Chapter Four: Business Plan ………………………………………

Introduction………………………………………………………
4.1. Definition and Importance of Business Plan………….
4.1.1. What Is the Business Plan? ...............................
4.1.2. Scope and Importance of the Business Plan: Who Reads the
Plan? ...................................................................
4.1.3 Information Needs for Business Plan…………………………
4.1.4. Writing the Business Plan………………………………………..
4.1.5. Sample business plan……………………………………………….
4.2. Basic Element (mix) of Marketing and Marketing Plan………………
4.2.1. Basic Element(mix) of Marketing…………………………..
4.2.2. A Marketing Plan…………………………………………………
4.2.3. The Marketing Planning Process………………………………
4.3. Using and Implementing the Business Plan………………………..
4.4. Why Some Business Plans Fail………………………………………….
4.5. Steps in Preparing the Marketing Plan………………………………..
Summary
Self Assessment Questions

Introduction
A business plan is a written document prepared by the entrepreneur that
describes all the relevant external and internal elements involved in starting
a new venture. It addresses both short- and long-term decision making. The
business plan is like a road map for the business’ development. This part
will be studied in the first of this unit. Understanding the marketing
element is one of the vital components for entrepreneurs that should be
given high attention so as to have the real business plan. You will get these
factors in the second part of the unit. When you have concepts about
business plan and marketing mix, it is believed that you can make the
business plan. Thus, how to prepare the business plan will be the last
important point of the chapter.
Finally, there will be summery and self assessment question to check your
understanding about the unit.
The objectives of the Unit
After completing this module, students should be able to:
 define what the business plan is who prepares it, who reads it, and
how it is evaluated.
 understand the scope and value of the business plan to investors,
lenders, employees, suppliers, and customers.
 identify information needs and sources for business planning.
 present helpful questions for the entrepreneur at each stage of the
planning process.
 understand how to monitor the business plan
 present examples and a step-by-step explanation of the business
plan.
 explain how to write a business plan
 explain the procedure and list of document included in business plan
 describe the role of marketing research in determining market
strategy for the marketing plan.
 illustrate an effective and feasible procedure for the entrepreneur to
follow in engaging in a market research study.
4.1. Definition and Importance of Business Plan
Dear students! Before you begin the discussion of business plan, it is
important to understand different types of plan that may be part of any
business operation. Planning is a process that never ends. In the early
stages, it is very important for the entrepreneur to prepare a preliminary
plan. The plan will be finalized as the enterprise has a better sense of the
market, products, or service to develop. As the venture evolves from early
start up to a mature business, planning will continue as management seeks
to meet its short or long term business goals. Many different types
organizations, it is of plans may be part of any business operation-financial,
mar possible to find financial plan, production, and sales plans. Plans may
be short term or long term, or they may be strategic or operational. All of

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these plans have one purpose: to provide guidance and structure to
management in a rapidly changing market environment.
4.1.1. What Is the Business Plan?
A business plan is a written document prepared by the entrepreneur that
describes all the relevant external and internal elements involved in starting
a new venture. It addresses both short- and long-term decision making. The
business plan is like a road map. For example, you were trying to drive a car
from Defenses Hospital to Megenagna, you may have different routs, each
may require different costs and time frame. Like wise entrepreneur should
make some important decisions and gather information before preparing a
business plan.

Entrepreneurs can also hire or offer equity to another person to provide

expertise in preparing the business plan. In developing the business plan
the entrepreneur can determine how much money will be needed from new
and existing sources. Business planning is often conducted when:

 Starting a new venture (organization, product or service)

 Expanding a current organization, product or service
 Buying a current organization, product or service
 Working to improve the management of a current organization,
product or service

There are a wide variety of formats for a business plan. The particular
format and amount of content included in a plan depends on the complexity
of the organization, product or service and on the demands of those who will
use the business plan to make a decision.

The business plan should be prepared by the entrepreneur; however, he or

she may consult many other sources in its preparation. Lawyers,
accountants, marketing consultants, and engineers are useful supplemental
sources.
4.1.2. Scope and Importance of the Business Plan: Who Reads the
Plan?
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The business plan must be comprehensive enough to address the concerns
of employees, investors, bankers, venture capitalists, suppliers, and
customers. Since each of these groups reads the plan for different purposes,
the entrepreneurs must try to satisfy the needs of issues and concerns. In a
way the business plan must try to satisfy the needs of every one. How ever
there are three perspectives that should be considered when preparing the
business plan. The first is the perspective of the entrepreneur who
understands the new venture better than anyone. The second is the
marketing perspective considers the venture through the eyes of the
customer. The third is when the entrepreneur considers on the eyes of the
investor looks for sound financial projections. The depth of the business
plan depends on the size and scope of the proposed venture.

