Failing to plan, is planning to fail….
Or, alternatively, one of my favourites, the five P's: “prior preparation prevents piss poor performance”
Like everything else in the business world (and the wider world for that matter) – planning and preparation is critical for success. Marketing is no different.
However, the majority of small businesses rarely involve themselves in the marketing planning process, preferring, instead, to do there marketing in a more ad hoc, less structured way. Whilst this may suit smaller businesses, for those businesses wishing to grow and develop themselves, this lack of marketing planning can potentially be a significant handicap for their future success. At the very least it will ensure that the resources dedicated to marketing the business (both time and money) will be at least partially (if not all) wasted, and at the very worst, could see the business bankrupt itself chasing non-profitable customers.
A marketing plan?
A marketing plan, in many ways is similar to a business plan (for many organisations, the two are interchangeable). It can be as simple, or as complex as the business requires and it exists to provide a road-map for the business to follow in order to achieve its objectives (for example: turnover, market share, profitability). Like a business plan, a marketing plan is a live document. It’s not something that is written and then followed to the letter no matter what. If situations change, then the market plan needs to change and adapt to the new circumstances.
A marketing plan exists to provide a structure for the successful marketing of the business.
Further, a comprehensive marketing plan can help the business identify and exploit opportunities within its market as well as highlighting any potential weaknesses.
And, before we get too involved, a marketing plan can be as specific or generic as the business wants / needs. In other words, it can either be focused towards the business as a whole, towards a specific product group, product or customer type.
Most larger businesses, for example, will have several marketing plans (theoretically all tied together at some level to form a master plan) for the business as a whole, product groups, individual products and customer groups. The objectives for the business will cascade downwards to form the objectives of the product groups and the like.
Further, whilst marketing plans can be lengthy all encompassing documents – they don’t have to be. They can be as concise as the business needs them to be – as long as they still provide objectives and direction.
What should be in a marketing plan?
Quite simply, as with any other plan, a marketing plan should answer the following inter-linked questions:
- Where we have come from?
- Where are we now?
- Where do we want to go?
- How are we going to get there?
I say inter-linked, as by answering each question the business can gain insights to answering the next question and potentially highlight new opportunities, or for that matter threats to the business. And again, the simplicity or complexity of the answers to these questions depends upon the business and the market it’s targeting.
Where have we come from?
This is a critical question to answer. If we don’t know how the business has performed in the past, what its been good at, and what it hasn't been good at – we can’t possibly predict or plan in any meaningful way what the business will do in the future. A deep understanding of the business, its products, customers, finances, people and processes is a necessary foundation to any marketing plan.
Specifically, we need to know:
- sales performance – of the business as a whole, and of individual products. It is critical to understand what has sold well and what has not – individual products and services will, undoubtedly vary greatly – some being faster sellers than others. If we don’t know this, it will be hard to generate any meaningful sales or revenue objectives for the marketing plan nor any form of baseline to measure the effectiveness of any marketing activity
- profitability – distinctly different to the above. What are the most profitable products and services, what are the least? If you do not know what is profitable to the business (and by how much), you don’t know what to focus your time and effort on. It is not uncommon for businesses to focus on selling products that have very little margin – if any – because they do not understand where there profit comes from. Accurately assessing profitability (with sales performance) will give businesses an insight into what type of products and services they should be focusing on
- customers – not all customers are the same. A few will be profitable, most will be marginal, and a few will be non-profitable. Pareto’s principal holds true for the majority of industries (80% of profits come from just 20% of customers) – so it is critical to identify those customers that are highly profitable (or likely to be), and either find more of them, or sell them more. Vice verily, by identifying those that are not profitable….. Segmentation – the division of your customer base into definable segments – is again, critical (using critical too much – sorry). By segmenting the customer base, the attributes of a profitable customer can be defined, and can be earmarked to be targeted within the marketing plan
- what has worked – what hasn't worked – understanding what has worked for the business previously, and what hasn't is again key (different word to critical there). This is very much a process / people question to answer – if the business is good at a particular thing, and it has done well in the past – worthwhile investing in that in the future. Likewise, if a business has failed in a particular action or process in the past – what is the likelihood of turning this around in the future? For example, the internet may have worked for your business in the past – and therefore can be expected to work well in the future. However, it’s just as likely not to have worked – maybe because the product or service isn't suitable for online – in which case should you be focusing on it in the future?
It should be noted, that many small businesses may not have robust historical data, or for that matter the level of sales history that allows meaningful historical analysis. In which case, businesses should make a judgement call from their experiences in the market – paying specific attention to profitability and customers.
