Building An Effective Marketing Plan

“New ideas are a dime a dozen,” observes Arthur R. Kydd, “and so are new products and new technologies.” Kydd should know. As chief executive officer of St. Croix Venture Partners, he and his firm have provided the seed money and venture capital to launch more than 60 start-up firms in the last 30 years. Today, those firms have more than 5,000 employees. Kydd explains:

“I get 200 to 300 marketing and business plans a year to look at, and St. Croix provides start-up financing for only two or three. What sets a potentially successful idea, product, or technology apart from all the rest is markets and marketing. If you have a real product with a distinctive point of difference that satisfies the needs of customers, you may have a winner. And you get a real feel for this in a well-written marketing or business plan.”

This appendix (1) describes what marketing and business plans are, including the purposes and guidelines in writing effective plans, and (2) provides a sample marketing plan.

MARKETING PLANS AND BUSINESS PLANS

After explaining the meanings, purposes, and audiences of marketing plans and business plans, this section describes some writing guidelines for them and what external funders often look for in successful plans.

Meanings, Purposes, and Audiences

A marketing plan is a road map for the marketing activities of an organization for a specified future time period, such as one year or five years. No single “generic” marketing plan applies to all organizations and all situations. Rather, the specific format for a marketing plan for an organization depends on the following:

- The target audience and purpose. Elements included in a particular marketing plan depend heavily on (1) who the audience is and (2) what its purpose is. A marketing plan for an internal audience seeks to point the direction for future marketing activities and is sent to all individuals in the organization who must implement the plan or who will be affected by it. If the plan is directed to an external audience, such as friends, banks, venture capitalists, or potential investors for the purpose of raising capital, it has the additional function of being an important sales document. In this case, it contains elements such as the strategic plan/focus, organization, structure, and biographies of key personnel that would rarely appear in an internal marketing plan. Also, the financial information is far more detailed when the plan is used to raise outside capital. The elements of a marketing plan for each of these two audiences are compared in Figure A–1.

-The kind and complexity of the organization. A small neighborhood restaurant has a somewhat different marketing plan than Medtronic, which serves international markets. The restaurant’s plan would be relatively simple and directed at serving customers in a local market. In Medtronic’s case, because there is a hierarchy of marketing plans, various levels of detail would be used—such as the entire organization, the strategic business unit, or the product/product line.

-The industry. Both the restaurant serving a local market and Medtronic, selling heart pacemakers globally, analyze competition. However, their geographic thrusts are far different, as are the complexities of their offerings and, hence, the time periods likely to be covered by their plans. A one-year marketing plan may be adequate for the restaurant, but Medtronic may need a five-year planning horizon because product-development cycles for complex, new medical devices may be three or four years.

In contrast to a marketing plan, a business plan is a road map for the entire organization for a specified future period of time, such as one year or five years. 3 A key difference between a marketing plan and a business plan is that the business plan contains details on the research and development (R&D)/operations/manufacturing activities of the organization. Even for a manufacturing business, the marketing plan is probably 60 or 70 percent of the en- tire business plan. For firms like a small restaurant or an auto repair shop, their marketing and business plans are virtually identical. The elements of a business plan typically targeted at internal and external audiences apear in the two right-hand clumns in Figure A-1.

The Most-Asked Questions by Outside Audiences

Lenders and prospective investors reading a business or marketing plan that is used to seek new capital are probably the toughest audiences to satisfy. Their most-asked questions include the following:

1. Is the business or marketing idea valid?

2. Is there something unique or distinctive about the product or service that separates it from substitutes and competitors?

3. Is there a clear market for the product or service?

4. Are the financial projections realistic and healthy?

5. Are the key management and technical personnel capable, and do they have a track record in the industry in which they must compete?

6. Does the plan clearly describe how those providing capital will get their money back and make a profit?

Rhonda Abrams, author of The Successful Business Plan, observes, "Although you may spend five months proparing your plan, the cold, hard fact is that an investor or lender can dismiss it in less than five minutes. If you don't make a positive impression in those critical first five minutes, your plan will be rejected." While her comments apply to plans seeking to raise capital, the first five questions listed above apply equally well to plans for internal audiences.

Writing and style suggestions

There are no magic one-size-fits-all guidelines for writing successful marketing and business plans. Still, the following writing and style guidelines generally apply:

- Use a direct, professional writing style. Use appropriate business terms without jargon. Present and future tenses with active voice("I will write an effective marketing plan") are generally better than past tense and passive voice("An effective marketing plan was written by me").

-Be positives and specific to convey potential success. At the same time, avoid superlatives("terrific","wonderfull"). Specifies are better than glittering generalities.

-Use numbers for impact, justifying projections with reasonable quantitative assumptions, where possible.

-Use bullet points for succinctness and emphasis. As with the list you are reading, bullets enable key points to be highlighted effectively.

-Use A-level(the first level) and B-level(the second level) headings under the numbered section headings to help readers make easy transitions from one topic to another. This also forces the writer to organize the plan more carefully. Use these headings liberally, at least one every 200 to 300 words.

-Use visuals where appropriate. Photos, illustrations, graphs, and charts enable massive amounts of information to be presented succinctly.

-Shoot for a plan 15 to 35 pages in length, not including financial projections and appendixs. An uncomplicated small business my require only 15 pages, while a high-technology start-up may require more than 35 pages.

-Use care in layout, design, and presentation. Laser printers give a more professional look than ink-jet printers do. Use 11- or 12 point type (you are now reading 10.5-point type) in the text because it is easier to read. and sans serif (without "feet") in graphs and charts like Figure A-1. A bound report with a nice cover and a clear title page adds professionalism.