A User Friendly Guide to

Marketing Plans
John Gregg
Principal
Navigate Consulting
1
Basic steps and elements of the marketing plan
Step 1
Step 2
Step 3
Market and
competition analysis
Target market
selection
Marketing strategy
development
Market size
Market growth
Strengths and
weaknesses of
competitors
Competitors'
behavior
Market
segmentation
Positioning
Differentiation
factors
Market share
Marketing mix
Product
Price
Place
Promotion
2
Step 1:
Analyzing the market and competition (1/2)
End product
Market size and growth
Current suppliers/
competitors in the market
Companies' behaviors
Strengths and weaknesses of
competitors
New potential competitors
Key questions
What is the estimated size of the overall
market?
Number of users?
What is the potential volume/
units we can sell?
What might the price and overall
potential market size be?
What are the market trends?
What is the estimated growth for the
next 510 years?
Who are the current competitors?
What is their business model? Which
segments are they serving?
Might some potential new players enter
the market?
What are the potential substitutes for your
product/service?
Market
Competition
1
3
Step 1:
Analyzing the market and competition (2/2)
How to make an accurate estimate?
Hints
Start from a solid basis There may be many unknowns, but if you use easily verifiable
figures as a basis, you will build your estimate on solid foundations
Follow a logical path The logic of an estimate should be clear there should be no
breaks in the chain or unspecified assumptions
Compare your sources Wherever possible, check information, such as statements in an
interview, against other sources
Be creative The shortest distance is not always a straight line. For example,
if one value is unknown, try to find a substitute value that relates
to the one that is missing
Check for plausibility For every estimate always ask yourself "Does the result actually
make sense?"
1
4
Step 2:
Choosing the target segment (1/6)
Key questions
Who are your customers or customer groups ("segmentation")?
Which customers or customer groups are particularly attractive financially?
How can you differentiate yourself from the competition ("positioning")
for those attractive customers?
What market share and what level of sales do you expect to achieve with these customers?
2
5
Step 2:
Choosing the target segment (2/6)
Objectives
Define the market/market segments that your
product/service can reach
Identify customer groups with similar buying
behavior
Help design a specific and targeted value
proposition and a strategy by segment
Customer
segmentation
Segment
selection
Positioning
2
6
Step 2:
Choosing the target segment (3/6)
Sample of customer segmentation criteria
For consumer goods
Geographic: country or population density (urban/rural, etc.)
Demographic: age, gender, income, profession, etc.
Lifestyle: technofreaks, the environmentally-conscious,
Generation X, etc.
Behavior: frequency of usage, application of product, etc.
Purchasing behavior: brand preference, price consciousness,
etc.
For industrial goods
Demographic: company size, sector, location, etc.
Operational: technology employed, etc.
Purchasing behavior: central or decentral purchasing,
contracts with suppliers, etc.
Situational factors: urgency of need, order size, etc.
2
Customer
segmentation
Segment
selection
Positioning
7
Step 2:
Choosing the target segment (4/6)
Key questions
Size and growth potential of the different
segments?
How good is the match between your
product/service and the customer needs?
Is there a potential for differentiation and
how can you differentiate your
product/service against competing
products/services?
What is the financial attractiveness of the
segments?
2
Customer
segmentation
Segment
selection
Positioning
8
Step 2:
Choosing the target segment (5/6)
Positioning vis--vis competitors
Why should a potential customer
buy your product rather than that
of one of your competitors?
Why does your product represent
a "better" offer (emotionally or
rationally)?
How can I best adopt the
customers' perspective?
What are the product attributes
that the customer values?
Need for a clear,
compelling, and
convincing
Unique Selling
Proposition
(USP)
2
Customer
segmentation
Segment
selection
Positioning
9
Step 2:
Choosing the target segment (6/6)
How to design a compelling USP
Identify relevant customer needs or problems
Define clear customer segments of sufficient
size
Design an attractive proposition in terms of
products or services
Define your uniqueness by differentiating
against the competition
Address the subjective perception of your
potential customers
Also ensure customer satisfaction after the
purchase
2
Customer
segmentation
Segment
selection
Positioning
10
Step 3:
Executing the marketing plan
Key area What it helps us to do
Develop
pricing
strategies
Determine how industry/sector structure (e.g., supply, demand, cost
dynamics) and the conduct of individual players affects overall industry price
levels
Understand consumer price elasticities and their implications for the value
equation
Generate hypotheses about the price architecture/structure to maximizes
value over the lifetime of both the product and the customer
Design and
manage Sales
channel
Understand the elements of a good channel strategy (e.g., alignment with
customer segment needs)
Understand the levers for improving channel performance (partner networks,
incentives)
Understand the key levers of a successful sales force management program
3
11
PRICING OPTIONS
Price
structure
Costs
Option
Consumer goods market
Industry cost structure is known to both
competitors and customers
Customers know the product well
Applicability
Gasoline
Chemicals
Example
Value Complex goods, value lies in the economic
effect more than in true product value (e.g.,
intellectual property)
Price comparison difficult
Must be highly tailored to customer needs
Customers not very familiar with product
Pharmaceuticals
High-tech products
Watches (Rolex,
Breitling, etc.)
Strategic Overriding strategic goals that will lead to
long-term profits
Product whose value lies in imitation
Substitute or new product without
established benefit
Zanussi coffee
makers
Australian domestic
flights
Highest possible
profit
Competitors Hotly contested market as regards price
Price is an important purchase factor
Customers make a price comparison
Price comparison is simple
DRAM chips
3
12
PRICING HOW TO HARVEST MAXIMUM CUSTOMER SURPLUS
Gather experience with
little volume while still
operating in a real market
Obtain highest margin with
limited, early production
Move up along the
demand curve with
increasing capacity
Maintain margin through
downward movement on
the learning curve
Advantages
Target the large market
without knowing how to win
over the important
customers (opinion-makers)
Damage to the brand
because early production
does not suit market
demands
Iterative price adjustments
simply forgotten
Insufficient experience with
scale economies and
learning effect
Mistakes by start-ups
Set a high price
and attack the market
segment with the least
price sensitivity
Opinion-
makers
Quick
succes-
sors
Early
adapters
Stragglers
Market
acceptance
Price
3
13
PRICING - CORE FACTORS OF PENETRATION PRICING
Customer value high due to a not
yet mature market
High price elasticity
Latent demand
Possibility of becoming a customer
"standard"
Own performance costs drop
dramatically with a rise in volume
Dropoff of high, variable unit costs
Transition to new, fixed cost
structure
Competitors cannot match price
due to structure
Higher cost structure
Limited freedom due to current
customer/market situation
Market share/volume currently very
low
3
14
Step 3:
Executing the marketing plan
Key area What it helps us to do
Develop
pricing
strategies
Determine how industry/sector structure (e.g., supply, demand, cost dynamics) and
the conduct of individual players affects overall industry price levels
Understand consumer price elasticities and their implications for the value equation
Generate hypotheses about the price architecture/structure to maximizes value
over the lifetime of both the product and the customer
Design and
manage
Sales
channel
Understand the elements of a good channel strategy (e.g., alignment with
customer segment needs)
Understand the levers for improving channel performance (partner networks,
incentives)
Understand the key levers of a successful sales force management program
3
15
SALES CHANNELS MULTIPLE OPTIONS AVAILABLE
Licensing
ILLUSTRATIVE
OEM
Sales partner
Direct
Achieved share of value
R
e
l
a
t
i
v
e

