Published by YMCA of Newfoundland and Labrador
35 Ridge Rd., P.O. Box 21291, St. John’s, NL Canada A1A 5G6 Co-authored by: Paul J. Dwyer, Gary Ryan and Melanie Maher. Graphic Design: Vivid Communications Inc.
Funding for Creating Businesses: Guiding you towards entrepreneurial success was provided by: Atlantic Canada Opportunities Agency (ACOA), Government of Newfoundland & Labrador and Academy Canada. Copyright 2016 YMCA of Newfoundland and Labrador
All Rights Reserved. No part of this work covered by copyright herein may be reproduced or used in any form or by any means - graphic or electronic - without prior written permission from YMCA of Newfoundland and Labrador. Duplication of this work in any manner, except for use in schools, is strictly prohibited without the written permission of YMCA of Newfoundland and Labrador.
This resource is designed as a guide only. YMCA of Newfoundland and Labrador is not responsible for losses, no matter how incurred, as a result of using information contained herein.
ACKNOWLEDGMENTS
The YMCA of Newfoundland and Labrador would like to thank the many teachers of Entrepreneurship 3209 and their students who provided feedback and suggestions on improving the delivery of this resource. We would also like to thank Entrepreneurship teachers for their knowledge and enterprise expertise in assisting with the revision of Creating Businesses.
How to use this Guide
1Introduction
1Consumer wants & needs
2Supply and Demand 3
The Business
6Business Idea Identification 6
Running a Business 7
Business Life Cycle 8
The Competition
8Product/Business Competition 8
The Entrepreneur
9Profile of a Typical Entrepreneur 9
The Customer
10Customer Profile 10
The Venture
12Venture Ideas 12
Your IDEA for a Venture Plan 14
Venture Marketing Plan
151.01 Executive Summary 15
1.1 Business Description 16
1.2 The Industry 18
1.3 Management 18
2.0 Market Description 19
2.1 Customer Profile 23
2.2 The Market 24
2.3 Competition Analysis 25
3.0 Product/Service Development 27
3.1 Original Idea 27
3.2 Consumer & Industry Research 27
3.3 Product/Service Improvement 27
4.0 Product/Service Marketing 28
4.1 Product 28
4.2 Pricing 28
4.3 Distribution 29
4.4 Promotion 30
5.0 Operations 35
5.1 Venture Organization 35
5.2 Break-Even Analysis 35
5.3 Risks and Assumptions 37
The Pitch
39Venture Marketing Plan Presentation 39
1
This resource was developed as a supplementary resource so that young people would have the opportunity to use it as a guide in the development of their venture marketing plans.
How to use this Guide
First you come up with an idea, match it to your skill set, then, you will identify the size of your market, your customer, your competition and estimate your market share. As well, you will complete sections including market research, marketing and promotions and financials.
Each section of Creating Businessesprovides exercises related to your venture marketing plan. These activities are designed to: enable you to gain the knowledge and practice you will need to complete your own venture plan.
The first 14 pages of this guide provide simple exercises for you to use in preparation for writing your venture marketing plans, followed by the venture marketing plan outline and exercises. The particular order you follow in completing venture marketing plans may vary according to preference. Good Luck!
Introduction
Completing a venture marketing plan is a very challenging process. It takes time, patience and dedicated hard work. No one could have said it any better than Natasha Squires, an aspiring young entrepreneur, who set out to start her own business called Mosaics and Modern Furnishings.
“Every single thing that I needed - all of my materials for start up were listed right there, down to the last penny. All my ideas were explained, from who I was going to sell to, how I was going to do it and, even how I would transport it. Everything was right there in front of me. It was not like I could forget
about anything. If I had this really good idea, it would be in the venture plan so I wouldn’t forget about it in the future. My plan really became my shopping list for everything that I had to do or get. It was very impressive when it was completed.”
2
Consumer wants & needs
For this exercise, you are asked to list things that the consumer might consider before purchasing a product/service (eg: laundry detergent, Pepsi, chocolate bar, etc.):
1. 2. 3. 4. 5.
Discuss what impact the consumer has on business owners and their actions, if any:
3
Supply & Demand
How much was that?
Take the following list of goods and identify three separate businesses that sell these products. Then price them in accordance to company A, B and C. Afterwards, answer these questions:
1. Why do you think the prices are different or the same? 2. Which would you buy and why?
3. Are each of these products considered elastic or inelastic? A litre of gasoline:
A two litre bottle of cola:
A chocolate bar:
A 12-roll of toilet paper:
Elasticity
4 I went into a store the other day to purchase a bag of chips and
the clerk said “Hi, is there anything else you would like?”“No” was my response. He looked me in the eye and handed back my change and said “Have a good day.” I left feeling pretty good. On the other hand I have been going to the same grocery store for 6 years now, spending on average $125 four times a month which comes to a total of $36,000. Yet, almost every time I go into that store, the clerk looks at me as if I’m a hindrance and I’m thinking, “Don’t you know that I’m helping to pay your salary.”
Customer service is a series of activities that a company uses to win and retain customers.There is a perception today that many store and restaurant owners must do a lot more work to improve the quality of providing good customer services. When asked, people are quick to give you the name of their favorite restaurant along with a number of accolades. However, you don’t need to ask when service is bad because people tend to talk about it as a way of venting their frustration and sometimes anger.
CUSTOMER SERVICE
Customer Service
Set up a focus group of 4-6 people. Explore the types of customer services you would expect at each of the following establishments:
(A) a take out restaurant, a family restaurant, a high end restaurant:
(B) a catalogue service supplied by: Sears, Avon and L.L. Bean:
(C) a bargain shop:
(D) a hunting lodge, a cabin:
5
CUSTOMER SERVICE
Providing customer services will add value to your product or service and will differentiate your business from your competitors.
Use the following as a guide in completing the customer service section of your venture marketing plan.
• Which customer services will you be offering? (Flexible business hours, lay-a-way plan, guarantees, alterations, return policy, written estimates, free delivery and pick up, repair and maintenance, warranty...)
• What type of customer services are expected in your business?
• How will you maintain consistent high quality in the product(s) or service(s) that you will provide? (Customer surveys, checkpoints, record-keeping, checklists...)
