Marketing Strategy

Business Plan PreparationBusiness Plan PreparationBusiness Plan PreparationBusiness Plan Preparation

Frank MoyesFrank MoyesLeeds College of Business Leeds College of Business University of ColoradoUniversity of ColoradoBoulder, ColoradoBoulder, Colorado

Marketing Strategy

TonightTonight

Marketing StrategyMarketing Strategy Revenue ModelRevenue Model Customer surveysCustomer surveys Margins – didn’t cover last weekMargins – didn’t cover last week In the Fire – Industry Analysis & Model CompanyIn the Fire – Industry Analysis & Model Company Hand-inHand-in

10 Call Reports10 Call Reports Competitive matrixCompetitive matrix Model company descriptionModel company description

Marketing Strategy

Next WeekNext Week

Operations PlanOperations Plan Development PlanDevelopment Plan Review status of plansReview status of plans Hand-in: Customer Survey questionnaireHand-in: Customer Survey questionnaire Wednesday Office Hours two weeks 3:00 to 4:30Wednesday Office Hours two weeks 3:00 to 4:30

Marketing Strategy

Business Plan ElementsBusiness Plan Elements

Executive SummaryExecutive Summary Company OverviewCompany Overview Market & Industry AnalysisMarket & Industry Analysis Product/Service DescriptionProduct/Service DescriptionMarketing PlanMarketing Plan Operations PlanOperations Plan Development Plan Development Plan ManagementManagement Competitive AdvantageCompetitive Advantage Financial PlanFinancial Plan FundingFunding

Marketing Strategy

Marketing Plan ObjectivesMarketing Plan Objectives

Build on Market & Industry Analysis Build on Market & Industry Analysis Define the strategies & programs to exploit the Define the strategies & programs to exploit the

opportunityopportunity

Marketing Strategy

Marketing Plan OutlineMarketing Plan Outline Customer ResearchCustomer Research Target Market StrategyTarget Market Strategy Channel StrategyChannel Strategy PositioningPositioning Product/Service StrategyProduct/Service Strategy Pricing StrategyPricing Strategy E-commerceE-commerce Communications StrategyCommunications Strategy Sales StrategySales Strategy Revenue ModelRevenue Model

Marketing Strategy

Customer ResearchCustomer Research

Show your resultsShow your results Questionnaire - qualitative 20 peopleQuestionnaire - qualitative 20 people Surveys – walk-up, mailed, email, on-lineSurveys – walk-up, mailed, email, on-line

ProveProve You solve a problemYou solve a problem Features are wantedFeatures are wanted Customer understand the benefitsCustomer understand the benefits Customer will pay your priceCustomer will pay your price

Don’t cook the booksDon’t cook the books

Marketing Strategy

Target Market StrategyTarget Market Strategy

Consumers vs. purchasersConsumers vs. purchasers Profile of the customers you will serveProfile of the customers you will serve

Consumer: demographics, psychographics & valuesConsumer: demographics, psychographics & values Business: industry, size, location, purchase decisionBusiness: industry, size, location, purchase decision

How will you overcome brand loyalty? What will cause How will you overcome brand loyalty? What will cause customers to switch?customers to switch?

Future marketsFuture markets

Marketing Strategy

How Do Customers Make Decisions?How Do Customers Make Decisions?

Decision making process – where, when & how Decision making process – where, when & how Initiator, Influencer, Decider, Purchaser & UserInitiator, Influencer, Decider, Purchaser & User Identify criteria used to make decisionsIdentify criteria used to make decisions

Criteria may be different than your featuresCriteria may be different than your features Customers buy benefitsCustomers buy benefits

Marketing Strategy

ChannelChannel Describe and justify the distribution channels Describe and justify the distribution channels Potential channelsPotential channels

Distributors, wholesalers, retailersDistributors, wholesalers, retailers OEM’s & VAR’sOEM’s & VAR’s E-commerceE-commerce

Describe how you will gain access to the channels Describe how you will gain access to the channels Identify specific companiesIdentify specific companies Decision making processDecision making process

Delivery to your customers, eg UPS is not the channelDelivery to your customers, eg UPS is not the channel

Marketing Strategy

PositioningPositioning

What must target customer believe about youWhat must target customer believe about you Positioning is in the mind of the customer, relative to the Positioning is in the mind of the customer, relative to the

competitioncompetition ““perceptions, impressions and feelings”perceptions, impressions and feelings” How are you unique & different?How are you unique & different?