Where are we now?
Answering the previous question has given us a firm understanding of what has sold in the past, what has been most profitable, and who is most likely to buy it. By answering this question we want to find out what’s happening today – specifically what the state of the market the business is trying to market its products and services is in.
Things that need to be assessed here include:
- state of the market – is the overall size of the market growing or shrinking? What are the trends within the market – higher purchase prices /lower volume or lower prices / higher volume etc.
- the competition – getting more or less competitive? What are they doing right? What are they doing wrong? In what way are you better than them?
- the wider environment – what’s happening in the wider market (society) that will affect your business. For example, forthcoming government legislation, new regulations, changes in tax, shifting political views and social attitudes (for example the move towards environmentally friendly products). Can also include other things such as the increasing use of social media, the opening of new transportation links etc. In other words, things from the wider environment that may affect your business.
By answering this question, a business should understand its current position within the overall market, and an understanding of where that market is going in terms of trends. Is the market growing / declining, what is the competition like – increasing / lessening and what is the focus of that competition is it price, service, the product itself or a combination of all three, and what effects, if any, is the outside world having on the market.
Where do we want to go?
This is the hardest question to answer. It’s very easy to answer it superficially and come up with some random but ultimately un-achievable aspiration. It’s harder to come up with something that is both stretching yet realistically achievable.
This is why its important to answer the previous two questions. Because they can guide the business into understanding what is achievable within their market and critically what isn't. From answering those questions, a business should have a good understanding of who their most profitable customers are, what their most profitable product is and which distribution channels / promotional activities work best for them. Further, from understanding the current market, businesses will have a firm view on what is achievable within that market. This can guide a business into setting appropriate and realistic objectives in terms of where they want to take the business.
Ideally, when setting an objective, its best to be as specific as possible. Both in terms of what the business wants to achieve, the time period they want to achieve it in and the resources and investment they are willing to commit in order to achieve it. For example:
- increase sales by 10% by end Q2 spending no more than £5,000
However, even the above is quite generic, and not necessarily as granular (specific) as it should be. Much better to have something like:
- increase sales of product x by 12% to end Q2 with a spend of no more than £3,000
- increase sales of product y by 7% by end Q2 with a spend of no more than £2,000
- maintain sales of product z and w at current levels within existing budgets
The above will still gain a 10% overall increase in sales, but is a little bit more specific, and has broken the monolithic 10% target down into two more manageable and specific chunks.
Where possible, objectives for marketing plans needs to be SMART (specific, measurable, achievable, realistic and targetable). Although sometimes, for example when branding issues are involved, things may get a little bit woolly.
Note, whilst I do mention sales above, this shouldn't be the driving factor in any business. What should be the driving factor is profitability – which while closely linked to sales, is not the same.
How are we going to get there?
Now, here’s the interesting bit – how are we going to get to where we want to be?
However, we already have some things to help us. We know specifically where we want to be, we know how much money we want to spend in getting there, and from the analysis of the business we know (or at least have an inclination) as to what has worked before, who the most profitable customers are and what the most profitable channels are.
There are a couple of ways to approach this – simplistically or more comprehensively. The simplistic approach, which I will detail shortly, will adhere to the majority of small businesses views on marketing – i.e. it’s all about the window dressing of how you promote a particular service or product – or in other words the marketing communications side. Whereas the more comprehensive view on marketing entails the full marketing mix – the 7 p’s of marketing.
The 7 p’s of marketing
The more comprehensive view of marketing is that it is a holistic all encompassing discipline affecting every part of the business process. This view on marketing often centers around the 7 p’s of marketing:
- price – the price charged to the customer for the product or service (assuming price elasticity – lower price= more sales/lower profit, higher price= less sales/more profit). Also for some products, there is a perceived value, especially if a brand is involved, which can substantiate significantly higher pricing levels
- product – the actual product itself, its features and benefits, how it compares to the competition, its perceived value, and any added value to the potential customer
- promotion – the advertising / marketing communication of the product itself
- placement – the distribution channel used for selling the product or service – for example your shop, third party distribution, door to door, by telephone, mail order or online
- people – the customer facing people that represent the business – the sales guys
- process – the manufacturing and sales process of the product (for example – built using traditional means / low waiting times) and any added value service or guarantee
- physical evidence – how to demonstrate that you deliver what you deliver - most important to service related industries -where there is no tangible physical end product.
By playing around with the 7p’s a business can develop a comprehensive marketing strategy to achieve its objectives.
For example: choosing to use a new distribution channel (perhaps using the internet), developing a dedicated sales force, or developing the product itself.