The business plan is valuable to the entrepreneur and investors because:

 It helps determine the viability of the venture in a designated market.
 It gives guidance in organizing planning activities.
 It serves as an important tool in obtaining financing.
Potential investors are very particular about what should be included in the
plan. The process of developing a business plan also provides a self-
assessment of the entrepreneur. This self-evaluation requires the
entrepreneur to think through obstacles that might prevent the venture’s
success. It also allows the entrepreneur to plan ways to avoid such
obstacles.
How do potential lenders and investors evaluate the plan?
Because the business plan should address the needs of all the potential
evaluators, software packages and Internet samples should be used only to
assist in preparation. As the entrepreneur becomes aware of who will read
the plan, appropriate changes will be necessary. Suppliers may want to see
a business plan before signing a contract to supply products or services.
Customers may also want to review the plan before buying the product. The
business plan should consider the needs of these constituencies. Potential
suppliers of capital will vary in their needs and requirements in the

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business plan. Lenders are primarily interested in the ability of the new
venture to pay back the debt and focus on the four C’s of credit. These four
C’s of credits are:
 The entrepreneur’s credit history or character.
 Their ability to meet debt and interest payments (cash flow.)
 The collateral or tangible assets being secured.
 Equity contribution or the amount of personal equity that has been
invested by the entrepreneur.

They will often place more emphasis on the entrepreneur’s character than
lenders. The venture capitalist will play an important role in management of
the business and wants the entrepreneurs to be pliable and willing to accept
this involvement. These investors will also demand high rates of return and
will thus focus on the market and financial projections. If the entrepreneur
does not consider the needs of these sources, the plan may be an
internalized document without consideration of the feasibility of meeting
market goals.

Most external advisors and potential investors are bound by a professional

code of ethics regarding disclosure.
Activity 4.1: Evaluating business plan
How do you evaluate business plan if some body asks you to evaluate his or
her businesses plan?
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Feed-back:

Presenting the Plan

It is often necessary for an entrepreneur to orally present the business plan
before an audience of potential investors. In the Typical forum the
entrepreneur would be expected to provide a short presentation of the
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business plan. The entrepreneur must sell their business concept in a short
time period with the audience given the opportunities to ask difficult and
penetration questions. A venture capitalist or angel group may also ask the
entrepreneur to present the plan to their partners before making a final
decision.
4.1.3. Information Needs for Business Plan
Before preparing a business plan, the entrepreneur should do a quick
feasibility study of the business concepts to see if there are possible barriers
to success. The information, obtained from many sources should focus on
marketing, finance and production. These goals and objectives also provide
a frame work for the business plan, marketing plan and financial plan.
Thus, the entrepreneur should clearly define the venture’s goals, which
provide a framework for the business plan. The business plan must reflect
reasonable goals.
 Market Information
One of the initial important elements of information needed by entrepreneur
is to know the market potential for the product or service. In order to
ascertain the size of the market, it is first necessary for the entrepreneur to
define the market. A well-defined target market makes it easier to project
market size and market goals. To assess the total market potential, the
entrepreneur can use trade associations, government reports, and
published studies.
 Operations Information Needs
The entrepreneur may need information on: Location, Manufacturing, Raw
materials, Equipment. Labor skills, Space, Overhead, Each item may
require some research but it is needed by those who will assess the
business plan.
 Financial Information Needs
Before preparing the plan, the entrepreneur must evaluate the profitability
of the venture through the following: expected sales and, expense figures for
the first three years, cash flow figures for the first three years, current
balance sheets and pro forma balance sheets for the next three years,

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determination of expected sales and expenses is based on the market
information gathered earlier., estimates of cash flow will consider the ability
of the new venture to meet expenses at designated times, and current
balance sheet figures show the assets, liabilities, and investments made by
the owner.
Activity. 4.2: Information for Business Planning (15 minutes)
Assume that one of your family want to make business plan but he/she does
not know how to collect information for making business plan. Please
demonstrate the main sources of information so as to make business plan.
Thank you!
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4.1.4. Writing the Business Plan
The business plan should be comprehensive enough to give a potential
investor a complete understanding of the new venture and will help the
entrepreneur clarify his or her thinking about the business. The out line for
the business plan is presented as follows.
Introductory Page
This is the title or cover page that provides a brief summary of the business
plan’s contents, and the introductory page should include: the name and
address of the company, the name of the entrepreneur and a telephone
number, a paragraph describing the company and the nature of the
business, the amount of financing needed, a statement of the confidentiality
of the report, it also sets out the basic concept that the entrepreneur is
attempting to develop.
Executive Summary
This section of the business plan is prepared after the total plan is written.
It should be three to four pages in length and should highlight the key
points in the business plan. The summary should highlight in a concise
manner the key points in the business plan. Issues that should be
addressed include: brief description of the business concept, any data that
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support the opportunity for the venture, statement of you this opportunity
will be pursued, highlight some key financial results that can be achieved
because of the limited scope of the summary, the entrepreneur should
ascertain what is important to the audience to whom the plan is directed.
Environmental and Industry Analysis
The entrepreneur should first conduct an environmental analysis to identify
trends and changes occurring on a national and international level that may
impact the new venture.
Examples of environmental factors are: economy, culture, technology and
legal concerns. All of the above external factors are generally uncontrollable.
Next the entrepreneur should conduct an industry analysis that focuses on
specific industry trends. Some examples of industry factors include:
industry demand and competition. The last part of this section should focus
on the specific market. This would include such information as who the
customer is and what the business environment is like. The market should
be segmented and the target market identified.
Description of the Venture
The description of the venture should be detailed in this section. This
should begin with the mission statement or company mission, which
describes the nature of the business and what the entrepreneur hopes to
accomplish. The new venture should be described in detail, including the
product, location, personnel, background of entrepreneur, and history of the
venture. The emphasis placed on location is a function of the type of
business. Maps that locate customers, competitors, and alternative
locations can be helpful. If the building or site decision involves legal issues,
the entrepreneur should hire a lawyer.

