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Marketing PlanMarketing Plan Product managers come up with a marketing plan for individual products, lines, brands, channels, or customer groups. Each product level, whether product line or brand, must develop a marketing plan for achieving its goals. A marketing plan is a written document that summarizes what the marketer has learned about the marketplace and indicates how the firm plans to reach its marketing objectives. It contains tactical guidelines for the marketing programs and financial allocations over the planning period. Contd.The marketing plan is the central instrument for directing and coordinating the marketing effort. It operates at two levels: strategic and tactical. The strategic marketing plan lays out target markets and the firms value proposition, based on an analysis of the best market opportunities. The tactical marketing plan specifies the marketing tactics, including product features, promotion, merchandising, pricing, sales channels, and service. Contd.A marketing plan is one of the most important outputs of the marketing process. It provides direction and focus for a brand, product, or company. Nonprofit organizations use marketing plans to guide their fund-raising and outreach efforts, and government agencies use them to build public awareness of nutrition and stimulate tourism.Contd. More limited in scope than a business plan, the marketing plan documents how the organization will achieve its strategic objectives through specific marketing strategies and tactics, with the customer as the starting point. It is also linked to the plans of other departments. Suppose a marketing plan calls for selling 200,000 units annually. The production department must gear up to make that many units, finance must arrange funding to cover the expenses, human resources must be ready to hire and train staff, and so on. Without the appropriate level of organizational support and resources, no marketing plan can succeedContd.Marketing plans are becoming more customer- and competitor-oriented, better reasoned, and more realistic. They draw more inputs from all the functional areas and are team-developed. Planning is becoming a continuous process to respond to rapidly changing market conditions. The most frequently cited shortcomings of current marketing plans, according to marketing executives, are lack of realism, insufficient competitive analysis, and a short-run focus.A marketing plan usually contains the following sections.Executive summary and table of contents. The marketing plan should open with a table of contents and brief summary for senior management of the main goals and recommendations.Situation analysis. This section presents relevant background data on sales, costs, the market, competitors, and the various forces in the macro environment. How do we define the market, how big is it, and how fast is it growing? What are the relevant trends and critical issues? Firms will use all this information to carry out a SWOT analysis.Contd.Marketing strategy. Here the marketing manager defines the mission, marketing and financial objectives, and needs the market offering is intended to satisfy as well as its competitive positioning. All this requires inputs from other areas, such as purchasing, manufacturing, sales, finance, and human resources.Financial projections. Financial projections include a sales forecast, an expense forecast, and a break-even analysis. On the revenue side is forecasted sales volume by month and product category, and on the expense side the expected costs of marketing, broken down into finer categories. The break-even analysis estimates how many units the firm must sell monthly (or how many years it will take) to offset its monthly fixed costs and average per-unit variable costs.Contd.Implementation controls. The last section outlines the controls for monitoring and adjusting implementation of the plan. Typically, it spells out the goals and budget for each month or quarter, so management can review each periods results and take corrective action as needed. Some organizations include contingency plans.Measuring Marketing Plan PerformanceSales Analysis Sales analysis measures and evaluates actual sales in relationship to goals. Two specific tools make it work. Sales-variance analysis measures the relative contribution of different factors to a gap in sales performance. Suppose the annual plan called for selling 4,000 widgets in the first quarter at $1 per widget, for total revenue of $4,000.At quarters end, only 3,000 widgets were sold at $.80 per widget, for total revenue of $2,400.How much of the sales performance gap is due to the price decline, and how much to the volume decline?Variance due to price decline: ($1.00$.80) (3,000) = $ 600 37.5%Variance due to volume decline: ($1.00) (4,0003,000) = $1,000 62.5%

