The Marketing Plan
Module 3
Business Plan
• A comprehensive paper that details the situation analysis, objective,
strategies and tactics and how to monitor and control the enterprise.
Marketing Process
• in a nutshell, it is knowing the customers
• starts with identifying the customers needs where you are tasked to
create a meaningful value proposition.
• study what the customers want or desire for you to build a unique
selling proposition.
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Value proposition
• states why a customer should buy a certain product or
service.
• Customers are specific when it comes to their needs
and desired benefits, so the value proposition should
cater to those particular needs.
• the major driver in customer purchase or service
availment.
Tips on how to create effective value proposition
to the target customers:
1. Prepare a situation that details the problem(s) of the customers.
2. Make your VP straight to the point, simple, and specific; in short
there should be no complications.
3. Highlight the value of your product/service so that customers will
easily get what benefits you can provide.
4. Adapt to the language of your market.
5. Add credibility-enhancing elements such as actual testimonials,
social acceptability metrics found in social media or press matetials.
Several Quality management certification, such as ISO seal, add
credibility to the product/service.
6. Differentiate your VP with your competitors.
Unique Selling Proposition
• refers to how you will sell the product or service to your customers.
• addresses the customers wants and desires
• Tips to create an effective USP:
• Identify and rank the uniqueness of the product or service attribute.
• Be very specific.
• KISS (Keep it short and simple)
Know Your Customer
• Marketing Research - a comprehensive process of understanding the
customers intricacies and industry they revolve in.
 one of the most critical tasks of an entrepreneur.
 its result is the entrepreneur's major investment on a business, it will lead
him to the most effective strategies to employ.
 aims to scrutinize the target market, their specific requirements, and the
market size where the business operates.
Basic Questions in Market Research
WHY
Purpose and Objective for conducting the market research
What
Determines the scope and the limitations of the market research to be conducted.
Which
Determines which segment of the market must be studied; this must be the
market segment that the entrepreneur is eyeing.
Who
Identifies who among the members of the selected market segment will
participate in market research
When
Determines the time and the timing of the research. This is critical for the
entrepreneurs whose product/service will be offered to the time constrained
market such as office workers.
Where
Pinpoints the relevant location of the market research.
How
Determines the methodology to be used for the market research
Market Size
• the size the arena where entrepreneur's business will play.
• the approximation of the number of buyers and sellers in a particular market.
• Required to determine the market size first to gauge the vastness or tininess
of the market where he/she intends to join.
1. Estimate the potential market - approximate number of customers that will
buy the product.
2. Eliminate the customers who are probably unlikely to buy the product of
avail the service.
3. Estimate the market share - the plotting and calculation of the competitors
market share to determine the remaining portion for the new venture.
• Direct Competitors - offer exactly the same product and are
structured similarly.
• Indirect Competitors - don't offer exactly the same product type, and
are not similarly structured but still compete.
• Customers - the lifeblood of the business.
• People who buy the products or avail the services of the entrepreneur.
• Thoughts, feelings and experiences shape the decision of the business.
• The phrase “the customer is always right” is a mantra that most successful
entrepreneurs follow.
Customer Requirements - specific features and characteristics that the
customers need from a product or a service. It is this customer requirements
that business opportunities originate.
Market Intelligence
• includes customer profiling, drives the entrepreneur on what correct
strategies and tactics to employ.
Market Segmentation
• a process of grouping similar or homogeneous customers according
to demographic, psychographic, geographic (location), and behaviour.
• gives the entrepreneur holistic and general view of market group that
he or she is serving.
Demographic
• Demographic Segmentation - also called socioeconomic
segmentation :
• process of grouping customers according to relevant
socioeconomic variables.
• these includes, social class, occupation, gender and age,
religion and ethnicity.
• data help the entrepreneur target customers accurately
and classify their respective needs, wants, desires.
• data can be derived from public documents or internet,
therby giving the entrepreneur an easier task of collecting
data.
Income range and the social class
• important factors for the entrepreneur to consider because these
represent the purchasing power of the market.
• The entrepreneur will be able to determine the extent to which the
customers can buy opr avail of the servce.
Occupation
• considered not just to determine the customers income but
also their routine where goods and services can be properly
positioned.
Gender and Age Group
• data must be mined because the life cycle of customers and their
gender influence their buying behaviour.
Religion and ethnicity
• should be tken to account because these affect the way they buy
products or avail of services. Ex. food choices, events and holidays,
traditions and beliefs, spending habits, and conservativeness.
Psychographic
• Psychographic Segmentation - process of grouping customers
according to their perceptions, way of life, motivations, and
inclinations.