Marketing Strategy

Positioning StrategyPositioning Strategy

Positioning statementPositioning statement Describes market/industry, target customer, important Describes market/industry, target customer, important

features, benefitsfeatures, benefits Use your Value PropositionUse your Value Proposition

What features & benefits are most persuasive to get the What features & benefits are most persuasive to get the customer to act? customer to act?

Other considerationsOther considerations Name of your companyName of your company Company characteristics – essence of personality, tone & Company characteristics – essence of personality, tone &

mannermanner

Marketing Strategy

Attribute MapAttribute Map

Attribute 1

Attribute 2

You

Competitor 2

Competitor 3

Competitor 1

Marketing Strategy

Hot ChocolateHot Chocolate

Flavour

Convenience

HC

Hersheypackets

Ski Resortcafe

Brown Palace

Marketing Strategy

Hot ChocolateHot Chocolate

“Coolness”

Price

HC

Brown Palace

Ski Resortcafe

Hersheypackets

Marketing Strategy

Product/Service StrategyProduct/Service Strategy Not the descriptionNot the description Product/service roll outProduct/service roll out

Initial product/servicesInitial product/services Future product/servicesFuture product/services

Enhance the product/service with operations & Enhance the product/service with operations & serviceservice

Actions to sustain competitive advantageActions to sustain competitive advantage New features & benefitsNew features & benefits New technologyNew technology New processNew process

Marketing Strategy

Pricing StrategyPricing Strategy

Describe and justify your pricing strategyDescribe and justify your pricing strategy Provide evidence that your target market will accept Provide evidence that your target market will accept

your priceyour price Position your pricing relative to current and potential Position your pricing relative to current and potential

competition competition Low price usually is Low price usually is NOTNOT a good strategy! a good strategy!

Measure of managementMeasure of management

Marketing Strategy

What Are the Pricing Methods?What Are the Pricing Methods?

Commodity pricingCommodity pricing Set by the marketSet by the market Supply and demandSupply and demand Seasonality & perishabilitySeasonality & perishability

CompetitionCompetition Value pricing - how much is customer willing to pay?Value pricing - how much is customer willing to pay? Payback period – depends on impact on company profitPayback period – depends on impact on company profit Rule of thumb – KeystoneRule of thumb – Keystone Introductory low price to get customers to useIntroductory low price to get customers to use Cost plus – markupCost plus – markup Razor & razor bladeRazor & razor blade A la carteA la carte

Marketing Strategy

CommunicationsCommunications

How you will communicate with current and potential How you will communicate with current and potential customers?customers? Advertising – paid advertising newspapers, magazines, TV, Advertising – paid advertising newspapers, magazines, TV,

internetinternet Public relations – articles in paper, journals, blogs, websitesPublic relations – articles in paper, journals, blogs, websites Printed materials – flyers, brochuresPrinted materials – flyers, brochures Performances, concerts, exhibitionsPerformances, concerts, exhibitions ExhibitionsExhibitions

Why is this the most effective strategy?Why is this the most effective strategy?

Be imaginativeBe imaginative! Be a guerilla!! Be a guerilla!

Marketing Strategy

Guerilla Examples IGuerilla Examples I New restaurant invites local hairdressers for free meal just after New restaurant invites local hairdressers for free meal just after

openingopening Mattress retailer has sleep over advertising on the ceiling of a Mattress retailer has sleep over advertising on the ceiling of a

retail storeretail store News is created so it will be covered in local newspaperNews is created so it will be covered in local newspaper

Computer store does computer training for underprivileged kidsComputer store does computer training for underprivileged kids Owner makes bold predictions, does something unusualOwner makes bold predictions, does something unusual