• Which customer services will you be offering?
• What is considered to be high quality for your product or service? (Customer satisfaction ratings, delivery times, friendly and capable employees, safety standards, health standards...)
• How will your customers pay for your product(s) or service(s)?
• Are you going to offer credit to your customers? Why? How will you decide which customers are granted credit?
• What steps do you intend to take to follow-up overdue accounts? e.g. monthly statements, collection letters, phone calls, personal visits, legal action...)
We have all heard the story about the customer who had a bad experience at the local store. The customer would tell 10 people about it within a day, 20 people within three days and over 50 people within a week. Word of mouth like this will eventually sink your business.
HELPFUL HINTS
How to keep your customers and repeat sales.
• Treat customers like guests • Listen to them with an open mind
• Remember your customer’s names • Don’t take complaints personally
• Be polite and use good communication skills
on the phone
• Be patient, be patient, be patient
• When it comes to losing customers, there’s nothing
more effective than “Indifference and lack of interest.” Give customers the impression that you’d like them to get lost and they will.
Write your
Customer Service
findings here.
6
Business Idea Identification
The objective of this exercise is for you to identify and list ten business opportunities that you believe are evident in your community or province. Classify each according to economic sector.
Which of these businesses do you frequent? What needs do they fulfill?
The Business
Business Economic Sector
7
Running a Business
In this section, review the following aspects of running a successful business and discuss why you think each section is of importance. Rank their importance from 1-9 with 1 being the most important and 9 being the least important. You can have the class debate the issue and argue their opinions.
Company Goals:
The Team:
The Market:
Customer Needs:
The Product/Service:
The Marketing Approach: (How will you attract your customers?)
The Competition:
Risk Management:
Implementation:
8
Business Life Cycle
Discuss what takes place in each of the stages of the Business Life Cycle. Choose a business for evaluation, i.e. a local restaurant.
Establishment:
Growth:
Expansion:
Maturity:
Decline:
Discuss what can be done to ensure the continued success of the business once it hits the maturity and decline stages.
Suggested Activity
Product/Business Competition
The purpose of this exercise is for you to compare similar businesses to become aware of what truly gives one business an advantage over another. You are asked to compare Coca Cola and Pepsi companies; what makes one product/business better than another? Here you should list the attributes of the products, your preference and why you believe one is better than the other:
Attributes:
Coca Cola Pepsi
9
In your opinion, which is better? Why?
List the reasons you have provided and discuss:
1.
2.
3.
4.
5.
This will help bring more insight to the discussion and it is a fun activity:
a) A blind taste test with Coca Cola, Pepsi and PC Cola b) A blind taste test with Lays, Humpty Dumpty and No Name
You will be surprised at how few match the brand to the taste.
Suggested Activity
Profile of a Typical Entrepreneur
Here are some typical characteristics of entrepreneurs that you may or may not have.If you don’t have all of these characteristics or even some of them, it doesn’t mean that you can’t be an entrepreneur. The characteristics suggested here are simply some common qualities that these people have. Let’s take a closer look.Did you know that:
• Entrepreneurs are usually very creative. They tend to come up with unique ideas and/or ways to solve problems. They see problems as challenging, creative opportunities.
• Entrepreneurs are perceived as being flexible and innovative in their approach to problem solving and crisis management.
• An entrepreneur enjoys being a leader rather than
a follower. Many entrepreneurs get started because they want to be their own boss.
The Entrepreneur
• An entrepreneur is usually willing to take risks. Some are perceived as being big risk takers while others are viewed as calculated risk takers.
• An entrepreneur’s working day is usually not a typical 9 to 5 job. It is not uncommon to hear that some entrepreneurs may work 14 or 16 hour work days.
• Entrepreneurs are ambitious. They set long term objectives and often take on tasks that others would never consider.
• Entrepreneurs have a considerable amount of self-control
and are comfortable in stressful situations.
• Entrepreneurs are self-confident and like being in control. They tackle problems immediately with confidence and are persistent in meeting their objectives.
• Entrepreneurs have a never-ending sense of urgency to
For this activity name an entrepreneur and list the qualities of this person; for example, Donald Trump.
Entrepreneur:
1.
2.
3.
4.
5.
6.
7.
Please list some of the risks and benefits of being an entrepreneur:
Benefits Risks
Qualities of an Entrepreneur
“My customer is anybody who has a pulse. Really! Who wouldn’t want to purchase a skateboard?”
Understanding your customer and then aiming your market efforts at that customer, who is more likely to want your product or service, is instrumental to the success of any business.
Customer Profile
A customer profile is a description of the typical person who shops at your store.The who, what, when and where as it relates to demographics and purchasing patterns are the essence of a good customer profile. Arriving at a customer profile is like peeling back the many layers of an onion. The more layers you are aware of the better the chances you will be able to extrapolate the market potential, communicate to them, market to them and build relationships with them.
11
Bread Anyone?
The following example of a skateboard shop illustrates how important it is to clearly understand your typical customer/ target market.
At first glance when you look at a population of 10, 000 people in your community you may think it’s huge. Imagine if 10,000 people shopped at a skateboard shop and spent $75 once a month, the total sales for the year would be 9 million dollars. However, when you clearly define your customer you realize that not all 10,000 will shop at your store. Ah well, there goes the corvette. In fact, through your research you determined that the majority of your customers will be young males between the ages of 14 to 19 (500 in total) and they will purchase a skateboard once a year at an average price of $75. If everyone of them purchased once a year, the total annual sales would be $37,500 compared to the original 9 million dollars.
Furthermore, there are hundreds of advertising media to select from and you have to put your dollars where they will be most effective. Where it counts is the medium(s) that speak to your
target market. Selecting the right medium(s) and knowing who you are targeting puts you at a significant advantage in the marketplace. For example, just think about GAP commercials on TV. Think about the age, gender, color and mannerisms of the people used in the commercial. They know the people who shop at the GAP and who wear GAP clothing.
The importance of having a good understanding of your customer profile crosses over all aspects of business. Let’s assume that your target market is the ultra conservative people or person over the age of 65. As an owner/entrepreneur you decide one weekend to change your look by dying your hair red and inserting an earring in your nose. Do you think that your personal appearance will influence the likelihood of these conservative 65 year old people becoming regular customers? You better believe it!
