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A User Friendly Guide to Marketing Plans
John GreggPrincipal
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 5–10 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-à-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
Rela
tive r
isk
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
Co
mp
lex
ity o
f c
us
tom
er
rela
tio
nsh
ip
Complexity of sales
activity-product
HighLow
Low
Hig
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 doKey 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 doKey area
3
20
Check list for a convincing marketing plan
Is the Unique Selling Proposition formulated precisely and from the
customer’s 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?