Production Plan or Operations Plan

If a new venture is a manufacturing operation, a production plan is
necessary. This plan should describe the complete manufacturing process,
including whether or not the process is to be subcontracted. If the

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manufacturing is carried out by the entrepreneur, the plan should describe
the physical plant layout and machinery and equipment needed.
If the venture is not manufacturing, this section would be titled operational
plan. The entrepreneur would need to describe the chronological steps in
completing a business transaction.
Marketing Plan
The marketing plan describes how the products will be distributed, priced,
and promoted. Potential investors regard the marketing plan as critical to
the venture’s success.
Organizational Plan
The organizational plan section should describe the venture’s form of
ownership. If the venture is a corporation, this should include the number
of shares authorized, share options, and names and addresses
of the directors and officers. It is helpful to provide an organization chart
indicating the line of authority. This chart shows the investor who controls
the organization and how members interact.
Assessment of Risk
It is important that the entrepreneur make an assessment of risk in the
following manner: The entrepreneur should indicate the potential risks to
the new venture. Next should be a discussion of what might happen if these
risks become reality. Finally the entrepreneur should discuss the strategy to
prevent, minimize, or respond to these risks. The entrepreneur should also
provide alternative strategies should these risk factors occur.
Financial Plan
The financial plan determines the investment needed for the new venture
and indicates whether the business plan is economically feasible. The
entrepreneur should summarize the forecasted sales and expenses for the
first three years. Cash flow figure for three years are needed, with the first
year’s projections provided monthly. The projected balance sheet shows the
financial condition of the business at a specific time.

Activity 4.3: Values of Business Plan

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Students! Please make your own discussion about the purpose of business
plan.

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A Sample Business Plan---ABC Trading

The following business plan has been conducted and edited somewhat
because of space requirements. However, the areas where editing has taken
places are clearly identified and do not in any way detract from the meaning
fullness of this example. An average business plan will vary in length
depending on the industry size of appendix and number of illustration.

Venture description
ABC trading is a personal shopping service located in the down town of
Bole, Addis Ababa. It is based on the belief that people’ schedules these
days are more demanding; thus the values of personal leisure time have
increased. in 1990s, personal convinces services are a high growth market
opportunities. The professional white-collar employees in the down town
district, who has high disposable income and a strong motive to increase
leisure time, represents the main focuses of the venture’ marketing effort.

Running duty before work, during lunch time or after work time takes time
and is often irritating. Have People often have to wait in line for services,
fight traffic and skip from lunch. ABC trading has established an errand
service for professional in the heart of down town businesses district of
Bole, Addis Ababa. The company will be located at brothers building second
floor where the employees have direct access to public transportation and
customers will be able to stop by and conveniently request any service. the
entry area where customers will place their service order will be
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professionally decorated and staffed with trained individuals to answer the
customers needs. The number of staffs will vary depending on when the
office is most often busy (early morning, lunch time, and close of the
business days) The diverse services that will be offered are categorized as
standard or custom. Standard service include dropping/picking up
laundry, dry cleaning mail tickets such as air line or theatre, prescriptions,
shopping for groceries or gift and making bank deposits.

Industry Analysis
The service sectors in Ethiopia continue to grow. Entrepreneurs have
initiated many new ventures in the service sector in response to greater
demand for leisure time, the increasing number of dual-career families, and
more disposable income.
Demographic trends
According to the research finding, there are about 240,000 people in the
central business area of the sub-city. There are approximately 10,345 to
13,456 people who pass our office every business days. Based on the
research, which is conducted in the sub-city, about 75% of these
individuals match our target market. This would consists of individuals
between the age of 25 and 60 , male/female with high disposable income,
employed as professional business persons or offices staffs.

Competitors’ analysis
Although there are many indirect competitions to ABC trading, there are
none in the Bole Market that offer such a broad ranges of services. Couriers
service have existed for many years but other service business have been
slow in their responses to customers’ needs by offering only pickup and
delivered services.
Marketing Plan

The marketing strategy was designed on the basis of personal interview

conducted with employers and professional in the down town which
represents our target market. The interview indicated that individuals
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preferred to have some one else perform many times –consuming errands
that they were required to do a weekly or regular base

Marketing goals:
 To meet the growing needs of a target market defined on the basis of
geography demography, lifestyle, and buyer intentions
 To evaluate the competitive environment and continue establish a
differential advantage able
 to establishes an effective and profitable marketing mix of service
place price and promotion
Marketing objectives
 To establish a customer base of 10% the defined target market in the
first year
 To generate 250,000.00 birr in sales for the first year
 To increase sales by 10% annually for the first years
 To expand to at least two new locations by the end of the first three
year

Size of Market

On the base of the demographic information, it is estimated that potential

market is between 17,000 and 20,000 people. Our objective is to reach 10
percent of primary market and secondary market. Thus, in our first year
the market would be consisting of about 1,275 customers.

