MARKETING SECTION OF THE BUSINESS PLAN

The purpose of the marketing section of the business plan is to convince readers that your business or planned venture provides a great opportunity. As you might suspect, the structure of the marketing section varies from business to business and from entrepreneur to entrepreneur. In our discussion, however, we will introduce you to a format that is most often used by business plan writers. This is not to say that you can not deviate away from the suggested structure, because you can. Lets get started.

The Marketing Section generally consists of four main components; namely, The Market Description,  the Customer Profile, the Competition, and the Marketing Plan. Below separately discusses each component; beginning with The Market Description.

COMPONENT 1   -  MARKET DESCRIPTION

The Market Description describes your market in terms of size, value, history, recent growth trends and anticipated future growth. If there are any major barriers or obstacles that will effect your entry in to the industry, they too should be discussed.

If you have not yet identified, in your business plan, the industry's Key Success Factor's or Driving Forces, be sure to address them under your Market Description.

Many business owners and aspiring entrepreneurs experience difficulty when searching for Industry information. Much of the industry information can be found in trade publications, business magazines, from marketing firms, through the chamber of commerce, from the Small Business Administration, through Business Service Centers, over the Internet, from suppliers, and so on...

For an example of  J&B Incorporated's Market Description, please chick here.

COMPONENT 2 -  CUSTOMER PROFILE

The second component of the marketing section outlines your Customer Profile. Knowing the characteristics, attributes, behaviors, and traits of your customers is extremely important to the success of your business. Experts suggest that three segmentation variables may be used to help entrepreneurs define or predict who their customers will be, namely; Demographics, Geographics, and Phychographics. Below discusses each. Determine which variables relate to your business and potential customers.

Geographic Segmentation Variables:
Geographic Segmentation is used to identify specific regions, city sizes, and densities.

What regions will your customer live in? What is the City Size of these regions and how many people are in your target market? Will you focus your marketing efforts only in urban areas, suburban areas or rural areas? Below depicts examples of Geographic Segmentation Variables? Which Variables apply to your particular product(s)/business?

Region:  -  Eastern US, Central US, Western US, Canadian Prairies, Ohio, Utah, Ontario, etc..

City Size:  -  Under 1000, 1000-2999, 3000-4999, 5000-9999, 10000-14999, 15000-24999, 25000-49999, 50,000-99 999, 100,000-199,999, 200,000-299,999, 300,000-399,999, 400,000-499,999, over 500,000

Density :  -  Urban, suburban, rural

Demographic Segmentation Variables:
Demographic Segmentation Variables are most often used to develop a customer profile. Demographic Segmentation divides the market into groups based upon variables such as age, sex, family size, income, education and so on. Below depicts examples of Demographic Segmentation Variables. Which Variables apply to your particular product(s)/business/customers?

Age:  - Under 5, 5-10, 11-15, 16-19, 20-35, 36-49, 50-64, 65+. What groups are most likely to buy your product? Does age matter?

Sex:  -  Female, Male, Both Sexes. What sex will more readily purchase your product? If sex a major issue?

Family Size:  -  1-2, 3-4, 5-6, 7+. Is family size a major issue in the purchase of your product? If so, what is the ideal family size?

Family Structure:  -  Young & single with no kids, young & married with no kids; young & married with youngest child under 5; young & married with youngest child 5 or over; older & married with children; older & married with no children; divorced, single; etc... Does the family structure have an effect on whether your product is purchased?

Income:  -  Under $10,000, 10,000-14 ,999, 15 000-24 999, 35 000-49 999, 50 000 and over. What Income level will most of your customers fall into? Is income a major issue?

Occupation:  -  Professional managers and officials, business owners; clerical workers, craftspeople, farmers, homemakers, unemployed, retired, students. What occupation will most of your customers hold? Is their occupation a major issue?

Education:  -  Pre-school, grade-school; high school not completed; graduated high school; some university; graduated university, masters degree, PHD. What education level will most of your customers have? Is education an important factor?

Religion:  -  Catholic, Protestant, Jewish, other. Does the religion of a customer determine whether or not they purchase your product?

Race:  -  Oriental, black, white, other. Does the race of a customer determine whether or not they purchase your product?

Nationality:   -  American, Canadian, Germany, Italian, European, British, Scandinavian, Latin American, Japanese, Chinese. Does the nationality of a customer determine whether or not they purchase your product?

Psychographic Segmentation Variables:
In Psychographic Segmentation, customers are divided into groups based on their social class, life style and personality. Below depicts examples of Psychographic Segmentation Variables. Which Variables apply to your particular product(s)/business/customers?

Social Class:  -  Lower lowers, upper lowers, lower middles, lower uppers, upper uppers. Does the social class of a customer determine whether or not they buy your product? If so, What social class will most likely purchase your product?

