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Business Plan Marketing Strategy and Tactics – Section 4.0

business-plan-marketingThe Business Plan Marketing section is the fun part! Now that you have analyzed the market, chosen a target market, and selected your differentiation, it’s time to envision how you will be perceived by the market (positioning) and how you will support that image or slogan with each of the 4 P’s:

  • product
  • price
  • place (location and distribution)
  • promotion (communications)

Later, the market description and these marketing plans will enable you to prepare a well-informed sales forecast.

Positioning – The Basis for Marketing

Business Plan Marketing Strategy and Tactics start with “positioning.” Considering the differentiation you selected at the end of your competitive analysis, create a slogan or catchy statement that says how you want the customer to think of your product or company. It will be based on your competitive advantage, but it will be expressed in terms of the benefits that advantage delivers to the buyers in your target market.

For example, in its early years Amazon’s Kindle e-reader used the phrase “Books in 60 seconds.” This is a simple statement of the benefits to buyers resulting from its competitive advantages (differentiations) in the size of its library, the portability of the library within the e-reader, and its free wireless downloads of books. But they were not buying the size of the library – they were buying books downloaded fast. This was the benefit to them, so it became the “positioning statement.”

Later, after tablet computers were launched with e-reader applications and wireless download, Kindle was no longer very different on these features. So its positioning shifted to emphasize its non-glare screen display by adding “read anywhere” to its positioning. Again, buyers were not buying the screen technology for its internal clarity. The benefit they were buying was the opportunity to read on a screen in bright sunlight, i.e. anywhere, even at the beach or on the deck.

Aligning Goals, Strategy, and Tactics for Business Plan Marketing Section

After your insightful positioning statement, the next step is to create the big picture view of your business plan marketing: company or product goals, the strategy to achieve them, and key tactics to implement that strategy.

Your goals should be specific, both in time and in measurement. For example, “build a presence” is too vague. It would be a good goal statement if you added where, with who, when, and how much, such as “build a presence among Chicago area golfers, so that 50% are aware of the product and 25% express interest in buying it, within two years after product launch.”

I like to use a small table to match my goals to the main strategy for achieving them, and make a brief note of the main tactics I’ll use to implement each strategy. This keeps me consistent and on track, so that my efforts are focused on achieving the business plan marketing goals I started with. Here is a model for you to consider:

 

Goal

Strategy

Tactics

Build presence in Chicago area in two years: 50% aware; 25% interest Communication & Promotion based on local events & PR –       Communications

–        Trade shows

–        Demo days at courses

–        Order via Website

Sell 500 units year one Presence in Pro Shops –        Direct Sales

–        Discounts to sellers

–        Merchandising

Sell 1000 units year two Presence in Retail chains

Introduce  complementary new product

–        Above plus celebrity endorser

–        Product roadmap

 

This table provides guidance as you consider each of the 4Ps, making sure that each one not only supports the positioning but also implements the the overall business plan marketing strategy to achieve the goals. Any activity that does not contribute to achieving goals or supporting positioning should not be done.

This is what Strategy is all about: allocating resources to reach goals. But strategy also means refusing to allocate resources to activities that do not enhance the likelihood of reaching goals.

Organization for Business Plan Marketing Section

Under the 4.0 heading, state your positioning and marketing goals. The next five subsections (4.1 through 4.5) address the 4 Ps and customer service. Section 4.6 summarizes your sales forecast.

4.1 Product Plan

The product part of your Business Plan Marketing section has four primary elements. You briefly mentioned product features in Section 2.2. Here is where you explain more fully any features that are significant due to difficulty, cost and competitive impact.

Next, describe the “augmented product:” those added features or services that make the entire offering more appealing, different, and valuable, e.g., packaging, choice of paint job, free installation, warranty/guarantee, user manual on a flash drive, etc.

Third, describe your set of product bundles, often three tiers of product content for three different prices. They might be named basic, standard, and premium, or bronze/silver/gold, but I’m sure you can do better than that! See Product Bundle for more on these product tiers, also called packages or bundles.