The thing to remember is that all of them are inter-connected, changing one will necessitate changes in the others.
However, most small businesses when they think about marketing, think about marketing communications – the promotion P of the seven p’s. This doesn’t mean that they ignore the other marketing p’s, they just consider those to be part of the business process, and not necessarily part of the marketing process.
Marketing communications include:
- advertising (online / traditional / outdoor)
- direct marketing – email / direct mail
- public relations (press releases etc.)
- sales promotion (special offers)
- social media
- marketing collateral – brochures / flyers etc.
- marketing collateral – websites and online content
Businesses can choose one, several or all of the marketing communications mix to market themselves, depending on their budget, their market and their customers (prospective customers) attitudes. Depending on the business being marketed, the customer proposition and the target market some of the above will work better than others, whilst some won’t work at all.
However, all potentially do have value for a small business – even sponsorship (for example sponsoring a local sports team) and PR (for example – writing a press release for the local paper).
Deciding which combination of the above together with what communication message and when is the fun bit of marketing planning.
Much of this will be driven by an understanding of the business, the market its in, and the businesses customers. However, all businesses need to consider the following when developing their plan, and structure it as much as they can anticipating what the customer response is going to be:
- what the message is – the customer proposition
- who is it being targeted at – customer segmentation – i.e. the potentially profitably customers
- what communication channels are going to be used – i.e. advertising for hard to reach audiences, direct marketing for those who we know
- when are we going to do it.
We also need able to measure the success or lack of success of marketing activities in order to adapt. Perhaps if something works well – we can do more of it, vice-verily, if something isn’t doing so well, we can do less of it.
There is no guarantee that any marketing activity will make any difference at all to the business. Marketing can be one of the easiest and most effective ways for businesses to loose money. This is why it needs to be measured – so that if marketing activity is generating very little or no return it can be stopped or adapted before it looses more money.
Obviously, somethings are easier to measure than others. But businesses need to try and measure their marketing results as much as possible so they can demonstrate the effectiveness of good marketing, and they can demonstrate that investing in marketing does actually produce a return on investment.
Putting it all together
Now comes the bit everybody loves – putting it all together. We already know where we want to be, what we want to achieve by when and with how much. Further, we know what we have to play with (assuming here we are focussing on a marketing communications) and we also know what type of customers we want to target, so its simply a case of scheduling (either in sequence or in parallel) specific actions targeted at specific groups.
For example, a quick, simple and easy marketing plan could be:
- week 1:build and agree customer proposition
- week 2: identify key target groups (customer types)
- week 3-5: develop website / write and print sales brochure / build database / create direct mail item
- week 6: launch marketing campaign / launch website / distribute brochure / send direct mail / hold launch party for key customers / issue press release
- week 7: follow up sales activity on direct mail / follow up website leads
- week 8: review campaign to date / measure results against success factors (objectives).
Obviously a very simple outline – but it gives you the gist. For some small businesses, this is all they might need – for others – with perhaps more staff, or a more complex marketing plan – more is needed to explain each step in further detail.
The key thing about a plan (any plan for that matter), is that it can be followed and understood by people within the business, who can then plan activities around it (and build those activities into the marketing plan). For example, with the above plan – perhaps the sales department would like to get involved by doing some pre-sales activity prior to the official launch with targeted customers, or, the service department might think it worthwhile mentioning the launch to customers they interact with – perhaps distributing the new brochure.
Another key thing about any plan – is never do anything in isolation. Don’t spend a lot of time planning something, then do it and not follow it up. Ensure every action, where possible, is followed up.
So, how do you write a marketing plan?
Well, if you have followed the above, you just have.
Marketing planning doesn’t need to be about jargon, or fancy structures and graphs. It is a plan that has been thought out about what the business is good at, what the opportunities in the market are, what the business wants to achieve and how it’s going to get there.
The marketing plan needs to be used and understood by the business, its format and structure are less important.
Something to constantly review
As mentioned before, a marketing plan is a live document – it needs constantly reviewing (well, once a week will probably be enough) and adapting to changing circumstances.
If something isn’t working – stop doing it. If something works better than expected – do more of it. If the business changes, change the marketing plan.
Much of this will only be obvious if you actually measure the results of your marketing – insofar as you can. Whilst somethings are wonderfully easy to measure – for example the number of discount vouchers used, or the number of purchases through a new website. Others, unfortunately are not.
If you want to find out more about marketing planning – please get in touch with Hot Lemon, we would be happy to talk through any questions you have – often only for the price of a cup of coffee.