• Perception - process wherein an individual receives external stimuli
using the five senses of hearing, touching and smelling, seeing and
tasting.
• Physiological motivation - involve the needs of the person(food,
clothing, shelter)
• Psychological motivation - involve customer preferences (what the
customer likes or dislikes).
Psychographic
• Aspirations - what the customer wants to achieve (i.e. inner peace,
financial stability, work-life balance)
• Deprivation - involves customer's recognition of certain voids to fill
(i.e. lack of financial security, lack of love, lack of knowledge)
• Customers inclinations - involve preferring one product over another
as a result of gaining a refreshing experience when using a product,
possibly due to the product's unique features or due to it giving more
value than other products. It encompass the customer's personal
preferences.
Geographic
• Geographic Segmentation - grouping customers according to their
location. This encompasses the cultures, beliefs, preferences, politics,
and lifestyle of a certain geography. Can be as small as street, a
village, or a barangay. It can be based on municipality, city, province o
region.
Behavioral
• Behavioral Segmentation - process of grouping the customers
according to their actions. These are instigated by occasions, desired
benefits, loyalty, and usage of products or availment of services.
Behavioral
• Occasions - drastically affect customers buying behavior. Ex. Christmas
season,valentine season)
• Customer's desired benefits - efficient because the entrepreneur
determines the exact needs of the customers and offer the most
suited product or service for them.
• Loyalty - result of maintaining satisfied customers.
The goal of every entrepreneur is to inform, persuade, and remind customers
to buy the product or avail of the service consistently.
• Usage of products or availment of service - a behavior segmentation
factor that describes to the entrepreneur how often a product is
being used or services being availed.
Market Aggregation
•happens when an entrepreneur wants to target
a broader market as possible because the
product or service that the business offers is
suited for an undifferentiated market such as
fruits, vegetables, rice, water, and bread, as well
as services such as haircut, plumbing, or
transportation.
Interview
•one of the most reliable and credible ways of
getting relevant information from the target
customers. It is a face-to-face contact between
the researcher/entrepreneur and a respondent
where the researcher asks
Focus Group Discussion
• Commonly used by market researchers to capture qualitative results
from target customers.
• A process of mining customer and noncustomer experience and
insights about a specific product or service.
• The researcher will be able to generate relevant concerns and issues
of customers such as their views and inclinations toward a product or
service,perceptions or impressions on new product or service models,
innovations of the older product or service, inventive concepts on
promotions, price elasticity and initial feedback of customers on
marketing tactics and advertisements.
Focused Group Discussion
•Led by a moderator who keeps the discussion
spontaneous and on the right track.
•The role of the moderator is to encourage group
of participants to talk about list of topics
prepared prior to FGD. He will direct the
discussions in the right path, ensuring all angles
are covered and the discussion doesnt go too
far from the topic.
Observation
• one of the preferred and practical methods of
generating ideas because the researcher documents
the behavioral patterns of people or of objects or
events without necessarily requiring them to
participate in the research process.
• to simply watch and examine the customer’s behavior
in their raw state without biases and pretentions,
thereby providing more accurate results and faster
process.
Example of human observation
1. Customer purchase patterns
2. Mystery shopping
Traditional and on-line surveys
• When it comes to quantitative research, taking surveys is essential. It
is the process of getting answers from a sample of respondents
derived from a particular population.
• Some of the traditional ways to conduct a survey are via telephone,
face-to-face interaction, or snail mail. The emerging and more
efficient way of conducting a survey is through the internet – through
e-mails, web sites or social media sites.
Marketing Mix: 7Ps of Marketing
• Marketing Mix - widely accepted strategic marketing tool that
combines the original 4Ps(product, place, price, promotion) with the
additional 3Ps - people, packaging, and process.
• Product - What product or service is the most appropriate for the
opportunity, and why will customers buy or avail them?
• Place - What location is best suited for the business where there are
more potential customers?
• Price - What is the most appropriate price, and what pricing strategies
will be used for target customers
• Promotion- What is the most effective advertisement or combination
of advertisement, and which advertising tool should be used to drive
awareness and increase sales?
•People - What type of people need to be hired?
What are the basic skills needed
•Packaging - What is the best packaging for the
product that is attractive enough to customers
and cost-efficient at the same time?
•Processing - What is the most compelling feature
of the product or the business that will make a
difference in the lives of the customers?
1. Product
• any physical good, service, or idea that is created by an entrepreneur
or an innovator in serving the needs of the customers and addressing
their existing problems.
