Business Plan Preparation Frank Moyes Leeds College of Business  University of Colorado Boulder, Colorado
Tonight <ul><li>Marketing Strategy </li></ul><ul><li>Revenue Model </li></ul><ul><li>Customer surveys </li></ul><ul><li>Ma...
Next Week <ul><li>Operations Plan </li></ul><ul><li>Development Plan </li></ul><ul><li>Review status of plans </li></ul><u...
Business Plan Elements <ul><li>Executive Summary </li></ul><ul><li>Company Overview </li></ul><ul><li>Market & Industry An...
Marketing Plan Objectives <ul><li>Build on Market & Industry Analysis  </li></ul><ul><li>Define the strategies & programs ...
Marketing Plan Outline <ul><li>Customer Research </li></ul><ul><li>Target Market Strategy </li></ul><ul><li>Channel Strate...
Customer Research <ul><li>Show your results </li></ul><ul><ul><li>Questionnaire - qualitative 20 people </li></ul></ul><ul...
Target Market Strategy <ul><li>Consumers vs. purchasers </li></ul><ul><li>Profile of the customers you will serve </li></u...
How Do Customers Make Decisions? <ul><li>Decision making process – where, when & how  </li></ul><ul><li>Initiator, Influen...
Channel <ul><li>Describe and justify the distribution channels  </li></ul><ul><li>Potential channels </li></ul><ul><ul><li...
Positioning <ul><li>What must target customer believe about you </li></ul><ul><li>Positioning is in the mind of the custom...
Positioning Strategy <ul><li>Positioning statement </li></ul><ul><ul><li>Describes market/industry, target customer, impor...
Attribute Map Attribute 1 Attribute 2 You Competitor 2 Competitor 3 Competitor 1
Hot Chocolate Flavour Convenience HC Hershey packets Ski Resort cafe Brown Palace
Hot Chocolate “ Coolness” Price HC Brown Palace Ski Resort cafe Hershey packets
Product/Service Strategy <ul><li>Not the description </li></ul><ul><li>Product/service roll out </li></ul><ul><ul><li>Init...
Pricing Strategy <ul><li>Describe and justify your pricing strategy </li></ul><ul><li>Provide evidence that your target ma...
What Are the Pricing Methods? <ul><li>Commodity pricing </li></ul><ul><ul><li>Set by the market </li></ul></ul><ul><ul><li...
Communications <ul><li>How you will communicate with current and potential customers? </li></ul><ul><ul><li>Advertising – ...
Guerilla Examples I <ul><li>New restaurant invites local hairdressers for free meal just after opening </li></ul><ul><li>M...
More Guerilla Examples II <ul><li>Reciprocal advertising:  two businesses mention one another in their ads </li></ul><ul><...
More Examples III <ul><li>Bowling alley charges based on number of bowling pins customer knocks down </li></ul><ul><li>Bic...
Sales Strategy <ul><li>How will you get orders ? </li></ul><ul><ul><li>Personal selling </li></ul></ul><ul><ul><li>Online ...
Revenue Model
Two Approaches  <ul><li>Top down – market penetration & timing </li></ul><ul><li>Bottom up – pipeline, revenue by customer...
Revenue Model Variables <ul><li>Market potential -  number of customers, transactions or units, purchases </li></ul><ul><u...
Revenue Model (Bottom-up) <ul><li>Identify specific customers </li></ul><ul><ul><li>Identify decision maker </li></ul></ul...
Revenue   Model
Revenue   Model
Revenue   Model
Revenue   Model
Revenue   Model
Revenue   Model
Revenue   Model
Revenue   Model
Margins <ul><li>% Gross Profit Margin </li></ul><ul><li>% Contribution Margin </li></ul><ul><li>% Net Profit Margin  </li>...
Margins %
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Marketing Strategy Business Plan Preparation

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  • Most important part of the Bplan
  • Child care service Who makes final decision? Who else involved?
