The first step in any marketing plan should be evaluating the entire potential market for each product category:
- How large is the potential market?
- How many people or businesses are currently using the product of any firm competing in this category?
- How many prospects have potential use for the product?
- Is the market growing, flattening, or shrinking?
Generally, a growing market is more desirable. Not only is there great sales potential, but also it is usually easier to enter and build sales in a growing marketplace than it is to supplant competition in flattening or shrinking marketplaces.
For very small firms, however, a large market can be a double-edged sword. On the positive side, of course, there is the potential for huge sales. Negatively, though, larger firms with established access to marketing channels and better financing may be tempted to enter such an attractive marketplace. Firms already involved in the particular industry may devote considerable resources to defending or increasing their current market share.
Almost All Markets Have Some Major and Distinctive Segments
Even if a market isn’t currently segmented, it probably carries that potential. In the case of large national markets, it is often very difficult for a small firm to be competitive unless the market is segmented.
Segmentation can come about in many ways. Often several types of segmentation are evident. Markets can usually be segmented by price and quality points. But price and quality issues may not form the clearest and most precise definitions of segmentation within a marketplace. Reasons for strong segmentation are most often found through an examination of product use and the benefits consumers derive from product use.
For example, the personal automotive car market may be thought of as being divided into station wagons, sedans, pickup trucks, minivans, and sports cars. Each of these segmented categories may be further divided by price and quality.
Within the luxury sedan segment, for instance, a change in the pricing or quality of pickup trucks would have no competitive impact because the potential consumer for a luxury sedan isn’t weighing a decision between purchasing a sedan or a pickup. However, if mid-price sedans are dramatically upgraded in quality, then they may become competition for the luxury sedan market. This happened in the luxury car market in the early 1990s. Offerings from Infiniti and Lexus caught the attention of consumers who had previously only considered the more expensive cars manufactured by Mercedes, BMW, and Jaguar.
Closely Evaluate Typical Target Consumers
There are countless possible behavior patterns to consider. Try to focus on the patterns that are most likely to determine the viability of your product in the marketplace. The following is an example of questions to consider:
- What type of product features most appeal to these consumers?
- How are choices made between competing products?
- How much disposable income do the target consumers have to spend on this product?
- How do these consumers reach decisions to purchase a particular product?
- Are these consumers typically presold on a brand before they visit a store, or are they impulse buyers?
- Which promotional vehicles does the consumer view most often?
- How are the consumers geographically situated?
- What activities do these consumers most like to engage in during their leisure time?
Make a Clear Distinction Between the Features of Competing Products and the Benefits to Consumers of Those Features
For example, years and years ago cars for a while featured very high “tails” on the end of the car. The feature has absolutely no impact on performance whatsoever, except it added a couple of pounds of extra weight to the vehicle. The benefit to the consumer was that it made the car more stylish, and specifically made buyers feel better about themselves by being perceived as more stylish.
Pay close attention to how strong the consumer benefit is from a particular feature. A careful evaluation of the intended product benefits will help you and others ascertain the correctness of the product positioning. You should be able to determine whether individual features are worth the cost to manufacture and whether they will provide a foundation for building promotional and advertising programs. To find more great marketing news check out Market Monkey.
Just because you have an existing sales force do not assume your current sales channels are appropriate for a new product. For example, the positioning of your product within its market segment may affect how the product should be sold. Let’s say you decide to position a new line of modular office systems as a premium product, complete with design consultation, targeted primarily to larger corporations. A highly trained, experienced, and knowledgeable sales staff, eager to visit customers’ offices for face-to-face presentations, would be crucial.
On the other hand, if your strategy is to sell economy office partitions to very small businesses at a low mark-up, then you could not afford an outside sales staff. While your inside sales group should be friendly and helpful, there would be little benefit in hiring higher-paid, design-oriented sales personnel.
If your positioning plan for a new product suggests the need for a new means of selling, you may want to reconsider the positioning plan. Ask yourself whether you can afford the extra cost and energy required to sell a premium or specialized product.
Advertising and Promotions: Start with Your Strengths
Your product positioning statement, along with an analysis of its strongest competitive features and consumer benefits, is a basic starting point in developing advertising and other promotional plans. For example, if you are starting the only all-business radio station in town, you may simply turn your basic positioning statement into your main advertising message: “WBUS: the only all-business radio station in town!” If your consumer analysis reveals that your targeted listeners are often driving in their cars, the same simple message might work well on outdoor billboard advertising. If your consumer analysis indicates that your intended audience commutes to work by train, subway, or bus, a transit ad campaign might be an appropriate way to impart your message effectively.
Alternately, you may learn that businesspeople really like the current stations they tune into to receive news. In this case, you may need to emphasize more specific features inherent in your broadcasting. You might want to play up the frequency of stock reports, investment advice, or business interviews that are a part of your format. To relay detailed information, it may be more appropriate to place Internet ads on local business websites or print ads in publications.
You might find that businesspeople aren’t clear on what the benefits would be to them if they were to tune into your station. In this scenario, you might want to develop an ad campaign with a tagline such as “the station for the well-informed executive.” You might run your ads during televised broadcasts of business programs. The ad might feature a businessperson getting praise at the office because he or she was able to disseminate timely news—news first heard on your station!
In short, there are important issues and endless alternatives to consider, from choosing advertising and promotional mediums, to developing message themes, to writing copy.
Marketing Plans Can Have a Boomerang Effect
If your marketing plans result in sharply declining market share for your competitors, then you need to be prepared for their reaction. For example, if you introduce a new product or service with great fanfare at a lower price than that of your competitors, then you may trigger a price war. This may culminate in the elimination of all but the strongest, most competitive, and best-financed firms. The victims may include you!
How can you avoid a competitive reaction that might backfire on you? Don’t compete on price. Instead, try targeting a small niche within your marketplace that is not directly targeted by your competition. If you can, stay away from mature, stable markets with clearly defined competitors.
Try to think like your competition before you implement any marketing strategies. How would you react if you were an existing firm and a competitor came out with a new, improved, or lower-priced product that had the potential of chipping away at your consumer base and, ultimately, profitability?
Decide whether or not it would be beneficial to the success of your business to alter your product, your pricing, or your unique selling proposition. Determine whether you should go full speed ahead with your plans. If you do so, be at the ready for the expected competitive reaction.
A Marketing Plan Should Include Focus on the Longer Term
If your plan succeeds:
- Will it help you realize the long-term strategic goals of your firm?
- Will you be able to build up long-term strengths in critical areas of your business operations?
- What effect will this particular product-marketing plan have on other products and services offered by your company?
- Will there be logical related or follow-on products that can be developed and/or offered if this product release is successful?
No Marketing Plan Is Complete without a Projection of Profitability
This is different than your annual plan for the entire business. The marketing plan should isolate every major expense relevant to a product, including an allocation of common expense items such as overhead.
You will, of course, need to carefully project a sales forecast. This forecast should realistically reflect all of the other factors detailed in this plan, including market size, sales of competing products, competitive factors, product features and benefits, and your promotional and advertising plans.
Sometimes firms discover during the development of a sales forecast that the product’s price is too low to clear a good profit. You will need to decide, at this point, whether the market would be receptive to a higher-priced product or a product with fewer features and benefits. Or, sometimes, the product makeup and price can remain the same and expense cuts can be made in the advertising or promotional budgets without affecting sales potential.
Takeaways You Can Use
- Evaluate markets, segments, consumers, and competitors.
- Distinguish between features and benefits.
- Develop your product positioning statement.