Appendix C Sample Marketing Plan C1

APPENDIX C Sample Marketing Plan

This sample marketing plan
for a hypothetical company
illustrates how the marketing Star Software, Inc.
planning process described in Marketing Plan
Chapter 2 might be implement-
ed. If you are asked to create a
marketing plan, this model may 1 I. EXECUTIVE SUMMARY
be a helpful guide, along with
Star Software, Inc., is a small, family-owned corporation in the first year of a transi-
the concepts in Chapter 2.
tion from first-generation to second-generation leadership. Star Software sells
custom-made calendar programs and related items to about 400 businesses, which
use the software mainly for promotion. Star’s 18 employees face scheduling chal-
The Executive Summary,
1 one of the most frequently
lenges, as Star’s business is highly seasonal, with its greatest demand during
October, November, and December. In other months, the equipment and staff are
read components of a marketing
plan, is a synopsis of the market- sometimes idle. A major challenge facing Star Software is how to increase profits
ing plan. Although it does not and make better use of its resources during the off-season.
provide detailed information, it An evaluation of the company’s internal strengths and weaknesses and external
does present an overview of the opportunities and threats served as the foundation for this strategic analysis and
plan so readers can identify key marketing plan. The plan focuses on the company’s growth strategy, suggesting
issues pertaining to their roles in ways in which it can build on existing customer relationships, and on the develop-
the planning and implementa- ment of new products and/or services targeted to specific customer niches. Since
tion processes. Although this is Star Software markets a product used primarily as a promotional tool by its clients,
the first section in a marketing it currently is considered a business-to-business marketer.
plan, it is usually written last.

2 II. ENVIRONMENTAL ANALYSIS

The Environmental Analysis
2 presents information
Founded as a commercial printing company, Star Software, Inc., has evolved into a
regarding the organization’s cur-
marketer of high-quality, custom-made calendar software and related business-to-
rent situation with respect to the
marketing environment, the cur- business specialty items. In the mid-1960s, Bob McLemore purchased the company
rent target market(s), and the and, through his full-time commitment, turned it into a very successful family-run
firm’s current marketing objec- operation. In the near future, McLemore’s 37-year-old son, Jonathan, will take over
tives and performance. as Star Software’s president and allow the elder McLemore to scale back his
involvement.
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This section of the environ- 3 A. The Marketing Environment

3 mental analysis considers
1. Competitive forces. The competition in the specialty advertising industry is very
relevant external environmental
forces such as competitive, eco- strong on a local and regional basis but somewhat weak nationally. Sales fig-
nomic, political, legal and regula- ures for the industry as a whole are difficult to obtain since very little business
tory, technological, and sociocul- is conducted on a national scale.
tural forces. The competition within the calendar industry is strong in the paper seg-
ment and weak in the software-based segment. Currently paper calendars hold a
C1 dominant market share of approximately 90 percent; however, the software-

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C-2 Appendix C Sample Marketing Plan

based segment is growing rapidly. The 10 percent market share held by

software-based calendars is divided among many different firms. Star Software,
which holds 30 percent of the software-based calendar market, is the only com-
pany that markets a software-based calendar on a national basis. As software-
based calendars become more popular, additional competition is expected to
enter the market.

2. Economic forces. Nationwide, many companies have reduced their overall pro-
motion budgets as they face the need to cut expenses. However, most of these
reductions have occurred in the budgets for mass media advertising (television,
magazines, newspapers). While overall promotion budgets are shrinking, many
companies are diverting a larger percentage of their budgets to sales promotion
and specialty advertising. This trend is expected to continue as a weak, slow-
growth economy forces most companies to focus more on the “value” they
receive from their promotion dollar. Specialty advertising, such as can be done
with a software-based calendar, provides this value.

3. Political forces. There are no expected political influences or events that could
affect the operations of Star Software.

