Section III - Building Considerations

the

Business

Plan:

Marketing

and

Financial

Chapter 6 Building a Powerful Marketing Plan (PPT 6.1) Part One: Learning Objectives 1. 2. 3. 4. Describe the principles of building a guerrilla marketing plan and explain the benefits of preparing one. Explain how small businesses can pinpoint their target markets. Discuss the role of market research in building a guerrilla marketing plan and outline the market research process. Describe how a small business can build a competitive edge in the marketplace using guerrilla-marketing strategies: customer focus, quality, convenience, innovation, service, and speed. Discuss the marketing opportunities the World Wide Web (WWW) offers entrepreneurs and how to best take advantage of them. Discuss the "four Ps" of marketing--product, place, price, and promotion--and their role in building a successful marketing strategy.

5. 6.

Part Two: Lesson Plan (PPT 6.2, 6.3) I. Building a Guerrilla Marketing Plan Marketing is the process of creating and delivering desired goods and services to customers and involves all of the activities associated with winning loyal customers. Guerilla marketing strategies are unconventional, low cost, creative techniques-small companies can get more bang from their marketing bucks. Guerilla Marketing Principles 1. 2. 3. 4. 5. Find a niche and fill it Dont just sell, entertain Strive to be unique Create an identity for your business Connect with customers on an emotional level

A Guerilla marketing plan should accomplish four objectives:

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1. It should determine customer needs and wants through market research. 2. It should pinpoint the specific target markets the company will serve. 3. It should analyze the firm's competitive advantages and build a marketing strategy around them. 4. It should help create a marketing mix that meets customer needs and wants. II. Pinpointing the Target Market (PPT 6.4) Target markets are the specific groups of customers at whom the company aims its goods or services. III. Determining Customer Needs and Wants Through Market Research Demographics are the characteristics and trends of a population including age, income, gender (composition), education, household size, race and ethnicity. A. The Value of Market Research (PPT 6.5)

Market research serves as the foundation for the marketing plan. Its objective is to learn how to improve the level of satisfaction for existing customers and to find ways to attract new customers. By performing some basic market research, small business owners can detect key demographic and market trends. Market research does not have to be time consuming, complex, or expensive to be useful. Faith Popcorn, a marketing consultant, offers tips to help spot significant trends: i. Read as many current publications as possible ii. Watch the top ten TV shows iii. See the top ten movies iv. Talk to at least 150 customers a year about what they're buying and why v. Talk with the 10 smartest people you know vi. Listen to your children B. How to Conduct Market Research (PPT 6.6 thru 6.8) Step 1: Define the objective Step 2: Collect the data Step 3: Analyze and data Step 4: Draw conclusions and act

interpret

YOU BE THE CONSULTANT Data Mining: A Sure Bet for Harrahs Harrahs Entertainment, the parent company to 26 gambling casinos in 13 states, experienced a significant increase in market share and profitability through their collection, analysis and use of statistical data.

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Former Harvard Professor Gary Loveman, once a consultant to Harrahs, devised a system that allows the company to really know its customers and to market accordingly. This is the replacement of intuition and hunch with science, says Loveman. Q1. Work with a group of your classmates in a brainstorming session to identify other industries that could benefit from a data collection and mining system like the one Harrahs uses so effectively. In what ways could those businesses use data to become more effective marketers? Q2. Discuss the ethical issues that Harrahs faces as a result of its data collection and mining efforts. Q3. What benefits does Harrahs gain from its efforts? What benefits do Harrahs customers gain? A1. Students will identify many different businesses that would benefit from market research and should clearly connect and convert the information to marketing efforts that address customers wants and needs. A2. Gambling can become a serious addiction that adversely affects the lives of people. A3. Harrahs is able to use their knowledge to offer their customers exactly what they want in terms of gambling, entertainment and accommodations-- much to the delight and satisfaction of both parties. (PPT 6.9 thru 6.12) YOU BE THE CONSULTANT What Would Tommy Wear? A group of entrepreneurs living on Floridas Gulf Coast created an imaginary figure named Tommy Bahama. Tommys handsome, successful and stylish image was transformed into a line of apparel aimed at 35 to 65 year-old men. The partners experienced a few years of frustration with unsuccessful and changing market strategies and financial challenges until they finally opened their own model store in Naples, Florida that featured a combination restaurant and clothing outlet. That successful venture led to the opening of 17 more restaurant-retail compounds. The partners are pursuing international sales opportunities and the prospect of opening a hotel and golf resort. And it all began with the question, What Would Tommy Wear. Q1. Work with a group of your classmates in a brainstorming session to identify brands whose names have faded. Q2. Use the resources of your library and the World Wide Web to research one of the brands you identified. What went wrong? What caused the brand to lose its popularity?

