizing
on opportunities

Micro-Environment
A marketing department functions in a sales environment that is impacted by factors external to the
organization and therefore beyond its control. These factors are either "macroenvironmental" or
"microenvironmental" forces. Macroenvironmental elements are encompassing; they include such concepts
as demographics, economics, social and cultural factors, political and legal factors, technology and the
natural environment; microenvironmental forces are those that are distinct and individual, such as
customers, producers, marketing intermediaries, public entities and the company itself.

Customers
A customer may be an individual or household, an organization that purchases a product for use in the
production of other products, or an organization that purchases a product for resale at a profit. This
customer factor of a marketing microenvironment can be further divided into business and institutional
customers and state, city and municipal governments customers. Marketing specialists, or marketers,
develop and market messages to appeal to a company's individual customers' needs.

Producers
A company relies on other producers and vendors for supplies and other production factors, such as labor,
utilities and equipment required to produce and deliver a product to a customer. As a result, events
affecting a producer or vendor also have the potential to impact customer satisfaction, whether those
events impact the availability of materials, supply chain costs or product quality. A marketing department
formulates its marketing strategy in light of these risk factors.
Related Reading: Differences Between Organization-Centered Marketing & Customer-Centered Marketing

Marketing Intermediaries
Organizations typically rely on banks, venture capitalists and other sources to finance operations;
wholesalers and retailers, warehousers and transportation companies to distribute goods; and advertising,
market research firms and public-relations firms to market their products. The marketing strategy is
defined in part on the degree to which each intermediary can potentially increase or decrease customer
satisfaction.

Publics
"Publics" are groups that may have a significant impact on marketing activities formulated to contribute to
customers' satisfaction with a product and an organization. For example, satisfied customers are a public
that contribute to a marketing program through positive word of mouth. Consumer advocates and
watchdog groups are examples of publics that may hinder marketing activities through negative word-ofmouth.

Company
All departments within an organization have the potential to positively or negatively impact customer
satisfaction. As a result, a marketing department works closely with the finance, purchasing, research and
development, and manufacturing departments, among others, to identify ways that each department can
contribute to the provision of exceptional customer value, which leads to superior customer satisfaction.
Competitive strategies are the method by which you achieve a competitive advantage in the market. There are
typically three types of competitive strategies that can be implemented. They are cost leadership, differentiation and a
focus strategy. A mixture of two or more of these strategies is also possible depending on your business' objectives
and current market position. Porters Generic Competitive Strategies
Cost leadership
The aim of this strategy is to be a low-cost producer relative to your competitors and is particularly useful in markets
where price is a deciding factor. Cost leadership is often achieved by carefully selecting suppliers and production
techniques to minimise production, distribution and marketing costs. However you need to be aware of any serious
loss in quality that may render low cost ineffective.
Differentiation
A differentiation strategy seeks to develop a competitive advantage through supplying and marketing a product that is
in some way different to what the competition is doing. If developed successfully this strategy can potentially reduce
price sensitivity and improve brand loyalty from customers.
Focus strategy
This strategy recognises that marketing to a homogenous customer group may not be that effective a strategy for the
product the business is selling. Instead the business focuses its marketing efforts on a different selected market
segments. That is, identify the needs, wants and interests of the particular market segments and customise marketing
techniques to reflect those characteristics.

How Can Customer Satisfaction Be Used As a Marketing Tool in an E-Business?

by Irene A. Blake, Demand Media
E-business owners improve business relationships by calling customers immediately after shipping issues occur.

Small e-business owners recognize that customer satisfaction is key to continued business success.
Satisfied customers often provide repeat business, referrals and word-of-mouth advertising. E-business
owners can use customer satisfaction as a marketing tool in much the same way it's used for other
businesses. You learn from it and promote it to improve your business, products and services with the goal
of current and potential customers noticing and reacting positively.

Feedback
Whether customers are satisfied or dissatisfied with your business, any feedback they provide about their
experience or the products and services they want can help you with your marketing strategy. Customer
feedback can show you the types of marketing efforts that are working and the areas of your business and
marketing you need to improve to increase customer satisfaction. Small e-business owners solicit feedback
in a variety of ways including email, surveys, social networks, forums, and blog comments.

