Marketing Plan

Marketing Plan
Product managers come up with a marketing plan
for individual products, lines, brands, channels, or
customer groups. Each product level, whether
product line or brand, must develop a marketing
plan for achieving its goals. A marketing plan is
a written document that summarizes what
the marketer has learned about the
marketplace and indicates how the firm plans to
reach its marketing objectives. It contains tactical
guidelines for the marketing programs and
financial allocations over the planning period.

Contd.
The marketing plan is the central

instrument for directing and coordinating the

marketing effort. It operates at two levels:
strategic and tactical. The strategic
marketing plan lays out target markets and
the firms value proposition, based on an
analysis of the best market opportunities. The
tactical marketing plan specifies the
marketing tactics, including product
features, promotion, merchandising, pricing,
sales channels, and service.

Contd.
A marketing plan is one of the most important

outputs of the marketing process. It provides

direction and focus for a brand, product, or
company.
Nonprofit organizations use marketing plans
to guide their fund-raising and outreach
efforts, and government agencies use them to
build public awareness of nutrition and
stimulate tourism.

Contd.
More limited in scope than a business plan, the

marketing plan documents how the organization

will achieve its strategic objectives through
specific marketing strategies and tactics, with the
customer as the starting point. It is also linked to the
plans of other departments.
Suppose a marketing plan calls for selling 200,000
units annually. The production department must gear
up to make that many units, finance must arrange
funding to cover the expenses, human resources must be
ready to hire and train staff, and so on. Without the
appropriate level of organizational support and resources,
no marketing plan can succeed

Contd.
Marketing plans are becoming more

customer- and competitor-oriented, better

reasoned, and more realistic. They draw more
inputs from all the functional areas and are
team-developed.
Planning is becoming a continuous process to
respond to rapidly changing market
conditions. The most frequently cited
shortcomings of current marketing plans,
according to marketing executives, are lack of
realism, insufficient competitive analysis, and
a short-run focus.

A marketing plan usually contains the

following sections.
Executive summary and table of contents. The

marketing plan should open with a table of contents

and brief summary for senior management of the
main goals and recommendations.
Situation analysis. This section presents
relevant background data on sales, costs, the
market, competitors, and the various forces in the
macro environment. How do we define the market,
how big is it, and how fast is it growing? What are
the relevant trends and critical issues? Firms will
use all this information to carry out a SWOT
analysis.

Contd.
Marketing strategy. Here the marketing manager defines

the mission, marketing and financial objectives, and needs

the market offering is intended to satisfy as well as its
competitive positioning. All this requires inputs from other
areas, such as purchasing, manufacturing, sales, finance, and
human resources.
Financial projections. Financial projections include a
sales forecast, an expense forecast, and a break-even
analysis. On the revenue side is forecasted sales volume by
month and product category, and on the expense side the
expected costs of marketing, broken down into finer
categories. The break-even analysis estimates how many
units the firm must sell monthly (or how many years it will
take) to offset its monthly fixed costs and average per-unit
variable costs.

Contd.
Implementation controls. The last section

outlines the controls for monitoring and

adjusting implementation of the plan.
Typically, it spells out the goals and budget for
each month or quarter, so management can
review each periods results and take
corrective action as needed. Some
organizations include contingency plans.

Measuring Marketing Plan Performance

Sales Analysis Sales analysis measures and evaluates actual

sales in relationship to goals. Two specific tools make it work.

Sales-variance analysis measures the relative contribution
of different factors to a gap in sales performance.
Suppose the annual plan called for selling 4,000 widgets in the
first quarter at $1 per widget, for total revenue of $4,000.At
quarters end, only 3,000 widgets were sold at $.80 per widget, for
total revenue of $2,400.How much of the sales performance gap is
due to the price decline, and how much to the volume decline?
Variance due to price decline: ($1.00$.80) (3,000) = $ 600
37.5%
Variance due to volume decline: ($1.00) (4,0003,000) = $1,000
62.5%

Contd.
Micro sales analysis looks at specific products,
territories, and so forth that failed to produce
expected sales. Suppose the company sells in three
territories, and expected sales were 1,500 units, 500
units, and 2,000 units, respectively. Actual volumes were
1,400 units, 525 units, and 1,075 units, respectively.
Thus territory 1 showed a 7 percent shortfall in terms of
expected sales; territory 2, a 5 percent improvement
over expectations; and territory 3, a 46 percent
shortfall! Territory 3 is causing most of the trouble.
Maybe the sales rep in territory 3 is underperforming, a
major competitor has entered this territory, or business
is in a recession there.

