Your Marketing Plan should include everything you do to get your customers to buy your product or service. This is often the weakest part of a business plan so it is important you spend enough time to get all of the research you need to complete it successfully. Your Marketing Plan will include both your strategies for growing sales as well as the tactics you will employ to get there along with an overview of the competition in your market. The Marketing Plan section of a business plan is made up of five subsections:
You need to have an understanding of the size of the target market for your product and the niche you are trying to carve out for your business. Explain the type of person or business that is likely to buy your product or service and how large this market is. Be sure to describe your direct competition, but don't forget your indirect competition. Your indirect competitors are the businesses that sell a product that is not the same as yours but could be used as an alternative by your customer. For example, if you want to open an ice cream store, your competition will not only be other ice cream shops, but also the candy store down the street that offers an alternative to satisfying your customer's sweet tooth.
Give a summary of the major trends in the marketplace. You'll have to do a lot of research to complete this section and it is important that you credit your sources since this will add credibility to your facts and figures. To find out more about researching techniques, visit this link.
The Target Market section should cover the following:
- Outline your target market. Include demographics statistics such as their age, gender, where they live, income etc. Also explain the psychographics of your target market. What do they have in common? What motivates them?
- Estimate the total size of the target market for your product or service in terms of gross sales and units of product or service sold.
- What trends are affecting the target market for your product or service? Consider industry trends, socioeconomic trends, government policy, and demographic shifts.
- Summarize your competition. Includes estimates of their market share, and your sense of their financial health. Compare their product or service to yours in terms of quality, price, service, warranties, image, etc. Include both your direct competition and your indirect competition.
Your marketing strategy should communicate what makes your product or service unique. It is important to describe both the features and the benefits of your product or service. Features are descriptive attributes of your product such as the colour, weight, etc. The benefits describe what good things the customer will enjoy by using your product or service (e.g. save time, save money, feel better etc.).
Your Services/Products section should cover the following:
- What is the one thing above all else that makes your product or service unique?
- What other features does your product or services have? Consider packaging, quality, price, service, etc.
- What benefits will your customers enjoy by buying your product or service? Will they save money, feel better, be smarter, etc.?
An important part of your strategy is determining how you will price your product or service. The secret here is to establish a reasonable base price that will enable you to make a fair profit. You may believe the easiest route is simply to set your prices in accordance with those of your competitors. That's not always wise. Before you set a base price, you have to look at your own objectives and special considerations.
The Pricing Strategy section should cover the following:
- What is your base price and how did you arrive at this figure? Provide a brief summary of your fixed and variable costs.
- How are similar products and services priced? Explain how the price of your product or service will compete with market prices. If your price is higher, why would a customer choose your product? Do you offer superior service or a higher quality product? If your price is lower, how are you able to charge less - is the quality different, is your production process more efficient, do you sell in large volumes?
- What do your costs include?
- Are you offering discounts to students or seniors or for those who pay in cash rather than by credit?
- Are you allowing trade-in, a layaway policy?
- What kind of a return are you looking for in your investment and how soon are you anticipating recouping your investment?
Your Sales/Distribution Plan should detail how the transaction between you and your customer will take place. It should include a discussion about how you plan on selling your product or service and it should outline all of the different people and companies involved in getting your product into the hands of your customer. You should explain in detail what type of distribution channels are available to you (account representatives, sales people, Internet, delivery services, other companies that will carry your product) what benefits you will have by choosing them and the length of time it will take to get your product to your customer. Don't forget to summarize your returns policy and describe any warranties or after-sales support you will offer customers.
Your Sales/Distribution Plan section should cover the following:
- How will you distribute your product or service? Will it be by mail, through a wholesaler, through retail, through a Website, an independent sales representative etc.? Outline all of the players or technology involved in getting your product/service to the end customer.
- How can customers pay for your product? What credit terms will you extend to your customer? Include any discounts you will offer for early payment or penalties for late payment.
- Describe your return policy, service guarantees and/or any warranties you intend to offer customers.
- What after-sales support will you offer? Will you charge for this service?
Advertising and Promotions Plan
Your Advertising and Promotions Plan must detail how you are going to communicate to your customers and prospects. There are many ways your business may communicate including advertising, public relations, brochures, a Website, trade shows, etc. If possible, include an example or mock-up of your communications pieces.
Your Advertising and Promotions Plan should cover the following:
- Describe how or if you will advertise your product. Include what medium you will use (i.e. direct mail, Internet, radio, television, etc.) How much will this cost? How much business do you anticipate this will bring in?
- Describe what plans you have to generate press for your business. What type of media will you target?
- What kind of marketing material will you produce? Include brochures, sell sheets, business cards, etc.
- Will you have a Website? If so, describe how you will use it to market your business.
- What other forms of marketing will you use? Consider trade shows, telemarketing, etc.
To see The Marketing Plan section of a sample business plan, click on any of the company logos below: