A business plan is
a marketing plan
Î Presented by Randy Shumway
President, Progrexion
Î Download a PDF of this presentation: www.progrexion.com/marketingplan.pdf
Marketing Plan = Business Plan
After all, what is a business without a market?
What is a product or service that no one buys?
Marketing is not just the ads or brand (although it’s that, too).
All good business plans are necessarily marketing plans.
Despite the prevailing prejudice, marketing does NOT come after the
business plan
New Product Launch – The Financials
We have an idea for a great new product—a denture cream that tastes like
chocolate. What will it take to make Chocodent into a business?
Let’s just stick to the numbers and build a business plan.
Chocodent costs 25¢ per unit for manufacturing and distribution.
You’ll charge $2, which is less expensive than the national brands.
There must be at least 1 million people who will need it. Right?
That’s a lot of revenue and a great margin.
Great business!!!
Selling the Product
It tastes delicious!
I’ll give it to you for the startlingly low price of $1.75!!!!! Buy now!!!!
Know Your Market
There’s no such thing as a biz plan that’s solely revenue and margin and growth.
That would be absurd.
A biz plan MUST know the market(s) it wants to enter.
But what does it mean to know a market?
Common Sense + Creativity + Research
How do you even know who your market is?
There are the obvious guesses: Older people who use dentures.
But is that the only market? Are there other ways to approach this? For example:
Are there illnesses that cause people to lose their teeth at an early age?
What about injuries?
Do hospitals keep denture cream on hand as they do, say, gauze or ibuprofen? Might hospitals, in fact, be your best market?
Do dentists keep denture cream on hand?
Do people who ride motorcycles use dentures?
How about soldiers who suffer injuries? Could the US military be your market?
Does the fact that you can produce your denture cream so inexpensively make you an optimal choice for large scale institutional purchases?
Creativity
Good business thinking means thinking
creatively about your market.
That is how your business will grow.
That is how you will make your business
plan attractive.
Or how about this: Are there other uses for Chocodent besides as a denture
cream? How about as a coating for kids’ braces? Or for tongue depressors in pediatricians’ offices? Or is it the perfect shoe sole adhesive?
Think Critically About Your Audience
You’ve decided who your target markets are—and these will no doubt change as
your business changes, as the world changes, but for now, for your business plan you’ve decided. Now you have to come to know this market.
Why? Because your product—Chocodent—may sound great but perhaps it
doesn’t appeal to your target. Perhaps the market size is diminishing—after all, access to dentistry is improving which, in turn, will mean that future generations
will not need dentures and hence not need your product. Are you embarking on a
business for which, in 20 years, there will be no market?
Or perhaps the cost of your product exceeds the spending habits of your target
demographic.
To know whether your business is even viable, you have to first know your market.
What does that entail?
Demographics
Who is this audience? Where do they live? How much money do they earn?
What has been published about this audience. You can try to get this data from
existing sources such as Jupiter Communications.
Or you might have to be creative. Try AARP. Are there dental associations?
You might need to do your own research by getting mailing lists and conducting
surveys—online, via phone, or snail mail.
Go to conferences in different fields—denture conferences, dentistry conferences.
Not only do you need to know how your market stands now, you need to know
where it’s headed. You don’t want to launch a product that will be moot in a matter of years.
0.0 0.2 0.4 0.6 0.8 1.0 1.2 Denture
Products ToothbrushProducts MouthwashProducts
S a le s ( B illi o n s) 1994 2000 2006
Total Industry Sales
Target Consumer Demographic Information
Market Research
Denture User Income (2006)
<$30,000 15% <$50,000 40% <$100,000 35% $100,000+ 10%
Persons 65 Years and Over (2000)
Single 4% Married 57% Widowed 32% Divorced 7%
Psychographics
Who is this audience? What do they like?
What do they dislike—not just in the realm of denture cream but in their lives?
Do extended phone interviews.
Conduct focus groups in which you sit 3-6
potential users in a room and ask them all kinds of questions.
Put a face to the customer.
Serve Your Audience
Understanding Your Audience
Henry Ford
Founder, Ford Motor Company
“Any color, so long as it’s black”
Alfred P. Sloan
President, General Motors
“A Car for Every Purse and Purpose.” Ford's failure to cater to the needs of its audience in the 1920's propelled GM to industry sales leadership by the early 1930's, a position it retains to this day.
Competition
Do a competitive analysis. Who else sells denture cream?
How do you fit in? What’s your difference? Price? Taste? Ease of use? What
will attract potential users to your product? What will make them change?
Branding Efficacy
The inherited thinking is that branding comes later, after the business is
developed. Numbers first; brand later.
Good branding is good business
This may be the case. After all, a good
brand alone does not make business— just look at:
Pets.com. A funny mascot is not enough.
We all learned this during the dot com daze.
Carmack’s. This Utah restaurant franchise
focused on the brand but forgot the burger, leaving a lot of expensive windows for
Product Recognition Value
Which product did you buy?
iPod
Store and enjoy up to 20,000 songs, 25,000 photos, or 100 hours of video
Full-color screen; plug-and-play ease Creative Zen - All of the above, plus:
Plays more video/music formats than iPod
Has a longer video battery life
Customizable shortcut buttons
It supports a wide variety of online music stores not just iTunes.
Has a built in FM tuner and recorder, as well as a voice recorder.
Comes in five colors, where as the iPod video only comes in two
Cluttered Market and Access to Information
But in today’s marketplace, brand is assuming an increasingly large burden
of the business due to:
the massive proliferation of choices
the Internet allowing for one-on-one
communication between customers and business
the increase in lifestyle brands reaching into
new realms, such as computing (think: Mac).
A smart brand play can in fact be a good
business play. For example: Mac thrives on being different than the PC.
Brand can be Better than the Product
Volkswagen: Brand as business
Volkswagen does not make good cars. They break down; they’re not cheap; they’re not cheap to fix; they don’t hold their value.
There are of course great things about VW cars. The interiors are well designed for the driver; the dashboard lights have a sexy glow about them.
VW built their cars around their brand. They took their target market—21-36 year old, urban professionals who want to be hip and not
ostentatious—and built the features that would serve that market.
That is, they made a brand play the heart of their business and built their product accordingly.
Differentiate
VW found an opportunity in the brandscape.
Mercedes: Stylish, innovative, sophisticated.
Mercedes focuses on precision engineering.
Toyota: Reliability at a good price.
Volvo: A car that barely works, is expensive,
but is safe. Volvo is not a fashion statement or a symbol of prestige. It’s all about safety.
Hyundai, Ford Aspire: Inexpensive cars for
the young crowd. But not stylish.
Brand is Who You Are
When we think “market,” we think about the end customer. But the market is of
course more than those who buy your product. The market includes those who work for you.
A brand is not just the sum of your ads and your tagline. A brand is your position –
your differentiator. A brand is every touchpoint people—customers and employees, potential customers and potential employees—have with your company.
Brand includes the benefits package for employees; it includes the culture; it
includes the design of the offices; it includes the incentives—does your company reward team work? Or individual success?
Be Your Brand
Your brand represents who you are.
Nike has a gym on its campus.
Google has a top notch cafeteria. The meals are free for employees.
At Applied Underwriters, an insurance company, everyone has to wear a jacket and tie—even though there are never clients in the office. Employees are on the phone all day—and still have to wear a jacket and tie. Why? Because it is a professional work environment; that is its culture; that is its brand.
Nike attracts people who want to work for Nike; Google attracts people who want to work for Google; Applied Underwriters attracts people who wanted that professional environment.
Acquisition Marketing
Sales Matter! Build your brand by doing it through the sales process
DIRECTV DSL vs. Clearwire Communications
DIRECTV DSL: $600 CPA for a Customer Value of $450
Clearwire: Target Specific Geographies, Grassroots, own the market
Lexington Law Firm
Online marketing; lead generation; affiliate sales; outbound sales = 300,000 customers
Myspace.com
Where do they advertise? What is their business model? Does it matter??? They have 125 million customers and sold for $580 million when they had less than 30 million customers
CPA: How much does it cost to capture each new customer – do it smartly and you can build your brand
Marketing Communications
There are of course other components of marketing, the so-called creative side:
Ad campaigns
Taglines
PR
These are essential but they are not center piece of your business plan. These
creative strikes are just that—opportunistic strikes, responses to present market conditions, announcements of launch, and so on. Once you know your audience and your brand – your position – the communications tactics are simple!
What most people think of when they think marketing is the day-to-day
communications, both internal and external. These are essential.
But they are driven by the business plan which, as we now know, is the top-level
marketing strategy.
Executive Summary
Choose your target markets. Be creative. Think beyond the obvious.
Research. You alone are only one data point.
Know your markets well.
Demographics
Psychographics
Competition
Collaborators – who wants you to succeed
The future of each
Sketch a brand play that a) fits the business, the service/product; b) that makes
sound business sense; and c) that fits you
Words of Advice
Don’t “play house”
Savantec vs. Progrexion
Do what you love and love what you do
Finale’s vs. Amazon
Luck is required; Don’t quit!
Test, screw-up, learn, test again…
Must take some risk to succeed
Sales matter – get as quickly as possible to the sell
Surround yourself with diversity-of-thought. Conduct real research
President Bush
You are only one data point; one data point does not make a trend