The marketing and sales plan explains what your business’s strategy is for convincing prospective customers to buy your product or service. It addresses concerns such as how you will convey your service or product's features, benefits and uniqueness; who your potential customers are and how you will attract them; how you will deal with competitors; and how you will develop customer loyalty that will generate repeat business and referrals.
Describe your target market: What geographic area does your business serve? What are the demographics of the customers you intend to reach? What are the psychographics of your target customers? (Psychographic characteristics include purchasing motivations, lifestyles and values.)
As in so many other sections of your business plan, you must be very specific. A potential lender or investor will not take you seriously if you define the target market for your grocery store as "All people, because everyone needs to eat." While it's true that everyone needs to eat, you'll need a more in-depth answer to this question, one that reflects your business's unique features and benefits.
A better description of your target market would be, “Men and women ages 22 to 45 who make food purchasing decisions with a strong social and environmental conscience. They have a household income of at least $60,000 per year and eschew traditional grocery stores that they perceive as offering low-quality food. They seek healthy, organic, locally grown food and are willing to pay a significant premium to feel good about their purchase and obtain higher quality items.”
Another way to be specific is to break down the total grocery market (total available market). How many consumers are in this market? Then, what percentage of that market will you attempt to gain as customers – how large is your segmented available market? Finally, what share of that market will you realistically reach?
Demonstrate a thorough understanding of your target market as gained from both primary and secondary sources. Primary sources include any market research your business conducts, such as interviews, surveys, focus groups and market testing. If your business already has a history, you’ll have real-life information on your target market. Secondary sources include data and publications produced by trade and industry groups, government agencies, chambers of commerce, merchants associations and so on. Like the industry analysis, the marketing and sales plan is research-intensive. (To understand the qualities that make for a great company, investors must dig deep into "soft" metrics. See Qualitative Analysis: What Makes A Company Great? for more.)
Direction and Image
What is your business's ultimate goal? Investors will be curious about your long-term plans. Do you just want to have just one very successful store, or do you hope to expand – and if so, how broadly and how quickly, and under what circumstances?
What is your business's mission statement? If you look at the corporate websites of Fortune 500 companies, you'll notice that they tend to have mission statements or something similar. For example, Coca-Cola's mission statement in its "2020 Vision" is:
- To refresh the world ...
- Inspire moments of optimism and happiness ...
- Create value and make a difference.
Coca-Cola then elaborates on this simple mission statement by explaining its vision, goals, priorities and metrics. Your business plan should do the same. In fact, the "about us" and "company profile" sections of corporate websites can be great sources of inspiration when writing your business plan.
What slogan will you use to convey the primary benefits of your product or service? Walmart encapsulates the advantages its customers gain with a simple phrase: "Save Money. Live Better." Competitor Target's slogan is "Expect More. Pay Less." A slogan like the one McDonald's uses – "I'm Lovin' It" – doesn't describe the business in any way, and might not be the best choice for your new company. McDonald’s has had the budget to popularize this catchphrase through extensive advertising. Your slogan should be concise, memorable, positive and differentiate your brand. “Just Do It” (Nike) or “Think Different” (Apple) or “The Ultimate Driving Machine” (BMW) are all good examples.
Besides your slogan, how else will you brand your company? Think about what kind of image you want to project and how this image will help you connect with your target audience. Are you a luxury brand or a value brand? How do you fit into the community? How do you decide which products to source? What are your quality standards? Whole Foods, for example, brands itself in part with its eight core values, which include selling the highest quality natural and organic products available, supporting team member excellence and happiness, and practicing and advancing environmental stewardship.
Include a picture of your company's logo and any other visuals that convey your company's image. These include your business's website, interior and exterior shots of your store (if you have a physical presence), photos of your products and the way they are packaged, the reusable bags you will give or sell to shoppers, the uniforms your employees will wear and anything else you will use to convey your business's brand.
Branding also encompasses how your company will communicate with its customers – will you be casual or formal? Friendly or strictly business? Your branding will help differentiate you from your competitors, tell customers whether they want to do business with you and remind customers who they’re buying from. (For related reading, see 10 Breakout Ideas For Small Businesses.)
