Business Plan and Value Proposition Overview

Value Proposition

• A value proposition answers the question "Why should a customer buy your product/service?".
• It is a major driver of customer purchases.
• Taglines are perpetual and slogans are used for campaigns and promotions only.
• An Effective Value Proposition should:
  • Be straightforward, simple, and specific.
  • Highlight the value of the product or service.
  • Use language that resonates with the target market.
  • Include elements that build credibility, such as testimonials from customers, partners, and stakeholders.
  • Differentiate the value proposition from competitors'.

Business Plan

• A business plan is a structured document that details the entrepreneur's idea and opportunity.
• All parts of the business plan should be completed before writing the Executive Summary.
• I. Executive Summary:
  • A concise outline of the business idea.
  • It's the first impression of the business idea.
• II. Study Background:
  • Details the origin of the business idea, including the opportunity it addresses.
  • Explains the business concept, logo, vision, mission, objectives, and value proposition.
    • Vision: Outlines the entrepreneur's long-term aspirations for the business.
    • Mission: Explains the business's purpose and how it will achieve its vision.
• III. Macro-environmental & Micro-market Analysis:
  • Macro Analysis (STEEPLE): Examines external factors that influence the business.
  • Micro Analysis: Examines the target market's preferences and behaviors, competitive landscape, and location.
• IV. Marketing Plan:
  • This section focuses on the marketing activities crucial to achieving the business's goals.
  • This plan includes a SWOT analysis, Marketing Strategies and Tactics, and the 7Ps of Marketing.
• V. Operational Plan:
  • Defines the infrastructure and resources needed to operate the business.
  • Includes manpower, machinery, materials, and methods.
• VI. Financial Plan:
  • Describes the financial needs of the business.
  • Includes the starting capital and how the business will be sustained.

Marketing Plan

• Marketing Mix: The combination of strategic marketing elements used to promote a brand or product.
• 7 Ps of Marketing
  • Product: Any tangible or intangible good, service, or idea offered to meet customer needs and address their problems.
  • Price: Defines the monetary value assigned to a product or service, taking into consideration cost, competition, objectives, positioning, and the target market.
  • Place: Refers to the location or medium where products or services are made available to customers. It includes the distribution channel and logistics.
  • Promotion: Communicating the value of products or services to the target market, building brand awareness, and driving sales.
  • People: The human element of the business that directly interacts with customers, such as employees, service providers, and the entrepreneur.
  • Process: The steps taken to deliver a product or service.
  • Physical Evidence: The tangible elements of the product or service experience.

Pricing Strategies

• Bundling.: Selling multiple products or services together at a discounted price.
• Penetration Pricing: Launching a product at a low price to attract customers and build market share, with the intention of increasing the price later.
• Skimming: Launching a product at a high price and gradually lowering it over time.
• Competitive Pricing: Setting prices based on competitors' offerings.
• Product Line Pricing: Using a range of price points for different versions or models within a product line.
• Psychological Pricing: Leveraging price perception to influence customer behavior.
• Premium Pricing: Setting a high price to position the product as high-quality, exclusive, or luxurious.
• Optional Pricing: Offering additional products or services for an extra charge.
• Cost-Based Pricing: Setting prices based on the cost of production plus a markup.
• Cost Plus Pricing: Setting prices based on the cost of production plus a specific percentage markup.

Distribution Channels

• Channels through which goods and services reach customers.
• Main Categories of Marketing Intermediaries:
  • Wholesalers: Businesses that buy from manufacturers and sell to retailers or other businesses.
  • Retailers: Businesses that sell directly to consumers.
• Types of Distribution Channels:
  • Direct Channel: Direct selling from the producer to the consumer.
  • Retailer Channel: The producer sells to retailers, who in turn sell to consumers.
  • Wholesaler/Retailer Channel: The producer sells to wholesalers, who sell to retailers, who sell to consumers.
  • Wholesaler/Jobber/Retailer Channel: The producer sells to wholesalers, wholesalers sell to jobbers, and jobbers sell to retailers.
• Functions of Marketing Intermediaries:
  • Buying & Selling:
  • Sorting: Classifying products based on quality and size.
  • Storing: Maintaining inventory until it can be sold.
  • Transporting: Moving goods from one location to another.

Promotion

• Promoting products and services to the target market.
• Types of Promotion:
  • Advertising
    • Using various media channels to influence customer behavior and drive sales.
    • Examples: Television, radio, newspapers, magazines, social media, online advertising.
  • Selling
    • Direct interaction with customers to explain the product and close a sale.
  • Sales Promotion:
    • Short-term incentives designed to encourage immediate sales.
    • Examples: Discounts, coupons, giveaways, contests, promotions, trade shows.
  • Public Relations:
    • Building positive relationships with stakeholders through carefully crafted communication.
    • Examples: Press releases, media coverage, events, social responsibility initiatives.
    • Primary Target Market: The main audience for the product or service.

People

• The human element of the business is crucial for customer satisfaction.
• Employees play a vital role in delivering customer service and can impact customer perceptions of the business.
• Customers may be influenced by the people they interact with within the business when making a buying decision.

This quiz explores the key components of a successful business plan, with a focus on the significance of a strong value proposition. It highlights how an effective value proposition can drive customer purchases and differentiate a business from its competitors. Test your understanding of these essential concepts in business strategy!