Market Share Analysis

Company sales dont reveal how well the company is performing

relative to competitors. For this, management needs to track its

market share in one of three ways.
Overall market share expresses the companys sales as a
percentage of total market sales.
Served market share is sales as a percentage of the total sales to
the market. The served market is all the buyers able and willing to buy
the product, and served market share is always larger than overall
market share. A company could capture 100 percent of its served
market and yet have a relatively small share of the total market.
Relative market share is market share in relationship to the
largest competitor. A relative market share of exactly 100 percent
means the company is tied for the lead; over 100 percent indicates a
market leader. A rise in relative market share means a company is
gaining on its leading competitor.

Conclusions from market share Analysis

The assumption that outside forces affect all companies in

the same way is often not true. The U.S. Surgeon Generals
report on the harmful consequences of smoking depressed total
cigarette sales, but not equally for all companies.
The assumption that a companys performance should be
judged against the average performance of all companies is
not always valid. A companys performance is best judged
against that of its closest competitors.
If a new firm enters the industry, every existing firms
market share might fall. A decline in market share might not
mean the company is performing any worse than other companies.
Share loss depends on the degree to which the new firm hits the
companys specific markets.
Sometimes a market share decline is deliberately
engineered to improve profits. For example, management
might drop unprofitable customers or products.

Contd.
Market share can fluctuate for many

minor reasons. For example, it can be

affected by whether a large sale occurs on
the last day of the month or at the beginning
of the next month. Not all shifts in market
share have marketing significance.
Overall Market share = Customer
penetration X Customer loyalty X
Customer selectivity X Price selectivity

Marketing Expense-to-Sales
Analysis
Marketing Expense-to-Sales Analysis Annualplan control requires making sure the
company isnt overspending to achieve sales
goals. The key ratio to watch is marketing
expense-to-sales. In one company, this ratio
was 30 percent and consisted of five
component expense-to-sales ratios: sales
force-to-sales (15 percent), advertising-tosales (5 percent), sales promotion-to-sales (6
percent), marketing research-to-sales (1
percent), and sales administration-to-sales (3
percent).

Financial Analysis
Marketers should analyze the expense-to-sales
ratios in an overall financial framework to
determine how and where the company is
making its money. They can, and are
increasingly, using financial analysis to find
profitable strategies beyond building sales.

Profitability Analysis
Companies can benefit from deeper financial

analysis , and should measure the profitability

of their products , territories , customer
groups , segments, trade channels, and order
sizes. This information can help management
determine whether any products or marketing
activities should be expanded, reduced or
eliminated .

Marketing Plan Criteria

Here are some questions to ask in

evaluating a marketing plan.

1. Is the plan simple? Is it easy to understand
and act on? Does it communicate its content
clearly and practically?
2. Is the plan specific? Are its objectives
concrete and measurable? Does it include
specific actions and activities, each with
specific dates of completion, specific persons
responsible, and specific budgets?

Contd.
3. Is the plan realistic? Are the sales goals,
expense budgets, and milestone dates
realistic? Has a frank and honest self-critique
been conducted to raise possible concerns
and objections?
4. Is the plan complete? Does it include all
the necessary elements? Does it have the
right breadth and depth?

Contents of a Marketing
Plan

Section 1: Executive Summary

Executive Summary last, and, as the name

implies, this section merely summarizes each

of the other sections of your marketing plan.
Executive Summary will be helpful in giving
yourself and other constituents (e.g.,
employees, advisors, etc.) an overview of your
plan.

Section 2: Target Customers

This section describes the customers you are

targeting. It defines their demographic profile

(e.g., age, gender), psychographic profile
(e.g., their interests) and their precise wants
and needs as they relate to the products
and/or services you offer.
Being able to more clearly identify your target
customers will help you both pinpoint your
advertising (and get a higher return on
investment) and better speak the language
of prospective customers.

Section 3: Unique Selling Proposition (USP)

Having a strong unique selling proposition

(USP) is of critical importance as it

distinguishes your company from competitors.
The hallmark of several great companies is
their USP. For example, FedExs USP of When
it absolutely, positively has to be there
overnight is well-known and resonates
strongly with customers who desire reliability
and quick delivery.

Section 4: Pricing & Positioning Strategy

Pricing and positioning strategy must be

aligned. For example, if you want your

company to be known as the premier brand in
your industry, having too low a price might
dissuade customers from purchasing.
In this section of your marketing plan, detail
the positioning you desire and how your
pricing will support it.

