One of the common reasons given for business failure is the absence of a workable marketing plan. You might wonder how can that be in 2017 with all the books, software, and free information on the Internet about creating marketing plans? Good question. Whatever the reasons, too many companies don't have the right plans to take them where they want to go. If you need help developing a workable plan, the following should help.
Primary purposes of a marketing plan
The two main purposes of a marketing plan are to provide (1) a blueprint for your company to follow and (2) a selling document to attract the people you need to help you build a successful business. These resources include:
- Key personnel to come work for you;
- Bankers to loan you money at a favorable interest rate;
- Investors to give you more money for each share of stock;
- Employees to be motivated and convinced that they are working for the right company.
Main elements in a marketing plan
Marketing plans have two main elements -- (1) Goals and (2) Strategies to achieve them. What kind of goals? The goals need to be measurable and challenging. Measurable goals give everyone in the company a common target. If the goal is to sell $1 million this month, it is easy to measure progress toward that goal during the month and to figure out if it is achieved at the end of the month. Challenging goals keep everyone interested, help to avoid boredom, and motivate people to reach their potential. If too easy, goals will bore and demotivate people. If too difficult, goals will frustrate and disappoint employees that find it nearly impossible to achieve them.
The right mix of marketing strategies
Once measurable goals are determined, the next step is to create marketing strategies to achieve them. Marketing strategies are devised from a marketer's periodic table of elements that I call the 7 building blocks.
Marketing Information System
It all starts with a system to collect, analyze, report (to the decision makers), and take action on marketplace information in real-time. In the "old days," market research was sufficient. Marketers could look backward to determine where and how they should go forward. Actually, looking backward is never sufficient, but it is far better than doing no research at all. To implement an effective Marketing Information System, market research has to be an important component since you need to look backwards to understand the successes and mistakes of the past and to forecast a way forward in the future. In the scouts and the military, they teach you to triangulate your position so you don't get lost. One or two of those points are behind you with at least one other in the front.
Branding (Corporate Image and Positioning)
Once the proper information is collected, you need to craft branding strategies to produce the right images of your company and products that (1) encourage prospects to buy yours and (2) differentiate them from competitors. To get non-experts to understand what branding is, I break it into two components that I call the "lock" and "key." Once the lock and key are fashioned, branding tools are developed to help communicate them.
- Lock. The "lock" represents the target audience that has a need for the products from the company it trusts to do a better job of fulfilling this need.
- Key. The "key" involves creating images of the company and each of its products that fit the lock better than competitors.
- Branding tools. Branding tools for creating a memorable key involve the name, logo, slogan, type fonts, colors, mascots, and jingles.
Products are developed to fit your brand map. It is critically important to make the product to meet or exceed buyer expectations. If the product does not deliver on the promise of the branding images that were created, buyers will be disappointed, and they will share their disappointment with their referral pyramids. If on social networks, these referral pyramids could grow to enormous proportions and destroy brands and companies.
Once the product is defined, cost of sales can be determined, and pricing strategies can then be devised. The more uniqueness, quality, and desirability created by the branding and product strategies, the higher the price that can be charged. There are many different pricing strategies. I have outlined three of the top choices that are commonly employed.
- What the market will bear. This is a pricing strategy that works for highly-unique and desirable quality products.
- Gross Margin Target. This strategy takes cost of sales and derives a price that produces a target gross-profit margin.
- Most Significant Digit. This strategy recognizes that the buyer's brain typically focuses on the most significant (or leftmost digit). For example, to the buyer brain, $9.99 or 9.95 seems a lot less expensive than $10.00 even though it is only a penny or a nickel less.
In some cases, these three strategies are combined. For example, Apple typically sells high-end differentiated products at higher prices that satisfy their gross profit margin targets and use most significant digit pricing. If you visit the Apple store, you will see iPads listed from $499.
Distribution is the convenience function. Buyers buy from sellers that make it easier for them to find, buy and use the products that they sell.
In the U.S., there are two common direct channels: (1) Sales people sell to customers in person (face-to-face) and (2) Direct marketing sells products via the Internet and direct mail without any "in person" interaction. And, there are two common indirect channels: (1) Manufacturer sells to a big box store or a franchisee who turns around and sells the product to the end buyer (Example: Wal-Mart or Target) and (2) Manufacturer sells to a distributor, or wholesaler, who sells the product to a dealer, or retailer, who then sells it to the end buyer. Example: Any local or small to mid-sized retailer.
Unsophisticated businesses presume that they can cut out the middle people and save money. While this can be true, those businesses don't know that they have to perform (or pay for others to perform) the functions of the middle people that they cut out -- the warehousing that the big box store or wholesaler provides and the convenience that the retailer provides. Also, these middle people have locations, sales people, and marketing efforts that are also lost when they are eliminated, and they may reach retailers and end buyers that you cannot.
The number of promotion strategies is so large that it would take an encyclopedia to cover them all. The top strategies in the US fall into the following four categories:
- Personal selling. A salesperson, or seller, sells to the buyer face to face.
- Advertising. The seller puts ads in mass communication media with the goal of producing buying actions that lead to sales.
- Sales promotion. A discount, coupon, rebate or other incentive is offered to the buyer (or reseller) to encourage them to buy or sell quicker - usually by an expiration date.
- Direct Marketing. Promoting products via direct mail, telephone, direct response advertising, the Internet (including social media and mobile techniques).
Putting it all together
Once integrated, marketing strategies that use the 7 building blocks as ingredients are crafted, (1) budgets to execute these strategies and (2) sales forecasts that sum to the measurable goal in the marketing plan are developed. As the plan is executed, actual costs are measured against the budget and actual sales are compared with the forecast. Any significant deviations from performance targets and budgets trigger an analysis to determine why.
This should be followed by the appropriate corrective action. If developed and implemented properly, the plan will have a high probability of success. If properly built and utilized, the marketing information system will produce continuous improvements and a competitive advantage. Best of luck in creating a marketing plan that leads to greater success for your organization.