SCORE ® Counselors to America’s Small Business Service Corps of Retired Executives Create a Winning Business Plan Session 2 Competitor Analysis Your Competitive Advantage Setting Strategies Sales and Margin Goals

203/06/08 Marketing Section Product and/or services – from customer’s view Product and/or services – from customer’s view Industry Description, size, growth, major trends Industry Description, size, growth, major trends Characteristics of target buyer and her unmet needs Characteristics of target buyer and her unmet needs Target market – your niche Target market – your niche Competitor Analysis – Strengths and Weaknesses Competitor Analysis – Strengths and Weaknesses Your competitive advantage & niche; i.e., why will a customer do business with you? Your competitive advantage & niche; i.e., why will a customer do business with you? Strategies – selling, pricing, purchasing, location and advertising Strategies – selling, pricing, purchasing, location and advertising Goals (sales volume and margins) based on forecast; list of key assumptions Goals (sales volume and margins) based on forecast; list of key assumptions

303/06/08 Marketing Section (continued) CompetitionStrengthsWeakness Competitor 1 Competitor 2 Competitor 3 Competitive Advantage ( Describe your unique competitive advantage) 1.How many direct competitors do you have? 2.Are there competitors or products that may offer indirect competition? 3.In what ways do they compete? 4.Will there be additional competitors? Worksheet 5

403/06/08 Define Your Competitive Advantage Cost – – Buying power – – Distribution – – Technology Quality/Performance – – Technology – – Features – – Guarantees 3. Service – Customer service – Strong sales force – Extra services – Customization 4. Convenience – Location – Broad line – Product bundling – Hours of service Define this advantage in your target market (or niche)

503/06/08 Example - Competition Competition comes from health clubs Competition comes from health clubs –national, regional, and local Few fitness centers located in downtown Seattle except several small fitness facilities Few fitness centers located in downtown Seattle except several small fitness facilities These organizations are primarily exercise facilities with little emphasis on personalizing individual plans to improve working performance These organizations are primarily exercise facilities with little emphasis on personalizing individual plans to improve working performance None of these cater their services to corporations None of these cater their services to corporations

603/06/08 Example – Competitor Analysis YMCA YMCA –market is lower-income families and/or students Gold's Gym Gold's Gym –targets motivated and dedicated individuals Better Bodies Better Bodies –aimed at casual fitness-seekers

703/06/08 Example – Competitive Advantage We manage health care costs, by working with client companies to implement wellness strategies We manage health care costs, by working with client companies to implement wellness strategies An integral part of our service is follow-up and monitoring the individuals An integral part of our service is follow-up and monitoring the individuals Many employees will benefit from our program without ever visiting the fitness facility Many employees will benefit from our program without ever visiting the fitness facility

803/06/08 Marketing Section (continued) Selling strategy  Retail;  Wholesale;  Service  Home-based;  Internet Location Strategy (Describe advantages or disadvantages vs. competition) Is your location important to your customers? Is it convenient? Is it consistent with your image? Is it better for you to be near your competitors or far? Pricing strategy  Mark up;  Cost+;  Bid What are the current pricing practices in your industry? What is the mark-up used by your competitors? How aggressive is the “Sales” pricing? Is chosen strategy consistent with your image? Purchasing strategy Major categories Vendors for each (List up to 5 vendors) Worksheet 6

903/06/08 Example - Selling Strategy We will target small- to medium-sized businesses in downtown Seattle We will target small- to medium-sized businesses in downtown Seattle The first task is to convince senior executives of the benefits and needs of wellness programs The first task is to convince senior executives of the benefits and needs of wellness programs This will be accomplished by aggressively pursuing interaction and relationships with business professionals who would profit from using this service This will be accomplished by aggressively pursuing interaction and relationships with business professionals who would profit from using this service

1003/06/08 Example - Location Strategy Corporate Fitness headquarters are located within the first club located in downtown Seattle Corporate Fitness headquarters are located within the first club located in downtown Seattle Upon expansion, offices will be moved to a different location, not within any individual club Upon expansion, offices will be moved to a different location, not within any individual club

