Small business marketing planning

Are you letting your customers know what work you do best and how you can make their business more successful? Effective marketing establishes and promotes your brand. Your web site and marketing materials should, powerfully, demonstrate why they should do business with you.

Introduction

A marketing plan is vital for your business as you consider how you can best achieve your business objectives. The planning process need not be complex – it is simply a logical approach to looking at your business and its environment, deciding on your marketing objectives are and then deciding the marketing programs that need to be created to ensure that those objectives are met. It is better that a marketing plan is a rough collection of notes that are used and applied than a pristine and ‘professional’ looking document that is ignored.

Marketing has been given many different definitions. It is sometimes confused with promotion – or even sales. It is neither. Marketing is concerned with the management of the ‘marketing mix,’ in other words the following: (sometimes referred to as the 4 Ps)

  • Price – how much you are selling the product or service for
  • Product (or service) – what you are designing, developing, manufacturing, providing and selling
  • Place (or channel strategy)
    – which channels you are using to sell your product or
    services (e.g. are you selling direct to customers over the Internet or
    are you selling through a retailer or other third party)
  • Promotion – what
    methods are you using to communicate what it is that you do to your
    market. This includes packaging, sales, brochures,
    exhibitions, advertising, direct mail, Internet marketing etc

Marketing planning is a creative process that is based on the solid analysis of your business and its environment. It also requires you to think about the future. We don’t know what is going to happen in the ‘invisible’ future – but there are things in the visible future that we can take account of. For example, we know that it will probably be colder in December than it is in June (unless you live in Australia.) This is known as the ‘visible’ future.

To create a 1 hour marketing plan for your business – follow the steps below:

The Marketing Audit

Before developing a marketing plan, the first step is the marketing audit. In its simplest terms this means reviewing the marketing that you have done up until now to determine how effective it has been – preferably in quantitative terms. This information will give you practical guidance as to where to place your valuable resources in the
future.

The SWOT Analysis

The first step in the marketing audit process is to do a Strengths, Weaknesses, Opportunities and Threats or SWOT analysis.  The SWOT analysis, beloved of generations of business school graduates, is an easy to remember and simple process to help you analyze your business. There are two main aspects of the SWOT – the inward looking, i.e. what are the strengths and weaknesses of your business, and the outward looking, i.e. what are the opportunities and threats coming from outside your business.

It is useful to create a SWOT matrix in the following format.

Strengths Weaknesses
  • Company reputation
  • Employees
  • Network
  • Marketing skills
  • Web skills
  • Lack of capital
  • Need for new investment
  • Size of operation
Opportunities Threats
  • New business park opening
  • Market deregulation
  • New legislation
  • Large competitor moving into the area

Figure 1 : SWOT analysis matrix

I have added a few example items to show the type of things that you should consider. They will vary from business to business. As you develop the SWOT analysis, put in anything that comes to mind – you can always cross it out later. The analysis can be done by an individual – but it may be better to gather your team together in order to get the creative juices flowing. A useful process is called ‘brainstorming’ – see the sidebar below. This applies to all of the creative and analytical phases of the marketing planning process.

RULES FOR ‘BRAINSTORMING’

Brainstorming
is a great way of generating ideas. It works best when used in a group
and every idea is written down – preferably where everyone in the group
can see it – WITHOUT editing. No matter how seemingly stupid the idea –
write it down. You can always go back and edit after the brainstorming
session is over.

Figure 2: Rules for brainstorming

PEST Analysis

Another technique that I have found useful in preparing marketing plans is the ‘PEST’ analysis. PEST is an acronym for:

  • Political and Legal
  • Economic and demographic
  • Social and cultural
  • Technology

and how each of these factors may affect your business. It is another way to help you think about the environment in which your business operates. It may be helpful for you to use this analysis when working on the opportunities and threats part of the SWOT analysis. For example, a future legal change may result in you having to pay greater costs in order to meet new regulations. Demographic changes may result in a population shift to your part of the country. This may result in more customers and hence,
potentially more business.

Setting marketing objectives

Before planning how to get somewhere it is important to decide where you want to go. Before setting marketing objectives you need to know the overall objectives for your business. This could be a certain level of profitability or volume of sales. To meet this business objective will involve a number of different activities within you business including: production, customer service, finance – and marketing.