Bread Anyone?
You and your friend have decided to open a bakery which would produce speciality breads (flax, whole grain, oat, rye, multigrain, sourdough, French and Italian) Who will be your customer? Consider your demographics: (gender, age, income, education, marital status) and the reasons why customers buy what they buy (attitude, lifestyle, and values).
12
Venture Ideas
Identify a business in your community that was created to meet a consumer need or want. Discuss.
Business name:
Description of product/service:
How effective is this business in meeting consumer needs or wants?
The Venture
Invent something which...
1. Styles your hair automatically
2. People can use to take their pet for a walk
3. Gardeners can use to get rid of weeds
4. Helps you get dressed in the morning
5. Prevents ice build up on roads
6. Alerts motorists to wildlife ahead
7. Makes it easier to eat shell fish
8. Makes road signs clearer
9. Controls garden pests
10. Helps people stop smoking Do you have what it takes to be an inventor?
Here is your opportunity to put your creativity and problem solving skills to work. Get into groups of 2 to 4. Each group is to invent and design a device to solve one of the following problems.
Each group is to make a 3 minute presentation to the class outlining their new invention.
Outside the Box
Your task is to identify 10 products/services that you feel are lacking in your community or region.The things can be products, services, or the way something is done or not done. You may have noticed something at home, in school, in your community, or with friends that you thought was needed or could be improved. You may have thought at the time, “Hey, why did they do it that way?
Or, why did they make it like that?I have a better idea than that;
I would have done it like this.”If you think like this, there may be a budding entrepreneur inside trying to find his/her niche in the marketplace. Here is your chance to improve on someone else’s product or service.
13
Brain Storming for Creative Opportunities
- cont’d
Instructions:You will want to select a partner to work with you on this part of the activity. Task: To identify 10 products/services that are lacking in your community or region.
1. 6.
2. 7.
3. 8.
4. 9.
5. 10.
Once you have selected the (10) products/services, decide on (5) that may be worth pursuing as a business idea.
1.
2.
3.
4.
5.
Discuss these ideas until you are satisfied that you have examined each of them in detail. Now select the ONE idea that is practical, realistic and gets you excited about doing the venture. Write it here.
Now write 2 to 3 sentences describing this idea.
Did you get any business ideas from the brain storming activity? If you did, write them here.
Is your idea/solution new and innovative?
Yes
❏
No❏
Maybe❏
Could it satisfy a need in your community?
Yes
❏
No❏
Maybe❏
Is it a new way of doing something?
Yes
❏
No❏
Maybe❏
Is it being offered in your community at present?
Yes
❏
No❏
Maybe❏
Do you think that you could make money from this business idea?
14 List some benefits of having a venture marketing plan:
1.
2.
3.
4,
5.
List some of the reasons that someone should have a back-up plan and be flexible in venture planning:
1.
2.
3.
4.
Your IDEA for a Venture Marketing Plan
If you are still passionate about your original idea after completing the activities which follow, then that is the idea you should pursue in developing your venture marketing plan. Lets’s get started!
Opportunities exist everywhere. Everyday new products arrive on the market or someone starts a new service or improves on an older one. Someone else finds new uses for old products or finds a more efficient way to distribute products faster around the country or the world. The question is, where do you see yourself in this picture of the entrepreneurial world?
What business idea would YOU like to pursue? This is a significant question because your business idea should be connected as closely as possible to your own abilities, skills, and interests. The purpose of this section is to help you generate some potential business ideas. Some of you may have already identified an idea that you would like to pursue and that is excellent. However, there may be a better one out there. For example, the following are things you can do to increase your chances of finding a venture idea.
You can explore the needs of your local community or region with a view to identifying an opportunity for a venture by engaging in activities such as researching, interviewing political leaders, and members of the local business associations, and conducting
community market surveys or you can examine community and regional venture opportunities by reviewing social factors, cultural factors, regulatory/ environmental factors, economic factors, and political factors.
For the time being, however, put your original idea(s) on hold as you work through the next few pages of activities. In fact, why don’t you write your idea here so you don’t forget about it.
My
original idea
is to:
“My venture marketing plan really became my shopping list for everything that I had to do or get. It was very impressive when it was completed.”
15
1.0 Executive Summary
1.1 Business Description 1.2 The Industry 1.3 Management
2.0 Market Description
2.1 Customer Profile 2.2 The Market
2.3 Competition Analysis
3.0 Product/Service Development
3.1 Original Idea
3.2 Consumer and Industry Research 3.3 Product/Service Improvement
4.0 Product/Service Marketing
4.1 Product 4.2 Pricing 4.3 Distribution 4.4 Promotion
5.0 Operations
5.1 Venture Organization 5.2 Break-Even Analysis 5.3 Risks and Assumptions
1.0 Executive Summary
• The intent of this section is to provide an overview of the business opportunity.
• Typically this will be the LAST section to be written.
• Suggested length: 50 words per section; 150 words total
Venture Marketing Plan
RECOMMENDED TIPS
for Venture Marketing Plan Preparation
OUTLINE
You have just completed your venture marketing plan. Well done! However, you must now take what you have written in rough work and rewrite it in a more formal way for presentation. This is a professional document and you want it to look its best. It’s time for operation cleanup. Remember, this is your work! Take pride in what you have done. Don’t accept doing an average job.
Think about it this way: How you make it look to others is part of your marketing strategy. You want it to look good. You want people who read it to know that you did your homework on this project. Making a good first impression does make a difference. Use the following recommended tips as a guide in writing your venture marketing plan.
•
Your document should be typed
•
Use 1.5 spacing between each line
•
Select appropriate font sizes for headings (16 point),
subheadings (14 point), text (12 point)
•
Use only black script in the body of your plan
•
Use consistent margins throughout
•
Use 8.5” x 11” white bond paper
•
Write “Confidential” on your cover page
•
Number your pages
•
Include a table of contents with page references
•
Proof read it before you submit it for evaluation
•
Make use of all available software in the preparation
of your venture marketing plan
•
Write your venture marketing plan in the third person:
16 An executive summary should include all the elements of your venture
marketing plan. It gives a brief summary of every section of the plan and informs the reader as to what to expect in the body of your paper. It is also used to get the attention of the reader. It is important to get the readers attention if you are planning on submitting your plan for financial aid or loan purposes. These people go through hundreds of plans and the summary is sometimes used as an indicator as to whether or not they decide to review your plan in detail or to dismiss it all together.
