How to Write a Marketing Plan – Part 1

The Marketing Plan is a highly detailed, heavily researched and, hopefully, well-written report that many inside and possibly outside an organization will evaluate. In many respects, the Marketing Plan is the most important document produced by marketers as it not only helps to justify what has occurred in the past, but is critical for explaining where an organization intends to go in the future. Consequently, understanding how to write a Marketing Plan is a key skill required of many marketers.

Section 1 of the plan is designed to provide the reader with the necessary information to fully understand the purpose of the Marketing Plan. This section also includes organizational background information, which may be particularly important if the audience for the plan is not familiar with the company, such as potential financial backers.

This section of the plan contains two key components:

• Purpose of the Marketing Plan

• Organization Mission Statement

Some of the information, in particular the mission statement, may require the input of upper-management. The information in this part will prove useful later in the plan as a point of reference for material that will be introduced (e.g., may help explain pricing decisions). In cases in which there are separately operated divisions or SBU, there may also be mission statements for each.

Purpose of the Marketing Plan

The main body of the Marketing Plan often starts with a brief discussion of the purpose of the marketing plan and why the plan is being developed. The tasks associated with this section are to (Length: 1 paragraph):

1. Offer a Brief Explanation For Why This Plan Was Produced

• e.g., introduce new product, enter new markets, continue growth of existing product, yearly review and planning document, etc.

2. Suggest What May Be Done With the Information Contained in the Plan

• e.g., set targets to be achieved in the next year, represents a departmental report to be included in larger business or strategic plan, etc.

Organization Mission Statement

Note: For larger firms this may already exist in a public way (e.g., found in annual report, found on corporate website) but for many others this may need to be formulated.

The organization mission statement consists of a short, finely-honed paragraph that considers the following issues (Length: 1 paragraph):

1. Identifies a stable (i.e., not dramatically changing every year), long-run vision of the organization that can answer such questions as:

• Why is the organization in business?

• What markets does the organization serve and why does it serve these markets?

• In general terms, what are the main benefits the organization offers to its customers?

  • e.g., a low-price software provider may state they offer “practical and highly affordable business solutions”

• What does the organization want to be known for?

• What is the organization out to prove to the industry, customers, partners, employees, etc.?

• What is the general organizational philosophy for doing business?

• What products/services does the organization offer?

2. In developing the vision presented in the mission statement consider:

• Organization’s History

  • Discuss how organization started and major events of the organization, products, markets served, etc.

• Resources and Competencies

  • Consider what the organization currently possesses by answering the following:

    • In general, what is the organization good at doing?

    • What is special about the organization compared to current and future competitors (in general terms do not need to mention names)?

  • What does the organization do that gives it a competitive advantage?

  • Consider the questions above in terms of:

    • people, products, financial position, technical and research capabilities, partnership/supply chain relations, others

• Environment

  • Consider the conditions in which the organization operates including:

    • physical (e.g., facilities), equipment, political regulatory, competitive, economic, technological, others

The situational analysis is designed to take a snapshot of where things stand at the time the plan is presented. It covers much of the same ground covered in the Preparing a Market Study Tutorial, so those preparing a Marketing Plan should check this out as well.

This part of the Marketing Plan is extremely important and quite time consuming. For many, finding the metrics needed in this section may be difficult, especially for those entering new market. For ideas on how to obtain information see the Marketing Research chapter of KnowThis: Marketing Basics book.

The situational analysis covers the following key areas:

1. Analysis: Current Product(s)

Note: The marketer may be able to skip this section if plan is for a new product and no related products exist.

Provide detailed analysis of the company’s product(s). (Length: 1-2 pages).

1. Describe the Organization’s Current Product(s) Offerings in Terms of:

• Product Attributes

  • Describe the main product features, major benefits received by those using the product, current branding strategies, etc.

• Pricing

  • Describe pricing used at all distribution levels, such as pricing to final users and to distributors, incentives offered, discounts, etc.

• Distribution

  • Describe how the product is made accessible to final users, including channels used, major benefits received by distributors, how product is shipped, process for handling orders, etc. (Note: More discussion of distribution is addressed in Analysis: Current Distributor Network(s) below.)

• Promotion

  • Describe promotional programs and strategies in terms of advertising, sales promotion, personal selling and public relations, how product is currently positioned in the market, etc.

• Services Offered

  • Describe support services provided to final users and distributors before, during and after the sale

2. Analysis: Current Target Market(s)

Examine in detail the organization’s current target market(s). Obviously to do this section correctly takes a great deal of customer-focused research. (Length: 2-3 pages).