4. Legal and regulatory forces. In recent years, more attention has been paid to
“junk mail.” A large percentage of specialty advertising products are distributed
by mail, and some of these products are considered “junk.” Although this label
is attached to the type of products Star Software makes, the problem of junk
mail falls on the clients of Star Software and not on the company itself. While
legislation may be introduced to curb the tide of advertising delivered through
the mail, the fact that more companies are diverting their promotion dollars to
specialty advertising indicates that most companies do not fear the potential for
increased legislation.

5. Technological forces. A major emerging technological trend involves personal

information managers (PIMs), or personal digital assistants (PDAs). A PDA is a
handheld device, similar in size to a large calculator, that can store a wide vari-
ety of information, including personal notes, addresses, and a calendar. Some
PDAs even have the ability to fax letters via microwave communication. As this
trend continues, current software-based calendar products may have to be

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adapted to match the new technology.

6. Sociocultural forces. In today’s society, consumers have less time for work or
leisure. The hallmarks of today’s successful products are convenience and ease
of use. In short, if the product does not save time and is not easy to use, con-
sumers will simply ignore it. Software-based calendars fit this consumer need
quite well. A software-based calendar also fits in with other societal trends: a
move to a paperless society, the need to automate repetitive tasks, and the grow-
ing dependence on computers, for example.

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 Appendix C Sample Marketing Plan C-3

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The analysis of current 4 B. Target Market(s)
target markets assesses
demographic, geographic, psy- By focusing on commitment to service and quality, Star Software has effectively
chographic, and product usage implemented a niche differentiation strategy in a somewhat diverse marketplace. Its
characteristics of the target mar- ability to differentiate its product has contributed to superior annual returns. Its tar-
kets. It also assesses the current get market consists of manufacturers or manufacturing divisions of large corpora-
needs of each of the firm’s tar- tions that move their products through dealers, distributors, or brokers. Its most
get markets, anticipated profitable product is a software program for a PC-based calendar, which can be tai-
changes in those needs, and lored to meet client needs by means of artwork, logos, and text. Clients use this cal-
how well the organization’s cur- endar software as a promotional tool, providing a disk to their customers as an
rent products are meeting those advertising premium. The calendar software is not produced for resale.
needs.
The calendar software began as an ancillary product to Star’s commercial
printing business. However, due to the proliferation of PCs and the growth in tech-
nology, the computer calendar soon became more profitable for Star than its wall
and desktop paper calendars. This led to the sale of the commercial printing plant
and equipment to employees. Star Software has maintained a long-term relationship
with these former employees, who have added capabilities to reproduce computer
disks and whose company serves as Star’s primary supplier of finished goods. Star’s
staff focuses on the further development and marketing of the software.

C. Current Marketing Objectives and Performance

Star Software’s sales representatives call on potential clients and, using a template
demonstration disk, help them create a calendar concept. Once the sale has been
finalized, Star completes the concept, including design, copywriting, and customiza-
tion of the demonstration disk. Specifications are then sent to the supplier, located
about a thousand miles away, where the disks are produced. Perhaps what most dif-
ferentiates Star from its competitors is its high level of service. Disks can be
shipped to any location the buyer specifies. Since product development and cus-
tomization of this type can require significant amounts of time and effort, particu-
larly during the product’s first year, Star deliberately pursues a strategy of steady,
managed growth.
Star Software markets its products on a company-specific basis. It has an
approximate 90 percent annual reorder rate and an average customer-reorder rela-
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tionship of about eight years. The first year in dealing with a new customer is the
most stressful and time consuming for Star’s salespeople and product developers.
The subsequent years are faster and significantly more profitable.
5 The company is currently debt free except for the mortgage on its facility.
A company must set
5 marketing objectives,
However, about 80 percent of its accounts receivable are billed during the last three
months of the calendar year. Seasonal account billings, along with the added travel
measure performance against
C3 of its sales staff during the peak season, pose a special challenge to the company.
those objectives, and then take
corrective action if needed.

