11 Essential Elements Of A Basic Marketing Plan
If you are going to sell products and/or services, you should have a marketing plan. You could just “wing it” like most people do, but you are likely to have better results if you do some planning up front. You don’t need to go crazy and come up with a 100-page marketing plan, but just as with everything, if you have some idea where you’re trying to go, it’s likely going to be easier to get there.
So, here’s an overview of the elements of a basic marketing plan, as well as a few tips on how to look at them and how to optimize your results. Note: marketing plans come in all shapes, sizes, and levels of sophistication. The elements covered here are the fundamentals. You can and should go far more in depth if you are so inclined.
Marketing Plan Element #1: Brief Description Of Problem You’re Solving For Customers
I like to see marketing plans start with a “problem statement”. That immediately forces the entrepreneur to think about and articulate what they are selling in terms of the customers’ needs. As you know, customers buy benefits, not features, so it’s key to consider what problem your product and/or service is solving for your prospective customer. That’s what they’re buying. For example, to use the old marketing adage (paraphrasing), customers don’t buy a drill; they buy the ability to make a hole.
Marketing Plan Element #2: Description of Your Products and Services
In this section, provide a description of the products and services you offer or plan to offer. Nothing fancy here and you don’t have to go into scientific or technical detail regarding every aspect of your offerings. Rather, this is where you describe your offerings and how they solve the customer problems you identified in Element #1.
Marketing Plan Element #3: Overview of The Market Opportunity
Here you cover the overall size of the market, in terms of units and dollar value. If you are coming out with a new, innovative product, there may not be sales of that specific product, as yet. However, that is not an excuse for not trying to estimate the overall size of the market for what you’re offering. Having an overall market size estimate is important, particularly in order to “sanity check” your sales goals and projections. Depending how far and wide you will distribute your product or provide your service, make sure that you break the market size estimates into relevant geographic sub-totals.
Marketing Plan Element #4: Competitor and Substitute Analysis
This section will include a matrix of your competitors that sell the same product or services, and of substitutes, which may not be exactly the same, but may solve some, or all, of the problem that your prospective customers care about. As discussed, your prospects don’t particularly care how the problem is solved; they just want it done as quickly, easily, and economically as possible. Another important point here is: don’t commit the cardinal sin of saying “we have no competitors,” or “we have no direct competitors”. While that may be true, it’s probably not. Even if it is, you still need to understand and articulate how prospective customers are currently dealing with the problem you’ve identified. That is, after all, the basis of the opportunity you’re going after. Without that problem and resulting need, no one would buy what you have to offer.
Marketing Plan Element #5: Discussion of The Segments (Niches) You Will Target
You described the overall market above, in Element #3. It’s now time to dig deeper and identify the relevant segments of the market. This is a place where big companies and other sophisticated marketers spend a lot of time and money on analysis. The better you identify and understand the needs of the various segments of the market, the better you are able to market and sell to them effectively. Don’t think simply, “we’ll just get one percent of the overall market and that will be a big sales number”. It does not work that way. You must determine, based on a variety of factors, which segments are most attractive and focus on selling to those segments. Those factors include: the composition of the market in the geography you are targeting, the products/services you are capable of providing, your marketing budget, etc. As a small company, you simply do not have the resources to sell and market to the market as a whole. You must pick your segments and focus, focus, focus. Obviously, you can course-adjust as you learn from your research and results, but you must be very focused, especially at the beginning.
Marketing Plan Element #6: Your Marketing and Sales Objectives
How will you know if you succeed with your marketing plan? You need to have goals to measure your results against. Those goals should include overall revenue targets, as well as objectives broken down by product, service, geography, etc. The more specific you can be with these goals, the easier it will be to communicate them to your team and have commensurate rewards and accountability. Even if you don’t hit your goals, you at least will have a benchmark and you can then adjust for future periods. Whatever you do, don’t put together a marketing plan without including goals. That would be like setting out to sea without a particular destination in mind. It would be hard to know if you arrived. It would also be hard to plan other important aspects of the journey, like how much fuel (“marketing budget”) and provisions (“other resources”) you would need along the way to your target destination.
Marketing Plan Element #7: Review and Analysis of Pricing
Pricing is one of the trickiest elements of marketing and probably the one I get the most questions on. At the end of the day, you want to set your price right at the point where you’ll maximize your profits. Good luck with that, particularly as a small business without a massive amount of historical price and demand data. As an entrepreneur, you need to look at price in terms of what the market (competitors) is charging and what it is costing you to provide your product or service. The last thing you want to do is set the price too low, lose money on every sale, and try to “make it up in volume”. Conversely, you don’t want to set your price so high that no one buys from you. There is a happy medium. You will need to test various price levels to find that happy medium. As you do so, bear in mind that the more “commoditized” your market is, the less potential you will have for deciding the price you can charge. In a fully commoditized market, the price will be set by the market and you will either have to be able to make profit at that level, or get out. In other non-commoditized markets, there may be a very wide range of prices for essentially the same product or service, with the pricing difference largely based on good marketing, positioning and differentiation. Test, test, test, in order to find the optimal pricing for your products and services.
Marketing Plan Element #8: Description of Sales Plan and Distribution Approach
Here you will describe in detail the approach you will take to selling and distributing your products and services. Will you have a direct sales force? Will you sell through partners? Will you sell online? There are many possibilities and usually, you will use a combination of approaches. It will depend heavily on what you’re selling, how complex the sales process is, the scale and scope of the markets you are going after, etc. Make sure you take into account how your margins will be affected by which sales approaches and channels you are employing. As with all aspects of your plan, you will need to keep testing, so you can find the optimal mix over time.
Marketing Plan Element #9: Advertising Approach and Budget
How will you advertise your products and services? Will you use print, television, radio, internet, etc? How much will you focus on each? It will depend to a large extent on what you are selling, how large your ad budget is and how wide a geography you are targeting. You will want to set up a line-item budget for each advertising medium you will employ. In the next step, you will track the effectiveness of your advertising and marketing in each medium, which will help you determine where you should spend more, and where you may want to cut back. Again, this is an area where you will want to test and course-correct constantly.
Marketing Plan Element #10: Metrics To Be Tracked
Depending on your market and the products and services you are offering, certain marketing metrics will be more important than others. The ultimate goal is to track “touches” (impressions, views, other interactions, etc.) on clients that then convert to inquiries, leads, prospects, and ultimately, sales. Not all prospects that see your advertising and marketing materials will buy, of course. Your objective is to figure out which of your advertising and marketing approaches are providing the most “bang for the buck” and do more of those. You will find that what “works” will vary by market segment and geography. You must steadily test and “tune” the approaches you are using. The more detailed the metrics you track, the more precisely you will be able to do this “tuning.
Marketing Plan Element #11: Marketing Strategy Feedback Loop
It is critically important that in all steps above, you are constantly testing and course-adjusting according to the results that you achieve. If you are going to put money, time and other resources into marketing and sales, you owe it to yourself (and your investors, if you have any) to keep close track of the results and make sure that you are optimizing your “spend” as much as possible. Also, don’t get complacent and think that what’s working today will continue to work the same way in the future. In the dynamic world in which we live, where change always seems to be accelerating based on technological advances, it’s important to remain vigilant and make sure that your approaches are “changing with the times”.
There you have the elements of a basic marketing plan. Have you put together such a plan? What elements did you include? Which parts do you think are most important? Are there others that you’d add to the list of “basic elements”?
I look forward to your thoughts and questions.
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