Testimonials
Feedback in the form of solicited or unsolicited detailed praise, or testimonials, is a valuable marketing tool
that can help you to attract new customers, retain current customers and build your reputation. Shoppers
often actively research several e-businesses, products and services online before making a purchase.
Testimonials posted as reviews on your website, partner sites and in e-newsletters, act as referrals that
outline reasons why shoppers can trust your business.
Related Reading: How to Measure Customer Satisfaction for Strategic Management

Dissatisfaction
Customer complaints shared with friends, family or coworkers, or on blogs, social networks and product
review sites, can quickly damage a companys reputation and result in customer attrition. You use
dissatisfaction to your advantage by attempting to turn negative experiences into positive outcomes so
customers can see youre concerned about them. These actions can improve customer opinion, business
practices and create positive advertising. A small e-business owner addresses dissatisfaction by following
up with a customer via phone or email within a week after a sale, or immediately after receiving or hearing
about a complaint, to attempt to resolve issues or ask for customer feedback.

Value
Another way you can use satisfaction is by satisfying customers with more than your product offerings.
Customers use the Internet to search for content such as general information, instruction guides or tips
that they consider interesting or valuable. They often base their buying decisions on what they find.
Valuable content can result in positive advertising as customers share positive content-related experiences
with others. It can also increase loyalty as customers start to see you as an expert about industry-related
topics. Small e-business owners distribute valuable content in a wide variety of ways including via enewsletters, articles, videos, webinars, chats, live online events, social networks and forums.
BY: smartcompany.com.au

Customer satisfaction, in its simplest form, is the relationship of perceived performance to expectation. It is
anticipated that higher satisfaction levels increase customer loyalty, reduce price elasticities, insulate market
share from competitors, lower transaction costs, reduce failure costs and the costs of attracting new customers
and improve the firms reputation.
Satisfied customers lead to long term business viability through repeat purchases, brand loyalty and word-ofmouth referrals. Satisfaction relates to the entire purchase experience and not just to post use reflection.

Therefore, attention needs to be given to ensuring that all stages of the purchase experience result in positive
satisfaction. It can be expected that early dissatisfaction can result in a negative intention to purchase.
Satisfaction and dissatisfaction will exist in varying degrees, therefore highly satisfied customers can be
expected to display much higher levels of repeat buyer intention and a higher level of positive referrals. Those
customers who are only satisfied or neutral are unlikely to provide strong referrals and their repeat buying
intentions will be significantly lower. At both extremes, highly satisfied and highly dissatisfied, these customers
will have a multiplier effect on outcomes. They are much more likely to be vocal about their experiences and
impact on many potential purchasers either negatively or positively.
Satisfaction and dissatisfaction can coexist for the same purchase experience. I can be dissatisfied with the
information available on the product and the service I received and yet be delighted by the product in use. My
dissatisfaction may lead me to tell others of the poor information and service while still saying how good the
product is.
Satisfaction can change over time depending on subsequent personal experience with the original and
alternative products and with the reported experience of others. Positive or negative comments from reference
groups such as family or friends may also affect post purchase satisfaction. The intensity of satisfaction or
dissatisfaction may change over time, often depending on the original intensity of the emotional response
around the time of the original purchase experience.
Satisfaction itself may comprise a number of components, some explicit while others may be implicit. Some
basic characteristics of the product or service are taken for granted; it works, it exists, it is safe to use and so
on. These are sometimes referred to as hygiene factors. Consumers only think of these when they are absent
and that can lead to serious dissatisfaction.
At a more practical level, expressed or anticipated performance is what the consumer expects and it is against
this hurdle that satisfaction is normally measured. At a higher level, the surprise or delight in an experience can
increase satisfaction but the absence of these experiences will not cause dissatisfaction as they were not
anticipated or expected.
Measuring satisfaction in service delivery has additional challenges as there is an interaction between service
provider and consumer. There is also an aspect of collective and individual performance as a single service
person can skew the outcome through poor performance even if all other staff perform well.
One methodology for measuring satisfaction in service delivery uses the following dimensions of service
quality:

Access means approachability and ease of contact;