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C-4 Appendix C Sample Marketing Plan

The need for cash to fund operations in the meantime makes it necessary for the
company to borrow significant amounts of money to cover the period until cus-
tomer billing occurs.
Star Software’s marketing objectives include increases in both revenues and
profits of approximately 10 percent over the previous year. Revenues should exceed
$4 million, and profits are expected to reach $1.3 million.

III. SWOT ANALYSIS

Strengths are competi- 6 A. Strengths

6 tive advantages or core
competencies that give the 1. Star Software’s product differentiation strategy is the result of a strong market-
organization an advantage ing orientation, commitment to high quality, and customization of products and
in meeting the needs of its support services.
customers.
2. There is little turnover among employees who are well compensated and liked
by customers. The relatively small size of the staff promotes camaraderie with
coworkers and clients, and fosters communication and quick response to clients’
needs.

3. A long-term relationship with the primary supplier has resulted in shared

knowledge of the product’s requirements, adherence to quality standards, and a
common vision throughout the development and production process.

4. The high percentage of reorder business suggests a satisfied customer base, as

well as positive word-of-mouth communication, which generates some 30 per-
cent of new business each year.

Weaknesses are limitations 7 B. Weaknesses

7 a firm has in developing
or implementing a marketing 1. The highly centralized management hierarchy (the McLemores) and lack of
strategy. managerial backup may impede creativity and growth. Too few people hold too
much knowledge.

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2. Despite the successful, long-term relationship with the supplier, single-sourcing
could make Star Software vulnerable in the event of a natural disaster, strike, or
dissolution of the current supplier. Contingency plans for suppliers should be
considered.

3. The seasonal nature of the product line creates bottlenecks in productivity and
cash flow, places excessive stress on personnel, and strains the facilities.

4. Both the product line and the client base lack diversification. Dependence on
current reorder rates could breed complacency, invite competition, or create a

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 Appendix C Sample Marketing Plan C-5

false sense of customer satisfaction. The development of a product that would

make the software calendar obsolete would probably put Star out of business.

5. While the small size of the staff fosters camaraderie, it also impedes growth
and new-business development.

6. Star Software is reactive rather than assertive in its marketing efforts because of
its heavy reliance on positive word-of-mouth communication for obtaining new
business.

7. Star’s current facilities are crowded. There is little room for additional employ-
ees or new equipment.

Opportunities are 8 C. Opportunities

8 favorable conditions in the
1. Advertising expenditures in the United States exceed $132 billion annually.
environment that could yield
rewards for an organization if More than $25 billion of this is spent on direct-mail advertising, and another
acted on properly. $20 billion is spent on specialty advertising. The potential for Star Software’s
growth is significant in this market.

2. Technological advances have not only freed up time for Americans and brought
greater efficiency but also have increased the amount of stress in their fast-
paced lives. Personal computers have become commonplace, and personal
information managers have gained popularity.

3. As U.S. companies look for ways to develop customer relationships rather than
just close sales, reminders of this relationship could come in the form of
acceptable premiums or gifts that are useful to the customer.

4. Computer-based calendars are easily distributed nationally and globally. The

globalization of business creates an opportunity to establish new client relation-
ships in foreign markets.

Threats are conditions 9 D. Threats

9 or barriers that may pre-
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vent the organization from 1. Reengineering, right-sizing, and outsourcing trends in management may alter
reaching its objectives. traditional channel relationships with brokers, dealers, and distributors or elimi-
nate them altogether.

2. Calendars are basically a generic product. The technology, knowledge, and

equipment required to produce such an item, even a computer-based one, are
minimal. The possible entry of new competitors is a significant threat.

3. Theft of trade secrets and software piracy through unauthorized copying are
C5 difficult to control.

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C-6 Appendix C Sample Marketing Plan

4. Specialty advertising through promotional items relies on gadgetry and ideas

that are new and different. As a result, product life cycles may be quite short.

5. Single-sourcing can be detrimental or even fatal to a company if the buyer-

supplier relationship is damaged or if the supplying company has financial
difficulty.