Contd. Micro sales analysis looks at specific products, territories, and so forth that failed to produce expected sales. Suppose the company sells in three territories, and expected sales were 1,500 units, 500 units, and 2,000 units, respectively. Actual volumes were 1,400 units, 525 units, and 1,075 units, respectively. Thus territory 1 showed a 7 percent shortfall in terms of expected sales; territory 2, a 5 percent improvement over expectations; and territory 3, a 46 percent shortfall! Territory 3 is causing most of the trouble. Maybe the sales rep in territory 3 is underperforming, a major competitor has entered this territory, or business is in a recession there.Market Share AnalysisCompany sales dont reveal how well the company is performing relative to competitors. For this, management needs to track its market share in one of three ways.Overall market share expresses the companys sales as a percentage of total market sales. Served market share is sales as a percentage of the total sales to the market. The served market is all the buyers able and willing to buy the product, and served market share is always larger than overall market share. A company could capture 100 percent of its served market and yet have a relatively small share of the total market. Relative market share is market share in relationship to the largest competitor. A relative market share of exactly 100 percent means the company is tied for the lead; over 100 percent indicates a market leader. A rise in relative market share means a company is gaining on its leading competitor.Conclusions from market share AnalysisThe assumption that outside forces affect all companies in the same way is often not true. The U.S. Surgeon Generals report on the harmful consequences of smoking depressed total cigarette sales, but not equally for all companies. The assumption that a companys performance should be judged against the average performance of all companies is not always valid. A companys performance is best judged against that of its closest competitors.If a new firm enters the industry, every existing firms market share might fall. A decline in market share might not mean the company is performing any worse than other companies. Share loss depends on the degree to which the new firm hits the companys specific markets. Sometimes a market share decline is deliberately engineered to improve profits. For example, management might drop unprofitable customers or products.Contd.Market share can fluctuate for many minor reasons. For example, it can be affected by whether a large sale occurs on the last day of the month or at the beginning of the next month. Not all shifts in market share have marketing significance.Overall Market share = Customer penetration X Customer loyalty X Customer selectivity X Price selectivity

Marketing Expense-to-Sales Analysis Marketing Expense-to-Sales Analysis Annual-plan control requires making sure the company isnt overspending to achieve sales goals. The key ratio to watch is marketing expense-to-sales. In one company, this ratio was 30 percent and consisted of five component expense-to-sales ratios: sales force-to-sales (15 percent), advertising-to-sales (5 percent), sales promotion-to-sales (6 percent), marketing research-to-sales (1 percent), and sales administration-to-sales (3 percent).Financial Analysis Marketers should analyze the expense-to-sales ratios in an overall financial framework to determine how and where the company is making its money. They can, and are increasingly, using financial analysis to find profitable strategies beyond building sales.Profitability AnalysisCompanies can benefit from deeper financial analysis , and should measure the profitability of their products , territories , customer groups , segments, trade channels, and order sizes. This information can help management determine whether any products or marketing activities should be expanded, reduced or eliminated . Marketing Plan CriteriaHere are some questions to ask in evaluating a marketing plan.Is the plan simple? Is it easy to understand and act on? Does it communicate its content clearly and practically?Is the plan specific? Are its objectives concrete and measurable? Does it include specific actions and activities, each with specific dates of completion, specific persons responsible, and specific budgets?Contd.3. Is the plan realistic? Are the sales goals, expense budgets, and milestone dates realistic? Has a frank and honest self-critique been conducted to raise possible concerns and objections?4. Is the plan complete? Does it include all the necessary elements? Does it have the right breadth and depth?

Contents of a Marketing PlanSection 1: Executive Summary

Executive Summary last, and, as the name implies, this section merely summarizes each of the other sections of your marketing plan. Executive Summary will be helpful in giving yourself and other constituents (e.g., employees, advisors, etc.) an overview of your plan.

Section 2: Target Customers

This section describes the customers you are targeting. It defines their demographic profile (e.g., age, gender), psychographic profile (e.g., their interests) and their precise wants and needs as they relate to the products and/or services you offer.Being able to more clearly identify your target customers will help you both pinpoint your advertising (and get a higher return on investment) and better speak the language of prospective customers.

Section 3: Unique Selling Proposition (USP)

Having a strong unique selling proposition (USP) is of critical importance as it distinguishes your company from competitors.The hallmark of several great companies is their USP. For example, FedExs USP of When it absolutely, positively has to be there overnight is well-known and resonates strongly with customers who desire reliability and quick delivery.

Section 4: Pricing & Positioning Strategy

Pricing and positioning strategy must be aligned. For example, if you want your company to be known as the premier brand in your industry, having too low a price might dissuade customers from purchasing.In this section of your marketing plan, detail the positioning you desire and how your pricing will support it.

