Paradigm21

Paradigm21

Strategy • People • Performance

Marketing Plan Guide

There are two major components to your marketing strategy:

1. Effective sustainable competitive strategies to make the competition irrelevant.

2. Effective daily operational primary and support activities

Remember: a strategy has zero value if you lack either the resources or the expertise to implement it.

Begin formulation of your marketing strategy by determining the overall objective such as:

· Market is very attractive and your firm is one of the strongest and you will want to invest your best resources in support of your offering.

· Market is very attractive but your enterprise is one of the weaker ones in the industry you must concentrate on strengthening the enterprise, using your offering as a stepping stone toward this objective.

· Unattractive market and your firm is strong and an effective marketing and sales effort will be good for generating near term profits.

· Unattractive market and your firm is relatively weak in industry. You should promote this offering only if it supports a more profitable part of your business (for instance, if this segment completes a product line range) or if it absorbs some of the overhead costs of a more profitable segment. Otherwise, divestiture should be considered.

Positioning Strategy
Next step is to select an effective positioning strategy using one of following 'generic' strategies:

· COST LEADERSHIP STRATEGY
Based on having lower cost structure than your competitors which then translates to potential lower customer pricing. Conditions that should exist to support a cost leadership strategy include an on-going availability of operating capital, good process engineering skills, close management of labor, products designed for ease of manufacturing and low cost distribution.

· DIFFERENTIATION STRATEGY
Being unique "throughout the industry". Emphasis on brand image, proprietary technology, special features, superior service, strong distributor network and other unique features setting you apart from the competition.

Differentiation allows you to charge a higher price. Some of the conditions that should exist to support a differentiation strategy include strong marketing abilities, effective product engineering, creative personnel, the ability to perform basic research and a good reputation.

· FOCUS STRATEGY
More 'intense' form of either the cost leadership or differentiation strategy. Designed to address a "focused" segment of the marketplace, product form or cost management process and is usually employed when it isn't appropriate to attempt an 'across the board' application of cost leadership or differentiation.

Based on serving a particular target in such an exceptional manner, that others cannot compete. Usually this means addressing a substantially smaller market segment than others in the industry, but because of minimal competition, profit margins can be very high.

Pricing
Having defined the overall offering objective and selecting the generic strategy you must then decide on a variety of closely related operational strategies. One of these is how you will price the offering. A pricing strategy is mostly influenced by your requirement for net income and your objectives for long term market control. There are three basic strategies you can consider.

· SKIMMING STRATEGY
If your offering has enough differentiation to justify a high price and you desire quick cash and have minimal desires for significant market penetration and control, then you set your prices very high.

· MARKET PENETRATION STRATEGY
If near term income is not so critical and rapid market penetration for eventual market control is desired, then you set your prices very low.

· COMPARABLE PRICING STRATEGY
If you are not the market leader in your industry then the leaders will most likely have created a 'price expectation' in the minds of the marketplace. In this case you can price your offering comparably to those of your competitors.

Promotion
To sell an offering you must effectively promote and advertise it. There are two basic promotion strategies, PUSH and PULL.

· PUSH STRATEGY maximizes use of all available channels of distribution to "push" the offering into marketplace using distributors. Usually requires personal selling force, generous discounts and will minimize external advertising.

· PULL STRATEGY requires direct interface with buyer. Promotion and a major commitment to advertising is required. Objective is to "pull" the prospects into the various channel outlets creating a demand the channels cannot ignore.

There are many strategies for advertising an offering. Some of these include:

· Product Comparison advertising. In a market where your offering is one of several providing similar capabilities, if your offering stacks up well when comparing features then a product comparison ad can be beneficial.

· Product Benefits advertising. When you want to promote your offering without comparison to competitors, the product benefits ad is the correct approach. This is especially beneficial when you have introduced a new approach to solving a user need and comparison to the old approaches is inappropriate.

· Product Family advertising. If your offering is part of a group or family of offerings that can be of benefit to the customer as a set, then the product family ad can be of benefit.

· Corporate advertising. When you have a variety of offerings and your audience is fairly broad, it is often beneficial to promote your enterprise identity rather than a specific offering.

Distribution
You must also select the distribution method(s) you will use to get the offering into the hands of the customer. These include:

· On-premise Sales involves the sale of your offering using a field sales organization that visits the prospect's facilities to make the sale.