• Three -Level Concept of products or services:
1. Core Benefits of the Product or Service - the major factors why
customer buys a product or avails of a service.
2. Physical Characteristics of a Product or Service - once the core
benefit has been satisfied and options are available to the
customers, the tendency is to look for the second layer of
selection.ie. which has a better packaging
3. Augmented Benefits of a Product/Service - additional benefits.
Distinguish them from competitors.
4 General types of product
• Breakthrough products
• Differentiated products
• Copycat products
• Niche products
Breakthrough Product
•Offer completely new performance benefit.
•Double the performance at half the cost
•Convenient and easy to use
•Cater unique customer needs that have not yet
been tapped
Differentiated Product
• try to claim a new space in the mind of the customer
different from the spaces occupied by the existing
product.
• The performance benefits may be close to existing
products but there would be additional benefits on
special aspect of the product.
Copycat Products
• not make much impression on the customer's mind.
• the marketer should make up for this lack of mental
space by offerring more physical space on the shelves,
lower prices, easier access, promotional freebies, and
the like.
Niche Product
• do not intend to compete directly with the giants.
• Products with lower reach, lower visibility, lower
prices, and lower top of mind.
• content to play minor roles in specific smaller market
segments.
2. Place
• location or medium of transaction.
• covers product distribution and the whole business logistics.
• Logistics side for products cover production, ordering and
receiving raw materials or finished goods from suppliers,
storage, reorder points, and transportations system.
• Logistics side for services covers the physical evidence or
servicescape, service providers, and service delivery process
Initial location screening
1. The number of customers residing or working in the area, and the
number of customers who frequently pass through the area.
2. The density or number of customers per unit area
3. The access routes to alternative locations and their traffic count on
those routes.
4. The buying habits of customers or where they buy, at what time and
how frequent.
5. Location features such as parking spaces, foot access, creature
comfort, and the like
The following are also considered:
1. The cost of buying or renting, renovating and operating the
location.
2. Customer volume, drop-in rates and sales conversion ratios.
3. Revenue based on the volume and mix goods and services
expected to be sold at certain prices.
4. Profits
Relevant Location Drivers
1. Physical Proximity to Target Market
2. Customer Traffic Flow
3. Industry Clustering
4. Convergence of Multiple Industries
5. Population Concentration.
6. Activity Hubs.
7. Growth Potential
8. Business Climate
9. Cost of Doing and producing goods and services.
Price
• the peso value that the entrepreneur assigns to a certain product or
services after considering its cost, competition, objectives, positioning
and target market.
• Common Pricing Strategies:
1. Bundling - two or more products or services in one reduced price(3in-1 coffee for P8.00)
2. Penetration pricing - setting low prices to increase market share,
but will eventually increase the price once the desired market share
is achieved
3. Skimming - opposite of penetration pricing where prices are initially
high and then they are lowered o offer the product or service to
wider market (i.e. real estate company)
4. Competitive pricing - benchmarking prices with the competitors
5. Product line pricing - pricing different product or services within
a parallel product array using varying price points.(LED T.V. is more
expensive than LCD T.V. even if under the same brand)
6. Psychological Pricing - considers the psychology and positioning
of price in the market (e.g. price of haircut service at P199 because
consumers tend to think that odd prices are considererably lower
than what they are; they tend to round off the price as P100
instead of P200)
7. Premium Pricing - refers to setting a very high price to reflect
elitism and superiority (e.g. prices of signature clothes, bags,
perfumes)
8. Optional Pricing - refers to adding and extra product
or service on top of original to generate more revenue
(e.g. meals on top of air fare)
9. Cost-based pricing - basis of markup is the cost of
sales. Ex.Cost of coconut juice (P10) and plastic
container (P4). He could set the price of P20 to earn P6
per coconut juice.
10. Cost plus pricing - markup is based on a certain
percentage of cost(e.g. the entrepreneur wants to set up
a 50% markup on juice cost which is P14 x 50%=P7; the
new price is P14 + P7)
Two classification of costs:
• Variable cost or controllable cost - costs are directly proportional to
the number of products manufactured or to the number of services
performed. Ex. cost of cleaning materials in car wash business. The
business will incur higer costs only when more customers avail of the
service
• Fixed costs or uncontrollable cost - costs that are not directly
proportional to the manufacturing of a product or to the performance
of service. Ex. cost of equipment, employee remuneration, rental
cost, and utilities. The business will incur the same cost whether or
not they provide more or less.
General pricing Guidelines:
1. Do not price the product or service below its cost.
2. Monitor competitors prices, and ensure that your prices are
at par with them unless the product or service is really way
superior to the competitors.
