If you follow the idea that not your business idea but your customers are the center of your business, then you are following the classical principles of marketing. And even though “marketing” is often equated with “advertisement”, it is actually much more. “Marketing” is the orientation of your business onto your customers. Therefore, the marketing plan is an essential part in your business plan.
Your marketing concept shows how you plan your market entrance and how you plan to achieve the market potential that you determined in your market analysis. A complete marketing concept includes four elements: Product policy, price policy, promotion policy (communication) and place policy (distribution). The combination of these for elements creates a “marketing-mix”.
The so called “product policy” answers the question how your product(s) and/or service(s) features are supposed to cover your customers needs as optimal as possible. Furthermore, you decide whether you favor a one product (service) or multi product (service) strategy.
You also decide whether you plan product modifications (constant modifications to keep up with new trends) and product variations (several different variations for one product and/or service for different customer groups) and/or product innovations (research). Also, the area of brand policy is part of your product policy.
Your price formation is primarily connected to your customers’ willingness to pay, which is the question what price the market will accept. Of course, your price must be higher than your production or procurement costs. The higher your price is above these costs, the higher is your profit margin.
What price you can attain depends on the benefit your product(s) and/or service(s) will have for your customers. In the chapter “Product(s) / Service(s)“, you already described the benefits and in best case, quantified it. Use this chapter to determine the price margin for your product(s) and/or service(s).
Basically, you can choose between several price strategies. Your choice depends upon whether you want to penetrate the market quickly with a low price and a high quantity (“penetration-strategy”), or whether you want to generate high profits with a high price (“skimming strategy”).
If you decide for the “penetration strategy”, you should be aware that a strategy like that makes only sense if you plan to use the gained market share to generate profits later on since you will not make much profit (if at all) at the beginning. This strategy requires higher start-up investments in order to satisfy the higher demand that you plan to create.
The “skimming strategy” on the other hand generates high profits in a short period of time but bears the danger that you attract new competition to enter the market. So think about how you want to make the market as unattractive for new competitors as possible.
Promotion Policy (Communication)
A customer can buy your product(s) and/or service(s) only if he/she knows about it. If you stay “hidden”, even the best product and/or service benefit is worthless because nobody will buy it. Therefore, it is necessary to make the public aware about your (new) business. Convince the customers to (at least) test your business and its product(s) and/or service(s).
In your promotion policy you will describe all instruments that you plan to use in order to make contact with your (potential) customers and how you want to deepen and maintain that contact once it is established. In general, the following instruments are available for you:
Classical advertisement in media (printed press, radio, TV, movie theaters, internet)
Direct marketing (direct mailings to selected customers or households, phone marketing)
Presence on trade fairs and exhibitions
Public relations – newspaper articles and reports about you (not necessarily initiated by you), your company and your product(s) and/or service(s) are an efficient method to increase your degree of awareness among your target customer group
Advertisement is expensive. Therefore, calculate your expenses before you initiate any advertisement. Have in mind to adjust your promotion channel to your customer target group(s) and its/their habits. Every communication medium has its own target group and you should inform yourself about these target groups before you start using these mediums. If you choose to talk to (potential) clients directly, focus on the person who is actually making the decision to buy in the end.
Place(ment) Policy (Distribution)
Your place(ment) policy determines which distribution channels you want to use in order to sell your product(s) and/or service(s). The selection of a direct or indirect distribution mainly depends upon the kind of product(s) and/or service(s), the customer structure and your price strategy.
For example, the number of potential clients, the way of shopping they prefer, the price segment your product(s) and/or service(s) are in, the fact whether your product(s) and/or service(s) need explanations or not and whether you want to sell your product(s) and/or service(s) to other businesses (B2B) or end customers (B2C), are just some of the factors that will influence your “place(ment) policy”.
Furthermore, you will have to decide whether you want to handle the distribution of your product(s) and/or service(s) yourself or whether you plan to outsource to a specialized service provider. That decision will heavily affect the organizational structure of your business.
Examples for distribution channels:
Own sales locations
… Are interesting if presentation and design of your product(s) and/or service(s) are important for sales and you do not need a big number of stores to cover the market. Have in mind that own sales locations require higher investments but give you the best possible control over your distribution.
Third party sales location
… Sell your product(s) and/or service(s) to the end customer for you. Have in mind that your product(s) and/or service(s) need to have a high profit margin for other businesses to take them into their range of offers.
