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MGT602 - Entrepreneurship - Lecture Handout 25

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THE MARKETING PLAN

LEARNING OBJECTIVES

  1. To understand the differences between business planning, strategy plans, and market planning.
  2. To describe the role of marketing research in determining market strategy for the marketing plan.
  3. To illustrate an effective and feasible procedure for the entrepreneur to follow in engaging in a market research study.
  4. To define the steps in preparing the marketing plan.
  5. To explain the marketing system and its key components.
  6. To illustrate different creative strategies that may be used to differentiate or position the new venture’s products or services.

PURPOSE AND TIMING OF THE MARKETING PLAN

The marketing plan establishes how the entrepreneur will effectively compete and operate in the marketplace. Marketing planning should be an annual activity focusing on decisions related to the marketing mix variables. The marketing plan section should focus on strategies for the first three years of the venture. For the first year, goals and strategies should be projected monthly. For years two and three, market results should be projected based on longer-term goals. Preparing an annual marketing plan becomes the basis for planning other aspects of the business.

MARKET RESEARCH FOR THE NEW VENTURE

Information for developing the marketing plan may require some marketing research. Marketing research involves the gathering of data in order to determine such information as who will buy the product, what price should be charged, and what is the most effective promotion strategy. Marketing research may be conducted by the entrepreneur or by an external supplier or consultant. Market research begins with definition of objectives. Many entrepreneurs don’t know what they want to accomplish from a research study.

Defining the Purpose or Objectives

One effective way to begin the marketing plan is to make a list of the information that will be needed to prepare the marketing plan.

Possible objectives:

  1. Determine what people think of the product or service and if they would buy it.
  2. Determine how much customers would be willing to pay for the product.
  3. Determine where the customer would prefer to purchase the product.
  4. Determine where the customer would expect to hear about such a product or service.

Gathering Data from Secondary Sources An obvious source is data that already exists, or secondary data, found in trade magazines, libraries, government agencies, and the Internet. The Internet can provide information on competitors and the industry, plus can be used for primary research. Commercial data may also be available, but the cost may be prohibitive. Free secondary information is available through:
The U.S. Bureau of Census and the Department of Commerce. State departments of commerce, chambers of commerce, and local banks. Private sources of data, such as Predicasts, the Business Index, and the SBA’s Directory of Business Development Publications, can be found in a good business library.
A local business library can also provide access to reference sources and articles about competitors and the industry.
The entrepreneur should exhaust all possible secondary data sources, observation, and networking before beginning costly primary data research.

Gathering Information from Primary Sources

Information that is new is primary data. Observation is the simplest approach. Networking is an informal method to gather primary data from experts in the field, can be a valuable low-cost research method.
A recent study found that the most successful ventures were focused on information about competitors, the customer, and the industry. Less successful ventures were more focused on gathering information on general economic and demographic trends. Interviewing or surveying is the most common approach, but is more expensive. The questionnaire used by the entrepreneur should include questions designed to fulfill one or more of the objectives. Questions should be designed so they are clear and concise, without bias, and easy to answer. If the entrepreneur lacks experience, he or she should seek help in developing the questionnaire through Small Business Development Centers or a local education institution.

Focus groups

A focus group is a sample of 10 or 12 potential customers who participate in a discussion.
Groups discuss issues in an informal, open format.
These groups should be led by an experienced monitor.
Experimentation involves control over specific variables in the research process.

Analyzing and Interpreting the Results

The entrepreneur can enter the results on a computer or hand-tabulate the results. Summarizing the answers to questions will give preliminary insights. Data can then be cross-tabulated to provide more focused results.

UNDERSTANDING THE MARKETINGPLAN

The marketing plan should answer three basic questions:

Where have we been? -The history of the marketplace, marketing strengths and weaknesses, and market opportunities.

Where do we want to go (short term)? - Marketing objectives and goals in the next twelve months. How do we get there? -Specific marketing strategy that will be implemented. The marketing plan should be a guide for implementing marketing decision-making and not a superficial document. The mere organization of the thinking process involved in preparing a marketing plan can be helpful in understanding and recognizing critical issues.

CHARACT E RIST ICS OF A MARK ETING PLA N

An effective marketing plan should:

  1. Provide a strategy to accomplish the company mission.
  2. Be based on facts and valid assumptions.
  3. Provide for the use of existing resources.
  4. Describe an organization to implement the plan.
  5. Provide for continuity.
  6. Be simple and short.
  7. Be flexible.
  8. Specify performance criteria that can be monitored and controlled.

The marketing system identifies the major interacting components, both internal and external, that enable the firm to provide products to the marketplace. Environment factors, although largely uncontrollable, should be studied.

Internal environmental factors are more controllable by the entrepreneur:

Financial resources: The financial plan should outline the financial needs for the venture.

Management team: An effective management team responsibilities assigned is needed for implementing the marketing plan.

Suppliers: Suppliers used are generally based on a number of factors, such as price, delivery time, and quality.

Company mission: Every new venture should define the nature of its business and what it hopes to accomplish.

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