Fourth, provide a “product roadmap” It says what you will do to change the product in the coming months and years. Will there be new versions? If so, what will be their new features? Which market segments are these designed to attract? What technology advances are needed to provide these new features? When can this be introduced? Consider what competitors are likely to offer or respond with. See Product Roadmap.

4.2 Pricing Plan

First, show the prices of the product offers (also called packages, bundles, or tiers), and the prices business-plan-marketing 4 psfor standalone services outside of these packages or tiers. Ideally, compare the price to the variable cost of the feature, and calculate the contribution margin. You will need to do this anyway for your financial forecasts.

Costs/price = margin percentage. Your product margin should be at least 50%, i.e. price should be at least twice as much as variable cost. This provides enough cash to cover overhead and still deliver your target profit.

Second, if you did a product roadmap, use a table to show price evolution per version over the next two years.

For pricing ideas and methods, see Pricing. Consider reactions of competitors to price changes. Will they follow? Can they afford to? What they do influences what you would do next. The best business plan marketing section recognizes that marketing is dynamic. Your actions result in reactions by competitors, not just customers.

Average price per product sold per month is an important input to the revenue (sales) forecast, so it would be good to state your estimate here.

4.3 Distribution Plan

Where will you sell your product? It should be where your target market likes to shop. Also, your choices should be consistent with your positioning: high end products must be sold at high end locations. How will you get your product onto their shelf? Identifying an effective distributor can be the most important element of your business plan marketing section.

Often you will choose more than one distribution channel to get broader market coverage. This means you will need to deal with price differences among channels:

  • Online: your website; catalog websites such as Amazon; other special interest sites
  • Retail: chains, independents, your own stores
  • Distributors and Agents: add expertise and network of contacts; pay commission or discount
  • Direct Sales Force for B-to-B products

For each channel, mention the price discount or commission, and estimate the % of total sales this channel will generate. This enables you to calculate sales revenue and costs accurately in the plan’s financial statements.

Describe any significant sales support costs. You incur these costs to generate more sales, by making your distribution channels more effective and more motivated. Examples could range from your website to a portal for distributors as described in Sales Support Techniques . These expenses will later be added to your financial forecast.

Finally, mention any logistics issues and costs involved with getting the product delivered from your location to the selling location.

4.4 Communications and Promotions Plan

What is the message you want to send, to whom, via what media, and what amount or % of revenue are you willing to spend? If you have new product offers directed to new target market segments, consider which media would reach them. Most small businesses today depend on their website, social media, local sponsorships and events, and inexpensive local traditional media such as coupons.

The timing of communications and promotions should be estimated in this part of the business plan marketing section. The effect of these efforts will boost revenue shortly after they begin until they end, and the costs will be incurred before they start until just before they end. These revenue and expense effects must be shown in the financials in the correct months. Obviously, if there aren’t any such effects, then the program is ineffective and should not be done!

4.5 Customer Service Plan

Customer service can be important in making the sale, by providing an accessible entry point for questions, and by referring prospects to the right channel for closing the sale. Customer service can also be critical for keeping customers and for repeat purchases. So this part of your business plan marketing section addresses accessibility, call routing/referral routines, policies for discontented customers, and customer information provided with the sale.

In order to develop accurate financial forecasts, this section will also include the cost of customer service: facilities, staffing, training, and reference materials.

4.6 Sales Forecast

The sales forecast is the culmination of all that went before in the business plan marketing section. It will be addressed in its own article.

 

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About the Author

About the Author: “Profit Spotter” Tom Gray helps business owners spot and capture opportunities to grow profits, and guides those considering a sale. He is a management consultant certified as a Turnaround Professional (CTP), Business Development Advisor, and SCORE Mentor. Reach Tom at 630-267-7193 or tgray@tom-gray.com See www.tom-gray.com. For Tom’s two books and ten booklets, see www.businesstechniquesbooks.com. .

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