A business plan is a marketing plan
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1 A business plan is a marketing plan Presented by Randy Shumway President, Progrexion Download a PDF of this presentation:
2 Shumway Family Slide #2
3 Marketing Plan = Business Plan All good business plans are necessarily marketing plans. After all, what is a business without a market? What is a product or service that no one buys? Marketing is not just the ads or brand (although it s that, too). Despite the prevailing prejudice, marketing does NOT come after the business plan Slide #3
4 New Product Launch The Financials Chocodent: The Denture Cream that Tastes Like Chocolate. We have an idea for a great new product a denture cream that tastes like chocolate. What will it take to make Chocodent into a business? Let s just stick to the numbers and build a business plan. Chocodent costs 25 per unit for manufacturing and distribution. You ll charge $2, which is less expensive than the national brands. There must be at least 1 million people who will need it. Right? That s a lot of revenue and a great margin. Great business!!! Slide #4
5 Selling the Product So, you folks want to buy some Chocodent? It tastes delicious! I ll give it to you for the startlingly low price of $1.75!!!!! Buy now!!!! Slide #5
6 Know Your Market For a business to succeed, it must know its market. There s no such thing as a biz plan that s solely revenue and margin and growth. That would be absurd. A biz plan MUST know the market(s) it wants to enter. But what does it mean to know a market? Slide #6
7 Common Sense + Creativity + Research Defining your market involves common sense + creativity + research How do you even know who your market is? There are the obvious guesses: Older people who use dentures. But is that the only market? Are there other ways to approach this? For example: Are there illnesses that cause people to lose their teeth at an early age? What about injuries? Do hospitals keep denture cream on hand as they do, say, gauze or ibuprofen? Might hospitals, in fact, be your best market? Do dentists keep denture cream on hand? Do people who ride motorcycles use dentures? How about soldiers who suffer injuries? Could the US military be your market? Does the fact that you can produce your denture cream so inexpensively make you an optimal choice for large scale institutional purchases? Slide #7
8 Creativity Or how about this: Are there other uses for Chocodent besides as a denture cream? How about as a coating for kids braces? Or for tongue depressors in pediatricians offices? Or is it the perfect shoe sole adhesive? Good business thinking means thinking creatively about your market. That is how your business will grow. That is how you will make your business plan attractive. Slide #8
9 Think Critically About Your Audience Knowing your market takes all kinds of research You ve decided who your target markets are and these will no doubt change as your business changes, as the world changes, but for now, for your business plan you ve decided. Now you have to come to know this market. Why? Because your product Chocodent may sound great but perhaps it doesn t appeal to your target. Perhaps the market size is diminishing after all, access to dentistry is improving which, in turn, will mean that future generations will not need dentures and hence not need your product. Are you embarking on a business for which, in 20 years, there will be no market? Or perhaps the cost of your product exceeds the spending habits of your target demographic. To know whether your business is even viable, you have to first know your market. What does that entail? Slide #9
10 Demographics Know your demographics through secondary and primary research Who is this audience? Where do they live? How much money do they earn? What has been published about this audience. You can try to get this data from existing sources such as Jupiter Communications. Or you might have to be creative. Try AARP. Are there dental associations? You might need to do your own research by getting mailing lists and conducting surveys online, via phone, or snail mail. Go to conferences in different fields denture conferences, dentistry conferences. Not only do you need to know how your market stands now, you need to know where it s headed. You don t want to launch a product that will be moot in a matter of years. Slide #10
11 Market Research Growth of Related Industries Target Consumer Demographic Information Persons 65 Years and Over (2000) 1.2 Total Industry Sales Divorced 7% Single 4% 1.0 Widowed 32% Sales (Billions) Denture User Income (2006) $100, % <$30,000 15% Married 57% 0.0 Denture Products Toothbrush Products Mouthwash Products <$100,000 35% <$50,000 40% Slide #11
12 Psychographics Know your psychographics Who is this audience? What do they like? What do they dislike not just in the realm of denture cream but in their lives? Do extended phone interviews. Conduct focus groups in which you sit 3-6 potential users in a room and ask them all kinds of questions. Put a face to the customer. Slide #12
13 Serve Your Audience Understanding Your Audience Henry Ford Founder, Ford Motor Company Any color, so long as it s black Alfred P. Sloan President, General Motors A Car for Every Purse and Purpose. Ford's failure to cater to the needs of its audience in the 1920's propelled GM to industry sales leadership by the early 1930's, a position it retains to this day. Slide #13
14 Competition Know your competition Do a competitive analysis. Who else sells denture cream? How do you fit in? What s your difference? Price? Taste? Ease of use? What will attract potential users to your product? What will make them change? Slide #14
15 Branding Efficacy Good branding is good business The inherited thinking is that branding comes later, after the business is developed. Numbers first; brand later. This may be the case. After all, a good brand alone does not make business just look at: Pets.com. A funny mascot is not enough. We all learned this during the dot com daze. Carmack s. This Utah restaurant franchise focused on the brand but forgot the burger, leaving a lot of expensive windows for closed signs to hang in. Slide #15