r
i
s
k
3
16
SALES CHANNELS - SELECTION CRITERIA
Franchise
Interest high on the part of franchisees
Lack of financing
Sustainability through patent
Ensure garanteed minimum fee
No customer loyalty
Lion's share of value added by
franchisees
OEM
New product launch in hotly contested
market
Fragmented customer base
Quick market penetration desired
Strong negotiating position through package
benefits
No profit margin
Dependence on OEM product
development
Few findings from end
consumer market
Sales partner
Limited market access, "high hurdles"
Thorough understanding of the market
necessary (e.g., regional market)
Dependence on sales partner
Uneven distribution of value
added
Direct sales
Customer loyalty necessary
Concentrated customer base
High cost
Low market penetration
When? Risk for start-up company
Sales
channel
3
17
SALES MANAGEMENT OPTIONS
Long line
Loose
0 - 50%
Quarterly/
annually
None
Intensive
support
Output
Large-scale
projects
Short line
Medium
50 - 80%
Monthly
Rough
Rough
guidelines,
intensive
support
Output, input
Assembly
Auto
Chemicals
Tight reins
Tight
100%
Daily/weekly
Detailed
Detailed
guidelines
Input
Consumer
goods
Management style
Planned sales
time
Reporting cycle
Visit planning
Activity planning
Monitoring
parameter(s)
Examples
C
o
m
p
l
e
x
i
t
y

o
f

c
u
s
t
o
m
e
r

r
e
l
a
t
i
o
n
s
h
i
p
Complexity of sales
activity-product
High Low
L
o
w
H
i
g
h
tight reins
short line
long
line
18
Step 3:
Executing the marketing plan
Manage
branding and
marketing
communic-
ations
Understand the core elements of the brand (rational and emotional benefits
and tangible and intangible associations)
Be aware of brand architecture options (umbrella, mutually reinforcing,
independent) and understand the benefits/risks associated with each one
Understand how to use the purchase funnel to optimize marketing spend
effectiveness
Develop
product
strategies
Prioritize product initiatives and identify gaps in the product offering
Understand the stages of a product lifecycle, determine in which stage
a particular product exists, and understand the implications for product strategy
Understand the dimensions that are important for new product development
strategy (timing, insights into customers)
What it helps us to do Key area
3
19
Step 3:
Executing the marketing plan
Manage
branding and
marketing
communic-
ations
Understand the core elements of the brand (rational and emotional benefits and
tangible and intangible associations)
Be aware of brand architecture options (umbrella, mutually reinforcing, independent)
and understand the benefits/risks associated with each one
Understand how to use the purchase funnel to optimize marketing spend
effectiveness
Develop
product
strategies
Prioritize product initiatives and identify gaps in the product offering
Understand the stages of a product lifecycle, determine in which stage
a particular product exists, and understand the implications for product
strategy
Understand the dimensions that are important for new product development
strategy (timing, insights into customers)
What it helps us to do Key area
3
20
Check list for a convincing marketing plan
Is the Unique Selling Proposition formulated precisely and from the
customers perspective?
Which customers make up your target segment? Why is this
segment particularly interesting for your company?
How large is the whole market? How large is the market
you are interested in? How will it develop?
Who are your competitors? What substitutes are available
for your product?
How do you expect your market share and your sales volume
to develop?
What price are you asking?
What distribution channel(s) will you use?
How much will your advertising cost?
Does your business plan answer the following questions?