3. Align the prices with the other 6Ps (Product, place,
promotion,people, packaging and processing)
4. Implement price strategies that are relevant to your market
segment.
5. Align the prices with your business objectives.
Promotion
• Expilicit communication strategy adopted by an enterprise to elicit
the patronage, loyalty, and support not only from its customers but
also from its other significant stakeholders
• Encompasses all direct communication efforts adopted by an
enterprise such as:
Advertising
Public Relation campaigns
Promotional Tours
Product Offering
Point of sale display
Websites
Flyers
e-mails
Promotion
• presenting the products/services to the public and how these can
address the public's needs, wants, problems or desires
• primary target market should be identified.
• main goal is to gain attention.
Key marketing messages for promotion can be:
1.
2.
3.
4.
Value proposition/unique selling proposition of the product/service.
Product service image.
Business Image
Business values and philosophy.
Promotional Tools
• 1. Advertising - type of communication that influence
the behavior of the customer the choose the product
• Objectives of Advertising:
1. informing, educating, and familiarizing the public
with the product and service offerings.
2. Building a trustworthy image.
3. Increasing Sales
Tools for advertising:
Television
Radio
Internet
Mobile phones
Print
Out-of-home
Promotional Tools
• 2. Selling - act of trading a product for a service/fee.
• 3. Sales Promotion - short-term promotional gimmicks wherein
practical incentives are incorporated to entice the customers to
buy/avail the product/service. Example: sales discount and coupons,
raffles, costest and games, promo items, product/service bundles,
trade fair or exhibit,sample distribution or free taste/trials,premiums,
point of purchase promotion, advertising specialties, rewards.
• 4. Public Relations - image building initiative of entrepreneur to make
the name of the business reputable to stake holders such as target
customers.
Promotional Tools
• Examples of PR strategies:
• Press conference
• launching events
• Strong media relation through press kits
• Social Responsibility events (e.g. Charitable/community
events)
• Lobbying (e.g. good relationship with public officials)
• Web public relations (e.g. blogs, social media, e-mails,
word of mouth)
Three critical factors on Effective Promotion:
1. The credibility of the communicator
2. The message and the medium of message
3. The receptiveness of the audience to all that is
being communicated.
People
• play a vital role in servicing customers even though the
entrepreneur sells only physical goods.
• Ultimate marketing strategy.
4 Levels of Marketing Efforts of People
1. To create customer awareness.
2. To arouse customer interest.
3. To educate customers as they evaluate their buying choices.
4. To close the sale and deliver the products.
Packaging
• how the product/service is presented to the
customers.
• overall identification (look and feel) of the
product/service.
• determine the uniqueness of the product from the
competitors
• ultimate goal is to entice customers to purchase
product/services
• establish the brands identity as well as the unique
selling proposition
Purpose of Packaging
1. Identifies the product, describes its features and benefits and
complies with government rules on specifying its contents, weight,
chemical composition, and potency.
2. Differentiates the product from its competitors and even from its
other brand offerings.
3. Lengthens the lifespan, physically protects, and extends the
usefulness of the product.
4. Become an environmental issue. recyclability and biodegradability
are now a major concern of packagers and conscern of packagers and
consumers.
Process
• the internal and external operations of the business to serve
the customers better.
• defined as the step-by-step procedure or activity workflow
that the entrepreneur or employees follow to effectively and
efficiently serve customers.
• components include input, throughput, and output.
• internal process include back-office operations
(preprocessing, processing, and postprocessing) wherein
employees/machines process customers request without
necessarily being seen
Fundamentals of Brand Management
• Brand - refers to the identity of a company, of a product, of a service,
or of an entrepreneur. A symbol of promise or assurance from the
entrepreneur.
• Brand management - supervision of the tangible and intangible
elements of a brand. The tangible elements include product itself, its
packaging, its price and its location. Intangible elements includes
perception and relationship of the customers to the brand.
• Branding - process of integrating strategies formed from marketing
mix to give an identity to product/service.
• The Goals of Branding :
1. Establishing to the customer that the business is reliable and
trustworthy and that the product/service is a superior solution to
their current problem.
2. Differentiating with the competitors.
3. Driving customer loyalty and retention.
Brand Name - major differentiator of the entrepreneur against the
competitors.
• Characteristics of Brand name:
1. Unique
2. Extendable
3. Easy to remember
4. Can describe the benefits of the product or service.
5. Can be converted to other dialects or languages in case
entrepreneur expands to other teritories.
6. Can describe product category
7. Can describe concrete qualities
8. Positive and inspiring