· Direct Sales involves the sale of your offering using a direct, in-house sales organization that does all selling through the Internet, telephone or mail order contact.

· Wholesale Sales involves the sale of your offering using intermediaries or "middle-men" to distribute your p
product or service to the retailers.

· Self-service Retail Sales involves the sale of your offering using self service retail methods of distribution.

· Full-service Retail Sales involves the sale of your offering through a full service retail distribution channel.

Of course, making a decision about pricing, promotion and distribution is heavily influenced by some key factors in the industry and marketplace. These factors should be analyzed initially to create the strategy and then regularly monitored for changes. If any of them change substantially the strategy should be reevaluated.

External Environment
Environmental factors positively or negatively impact the industry and the market growth potential of your product/service. Factors to consider include:

· Government actions - Consider subsidies, safety, efficacy and operational regulations, licensing requirements, materials access restrictions and price controls.

· Demographic changes - Changes may support or negatively impact growth potential. Includes factors such as education, age, income, current and future economy, marital status and geographic location.

· Emerging technology - Technological changes that are occurring may or may not favor the actions of your enterprise.

· Cultural trends - fashion trends and life style trends may or may not support your offering's penetration of the market

Target Market
It is essential to understand the market segments; demographics, competition, motivation for purchasing, consumer behavior and decision process and buyer perception of your offering.

· Selling to existing or new customers, market awareness of product/service, competition, industry growth rate and market demographics.

· Customer willingness to pay higher price because your offering provides a better solution to their problem.

· Buyer purchase decision timeframe is affected by the prospects confidence in your offering, number and quality of competitive offerings, number of people involved in the decision, urgency of the need for your offering and risks.

· Buyer knowledge of competitive pricing, their ability to pay and their need for characteristics such as quality, durability, reliability, ease of use, uniformity and dependability.

· Buyer's need, attitude about change, significance of the benefits, barriers that exist to incorporating the offering into daily usage and credibility of offering.

Product/Service
Review the factors that establish products/services as strong competitors. Factors to consider include:

· Proprietary technology and information specific to the business.

· Perceived customer value of product/service.

· Differentiation of product/service.

· Extent to which common introduction problems can be avoided such as lack of adherence to industry standards, unavailability of materials, poor quality control, regulatory problems and the inability to explain the benefits of the offering to the prospect.

· Potential for product obsolescence as affected by the enterprise's commitment to product development, the product's proximity to physical limits, the ongoing potential for product improvements, the ability of the enterprise to react to technological change and the likelihood of substitute solutions to the prospect's needs.

· Impact on customer's business as measured by costs of trying out your offering, how quickly the customer can realize a return from their investment in your offering, how disruptive the introduction of your offering is to the customer's operations and the costs to switch to your offering.

· Complexity of your offering as measured by the existence of standard interfaces, difficulty of installation, number of options, requirement for support devices, training and technical support and the requirement for complementary product interface.

Competition
Knowing your competition is essential to competing effectively. You must analysis each competitor's strengths and weaknesses in terms of: competitor's experience, financial strength, pricing strategy, differentiation factors, market position and share, brand strength, domestic or global operations, public or private, predictability and freedom to abandon the market

Your Enterprise
Internal assessment is critical to understanding your resources, capabilities and core competencies. Review the:

· Capacity to be leader in low-cost production considering cost control infrastructure, cost of materials, economies of scale, management skills, availability of personnel and compatibility of manufacturing resources with offering requirements.

· Ability to construct entry barriers to competition such as the creation of high switching costs, gaining substantial benefit from economies of scale, exclusive access to or clogging of distribution channels and the ability to clearly differentiate your offering from the competition.

· Ability to sustain market position determined by the potential for competitive imitation, resistance to inflation, ability to maintain high prices, the potential for product obsolescence and the 'learning curve' faced by the prospect.

· Brand name and reputation strength.

· Competence of the management team.

· Infrastructure in terms of organization, recruiting capabilities, employee benefit programs, customer support facilities and logistical capabilities.

· Freedom to make critical business decisions without undue influence from distributors, suppliers, unions, creditors, investors and other outside influences.

· Absence of legal problems.

Product/Service Development
Review the strength and viability of product/service development program will heavily influence the direction of your strategy. Factors to consider include:

· Strength of the development manager including experience with personnel management, current and new technologies, complex projects and the equipment and tools used by the development personnel.

