Chapter 3

Developing a Business Plan

Prof. Andres
 Identify the essential elements of a Business
Plan.

Identify how a good Business Plan can

create an anchor for continued success.

List additional resources that can help you

develop an effective Business Plan.
 Whats the Difference?
Market Analysis Marketing Plan
Describes Targets Describes Tactics
(Who & Why) (How)
Customers Product Positioning
Competition Price
Competitive Advantage Placement
Critical Success Promotion
Factors Sales Process
Critical Risks Partnerships
Potential Sales/Market
Share
 Why Segment the Market?

All firms have limited resources. They

cant be all things to all people. They must
decide where to focus their limited time,
money and human capital so that they
yield the greatest return.
That means identifying right-sized pieces
of the market to go after.
What Makes a Market Segment Promising?

Measurable: possible to determine size

Significant: large enough to be profitable
Recognizable: distinct enough so that you
can identify its members
Compatible: with your ventures mission,
strengths, ability
 Ways to Target the Market
Geographic
local, regional, national, international
Demographic
B2C: gender, age, income, education,
ethnicity
B2B: revenues, # employees, industry
Psychographic
values, lifestyles, hobbies
Behavioral
benefits sought, usage rate
Tips for Identifying Market Segments

Secondary Research
Databases & Reports
Newspapers & Magazines
Trade publications and Trade shows
Ask
Industry players
Potential customers
Suppliers
Observe
Make Sure Your Product Is Compelling

What problem will you solve? What need/desire

does your product address?
How will your product make their lives better,
easier, happier?
Know what your customers are currently doing:
Going to the competition
Using another solution
Nothing
Know how satisfied they are with existing options.
How hard will it be to get them to change what
theyre currently doing?
 Who Is My Competition?

Competition = everybody whos after the

same consumer dollar you are.
Direct Competitors
Indirect Competitors
Possible New Entrants
How Stiff Is the Competition?

Analyze your competition.

Look for marketplace gaps you can fill.
Develop a competitive matrix.
 Your Competitive Landscape

Honda Honda Toyota Toyota Your

Civic Civic LX Prius Corolla Product
XLE

Mpg 37 28 44 32 ?

5-Yr Fuel Cost $6,500 $8,500 $5,500 $7,500 ?

Tax Rebate $525 0 N/A 0 ?

Price $23,270 $18,430 $24,170 $19,330 ?

Creating a Competitive Advantage

Having a Sustainable Competitive

Advantage (SCA) allows you to
distinguish your product from the
competitions. Its what gives you a
significant edge. The basis of your SCA
must not be able to be duplicated or
imitated and is not substitutable.
Creating a Competitive Advantage

Tangible Items
Intellectual property rights
Exclusive license
Creating a Competitive Advantage

Intangible Items
Superior Product/Brand
Quality
Selection
Availability
Operational Excellence
Innovation Leadership
Intimate Customer Relationships/Experiences
Cost Advantage
 Your Critical Success Factors

CSF = What absolutely must happen in

order for you to be successful. In other
words, If I dont do X, then my venture will
fail.

Identify five or fewer CSFs.

CSFs will be driven by your industry,
business model, target markets, etc.
 Critical Risks

Investors arent looking for risk-free

businesses; there is no such thing.
What they are looking for is evidence that
you know where potential trouble lies and
that youve thought of contingency plans.
Be forthright in your assessment of risk.
Examples of Common Critical Risks

Competitor response to your entry into the

market.
Sales projections below expectations.
Unable to find suppliers.
Inability to find a distributor.
Inability to get shelf space.
The Marketing Plan

Your Go-to-Market Strategy

 Your Product
Core Product:
Communicated
Primary benefit
Tangible Product:
Augmented
Features
Tangible Augmented
Product:
Core
Product
Enhances
purchase exp.
Communicated
Product: Branding
 Pricing

How much can you charge?

Will your products be bundled?
Will you be offering discounts, leasing,
financing, coupons, etc.?
Avoid competing on pricefor most, its
not a winning strategy. Customers who
shop based on price tend not to be loyal.
Placement: Getting It to the Customer

Direct to your customer

Online
Own physical location
Indirect to your customer
Through retailers
Through wholesalers
Promotion: Getting Their Attention

Common Tools
Advertising (print, broadcast, online)
Direct mail
Email/website
Social networking
Trade shows/events
Cold calling/telemarketing
Face-to-face
Public relations
 Choosing Your Marketing Mix
Factors to consider
Choose media your target segments use most.
Take into account how complex your sale is (big
ticket, new technology, multiple decision makers).
Use media appropriate for your product.
Target your message so that your customer
receives it when theyre most receptive.
Use an assortment of tactics to send a unified
message.
Be focused.
 What Happens When Customers
Raise Their Hands?

What systems do I need in place to handle

customer inquiries and process orders?
Fulfillment
Shipping
Brochures/Sales literature
Website
 Partners

Seek out partners for all phases of the

Go-To-Market Strategy.
Collaborate with potential competitors.
Thank You

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