  • Where: retail stores, mail order, internet When: time of year, month and day; seasons; end fiscal year How: how collect info, sales people, brochures, TV, internet how make decision: emotional, holistic, automatic, spontaneous Initiator baby diapers - mom Influencer - grandmother, other moms, dad Decider - mom Purchaser - mom User – baby Initiator purse – women, husband, family Influencer – women of same demographic, friends, husband, Oprah Decider - women Purchaser – women, husband, boyfriend User - women
  • Bicycle type Racing Road Mountain Cross bike Cruiser Descent MBX Price Performance: speed, handling, ride comfort, Durability Quality Weight Design High tech Aesthetics Benefits Who is the TM? Kids Teenagers Racers Parents with Kids Baby Boomers Tourist locations – hotels Transport to work Channel High end bike retailers – University Bikes; Pro Peleton Bike retail chains – Performance Sports retailers – Garts Mass retailers – Walmart Catalog Internet Rental Direct sell Competition Huffy Asia Trek Kestrel Custom
  • depends on how persuasive
  • Exercise: Take 5 minutes and have each team present Use Spectrum analysis
  • Exercise: Take 5 minutes and have each team present Use Spectrum analysis
  • Exercise: Take 5 minutes and have each team present Use Spectrum analysis
  • Commodity pricing Set by the market Supply and demand Based on competitor(s) price Value pricing - how much the customer is willing to pay for value received Payback period – depends on impact on company profit Industry rule of thumb – keystone pricing is common in retail businesses and equals purchase cost + 100% markup Introductory low price to get customers to use Cost plus + markup Razor &amp; razor blade E-commerce – transaction fee, advertising, intermediary commission, affiliate commission fee, subscription fee A la carte Max price – what will attract enough customers Min price – lowest price to make a profit
  • Marketing Strategy Business Plan Preparation

    1. 1. Business Plan Preparation Frank Moyes Leeds College of Business University of Colorado Boulder, Colorado
    2. 2. Tonight <ul><li>Marketing Strategy </li></ul><ul><li>Revenue Model </li></ul><ul><li>Customer surveys </li></ul><ul><li>Margins – didn’t cover last week </li></ul><ul><li>In the Fire – Industry Analysis & Model Company </li></ul><ul><li>Hand-in </li></ul><ul><ul><li>10 Call Reports </li></ul></ul><ul><ul><li>Competitive matrix </li></ul></ul><ul><ul><li>Model company description </li></ul></ul>
    3. 3. Next Week <ul><li>Operations Plan </li></ul><ul><li>Development Plan </li></ul><ul><li>Review status of plans </li></ul><ul><li>Hand-in: Customer Survey questionnaire </li></ul><ul><li>Wednesday Office Hours two weeks 3:00 to 4:30 </li></ul>
    4. 4. Business Plan Elements <ul><li>Executive Summary </li></ul><ul><li>Company Overview </li></ul><ul><li>Market & Industry Analysis </li></ul><ul><li>Product/Service Description </li></ul><ul><li>Marketing Plan </li></ul><ul><li>Operations Plan </li></ul><ul><li>Development Plan </li></ul><ul><li>Management </li></ul><ul><li>Competitive Advantage </li></ul><ul><li>Financial Plan </li></ul><ul><li>Funding </li></ul>
    5. 5. Marketing Plan Objectives <ul><li>Build on Market & Industry Analysis </li></ul><ul><li>Define the strategies & programs to exploit the opportunity </li></ul>
    6. 6. Marketing Plan Outline <ul><li>Customer Research </li></ul><ul><li>Target Market Strategy </li></ul><ul><li>Channel Strategy </li></ul><ul><li>Positioning </li></ul><ul><li>Product/Service Strategy </li></ul><ul><li>Pricing Strategy </li></ul><ul><li>E-commerce </li></ul><ul><li>Communications Strategy </li></ul><ul><li>Sales Strategy </li></ul><ul><li>Revenue Model </li></ul>
    7. 7. Customer Research <ul><li>Show your results </li></ul><ul><ul><li>Questionnaire - qualitative 20 people </li></ul></ul><ul><ul><li>Surveys – walk-up, mailed, email, on-line </li></ul></ul><ul><li>Prove </li></ul><ul><ul><li>You solve a problem </li></ul></ul><ul><ul><li>Features are wanted </li></ul></ul><ul><ul><li>Customer understand the benefits </li></ul></ul><ul><ul><li>Customer will pay your price </li></ul></ul><ul><li>Don’t cook the books </li></ul>
