Preparing a Marketing Plan – Entrepreneurship
A Good Marketing plan is the backbone of all successful business enterprise.
A Marketing Plan aims at planning the marketing strategies for a company. Preparing a marketing plan involves the task of analyzing market opportunities through Market Research, identifying profitable segments and targeting them through compounded marketing mix strategies (4P`s – Product, Price, Place, Promotion).
Steps in Preparing a Marketing Plan –
(1) Market Research →
It is simply the process of collecting information or facts relevant to the market. Market Research refers to a systematic collection, analysis and interpretation of data and information to make marketing strategies and take relevant marketing decisions, like –
- Whether to enter a market or not ?
- Whether to charge premium prices or not ?
- What kind of discounts will be attractive to customers?
Information collected through Market Research →
- Total size of current market
- Total size of potential market
- Growth rate of the market
- Consumer demographics
- Consumer preference
- Consumer satisfaction
- Consumer buying behaviour
- Price and sensitivity analysis
- Distribution level etc.
Steps in conducting market research →
- Formulating the objectives you want to accomplish
- Select the type of research you want to conduct
- Collect and tabulate all the data
- Analyse the data
- Document the relevant facts, figures, conclusions
- Make the decisions
(2) Segmentation – It is the process of dividing the market into groups of people with similar characteristics or behaviour.
A market can be segmented along the following variables –
- Demographic – age, income, gender, education, occupation
- Psycho-graphic segmentation – life style, personality
- Geographic – (north, south, each, west)
- Behavioral – Occasion, usage rate, benefits, loyalty, user status, buyer readiness
(3) Market Targeting – It is the process of evaluating different segments and identifying the number and type of segment a company wants to target. It consists of 2 steps – (i) Market Evaluation (ii) Target market selection
(i) Market Evaluation – It involves the following tasks:
- Assessment of size of each market
- Assessment of segment growth
- Competitive strengths and weaknesses
- Potential opportunities and threats from competitors, suppliers, buyers, govt., substitutes
(ii) Target Market Selection – It involves the selection of the targeting strategy for the company. One of the following strategies can be selected.
- Single segment concentration – The business will target only one market segment.
- Selective specialization – The business will target few related segments.
- Product specialization – The business will specialize in a specific product segment.
- Market specialization – The business will target the needs of the whole market it specializes in.
- Full market leverage – The business will target all customers and satisfy all their needs.
(4) Market Positioning – It is the act of positioning the product/service in such a way that it appears attractive to the customers. The following variables must be considered before positioning a brand/product –
- What image the company wants to project?
- How competitors project themselves?
- The type of product?
- Product life cycle?
- The pricing strategy?
- The packaging of the product?
(5) Developing Marketing Mix Strategies → It is the task of preparing product, price, place and promotional strategies for a business.
(i) Product Mix → A Product may be physical goods, services, events, experience, place etc.
There are 5 levels of a product –
- Core benefit – The fundamental service a product provides. Eg. Room to stay on a Hotel
- Basic product – Core benefit or service the product will provide. Eg. Room, Bed, Bathroom
- Expected product – Set of attributes a customer normally expects. Eg. Clean Room, Room Service, Clean Towels
- Augmented product – Set of attributes that exceed customer expectations. Eg. Prompt Service, Bar and Restaurant, Friendly Staff
- Potential product – Set of attributes that could be added to the product in the future. Eg. Free WiFi, Complimentary Food, Swimming pool
Decisions related to a product that have to be taken –
- Product width or product line – the different types of product
- Product length – no. of items in product line
- Product Depth – no. of variants in each product line
- Consistency – relation between various product lines
- Branding – building, maintaining and enhancing image of a product
- Packaging and labeling – The following points must be kept in mind while deciding about packaging of a product:
- Convenience of carrying/handling the product
- Safety of the product
- Packing must compliment the price of the product
- The packaging must be attractive and easy to open
(ii) Price Mix Strategies – The Pricing strategies are based on –
- Competitors product price
- Cost of product/services
- Demand of the product
- Availability of raw material
- Overall marketing objectives of the company
The different pricing strategies that can be adopted are:
Mark Up Pricing = FC + VC + Mark up desired
Target Return Pricing = Unit cost + Desired return x ROI
Perceived Value Pricing = Price based on customers perceived value of product
Value Pricing = Value for money pricing
- Going Rate Pricing
- Geographical pricing
- Shimming penetration pricing
- EDLP (Everyday Low Price) etc.
(iii) Place Mix Strategies – It is the process through which the goods are delivered to the final customer. Different distribution channels or networks are developed by and between market intermediaries called channel levels to transport a product from its place of production to the final consumer. Marketing intermediaries are people that help in the final delivery of the product.
There are different levels of distribution channels –
Level 0 – Manufacturer → Customer
Level 1 – Manufacturer → Retailer → Customer
Level 2 – Manufacturer → Distributor → Retailer → Customer
Level 3 – Manufacturer → Wholesaler → Distributor → Retailer → Customer
(iv) Promotional Mix – It is the process of educating customers through various forms of media about Product Utility, Product Quality and Product Price. Promotional Mix Strategies help in successfully positioning the product in the market and building a positive brand image in the minds of the customer.
Things to keep in mind while making promotional mix strategies –
- Promotion and Advertising Cost
- Type of media to be used
- The message to be advertised
- Buyer behaviour towards different advertising appeals
Selection of promotional strategy – One of the following promotional strategy may be chosen:
- Advertising – Paid and non-personal communication with customers.
- Direct marketing – Reaching out directly to customers
- Sales promotion – Offering incentives to customers to push sales
- Public relations – Communicating and promoting products to prospective customers using direct communication methods
(6) Budgeting the Marketing Strategies →
An effective marketing plan must consider all the costs involved in implementation of feasibility studies and market plan. Various, monthly, yearly, quarterly costs that must be projected are –
- Cost of Market research
- Cost of New product development
- Cost of Sales and promotion
- Cost of Distribution
- Cost of Thriving competition
Budgeting all the costs helps in creating an effective financial plan and avoid any budget deficits.
(7) Implementing, Monitoring and Reviewing the Marketing plan →
After implementing the marketing strategies, performance standards or benchmarks must be set in order to evaluate the market plan against expected results. Monitoring involves constant analysis of the following –
- Market share data
- Sales figures
- Consumer Feedback
- Employees Feedback
- Feedback from Retailers
(8) Executive Summary →
The last step is to summarize the entire marketing plan.