The Marketing Plan

The marketing plan convinces the reader that an opportunity exists and that the proposed enterprise can capitalize on it. The consumer must demonstrate a thorough knowledge of market demands, trends, competition, and customers. To complete this section of the business plan, the consumer must conduct research to determine who will buy the product or service, how much to charge, how and where to distribute/sell the product or service, and how to package and promote it.

Products and Services

This section describes the product or service. The consumer discusses the currently-unsatisfied market need or desire and describes how his or her product or service will meet that need or desire. 

The Target Market

This section describes the market and the customer. These resources (many available at public libraries) provide data on markets and customers:

• County and City Data Book
• Statistics for States and Metropolitan Areas
• Statistical Abstract of the United States
• Trade Association Publications
• A Guide to Consumer Markets
• Editor & Publisher Market Guide
• Sales & Marketing Management Survey of Buying Power
• Sales & Marketing Management Survey of Buying Power, Part II
• The Internet (use search engines such as Excite, Lycos, Webcrawler,
Infoseek, etc., to gather information on a specific industry)
• Locale-specific directories such as the Montana Business Directory
• Small Business Administration
• State Departments of Labor
• Consumer-conducted surveys or focus groups
• Interviews with non-competing owners of similar businesses or the same type of business

The consumer references all information sources and describes the method used to gather target market data. He or she describes the geographic market including its physical size, history, and trends (e.g., growth); and the proximity and relevance of potential customers. This section should also contain an estimate of the potential market, the number of customers the business expects to serve immediately after opening, the rate of expansion, and possible expansion into other markets.

If the potential customer is an individual rather than a business, this section describes customer demographics such as gender, age, education and income levels, residence location, and how they will access the business. If pertinent, it describes customers' hobbies, where they shop, what they read, and what they buy.

If the potential customer is a business, this section describes customer demographics such as type of business, size, business location, how it will access the consumer's business, and other services or products it purchases. 

Business Location

If the business's location is integral to its marketing activities, the "Marketing" section briefly describes the location and the reason for its selection. In some business plans, the complete description may be in this section, but in others a more complete description will be included in the "Operations" section of the business plan. Please see the "operations" description for a comprehensive discussion of business location. 

Competition

This section describes others who are competing for the same market. It should state what they charge, their weaknesses and strengths, how the consumer's product or service differs from theirs, and the features and benefits of the consumer's service or product versus the features and benefits of competitors' service or product. Describe the methods used for gathering this information. 

The consumer should describe how he or she will gain market share. For example, will people patronize the business because of price, technical sophistication, image, superior product or service, location, or sales and/or marketing techniques? It is important to remember that a small business can rarely compete on the basis of price, because larger businesses' economies of scale and efficiencies allow them to offer lower prices.

Advertising and Promotion Strategies

This section describes how the message about the product or service will be communicated to the users. It should describe the business owner's philosophy about customer service. It also describes the image the consumer wishes to portray about his or her product through packaging, brochures, letterhead, business cards, displays, and the behavior/dress of employees.

This section discusses all promotional activities. It answers the following questions: What advertising media will be used - newspaper, radio, television, the Internet, windshield handouts, magazines, mailings, billboards, demonstration sites? What is the frequency of advertising - daily, weekly, monthly, bi-monthly? Will promotions (giveaways, discounts) be used? Who will contact customers - in-store sales staff, sales representatives, telemarketers? How will customers be contacted - by telephone, in-person cold-calls, trade shows, e-mail? Will a website be created? 

This section should also discuss how customer satisfaction will be assessed. For example, through questionnaires, focus groups, repeat business, and/or referrals to others.

More on Marketing and Advertising

"Marketing" describes everything a business owner does to present his or her product to potential customers. Advertising is part of a marketing plan. Marketing also includes designing a logo and written materials such as brochures, business cards, letterhead, packaging, web page - anything that is disseminated to the public about the business, product, or service. Marketing can also include developing a mailing list, and researching potential customers and their needs, and public relations activities.

The terms "promotion" and "advertising" often are used interchangeably, however, they are not the same. Promotion includes a range of activities including advertising (a paid announcement to sell a product), public relations (resulting in understanding of and goodwill towards a person or firm), direct mail, telemarketing, one-on-one selling, trade shows, and flyers or posters.

Promotion Serves Three Purposes:

• Promoting awareness of a business and its product or service
• Stimulating sales
• Establishing or modifying a firm's image

You will be asked to evaluate whether the type of promotional activity selected is appropriate for the business, if it will produce projected sales by reaching the targeted customers, and if it fits reasonably into the business's budget. The following will assist you with evaluating proposed promotional activities. 

Common types of paid advertising include radio, TV, print (newspaper, magazine, yellow pages, trade directory, billboard, and weekly shopper), direct mail ads (newsletters, flyers, postcards, brochures), and Internet/website advertising. 

Promotional opportunities also include follow-up services (checking on customer satisfaction or rectifying customer complaints), in-person contact, sales promotions, point of-purchase displays, shared advertising, and free samples. 

Public relations is an often overlooked but effective promotion method - especially for new or start-up companies. Public relations activities include news releases; magazine or journal articles; attending or providing seminars and workshops; sponsoring community activities; providing services or goods to community organizations as a door prize or to be auctioned off; or speaking engagements.

"Reach" and "Frequency" - Two Important Advertising Attributes

"Reach": The total number of unduplicated people to whom the advertiser delivers a message. "Effective reach" is determined by the number of people exposed to advertising who have some degree of recall. For example, if 100 people are exposed to a radio ad and 75 of them remember the ad and the product, then the effective reach is 75%. To increase reach, an ad must use different media. For example, running an ad on two radio stations, each with a different music format increases the number of people exposed to the ad.

"Frequency": The number of times the audience is exposed to a promotion over a period of time. "Effective frequency" is the number of times people are exposed to an ad until they have some level of recall. One rule of thumb says that three exposures constitute the minimum frequency level. Frequency increases by running an ad more times within a time period, such as three times per hour instead of one, or by placing an ad in a newspaper four times per week instead of two.

Each Advertising Venue has its Advantages and Disadvantages

Radio - Radio stations have fairly clearly defined audiences. This portable medium goes where the audience goes. However, there are no visuals - audio must carry the message, and the advertiser must rely on the announcer's skill to relay the message.

Television - TV creates a visual image that reinforces a message. The main disadvantage is cost. Another disadvantage is that homemade ads compete with well-produced, slick ads and programs - a reasonably good ad requires professional help.

Television can have a strong audio and visual impact, and may reach a large, varied audience.