2014 navigate-a guide to marketing planning

A User Friendly Guide to Marketing Plans

John GreggPrincipal

Navigate Consulting

April, 2014

1

Basic steps and elements of the marketing plan

Step 1

Step 2

Step 3

Market and

competition analysis

Target market

selection

Marketing strategy

development

• Market size

• Market growth

• Strengths and

weaknesses of

competitors

• Competitors'

behavior

• Market

segmentation

• Positioning

• Differentiation

factors

• Market share

• Marketing mix

– Product

– Price

– Place

– Promotion

2

Step 1:Analyzing the market and competition (1/2)

End product

• Market size and growth

• Current suppliers/

competitors in the market

• Companies' behaviors

• Strengths and weaknesses of

competitors

• New potential competitors

Key questions

• What is the estimated size of the overall

market?

– Number of users?

– What is the potential volume/

units we can sell?

– What might the price and overall

potential market size be?

• What are the market trends?

What is the estimated growth for the

next 5–10 years?

• Who are the current competitors?

• What is their business model? Which

segments are they serving?

• Might some potential new players enter

the market?

• What are the potential substitutes for your

product/service?

Market

Competition

1

3

Step 1:Analyzing the market and competition (2/2) –How to make an accurate estimate?

Hints

Start from a solid basis • There may be many unknowns, but if you use easily verifiable

figures as a basis, you will build your estimate on solid foundations

Follow a logical path • The logic of an estimate should be clear – there should be no

breaks in the chain or unspecified assumptions

Compare your sources • Wherever possible, check information, such as statements in an

interview, against other sources

Be creative • The shortest distance is not always a straight line. For example,

if one value is unknown, try to find a substitute value that relates

to the one that is missing

Check for plausibility • For every estimate always ask yourself "Does the result actually

make sense?"

1

4

Step 2:Choosing the target segment (1/6)

Key questions

• Who are your customers or customer groups ("segmentation")?

• Which customers or customer groups are particularly attractive financially?

• How can you differentiate yourself from the competition ("positioning")

for those attractive customers?

• What market share and what level of sales do you expect to achieve with these customers?

2

5


Objectives

• Define the market/market segments that your

product/service can reach

• Identify customer groups with similar buying

behavior

• Help design a specific and targeted value

proposition and a strategy by segment

Customer

segmentation

Segment

selection

Positioning

2

6


Sample of customer segmentation criteria

For consumer goods

• Geographic: country or population density (urban/rural, etc.)

• Demographic: age, gender, income, profession, etc.

• Lifestyle: technofreaks, the environmentally-conscious,

Generation X, etc.

• Behavior: frequency of usage, application of product, etc.

• Purchasing behavior: brand preference, price consciousness,

etc.

For industrial goods

• Demographic: company size, sector, location, etc.

• Operational: technology employed, etc.

• Purchasing behavior: central or decentral purchasing,

contracts with suppliers, etc.

• Situational factors: urgency of need, order size, etc.

2

Customer

segmentation

Segment

selection

Positioning

7


Key questions

• Size and growth potential of the different

segments?

• How good is the match between your

product/service and the customer needs?

• Is there a potential for differentiation and

how can you differentiate your

product/service against competing

products/services?

• What is the financial attractiveness of the

segments?

2

Customer

segmentation

Segment

selection

Positioning

8


Positioning vis-à-vis competitors

• Why should a potential customer

buy your product rather than that

of one of your competitors?

• Why does your product represent

a "better" offer (emotionally or

rationally)?

• How can I best adopt the

customers' perspective?

• What are the product attributes

that the customer values?

Need for a clear,

compelling, and

convincing

Unique Selling

Proposition

(USP)

2

Customer

segmentation

Segment

selection

Positioning

9


How to design a compelling USP

• Identify relevant customer needs or problems

• Define clear customer segments of sufficient

size

• Design an attractive proposition in terms of

products or services

• Define your uniqueness by differentiating

against the competition

• Address the subjective perception of your

potential customers

• Also ensure customer satisfaction after the

purchase

2

Customer

segmentation

Segment

selection

Positioning

10

Step 3:Executing the marketing plan

Key area What it helps us to do

• Develop

pricing

strategies

• Determine how industry/sector structure (e.g., supply, demand, cost

dynamics) and the conduct of individual players affects overall industry price

levels

• Understand consumer price elasticities and their implications for the value

equation

• Generate hypotheses about the price architecture/structure to maximizes

value over the lifetime of both the product and the customer

• Design and

manage Sales

channel

• Understand the elements of a good channel strategy (e.g., alignment with

customer segment needs)

• Understand the levers for improving channel performance (partner networks,

incentives)

• Understand the key levers of a successful sales force management program

3

11

PRICING OPTIONS

Price

structure

Costs

Option

• Consumer goods market

– Industry cost structure is known to both

competitors and customers

– Customers know the product well

Applicability

• Gasoline

• Chemicals

Example

Value • Complex goods, value lies in the economic

effect more than in true product value (e.g.,

intellectual property)

– Price comparison difficult

– Must be highly tailored to customer needs

– Customers not very familiar with product

• Pharmaceuticals

• High-tech products

• Watches (Rolex,

Breitling, etc.)