You have now completed writing your venture marketing plan. A good job, well done! But wait, all your work is not yet completed. The executive summary has to be written. The Executive Summary provides the reader with an overview of the key contents of the report.
The executive summary is unique and very important in the overall plan for two reasons. First of all, this concluding part of your venture marketing plan is normally written after all the other parts are completed. It is only then that you really get to see and understand the “BIG PICTURE” and secondly, it is placed at the beginning of your venture marketing plan and is the first thing that is read in the venture marketing plan. The executive summary gives the reader a snapshot of what you are proposing, the research you’ve carried out, how you plan to implement your new venture and the expected date of opening.
“How do you write one”you ask? It’s really very simple and fairly quick to do. You’ve done similar things many times. By now you know your venture marketing plan very well, it should be relatively easy to bring all the parts together into a concluding page or two. Here is our suggestion. What you are really trying to do is frame out everything that you have done in your venture marketing plan. Go back through every section of your venture marketing plan and ask yourself one question: what are the two most important points from this section that I want to convey to the reader? Start with the first section of the venture marketing plan - The Business Venture. For example, what are the two most important points that I want to convey about my narrative resumé?
Then, what are the two most important points that I want to convey about my business idea description? Do all remaining sections of the venture marketing plan in the same manner. When you have completed all the parts of the venture marketing plan, you will have written a summary of the entire venture marketing plan - the EXECUTIVE SUMMARY.
1.1
Business Description:
What is the product/service?
Who will buy it?
Why will they buy it?
The Business Idea Descriptionis where you describe your business concept.The development of your business idea description is much like trying to paint a picture so that someone else looking at it can appreciate and understand what the picture is all about. Describing your business concept simply means that you will write down your business idea, what you plan to do and why your idea has potential.
17
Identify, with a check mark, the appropriate box concerning your venture: Not for profit venture ❏ Profit venture ❏
1. Describe in detail what type of business you are planning and exactly what products and/or services will be offered.
2. What consumer need does it fill?
3. Why will your business idea be successful?
4. What are its growth opportunities?
5. What is your market niche? In other words, explain why you think your business is unique in the market place.
6. What are the major risks or limitations associated with your business?
Complete each of the following parts of the Business Idea Description.
18
1.2
The Industry:
• What is size/value of this industry?
• What trends are affecting this industry?
• Why will your venture be successful?
1.3
Management:
• Who are the business owners?
• What expertise do the owners possess that will enable this venture to be successful?
Strengths Weaknesses
Describe the industry your business will be part of and explain why it will be successful. List some strengths and weaknesses.
INDUSTRY DESCRIPTION
1.
2.
3.
4.
5.
6.
YOUR PERSONAL ABILITIES
19
MARKET RESEARCH
You have defined your business concept and determined that there is an appropriate match between the idea and yourself. Now you must do the necessary research to find out more about who your customers are. You will need to find out the number of customers in your trading area, how often they purchase, how much they spend, who is currently servicing their needs and the percentage of the market that you can reasonably attain.
It would be great if you had years of first hand knowledge related to these questions, as an expert your views would be valued; however, if you are not an expert or if you want to add credibility to your venture marketing plan, there is no better way than through market research.
For example, you can write in your venture marketing plan either,
“Based on my knowledge, customers will purchase twice a week and spend $35 per purchase” or you can more accurately say,
“According to Statistics Canada Family Expenditure’s Guide, customers will spend $20 per purchase three times a week.”
In the first example, some would question the validity of your comments, thinking that your information is not grounded in research and, therefore, somewhat biased and inflated because that is the information that you would like to present. The second example, however, is based on specific research carried out by Statistics Canada and is perceived to be accurate and reliable by those in the business community.
In order to properly approach the market research section of the venture marketing plan you must understand what you are looking for from a market research perspective. We suggest that you scan through this resource to familiarize yourself with all of its components so that when you come across a piece of information you will recognize the relevancy of it as it relates to your venture marketing plan.
The two types of research we are focusing on in this part of the resource aresecondary and primary research. We start with secondary research first because it will provide the foundation for completing primary research, if required.
Top 6 reasons to do Market Research
1. Helps you make better decisions 2. Gives you more than just a “gut” feeling 3. Gives credibility to your ideas
4. Reduces risk by indicating if there is a demand for your product or service
5. Forms the foundation of your venture marketing plan 6. Acceptance by the business community
Secondary Research
Everyday thousands of articles, stories and profiles are written by people throughout the world on various business concepts that are successful or which might have failed. This body of knowledge belongs to the realm of secondary research.
Rather than make the same mistakes as those who have gone before you, it is far better to research your concept and learn by other peoples’ best practices that have been published in the form of books, journals, and magazines. Maybe you can access a similar market study that supports your concept or geographical area. Maybe a professional association can supply statistics on the minimum size of an area in order for this concept to work. Maybe there is a venture marketing plan already written on this concept. Maybe you will not find anything at all. Unless you try, you will never know.
Secondary research may seem intimidating at first but there are many sources of information and agencies/organizations that are willing to help you gather the information that you may require.
Some secondary sources include:magazines, newsletters, journals, newspapers, directories, yellow pages, associations, radio, television, local boards of trade publications, community libraries, provincial libraries, and business libraries such as the Canada-Newfoundland and Labrador Business Service Centre (709) 772-6022 or Toll Free:1-888-576-4444.
QUICK TIP
Market research is knowledge
and knowledge is power.
2.0 Market Description
20 The following web sites are credible and informative web pages which will help you in your research.
Atlantic Canada Opportunities Agency (ACOA)www.acoa.ca
(This is an excellent site for links and information on entrepreneurship, including research materials and profiles of entrepreneurs.)
