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Business moves quickly, but always
take time to create a marketing plan

Map out your company's plans with a marketing planEverybody in Company X was excited about diversifying into the gift business. The company glowed with positive feedback on its new products. A major retailer had picked up the new line, and Company X's sales department wrangled a spot on a home shopping network. Sales ticked up initially, but as the months wore on, nervous company officials scratched their heads, wondering why sales were flat.

So they asked the retail chain's buyer what was wrong. "Your price is too high for a no-name brand," he told them. The price point was crucial to Company X. If the gifts were priced any lower, there would not be enough profit to warrant the initial investment. This information prompted a mad scramble to try to create a buzz for the gift line before the make-or-break Christmas buying season.

A common problem
Many small businesses find themselves in similar straits because they don't have a marketing plan, a road map to trace the path from the launch of a new business, product or service to the company's sales goals.

Without taking time to create a plan, businesses like Company X overlook critical questions, says Jessica Bailey, who holds a doctoral degree in marketing and is a professor at American University in Washington, D.C.

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"A lot of small businesses really have no marketing plan," she says. "It's just a small-business owner who has a concept in mind and who gets up every day and goes through the motions to reach that goal. Sometimes, you miss opportunities to reach exactly the buyers you're looking for."

Unfortunately, many small-business executives don't know what a marketing plan is, says Adrienne Zoble, author of The Do-Able Marketing Plan and founder of Adrienne Zoble Associates Inc., a consulting firm in Whitehouse Station, N.J.

"Most people do not know the difference between a business plan and a marketing plan. They use the words interchangeably."

Business plan vs. marketing plan
The business plan is a hard-numbers document typically taken to banks and other sources when a company is looking for a loan, she says. "Within that business plan is a section that says, 'This is how we are going to market these goods and services,' but that's not a marketing plan. The marketing plan is separate and apart from the business plan."

It needs to include measurable performance goals, but "this is not about the numbers themselves," she says. "In my seminars, I'll ask, 'How many of you know if sales or profits were up or down?' "

Of course, all raise their hands. Although that information should be in the marketing plan, she adds, "You need to know why sales were up or down. That's what counts in the marketing plan."

A two-level marketing plan
Bailey sees the need for two levels of marketing plan. "The strategic plan, or long-term plan, usually covers a three- or five-year period. It gives a vision for the firm and describes its long-term objectives. Then, there's the operational plan, which covers one year or less. It's at this more specific level that we really are talking about budgeting and implementation: what you're going to offer and who you're going to offer it to, etc."

However, Robert Duboff, director of national marketing for Ernst & Young in Boston and co-author of Market Research Matters: Tools and Techniques for Aligning Your Business, believes that a year is too long for an operational plan. Don't wait longer than one quarter to review and adjust, he says.

He adds that many entrepreneurs forgo marketing plans (and written plans in general) due to their nature as doers. "They'd rather do than say what they're going to do," he says. "A real entrepreneur wants to get out there and start selling or manufacturing. I don't want to stand in the way of that enthusiasm, but a little bit of forethought goes a long way."

Bailey agrees. "What happens, especially with entrepreneurs, is they have an idea. It's crystal clear to them, so they do not put the time, energy and thought into the marketing plan and answering some very basic questions."

Duboff adds that the current business climate further fuels that action-oriented mind-set. "I think too often, especially in this dot-com, Internet-speed environment, there is a tendency to go, 'Ready, fire, aim.' There is still time to be a little more deliberate and to use tools like market research."

Who, me? Research?
Market research! There's the rub. Sounds expensive and time-consuming, doesn't it? Yet how much time and money would it have cost Company X to discuss its pricing with retail-chain buyers before it put its products on sale?

The experts agree that a good marketing plan begins with analyzing the current market conditions and the place of your new business, product or service within that sphere. Think of it as providing a reality check. You need to know if your new idea is really that new and whether anyone wants to buy it.

"It's not enough to have the greatest solution to some problem," Duboff says. "You have to have something that works well, but your customers also have to come to believe that you do." And a marketing plan helps you figure out the best way to convince the market that you have a golden product or service.

Existing firms that plan to offer a new product or service can conduct a good deal of market research through existing customers and contacts, Zoble says. "How many times a day are you on the phone with your clients or customers? Maybe six of them a day? Thirty a week? Could you carve off six of them, and when you know you're coming to the end of the conversation, ask, 'By the way, Jane, several of our customers have been asking us if we would offer such and such or so and so, what do you think?' You will know quickly whether you're on to something. Then go to next stage: focus groups or a consultant."

It needn't be expensive
Duboff adds that such outside market-research help doesn't have to be expensive either. "In this day and age, solo practitioners are available for very reasonable fees. Try a local business school, find a grad student or a very experienced retired person."

At a minimum, Duboff advises, a business should analyze SWOT, an acronym that stands for "strengths, weaknesses, opportunities and threats."

Bailey says to begin the marketing plan by identifying your target market and then determining your "differential advantage," or what it is that makes your offering unique.

"Based on these two, then, there are four components that are classically known as the 'Four Ps of Marketing': product, promotion, place (distribution) and price.

"Those things have to be thought out in advance," she says. "If you know where you want to be at the end of the year -- and a marketing plan tells you how you're going to get there -- your life is so much easier along the way."

Salvatore Caputo is a freelance writer based in Arizona
To comment on this story, please e-mail the
Bankrate.com editors

-- Posted: June 30, 2000

 

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See Also
PLUS: A marketing plan worksheet
More Small Biz stories

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