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Marketing issues in business planning

Seppo Mönkkönen

M.Sc Agric.,Senior Lecturer in Business EconomicsSavonia University of Applied Sciences

Iisalmi, Finland

Innotools 14th April 2008

© Savonia University of Applied Sciences

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What is Business plan?

• A business plan is a formal statement of a set of business goals, the reasons why they are believed attainable, and the plan for reaching those goals.

• The business goals may be for-profit or non-profit. For-profit business plans typically focus on financial goals. Non-profit and government agency business plans tend to focus on service goals

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Internally or externally focused BP

• Externally focused plans target goals that are important to external stakeholders

• Internally focused business plans target intermediate goals required to reach the external goals. They may cover the development of a new product, a new service, a new IT system, a restructuring of finance, the refurbishing of a factory or a restructuring of the organization

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Content of a business plan

EXAMPLE

• 1 Executive Summary

• 2 Organizational Background

• 3 Marketing Plan

• 4 Operational Plan

• 5 Financial Plan

• 6 Risk analysis

• 7 Decision Making Criteria

• There is no fixed content for a business plan

• Rather the content and format of the business plan is determined by the goals and audience

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Marketing Plan

Two aspects:

1 Understand markets and customers behaviorPoint 1 Diffusion of innovationsPoint 2 Producut life cycle (PLC)Point 3 Market Segmentation

2 Marketing actions (Four P´s)ProductPricePlacePromotion

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Diffusion of innovations

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Cumulative diffusion of innovations

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Product life cycle

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• Market introduction stage » cost high » sales volume low » no/little competition - competitive manufacturers

watch for acceptance/segment growth losses » demand has to be created » customers have to be prompted to try the product

• Growth stage » costs reduced due to economies of scale » sales volume increases significantly » profitability » public awareness » competition begins to increase with a few new

players in establishing market » prices to maximize market share

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• Mature stage » Costs are very low as you are well established in market &

no need for publicity. » sales volume peaks » increase in competitive offerings » prices tend to drop due to the proliferation of competing

products » brand differentiation, feature diversification, as each player

seeks to differentiate from competition with "how much product" is offered

» Industrial profits go down • Decline or Stability stage

» costs become counter-optimal » sales volume decline or stabilize » prices, profitability diminish » profit becomes more a challenge of production/distribution

efficiency than increased sales

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Market Segmentation

• A market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs

• A true market segment meets all of the following criteria:

1. it is distinct from other segments (heterogeneity across segments)

2. it is homogeneous within the segment (exhibits common attributes)

3. it responds similarly to a market stimuli

4. it can be reached by a market intervention

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EXAMPLE

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Three possible strategies after market sementation

1. No segmentation in marketing

=> Same marketing to everybody

2. Concentrated marketing

=> Marketing for only one segment

3. Segmented marketing

=> Different marketing for different segment

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