6. Competition from traditional paper calendars and other promotional items is

strong.

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During the develop- 10 E. Matching Strengths to Opportunities/
ment of a marketing plan, Converting Weaknesses and Threats
marketers attempt to match
internal strengths to external 1. The acceptance of technological advances and the desire to control time create
opportunities. In addition, they a potential need for a computer-based calendar.
try to convert internal weak- 2. Star Software has more opportunity for business growth during its peak season
nesses into strengths and exter-
than it can presently handle because of resource (human and capital) con-
nal threats into opportunities.
straints.

3. Star Software must modify its management hierarchy, empowering its employ-
ees through a more decentralized marketing organization.

4. Star Software should discuss future growth strategies with its supplier and
develop contingency plans to deal with unforeseen events. Possible satellite
facilities in other geographic locations should be explored.

5. Star Software should consider diversifying its product line to satisfy new mar-
ket niches and develop nonseasonal products.

6. Star Software should consider surveying its current customers and its cus-
tomers’ clients to gain a better understanding of their changing needs and
desires.

11
The development of mar- 11 IV. MARKETING OBJECTIVES

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keting objectives is based
on environmental analysis, Star Software, Inc., is in the business of helping other companies market their prod-
SWOT analysis, the firm’s over- ucts and/or services. Besides formulating a marketing-oriented and customer-
all corporate objectives, and the focused mission statement, Star Software should establish an objective to achieve
organization’s resources. For cumulative growth in net profit of at least 50 percent over the next five years. At
each objective, this section
least half of this 50 percent growth should come from new, nonmanufacturing cus-
should answer the question,
tomers and from products that are nonseasonal or that are generally delivered in the
“What is the specific and meas-
urable outcome and time frame off-peak period of the calendar cycle.
for completing this objective?”

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 Appendix C Sample Marketing Plan C-7

To accomplish its marketing objectives, Star Software should develop bench-

marks to measure progress. Regular reviews of these objectives will provide feed-
back and possible corrective actions on a timely basis. The major marketing objec-
tive is to gain a better understanding of the needs and satisfaction of current
customers. Since Star Software is benefiting from a 90 percent reorder rate, it must
be satisfying its current customers. Star could use the knowledge of its successes
with current clients to market to new customers. To capitalize on its success with
current clients, benchmarks should be established to learn how Star can improve the
products it now offers through knowledge of its clients’ needs and specific opportu-
nities for new product offerings. These benchmarks should be determined through
marketing research and Star’s marketing information system.
Another objective should be to analyze the billing cycle Star now uses to deter-
mine if there are ways to bill accounts receivable in a more evenly distributed man-
ner throughout the year. Alternatively, repeat customers might be willing to place
orders at off-peak cycles in return for discounts or added customer services.
Star Software also should create new products that can utilize its current equip-
ment, technology, and knowledge base. It should conduct simple research and
analyses of similar products or product lines with an eye toward developing special-
ty advertising products that are software based but not necessarily calendar related.

V. MARKETING STRATEGIES

12
The marketing plan clearly 12 A. Target Market(s)
specifies and describes the
target market(s) toward which Target market 1: Large manufacturers or stand-alone manufacturing divisions
the organization will aim its of large corporations with extensive broker, dealer, or distributor networks
marketing efforts. The differ- Example: An agricultural chemical producer, such as Dow Chemical, dis-
ence between this section and
tributes its products to numerous rural “feed and seed” dealers.
the earlier section covering tar-
get markets is that the earlier Customizing calendars with Chicago Board of Trade futures or USDA
section deals with present target agricultural report dates would be beneficial to these potential clients.
markets, whereas this section
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looks at future target markets. Target market 2: Nonmanufacturing, nonindustrial segments of the business-to-
business market with extensive customer networks, such as banks, medical services,
or financial planners

Example: Various sporting goods manufacturers distribute to specialty

shop dealers. Calendars could be customized to the particular sport, such
as golf (with PGA, Virginia Slims, or other tour dates), running (with var-
ious national marathon dates), or bowling (with national tour dates).