    8. 8. Target Market Strategy <ul><li>Consumers vs. purchasers </li></ul><ul><li>Profile of the customers you will serve </li></ul><ul><ul><li>Consumer: demographics, psychographics & values </li></ul></ul><ul><ul><li>Business: industry, size, location, purchase decision </li></ul></ul><ul><li>How will you overcome brand loyalty? What will cause customers to switch? </li></ul><ul><li>Future markets </li></ul>
    9. 9. How Do Customers Make Decisions? <ul><li>Decision making process – where, when & how </li></ul><ul><li>Initiator, Influencer, Decider, Purchaser & User </li></ul><ul><li>Identify criteria used to make decisions </li></ul><ul><ul><li>Criteria may be different than your features </li></ul></ul><ul><li>Customers buy benefits </li></ul>0
    10. 10. Channel <ul><li>Describe and justify the distribution channels </li></ul><ul><li>Potential channels </li></ul><ul><ul><li>Distributors, wholesalers, retailers </li></ul></ul><ul><ul><li>OEM’s & VAR’s </li></ul></ul><ul><ul><li>E-commerce </li></ul></ul><ul><li>Describe how you will gain access to the channels </li></ul><ul><ul><li>Identify specific companies </li></ul></ul><ul><ul><li>Decision making process </li></ul></ul><ul><li>Delivery to your customers, eg UPS is not the channel </li></ul>
    11. 11. Positioning <ul><li>What must target customer believe about you </li></ul><ul><li>Positioning is in the mind of the customer, relative to the competition </li></ul><ul><li>“perceptions, impressions and feelings” </li></ul><ul><li>How are you unique & different? </li></ul>
    12. 12. Positioning Strategy <ul><li>Positioning statement </li></ul><ul><ul><li>Describes market/industry, target customer, important features, benefits </li></ul></ul><ul><ul><li>Use your Value Proposition </li></ul></ul><ul><li>What features & benefits are most persuasive to get the customer to act? </li></ul><ul><li>Other considerations </li></ul><ul><ul><li>Name of your company </li></ul></ul><ul><ul><li>Company characteristics – essence of personality, tone & manner </li></ul></ul>0
    13. 13. Attribute Map Attribute 1 Attribute 2 You Competitor 2 Competitor 3 Competitor 1
    14. 14. Hot Chocolate Flavour Convenience HC Hershey packets Ski Resort cafe Brown Palace
    15. 15. Hot Chocolate “ Coolness” Price HC Brown Palace Ski Resort cafe Hershey packets
    16. 16. Product/Service Strategy <ul><li>Not the description </li></ul><ul><li>Product/service roll out </li></ul><ul><ul><li>Initial product/services </li></ul></ul><ul><ul><li>Future product/services </li></ul></ul><ul><li>Enhance the product/service with operations & service </li></ul><ul><li>Actions to sustain competitive advantage </li></ul><ul><ul><li>New features & benefits </li></ul></ul><ul><ul><li>New technology </li></ul></ul><ul><ul><li>New process </li></ul></ul>
    17. 17. Pricing Strategy <ul><li>Describe and justify your pricing strategy </li></ul><ul><li>Provide evidence that your target market will accept your price </li></ul><ul><li>Position your pricing relative to current and potential competition </li></ul><ul><li>Low price usually is NOT a good strategy! </li></ul><ul><ul><li>Measure of management </li></ul></ul>
    18. 18. What Are the Pricing Methods? <ul><li>Commodity pricing </li></ul><ul><ul><li>Set by the market </li></ul></ul><ul><ul><li>Supply and demand </li></ul></ul><ul><ul><li>Seasonality & perishability </li></ul></ul><ul><li>Competition </li></ul><ul><li>Value pricing - how much is customer willing to pay? </li></ul><ul><li>Payback period – depends on impact on company profit </li></ul><ul><li>Rule of thumb – Keystone </li></ul><ul><li>Introductory low price to get customers to use </li></ul><ul><li>Cost plus – markup </li></ul><ul><li>Razor & razor blade </li></ul><ul><li>A la carte </li></ul>0
    19. 19. Communications <ul><li>How you will communicate with current and potential customers? </li></ul><ul><ul><li>Advertising – paid advertising newspapers, magazines, TV, internet </li></ul></ul><ul><ul><li>Public relations – articles in paper, journals, blogs, websites </li></ul></ul><ul><ul><li>Printed materials – flyers, brochures </li></ul></ul><ul><ul><li>Performances, concerts, exhibitions </li></ul></ul><ul><ul><li>Exhibitions </li></ul></ul><ul><li>Why is this the most effective strategy? </li></ul><ul><li>Be imaginative ! Be a guerilla! </li></ul>