Section 5: Distribution Plan

Distribution plan details how customers will buy from you. For example, will customers purchase directly from you on your website? Will they buy from distributors or other retailers? And so on.Think through different ways in which you might be able to reach customers and document them in this section of your marketing plan.

Section 6: Your OffersOffers are special deals you put together to secure more new customers and drive past customers back to you.Offers may include free trials, money-back guarantees, packages (e.g., combining different products and/or services) and discount offers. While your business doesnt necessarily require offers, using them will generally cause your customer base to grow more rapidly.

Section 7: Marketing Materials

Your marketing materials are the collateral you use to promote your business to current and prospective customers. Among others, they include your website, print brochures, business cards, and catalogs.Identify which marketing materials you have completed and which you need created or re-done in this section of your plan.

Section 8: Promotions Strategy

The promotions section is one of the most important sections of your marketing plan and details how you will reach new customers.There are numerous promotional tactics, such as television ads, trade show marketing, press releases, online advertising, and event marketing.In this section of your marketing plan, consider each of these alternatives and decide which ones will most effectively allow you to reach your target customers.

Section 9: Online Marketing Strategy

Like it or not, most customers go online these days to find and/or review new products and/or services to purchase. As such, having the right online marketing strategy can help you secure new customers and gain competitive advantage.The four key components to your online marketing strategy are as follows:Keyword Strategy: identify what keywords you would like to optimize your website for.Search Engine Optimization Strategy: document updates you will make to your website so it shows up more prominently for your top keywords.Paid Online Advertising Strategy: write down the online advertising programs will you use to reach target customers.Social Media Strategy:document how you will use social media websites to attract customers.

Section 10: Conversion Strategy

Conversion strategies refer to the techniques you employ to turn prospective customers into paying customers.For example, improving your sales scripts can boost conversions. Likewise increasing your social proof (e.g., showing testimonials of past clients who were satisfied with your company) will nearly always boost conversions and sales.In this section of your plan, document which conversion-boosting strategies you will use.

Section 11: Joint Ventures & Partnerships

Joint ventures and partnerships are agreements you forge with other organizations to help reach new customers or better monetize existing customers. For example, if you sold replacement guitar strings, it could be quite lucrative to partner with a guitar manufacturer who had a list of thousands of customers to whom it sold guitars (and who probably need replacement strings in the future).Think about what customers buy before, during and/or after they buy from your company. Many of the companies who sell these products and/or services could be good partners. Document such companies in this section of your marketing plan and then reach out to try to secure them.

Section 12: Referral Strategy

A strong customer referral program could revolutionize your success. For example, if every one of your customers referred one new customer, your customer base would constantly grow.However, rarely will you get such growth unless you have a formalized referral strategy. For example, you need to determine when you will ask customers for referrals, what if anything you will give them as a reward, etc. Think through the best referral strategy for your organization and document it.

Section 13: Strategy for Increasing Transaction Prices

While your primary goal when conversing with prospective customers is often to secure the sale, it is also important to pay attention to the transaction price.The transaction price or amount customers pay when they buy from you, can dictate your success. For example, if your average customer transaction is $100 but your competitors average customer transaction is $150, they will generate more revenues, and probably profits, per customer. As a result, they will be able to outspend you on advertising, and continue to gain market share at your expense.In this section of your plan, think about ways to increase your transaction prices such as by increasing prices, creating product or service bundles/packages, and so on.

Section 14: Retention Strategy

Too many organizations spend too much time and energy trying to secure new customers versus investing in getting existing customers to buy more often.By using retention strategies such as a monthly newsletter or customer loyalty program, you can increase revenues and profits by getting customers to purchase from you more frequently over time.Identify and document ways you can better retain customers here.

Section 15: Financial Projections

The final part of your marketing plan is to create financial projections. In your projections, include all the information documented in your marketing plan.For example, include the promotional expenses you expect to incur and what your expected results will be in terms of new customers, sales and profits. Likewise include your expected results from your new retention strategy. And so on.While your financial projections will never be 100% accurate, use them to identify which promotional expenses and other strategies should give you the highest return on investment. Also, by completing your financial projections, you will set goals (e.g., your goals for your referral program) for which your company should strive.