1. Describe the Target Market Approach

• What general strategy is used to reach targeted customers. In most cases approaches include:

  • mass market – aim to sell to a large broad market

  • segmentation approach – aim to selectively target one (niche) or more markets

2. Describe Demographic/Psychographic Profile of the Market

• Profile criteria may include:

  • gender, income, age, occupation, education, family life cycle, geographic region, lifestyle, attitudes, purchasing characteristics, etc.

3. Describe the Following Characteristics of Targeted Customers

• Needs/benefits sought by market

• Product usage

  • Consider answers to these questions related to customers using the product such as:

    • who is using the product?

    • why do they use the product?

    • when do they use the product?

    • how is the product used?

• Product positioning

  • Evaluate how customers perceive the product in relation to competitor’s products or to other solutions they use to solve their problems

• Attitudes

  • What is the target market’s attitude regarding the organization’s product?

  • What is the target market’s attitude regarding the general product category?

  • i.e., examine the general attitudes regarding how products from all competitors serve the target market’s needs

4. Describe the Purchasing Process

• How does the target market make their purchase?

  • What does the decision-making process involve?

  • What sources of information are sought?

  • What is a timeline for a purchase (e.g., impulse vs. extended decision-making)?

• Who makes the purchase?

  • Does user purchase or is another party responsible (e.g., parent purchasing for children)?

• Who or what may influence the purchase?

5. Provide Market Size Estimates (Note: Keep in mind these are estimates for the market not for a specific product.)

• Provide size estimates for the potential market

  • What is the largest possible market if all buy?

• Provide estimates of size for the current target market

  • What percent of the potential market actually purchased?

• Provide estimates of future growth rates

  • At least through the time frame for the plan (e.g., 1 year) but most likely longer (e.g., 3-5 year projections)

3. Analysis: Current Distributor Network

Note: This may not apply if the organization does not use distributors.

Evaluate how the organization’s product(s) is distributed. Clearly marketing plans for a service organization may not have much detail here but this section will most likely have some relevance even for service firms (e.g., package delivery services, online legal service, etc,). (Length: 2 pages).

1. Describe the Channels/Supply Chain Employed to Sell and Deliver the Product (Note: Internal sales force discussion should appear under company promotion in Analysis: Current Product(s) above.)

• Options may include:

  • Direct to customer

  • indirect via a distributor

  • Combination of both

2. What are the Needs/Benefits Sought by Distributors?

3. Describe the Product’s Role Within the Distributor Network

• How is this product used within the distributor’s business?

• How important is product within the distributor’s strategy?

• How is the product positioned?

• e.g., how does distributor view product in relation to competition

  • What are the attitudes and perceptions about the organization’s product(s)?

4. Purchasing Process

• How does distributor network make their purchase?

• Who or what influence distributor’s purchases?

5. Demographics

• Who makes up the distributor network?

  • types

  • size

  • geographic region

  • markets served

4. Analysis: Current Competitor(s)

Examine the main competitors serving the same target market(s). For much more detail on analyzing competitors see the Preparing a Market Study Tutorial. This section may also benefit from the use of comparison tables. (Length: 3-4 pages).

1. Describe Direct Competitors in Terms of:

• Target markets served

• Product attributes

• Pricing

• Promotion

• Distribution including the distributor network(s)

• Services offered

2. Discuss Competitor’s Strengths and Weaknesses

• May need to consider much more than just marketing issues such as:

  • financial standing

  • target market perception

  • R & D capabilities

3. Discuss Competitive Trends

• May need to include discussion of future competitive threats

5. Analysis: Current Financial Condition

Much of the information in this part can be handled within a graphical format, such as tables and graphs, though a paragraph explanation of each is generally required. Make sure to include total dollar (or other currency) amounts as well as percentage market share. For more detailed Marketing Plans or for plans for seasonal products, providing monthly or even weekly sales figures may be required. Provide a spreadsheet-style layout showing detailed breakdown of marketing revenues and expenses. (Length: 2-4 pages).

1. Current Sales Analysis

• Overall industry sales and market share (for at least the last year):

  • total market sales

  • total for organization’s product(s)

  • total for competition

• By segments/product categories:

  • total for segments/product categories

  • total for organization’s product(s)

  • total for competition

• By channels of distribution:

  • total for each channel

  • total for organization’s product(s) by channel

  • total for competition by channel

• By geographic region:

  • total for each region

  • total for organization’s product(s) by region

  • total for competition by region

2. Profitability Analysis

• Revenues

  • For highly detailed plans break out into categories as shown above in the Current Sales Analysis section.

• Marketing Expenses

  • Types:

    • Direct – those expenses that can be tied to the product

    • Indirect or Proportional – generally administrative or broad marketing expenses that may be assigned to a product based on some established criteria, such as a product’s percentage of overall company sales. (Note: not all organizations follow this approach.)

