Marketing Strategy and Tactics, Part 3 of 6
This is the fun part! Now that you have analyzed the market, chosen a target market, and selected your differentiation, it’s time to envision how you will be perceived by the market (positioning) and how you will support that image or slogan with each of the 4 P’s:
- Place (location and distribution)
- Promotion (communications)
Later, the market description and these marketing plans will enable you to prepare a well-informed sales forecast.
Marketing Strategy and Tactics starts with “positioning.” Considering the differentiation you selected at the end of your competitive analysis, create a slogan or catchy statement that says how you want the customer to think of your product or company. It will be based on your competitive advantage, but be expressed in terms of the benefits that advantage delivers to the buyers in your target market. Example: Amazon’s Kindle e-reader used the phrase “Books in 60 seconds.”
The Plan’s Organization
Under the 4.0 heading, state your positioning and marketing goals. The next five subsections (4.1 through 4.5) address the 4 P''s and customer service. Section 4.6 summarizes your sales forecast.
4.1 Product Plan
You briefly mentioned product features in Section 2.2. Here is where you explain more fully any features that are significant due to difficulty, cost and competitive impact. Next, describe the “augmented product:” those added features or services that make the entire offering more appealing, e.g., packaging, choice of paint job, free installation, warranty/guarantee, user manual on a flash drive, etc. Third, describe your set of product bundles, often three tiers of product content for three different prices. They might be named basic, standard, and premium, or bronze/silver/gold, but I’m sure you can do better than that! See Product and Service Bundles: Product Strategy for more on these product tiers, also called packages or bundles. Fourth, provide a “product roadmap.” It says what you will do to change the product in the coming months and years. Will there be new versions? If so, what will be their new features? Which market segments are these designed to attract? What technology advances are needed to provide these new features? When can this be introduced? Consider what competitors are likely to offer or respond with. See Product Roadmap.
4.2 Pricing Plan
First, show the prices of the product offers (also called packages, bundles, or tiers), and the prices for standalone services outside of these packages or tiers. Ideally, compare the price to the variable cost of the feature, and calculate the contribution margin. You will need to do this anyway for your financial forecasts. Costs/price = margin percentage. Your product margin should be at least 50%, i.e. price should be at least twice as much as variable cost. This provides enough cash to cover overhead and still deliver your target profit. Second, if you did a product roadmap, use a table to show price evolution per version over the next two years. For pricing ideas and methods, see Pricing. Consider reactions of competitors to price changes. Will they follow? Can they afford to? What they do influences what you would do next. Average price per product sold per month is an important input to the revenue (sales) forecast, so it would be good to state your estimate here.
4.3 Distribution Plan
Where will you sell your product? It should be where your target market likes to shop. Also, your choices should be consistent with your positioning: high end products must be sold at high end locations. Often you will choose more than one channel to get broader market coverage. This means you will need to deal with price differences among channels:
- Online: your website; catalog websites such as Amazon; other special interest sites
- Retail: chains, independents, your own stores
- Distributors and Agents: add expertise and network of contacts; pay commission or discount
- Direct Sales Force for B-to-B products
For each channel, mention the price discount or commission, and estimate the % of total sales this channel will generate. This enables you to calculate sales revenue and costs accurately in the plan’s financial statements. Describe any significant sales support costs. You incur these costs to generate more sales, by making your distribution channels more effective and more motivated. Examples could range from your website to a portal for distributors (as described in Sales Support Techniques for Sales Success). These expenses will later be added to your financial forecast. Finally, mention any logistics issues and costs involved with getting the product delivered from your location to the selling location.
4.4 Communications and Promotions Plan
What is the message you want to send, to whom, via what media, and what % of revenue are you willing to spend? If you have new product offers directed to new target market segments, consider which media would reach them. Most small businesses today depend on their website, social media, local sponsorships and events, and inexpensive local traditional media such as coupons.
4.5 Customer Service Plan
This section of your business plan is about how customers reach your customer service, call routing/referral routines, policies for discontented customers, and customer information provided with the sale. In order to develop accurate financial forecasts, this section will also include the cost of customer service: facilities, staffing, training, and reference materials.