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Q3. What lessons from the Tommy Bahama success story should the managers of the brand you identified have used to avoid problems? Q4. What advice would you offer the partners about keeping the Tommy Bahama brand going strong? A1. Students will think of and learn a valuable lesson from several now defunct companies. A2. Students responses should focus on the connection between customers specific needs and wants and their selected companies failures to offer and market the right products or services. A3. Students answers should address both the marketing and entrepreneurial flexibility and perseverance of the partners. A4. Students will offer a variety of marketing strategies for the partners to consider. IV. Plotting a Guerrilla Marketing Strategy: How to Build a Competitive Edge (PPT 6.13 thru 6.28) 1. Focus on the Customer Every business depends on customer satisfaction. If you can't take care of your customers, someone else will. 1. Devotion to Quality Quality goods and services are a prerequisite for survival. Today quality is more than just a slogan. Businesses buy into strategies like Total Quality Management (TQM) -- where quality is in the product or service and in every other aspect and component of the business as well. 1. Attention to Convenience Customers want convenience. Studies show that customers rank convenience at the top of their purchasing criteria. Successful companies must show that it is easy for customers to do business with them. 1. Concentration on Innovation In order to keep up with changing markets, small businesses must be innovative. Small businesses are frequently leaders in innovation even though they do not have the resources that larger businesses do. 1. Dedication to Service and Customer Satisfaction Steps to achieving stellar customer service and satisfaction: 1. Listen to customers
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2. Define superior service 3. Set standards and measure performance 4. Satisfied customers exhibit one of the following: i. Loyalty ii. Increased purchases iii. Resistance to rivals attempt to lure them away with lower prices 5. Examine your company's service cycle 6. Hire the right employees 7. Train employees to deliver superior service 8. Empower employees to offer superior service 9. Use technology to provide improved service 10. Reward superior service 11. Get top managers' support 12. View customer service as an investment, not an expense Emphasis on Speed To be competitive, companies must reduce the time it takes to develop, design, manufacture, and distribute a product, which results in reduced costs, increased quality, and increased market share. YOU BE THE CONSULTANT The Power of the Little Blue-and-White Boxes Jiffy baking products (the little blue-and-white boxes), once a sideline operation of the Chelsea Milling Company commands over 50% of its market. The company seems to defy modern day business practices by remaining privately held and by not advertising. That strategy has paid off handsomely by allowing the company to maintain a low overhead and a small management team that can make decisions and take actions efficiently. The result is a high quality product with strong demand and a price that no one can beat. The third generation family business owner has upgraded the companys manufacturing facilities and general business practices and now has the company exploring a variety of new markets (exporting, institutional markets and food service). Q1. What is the basis for Chelsea Millings marketing strategy? How effective is it? Q2. How easily could a competitor duplicate Chelseas marketing strategy for Jiffy? Q3. How successful do you think a company launching a product such as Jiffy today would be if it never advertised? Q4. How would you evaluate the opportunities Chelsea Milling faces for Jiffy products? A1. The basis for the companys marketing strategy is cost efficiency. It is very effective because many of its customers are price-sensitive shoppers. A2. Under the right business conditions, a competitor could start locally with the same strategy and grow it over time. Students should be encouraged to present and defend their options. A3 and A4: Same answer as above. V. Marketing on the World Wide Web (WWW) (PPT 6.29 thru 6.31)

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The Internet is a vast network that links computers around the globe via the WWW. By establishing a Web site, a small business can sell its products electronically around the world. It is a phenomenal commercial opportunity that offers businesses a worldwide marketing and distribution system. It is the Great Equalizer in a world of larger competitors. Todays business students and entrepreneurs are on the frontier of an industry and market that will likely see tremendous growth in the next few years. The opportunity is now. VI. The Marketing Mix (PPT 6.32 thru 6.39) 1. 2. 3. 4. Product Place Price Promotion