Service: The services that will be provided the ABC trading are designed to
provide customers with the benefit of convenience and the saving of time.
Although the services vary widely, there are standard services offered to the
customers. Standard services include lunch delivery, dry cleaning pick up
and drop-off, grocery shopping and gift shopping in the down town.
Customers’ services of almost any kind will be offered on a fee-for- time
basis. Examples of Customers services are auto pick up and drop off, pick

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up of theater tickets, supply pick up, post office visits and bank deposits.
The most economical and efficient solution will be chosen for each situation.

Price: pricing strategy is based on a fee per errand. This strategy was
determined from a marketing research study of the target market. For
Customers services, the price will be based on the amount of time necessary
to perform the errand. The lowest price would be 5 birr for a quick errand
that took less than five minutes. Price for errand taking longer than five
minutes would increase accordingly and are indicated below.

Miscellaneous personal services are:

 Pick up ticket for theaters district shows
 Pick up ticket for sporting
 Pick up automobile at repair shop
 Wait in line for a book autograph
 Post office visits
 Office supply shopping
 Bank deposits
 Any other personal errands

Time spent (in minutes) price in birr

0---5 5
6---10 10
11---15 15
. .
. .
. .
26+ 30

Regular/ standard services price in base

Express lunch delivery 5
Dry cleaning drop-off 5

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Dry cleaning picks up 6
Grocery shopping (maximum of 10 items) 10
Gift shopping in down town 15

Promotion: ABC Trading will rely extensively on word of mouth advertising.

How ever, it will be important to create an awareness of our services to the
target market. To attract attention and create awareness, signs will display
our name and describe our services to many individuals who actually pass
by the office. Pamphlets will also be distributed to office building in the
target market.

Facilities Plan
The location of the venture will be in the lobby at Bole Street in the down
town. The location is ideal because it provides access to a large base of
potential customers who pass the office going to and from work to the
transit station. This large base of potential customers is an excellent target
market for our services.
Certain equipment will also necessary to operate the business effectively- a
multi-line phone system, computer and printer, fax machine, storage for hot
and cold foods, storage for garment, gifts, and groceries. Counter will be set
up in a small area at the front of the offices for conducting business with
clients.
Organizational plan
ABC trading will be established as a partnership. There will be four
partners such as Ato Ersido Shambemo, Wro Kiros Belay, Wro Sara Bedewi
and Ato Argaw Tefera. Each will have equal ownership in the business.
Back ground and roles of each of the four partners are described below.
The partnership agreement is summarized in the appendix.
Management team backgrounds
Ato Ersido Shambemo, was born in Hawassa, graduated in accounting from
Addis Ababa University. He has significant experience in different food and
beverage industries in managing and training the financial matters or
management. Wro Kiros Belay, was born in Addis Ababa, graduated in
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marketing management from Mekele University and she has good
experience as a marketing head and expert in many government hotels. Ato
Argaw Tefera, was born in Wolquite gurage zone, graduated in sociology
from Bahrdar University and has good experience as a social consultant in
the ministry of trade for fourteen years. Wro Sara Bedewi, was born in
Jimma, has a master degree in Business Administration and significant
experience in managing the human resources and property administration
for many years.

Duties and Responsibilities of the partners

Wro Sara Bedewi: general administrator and manager will oversee he daily
operation of the business. This includes the hiring and firing of the
employees as well as training and supervising. Periodic employee
evaluations will be completed by the general administrator and manager.
She will also handle all purchasing for the office and will be responsible for
the opening and closing of the office.
Ato Ersido Shambemo- financial manager and will be responsible for
finance, accounting payroll, billing, taxes and any other matters/ cases
related to sale or revenue budget.
Wro Kiros Belay- marketing and sale manager will bear responsible for
marketing research; customers’ focuses study and establish effective
strategies to develop the marketing.
Ato Argaw Tefera-promotion heads will be responsible for creating
awareness and promoting the services. He will be responsible to study the
impacts of the business and analysis the demographic situation of the
consumers.

Risk assessment
The proposed errand service offered ABC Trading has very low barrier to
entry. Set up cost and high liquidity will be a significant attraction to
competitors who could penetrate some of ABC trading market. Thus ABC
Trading will rely on the quality service and being first in the market to
protect its market share.
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Appendix
Resumes of partners
Partnership agreement
Lease agreement
Marketing survey result
Marketing brochures with price lists
4.2. Basic Element(mix) of Marketing and Marketing Plan
4.2.1. Basic Element(mix) of Marketing
Marketing Elements or marketing mix is the combination of the elements
of marketing and what roles each element plays in promoting your products
and services and delivering those products and services to your customers.
The original 4 P's of marketing (although they have been renamed a bit over
the years) that were the elements of marketing elements are controllable.
These are:

 Product – The products or services offered to your customer: Their

physical attributes, what they do, how they differ from your
competitors and what benefits they provide.

The first element of the 4 Ps of marketing focuses on your individual

goods and their product line. Product includes services and electronic
or digital products such as e-books that don't have a recognizable
physical substance. It includes features and benefits, installation,
service, warranty, packaging, branding.

 Price – How you price your product or service so that your price
remains competitive but allows you to make a good profit. How price
plays a role in your marketing strategy with respect to differentiating
your products or services from your competitors'.

 Place (Also referred to as Distribution) – Where your business sells its

products or services and how it gets those products or services to

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 your customers. May also be used in your marketing strategy to
differentiate you from your competition.

 Promotion – The methods used to communicate the features and

benefits of your products or services to your target customers.

