So they asked the retail chain's buyer what was wrong. "Your
price is too high for a no-name brand," he told them. The price point
was crucial to Company X. If the gifts were priced any lower, there
would not be enough profit to warrant the initial investment. This
information prompted a mad scramble to try to create a buzz for the
gift line before the make-or-break Christmas buying season.
A common problem
Many small businesses find themselves in similar straits
because they don't create a marketing plan, a road map to trace the path
from the launch of a new business, product or service to the company's
sales goals.
Without taking time to create a plan, businesses like
Company X overlook critical questions, says Jessica Bailey, who holds
a doctoral degree in marketing and is a professor at American
University in Washington, D.C.
"A lot of small businesses really have no marketing plan,"
she says. "It's just a small-business owner who has a concept in mind
and who gets up every day and goes through the motions to reach that
goal. Sometimes, you miss opportunities to reach exactly the buyers
you're looking for."
Unfortunately, many small-business executives don't know
what a marketing plan is, says Adrienne Zoble, author of
The Do-Able Marketing Plan and founder of Adrienne Zoble Associates, Inc., a consulting firm in
Whitehouse Station, N.J.
"Most people do not know the difference between a business
plan and a marketing plan. They use the words interchangeably."
Business plan vs.
marketing plan
The business plan is a hard-numbers document typically taken
to banks and other sources when a company is looking for a loan, she
says. "Within that business plan is a section that says, 'This is how
we are going to market these goods and services,' but that's not a
marketing plan. To create a marketing plan is separate and apart from the
business plan."
It needs to include measurable performance goals, but "this
is not about the numbers themselves," she says. "In my seminars, I'll
ask, 'How many of you know if sales or profits were up or down?' "
Of course, all raise their hands. Although that information
should be in the marketing plan, she adds, "You need to know why sales
were up or down. That's what counts in the marketing plan."
A two-level marketing
plan
Bailey sees the need for two levels of marketing plan. "The
strategic plan, or long-term plan, usually covers a three- or
five-year period. It gives a vision for the firm and describes its
long-term objectives. Then, there's the operational plan, which covers
one year or less. It's at this more specific level that we really are
talking about budgeting and implementation: what you're going to offer
and who you're going to offer it to, etc."
However, Robert Duboff, director of national marketing for
Ernst & Young in Boston and co-author of Market Research Matters:
Tools and Techniques for Aligning Your Business, believes that a
year is too long for an operational plan. Don't wait longer than one
quarter to review and adjust, he says.
He adds that many entrepreneurs do not create a marketing plan
(or
written plans in general) due to their nature as doers. "They'd rather
do than say what they're going to do," he says. "A real entrepreneur
wants to get out there and start selling or manufacturing. I don't
want to stand in the way of that enthusiasm, but a little bit of
forethought goes a long way."
Bailey agrees. "What happens, especially with entrepreneurs,
is they have an idea. It's crystal clear to them, so they do not put
the time, energy and thought into the marketing plan and answering
some very basic questions."
Duboff adds that the current business climate further fuels
that action-oriented mind-set. "I think too often, especially in this
dot-com, Internet-speed environment, there is a tendency to go,
'Ready, fire, aim.' There is still time to be a little more deliberate
and to use tools like market research."
Who, me? Research?
Market research! There's the rub. Sounds expensive and
time-consuming, doesn't it? Yet how much time and money would it have
cost Company X to discuss its pricing with retail-chain buyers before
it put its products on sale?
The experts agree that a good marketing plan begins with
analyzing the current market conditions and the place of your new
business, product or service within that sphere. Think of it as
providing a reality check. You need to know if your new idea is really
that new and whether anyone wants to buy it.
"It's not enough to have the greatest solution to some
problem," Duboff says. "You have to have something that works well,
but your customers also have to come to believe that you do." And a
marketing plan helps you figure out the best way to convince the
market that you have a golden product or service.
Existing firms that plan to offer a new product or service
can conduct a good deal of market research through existing customers
and contacts, Zoble says.
"How many times a day are you on the phone with your clients
or customers? Maybe six of them a day? Thirty a week? Could you carve
off six of them, and when you know you're coming to the end of the
conversation, ask, 'By the way, Jane, several of our customers have
been asking us if we would offer such and such or so and so, what do
you think?' You will know quickly whether you're on to something. Then
go to next stage: focus groups or a consultant."
It needn't be
expensive
Duboff adds that such outside market-research help doesn't
have to be expensive either. "In this day and age, solo practitioners
are available for very reasonable fees. Try a local business school,
find a grad student or a very experienced retired person."
At a minimum, Duboff advises, a business should analyze SWOT,
an acronym that stands for "strengths, weaknesses, opportunities and
threats."
Bailey says to create a marketing plan by identifying your
target market and then determining your "differential advantage," or
what it is that makes your offering unique.
"Based on these two, then, there are four components that
are classically known as the 'Four Ps of Marketing': product,
promotion, place (distribution) and price.
"Those things have to be thought out in advance," she says.
"If you know where you want to be at the end of the year -- and a
marketing plan pretty much tells you how you're going to get there --
your life is so much easier along the way."