Section 5: Distribution Plan

Distribution plan details how customers will

buy from you. For example, will customers

purchase directly from you on your website?
Will they buy from distributors or other
retailers? And so on.
Think through different ways in which you
might be able to reach customers and
document them in this section of your
marketing plan.

Section 6: Your Offers

Offers are special deals you put together to

secure more new customers and drive past

customers back to you.
Offers may include free trials, money-back
guarantees, packages (e.g., combining
different products and/or services) and
discount offers. While your business doesnt
necessarily require offers, using them will
generally cause your customer base to grow
more rapidly.

Section 7: Marketing Materials

Your marketing materials are the collateral

you use to promote your business to current

and prospective customers. Among others,
they include your website, print brochures,
business cards, and catalogs.
Identify which marketing materials you have
completed and which you need created or redone in this section of your plan.

Section 8: Promotions Strategy

The promotions section is one of the most

important sections of your marketing plan and

details how you will reach new customers.
There are numerous promotional tactics, such
as television ads, trade show marketing, press
releases, online advertising, and event
marketing.
In this section of your marketing plan,
consider each of these alternatives and decide
which ones will most effectively allow you to
reach your target customers.

Section 9: Online Marketing Strategy

Like it or not, most customers go online these days to find and/or

review new products and/or services to purchase. As such, having

the right online marketing strategy can help you secure new
customers and gain competitive advantage.
The four key components to your online marketing strategy are as
follows:
Keyword Strategy: identify what keywords you would like to optimize
your website for.
Search Engine Optimization Strategy: document updates you will
make to your website so it shows up more prominently for your top
keywords.
Paid Online Advertising Strategy: write down the online advertising
programs will you use to reach target customers.
Social Media Strategy:document how you will use social media
websites to attract customers.

Section 10: Conversion Strategy

Conversion strategies refer to the techniques

you employ to turn prospective customers into

paying customers.
For example, improving your sales scripts can
boost conversions. Likewise increasing your
social proof (e.g., showing testimonials of past
clients who were satisfied with your company)
will nearly always boost conversions and
sales.
In this section of your plan, document which
conversion-boosting strategies you will use.

Section 11: Joint Ventures & Partnerships

Joint ventures and partnerships are agreements you forge

with other organizations to help reach new customers or

better monetize existing customers. For example, if you
sold replacement guitar strings, it could be quite lucrative
to partner with a guitar manufacturer who had a list of
thousands of customers to whom it sold guitars (and who
probably need replacement strings in the future).
Think about what customers buy before, during and/or
after they buy from your company. Many of the companies
who sell these products and/or services could be good
partners. Document such companies in this section of your
marketing plan and then reach out to try to secure them.

Section 12: Referral Strategy

A strong customer referral program could

revolutionize your success. For example, if

every one of your customers referred one new
customer, your customer base would
constantly grow.
However, rarely will you get such growth
unless you have a formalized referral strategy.
For example, you need to determine when you
will ask customers for referrals, what if
anything you will give them as a reward, etc.
Think through the best referral strategy for
your organization and document it.

Section 13: Strategy for

Increasing Transaction Prices
While your primary goal when conversing with prospective

customers is often to secure the sale, it is also important to

pay attention to the transaction price.
The transaction price or amount customers pay when they
buy from you, can dictate your success. For example, if your
average customer transaction is $100 but your competitors
average customer transaction is $150, they will generate
more revenues, and probably profits, per customer. As a
result, they will be able to outspend you on advertising, and
continue to gain market share at your expense.
In this section of your plan, think about ways to increase your
transaction prices such as by increasing prices, creating
product or service bundles/packages, and so on.

Section 14: Retention Strategy

Too many organizations spend too much time

and energy trying to secure new customers

versus investing in getting existing customers
to buy more often.
By using retention strategies such as a
monthly newsletter or customer loyalty
program, you can increase revenues and
profits by getting customers to purchase from
you more frequently over time.
Identify and document ways you can better
retain customers here.

Section 15: Financial Projections

The final part of your marketing plan is to create financial

projections. In your projections, include all the information

documented in your marketing plan.
For example, include the promotional expenses you expect to
incur and what your expected results will be in terms of new
customers, sales and profits. Likewise include your expected
results from your new retention strategy. And so on.
While your financial projections will never be 100% accurate,
use them to identify which promotional expenses and other
strategies should give you the highest return on investment.
Also, by completing your financial projections, you will set
goals (e.g., your goals for your referral program) for which
your company should strive.