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C-8 Appendix C Sample Marketing Plan

Target market 3: Direct consumer markets for brands with successful licensing
arrangements for consumer products, such as Coca-Cola

Example: Products with major brand recognition and fan club member-
ship, such as Harley-Davidson motorcycles or the Bloomington Gold
Corvette Association, could provide additional markets for customized
computer calendars. Brands with licensing agreements for consumer
products could provide a market for consumer computer calendars in
addition to the specialty advertising product, which would be marketed to
the manufacturer/dealer.

Target market 4: Industry associations that regularly hold or sponsor trade

shows, meetings, conferences, or conventions

Example: National associations, such as the National Dairy Association or

the American Marketing Association, frequently host meetings or annual
conventions. Customized calendars could be developed for any of these
groups.

Though the marketing 13 B. Marketing Mix

13 mix section in this plan is
abbreviated, this component 1. Products. Star Software markets not only calendar software but also the serv-
should provide considerable ice of specialty advertising to its clients. Star’s intangible attributes are its abili-
details regarding each element ty to meet or exceed customer expectations consistently, its speed in responding
of the marketing mix: product, to customers’ demands, and its anticipation of new customer needs. Intangible
price, distribution, and attributes are difficult for competitors to copy, thereby giving Star Software a
promotion. competitive advantage.

2. Price. Star Software provides a high-quality specialty advertising product cus-

tomized to its clients’ needs. The value of this product and service is reflected
in its premium price. Star should be sensitive to the price elasticity of its prod-
uct and overall consumer demand.

3. Distribution. Star Software uses direct marketing. Since its product is com-

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pact, lightweight, and nonperishable, it can be shipped from a central location
direct to the client via United Parcel Service, FedEx, or the U.S. Postal Service.
The fact that Star can ship to multiple locations for each customer is an asset in
selling its products.

reserved.
Company.
4. Promotion. Since 90 percent of Star’s customers reorder each year, the bulk of
All rights
promotional expenditures should focus on new product offerings through
Company.Mifflin

direct-mail advertising and trade journals or specialty publications. Any remain-

ing promotional dollars could be directed to personal selling (in the form of
© Houghton

sales performance bonuses) of current and new products.

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 Appendix C Sample Marketing Plan C-9

VI. MARKETING IMPLEMENTATION

This section of the mar- 14 A. Marketing Organization

14 keting plan details how
Because Star’s current and future products require extensive customization to match
the firm will be organized—by
functions, products, regions, or clients’ needs, it is necessary to organize the marketing function by customer
types of customers—to imple- groups. This will allow Star to focus its marketing efforts exclusively on the needs
ment its marketing strategies. It and specifications of each target customer segment. Star’s marketing efforts will be
also indicates where decision- organized around the following customer groups: (1) manufacturing group; (2) non-
making authority will rest within manufacturing, business-to-business group; (3) consumer product licensing group;
the marketing unit. and (4) industry associations group. Each group will be headed by a sales manager
who will report to the marketing director (these positions must be created). Each
group is responsible for the marketing of Star’s products within that customer seg-
ment. In addition, each group will have full decision-making authority. This repre-
sents a shift from the current highly centralized management hierarchy. Frontline
salespeople will be empowered to make decisions that will better satisfy Star’s
clients.
These changes in marketing organization will enable Star Software to be more
creative and flexible in meeting customers’ needs. Likewise, these changes will
overcome the current lack of diversification in Star’s product lines and client base.
Finally, this new marketing organization will give Star a better opportunity to moni-
tor the activities of competitors.