· Personnel who understand the relevant technologies and are able to perform the tasks necessary to meet the development objectives.

· Adequacy and appropriateness of the development tools and equipment.

· The necessary funding to achieve the development objectives.

· Design specifications that are manageable.

Production
Review the company's ability produce competitive products/services. The following factors are considered:

· Strength of production manager including experience with personnel management, current and new technologies, complex projects and the equipment and tools used by the manufacturing personnel.

· Economies of scale allowing the sharing of operations, sharing of production and the potential for vertical integration.

· Technology and production experience

· Necessary production personnel skill level and/or the enterprise's ability to hire or train qualified personnel.

· Ability of the enterprise to limit suppliers bargaining power.

· Ability of the enterprise to control the quality of raw materials and production.

· Adequate access to raw materials and sub-assembly production.

Marketing and Sales

· Experience of Marketing/Sales manager including contacts in the industry (prospects, distribution channels, media), familiarity with advertising and promotion, personal selling capabilities, general management skills and a history of profit and loss responsibilities.

· Ability to generate good publicity as measured by past successes, contacts in the press, quality of promotional literature and market education capabilities.

· Sales promotion techniques such as trade allowances, special pricing and contests.

· Effectiveness of your distribution channels as measured by history of relations, the extent of channel utilization, financial stability, reputation, access to prospects and familiarity with your offering.

· Advertising capabilities including media relationships, advertising budget, past experience, how easily the offering can be advertised and commitment to advertising.

· Sales capabilities including availability of personnel, quality of personnel, location of sales outlets, ability to generate sales leads, relationship with distributors, ability to demonstrate the benefits of the offering and necessary sales support capabilities.

· Pricing of product/service as it relates to competition, target market price sensitivity, market familiarity with offering and current market life cycle stage.

Customer Services
Customer service function has a strong influence on long term market success. Factors to consider include:

· Experience of the Customer Service manager in the areas of similar offerings and customers, quality control, technical support, product documentation, sales and marketing.

· Availability of technical support to service your offering after it is purchased.

· One or more factors that causes your customer support to stand out as unique in the eyes of the customer.

· Accessibility of service outlets for the customer.

· Reputation of the enterprise for customer service.

Conclusion
After defining your strategy you must use the information you have gathered to determine whether this strategy will achieve the objective of making your enterprise competitive in the marketplace.

Two of the most important assessments are:

Cost To Enter Market
Analysis of factors that influence costs to achieve significant market penetration. Factors to consider include:

· Your marketing strength.

· Access to low cost materials and effective production.

· Experience of your enterprise.

· Complexity of introduction problems such as lack of adherence to industry standards, unavailability of materials, poor quality control, regulatory problems and the inability to explain the benefits of the offering to the prospect.

· Effectiveness of the enterprise infrastructure in terms of organization, recruiting capabilities, employee benefit programs, customer support facilities and logistical capabilities.

· Distribution effectiveness as measured by history of relations, the extent of channel utilization, financial stability, reputation, access to prospects and familiarity with your offering.

· Technological efforts likely to be successful as measured by the strength of the development organization.

· Availability of adequate operating capital.

Profit Potential
Factors that influence the potential for generating and maintaining profits over an extended period include:

· Potential for competitive retaliation based on competitors resources, commitment to industry, cash position and predictability and status of the market.

· Entry barriers such as; high switching costs, gaining substantial benefit from economies of scale, exclusive access to or clogging of distribution channels and the ability to clearly differentiate your offering from the competition.

· Competitive rivalry as measured by the size and number of competitors, limitations on exiting the market, differentiation between offerings and the rapidity of market growth.

· Suppliers bargaining power based on uniqueness of raw materials.

· Potential for imitation, inflation resistance, ability to maintain high prices, product obsolescence and market 'learning curve'.

· Substitute or alternatives available.

· Bargaining power of buyers due to large array of options available. Cost to look at alternatives, cost of offering, differentiation between your offering and competition, and the degree of the prospect's need.

· Market potential for new products considering market growth, prospect's need for your offering, the benefits of the offering, the number of barriers to immediate use, the credibility of the offering and the impact on the customer's daily operations.

· Freedom of enterprise to make critical business decisions without undue influence from distributors, suppliers, unions, investors and other outside influences.

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