Part Three: Suggested Answers to Discussion Questions 1. Define the marketing plan. What lies at its center? The marketing plan focuses the company's attention on the customer and recognizes that satisfying the customer is the foundation of every business. Its purpose is to build a strategy for success with a focus on the customer. 2. What objectives should a marketing plan accomplish? The marketing plan has four objectives: 1. Determining customer needs and wants through market research 2. Pinpointing specific target markets the small company will serve 3. Analyzing the firm's competitive advantages and building a marketing strategy around them 4. Helping to create a marketing mix that meets customer need and wants 3. How can market research benefit a small business owner? List some possible sources of market information. Market research provides the foundation for the marketing plan. By performing basic market research, small business owners can identify key demographic and market trends. Possible sources of market information include: 5. Current publications 6. Top ten shows 7. Top ten movies 8. Customers 9. Smart people you know
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10. Children 4. Does market research have to be expensive and sophisticated to be valuable? Explain. No, market research does not have to be expensive and sophisticated to be valuable. For example, for most business owners, information is often floating around. It is a matter of collecting and organizing the data to make it valuable. 5. Describe several market trends and their impact on small business. 11. Increasing population diversity offers special challenges to business owners. 12. Changing family patterns will force marketers to rethink their strategies. 13. Greater environmental and health concerns have consumers more focused on the environmental impact of the products and services they buy. 14. Emergence of "premium" and "discount" niches an increasing number of lower income households force more buyers to become bargain shoppers. 15. Surge in "baby boomers" and the elderly results in changing needs for those consumers. 16. Greater emphasis on social responsibility has a growing number of consumers buying products associated with a cause they care about. 17. Slower growing markets and shorter product life cycles require businesses to focus on narrow niches, understand customer needs and wants, and give them value. 6. Why is it important for small business owners to define their target markets as part of their marketing strategies? Small businesses must be more focused on the types of customers they want to target. Small firms are ideally suited to reach market segments that their larger rivals overlook or consider too small to be profitable. A clear, concise target market allows a small business to be profitable. 7. What is a competitive advantage? Why is it important for a small business owner to create a plan for establishing one? A competitive advantage is an aggregation of factors that sets a company apart from its competitors. Developing a strategic plan allows a small business to differentiate itself from other companies. Developing a strategic plan allows the small company to meet the customer's needs of today, while looking one step ahead to what they will need tomorrow.
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8.

Describe how a small business owner could use the following sources of a competitive advantage: 1. Focusing on a niche: target a specific segment of the population that your business can efficiently serve-- senior citizens. 2. Entertaining: offer a service that customers enjoy and actively seek out-- gambling. 3. Striving to be unique: the latest craze in body piercing and tattoos. 4. Creating an identity for the business: a name or a song that everyone associates with your product. 5. Connecting with customers on an emotional level: environmentally safe products. 6. Focusing on the customer: specialized exercise equipment for disabled people. 7. Focusing on the customer: health and beauty aidshair coloring. 8. Devotion to quality: specialty food products. 9. Attention to convenience: business location. 10. Concentration on innovation: battery powered blenders. 11. Dedication to service: installation and maintenance of product lines.

9.

One manager says, When a company provides great service, its reputation benefits from a stronger emotional connection with its customers, as well as from increased confidence that it will stand behind its products. Do you agree? Explain. If so, describe a positive service experience you have had with a company and your impressions of that business. What are the implications of a company providing poor customer service? Describe a negative service experience you have had with a company and your impressions of that business. How likely are you to do business with that company again? It is true in most cases that a great service experience creates a bond, confidence in the product or service and the desire to be a repeat customer. Students will share their positive and negative service experiences and comment on the business implications of each.

10.

What marketing potential does the World Wide Web offer small businesses? What does it take for a company to market successfully using the Web? The WWW is a vast network connecting the worlds computers and information sources. With its ability to display colorful graphics, sound, animation, video and text, the web allows small business companies to equal and even surpass their larger rivals web presence. It offers businesses a worldwide marketing and distribution system. Successful companies must have a marketing strategy that will get them a high
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volume of web attention and recognition and a line of products and services that people want to buy. 11. Explain the concept of the marketing mix. What are the four Ps? Applying the concept of the marketing mix requires a company to conduct useful market research and to develop and market each of the four PsProduct, Price, Place and Promotion. 12. List and explain the stages in the product life cycle. How can a small firm extend its products cycle? The stages include: the introductory stage, the growth stage, maturity, market saturation and decline. A focus on product innovation and change, as well as the development of more stable products, versus fad merchandise, can extend the product life cycle. 13. With a 70 percent customer retention rate (average for most U.S. firms, according to the American Management Association), every $1 million of business in 2000 will grow to more than $4 million by the year 2010. If you retain 80 percent of your customers, the $1 million will grow to a little over $6 million. If you can keep 90 percent of your customers, that $1 million will grow to more than $9.5 million. What can the typical small business do to increase its customer retention rate? Practice the company philosophy of dedication to service, customer satisfaction, and customer astonishment. Part Four: Lecture or Critical Thinking Case Studies-Not Found In Student Text ARE WE MAKING THE GRADE? ARE WE MAKING THE GRADE? On the surface, Granite Rock Company looks like any other small, family-owned construction material supplier. But a closer examination reveals a highly sophisticated, quality-conscious, customer-oriented industry leader in what is ordinarily considered a commodity business. Granite Rock quarries produce concrete, asphalt, sand, and gravel; they sell brick, drywall, cinder block, and masonry tools. On average, Granite Rock customers pay a 6 percent premium over competitors' prices. How, then, does Granite Rock maintain its leadership position in such a cutthroat industry? "Our competitors tend to see price as the main wedge," says general manager Wes Clark. "We are not low price, but we are high value."