1103/06/08 Example - Pricing Strategy Prices for using Corporate Fitness' services are comparable to those of higher-end fitness centers and reflect the quality of the equipment and service Prices for using Corporate Fitness' services are comparable to those of higher-end fitness centers and reflect the quality of the equipment and service An employee choosing to utilize a Corporate Fitness center will pay a $100 monthly fee An employee choosing to utilize a Corporate Fitness center will pay a $100 monthly fee For each employee enrolled in the general wellness program, regardless of whether or not they use the fitness facility, the employer will pay $150 annually For each employee enrolled in the general wellness program, regardless of whether or not they use the fitness facility, the employer will pay $150 annually

1203/06/08 Example – Purchasing Strategy All fitness machines are purchased from exercise equipment distributors, while all medical equipment is bought from a reputable supply company All fitness machines are purchased from exercise equipment distributors, while all medical equipment is bought from a reputable supply company

1303/06/08 Marketing Section (continued) Advertising StrategyDevelop a Message What is the purpose of the message?  Promote your product;  Promote your image Define the image you wish to promote What BENEFITS of your products, or doing business with you should it emphasize? How will it motivate the buyer? Write Your message Is it clear, concise, understandable?  Yes;  No Is it easily remembered?  Yes;  No Is it supported by credible facts?  Yes;  No Worksheet 7

1403/06/08 Marketing Section (continued) Advertising Strategy Select the Media Define demographic s of your target audience Sex: Age : Race: Money: Select the right media  Word of Mouth  Networking  Community involvement  Newsletter  News release  Publish articles/testimonials  Flyers  Door hangers  Signage  Billboards  Internet  Newspaper  Directory/Yellow Forms  Radio  TV  Catalog/Direct Mail Why did you make this selection? Worksheet 5

1503/06/08 Advertising Budget start-up + maintenance Avoid start … stop advertising Avoid start … stop advertising Set affordable ad budget as % of revenue Set affordable ad budget as % of revenue Perform cost / benefit analysis Perform cost / benefit analysis –Track sales outcome from each ad strategy –Compare it to the cost –Decide if it is worth it

1603/06/08 Example – Advertising Strategy Initial promotional activity Initial promotional activity –advertisements in newspapers, magazines, and on television and radio Maintenance advertising Maintenance advertising –word-of-mouth to attract more clients –occasionally supplemented by small promotions thru media

1703/06/08 Forecast Sales & Margins Educated view of the future with data which can be defended Start with Market Research Start with Market Research Disaggregate product lines or services for improved estimates Disaggregate product lines or services for improved estimates Make reasonable assumptions & realistic premises (list them) Make reasonable assumptions & realistic premises (list them) –Census data Demographics & competition Demographics & competition Spendable income and growth patterns Spendable income and growth patterns –Industry data RMA, D&B, Bizstats RMA, D&B, Bizstats Trade Association data Trade Association data Vendor input and own or other data Vendor input and own or other data –Constructive estimates Pre-sold contracts / Commitments from buyers Pre-sold contracts / Commitments from buyers Market research and focus groups Market research and focus groups Historical experience – own or others Historical experience – own or others

1803/06/08 Sales Volume-Margin Forecast Develop it here and reuse it in the Cash Flow Forecast in the Financial Section Month  YEAR # of customers Average # of units per customer # of units you expect to sell Average sales price Average cost of sale Gross margin = price - cost Gross Profit =Sales units x gross margin Worksheet 8

1903/06/08 Sales Forecast Example

2003/06/08 Homework Session 2 Finish the Marketing Section by completing template pages 5, 6, 7, 8. to the instructors by Sunday noon, and bring to session #3. Finish the Marketing Section by completing template pages 5, 6, 7, 8. to the instructors by Sunday noon, and bring to session #3. Use your SCORE counselor Use your SCORE counselor