Some marketing theorists have added a 5th P of marketing to the elements

of the marketing mix: People. When referred to as an element in the
marketing mix, this 5th P refers to how your level of service and the
expertise and skills of the people who work for you can be used to set you
apart from your competitors.

4.2.2. A Marketing Plan

A marketing plan outlines the specific actions you intend to carry out to
interest potential customers and clients in your product and/or service and
persuade them to buy the product and/or services you offer.

The marketing plan implements your marketing strategy. "The marketing

strategy provides the goals for your marketing plans. It tells you where you
want to go from here. The marketing plan is the specific roadmap that's
going to get you there. " It may be developed as a stand alone document or
as part of a business plan. Either way, the marketing plan is a blueprint for
communicating the value of your products and/or services to your
customers.

A marketing plan is a written document that details the necessary actions to

achieve one or more marketing objectives. It can be for a product or service,
a brand, or a product line. Marketing plans cover between one and five
years. It may be part of an overall business plan. Solid marketing strategy is
the foundation of a well-written marketing plan. While a marketing plan
contains a list of actions, a marketing plan without a sound strategic
foundation is of little use.

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4.2.3. The Marketing Planning Process

It consists of 5 steps, beginning with the market & environment research.

After fixing the targets and setting the strategies, they will be realized by the
marketing mix in step 4. The last step in the process is the marketing
controlling.

In most organizations, "strategic planning" is an annual process, typically

covering just the year ahead. Occasionally, a few organizations may look at
a practical plan which stretches three or more years ahead.

To be most effective, the plan has to be formalized, usually in written form,

as a formal "marketing plan." The essence of the process is that it moves
from the general to the specific; from the overall objectives of the
organization down to the individual action plan for a part of one marketing
program. It is also an interactive process, so that the draft output of each
stage is checked to see what impact it has on the earlier stages - and is
amended.These plans therefore be:

 Clear - They should be an unambiguous statement of 'exactly' what is

to be done. 
 Quantified - The predicted outcome of each activity should be, as far
as possible, quantified; so that its performance can be monitored. 
 Focused - The temptation to proliferate activities beyond the numbers
which can be realistically controlled should be avoided. The 80:20
Rule applies in this context too.
 Realistic - They should be achievable. 
 Agreed - Those who are to implement them should be committed to
them, and agree that they are achievable.  The resulting plans should
become a working document which will guide the campaigns taking
place throughout the organization over the period of the plan. If the
marketing plan is to work, every exception to it (throughout the year)
must be questioned; and the lessons learned, to be incorporated in
the next year's planning.

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Activity 4.4: list the marketing elements or mix

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Content of the marketing plan

The main contents of a marketing plan are:

1. Executive Summary
2. Situational Analysis

3. Opportunities / Issue Analysis - SWOT Analysis

4. Objectives

5. Strategy

6. Action Program (the operational marketing plan itself for the period
under review)

7. Financial Forecast

8. Controls

Performance analysi: The most important elements of marketing

performance analysis are discussed as follows.

Sales analysis: Most organizations track their sales results; or, in non-
profit organizations for example, the number of clients. The more
sophisticated track them in terms of 'sales variance' - the deviation from the
target figures - which allows a more immediate picture of deviations to
become evident.

`Micro-analysis: which is a nicely pseudo-scientific term for the normal

management process of investigating detailed problems, then investigates
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the individual elements (individual products, sales territories, customers
and so on) which are failing to meet targets.

Market share analysis

Few organizations track market share though it is often an important

metric. Though absolute sales might grow in an expanding market, a firm's
share of the market can decrease which bodes ill for future sales when the
market starts to drop. Where such market share is tracked, there may be a
number of aspects which will be followed:

 overall market share

 segment share - that in the specific, targeted segment
 relative share -in relation to the market leaders
 annual fluctuation rate of market share

Expense analysis

The key ratio to watch in this area is usually the `marketing expense to
sales ratio'; although this may be broken down into other elements
(advertising to sales, sales administration to sales, and so on).

Financial analysis

The "bottom line" of marketing activities should at least in theory, be the net
profit (for all except non-profit organizations, where the comparable
emphasis may be on remaining within budgeted costs). There are a number
of separate performance figures and key ratios which need to be tracked:

 gross contribution<>net profit

 gross profit<>return on investment
 net contribution<>profit on sales

The above performance analyses concentrate on the quantitative measures

which are directly related to short-term performance. But there are a
number of indirect measures, essentially tracking customer attitudes, which
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can also indicate the organization's performance in terms of its longer-term
marketing strengths and may accordingly be even more important
indicators. Some useful measures are:

 market research - including customer panels (which are used to track

changes over time)
 lost business - the orders which were lost because, for example, the
stock was not available or the product did not meet the customer's
exact requirements
 customer complaints - how many customers complain about the
products or services, or the organization itself, and about what

4.3. Field Interview Techniques and Field Work

Marketing Requirement Sheet
In the spaces provided below, list all the information required for each
element of the marketing plan considering your specific product or project
ideas.
A. demand for the product

INFORMATION POSSIBLE DEAD LINE

SOURCE

B. EXPORT POSSIBILITIES

INFORMATION POSSIBLE DEAD LINE

SOURCE

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C. COMPETITORS /OTHER SUPLIERS

