Download Integrated Business Modeling

Integrated Business Modeling
BADM 672D
Business Plan – Marketing Component
I. Trend Analysis:
A. Analyze industry trends (look for trends in industry, especially those that may signal success for
failure for your product)
1. Consult internal sources
2. Consult government publications
3. Consult periodicals and books
a. Moody’s Manuals, Standard and Poor’s Industry
b. Marketing Journals (Journal of Marketing, Harvard Business Review)
c. Trade Magazines (Advertising Age, Wall Street Journal, Progressive Grocer)
4. Consult commercial sources
a. Nielsen Media Research
b. Simmons Market Research
5. Consult Internet sources
B. Analyze consumer and other environmental trends (anything that influences buyer behavior
relevant to your product)
1. Demographic environment
a. Relevant trends in population, age, ethnicity, education, households
2. Economic environment
a. Income trends
3. Other environments as relevant to your product
a. Socio-cultural trends
b. Political-legal trends
c. Technological trends
d. Natural (raw materials) trends
C.
Analyze the competition
1. Make a list of primary and secondary competitors that sell products within a 60-mile
geographical radius of your firm
2. Determine the three competitors that are of greatest threat (i.e., the three most direct
competitors)
3. Create a chart summarizing each firm’s product strategies, pricing strategies, distribution
strategies, promotion strategies and any other strengths/weaknesses
4. Use this information to formulate your positioning strategy (this is how your product will be
positioned in the mind of the consumer, relative to these competitors; this is the “value
proposition;” for example, Wal-Mart is the low-price, high variety leader—that is why consumers
love it)
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D. Segment market, determine target market
1. Market segmentation consists of taking your mass market and breaking it up into smaller
groups of consumers who share similar needs/wants. From that analysis, marketers choose one (or
more) market segments on which to focus their efforts—this is the target market.
2. Segmentation bases: geographic, demographic (age, income), psychographic (values, attitudes,
lifestyle), and behavioral (benefits, user status, usage rate, loyalty status, buyer readiness, attitude)
3. Most likely demographic segmentation is best in this situation
4. From that segmentation, choose a target market (the group of customers on which you plan to
focus; this group will have similar demographic characteristics)
5. To estimate demand, go to www.census.gov and determine the number of consumers in your
target market, apply those numbers to your particular geographic domain to determine a number of
potential buyers
i. Assume that you can capture a small percentage of that market [i.e., 1-5%; but
in some cases you could have higher/lower depending on your product (energy
gum versus kayaks), competition, etc.]
6. Estimate how many times your target consumers will buy your product per year
7. Determine whether sales will be higher in certain months
8. Use the demand estimate and other relevant factors to create a year long sales forecast, broken
down by months
II.
Marketing Plan
A. Establish three measurable goals for your new firm. For example, the items below would serve
as appropriate goals.
a.
b.
c.
d.
Sales or Profits
Market share
Awareness among the target market
Repeat purchase rate
B. Product
a. Choose a product that has a clear, core benefit for consumers
i. Think through all the features of your product (materials, labor, packaging,
warranty, etc.) and how you will produce the product
b. Think through the branding implications of your product
i. Brand name decision
ii. Brand strategy
1. functional (emphasize product/price features, Nose strips)
2. image (Armani suit)
3. experiential (Barnes and Noble)
C. Pricing
a.
To price your product you will need to consider: costs, mark-ups, and your competition
i. Determine your fixed costs (overhead)
ii. Determine your variable costs per unit (manufacturing costs)
iii. Determine the industry standard for mark-ups in the channel of distribution (from
trade publications; contacting suppliers; Internet)
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Unit cost = Variable cost per unit + (Fixed costs/Unit Sales)
Markup price = Unit costs / (1 – Desired return on sales such as .2)
iv. Based on your price, determine the number of units you must sell to break-even
Break-even volume = Fixed costs / (Price – Variable cost per unit)
Consider: Does your sales forecast indicate that you will break even, given the number
you just computed? What is your expected revenue, expenses and profit?
iv. Examine your competitors’ prices: set your pricing strategy for value (low price),
status quo (match competitive price), or prestige (high price)
vi. Determine how you will adapt the price: cash discounts, quantity discounts, trade
discounts, seasonal discounts, or allowances
D. Distribution
a. In your channel strategy you will need to consider: channel directness, number of
channel members, criteria in selecting channel members, and number of channels
b. Channel directness: direct (Internet) channel or indirect (store) channel; this is based
on your dispersion of customers, product attributes, cost benefits, and firm attributes
c. Number of channels: one channel (Internet) or multiple channels (i.e., Internet, store,
wholesalers who go to other retailers)
d. Number of channel members: intensive (as many wholesalers/retailers as possible),
selective (a few key wholesalers/retailers), or exclusive (one wholesaler/retailer)
e. Channel member selection criteria: reputation and services provided (ask yourself:
does the channel partner’s strategy match your positioning strategy?)
E. Promotion
1.
Assume a $25,000 maximum marketing communication budget for your firm
2.
Marketing communication comes in four basic forms:
i. Advertising (print; broadcast; packaging; flyers; billboards; point of purchase
displays; etc.)
ii. Sales promotion (contests, premiums, samples, coupons, rebates, loyalty
programs, etc.)
iii. Public relations (press kits, special events, sponsorships, speeches, etc.)
iv. Direct marketing (email, direct mail, telemarketing, web shopping, etc.)
3.
Most start up firms have little money to devote to marketing communication.
Consider choosing one form of advertising (i.e., billboard), one sales promotion
(i.e., free gift), and one form of public relations (i.e., press release) that you will
administer during your first year of operation.
4.
Create a communication platform (key selling idea/theme/campaign/slogan for all of
your marketing communication efforts) that captures the needs/wants of your target
market and what you want them to do
5.
Design specific examples of your marketing communication and discuss their
implementation; for example, create the specific ads, choose the media, vehicles and
determine when the ads will run
6.
Give a detailed budget for the cost of your marketing communication efforts
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7.
8.
Create a 12-month calendar that illustrates when your ads, sales promos, and public
relations campaigns will be running
Design some way to measure the effectiveness of your marketing communication
efforts (how can you tell if they are worth the investment? possibilities: after sales
response cards, survey research, number of coupons cashed, sales data)
F. Controls (tracking the specific results of your marketing plan)
1.
2.
There are four common types of controls
i. annual-plan control – examines whether plan results are achieved
1. sales analysis, market share, sales-to-expense ratios, financial analysis or
a market-based score card
ii. profitability control – examines profit
1. profitability by: product, customer, territory, channel, etc.
iii. efficiency control – determine impact of marketing expenditures
1. examines efficiency of sales force, advertising, sales promotion,
distribution
iv. strategic control – examines whether firm is pursuing best opportunities
1. marketing audit
2. ethical/social responsibility of firm
Given your goals, you should design a control plan that measures whether you
achieved your objectives at the end of year one.
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