The focus of the next section of the business plan, in our Business Plan Challenge, is Marketing and Sales. We’re sure that all of the smart Modish BIZtips readers know the difference between marketing and sales, but just to make sure everything is clear, lets do a quick review.
Marketing is building relationships and letting people know what your business does. Sales, on the other hand, are the result of your customer seeing your business’ marketing information, and ultimately paying you money!
This section of the business plan addresses both of these areas: how you are going to attract customers to your business and how you are going to deliver the sale.
Product or Service Information
- Product or Service Description: Describe in detail what your business will be selling or what service you will be offering. This should be quite specific.
- Differentiation: What makes your product or service different than others currently available (examine your competition to make this section easier to answer)
- Pricing Strategy: There are three ways to compete in any market – speed of delivery, quality of product and price of product. Your pricing strategy will be a combination of two of these items, but not all three. You can have a high quality product that is quickly delivered, but it will cost a lot of money (you’re not competing on price). Or, your product will be inexpensive and delivered quickly, but the quality will not be recognized. For your strategy, choose a combination of these items that will be a strong position against the competition.
Target Market
- Description: Describe your target market. Include demographic information like age, gender and income levels. If you're targeting your local area, include local publications your customer might read and craft shows they may attend. For the internet, include blogs they read and websites they visit. Things as detailed as the books they read or the food they like the eat may seem trivial, but the more detailed this section is the more you’ll be able to “get inside” your customer’s head and understand where to market your business.
- Size of target market: For a retail store, we used the demographic information from the description of our target market (gender, age, income) to estimate a general number of people in Vancouver that fit within these parameters. From there, we estimated (based on statistics) how many people might buy the product we are offering.
Competition
- Competitive Environment: What is the competition like in your market? List what type of stores your business is competing against. Is your competition big chain stores or small boutiques? Are you selling on Etsy where there are hundreds, if not thousands of people in the jewelry section? Or are you the only one selling hand painted dog beds?
- Direct Competition: Direct Competition is a competitor that offers the same or a substituting product as yours. For a jewelry designer, direct competition is someone else that sells jewelry. In this section, outline key information about what your competition is doing, including what they excel at. Also examine where they could improve and what your company can do to fill the competition’s shortfalls.
- Indirect Competition: Indirect competition is a business where your customer could spend their money within the same market. For example, for a jewelry designer, a business that sells handbags would be indirect competition. A customer might only have a $100 budget for accessories and she will choose between a new necklace or a new handbag. Complete the same evaluation on Indirect Competition as you would Direct. What is the competition doing well? Are there any holes your business can fill?
- Future Competition: What do you anticipate the competition will do in the next year? Five years? How will you be prepared for this?
- Competitive Strategy: What are the competitive advantages that you have that the customer needs to know about?
The rest of the Marketing and Sales section includes the Marketing Strategy and the Sales Strategy. After the last post, we decided to break up this section a bit more and give everyone time to read the posts! For next week, start thinking about how you are going to sell your product and what advertising your business will use! We will see you here next Thursday!
Lili Nedved and Henry Sinha are opening a brick and mortar retail store
in Vancouver, Canada. With lots experience staying up late and working
on Lili’s handbag business, iglubu,
Henry was recently promoted from an Electrical Engineer to Director of
Fabric Organization. Lili hopes her Finance degree will give her the
edge in the competition for Employee of the Month.