INFORMATION POSSIBLE DEAD LINE

SOURCE

D. TARGET MARKET OR BUYERS

INFORMATION POSSIBLE DEAD LINE
SOURCE

E. PRODUCT STRATEGIES
INFORMATION POSSIBLE DEAD LINE
SOURCE

F. CHANNAL OF DITRIBUTION
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INFORMATION POSSIBLE DEAD LINE
SOURCE

G. PROMOTION AND ADVERTISING

INFORMATION POSSIBLE DEAD LINE
SOURCE

H. SALE ORGANISATION AND ADMINISTRATION

INFORMATION POSSIBLE DEAD LINE
SOURCE

I. PRICING INFORMATION
INFORMATION POSSIBLE DEAD LINE
SOURCE

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SAMPLE MARKETING QUESTIONNAIR

NAME OF INTERVIEWEE: _________________________________________

Show the prototype of or describe the selected product, to the possible

respondents of this survey and note down their answers to the following
questions.
1. Personal Information
1.1. age of the respondent
_________________________________

1.2. Sex: Male: ____

Female: _________
1.3. Marital Status: A) Single
B) Married
C) Divorced
d) Widow
1.4. Education (highest):

A) High school
B) Vocational
C) College
D) Bachelor degree
E) Master’s degree, etc

2. Marketing Information
2.1. Have you seen this product before? yes____ no_______

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 2.2. Do you own a similar product before? yes__________ No
________
2.3. If you answer is yes, for how long have you seen it?
A) Less than one year
B) One to two years
C) 2 to 5 years
D) Over five years
2.4. If available, would you buy the product? yes__________
No__________
2.5. If yes, for how much do you want to buy it?
3. Product information
3.1. What color would you like to buy?

A) Lighter__________
B) Darker__________
C) Please specify ____________________________
3.2. What size would you like the product to be?
A) Small_________
B) Medium________
C) Large__________
D) Specify please_________
3.3. What challenge would you like incorporated in the product
design?
___________________________________________________________
___________________________________________________________
___________________________________________________________
___________________________________________________________
4. Competitors information:
benefits, durability, taste, multiple use, quality, brand, design
5. other information, please describe here
_____________________________________________________________________
_____________________________________________________________________
_________________________________________________________________
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4.4.Using and Implementing the Business Plan
The business plan is designed to guide the entrepreneur through the first
year of operations. It should contain control points to ascertain progress.
Planning should be a part of any business operation. Without good planning
the employees will not understand the company’s goals and how they are
expected to perform their jobs. Bankers say that most businesses fail
because of the entrepreneur’s inability to plan effectively.
The entrepreneur can enhance efficient implementation of the plan by
developing a schedule to measure programs and to institute contingency
plans.
Measuring Plan Progress
Plan projections will typically be made on a 12-month schedule, but the
entrepreneur should check key areas more frequently. These are:
 Inventory control: By controlling inventory, the firm can ensure
maximum service to the customer.
 Production control: Compare the cost figures against day-to-day
operating costs.
 Quality control: Quality control depends on the type of production
system used.
 Sales control: Information on units, dollars, and specific products
sold should be collected.
 Disbursements: The new venture should control the amount of money
paid out
Updating the Plan
The most effective business plan can become out of date if conditions
change. Environmental factors and internal factors can change the direction
of the plan. Thus, it is important to be sensitive to changes in the company,
industry, and market.
4.5. Why Some Business Plans Fail
Dear students! Do you think that all business plan can be successful? Do
you know any entrepreneur who makes business plan and fail his or her
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plan? Please first you discuss the reason for failing the business plan
before you through the details.
A poorly prepared business plan can be blamed on one or more of the
following factors. These are: Goals set by the entrepreneurs that are
unreasonable, Goals those are not measurable, the entrepreneur has no
experience on preparation of business plan, has no potential threats or
weaknesses to the business. To be successful, Goals should be specific.
They should also be measurable and should be monitored over time. The
entrepreneur who has not made a total commitment to the business will not
be able to meet the venture’s demands of the venture. Investors will not be
positive about a venture that does not have fulltime commitment. Investors
will typically expect the entrepreneur to make significant financial
commitment to the business. Lack of experience will result in failure unless
the entrepreneur can gain knowledge or team up with someone. The
entrepreneur should also document customer needs before preparing the
plan
4.6. Steps in Preparing the Marketing Plan
Step 1: Defining the Business Situation
The situation analysis is a review of where the company has been and
considers many of the environmental factors. The entrepreneur should
provide a review of past performance of the product and the company.
Industry analysis should include information on market size, growth rate,
suppliers, new entries, and economic conditions.
Step 2: Defining Target Market/Opportunities and Threats
The entrepreneur should have a good idea of who the customer or target
market will be. The defined target market will usually represent one or
more segments of the entire market. Market segmentation is the process of
dividing the market into smaller homogeneous groups.. The process of
segmenting is:
a. Decide what general market or industry you wish to pursue.
b. Divide the market into smaller groups based on characteristics of the
customer.
c. Select segment or segments to target.
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d. Develop marketing plan integrating the parts of the marketing mix.
Step 3: Considering Strengths and Weaknesses
It is important for the entrepreneur to consider its strengths and
weaknesses.
Step 4: Establishing Goals and Objectives
Before strategy decisions can be outlined, the entrepreneur must establish
realistic marketing goals and objectives. These answer the question
"Where do we want to go?” These goals should specify such things as
market share, profit, sales, market penetration, pricing policy, and
advertising support. Not all goals and objectives must be quantified. It is a
good idea to limit the number of goals to between six and eight.
Step 5: Defining Marketing Strategy and Action Programs
Strategy and action decisions respond to the question "How do we get
there?" It incorporates:
1. Product or Service
This includes a description of the product and may include more than the
physical characteristics.
It involves packaging, brand name, price, warranty, image, service, features,
and style.
2. Customer Service
Meeting customer needs and creating loyalty involves a number of low-cost
steps: in writing develop a statement of customer service principles, train
those employees who have direct contact with customers, establish a
process for evaluating customer service, reward employees who are most
effective in providing quality customer service, make regular contact with
customers, invest in quality telephone equipment, meet customer
expectations, customer service is especially important for e-businesses.
3. Pricing.
One of the difficult decisions is determining the appropriate price for the
product. Factors such as costs, discounts, freight, and markups must be
considered. Marketing research can help determine a reasonable price that
consumers are willing to pay.
4. Distribution.
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This factor provides utility or makes the product convenient to purchase
when it is needed. This variable must be consistent with other marketing
mix variables. Type of channel, number of intermediaries and location of
members should be described. Regardless of the type of business, it is
usually necessary for the new venture to have a website. The Internet will
become an increasingly important medium for information and distribution.
Direct mail or telemarketing may be considered. Direct mail marketing is
one of the simplest and lowest in entry costs. But the direct marketing or
Internet strategies are not a guarantee for success. The entrepreneur should
evaluate all possible options for distribution.
5. Promotion.
The entrepreneur needs to inform customers as to the product’s availability
using advertising media such as print, radio, or television. Usually television
is too expensive unless cable television is a viable option. Larger markets
can be reached using direct mail, trade magazines, or newspapers. A
website may also create awareness and promote the product and services of
the venture. It is possible to make use of publicity as a means of
introduction. It is important that the marketing strategy and action
programs be specific and detailed enough to guide the entrepreneur through
the first year.
Step 6: Coordination of the Planning Process
The management team must coordinate the planning process. The
entrepreneur may be the only person involved but may lack experience in
preparing the plan. Assistance is available from many sources, such as
the SBA.
.Step 7: Designing Responsibility for Implementation
The plan must be implemented effectively to meet all of the desired goals
and objectives. Someone must take the responsibility for implementing each
decision made in the marketing plan.
Step 8: Budgeting the Marketing Strategy
Planning decisions must also consider the costs involved in the
implementation of these decisions. This budgeting will be useful in
preparing the financial plan.
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Step 9: Implementation of the Marketing Plan
The marketing plan is meant to be a commitment to a specific strategy. A
commitment to make adjustments as needed by market conditions is also
valuable.
Step 10: Monitoring Progress of Marketing Actions
Monitoring of the plan involves tracking specific results of the marketing
effort. What is monitored is dependent on the specific goals and objectives
outlined.