15 This component of the 15 B. Activities, Responsibility, and Timetables for Completion

marketing plan outlines
the specific activities required to All implementation activities are to begin at the start of the next fiscal year on
implement the marketing plan, April 1. Unless specified, all activities are the responsibility of Star Software’s next
who is responsible for perform- president, Jonathan McLemore.
ing these activities, and when • On April 1, create four sales manager positions and the position of marketing
these activities should be
director. The marketing director will serve as project leader of a new business
accomplished based on a speci-
fied schedule. analysis team, to be composed of nine employees from a variety of positions
within the company.
All rights reserved.

• By April 15, assign three members of the analysis team to each of the following
projects: (1) research potential new product offerings and clients, (2) analyze the
current billing cycle and billing practices, and (3) design a customer survey pro-
reserved.

ject. The marketing director is responsible.

Company.

• By June 30, the three project groups will report the results of their analyses. The
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full business analysis team will review all recommendations.

Company.Mifflin

C9 • By July 31, develop a marketing information system to monitor client reorder pat-
© Houghton

terns and customer satisfaction.

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Copyright

9
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C-10 Appendix C Sample Marketing Plan

• By July 31, implement any changes in billing practices as recommended by the

business analysis team.

• By July 31, make initial contact with new potential clients for the current product
line. Each sales manager is responsible.

• By August 31, develop a plan for one new product offering along with an analysis
of its potential customers. The business analysis team is responsible.

• By August 31, finalize a customer satisfaction survey for current clients. In addi-
tion, the company will contact those customers who did not reorder for the 2001
product year to discuss their concerns. The marketing director is responsible.

• By January, implement the customer satisfaction survey with a random sample of

20 percent of current clients who reordered for the 2001 product year. The mar-
keting director is responsible.

• By February, implement a new product offering, advertising to current customers

and to a sample of potential clients. The business analysis team is responsible.

• By March, analyze and report the results of all customer satisfaction surveys and
evaluate the new product offering. The marketing director is responsible.

• Reestablish the objectives of the business analysis team for the next fiscal year.
The marketing director is responsible.

16 This section details how 16 VII. EVALUATION AND CONTROL

the results of the market-
ing plan will be measured and A. Performance Standards and Financial Controls
evaluated. The control portion
of this section includes the A comparison of the financial expenditures with the plan goals will be included in
types of actions the firm can the project report. The following performance standards and financial controls are
take to reduce the differences suggested:
between the planned and the
actual performance. • The total budget for the billing analysis, new-product research, and the customer
survey will be equal to 60 percent of the annual promotional budget for the com-

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ing year.

• The breakdown of the budget within the project will be a 20 percent allocation to
the billing cycle study, a 30 percent allocation to the customer survey and market-
ing information system development, and a 50 percent allocation to new-business
development and new-product implementation.

• Each project team is responsible for reporting all financial expenditures, includ-
ing personnel salaries and direct expenses, for their segment of the project. A
standardized reporting form will be developed and provided by the marketing
director.

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 Appendix C Sample Marketing Plan C-11

• The marketing director is responsible for adherence to the project budget and will
report overages to the company president on a weekly basis. The marketing direc-
tor also is responsible for any redirection of budget dollars, as required for each
project of the business analysis team.

• Any new product offering will be evaluated on a quarterly basis to determine its
profitability. Product development expenses will be distributed over a two-year
period, by calendar quarters, and will be compared with gross income generated
during the same period.

B. Monitoring Procedures
To analyze the effectiveness of Star Software’s marketing plan, it is necessary to
compare its actual performance with plan objectives. To facilitate this analysis,
monitoring procedures should be developed for the various activities required to
bring the marketing plan to fruition. These procedures include, but are not limited
to, the following:

• A project management concept will be used to evaluate the implementation of the

marketing plan by establishing time requirements, human resource needs, and
financial or budgetary expenditures.

• A perpetual comparison of actual and planned activities will be conducted on a

monthly basis for the first year and on a quarterly basis after the initial implemen-
tation phase. The business analysis team, including the marketing director, will
report their comparison of actual and planned outcomes directly to the company
president.

• Each project team is responsible for determining what changes must be made in
procedures, product focus, or operations as a result of the studies conducted in its
area.
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