Communication means informing the customers in an understandable way and listening to them. It
may imply that companies need to use different languages to talk to different customer groups (i.e.
professional and private customers) in explaining what the service comprises, how much various service
elements and offers cost, and other features of the service;

Competence means possession of required skills (i.e. organisational and personal) and knowledge to
perform the service;

Courtesy comprises politeness, respect, friendliness of the service provider personnel;

Credibility includes trustworthiness and honesty;

Reliability means that the service is performed with high accuracy and thoroughness every time;

Responsiveness concerns the willingness of employees to provide the service and how fast the
service is provided;

Security comprises physical and financial safety and confidentiality;

Tangibles include all physical products that are involved in service delivery and even other customers;

Understanding the customer means taking steps to know the customer better, learning their specific
requirements, providing individual attention and recognising regular customers.
As you can see there are many dimensions in delivering a satisfactory experience. Just because a restaurant
has good food, does not by itself result in a satisfied customer. What we have to accept is that satisfaction is a
complex feeling made up of inputs and experiences across the entire customer experience. It is by
understanding the components which make up this experience that we can begin to tackle the objective of
improving the customer experience.
The management of satisfaction by marketing focuses on the gap between expected and perceived service.
This focus suggests that marketing need to work on both, expectations and what is perceived as delivered.

If the objective of a marketing program is to gain repeat sales and referral business then satisfaction of the
current customer is critical. We cannot expect the customer to return or to refer us to others unless we provide
a satisfactory customer experience, certainly one which they are willing to repeat or to recommend. Therefore,
understanding what creates a satisfied customer is where we need to start our marketing planning.

Strategic Planning and Marketing Plan Formulation

What Is Marketing Strategy Formulation?

by Alex Saez, Demand Media
Mass advertisements, such as billboards, are the end product of a marketing strategy.

To run a successful business, you must first get the word about about your products and services.
Successful marketing requires a winning strategy. Understanding marketing strategy formulation lets you
properly evaluate your organization's marketing needs. You can then gear your marketing strategies to
achieve maximum effectiveness.

Definition
Marketing strategy formulation is the process of defining an organization's marketing goals and objectives.
This allows formulators to create a guide. They examine the market and in doing so, use that information
to determine what marketing approaches will be best at reaching clients and enticing them to seek out the
business' services.

Process
As a general rule, a good first step in a marketing strategy formulation is determining what you want to
accomplish in terms of marketing. It could be as simple as letting potential customers know what you sell,
and how your product can benefit them. The next step is to examine internal and external trends. These
could include spreading the word about a next-generation version of one of your products (internal), and
how it improves upon other products in the industry (external). After that, assign a value to the strategy's
outcome. This can be a dollar value, such as how much revenue you expect your marketing strategy to
generate over a specified period of time. Or it could be an opportunity value, such as getting face-to-face
meetings with a certain number of potential clients. Once the targets are set, marketers assign certain
tasks to each department to identify the role each will play in reaching the strategy's goals. The idea is to
get a firm idea of where you business is now and where it will be after the strategy is implemented. Finally,
take all the information you gathered throughout the process and choose which strategy best fits your
goals and needs.
Related Reading: How to Develop an Effective Marketing Strategy by Understanding Marketing Research
Fundamentals

Online Marketing
There are dozens of marketing strategies to choose from. However, these can be split into two basic
categories. The first is online marketing. For example, your business might choose to place video or text
advertisements online with the help of search engines like Google, a process known as "search marketing".
Another type of online marketing strategy is social media marketing, which uses tools like Facebook or
Twitter to gain exposure. A third example of online marketing is through the use of mobile devices,
specifically smartphones containing the iPhone or Android system. Companies place banners or small ads
in games or websites frequented by mobile users.

Offline Marketing
The second major category, offline marketing, involves any marketing that does not take place on the
Internet. There are many options in this area. A common one is buying ad space in newspapers, trade
journals or on television. Another common one is setting up booths at trade shows. Word of mouth, or
"referral marketing," is also effective, although you have less control over it. With referral marketing,
companies rely on good services and products to motivate customers to recommend your business to their
friends, family members and colleagues. In some cases, businesses resort use telemarketing to spread the
word. In telemarketing, salespeople place calls to either random or targeted numbers, informing recipients
of deals or services.