Summary
This chapter has focused the scope and values of business plan and
outlined the steps in its preparation. The business plan may be read by
Lawyers, accountants, marketing consultants, and engineers are useful
supplemental sources. Other resources are the Small Business
Administration, Service Core of Retired Executives, Small Business
Development Centers, universities, friends, and relatives.
The scope of plan will depend on who read it, the size of the venture and the
specific industries for which the venture is intended.
The business plan must be comprehensive enough to address the concerns
of employees, investors, bankers, venture capitalists, suppliers, and
customers.
It is often necessary for an entrepreneur to orally present the business plan
before an audience of potential investors. In the Typical forum the
entrepreneur would be expected to provide a short (20-30 minutes)
presentation of the business plan.
Before preparing a business plan, the entrepreneur should do a quick
feasibility study of the business concepts to see if there are possible barriers
to success. The information, obtained from many sources should focus on
marketing, finance and production.

One of the initial important elements of information needed by entrepreneur

is to know the market potential for the product or service. In order to
ascertain the size of the market, it is first necessary for the entrepreneur to
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define the market. A well-defined target market makes it easier to project
market size and market goals.

The business plan should be comprehensive enough to give a potential

investor a complete understanding of the venture.
The marketing plan describes how the products will be distributed, priced,
and promoted. Potential investors regard the marketing plan as critical to
the venture’s success. The marketing plan establishes how the entrepreneur
will effectively compete and operate in the marketplace. Marketing planning
should be an annual activity focusing on decisions related to the marketing
mix variables.
Generally, business plan is designed to guide the entrepreneur through the
first year of operations. It should contain control points to ascertain
progress. Planning should be a part of any business operation. Without
good planning the employees will not understand the company’s goals and
how they are expected to perform their jobs.

Self Assessment Questions

Part One: Say True or False

1. Marketing mix are uncontrolled factors by organization.

2. The marketing plan describes how the products will be distributed,
priced, and promoted but not how to produced.

3. Before preparing a business plan, the entrepreneur should do a quick

feasibility study of the business concepts to see if there are possible
barriers to success.

4. It is often necessary for an entrepreneur to orally present the

business plan before an audience of potential investors.

