Entrepreneurs cannot sustain new enterprises for very long if they do not understand their product or service and its niche in the marketplace. Effectively marketing a business is a function of knowing your proposed product or service, quantifying its demand within a geographic market, identifying key customers, identifying actual or potential competitors, implementing general or specific promotions, and identifying the product or service's key features and benefits.
Here are the primary elements in a marketing plan for a startup business:
Why? No matter how good your product and your service, the venture cannot succeed without effective marketing. And this begins with careful, systematic research. It is very dangerous to assume that you already know about your intended market. You need to do market research to make sure you’re on track. Use the business planning process as your opportunity to uncover data and to question your marketing efforts. Your time will be well spent.
There are two kinds of market research: primary and secondary. Secondary research means using published information such as industry profiles, trade journals, newspapers, magazines, census data, and demographic profiles. This type of information is available in public libraries, industry associations, chambers of commerce, from vendors who sell to your industry, and from government agencies. Start with your local library. Most librarians are pleased to guide you through their business data collection. You will be amazed at what is there. There are more online sources than you could possibly use. Your chamber of commerce has good informationon the local area. Trade associations and trade publications often have excellent industry ?specific data.
Primary research means gathering your own data. For example, you could do your own traffic count at a proposed location, use the yellow pages to identify competitors, and do surveys or focus?group interviews to learn about consumer preferences. Professional market research can be very costly, but there are many books that show small business owners how to do effective research themselves. In your marketing plan, be as specific as possible; give statistics, numbers, and sources. The marketing plan will be the basis, later on, of the all?important sales projection.
In the Products and Services section, you described your products and services as you see them. Now describe them from your customers’ point of view.
Features and Benefits
List all of your major products or services. For each product or service:
Identify your targeted customers, their characteristics, and their geographic locations, otherwise known as their demographics. The description will be completely different depending on whether you plan to sell to other businesses or directly to consumers. If you sell a consumer product, but sell it through a channel of distributors, wholesalers, and retailers, you must carefully analyze both the end consumer and the middleman businesses to which you sell. You may have more than one customer group. Identify the most important groups. Then, for each customer group, construct what is called a demographic profile:
For business customers, the demographic factors might be:
What products and companies will compete with you?
List your major competitors (Names and addresses).
Will they compete with you across the board, or just for certain products, certain customers, or in certain locations?
Will you have important indirect competitors? (For example, video rental stores compete with theaters, although they are different types of businesses.)
How will your products or services compare with the competition?
What are your Strengths, Weaknesses, Opportunities & Threats as a business?
How will you get the word out to customers?
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, catalogs, dealer incentives, word of mouth (how will you stimulate it?), and 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).
Should you have a system to identify repeat customers and then systematically contact them?
How much will you spend on the items listed above?
Explain your method or methods 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.
Does your pricing strategy fit with what was revealed in your competitive analysis?
Compare your prices with those of the competition. Are they higher, lower, the same? Why?
How important is price as a competitive factor? Do your intended customers really make their purchase decisions mostly on price?
What will be your customer service and credit policies?
Probably you do not have a precise location picked out yet. This is the time to think about what you want and need in a location. Many startups run successfully from home for a while. You will describe your physical needs later, in the Operational Plan section. Here, 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)?
How do you sell your products or services?
Now that you have described your products, services, customers, markets, and marketing plans in detail, it’s time to attach some numbers to your plan. Use a sales forecast spreadsheet to prepare a month by month projection. The forecast should be based on your historical sales, the marketing strategies that you have just described, your market research, and industry data, if available. You may want 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.
Now that you've got your business ready to go, how are you going to get customers or sell your products? Are you trying to expand your customer base? Do you know the difference between marketing and advertising? The most important question is - who will buy your product?