Marketing objectives are what you are aiming to achieve through the marketing plan in order to meet he overall business objectives. Marketing objectives fall into four categories as summarized by the Ansoff matrix (figure 3):

PRODUCT
Present New
MARKET Present Market penetration Product development
New Market extension Diversification

Figure 3: The Ansoff Matrix

The Product Lifecycle

All products have, what is called in ‘marketing speak’, a product lifecycle. This describes the natural process by which a new product is introduced, is gradually accepted, sells well for a while and is then gradually superseded before, potentially, being phased out.

The following chart gives an indication of how sales will vary as a product goes through the various stages of its lifecycle.

Product life cycle
Figure 5: The product lifecycle

The Product Lifecycle

All products have, what is called in ‘marketing speak’, a product
lifecycle. This describes the natural process by which a new product is introduced, is gradually accepted, sells well for a while and is then gradually superseded before, potentially, being phased out. 
The following chart gives an indication of how sales will vary as a product goes through the various stages of its lifecycle.
The product life cycle is a useful concept to consider when reviewing your product or service set (product/service portfolio). It is important to consider where a product is on the lifecycle in order to set marketing objectives and appropriate marketing programs. For example, if a product is in the introduction phase it may be appropriate to spend more on promotion than for a product in decline.

Figure 5: Sidebar – the product lifecycle

Set marketing strategies

Marketing objectives are concerned with what you would like to achieve, marketing strategies are how you expect these things will be achieved.

Having set the strategies, individual marketing tactics will be created in the form of specific marketing programs. The difference between the marketing strategy and marketing tactics can be illustrated as follows. A valid marketing strategy would be to create an exhibition program in a new market. The tactic associated with this strategy would be a specific exhibition, the dates, logistics, size of booth and promotional events surrounding the exhibition.

The following are some of your marketing strategy options. This list can be expanded to meet your needs:

Price

  • Review pricing
  • Change payment options
  • Offer new discount schemes
  • Price sensitivity – supply demand curve
  • Psychological pricing (premium pricing)
  • Promotional pricing

Product and service differentiation

Perhaps the most important marketing imperative is to differentiate your business. In other words, what makes (or could make) your business different from your competitors in a MEANINGFUL way. You need to be specific and carefully think through what makes you truly different.

Differentiation need not come directly from a product or services – it could come from the way you deliver, price or sell a product or
service. It may be tangible or intangible. One way of creating
differentiation is to think of new ways of how you can ‘add value’ to
your offering for the benefit of your customers
.

Figure 6: Product and service differentiation
Supply and demand graph
Figure 7: Supply and demand curve

Product

  • Create new products
  • Offer new services
  • Bundle products or services
  • Change product positioning

Place

  • Find alliance partners
  • User new channels to market
  • Change delivery options

Promotion

  • Start new advertising campaigns
  • Create direct marketing campaign
  • Review sales force commission scheme
  • Review product positioning (see sidebar below)
  • Develop Internet marketing capabilities
  • Create new branding for products

Product positioning

Product positioning refers to how you want your product or service to be viewed in the marketplace. For example, you could position your product as a luxury brand or a cost-competitive commodity. The way that you position a product determines your strategies relating to all of the marketing mix. For example, for a luxury brand you would want to sell through a more exclusive channel, your pricing would be higher and your promotional techniques would emphasize the luxury, quality and premium price of the product.

Product positioning

Product positioning refers to how you want your product or service to be viewed in the marketplace. For example, you could position your product as a luxury brand or a cost-competitive commodity. The way that you position a product determines your strategies relating to all of the marketing mix. For example, for a luxury brand you would want to sell through a more exclusive channel, your pricing would be higher and your promotional techniques would emphasize the luxury, quality and premium price of the product.

Figure 8: Product positioning

Marketing segmentation

Segmentation involves the categorization of customer or potential customers into economically viable groups based on a group of similar characteristics. Consumer markets could be segmented based on geography, demographics (e.g. age, sex, job, educational attainments, race and class) and lifestyle. Business markets can be segmented based on geography, size of business, urgency, type of business and buying organization.