Articles are written by the entrepreneur for newspapers

Mike Morris, Syracuse University

Marketing Strategy

More Guerilla Examples IIMore Guerilla Examples II

Reciprocal advertising: two businesses mention one another in Reciprocal advertising: two businesses mention one another in their adstheir ads

Store offers discount card/coupon that appreciates in value each time it is used

Coupon that is worth something different each time it is used

Theatre places speakers outside front of facility with movies soundtracks playing; bakery purposely lets smells waft into customer passageway of mall

Mike Morris, Syracuse University

Marketing Strategy

More Examples IIIMore Examples III

Bowling alley charges based on number of bowling pins customer knocks down

Bicycle retailer puts promotional tags on bike racks around town Day care center adds cameras and streaming videos so parents

can see how children are treated Flower shop with lack of visibility at their location decorates

popular park and some small cafes in the area with creative and simple flower arrangements

Mike Morris, Syracuse University

Marketing Strategy

Sales StrategySales Strategy

How will you get ordersHow will you get orders?? Personal sellingPersonal selling Online purchasingOnline purchasing TV infomercials TV infomercials Direct mailDirect mail 800 telephone800 telephone

Who will do the sellingWho will do the selling?? An internal sales forceAn internal sales force Field sales forceField sales force Manufacturer's repsManufacturer's reps Telephone solicitors Telephone solicitors

How will you recruit, How will you recruit, train, and compensate train, and compensate our sales force?our sales force?

How will you support the How will you support the sales effort? sales effort? Internal staffInternal staff Service operationsService operations

Marketing Strategy

Revenue ModelRevenue ModelRevenue ModelRevenue Model

Marketing Strategy

Two Approaches Two Approaches

Top down – market penetration & timingTop down – market penetration & timingBottom up – pipeline, revenue by customerBottom up – pipeline, revenue by customer

Marketing Strategy

Revenue Model VariablesRevenue Model Variables Market potential - Market potential - number of customers, transactions or units, purchasesnumber of customers, transactions or units, purchases

Size & growthSize & growth Market share - penetration rateMarket share - penetration rate Product/Services offeredProduct/Services offered

Roll-out strategyRoll-out strategy Range & mixRange & mix New Products/ServicesNew Products/Services ObsolescenceObsolescence

Frequency of purchase – per day/week/monthFrequency of purchase – per day/week/month Capacity Utilization – per time period, eventCapacity Utilization – per time period, event PricesPrices

Price per customer, transaction or unitPrice per customer, transaction or unit Average revenue per customer or transactionAverage revenue per customer or transaction

Channel strategy - discountChannel strategy - discount

Marketing Strategy

Revenue Model (Bottom-up)Revenue Model (Bottom-up)

Identify specific customersIdentify specific customers Identify decision makerIdentify decision maker

DetermineDetermine Annual purchases today & futureAnnual purchases today & future Who purchase from & level of satisfaction Who purchase from & level of satisfaction

What do you need to do to get an order?What do you need to do to get an order? If you meet the criteria, how much business can you expect?If you meet the criteria, how much business can you expect?

Revenue Model

Revenue Model

Revenue Model

Revenue Model

Revenue Model

Revenue Model

Revenue Model

Revenue Model

Marketing Strategy

MarginsMargins

% Gross Profit Margin% Gross Profit Margin

% Contribution Margin% Contribution Margin

% Net Profit Margin % Net Profit Margin

% Operating Expenses% Operating Expenses

Revenue – COG’s Revenue

Revenue – Variable Costs Revenue

Net Earnings Revenue

Sales, General & Admin Revenue

Margins %

ToyotaIntel Dell HP Corp

2005 2005 2005 2005 2004 2005Gross Profit 59.4 17.8 23.6 11.2 17.3 19.5SGA 16.4 9.3 16.6 3.6 2.4 4.8Net Profit 22.3 6.4 2.8 -5.7 1.4 6.5

P & G Whole Fds Kroger Amazon Merck2005 2005 2005 2005 2005

Gross Profit 51.4 35.1 24.8 24.0 76.6SGA 28.2 27.2 19.3 17.5 43.4Net Profit 12.7 2.9 1.6 4.2 21.0

Gen Motors