Own distribution staff (sales representative)
… Can be used if you offer product(s) and/or service(s) that need to be explained or are very complex and you need to visit your customers instead of them coming to you. Have in mind that the number of customers can not be too high and that an own distribution staff is quite expensive.
Third part distribution staff (sales representative)
… Sell product(s) and/or service(s) from several different businesses, not just yours. Using third party distribution sales representatives makes sense if you do not want to start out with an own distribution staff. The risk hereby is very limited since they only cost money if they sell. Depending on the contract, these costs can be high.
… Have contact to several retailers. You can use the wholesaler’s distribution channels but need to calculate a separated profit margin for the wholesaler in your price.
… Can be worthwhile since the internet allows you to reach a big number of customers with low costs. Have in mind to pay attention to your target customer groups’ shopping habits. You also have to guarantee a smooth shipment and service for you customers.
When you developed all activities for the four parts “product policy”, “price policy”, “promotion policy” (communication) and “place(ment) policy” (distribution), and adjusted them to each other, you will get your individual marketing-mix. Already now you can estimate costs for your marketing measures. That information will be part of your finance planning.
- What steps do you plan to take to bring your product(s) and/or service(s) to the market?
- What features do your product(s) and/or service(s) must have in order to cover the customers’ needs?
- Do you favor a one product/service strategy or a multi product/service strategy?
- Do you plan product/service modification, variations and innovations?
- What will be your product(s) and/or service(s) price when you position yourself on the market?
- What are you aiming at with your price strategy?
- How do you get direct contact with your customers?
- What kind of advertisement do you prefer and how do you plan to reach your customers?
- What distribution channels do you plan to use in order to sell your product(s) and/or service(s)?
- How do you want to build your distribution system/network?
- Have you thought about presenting your business on the internet? Did you set up an email-account so that customers can reach you 24/7?
The internet (World Wide Web … WWW) has changed marketing in a way never seen before. Every business, big or small, that takes pride in itself has at least some form of (re)presentation in the internet.
The web is a very powerful tool for your marketing if you use it right. It can be used for distribution just as much as it serves as advertisement. That way, the internet could be the solution to several of your “marketing tasks”.
As described below, the internet can offer your business a lot of opportunities, but you can also fail miserably using it. Whether you decide for a normal website or for a social network, your online representation serves as your virtual business card, so make sure your website is proportionate to your business and don’t try to overdo it. Sometimes, less is even more.
Why You Should Use The Internet
Even a simple website without any options to buy will give your business a virtual storefront to make your business more visible to a worldwide audience.
Your customer can use it as a resource for information about your product(s) and/or service(s), your location, contacts, and more, making the website a compliment to all other marketing efforts.
If you should decide to forego the opportunities of an own website, set up at least an email account so you can send and receive information and customer requests. Maybe you want to pay for ads on other websites that relate to your own product(s) and/or service(s). Ask your provider/supplier to include your company’s information on their own “link list”.
Things To Have In Mind …
Choose a site name (website address) that relates to your business. In case that name has already been taken by someone else, have several others as backup available.
You can create your website yourself or hire someone to do that. Also, you can host the website on your own computer system or use a hosting service to do that for you. Include the costs for your website in your marketing budget.
If you want to sell your product(s) and/or service(s) through your website, make arrangements about who will handle the transactions (money traffic, fulfilling the order, etc.).
Include security measures to protect your business’ information from outsiders. Also, make sure that you protect your customers’ information.
Your website needs to be updated and maintained, depending upon the product(s) and/or service(s) you are offering, quite frequently or just occasionally. Either way make sure the information on your website is always complete and up-to-date.
Creating Traffic For Your Website
As in the real world, people will only find your website if they know about it. So think about registering with search engines so your website comes up in a search.
You should also include a tracking program (so called “traffic or hit counter”) to monitor how many people visit your site. Some of these programs even allow you to see how long the people stay on your website, what they are looking at and roughly where they come from).
You can create additional revenue by allowing other companies to post advertisements on your website. Or, in return, you could post advertisements on other websites. Make sure to include any expenses and/or income into your finance planning.
Use Of Social Media Or Web 2.0
In “Social Media” there is “Media”, which means that social media are digital places for publication.
In “Social Media” there is “Social”, which implies sharing (files, tastes, opinions…) but also social interactions (individuals gathering into groups, individual acquiring notoriety and influence…).
Yes, you get the point: social media are places, tools, services allowing individuals to express themselves (and so to exist) in order to meet, share, discuss and more … so use it to your business’ advantage!