What Is A Marketing Plan and
How Do I Develop One?

Steve Bogash
Franklin County Extension Agent

Simply put, your marketing plan clearly lays out your strategy to sell your venture to both your customers and your potential investors and bankers. Getting this plan prepared will involve substantial research into the industry you wish to market in as well as a complete understanding of consumer motivations. Your marketing plan in a complete description of how you will get your product or service to market, build a market niche, maintain growth, and deal with future market change. Portions of the plan become templates and schedules for specific activities such as festival markets, newsletter mailings, advertising copy and other specific operations to promote your business.

Your market plan is made up of the following parts:

Positioning

How do your customers perceive your business and its products? Since all decisions made by individuals and businesses are motivated by emotions, you must position your products and services to benefit from the market position that you choose. Look at how important brands are when we purchase any given product. With so many brands of a similar product competing for every consumer dollar it is certainly in every business’s best interest to create more than just a

quality product. You must also develop an allure to help entice sales. Convince your buyers that they cannot do without your version of the product and you now have an excellent market position. The location of your business, the appearance of your entrance, employee attitude, employee appearance, and so many other factors all contribute to your business’s position.

Pricing

Getting your price structure right for your business is one of the most effective marketing tools you have. Price conveys image, affects demand, and effectively targets specific market segments. Base your price structure on the value of the product or service to the customer, not costs plus profit. If your price structure fails to generate sufficient profit, then changes must be made.

Many questions must be answered to develop a complete pricing strategy:

Is the pricing scheme competitive?
Is there some perceived value inherent in higher prices?
Are prices to be based on cost plus some standard mark-up?
Why are your prices higher or lower than your competitors?
How will price affect consumer demand?

There are so many decisions to make regarding pricing and price policies. Below are some of the considerations that go into a complete pricing policy:

Pricing Strategies

There are three primary strategies involving pricing:

“Skimming the cream” When there is limited competition you can charge what you like since substitution will be limited.
“Matching the competition” This simple strategy guarantees that your prices will meet local standards. Often, a new marketer will slightly undercut the competition to expand market share
“Undercut the competition” This strategy involves substantially undercutting competitors’ prices to exclude their market access.

Profit-Oriented Goals

One way to determine your pricing is to base the mark-up on your goals for the company. You decide what the return on investment needs to be and set your prices accordingly.

Sales-Oriented Goals

These are usually set to develop or maintain a particular market share and are very useful in new product introductions where the profit is less of a goal in the beginning. Retailers to induce customers into the store or introduce a new product typically use “Loss Leaders”. In the “Loss Leader” you sell a product at or near cost in an effort to increase market share.

Status Quo Pricing

You choose to sell your products at a set price since everyone sells theirs at that price and no one wants to “rock the boat” and possibly set off a price war.

Discounts

Once you establish a price you can then look at various discount schemes to sell more product. Quantity discounts are common throughout the greenhouse industry as well as Senior Citizen discount plans and frequent buyer promotions.

Coupons

Coupons have gotten to be extremely popular among consumers and retailers alike. The consumer gets a set deal based on your coupon and you have an easy method to measure advertising effectiveness through coupon returns. Be sure your pricing structure is balanced to handle the coupon deals or your end of year profit statements will suffer.

Shipping Terms

If your business ships products in any way, you must have a policy for assessing freight charges and recouping shipping costs. This can be a very sensitive subject, especially when it comes to local deliveries. Spell everything out clearly so there is no question regarding the delivery cost.

Sales Term and Credit Policies

Sales terms allow customers to take a discount if the invoice is paid within a set period. Typically, the terms will read 2% 10 days, net 30. This means that you are providing for a quick pay discount of 2% if the bill is paid within 10 days, then until the end of the 30 days the full amount is due. Most sales terms also provide for a slow pay fee of 1.5-2% per month in finance charges. New charge customers are frequently COD for the first year or must pay 50% COD and the remainder, net 30. Spelling your policies out in writing can substantially limit disagreements later.

Market Channels

All products are marketed through two primary channels, retail and wholesale. Retail marketing is selling product to the end user. Wholesaler marketing is selling through a middleman, whom then sells it to the retail marketer. Each form of marketing has advantages and disadvantages that will ultimately affect choice of channels. Most smaller growers sell a larger proportion of their product directly to the consumer or end use, but sell some wholesale, while larger producers exclusively sell their product wholesale. This is called market mix. Each business owner must determine this mix for himself and it will vary as your business evolves.

Advertising and Promotions

For many, advertising is synonymous with marketing, but as you can see from all the other aspects of marketing it is only the most visible, or you hope it is the most visible. An example is probably the easiest way to illustrate the difference between advertising and promotion. Assume you are a retail marketer, your spring promotion centers around a theme called “A MONTH OF COLOR.” Every day you feature a different flowering plant in bloom at half price.

In order to communicate your theme to the public you place radio and newspaper advertisements as well as explaining the idea in detail in your regular customer newsletter. To better focus the public on your goal, you lease a small tethered blimp and have special classes every Saturday in flower bed design. The promotion is the “Month of Color” and everything else that you do is advertising or promoting your products.

The promotion noted above would be only one aspect or part of your overall marketing plan. Your plan includes everything from pricing to the way your employees dress to your returns policies. Also included under market planning is your public fa�ade, which you manage through good public relations. Your activities in the community, appearances at festivals and newsletters all contribute to your public image. There is usually a blurry line between advertising and public relations. Everything you do in the public eye should be considered marketing and needs to be carefully planned.

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What Is A Marketing Plan and How Do I Develop One?