What methods of marketing will you use to reach your target customers? For example, how and where will you advertise? What promotions or giveaways will you offer? What makes these marketing methods the best ones for conveying the unique features and benefits of your product or service and for reaching your target market?
How much will it cost? Break down your marketing budget and be specific. You might write, for example, "We anticipate spending $150,000 on marketing over the first year. $30,000 will be spent on training employees to be extremely knowledgeable about our products to increase customer confidence in our brand and drive sales. $40,000 will be spent on professional public relations services. $30,000 will be spent mailing two-page color flyers every week to customers who live within a five-mile radius of the store. Another $20,000 will go toward building, designing and hosting our website and hiring professional writers and editors for our content marketing strategy. Finally, we will spend $30,000 on social media campaigns on Facebook, Twitter and Instagram.”
Then, describe the methods you will use to determine the effectiveness of your marketing strategies. For example, "The color flyers will contain a coupon for $5 off a purchase of $50. The number of customers that bring in the coupon will show us how many people read the flier and acted on the special offer." Or, for your Facebook campaign, you could evaluate how many people follow and like your page, how often people post to it and the click-through rate on your ads. You will also need to project what return on investment your marketing plan might realistically produce. (If you have a promising business that needs a boost, you may be able to put your faith in these wealthy investors. See When Your Business Needs Money: Angel Investors.)
Where do your potential customers currently obtain the product or service you are selling? What strengths and weaknesses do those businesses exhibit? How will you offer a superior product or service? Don't commit the common mistake of claiming that your product or service is so unique that it has no competition.
Let's say that currently, your potential customers are only able to obtain local foods by shopping at the farmers market – which is only open for four hours, once a week – or through a community-sponsored agriculture (CSA) program, which makes people commit to buying a certain amount of produce each month, doesn't let them choose what they'll be eating and is only available six months of the year. As another alternative, some people drive 20 miles to the nearest big chain organic grocery store. Many people like shopping at the farmers market because they get to meet the people who produce their food and interact with members of their community. Others like the CSA program because they no longer have to think about shopping for produce. And the big chain store offers a great selection.
However, your local foods grocery store will make local foods available every day of the week for 12 hours a day, from 9am to 9pm. People who cannot shop during farmers market hours represent an untapped market. You can also steal market share from the people who make the long drive to the big chain organic grocery store by offering a much more convenient location. Furthermore, you will offer a wider variety than is available through either the farmers market or the CSA program, and unlike the CSA program, your store will not require customers to commit to spending a certain amount of money each month and will give them greater choice in the produce they eat. It will be available year-round, too. You will also host community events and "meet the farmer" days to foster the same sense of community provided by farmers' markets and CSAs. (Check out Which Is Better: Dominance Or Innovation?)
You’ll also need to identify where your competitors have an advantage over you. The large chain organic grocery store, while far away, is twice as large as your store will be, has an established base of loyal customers and has a marketing budget that you can’t touch. A grocery store does not foster the same sense of community that a farmers market does and may not be able to offer produce that has been picked the same day or eggs that were laid that morning. Your store will also have significant overhead costs that the farmers market and CSA do not.
Another big point to hit is how you will price your product or service. What will make this price appealing to consumers and profitable to your business? How does it compare to your competitors' pricing strategy? What profit margin do you anticipate on your major products? Include charts and graphs: you might depict monthly sales for the first year by major product type or category using a bar graph, and yearly sales by major product or category for the next three years using a table. (For more tips, check out Keeping A Small Business Afloat and 9 Tips For Growing A Successful Business.)
Making the Sale
What sales strategies will you use to make your marketing plan pay off? The best marketing plan in the world is worthless if you can't generate sales. If you send out flyers that get people to come to your store, what customers find when they arrive is what will ultimately make or break your company. How products are displayed, how your store is organized, how your employees behave, how much they know about the products and numerous other factors – all within your control – will comprise your sales strategy and should be discussed in your plan.
Essentially, your marketing and sales plan describes how you will convey to your customers what's in it for them and then get them to actually purchase your product or service. While your marketing plan is a key document for potential lenders and investors, it’s also a key tool in your business's money-making strategy. Even if you weren't looking for financing, you would need a marketing plan.
Next, we’ll explain how to write your organizational and operating plan.
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