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The Marketing Best Practices Newsletter

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Creating a Marketing Plan

 

By: Len Bainbridge

homepages.ihug.co.nz 

 

PLANNING STEPS:

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Market Research.

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Analyzing your business.

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Setting Goals Targets and Objectives.

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Determining Marketing Policy.

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Compiling the Marketing Plan.

 

1.   MARKET RESEARCH.
Market research is an essential pre-requisite to creating a marketing plan. Without research the marketing plan cannot be compiled on a realistic and objective basis. Market research should be an ongoing, routine function of collecting information relating to; the market; the needs of the customer; the customer's perception of the Company; its competitors and their activities.

 

                         I.            By product/activity state the following:-                                  

                        The estimated market size and the Company's market share objective.

    The growth factor. That is, is the market for the particular activity/product, growing; static; or declining.

 

         Customers - why they specifically come to the company.

 

         Market research needs. That is the research you need to undertake during the planning period, to help you meet your marketing plans.


Market characteristics and structure are important in determining a marketing plan. A market can be immature or mature. An immature market is where the product or service has not yet supplied the potential market. Market growth therefore consists of two factors, supplying the product or service to the "new" customer and replacing the product or of the "old" customer. A immature market exists when:-

 

         -Political and social changes create a new market.

 

           -The wealth of the population of a market is increasing.         

 

         -Technology provides new products. e.g.. Personal computers.

 

         -Technology provides a superior replacement product.

 

         The price of the product is reduced and brought within the buying power of a greater proportion of the population. e.g.. Air fares, color television sets, personal computers. Where price is a significant factor in creating immature markets, they are usually highly competitive despite growing rapidly.


A mature market, is a market where the potential market has been virtually fully supplied. Activity in the market is therefore largely confined to replacing the product or service at the end of its useful life. It will grow in accordance with population variations (both numbers and wealth), providing no alternative products or new competitive elements (e.g.. imports) are introduced into the market.


Because of the technological changes that have occurred, and the increasing wealth of populations, markets can mature very quickly, particularly in the electronics field. Good examples of mature markets in the domestic field are, washing machines, television sets, refrigerators and cars.


Basic commodities such as food and clothing are very mature markets. But the rapidity with which they mature (some fresh food products in a day) make them large and valuable markets to supply.


In both immature and mature markets, the size of a market can be affected by a natural growth or decline in population and/or population movement.


Sources that can provide information to help estimate the size of a market are:-

    Government statistics for - Population and related information; specific information on specific industries.

 

         Local government for local population and industry.

         Business associations.


Do not overlook how information relating to one industry can indicate the likely activity in another when creating a marketing plan. A good example is activity in the housing market, affecting the activity of tradesmen, furniture and furnishing suppliers, furniture removers etc.


It is important that the Company has a clear idea of the customers it is serving, in terms of their buying power and economic grouping.

 

                            II.            Compile an analysis of competitors on the following lines:-

         List all important competitors in the market.

         Analyze their strengths and weaknesses.

         List their products.

         Rate their pricing structures compared to your own.

         Make an assessment of their promotional activity compared to your own.

         Make an assessment of their distribution methods compared to your own.


The structure of a market in terms of its suppliers is important when determining market strategy.


To enter a market dominated by one or a few important suppliers, could only be relevant if it is considered that the existing suppliers are inefficient and/or complacent.


If you are one of a few important suppliers, market share is more likely to be gained on service and quality or acquisition policies. To attempt to take market share by price, could lead to a price war.


If a market consists of a few suppliers with a significant proportion of the market and then many other players, market share can be increased by increased sales and marketing activity (e.g. increased advertising and additional salespersons) and/or acquisition policies.


If a market has many suppliers, none of whom are dominant, then market share can be increased by applying any combination of the policies mentioned previously. In this case the policies chosen should be aimed at presenting an image to the market that the directors feel best represents the Company's aims and objectives.

 

Assessing competitors and rating their size, is an alternative method of estimating the total market.


Information about competitors, can be obtained from Yellow pages (identifies competitors); credit agencies; such as Dunn & Bradstreet; Business publications, such as "Who's Who in Business", Trade Association activities; the local chamber of commerce; and legal (but not very ethical) direct approaches, without disclosing your true identity.

 

2.     ANALYZING YOUR BUSINESS.

 

                               I.            Write a brief description of the business

 

                               II.            List the type of product(s) or service(s) supplied. Assess each product in relation to the product of competitors.

 

                              III.            Summarize the business performance of the last few years in terms of Sales, Costs and Operating Profit. Analyze the sales by product/activity and costs by type.

 

                             IV.            Complete a SWOT analysis. That is consider the Company's current Strengths; Weaknesses; Opportunities and Threats.

 

                             V.            Customers - why they specifically come to the company.

 

                             VI.            List the factors which you consider are the reasons for the Company's success. That is, what is its competitive advantage?

 

                             VII.            Consider how external factors influence the business. For example, factors such as Economic (e.g., inflation and exchange rates); Political Climate; Social Climate; and Technology.

 

                             VIII.            Consider how internal factors, such as Image; Location; Personnel etc., influence the business.

 

3.     GOALS, TARGETS & OBJECTIVES.

                               I.            Before setting business goals be clear about personal goals.
Make sure the goals set are the true goals. For example is the goal to become a successful business person to create a busy life style, providing both social and business contacts, or to provide financial security which allows provision for family and the development of other social activities?

 

                              II.            Convert the relevant personal goals into business goals.

 

                              III.            Separate the business goals into short term and long term.

 

                              IV.            Incorporate the business goals into the marketing plan.

 

4.     POLICY STATEMENT.

 

                               I.            The Policy Statement lists the policies that are considered necessary to achieve the marketing objectives. It states the basic policies and targets for the planning period, without evaluating these.

 

                               II.            The statements in the policy document must be realistic and have substance justifying their inclusion, covering such areas as:-

         Customer service objectives

         The introduction of new products

         Rationalization of the product range

         Market share increase or decrease

         Pricing policy and anticipated real changes in prices

         Changes in product specifications

 

5.   CREATING A MARKETING PLAN.
Basing your estimates on Objectives, Previous experience and the Marketing Analysis

 

                               I.            By product/activity state the following:-

                 The target market(s)

    The estimated market size and the Company's market share  objective. The growth factor. That is , is the market for the particular activity/product, growing; static; or declining. Advertising methods and focus.

 

                               II.            Estimate the sales for the year as follows:-

    Estimate the frequency/number of each type of product/activity that will occur in the year.

 

         If the business is seasonal, split the year into seasons and estimate the frequency/number of each type of product/activity for each season.

 

         Value each of the activities to determine the sales for the year.

 

         If the estimated sales for the year show an increase larger than the estimated market growth, write up the action plans which cause the change.

 

         If the estimated sales for the year fail to meet objectives, create action plans to generate the additional sales.

 

         After you create a marketing plan, if credible action plans, which justify the changes, have not been, or cannot be compiled, modify the marketing plan accordingly.