Figure 6 : Market segmentation

Develop marketing programs based on marketing strategies

Having developed an overall marketing strategy, it is time to create detailed marketing programs. Programs need to be created within your resources – both budget and time – and should be mapped out carefully on a calendar (e.g. do you have the resources necessary to attend 2 major trade shows at the same time?). The following
are just some of the multitude of factors that need to be considered in creating programs.

Price

When your first think about pricing your first inclination may be to apply a simple mechanism which adds a percentage to the cost of producing the product or providing the
service, this is known as cost-plus pricing. This may be the best way of pricing your product – but you must also think about premium pricing. An expensive product may create an idea of prestige or luxury – irrespective of how much it cost to create the product. Branded perfumes and designer clothing labels fall into this category.

You should also consider the product lifecycle. Is you product is in a growth phase where you are trying to build market share – or is the product in an irreversible decline? If you are trying to build market share, you may decide to be cost competitive. If a product is in decline you may wish to sell for a more ‘premium’ price.

Other factors you will likely taken into account are the cost of competitor products and services ogether with the distribution costs that may need to be built into your pricing (for example, the amount you will need to pay your distributor).

Product

An area of enormous importance to be considered when you look at your products is the concept of the product and service portfolio. A portfolio implies that you are marketing more than one product or service. In actual fact, even if you only have one product – you will likely have at least one service offering connected to that product. In developing the tactical aspect of your marketing plan your need to analyze each product in turn. A good way to do this is by using the Boston Matrix. This matrix, originally developed by the Boston Consulting Group, divides products into the following categories:

  • Low relative market share – low market or business growth
  • Low relative market share – high market or business growth
  • High relative market share – low market or business growth
  • High relative market share – high market or business growth

Relative market share is defined as the ratio of company share compared to that of your largest competitor. The matrix is designed to show where products are in terms of their need for cash. High growth products have a greater need for cash than slow growth products. High relative market share products will contribute more cash when compared with low relative market share products.

Boston Matrix
Figure 9 shows a representation of the Boston matrix.

Portfolio management involves managing the portfolio such that there is a balance between cash generated and cash required. It is important to visualize where products are likely to be in the future and how you can achieve those positions. For example, a new, but highly promising product may begin as a ‘question mark’ (see figure 9). In other words, it has a low market share – it is a new product – but a high market growth rate – it is very promising. In order for the product to become a star requires that the relative position needs to improve. To achieve this will require other aspects of the marketing mix to be applied, for example increased promotional activities. Figure 7 : Boston Matrix

Place (channel strategy)

The channel strategy is your plan as to how you are going to get you product or service to market. It’s likely that you have already made some plans here. The trick is to find new and innovative ways in which you can gain the widest market coverage at the lowest cost. Options include:

  • Setting up a distributor network
  • Finding ‘business partners’
  • Selling directly over the Internet
  • Creating retail outlets
  • Developing export markets

Promotion

Promotion is a highly creative process. You never really know which promotional method is going to be the most effective until you try it. The trick is to try different promotional methods and to test each one’s effectiveness.

Many different things effect an ultimate buying decision. It may seem that the final buying decision is made because of excellent salesmanship. The complete picture may be slightly different when rigorously taking all the promotional factors into account.

Promotional tip

Whenever
you receive a piece of marketing material that strikes you as being
particularly effective, put it in a file. You will soon have a
collection of materials that will be helpful in generating new ideas
for your business.

Figure 8 : promotional tip

Marketers have the following methods at their disposal:

  • Internet marketing (both ‘organic’ Web site search engine positioning and Web advertising)
  • E-mail marketing
  • Advertising (also known as ‘above the line expenditure.’)
  • Merchandizing
  • Sales – personal selling
  • Trade shows and exhibitions
  • Media relations (public relations – PR)
  • Direct mail
  • Network marketing

Conclusions

As I said in the introduction, a marketing plan is not an end in itself, rather, it represents a process of examining and rethinking your business from a marketing perspective. By thinking through the issues you should get a greater appreciation of all the different marketing options – as well as a few new ideas about things to try in your business.

Why not get Billy Fire to help you though this process? Phone 858 668 0874 or e-mail martyn.whittaker@billyfire.com.