Unit 8 Business Planning Task Sheet 3aAO2: Marketing Planning The importance of a marketing plan, designed to attract customersto a business, including:

• customers . who they are and why they would be prepared to buy the product; the projected number of customers and their buying behaviour

• competitors . the level of competition for the product and how your business proposal might establish a competitive advantage

• marketing mix . the application of the four Ps (Price, Product, Promotion and Place) to the product.

How a sales forecast, quantifying expected monthly revenues and based on a chosen marketing mix, can be produced by considering likely customer and competitive behaviour.

This task will now show the results of your research in a formal and professional business plan.

Student tasks:

Design a marketing plan that includes the following:

1. Identifies the customers in terms of target audience, profile and attributes for spending. Explain what is the buying behaviour of the customers (are they seasonal buyers, frequent buyers, complimentary good buyers etc?)

2. Explain why the customers would be prepared to buy the product you have developed using your market research to justify these points.

3. Give an estimated number of customers (per day, week, month and year). You will need to do this based on capacity, expected sales, competitor observations and market research. Remember sales will usually start off slower.

4. Identify who the competitors are and the level of competition they pose for your company. Will you therefore need a penetration strategy or can you get away with prestige/premium or competitive strategies? If you penetrate the market how will you change your price over time to make sure you do not alienate your customers?

5. Explain how you will achieve a competitive advantage.

6. Explain your marketing mix for the product (price you will charge, what is special about the product, how you will promote the product and the place where the product will be available to customers.

7. In detail describe how your marketing plan will help you achieve your business objectives.

Remember – use your research to justify your decisions and recognise the source you have used to back up your decision. It is vital your research is organised effectively and page numbered to make this sourcing easier.

Unit 8 Business Planning Task Sheet 3bOperations Planning

The importance factors included in an operations plan to consider are:

• the monthly quantity produced, considering both volume and timing in order to meet customer demand predicted by the marketing plan and its sales forecast

• the different stages of production and how established quality levels might be assured

• the human and physical resources required, including:

Human:− the personnel essential to operate a business and their cost− the skills required, training needed and the cost of training.

This task will show the practicalities of running your business on a day to day basis. How will your business operate? You may wish to interview a competitor to look at an average day in their life to help you shape this section.Student tasks:

1. In your marketing plan you will have identified monthly demand for your product or service. This should include the volume of demand and any timing considerations for you ordering raw materials. Consider therefore what your weekly monthly and yearly variable costs will be. Where will you source these products? How will they give you a competitive advantage?

2. Identify the different stages of production. Describe your production process or the process you will have to follow when you provide a service for a customer. You may want to do this in the form of a quality charter. Explain how you would establish quality assurance.

3. Identify what physical resources you will need. (See operations planning grid for an overview of the requirements)

a. Type of premises and its costb. Stock required and its costc. How to acquire the premises and stock (lease, rent, hire purchase,

trade credit etc.)d. How stock levels will be maintained (minimum, maximum, re-order

levels, JIT ordering)e. All other running costs and where you will source them should be

included here.

4. Identify what staffing you will need. This should includea. Cost of staffb. Skills requiredc. Training requiredd. Cost of training.

5. In detail describe how your operations plan will help you achieve your business objectives.

Unit 8 Business Planning Task Sheet 3cFinancial Analysis and Planning

How a business can plan its financial requirements, based on the requirements of the marketing and operations plans, considering:

• size, duration and rate of interest of bank loan required• start-up budget with estimates of buying or renting premises,

purchases of machinery, office equipment and fixtures and fittings

• break-even forecasts, including contribution and margin of safety

• cash flow forecasts• projected profit and loss statement and balance sheet.

This task requires you to combine your research to create a number of financial statements. The quality of your statements will directly depend upon the quality of research in terms of potential demand, cost of raw materials and seasonal changes. Your best case scenario should reflect your maximum capacity. Your worst case scenario will show you making a loss. Your most likely case scenario should be realistic and not over optimistic with huge profits in your first year.

Student tasks:1. Identify the size of a loan required to start and run the business

2. State how long the loan is required for.

3. State the rate of interest to be charged on the loan

4. Produce a start up budget including: (see mini budget operations plan)

a. Estimated Sales revenueb. Estimates of buying/renting premisesc. Estimates of buying/renting machineryd. Estimates of buying/renting office equipmente. Estimates of buying/renting fixture and fittings.f. Estimated monthly profit

5. Produce a break even chart or formula and state the margin of safety

6. Produce a cash flow forecast

7. Produce a projected Profit and Loss Statement

8. Produce a projected Balance Sheet

9. In detail describe how your finance plan will help you achieve your business objectives.

Remember – estimate your most likely case scenario first and then consider worst and best case scenarios. Interpret and analyse each chart explaining how accurate you think they are and how you have come to these conclusions. Explain your reasons for optimism and pessimism in your best and worst case scenarios.