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Chapter 6: The Marketing Plan

• The aim of the following marketing sections is to give a potential investor a strong impression that the opportunity is compelling.
• The marketing plan appears in Chapter 6.

Coverage of the Chapter

• The market analysis includes industry, competitors, and customers.
• The marketing plan includes product, price, place, and promotion.
• It is important to adjust to reality.

Learning Objectives

• Define marketing plan and market analysis.
• Discuss the goals of market analysis.
• Distinguish product features from product benefits.
• Illustrate ways a unique selling point may be achieved.
• State the goal of pricing and suggest appropriate ways to price a product.
• Suggest ways to distribute, support, advertise, and promote a product.

Story from Real Life

• Mike, a family man with three children in high school, was not hired for a janitorial job due to a lack of qualifications.
• Frustrated, he bumped into a pile of tomatoes and wondered why vendors were selling them in the street.
• He sold all the tomatoes in less than an hour for an extra $10 and doubled his money the next day.
• The couple decided to continue selling tomatoes and saved enough money to purchase a truck and send their children to college.
• The couple's children helped out with the tomato enterprise after finishing accounting and business courses.
• A good dose of ingenuity and drive gets you entrepreneurial success and saves you from a stale job.

Market Analysis

• Marketing research is an activity that begins by identifying an unmet consumer need and how a product or service can meet it.
• Marketing research includes qualitative research (feelings) and quantitative research (numbers).
• Market analysis involves a careful study of the customers and competitors of a business.
• It identifies the target market, the competitors, and how the market is segmented.
• The objectives of the market analysis section of a business plan are to show to investors that you know your market.
• The market is large enough to build a sustainable business.

Macro Analysis

• PESTEL analysis is a simple tool that identifies external trends and drivers that could impact a business positively or negatively.
• PESTEL stands for political, economic, social, technological, environmental, and legal.
• Political factors include government policy and changes to government.
• Economic factors include funding opportunities and the economic environment, such as interest rates and consumer spending.
• Social factors include lifestyle/cultural factors affecting customers/beneficiaries and public attitudes.
• Technological factors include emerging technologies and data and information.
• Environmental factors include weather, climate change, pollution, waste and recycling.
• Legal factors include regulations, law, and standards.
• Marketing analysis includes demographics and segmentation, target market, market need, competition, barriers to entry, and regulation.

Demographics and Segmentation

• When assessing market size, the approach depends on the business type.
• A local approach is suitable for a small shop or restaurant by assessing the market around the shop.
• A national approach is necessary when writing a business plan for a restaurant chain.

Target Market

• The target market includes the type of customers you target within the larger market.
• One can either be a generalist or decide to focus on the high end or the lower end of the market.
• This section is relevant when the market has clear segments with different drivers of demand.
• Value for money drives the lower-end market, while exclusivity and prestige drive the high end in the example of jewels.

Market Need

• The market need section shows a potential investor that you have intimate knowledge of your market.
• It identifies why customers buy.
• This section highlights some of the drivers that the competition is not focusing on.

Competition

• This section provides a fair view of who you are competing against.
• You need to explain your competitors' positioning and describe their strengths and weaknesses.
• You should write this section in parallel with the Competitive Edge part of the Strategy section.
• The idea is to analyze a competitor's angle to the market in order to find a weakness that your company can use in its own market positioning.

Barriers to Entry

• This section answers two questions from investors.
• What prevents someone from opening a shop in front of yours and taking 50% of your business?
• Having answered the previous question, what makes you think you will be successful in trying to enter this market? (start-up only).

Regulations

• Merge this section with the previous one if regulation is a barrier to entry in your sector.
• Otherwise, this section serves as a checklist to explain the main regulations applicable to your business and the steps you will take to remain compliant.

Marketing Plan

• It is a roadmap or plan of action that will get customers to buy a product or service.

The 4P's

• Product: What the product or service is, and how it will stand out against the competition.
• Price: How to determine the price of the product.
• Place: Location of the product, and how it can ensure that shoppers walk into the enterprise.
• Promotion: How the product or service will become known to the outside world.

Points to Remember

• The chapter discussed the marketing section of the business plan, which has two parts: market analysis and the marketing plan itself.
• Market analysis looked into the industry, the competitor, and the customer or target market.
• The goals of the market analysis are to identify gaps and unmet needs that the business can exploit.
• Demonstrate is a large and growing demand to support the business.
• The marketing plan followed the 4 P's framework of product, price, place, and promotion.
• The customer and the unique selling point of the product are the drivers that guide decisions in the marketing plan.
• Product features describe the physical traits of the product, what it does, and how it works.
• A product benefit is meeting a customer need that is satisfied by a product.
• Unique selling points state what benefit sets your product apart from all the rest.
• Determine why your product is unique, distinct, or better than what is available.
• Answer these questions to find out the unique selling point.
• What needs are you meeting better than anyone else?
• What benefit do you deliver better than the competition?
• What needs or customers do you serve that the competition is not?

Achieving a Unique Selling Point

• Ease of use/easy to use.
• Preferred location/accessible.
• Use of new technology or process.
• First on the market.
• Savings compared to existing products.
• Glamour, fashion, coolness.
• Luxury.
• Friendly to the environment.
• Healthy, organic, natural.
• Socially-responsible, profits go to charity.
• Best customer service.
• Fastest to deliver.
• Trouble-free product.

Goal of Pricing

• Setting the price and terms for your product such that the highest possible profit is achieved.
• Cover all costs, and consider what customers can afford.
• The price should provide the business a decent return.
• The price should be related to product positioning.
• How you want your product to be known to your target market.

Distribution Network

• Explanation of where the customer can get your product and how the customer is going to get there.
• Customer service is about what to do after the customer has made the decision to buy.
• Advertising seeks to inform or persuade the market to support or buy a product.
• Most other activities that persuade the customer to buy the product but do not fall under advertising may be called "promotions."
• These can include handing out free samples, coupons, product displays, and organizing demonstrations on how to use your product.