Canada Nfld/Lab Business Service Centrewww.canadabusiness.ca
Business Development Bank of Canadawww.bdc.ca
Getting the Message Outwww.gmo.nl.ca
Statistics Canadawww.statcan.gc.ca
Industry Canadawww.strategis.ic.gc.ca
Government contactswww.BusinessGateway.ca
BusinessGateway provides a single access point to all the government services and information needed to start, run and grow a business.
Canadian Manufacturers and Exporters (CME)www.cme-mec.ca
Canada’s leading business network for manufacturers and exporters. Find out more about international trade and development, manufacturing and innovation and much more at this web site.
A WISE STRATEGY
Through secondary research you will be able to identify potential suppliers. Once they are identified it could literally take months to establish contact with them, review their catalogues, do some comparative pricing and investigate shipping, handling and customs. You don’t want to delay your start up because you are still waiting on listings from suppliers.
If you contact them and say that you are working on a venture marketing plan that might not start, they probably won’t be that helpful because they are more interested in the immediate sale. From their perspective you are a maybe customer with no track record or credit history. Would you spend any great amount of time trying to cultivate that relationship?
Be creative in your approach with suppliers. When
you phone anywhere for information, write down
the name of the person giving you the information
and the date. Be prepared with your list of questions
on things you need to know.
SECONDARY RESEARCH
Now that you are warmed up to research, focus your attention on your concept and use any and all of the tools mentioned in the market research section to complete your research. When you finish with secondary research, you may have statistics about your area, quotes from several articles, or you may be able to reference a study that was written three years earlier. The important thing is to keep all of this information and to be ready to put it into the relevant sections of your venture marketing plan when required.
Write your
Secondary Research
findings here.
QUICK TIP
Do diligent research
21
Primary Research
Primary Researchis basically first hand information from potential customers about your business idea.Have you ever heard about anyone who has had their “bubble burst”? Sometimes when we think that we have a great business idea, we get very excited about the potential it may have. In all of the excitement we anticipate huge success and profit, but when we do our primary research we find that for one reason or another either the interest was not there, or the community was not large enough, or existing customers were loyal to local businesses. Doing your primary market research is a very good thing, it will help you get grounded. It will help you determine if there is demand for your product or service. The most difficult thing about primary research is that it bursts bubbles.
Primary research is like....
• trying on a new pair of shoes before buying them
or
• testing the temperature of the bath water before getting in the tub
or
• finding out whether the graduating class is willing to pay $39.99 for your handmade “Memory Medallions” before you make 200 of them
Got the idea?
• identify a person you will interview
• plan questionscarefully/accordingly
• keep questions open-ended
• leave room for spontaneous questions
• set up a time to meet
• provide a brief but good introduction
(who, what and why)
• remember to be polite
• always thank the participantsfor being a part of your research.
You and two business acquaintances have decided to investigate the possibility of opening a pizza franchise connected to a gas station in your community. A market research specialist has advised you that an interview would be a good way to collect valuable information. Draft questions for an interview. In presenting your feedback be sure to indicate whether the results suggest that this type of concept would work or would not work.
Guidelines for Interview Questions:
QUICK TIP
Ineffective market research can
lead to some very costly mistakes
DIAPERS
ANYONE?
When it was decided to introduce disposable diapers
into Japan, an important detail in their market research
was missed. The product was introduced and sales
were much lower than anticipated. Why? After some
further investigation, they found the packaging size
was too large for the typical Japanese household
which has very little storage space. The diapers were
repackaged into smaller sizes and sales took off!
Sources of primary market research include:
• focus groups
• traffic counts
• observation
• mail and telephone surveys
• personal interviews
• product testing
22
Write your
Primary Research
findings here.
PRIMARY RESEARCH
The type and amount of primary research that you undertake for your business plan is in relation to the uniqueness of your concept, the size of operation, the amount of start-up financing required, and your knowledge of the industry, customers, and the community. Your advisor will help you
determine the approach most appropriate for your idea. All primary research findings which are relevant to your business concept, both good and bad, should be presented in this section.
What is the difference between primary, secondary and tertiary trading areas?
Your primary trading area is where the bulk of your sales will come from. Your secondary trading area is where your next group of clients come from but it may not be that obvious. Your tertiary trading area represents a very small market. For example, a savoury producer located in Gander has its primary market, the town and, surrounding areas. Its secondary market maybe the City of Toronto while its tertiary market maybe customers from all over the world who use the internet to order their products.
Once you have completed your primary research you should ask yourself the following questions.
(1) Is the research positive?
(2) Should I pursue this business based on the research?
If the answer is NO, then go back to the drawing board to revisit your business idea. Discuss with your advisor.
QUICK TIP
Use the feedback from
23
Write your
Customer Profile
here.
DRAFTING YOUR CUSTOMER PROFILE
Use the following as a guide in developing your customer profile for your business.
• Who are your potential customers? (gender, age, income, education, marital status, lifestyle)
• What are their needs/wants/demands?
• Does your product or service satisfy their needs/wants?
• What will be your target market? (a particular age group,
gender, interest group, income level, occupation, marital status...)
• Do consumers currently buy a product or service like yours?
• How much and how often do they buy this product or service? ($ amount per purchase, weekly, monthly, annually...)
• Why will customers prefer your product or service to that of your competitors? (lower price, better quality, better service, more choice...)
• What do you really need to know about your customers
current buying habits based on their lifestyle?
• How will your product or service be affected by changes in the market? (changing customer needs, weak economy, need to increase prices, technical developments, trends...)
• What months of the year are most popular for your product or service?
Before you start any sales and marketing activities you should establish a solid knowledge of the market by creating a Customer Profile/Market Description.This will help you when you choose the ways in which to approach your customer. There are a lot of questions that could be asked in order to establish a description of your customers. This would include a description of your ideal customer; their demographic including age, income, lifestyle etc. You should know as much as possible about your potential customers.
• How many customers can there potentially be?
• Do the live in the neighbourhood or in the urban area, in the province, in the country or all over the world?
2.1
Customer Profile
• Who is the main user?
• What need is being satisfied?
• Are they men, women, old people or children?
• What do they do in the spare time?
