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

Tonight Marketing Strategy Revenue Model Customer surveys In the Fire – Industry Analysis & Model Company Hand-in 10 Call Reports Competitive matrix Model company description Elevator speech Marketing Strategy

Next Week Operations Plan Development Plan Supply chain Walk an order Review status of plans Hand-in: Customer Survey questionnaire Workshop Engineering: Marketing Tuesday 6:30pm? Marketing Strategy

Business Plan Elements Executive Summary Company Overview Market & Industry Analysis Product/Service Description Marketing Plan Operations Plan Development Plan Management Competitive Advantage Financial Plan Funding Most important part of the Bplan Marketing Strategy

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

Marketing Plan Outline 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 Show your results Prove Don’t cook the books Questionnaire - qualitative 20 people Surveys – walk-up, mailed, email, on-line Prove You solve a problem Features are wanted Customer understand the benefits Customer will pay your price Don’t cook the books Marketing Strategy

Target Market Strategy Consumers vs. purchasers Profile of the customers you will serve Consumer: demographics, psychographics & values Business: industry, size, location, purchase decision How will you overcome brand loyalty? What will cause customers to switch? Future markets Child care service Who makes final decision? Who else involved? Marketing Strategy

How Do Customers Make Decisions? How Do Customers Make Decisions? Decision making process – where, when & how Initiator, Influencer, Decider, Purchaser & User Identify criteria used to make decisions Criteria may be different than your features Customers buy benefits Where: retail stores, mail order, internet When: time of year, month and day; seasons; end fiscal year How: how collect info, sales people, brochures, TV, internet how make decision: emotional, holistic, automatic, spontaneous Initiator baby diapers - mom Influencer - grandmother, other moms, dad Decider - mom Purchaser - mom User – baby Initiator purse – women, husband, family Influencer – women of same demographic, friends, husband, Oprah Decider - women Purchaser – women, husband, boyfriend User - women Marketing Strategy

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

Positioning What must target customer believe about you Positioning is in the mind of the customer, relative to the competition “perceptions, impressions and feelings” How are you unique & different? Bicycle type Racing Road Mountain Cross bike Cruiser Descent MBX Price Performance: speed, handling, ride comfort, Durability Quality Weight Design High tech Aesthetics Benefits Who is the TM? Kids Teenagers Racers Parents with Kids Baby Boomers Tourist locations – hotels Transport to work Channel High end bike retailers – University Bikes; Pro Peleton Bike retail chains – Performance Sports retailers – Garts Mass retailers – Walmart Catalog Internet Rental Direct sell Competition Huffy Asia Trek Kestrel Custom Marketing Strategy

Positioning Strategy Positioning statement Positioning Strategy Positioning statement Describes market/industry, target customer, important features, benefits Use your Value Proposition What features & benefits are most persuasive to get the customer to act? Other considerations Name of your company Company characteristics – essence of personality, tone & manner depends on how persuasive Marketing Strategy

Attribute Map Attribute 1 You Attribute 2 Competitor 3 Competitor 1 Exercise: Take 5 minutes and have each team present Use Spectrum analysis Marketing Strategy

Hot Chocolate Flavour HC Convenience Brown Palace Ski Resort cafe Hershey packets Convenience Exercise: Take 5 minutes and have each team present Use Spectrum analysis Marketing Strategy

Hot Chocolate “Coolness” HC Price Ski Resort cafe Hershey packets Brown Palace Exercise: Take 5 minutes and have each team present Use Spectrum analysis Marketing Strategy

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

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

What Are the Pricing Methods? What Are the Pricing Methods? Commodity pricing Set by the market Supply and demand Seasonality & perishability Competition Value pricing - how much is customer willing to pay? Payback period – depends on impact on company profit Rule of thumb – Keystone Introductory low price to get customers to use Cost plus – markup Razor & razor blade A la carte Commodity pricing Set by the market Supply and demand Based on competitor(s) price Value pricing - how much the customer is willing to pay for value received Payback period – depends on impact on company profit Industry rule of thumb – keystone pricing is common in retail businesses and equals purchase cost + 100% markup Introductory low price to get customers to use Cost plus + markup Razor & razor blade E-commerce – transaction fee, advertising, intermediary commission, affiliate commission fee, subscription fee A la carte Max price – what will attract enough customers Min price – lowest price to make a profit Marketing Strategy

Communications Be imaginative! Be a guerilla! How you will communicate with current and potential customers? 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 this the most effective strategy? Be imaginative! Be a guerilla! Marketing Strategy

Guerilla Examples I 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 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 More Guerilla Examples II Reciprocal advertising: two businesses mention one another in their 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 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 Strategy How will you get orders? Personal selling Online purchasing TV infomercials Direct mail 800 telephone Who will do the selling? An internal sales force Field sales force Manufacturer's reps Telephone solicitors How will you recruit, train, and compensate our sales force? How will you support the sales effort?   Internal staff Service operations Marketing Strategy

Revenue Model Marketing Strategy

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

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

Revenue Model

Revenue Model

Revenue Model

Revenue Model

Revenue Model

Revenue Model

Revenue Model

Revenue Model

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