Strategic • Overriding strategic goals that will lead to

long-term profits

– Product whose value lies in imitation

– Substitute or new product without

established benefit

• Zanussi coffee

makers

• Australian domestic

flights

Highest possible

profit

Competitors • Hotly contested market as regards price

– Price is an important purchase factor

– Customers make a price comparison

– Price comparison is simple

• DRAM chips

3

12

PRICING – HOW TO HARVEST MAXIMUM CUSTOMER SURPLUS

• Gather experience with

little volume while still

operating in a real market

• Obtain highest margin with

limited, early production

• Move up along the

demand curve with

increasing capacity

• Maintain margin through

downward movement on

the learning curve

Advantages

• Target the large market

without knowing how to win

over the important

customers (opinion-makers)

• Damage to the brand

because early production

does not suit market

demands

• Iterative price adjustments

simply forgotten

• Insufficient experience with

scale economies and

learning effect

Mistakes by start-ups

Set a high price

and attack the market

segment with the least

price sensitivity

Opinion-

makers

Quick

succes-

sors

Early

adapters

Stragglers

Market

acceptance

Price

3

13

PRICING - CORE FACTORS OF PENETRATION PRICING

Customer value high due to a not

yet mature market

• High price elasticity

• Latent demand

• Possibility of becoming a customer

"standard"

Own performance costs drop

dramatically with a rise in volume

• Dropoff of high, variable unit costs

• Transition to new, fixed cost

structure

Competitors cannot match price

due to structure

• Higher cost structure

• Limited freedom due to current

customer/market situation

• Market share/volume currently very

low

3

14


Key area What it helps us to do

• Develop

pricing

strategies

• Determine how industry/sector structure (e.g., supply, demand, cost dynamics) and

the conduct of individual players affects overall industry price levels

• Understand consumer price elasticities and their implications for the value equation

• Generate hypotheses about the price architecture/structure to maximizes value

over the lifetime of both the product and the customer

• Design and

manage

Sales

channel

• Understand the elements of a good channel strategy (e.g., alignment with

customer segment needs)

• Understand the levers for improving channel performance (partner networks,

incentives)

• Understand the key levers of a successful sales force management program

3

15

SALES CHANNELS – MULTIPLE OPTIONS AVAILABLE

Licensing

ILLUSTRATIVE

OEM

Sales partner

Direct

Achieved share of value

Rela

tive r

isk

3

16

SALES CHANNELS - SELECTION CRITERIA

Franchise• Interest high on the part of franchisees

• Lack of financing

• Sustainability through patent

• Ensure garanteed minimum fee

• No customer loyalty

• Lion's share of value added by

franchisees

OEM• New product launch in hotly contested

market

• Fragmented customer base

• Quick market penetration desired

• Strong negotiating position through package

benefits

• No profit margin

• Dependence on OEM product

development

• Few findings from end

consumer market

Sales partner• Limited market access, "high hurdles"

• Thorough understanding of the market

necessary (e.g., regional market)

• Dependence on sales partner

• Uneven distribution of value

added

Direct sales• Customer loyalty necessary

• Concentrated customer base

• High cost

• Low market penetration

When? Risk for start-up company

Sales

channel

3

17

SALES MANAGEMENT OPTIONS

“Long line”

• Loose

• 0 - 50%

• Quarterly/

annually

• None

• Intensive

support

• Output

• Large-scale

projects

“Short line”

• Medium

• 50 - 80%

• Monthly

• Rough

• Rough

guidelines,

intensive

support

• Output, input

• Assembly

• Auto

• Chemicals

“Tight reins”

• Tight

• 100%

• Daily/weekly

• Detailed

• Detailed

guidelines

• Input

• Consumer

goods

Management style

Planned sales

time

Reporting cycle

Visit planning

Activity planning

Monitoring

parameter(s)

Examples

Co

mp

lex

ity o

f c

us

tom

er

rela

tio

nsh

ip

Complexity of sales

activity-product

HighLow

Low

Hig

h

“tight reins”

“short line”

“long

line”

18


• Manage

branding and

marketing

communic-

ations

• Understand the core elements of the brand (rational and emotional benefits

and tangible and intangible associations)

• Be aware of brand architecture options (umbrella, mutually reinforcing,

independent) and understand the benefits/risks associated with each one

• Understand how to use the purchase funnel to optimize marketing spend

effectiveness

• Develop

product

strategies

• Prioritize product initiatives and identify gaps in the product offering

• Understand the stages of a product lifecycle, determine in which stage

a particular product exists, and understand the implications for product strategy

• Understand the dimensions that are important for new product development

strategy (timing, insights into customers)

What it helps us to doKey area

3

19


• Manage

branding and

marketing

communic-

ations

• Understand the core elements of the brand (rational and emotional benefits and

tangible and intangible associations)

• Be aware of brand architecture options (umbrella, mutually reinforcing, independent)

and understand the benefits/risks associated with each one

• Understand how to use the purchase funnel to optimize marketing spend

effectiveness

• Develop

product

strategies

• Prioritize product initiatives and identify gaps in the product offering

• Understand the stages of a product lifecycle, determine in which stage

a particular product exists, and understand the implications for product

strategy

• Understand the dimensions that are important for new product development

strategy (timing, insights into customers)

What it helps us to doKey area

3

20

Check list for a convincing marketing plan

Is the Unique Selling Proposition formulated precisely and from the

customer’s perspective?

Which customers make up your target segment? Why is this

segment particularly interesting for your company?

How large is the whole market? How large is the market

you are interested in? How will it develop?

Who are your competitors? What substitutes are available

for your product?

How do you expect your market share and your sales volume

to develop?

What price are you asking?

What distribution channel(s) will you use?

How much will your advertising cost?

Does your business plan answer the following questions?