5. Cash -on –hand represents the amount of cash to keep the business
operating
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Part two: matching items
Match ‘a’ with ‘b’
A B
1. marketing mix a. working capital of asset
2. business plan b. promotion
3. cash in bank c. description of venture
4.performance analysis d. cash flow out
5. transport cost e. market share analysis
Part Three: Fill In the Blank Space
1. The difference between sales and expenses of an enterprise over the
given period of time is called profit and loss statement. If the
difference is positive, it is called profit where as the difference is
negative, it is called loss.
2. Work-in-process represents the value of products which are in semi-
finished states

3. Working capital is the difference between the current asset and

current liabilities which is normally measured in terms of raw-
material purchase, payment for creditors, labour, work-in-process,
overheads, and finished-goods stocks
4. Cash items refers to coin, bank deposits, notes and cheques. The non-
cash items in profits consists of credit sales, credit purchase, unpaid
expenses, stocks and depreciation

Glossaries
Acquisition; purchasing all or part of a company
Asset base for loans: Tangible collateral valued at more than the amount of
money borrowed

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Assets; Represents items that are owned or available to be used in the
venture operations

Brainstorming: A group method for obtaining new ideas and solutions

Breakeven: Volume of sales where the venture neither makes a profit nor
incurs a loss
Business ethics: The study of behavior and morals in a business situation
Business plan: The description of the future direction of the business

C Corporation: Most common form of corporation regulated by statute and

treated as a separate legal entity for liability and tax purposes
Copyright: Right given to prevent others from printing copying or
publishing any original works of authorship
Corporation: two or more individuals having unlimited liability who have
pooled resources to own a business.
Creative problem solving: a method for obtaining new ideas focusing on
the parameters
Debt financing: obtaining borrowed funds for the company

Entrepreneurial decision process: Deciding to become an entrepreneur by

leaving present activity

Entrepreneurial domain: The ways entrepreneurs make decisions

Entrepreneurial process: The process through which a new venture is
created by an entrepreneur
Entrepreneurship: process of creating something new and assuming the
risks and rewards
Equity financing: Obtaining funds for the company in exchange for
ownership
Equity participation: Taking an ownership position equity pool Money
raised by venture capitalists to invest
Financial plan: Projections of key financial data that determine economic
feasibility and necessary financial investment commitment
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Gordon method: Method for developing new ideas when the individuals
are unaware of the problem
Marketing system: Interacting internal and external factors that affect
venture’s ability to provide goods and services to meet customer needs

Intellectual property: Any patents, trademarks, copyrights, or trade

secrets held by the entrepreneur.
Entapreneurship: Entrepreneurship within an existing organization
Iterative synthesis; The intersection of knowledge and social need that
starts the product development process

Leverage buyout (LBO): purchasing an existing venture by any employee

group
Liabilities: Represents money that is owed to creditors
Licensing: Allowing someone else to use something o the company’s
Limited Liability Company; special type of partnership where liability is
limited and continuity options are more flexible
Limited partner: A party in a partnership agreement that usually supplies
money and has a few responsibilities
Marketing mix; Combination of product, price, promotion, and
distribution and other marketing activities needed to meet marketing
objectives
Marketing plan; written statement of marketing objectives, strategies, and
activities to be followed in business plan
Marketing system; Interacting internal and external factors that affect
venture’s ability to provide goods and services to meet customer needs

Opportunity identification: The process by which an entrepreneur comes

up with the opportunity for a new venture

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Pro forma balance sheet: Summarizes the projected assets, liabilities,
and net worth of the new venture
Proprietorship; Form of business with single owner who has unlimited
liability, controls all decisions, and receives all profits

Research and development limited partnerships money given to a firm

for developing a technology that involves a tax shelter

S Corporation Special type of corporation where profits are distributed to

stockholders and taxed as personal income
synectics A method for individuals to solve problems through one of four
mechanisms
synergy two parties having things in common

Target market Specific group of potential customers toward which venture

aims its marketing plan
Trade barriers Hindrances to doing international business
Trade secret protection against others revealing or disclosing information
that could be damaging to business
Trademark A distinguishing word, name, or symbol used to identify a
product

References

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Simon, Bridge Ken O’Neill and Stan Cromie (2003): Understanding
Enterprise, Entrepreneurship and Small
Business. Creative Print and Design.
Great Britain

Michael J. Etzel, Bruce J. Walker and William J.Stanton(2004):

Marketing . India: the Mcgraw-Hill Companies.

Robert D.Hisrish and Micheal P. Peter(2002): Entrepreneurship.New

Delhi: Mcgraw-Hill Publishing Company Limited.

Hisrich, PhD, Robert D., Michael P. Peters, PhD and Dean A. Shepherd,
PhD. Entrepreneurship.6 ed. New York: McGraw-Hill Irwin, 2005.

Drucker, P F. (1985).Innovation and Entrepreneurship, London:

Heinemann.
Hisrich,R.D.and Peter,M.P.(2005).Entrepreneurship. New York: McGraw
Hill.
Karl Vesper(1980).New Venture Strategies.Englewood cliffs,NJ: Prentice
Hall.
Ross,J.(1987).’Corporation and Entrepreneurship’, Strategic Management
Journal. Vol.15.pp.76-80
Young ,A.P.(1999) ‘Rules breaking and a new opportunistic management’.
Management Decision,Vol.37

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