• For highly detailed plans break out into categories as shown above in the Current Sales Analysis section.

6. Analysis: External Forces

Describe trends, events, conditions that are external (usually uncontrolled by the organization ) that may impact the organization’s product(s) or the market. (Length: 1-2 pages)

1. Areas of Consideration

• social and cultural

• demographic

• economic

• technological

• innovation

• political

• legal, regulatory, ethical

7. Analysis: Summary

In an effort to provide an easy-to-visualize summary of the product(s), consider using one or more of the following commonly used product/market analysis tools. (Length: 1 page)

• Planning With the Product Life Cycle Tutorial

• Boston Consulting Group Growth/Share Matrix

• General Electric Market Attractiveness Matrix

Finally, summarize all information in the Situational Analysis. (Length: 1 page)

1. Provide a SWOT Analysis for the Organization’s Product(s) That Includes:

• Strengths

• Weaknesses

• Opportunities

• Threats

Those reading a Marketing Plan need a clear picture of the direction the product(s) will take. Also, they want to see that some accountability has been built into the plan so that the plan is not just fluff but results in measurable actions.

The best way to provide this information is through a section devoted to identifying the key marketing strategy and marketing objectives for the product(s).

This section consists of three major issues:

• Identify Marketing Strategy

• Determine Financial Objectives

• Determine Marketing Objectives

Identify Marketing Strategy

In this section, identify the general marketing strategy under which this plan is being developed. It is very possible that a product will follow more than one strategy (e.g., sell more of same product to current customers but also find new customers in new markets). Plan developers may get some guidance and also rationale for strategy by examining general business objectives that may be established for the entire organization. For instance, the organization may state within its Mission Statement or in other internal documents that its objective is to be the market leader in all markets it serves. This would then become an objective for the products managed by a marketer.

Additionally, the Situational Analysis performed by the marketer may also provide insight. In particular, planners may look to strategies that are suggested within the scope of the Product/Market Analysis Tools. However, planners should refer to the Mission Statement in Step 1 to ensure any strategies that are developed are in line with how the company views itself. (Page length: less than 1 page)

Strategies generally fall under one of the following (or in some cases more than one) ideas:

1. Market Growth (see Ansoff Matrix)

• Higher market penetration

  • Sell more to same market (i.e., get current customers to buy more or buy more frequently)

    • If overall market is growing this may not necessarily mean a growth in overall market share

    • If overall market is not growing this means a growth in overall market share

• Find new markets

  • Sell to markets or market segments not previously targeted

• Develop new products for existing customers

• Develop new products for new customers

2. Market Stability

• Techniques to keep the status quo

  • Primarily used in times of economic decline or market decline

  • Generally requires the taking of market share from others in the industry

3. Cost Control

• Techniques to contain costs or operate more effectively

  • Can work in combination with market growth or market stability

4. Market Exit

• Techniques to depart a market

Determine Financial Objectives

For many organizations, the ultimate goal of the Marketing Plan is the effect it will have on the bottom line. Measures reflect income statement items and common ratios. (Page length: less than 1 page)

1. Customer Sales

• by volume and growth percentage

• by segments

2.Channel Sales

• by volume and growth percentage

• by channel

3. Margins

4. Profitability

5. Ratios

• use common financial ratios and other metrics associated with marketing in the industry

Determine Marketing Objectives

Marketing success can be measured on several non-financial market metrics. These measures are important since these often shed light on underlying conditions and circumstances facing the organization that are not easily seen within financial measures. For instance, a company may report strong sales for a product but market share information may suggest the product is losing ground to competitors. The marketing objectives section will indicate targets to be achieved across several marketing decision areas. To add additional strength to this section include marketing metrics where possible. (Page length: less than 1 page)

1. Target Market Objectives

• market share

  • total

  • by segments

  • by channel

• customers

  • total

  • number/percentage new

  • number/percentage retained

• purchases

  • rate of purchases

  • size/volume of purchases

2. Promotional Objectives

• level of brand/organization awareness

• traffic building

  • (e.g., store traffic, website traffic, social media subscribers)

• product trials

  • (e.g. sales promotions, product demonstrations)

• sales force

  • (e.g. cycle time, cost-per-call, closing rate, customer visits, etc.)

3. Channel Objectives

• dealers

  • total

  • number/percentage new

  • number/percentage retained

• order processing and delivery

  • on-time rate

  • shrinkage rate

  • correct order rate

4. Marketing Research Objectives

• studies initiated

• studies completed

5. R&D Objectives

• product development

6. Other Objectives

• e.g., partnerships developed

We continue our discussion of the marketing plan in the How to Write a Marketing Plan Tutorial – Part 2.