24
2.2
The Market
• What is the size/value of the market for this type of product/service?
• What are the buying habits of the typical user?
• What trends are affecting this market?
Write your
Community Profile
here.
COMMUNITY PROFILE
Have you ever wondered why there is a McDonald’s, WalMart, or Tim Horton’s in one community and not another? Half of the reason could be related to the willingness of individuals to make it happen, while the other half could be related to the population size of community. For certain types of businesses a minimum population is required in order for it to survive and prosper.
For example, let’s assume that you live in a community of 1,000 people and you decide to open a fancy restaurant selling lobster and steak. Your research indicates that you will need to generate one million dollars worth of sales to break even. If the average bill is $40 a person, then you will need 25,000 transactions per year in order to break even. (Calculation: $1 million at $40 = 25,000). If you further divide this number by the population, it will mean that every single person, no matter their age, would have to eat at your restaurant 25 times each year. Really, what are the chances of that happening?
The good thing about this section of the plan is that you probably already have it done or, at least, have it started. Most likely you came
across population figures in your secondary research. As well, you defined the characteristics of your target market in the customer profile section. Based on these statistics and characteristics, you now have to develop a community profile that captures this information.
The following example will illustrate how to write a community profile. You decide to start an errand service for seniors. You know, through your research, that there are 40,000 people in your community. More specifically, however, you are targeting people age 65 and over. By identifying this number you are profiling your community. You further indicated in your customer profile that seniors living in a seniors’ complex and those who drive their own car are not part of your target market. Your secondary research indicated that 35% of the population were above 65 while your primary research indicated that only 25% of seniors lived in their own home and do not have access to a vehicle. What is the total number of customers, age 65 and over, in your community? (Calculation: 40,000 x 35% = 14,000 x 25% = 3,500). The total number of customers in your community is therefore 3,500. This is how to identify your community profile.
COMMUNITY PROFILE
Use the following as a guide in developing your community profile.• What are the primary, secondary and tertiary trading areas of your business? (These are usually geographic areas.)
• What is the population of potential customers in your trading areas as it relates to relevant demographic information?
• What other businesses/organizations are in the trading area that will affect your business? (e.g., suppliers, complimentary businesses ? NOT customers or competition)
2.3
Competition Analysis
• Who are the current competitors in this market?
• What are the strengths and weaknesses of your most important competitor(s)?
• What can be learned from this analysis to help increase the potential success of this venture?
Do a Competition Analysisto create a benefit that customers perceive as being of greater value to them than what they can get somewhere else.It’s not enough for you to be different; a potential customer has to notice the difference and must feel that the difference somehow suits their needs better.
It’s time you put on your investigator’s hat and checked out your competitors. You will be looking for everything and anything about the competitors products/services, strengths and weaknesses. Use the tips section and the questions following to complete your competition analysis.
• What is the approximate square feet of their location/space?
• How many staff do they have? (full-time vs. part-time)
• What type of staff do they have?
• Is the interior well laid out?
• Is the interior clean?
• Are the staff friendly, knowledgeable, helpful, etc.?
• What are the average selling prices on select items?
• What types of promotion do they use?
• What methods of payment do they accept?
• What policies do they have on refunds, lay-a-ways,discounts, etc?
• Approximately, what percentage of the market share do they have?
DIFFERENTIATE
TIPS FOR CONDUCTING A COMPETITION ANALYSIS
• First, identify the number of competitors. If there is a small number, analyze all of them. If the number is large (more than 4), select a representative sample; possibly a small, medium and large company.
• Group the companies according to direct and indirect. A detailed analysis will be required on the direct competitors while a general analysis will be sufficient for the indirect.
• Go at it from general to specific. Start your analysis by interviewing the owner or manager, follow this with a telephone call and then follow this by a site visit.
• Immediately following conversations and site visits, write the information down while it’s still fresh in your mind.
• When information is not forthcoming, you will have to rely on your powers of observation.
Use the following questions to gather data about your competitors.
• Company name?
• Who owns the Company?
• What types of products/services do they sell?
• How long have they been in business?
• How well known are they?
• Where are they located?
• Is location key to their success? (Explain)
• Do they have parking?
• Do they have an exterior sign?
• Is the sign complimentary to the - building?
• What is the exterior of the premises like?
QUICK TIP
The bottom line in business is
all about getting the customer,
keeping the customer, getting
an edge on your competitors
and, of course, making a
salary out of something that
you want and like to do. Be
sure to set yourself apart from
the competition.
26
Based on your Competition Analysis, identify 3 major strengths and weaknesses of your primary competitor.
Major Strengths:
1.
2.
3.
Major Weaknesses:
1.
2.
3.
27
3.0 Product/Service Development
This section explains how and what the authors of the marketing plan did to improve their original idea and provide for a better market fit. (It should reflect the same process used in the Steps #1, 2 and 3 in the Dragon’s Den project.) Suggested length: 75-100 words per section; 225-300 words total
3.1
Original Idea
What was the original idea?
3.2
Consumer and Industry Research
What did you learn from interviewing potential customers?
What did you learn from interviewing relevant business people?
3.3
Product/Service Improvement
“You’re Cracked! I can go across the street and get the same thing for $2.00 cheaper! What is so great about your product that you feel you can
charge $2 more”? Do you take the time to explain in detail the differences
and the value added in comparison to the competition? Do you tell the customer to get lost and go across the street? Or, do you lower your price because you were only ball parking it in the first place. To prepare you for these eventualities, you have to give some serious thought to pricing because first impressions are lasting, even when it comes to prices.
3 basic pricing strategies may be followed in starting your business:
1. Penetration pricing 2. Price skimming
3. Meet the competition pricing.
Penetration pricinginvolves entering the market with a low price that will hopefully capture as large a share of the market as possible. Be careful with this strategy because you may get into a price war and customers just might think that your lower price means lower quality.
Price skimming involves a new, relatively high priced product or service. Skimming is frequently done when a product or service is a first in the marketplace.
Meet the competition pricing strategyinvolves introducing a product or service at about the same level as that of its competitors.
PRICING
28
4.0 Product/Service Marketing
• This section provides a detailed description of the venture opportunity. Suggested length: 75-100 words per section; 300-400 words total
4.1
Product
What is the product/service?