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Selling value can be a successful marketing strategy if customers recognize and are willing to pay for it. Granite Rock concentrates on understanding exactly how its customers define such nebulous terms as value, quality, and service. The company also regularly monitors its performance (from the customer's perspective) and feeds all of this information directly to its workforce. Here's how Granite Rock's customer satisfaction system works: Every three or four years, the company conducts an extensive survey of its customers to determine their needs and wants and what factors are most important to them when choosing a supplier. Every year, Granite Rock sends a report card to customers, asking them to grade their top three suppliers on these factors. The factors include various measures of product quality and customer service, and the grades range from A ("The Best") to F ("Terrible"), with a "No Opinion" option. Granite Rock then combines the results of the survey with those from the report cards to generate a Customer Service Graph. The graph has two axes: the importance axis and the performance axis. The importance axis depends on the results of the extensive customer survey. (In its most recent survey, Granite Rock found that on-time delivery and product quality were most important to customers, whereas credit terms and salespeople's skills were least important.) The performance axis plots the results of the report card. The company's grade is determined by adding the number of As and Bs it gets. 1. What benefits does Granite Rock's customer satisfaction system offer to its customers and to the company itself? 2. Which areas of the Customer Service Graph would be most and least important to Granite Rock? Why? Source: Adapted from Edward O. Welles, "How're We Doing?" 1991, pp.80-83. Inc., May

Part Five: Chapter 6 exercises

Selecting a Voice That Lends Credibility to Your Plan

In developing your business plan, you must keep the reader in mind as you select the type of voice you will be addressing your readers with. There are (3) basic voices used in developing a business plan. First Person - (I) or (We) in the plural

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First person voice is most effectively used when trying to convey a more personal image or tone. For example, a personal trainer, cosmetologist or artist are very much a part of the product or service they provide. A day care center for seniors appears more caring as shown in the following statement: We provide home cooked meals and pay individual attention to the personal dietary needs of each of our valued guests. Second Person - (You) - The opening paragraph of this handout is written in second person. This voice has often been used by motivational speakers and self-help book authors, and is most effective when trying to initiate action from the reader. For example, All you need to do is pick up the phone and call 1 800 CARLOAN and youre on your way to driving the car of your dreams. It is also used successfully in writing training manuals and when giving directions. Third Person - (They or The Firm) - The Organization. This voice is often used by professional organizations and smaller firms who wish to promote a more professional image. Carefully done, it can lend a more professional image to the sole proprietor, writing her own small business plan. For example, The proprietor, Hella-Ilona Johnson, has established the business in a prime location to better serve the needs of Kitsap County. 1. Individually, or as a group exercise, write a few lines about how the

entrepreneurial project you are involved with became a business venture. Rewrite the statements using all three voice styles and determine which style contributes best to the credibility of the venture. Once you determine which voice lends the most credibility to your business plan, be sure you use with the same voice throughout the entire document.

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6.2 Group Plan Description

Plan/Project Description
Business Topic: ____________________________________________________ or Name Each Group Member's Name:
(print in alphabetical order)

_____________________ _____________________ _____________________ _____________________ _____________________ _____________________ _____________________ _____________________ _____________________

Group Coordinator: __________________________________________

(if individual plan name here)

Description of Project/Plan:

Comments:

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6.3 Project/Group Feedback Sheet

Meeting# ____Date ____

Group Member Name: ____________________________________ Area(s) of Responsibility-Specific Performance Target for Next Meeting Date ______

Group Member Name: ____________________________________ Area(s) of Responsibility-Specific Performance Target for Next Meeting Date ______

Group Member Name: ____________________________________ Area(s) of Responsibility-Specific Performance Target for Next Meeting Date ______

Group Member Name: ____________________________________ Area(s) of Responsibility-Specific Performance Target for Next Meeting Date ______

Group Member Name: ____________________________________ Area(s) of Responsibility-Specific Performance Target for Next Meeting Date ______

Group Member Name: ____________________________________ Area(s) of Responsibility-Specific Performance Target for Next Meeting Date ______
Part Six: Supplemental Readings

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Hacker, Robert C. "7 steps to a successful business plan." Target Marketing. Feb. 1997, v20 n2 p33(2). Hayes, John R. "Ya gotta give 'em what they want." Forbes. Jan. 27, 1997 v159 n2 p62(1). Jensen, Jeff. "Picabo Street wins starring role in Nike game plan." Advertising Age. Nov. 11, 1996 v67 n46 p3(2). Reilly, Brian. "DMA puts focus on Web marketing." Nov. 1996, v81 n9 p2(2). Business Marketing. Mediaweek.

Cornillie, Tim. "Add maneuverability to your marketing plan." Oct. 21, 1996 v6 n40 pS15(2).

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