Business Plan Preparation Frank Moyes Leeds College of

Business Plan Preparation Frank Moyes Leeds College of Business University of Colorado Boulder, Colorado Marketing Strategy

Tonight Marketing Strategy n Revenue Model n Customer acquisition costs n Marketing Strategy

Next Week Operations Plan n Development Plan n Walk an Order n Marketing Strategy

Business Plan Elements n n Executive Summary Company Overview Market & Industry Analysis Product/Service Description n Marketing Plan n Operations Plan n Development Plan n Management n Competitive Advantage n Financial Plan n Funding Marketing Strategy

Marketing Plan Objectives Build on Market & Industry Analysis n Define the strategies & key actions to exploit the opportunity n Marketing Strategy

Marketing Plan Outline n n n n n Customer Research Target Market Strategy Channel Strategy Positioning Product/Service Strategy Pricing Strategy E-commerce Communications Strategy Sales Strategy Revenue Model Marketing Strategy

Customer Research n Show your results n n George’s Questionnaire - qualitative 20 people Surveys – walk-up, mailed, email, on-line Lurk & listen How do customers pay? Marketing Strategy

Target Customer Strategy n Profile of the target customers n n n Demographics, psychographics, etc. Photo How does TC perceive products/services? How will you overcome brand loyalty? What will cause customers to switch? Spend money? Identify first 10 customers Future markets Marketing Strategy

How Do Customers Make Decisions? Where, when & how n Initiator, Influencer, Decider, Purchaser & User n Identify criteria used to make decisions n n n Criteria may be different than your features Where get information, advice Marketing Strategy

Customers Buy Benefits Does your TC understand n How will you convince? n Marketing Strategy

You Must Prove That You Understand the Target Customer Marketing Strategy

Channel Strategy n n Describe and justify the distribution channels Potential channels n n n n Distributors, wholesalers, retailers OEM’s & VAR’s E-commerce Describe how you will gain access to the channels Identify specific companies What is the decision making process Delivery to your customers, e. g. UPS is not the channel Marketing Strategy

Positioning n Positioning is relative to the competition n Overt or perceived How are you unique & different? n Base on Buying Decision Criteria n Marketing Strategy

Perceptual Map Attribute 1 Competitor 3 You Competitor 1 Competitor 2 Marketing Strategy Attribute 2

Hot Chocolate Flavour Brown Palace HC Ski Resort cafe Hershey packets Marketing Strategy Convenience

Hot Chocolate “Coolness” HC Ski Resort cafe Hershey packets Brown Palace Marketing Strategy Price

Branding n Perceptions, impressions and feelings n What must target customer believe about you Every thing you do supports this n Other n n n Name of your company Company characteristics – essence of personality, tone & manner Marketing Strategy

Product/Service Strategy n n Not the description Product/service roll out n n Initial product/services Future product/services Enhance the product/service with operations & service Actions to sustain competitive advantage n n n Features & benefits New technology New process Marketing Strategy

Pricing Strategy Describe and justify your pricing strategy n Provide evidence that your target customer will accept your price n Position your pricing relative to current and potential competition n Low price usually is NOT a good strategy! n Measure of management n Marketing Strategy

What Are the Pricing Methods? n n Value pricing - how much is customer willing to pay? Commodity pricing n n n Set by the market Supply and demand Seasonality & perishability Competition Payback period – depends on impact on company profit Rule of thumb – Keystone Introductory low price to get customers to use Cost plus – markup Transaction fee Razor & razor blade A la carte Marketing Strategy

Communications n How you will communicate with current and potential customers? n n n Advertising – paid advertising newspapers, magazines, TV, internet Public relations – articles in paper, journals, blogs, websites Printed materials – flyers, brochures Performances, concerts, exhibitions Exhibitions Why is the most effective strategy? n Be imaginative! Be a guerilla! n Marketing Strategy

Guerilla Examples I n n n New restaurant invites local hairdressers for free meal just after opening Mattress retailer has sleep over advertising on the ceiling of a retail store News is created so it will be covered in local newspaper n n n Computer store does computer training for underprivileged kids Owner makes bold predictions, does something unusual Articles are written by the entrepreneur for newspapers Mike Morris, Syracuse University Marketing Strategy

More Guerilla Examples II n Reciprocal advertising: two businesses mention one another in their ads n Store offers discount card/coupon that appreciates in value each time it is used n Coupon that is worth something different each time it is used n 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 III n n 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 Strategy n n How will you get orders? n How will you recruit, n Personal selling train, and compensate n Online purchasing our sales force? n TV infomercials n Direct mail n How will you support n 800 telephone the sales effort? Who will do the selling? n Internal staff n n An internal sales force Field sales force Manufacturer's reps Telephone solicitors Marketing Strategy n Service operations

Customer Acquisition Costs to Get a Customer Number of Customers n Costs to get a customer n n n Sales salaries, commissions Advertising & promotion Customer & tech support Website Travel & entertainment Number of customers Financial Plans 26

Revenue Model Marketing Strategy

Two Approaches n Top down – market penetration & timing n Bottom up – pipeline, revenue by customer Marketing Strategy

Revenue Model Marketing Strategy

Revenue Model Variables n Market potential - number of customers, transactions or n n Market share - penetration rate Product/Services offered units, purchases n Size & growth n n n n Roll-out strategy Range & mix New Products/Services Obsolescence Price per customer, transaction or unit Average revenue per customer or transaction Frequency of purchase – per day/week/month Capacity Utilization – per time period, event Prices n n Channel strategy - discount Marketing Strategy

Revenue Model (Bottom-up) n Identify specific customers n n Determine n n n Identify decision maker Annual purchases today & future Who purchase from & level of satisfaction What do you need to do to get an order? n If you meet the criteria, how much business can you expect? Marketing Strategy

How Much Do Your Customers Care? High Involvement Low Involvement Easy to get attention Will invest to upgrade Will try new brands About “wants” Hard to get attention Will delay upgrading Hard to change About “needs”