Life style:  -  Active achiever, pleasure seeker, values, beliefs, etc. Does the life style of a consumer determine whether or not they purchase your product?

Personality:  -  Introvert, extrovert, highly determined, authoritarian, sociable, motivated, etc... Does the personality of a consumer determine whether or not they purchase your product?

For additional information, on segmentation and identifying your customers, please refer to the section entitled "Who are the End Consumers of Your Product or Service".

For an example of J&B Incorporated's Customer Profile, please click here.

COMPONENT 3 - COMPETITION

The third component of the marketing section is Competition. It is imperative for you to identify and discuss each major player currently operating within the industry. What products do your competitors sell? How do competitor products compare to yours? How are competitor products similar or dissimilar to your products? Do competitors identify specific markets or cater to the mass market? Why do consumers purchase the products of competitors?

Do competitor products fully satisfy the needs, wants, interests, and desires or their customers? What product improvements can be made to competitor products? What features do competitor products have? How do they differ from your product features? What are the strengths and weaknesses of each competitor? How do consumers perceive competitor products? Do your competitors have a research and development department? If so, how much do they contribute to researching and developing new products?

What is each competitor's pricing strategy? Are your prices higher, lower, or the same as competitors and why? Do competitors hold clearance sales and if so when are they held? What discounts do competitors provide their customers? Do your competitors offer credit terms? Do competitors achieve a higher gross profit than you? Where is each competitor located? Is location considered a competitive strength? Will your facility or your competitor's facility accommodate future expansion? Do your competitors use advertising, sales promotions, personal selling, publicity or a combination thereof to promote their products? How much do competitors spend on advertising? What is each competitor's promotional strategy? Where do your competitors promote? How effective is each competitor's promotional campaign?

Do your competitor's offer commissions to their sales force, if so how much? How strong or effective is each competitor's sales force? How strong is each competitor's management team? Do competitor's offer a training program to their employees? What experience does each competitor's management team have? What market share do each competitor have? How financially stable is each competitor? How does your proposed business compare to the above questions? These are some of the questions that should be addressed in the competition section of your business plan.

For an example of J&B Incorporated's Competitive Analysis, please click here.

COMPONENT 4  -  THE MARKETING PLAN

The fourth component of the Marketing Section is your Marketing Plan. The Marketing Plan consists of three main areas; namely, the Pricing Strategy, the Distribution Strategy, and Advertising & Promotions. Below discusses each area; beginning with Pricing Strategy. Examples follow each topic.

Pricing Strategy
What price will you charge for the products you plan to sell? How did you arrive at these prices? What Pricing Method did you use? What margin will you make of an average sale? Do you plan to hold clearance sales, if so, when and how often? Are your prices higher or lower than competitor prices and why? Do you plan to offer credit terms to your customers? Will customers receive discounts for frequent purchases? Will you except trade-in allowances? Will you offer coupons? These questions and the like form your overall pricing strategy. For additional information, please refer to the selection entitled "Setting your Price"?

For an example of J&B Incorporated's Pricing Strategy, please click here.

Distribution Strategy
Distribution refers to the methods used to sell products and the channels in which products pass before reaching the end-consumer.  What channels will your product/service pass through in order to reach your end consumers (customers)?   Will you sell directly to customers or will you sell to a middleman?   Why have you chosen such channels?   Have you already established a relationship or contact with these channels?   Will these channels of distribution remain the same throughout your forecasted period?  What changes in distribution, if any, do you anticipate in the future?  What channels do competitor products pass through?  Can you realistically achieve higher profits by reducing the number of channels?  These are some of the questions you need to address when developing your Distribution Strategy.

For an example of J&B Incorporated's initial distribution strategy as well as a variety of future distribution possibilities, please click here.

Advertising & Promotions
Which form(s) of promotions will you use; advertising, sales promotion, publicity, personal selling, or a combination thereof. Will you advertising in newspapers, on tv, on the radio, or perhaps you plan to advertise on the Internet?  How often, and how much will each promotion/advertisement cost?   What will your advertisements say? How much is your promotional budget for each forecasted year? Will you use the same promotional methods as your competitors? How many unit sales and dollar sales will your promotions generate? These are some of the questions you will answer under the advertising and promotions section.

For an example of J&B Incorporated's Advertising & Promotions, please click here.

This concludes our discussion on the Marketing Section of your Business Plan.  Below provides additional Marketing Section examples. Remember: the structure of the marketing section generally varies from business plan to business plan.  The items, however, contained within usually remain constant.

EXAMPLES OF THE MARKETING SECTION OF A BUSINESS PLAN

J&B Incorporated
Scholarship Information Services
The Internet Company