What are the product/service strengths and/or advantages?
4.2
Pricing
• What does it cost?
Product/Service Innovationis the creation and introduction of a good or service that is either new or improved on previous goods or services of its kind.
29
My Pricing Strategy:
Discounts:
Specials:
Warranty / Servicing:
4.3
Distribution
How is the product/service made? By whom?
Who is selling the product/service? Why? Competitor’s Pricing Strategy:
Discounts:
Specials:
Warranty / Servicing:
30
You are the new kid on the block.You are competing with
established companies that have been around for years but no one has heard about you. You do not have a reputation. Word of mouth does not exist, but you do have 0% awareness and 0% of the market share. What are you going to do about it?
As stated earlier, businesses fail due to insufficient management expertise but, more specifically, the area that is lacking is the knowledge related to promotion/marketing.If you do not get the word out that you exist, people won’t come and check your business out, you won’t generate sales, you won’t be able to pay the bills, and you will fail. A tough lesson to learn but one that is avoidable. The days are long gone when word of mouth was the predominant way to promote your business. Today, there is an arsenal of promotional tools that you can use to get the word out that you’re “Open For Business”.
In selecting your promotional tools the most important thing you have to do is match the tools with your customer. For example, you are selling toys to children age 3 to 15 years and you want to get their attention. Would you advertise in a business newspaper, a mechanics journal, a housekeeping magazine, or on a TV station that targets young people in the age category?
Traditional marketing tools that you might want to consider:
•newspapers •radio •television •flyers •business cards •magazines •yellow pages •fax •billboard •websites •brochures •signs •samples •contests •trade shows/
telemarketing •public relations •sponsorship
•advertising specialities •sampling •contests...
Once you have selected the tools in accordance to your customer profile, you have to know when to draw on the experts to fine tune your marketing material.Just because you write well or know how to use a computer does not make you qualified to design your own ads, brochures, signs, etc. You have to realize that you can’t do everything and that there is a very good reason why people go to school for years and study such topics as graphic art, photography, writing, and advertising.
The next two activities focus on identifying the right promotional tools for a specific customer and secondly, designing an advertisement. (Keep in mind that, in real life, once you have it drafted you should go to the experts to fine tune it.)
PROMOTION
4.4
Promotion
• What is the most effective way to advertise this product/service?
• What is your advertising plan?
Developing a promotional plan for a new or existing product entails researching the target market, knowing the competition and developing a strategy to reach your market effectively and efficiently. Before you can develop a successful strategy, it’s important to come up with a list of Product Promotional Goalsyou can evaluate later to determine the success of your promotional campaign.
Decide what forms of Advertising and Promotionwould work best for your organization and indicate why you have chosen each form. Some examples include: brochures, flyers, direct mail E-mail, magazines, newsletters, newspapers, (major) newspapers (neighbourhood), online discussion groups, chat groups, posters and bulletin boards, radio announcements, telemarketing, television ads, web pages, Yellow Pages
Promotional Activitiesthrough the Media. Some examples include: articles that you write, editorials and letters to the editor, press kits, press releases or news alerts, public service announcements (PSA)s
31
Outfitters’ Lodge
You just completed your market research and determined that the area is large enough to support another outfitters’ lodge. Through your research you were able to determine that 15% of your customers will originate from within the province, while the remaining 85% will come from outside. Your two main products include a five (5) day big game package and a five (5) day salmon fishing package. During the off-season the outfitters’ lodge will be marketed to businesses as a corporate retreat. The five (5) day packages are priced at $2,000 and up, while the lodge can be rented for corporate retreats at a cost of $3,000 per day. (Note: the lodge can accommodate up to 15 customers plus three (3) staff ). Projected sales for this business is $268,000 in year one with $50,000 allocated for marketing.
You and your partners are now focusing on the marketing plan. First, you are to rank the various marketing tools, from most effective to least effective, as they apply to your customer. Secondly, identify how much you will spend of your $50,000 budget on each tool.
Here are some examples of advertising media: Radio: $60 per thirty seconds.
Yellow pages:$400 per month.
Newspaper:$35 an inch.
Brochures:in the range of $14,000 at $1,500.
Magazines:$4,000 per page.
Web site:$2,000
Design an effective ad campaign based on your budget of $50,000.
32
Creating an Ad for Your Business
In presenting your ad, keep in mind the four basic ingredients of good advertising, know the AIDA formula:
Attention, Interest, Desire, and Action. Attention:
Get their attention through the use of pictures, headings and sub-headings.
Interest:
Get them interested. Be creative in the body of the text-information that educates or informs them about the product.
Desire:
Through the use of emotions, create a desire in them for more information.
Action:
Call them to action. Leave them hanging, so that they will have to call, visit or purchase the product or service.
10
G
R
E
A
T
M
A
R
K
E
T
I
N
G
S
T
R
A
T
E
G
I
E
S
1. Hold a contest that features children. A music shop could hold a talent search.
2. If you are seeking donations to support your activities, stage a dramatic presentation showing how your efforts help people,
then invite the media and the public to observe.
3. If you are involved in an event that might profit from the clientele of senior citizens, inquire at your local seniors’ centre
about presenting an educational or entertaining program
specially designed for that sector of the market, for example,
a travel agency could hold a session on Florida.
4. Hold a fashion show with a theme, such as “Dressing up for the Slopes” or “Putting Pizzazz into Outdoor Wardrobes.”
5. Present some needed equipment to a local library, school, seniors’ centre or recreation facility.
6. Give away free samples of something related to your business. An aerobics instructor may give free passes to attend a class.
7. Hold a draw for a free prize. Anything, from one of your own products to free tickets to a sporting event or music concert.
8. Plan an auction to raise money for charity and then volunteer to be the auctioneer.
9. Speak to clubs and organizations about your field of knowledge. Emphasize consumer hints and provide audience members with
some sort of promotional item imprinted with your company name.
10.Use your imagination to create an unusual exhibit to lure customers and then notify the media. Depending on your business, some
possible displays include people posing as mannequins, people
constructing a craft, or a cooking demonstration. Don’t forget
singers, dancers, and musicians to attract attention.
to promote your business
which in turn could result in
33
Write your
Promotional Plan
here. Be thorough.