    20. 20. Guerilla Examples I <ul><li>New restaurant invites local hairdressers for free meal just after opening </li></ul><ul><li>Mattress retailer has sleep over advertising on the ceiling of a retail store </li></ul><ul><li>News is created so it will be covered in local newspaper </li></ul><ul><ul><li>Computer store does computer training for underprivileged kids </li></ul></ul><ul><ul><li>Owner makes bold predictions, does something unusual </li></ul></ul><ul><li>Articles are written by the entrepreneur for newspapers </li></ul>0 Mike Morris, Syracuse University
    21. 21. More Guerilla Examples II <ul><li>Reciprocal advertising: two businesses mention one another in their ads </li></ul><ul><li>Store offers discount card/coupon that appreciates in value each time it is used </li></ul><ul><li>Coupon that is worth something different each time it is used </li></ul><ul><li>Theatre places speakers outside front of facility with movies soundtracks playing; bakery purposely lets smells waft into customer passageway of mall </li></ul>0 Mike Morris, Syracuse University
    22. 22. More Examples III <ul><li>Bowling alley charges based on number of bowling pins customer knocks down </li></ul><ul><li>Bicycle retailer puts promotional tags on bike racks around town </li></ul><ul><li>Day care center adds cameras and streaming videos so parents can see how children are treated </li></ul><ul><li>Flower shop with lack of visibility at their location decorates popular park and some small cafes in the area with creative and simple flower arrangements </li></ul>0 Mike Morris, Syracuse University
    23. 23. Sales Strategy <ul><li>How will you get orders ? </li></ul><ul><ul><li>Personal selling </li></ul></ul><ul><ul><li>Online purchasing </li></ul></ul><ul><ul><li>TV infomercials </li></ul></ul><ul><ul><li>Direct mail </li></ul></ul><ul><ul><li>800 telephone </li></ul></ul><ul><li>Who will do the selling ? </li></ul><ul><ul><li>An internal sales force </li></ul></ul><ul><ul><li>Field sales force </li></ul></ul><ul><ul><li>Manufacturer's reps </li></ul></ul><ul><ul><li>Telephone solicitors </li></ul></ul><ul><li>How will you recruit, train, and compensate our sales force? </li></ul><ul><li>How will you support the sales effort?   </li></ul><ul><ul><li>Internal staff </li></ul></ul><ul><ul><li>Service operations </li></ul></ul>
    24. 24. Revenue Model
    25. 25. Two Approaches <ul><li>Top down – market penetration & timing </li></ul><ul><li>Bottom up – pipeline, revenue by customer </li></ul>
    26. 26. Revenue Model Variables <ul><li>Market potential - number of customers, transactions or units, purchases </li></ul><ul><ul><li>Size & growth </li></ul></ul><ul><li>Market share - penetration rate </li></ul><ul><li>Product/Services offered </li></ul><ul><ul><li>Roll-out strategy </li></ul></ul><ul><ul><li>Range & mix </li></ul></ul><ul><ul><li>New Products/Services </li></ul></ul><ul><ul><li>Obsolescence </li></ul></ul><ul><li>Frequency of purchase – per day/week/month </li></ul><ul><li>Capacity Utilization – per time period, event </li></ul><ul><li>Prices </li></ul><ul><ul><li>Price per customer, transaction or unit </li></ul></ul><ul><ul><li>Average revenue per customer or transaction </li></ul></ul><ul><li>Channel strategy - discount </li></ul>
    27. 27. Revenue Model (Bottom-up) <ul><li>Identify specific customers </li></ul><ul><ul><li>Identify decision maker </li></ul></ul><ul><li>Determine </li></ul><ul><ul><li>Annual purchases today & future </li></ul></ul><ul><ul><li>Who purchase from & level of satisfaction </li></ul></ul><ul><li>What do you need to do to get an order? </li></ul><ul><ul><li>If you meet the criteria, how much business can you expect? </li></ul></ul>
    28. 28. Revenue Model
    29. 29. Revenue Model
    30. 30. Revenue Model
    31. 31. Revenue Model
    32. 32. Revenue Model
    33. 33. Revenue Model
    34. 34. Revenue Model
    35. 35. Revenue Model
    36. 36. Margins <ul><li>% Gross Profit Margin </li></ul><ul><li>% Contribution Margin </li></ul><ul><li>% Net Profit Margin </li></ul><ul><li>% Operating Expenses </li></ul>Revenue – COG’s Revenue Revenue – Variable Costs Revenue Net Earnings Revenue Sales, General & Admin Revenue
    37. 37. Margins %
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