Your marketing strategy consists of four factors that create your overall competitive position in the marketplace. These are Product, Promotion, Price, and Place (includes Location and/or Distribution Channels). These factors are discussed below:
Product
In the Products/Services section, you described your products and services as YOU see them. Now describe them from your CUSTOMER'S point of view.List all your major products or services.
Features and benefits for each Product/Service
- Describe the most important features . That is, what will the product do for the customer? What is special about it?
- Now, for each produce/service, describe its benefits . That is, how will the product improve the customer's life or business?
Note the difference between features and benefits, and think about them. For example, a house that gives shelter and lasts a long time is made with certain materials and to a certain design; those are its features. Its benefits include pride of ownership, financial security, providing for the family, inclusion in a neighbourhood. You build features into your product so you can sell the benefits.
What after-sale services will be given? Some examples are delivery, guarantee, service contracts, support, follow up, or refund policy.
Promotion
How will you get the word out to customers? Are you going to use direct sales, paid advertising, free publicity, online strategies?
I f your strategy includes advertising, what media, why, and how often? Why this mix and not some other? Have you identified low cost methods to get the most out of your promotional budget?
Will you use methods other than paid advertising, such as trade shows, catalogues, dealer incentives, word of mouth (how will you stimulate it?), network of friends or professionals?
What image do you want to project? How do you want customers to see you?
In addition to advertising, what plans do you have for graphic image support? This includes things like logo design, cards and letterhead, brochures, signage, and interior design (if customers come to your place of business).
Doyou have a system to identify repeat customers, and then systematically contact them?
Promotional Budget
How much will you spend on the items listed above?
- Before start-up? (These numbers will go into your start-up budget.)
- Ongoing? (These numbers will go into your Operating Plan budget.)
- Use the Promotional Plan Excel Worksheet to provide a detailed budget with timing, costs and expected outcomes.
Pricing
Explain your method(s) of setting prices. For most small businesses, having the lowest price is not a good policy. It robs you of needed profit margin; customers may not care as much about price as you think; and large competitors can under-price you anyway. Usually you will do better to have average prices and compete on quality and service.
Cost
Have you determined the cost of your product or service? Keep in mind all of the cost variables such as warranty cost, service and support costs.
Competition
- Does your pricing strategy fit with what was revealed in your competitive analysis?C
- Compare your prices with those of the competition. Are they higher, lower, the same? Why?
Customers
How important is price as a competitive factor? Do your intended customers really make their purchase decisions mostly on price? What are your customer's perceptions regarding price? Is your pricing consistent with the rest of the marketing mix? Will the customer perceive that the pricing matches the product and service offering, the location/distribution strategy, the promotional message and the image? What will be your customer service and credit policies?
Proposed Location
You may or may not have a precise location picked out yet. This is the time to think about what you want and need in a location. Many start-ups run successfully from home for a while.
You will describe your physical needs later, in the Operational section of your business plan. Here in the marketing section, analyze your location criteria, as they will affect your customers.
- Is your location important to your customers? If yes, how?
- If customers come to your place of business: Is it convenient? Parking? Interior spaces? Not out of the way?
- Is it consistent with your image?
- Is it what customers want and expect?
- Where is the competition located?
- Is it better for you to be near them (like car dealers or fast food restaurants) or distant (like convenience food stores)?
Distribution Channels
How do you sell your products/services?
- Retail
- Direct (mail order, web, and catalogue)
- Wholesale
- Your own sales force
- Agents
- Independent reps
- Bid on contracts
Sales forecast
Now that you have described your products, services, customers, markets, and marketing plan in detail, it is time to attach some numbers to your plan. Use the sales forecast spreadsheet to prepare a month-by-month projection. The forecast should be based upon your historical sales, the marketing strategies that you have just described, upon your market research, and industry data, if available. It will be directly connected to your detailed Promotional Plan Worksheet and the expected outcomes derived from those activities.
You may wish to do two forecasts: 1) a "best guess", which is what you really expect, and 2) a "worst case" low estimate that you are confident you can reach no matter what happens.
Remember to keep notes on your research and your assumptions as you build this sales forecast, and all subsequent spreadsheets in the plan. This is critical if you are going to present it to funding sources.