PROMOTION
Use the following as a guide when completing your promotional plan.
• Indicate which promotional tools you will be using and why (e.g., newspaper, radio, television, flyers, business cards, magazines, yellow pages, fax, billboards, web sites, brochures, signs, samples, contests, trade shows/fairs exhibitions, telemarketing, public relations, sponsorships, advertising specialities, sampling, contests...)
• Indicate the cost associated with each promotional tool. Prepare
34
Creating a logo for YOUR Business
It’s time to create a logo for your business. Logos are simply symbols by which customers recognize products/services and companies through their packaging and advertising campaigns. Logos can convey many characteristics that the consumer may admire, for example: strength, quality, warmth, trust, elegance,
wealth, stability or coolness. Companies use logos to reassure the consumer that their products/services are the very best in the market place. They want you, the consumer, to identify with their products or services and to purchase from them, preferably, on a regular basis.
In groups discuss and show several logos using the following questions as a guide.
What did you notice first about the logos? (Shape, colour, size)
What did you like about each logo?
What didn’t you like about each logo?
What message do you think the logo was trying to convey to you?
If any, what words and symbols were common to all of the logos?
Do you think you could improve any of the logos? Explain:
Briefly explain your logo and how it reflects the name of your business product or service. After completing your design, share your business idea and logo with your classmates.
Now its time to design a logo which reflects the name of your business product or service. What message(s) do you want to convey to the consumer about your product(s) or service(s)? Logos can easily be designed using available software.
Here are some helpful hints when designing your logo.
•keep it simple •stick to 3 colours or less
•detail is not important •don’t clutter
•review other prominent logos •do lots of drafts
Identify and list 5 logos that you see everyday.Was your first thought about the Golden Arches of MacDonald’s - the BIG M? Think about others and what they offer; for example, clothing companies, toy manufacturers, food distributors, car manufacturers and so on. Look around your classroom, name and list the many logos that already exist there - various logos on students’ clothing. Bring to class other examples of logos from magazines, newspapers and catalogues.
1.
2.
3.
4.
5.
35
A Sales Forecastestimates the amount of money that you will pay out and you will receive over the first year of business.
A Marketing Budgetestimates how much money you think you will need based on the cost of activities laid out in your marketing plan.
A Break-Even Analysisidentifies the point or amount of sales that need to be realized to break-even. Here are some things that you will need to know in order to determine your break-even.
Here are some things that you will need to know in order to determine your break-even.
The Break-Even Formula: fixed costs
(Revenue/unit - Variable costs/unit) Fixed costs:costs that must be paid whether or not any units are produced. These costs are fixed: such as rent, insurance, tools, etc.
Variable costs: costs that vary directly with the number of products produced. These would include such things as materials and labor used to produce units.
Let’s use the following as an example:
fixed costs = $ 50,000/year variable costs = $ 1.60 materials
$ 3.00 labor .60 overhead $ 5.20
BREAK-EVEN
5.0 Operations
• This section provides a brief overview of relevant operational considerations. Suggested length: 50-75 words per section; 150-225 words total
5.1
Venture Organization
What form of business organization will be used? Why?
5.2
Break-Even Analysis
• What does it cost to produce the product/service?
• At what point will the venture be profitable?
Selling price per unit = $9.00
$50,000/year $9.00 / Unit - $5.20 / Unit
In this example, 13,157 units must be sold before the company will break-even. You may use the break-even analysis to determine how changes in price and sales level or, cost increases or
decreases will affect profitability.
36
Polar Fleece
Chris is going to make monogrammed polar fleece scarves and sell them for $10.00 each. His fixed costs of $860 include a sewing machine and a cell phone. In order to produce 30 scarves Chris will spend $100 on a bolt of fabric, $2.95 on a spool of thread, $4 on packaging and $60 on labor, all of which are variable costs.
The first thing that Chris must do is find out the cost of producing one scarf.
List expenses: ______ (fabric) ______ (tread) ______ (packaging) ______ (labor) Total expenses: ______
Next, Chris needs to find out how many scarves he needs to sell to break-even. Customers are willing to pay $10 per scarf.
Break-even Formula:
fixed costs (Revenue/unit - Variable costs/unit)
Chris now knows that he needs to sell ______ scarves to break-even in this business.
Chris can now make some other decisions.
• How can he reduce his operating expenses? (Buy a used sewing machine, give up the cell phone.)
• What will be the effect if he uses a cheaper fabric to make the scarves?
• What will happen if he increases his price per scarf?
• Will he lose customers?
• Chris can sell 500 scarves. How much profit will he make on the scarves?
Write your
Break-even Analysis
here.
BREAK-EVEN ANALYSIS
Go through the process of discovering your own break-even point.cost per scarf
# of units needed to sell to break-even
=
-= =
37
In looking back over your plan you may have identified a number of Risksinvolved with your venture marketing plan. Do you remember what they were? You may have made certain Assumptionsabout your customers, suppliers, your product or other aspects of the plan that you could not verify or find answers to during your research and planning. Do you remember what they were?
Write your
Identified Risks
here.
Write your
Assumptions
here.
This section is simply a review of the things you must overcome to start your venture marketing plan.A review will allow you the opportunity to stand back and re-examine the risks you might be faced with and to be able to explain how you will overcome them. It is important to explain the risks and assumptions your plan is based on so others who are looking at it, whether they are potential investors, creditors or anyone else, can appreciate how you decided on your plan. List below the top three risks associated with your venture marketing
plan. Make sure you identify the key areas of concern and explain what you have done or will do to lessen the risks or resolve the problems.
List below any assumptions you may have made in developing your plan. Were your initial assumptions correct? If yes, how did they influence the development of your venture marketing plan? If not, what new assumptions did you make? How did they influence the development of your venture marketing plan?
1.
2.
3.
1.
2.
3.
5.3
Risks and Assumptions
• What are the potential threats that could reduce the likelihood of this venture marketing plan being successful?
• What can be done to minimize these risks?
• What factors are beyond the owners control that will need to be monitored?
38