16 Product Recognition Value Which product did you buy? ipod Store and enjoy up to 20,000 songs, 25,000 photos, or 100 hours of video Full-color screen; plug-and-play ease Creative Zen - All of the above, plus: Plays more video/music formats than ipod Has a longer video battery life Customizable shortcut buttons It supports a wide variety of online music stores not just itunes. Has a built in FM tuner and recorder, as well as a voice recorder. Comes in five colors, where as the ipod video only comes in two Slide #16
17 Cluttered Market and Access to Information Good branding is good business But in today s marketplace, brand is assuming an increasingly large burden of the business due to: the massive proliferation of choices the Internet allowing for one-on-one communication between customers and business the increase in lifestyle brands reaching into new realms, such as computing (think: Mac). A smart brand play can in fact be a good business play. For example: Mac thrives on being different than the PC. Slide #17
18 Brand can be Better than the Product Volkswagen: Brand as business Volkswagen does not make good cars. They break down; they re not cheap; they re not cheap to fix; they don t hold their value. There are of course great things about VW cars. The interiors are well designed for the driver; the dashboard lights have a sexy glow about them. VW built their cars around their brand. They took their target market year old, urban professionals who want to be hip and not ostentatious and built the features that would serve that market. That is, they made a brand play the heart of their business and built their product accordingly. Slide #18
19 Differentiate VW found an opportunity in the brandscape. Mercedes: Stylish, innovative, sophisticated. Mercedes focuses on precision engineering. Toyota: Reliability at a good price. Volvo: A car that barely works, is expensive, but is safe. Volvo is not a fashion statement or a symbol of prestige. It s all about safety. Hyundai, Ford Aspire: Inexpensive cars for the young crowd. But not stylish. VW: Young and stylish and hip. Slide #19
20 Brand is Who You Are But brand is more than market appeal. It is your business structure. When we think market, we think about the end customer. But the market is of course more than those who buy your product. The market includes those who work for you. A brand is not just the sum of your ads and your tagline. A brand is your position your differentiator. A brand is every touchpoint people customers and employees, potential customers and potential employees have with your company. Brand includes the benefits package for employees; it includes the culture; it includes the design of the offices; it includes the incentives does your company reward team work? Or individual success? Slide #20
21 Be Your Brand Your brand represents who you are. Nike has a gym on its campus. Google has a top notch cafeteria. The meals are free for employees. At Applied Underwriters, an insurance company, everyone has to wear a jacket and tie even though there are never clients in the office. Employees are on the phone all day and still have to wear a jacket and tie. Why? Because it is a professional work environment; that is its culture; that is its brand. Nike attracts people who want to work for Nike; Google attracts people who want to work for Google; Applied Underwriters attracts people who wanted that professional environment. Slide #21
22 Acquisition Marketing Sales Matter! Build your brand by doing it through the sales process DIRECTV DSL vs. Clearwire Communications DIRECTV DSL: $600 CPA for a Customer Value of $450 Clearwire: Target Specific Geographies, Grassroots, own the market Lexington Law Firm Online marketing; lead generation; affiliate sales; outbound sales = 300,000 customers Myspace.com Where do they advertise? What is their business model? Does it matter??? They have 125 million customers and sold for $580 million when they had less than 30 million customers CPA: How much does it cost to capture each new customer do it smartly and you can build your brand while you grow sales Slide #22
23 Marketing Communications What people think of when they think marketing There are of course other components of marketing, the so-called creative side: Ad campaigns Taglines PR These are essential but they are not center piece of your business plan. These creative strikes are just that opportunistic strikes, responses to present market conditions, announcements of launch, and so on. Once you know your audience and your brand your position the communications tactics are simple! What most people think of when they think marketing is the day-to-day communications, both internal and external. These are essential. But they are driven by the business plan which, as we now know, is the top-level marketing strategy. Slide #23
24 Executive Summary Marketing as part of your business plan Choose your target markets. Be creative. Think beyond the obvious. Research. You alone are only one data point. Know your markets well. Demographics Psychographics Competition Collaborators who wants you to succeed The future of each Sketch a brand play that a) fits the business, the service/product; b) that makes sound business sense; and c) that fits you Slide #24
25 Words of Advice Winning the business plan competition does not necessarily equate to creating a successful business Don t play house Savantec vs. Progrexion Do what you love and love what you do Finale s vs. Amazon Luck is required; Don t quit! Test, screw-up, learn, test again Must take some risk to succeed Sales matter get as quickly as possible to the sell Surround yourself with diversity-of-thought. Conduct real research President Bush You are only one data point; one data point does not make a trend Slide #25
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