Developing a Marketing Plan

1) The market
The first step in any marketing plan should be evaluating the entire potential market for
each product category. 
Ask

 How large is the potential market?

 How many people or businesses are currently using the product of any firm
competing in this category?
 How many prospects have potential use for the product?
 Is the market growing, flattening, or shrinking?

Generally, a growing market is more desirable. Not only is there great sales potential,
but it is usually easier to enter and build sales in a growing marketplace than it is to
supplant competition in flattening or shrinking marketplaces.

For a very small firms, however, a large market can be a double-edged sword. On the
positive side, of course, there is the potential for huge sales. Negatively, though, larger
firms with established access to marketing channels and better financing may be
tempted to enter such an attractive marketplace. Firms already involved in the particular
industry may devote considerable resources to defending or increasing their current
market share.

Market segmentation
Almost all markets have some major and distinctive segments. Even if a market isn’t
currently segmented, it probably carries that potential. And, in the case of large national
markets, it would be almost impossible for a small firm to be competitive unless the
market were segmented.

Segmentation can come about in many ways. Often several types of segmentation are
evident. Almost all markets can be segmented by price and quality points. So price and
quality issues may not form the most clear and precise definition of segmentation within
a marketplace. Reasons for strong segmentation are most often found through an
examination of product use and the benefits consumers derive from product use.

For example, the personal automotive car market may be thought of as being divided
into station wagons, sedans, pickup trucks, mini-vans, and sports cars. Each of these
segmented categories may be further divided by price and quality. With the luxury
sedan segment, for instance, a change in the pricing or quality of pickup trucks would
have no competitive impact because the potential consumer for a luxury sedan isn’t
weighing a decision between purchasing a sedan or a pickup. However, if mid-price
sedans are dramatically upgraded in quality, they may become competition for the
luxury sedan market. This happened in the luxury car market in the early 1990s.
Offerings from Infiniti and Lexus caught the attention of consumers who had previously
only considered the more expensive cars manufactured by Mercedes, BMW, and
Jaguar.

Consumer analysis
You need to closely evaluate typical consumers in the market segments you are
targeting. There are countless possible behavior patterns to consider. Try to focus on
the patterns that are most likely to determine the viability of your product in the
marketplace. Ask

 What type of product features most appeal to these consumers?

 How are choices made between competing products?
 How much disposable income do the target consumers have to spend on this
product?
 How do these consumers reach decisions to purchase a particular product?
 Are these consumers typically presold on a brand before they visit a store, or are
they impulse buyers?
 Which promotional vehicles are most often viewed by the consumer?
 How are the consumers geographically situated?
 What activities do these consumers most like to engage in during their leisure
time?

Product features and benefits

It is very important to make a clear distinction between the features of competing
products and benefits to consumers of those features. Pay close attention to how strong
the consumer benefit is from a particular feature.

A careful evaluation of the intended product benefits will help you and others ascertain
the correctness of the product positioning. You should be able to determine whether or
not individual features are worth the cost to manufacture and provide a foundation for
building promotional and advertising programs.

Sales
Just because you have an existing sales force or an established method of selling
products, do not assume current sales channels are appropriate for a new product.

For example, the positioning of your product within its market segment may affect how
the product should be sold. Let’s say you decided to position a new line of modular
office systems as a premium product, complete with design consultation, targeted
primarily to larger corporations. A highly trained, experienced, and knowledgeable sales
staff, eager to visit customers’ offices for face-to-face presentations, would be crucial.
On the other hand, if your strategy was to sell economy office partitions to very small
businesses at a low mark-up, then you could not afford an outside sales staff. While
your inside sales group should be friendly and helpful, there would be little benefit in
hiring higher-paid, design-oriented sales personnel.
If your positioning plan for a new product suggests the need for a new means of selling,
you may want to reconsider the positioning plan. Ask yourself if you can afford the extra
cost and energy required to sell a premium or specialized product.

Advertising and promotions

Your product positioning statement, along with an analysis of its strongest competitive
features and consumer benefits, are basic starting points in developing advertising and
other promotional plans.

For example, if you are starting the only all-business radio station in town, you may
simply turn your basic positioning statement into your main advertising message:
“WBUS: the only all-business radio station in town!” If your consumer analysis reveals
that your targeted listeners are often driving in their cars, the same simple message
might work well on outdoor billboard advertising. If your consumer analysis indicated
that your intended audience commutes to work by train, subway, or bus, a transit ad
campaign might be an appropriate way to impart your message effectively.

Alternately, you may learn that business people really like the current stations they tune
into to receive news. In this case you may need to emphasize more specific features
inherent in your broadcasting. You might want to play up the frequency of stock reports,
investment advice, or business interviews that are a part of your format. To relay
detailed information, it may be more appropriate to place print ads in the business
section of the local newspaper or regional editions of national business publications.

You might find that business people aren’t clear on what the benefits would be to them if
they were to tune into your station. In this scenario, you might want to develop an ad
campaign with a tag line such as “the station for the well-informed executive.” You might
run your ads during televised broadcasts of business programs. The ad might feature a
business person getting praise at the office because he or she was able to disseminate
timely news—news first heard on your station!

In short, there are important issues and endless alternatives to consider, from choosing
advertising and promotional mediums to developing message themes to writing copy.
You may want to refer to Chapter 4 on Advertising or the Publicity and Cheap Marketing
Tricks of this chapter for helpful information and tips on putting together effective
advertising and promotional campaigns.

Competitive reaction
If your marketing plans result in sharply declining market share for your competitors,
you need to be prepared for their reaction. For example, if you introduce a new product
or service with great fanfare at a lower price than offered by competitors, you may
trigger a price war. This may culminate in the elimination of all but the strongest, most
competitive, and best-financed firms. The victims may include you!

How can you avoid a competitive reaction that might backfire on you? Don’t compete on
price. Instead, try targeting a small niche within your marketplace that is not directly
targeted by your competition. And, if you can, stay away from mature, stable markets
with clearly defined competitors.

Try to think like your competition before you implement any marketing strategies. How
would you react if you were an existing firm and a competitor came out with a new,
improved, or lower-priced product that had the potential of chipping away at your
consumer base and, ultimately, profitability? Decide whether or not it would be
beneficial to the success of your business to alter your product, your pricing, or your
unique selling proposition. Determine if you should go full speed ahead with your plans.
If you do so, be at the ready for the expected competitive reaction.

The future
The perfect marketing plan is not complete without some focus on the longer term. If
your plan succeeds

 Will it help you to realize the long-term strategic goals of your firm?
 Will you be able to build up long-term strengths in critical areas of your business
operations?
 What effect will this particular product marketing plan have on other products and
services offered by your company?
 Will there be logical related or follow-on products that can be developed and/or
offered if this product release is successful?

Pro forma
No marketing plan is complete without a quantitative projection of profitability for each
product. This is very different than your annual plan for the entire business. The
marketing plan should, as much as possible, isolate every major expense relevant to a
product, including an allocation of common expense items such as overhead.

You will, of course, need to carefully project a sales forecast. This forecast should
realistically reflect, in numbers, all of the other factors detailed in this plan, including
market size, sales of competing products, competitive factors, product features and
benefits, and your promotional and advertising plans.

Sometimes it is discovered during the development of a sales forecast that the product’s
price is too low to clear a good profit. You will need to decide, at this point, whether the
market would be receptive to a higher-priced product or a product with fewer features
and benefits. Or, sometimes, the product makeup and price can remain the same and
expense cuts can be made in the advertising or promotional budgets without affecting
sales potential.

Cheers,