Development Cooperation Handbook/Designing and Managing Programmes/Programme Fund Raising and Marketing
This was prepared for a business plan of a profit company and needs to be rewritten for the programme plan of an NGO.
Every new product or service will fail if it is not communicated effectively to the appropriate target audience. This module discusses what a marketing plan contains, and what its role is within a project or program plan. In addition, this section discusses the mistakes that managers commonly make when crafting a marketing plan and cites how to avoid them. Finally, a brief sample marketing plan is presented for analysis.
It is not enough to make a quality product or provide an excellent service; these offerings must be delivered into the marketplace in the most successful manner possible. The marketing plan explains how a new project/program will affect and react to the market conditions in order to generate sales. Marketing plans are critical for the success of a new project/program. Many organizations have failed despite having a superior product or service, mainly because they lacked a clear marketing strategy or implemented it poorly. Investors or other potential partners study the marketing plan closely to make sure the manager understands the market, can penetrate it, and that they are in control of the critical factors that will enable the organization to reach its sales goals. Most importantly, at the heart of any marketing plan is the ability to prove that there is a strong consumer demand for the product.
Marketing plans are one of the longer sections within a project/program plan and typically run between three to five pages. The following are key sections that should be addresses in this section:
- Market Definition/Opportunity
- Market Segmentation
- Marketing Strategy
- Market Research
- Sales Forecasts
Different types of project/programs can require vastly different marketing plans. Issues of target market, product features, pricing, location, and the nature of the product itself all have an impact on what marketing strategy will be the most effective for the organization.
As mentioned earlier, no product or service can succeed unless there is a demand for it. In this section, managers must detail the market beings served with the product or service, and the opportunity they present to the organization and its investors.
Most marketing plans begin with an overview of the sector of activity. This typically includes a summary of sector of activity growth over the years (or lack thereof), the sources of demand in the market, and the way that the demand is currently being satisfied. This information can often be collected using trade research including trade associations, trade magazines and literature, sector of activity studies, and key sector of activity “experts.”
managers must be careful to provide a level of detail and support which is appropriate for the task at hand. This is often difficult to achieve because the amount of detail varies based on the nature of the project/program. For example, project/programs that are attacking a very large market with ambitions of gaining a small market share need less details and support. Alternately, as the intended market share increases, so does the level of support needed. For example, an manager who is opening a new Chinese restaurant does not need to supply information that individuals are going out to eat on a more regular basis than years ago. However, the managers should provide evidence that Chinese restaurants in their area have been doing increasingly well in the past several years.
Once the sector of activity has been sufficiently presented, the manager then identifies the relevant target markets for the organization. Once the target markets have been identified, they can be studied and ordered by their relative importance to the continued success of the organization. However, before target markets can be selected, the market must be segmented.
Market segmentation is the process of dividing the market (consumers) into identifiable groups based on similarities and differences as they relate to the product/product class.
Marketers simply take the entire potential market for a product or service and then divide it into more homogeneous smaller subgroups. The goal of market segmentation is to categorize potential customers into groups whose members are more similar to each other than they are to members of other market segments. Market segmentations are vital tools of marketing for the following reasons:
- Segmentation identifies and defines common customer needs
- Segmentation allows the marketing mix to be aligned more closely with consumer needs, improving the efficiency and effectiveness of marketing programs
- As markets mature, imaginative dissection of markets can help identify emerging or neglected segments where sustainable advantages can be created.
The key to good segmentation analysis is finding groups of customers with common needs, unique from other groups. Marketers can then tailor a marketing mix that is closely aligned to the needs of their target group, which should reduce unnecessary costs and increase effectiveness when compared to targeting all consumers. However, it is not enough to simply divide the market into segments. Market segments are only useful if the organization can take advantage of them. The essential requirements for a successful segmentation are as follows:
- The segments must be distinctive in a strategically meaningful way?
- The segments must be large enough to meet corporate goals?
- The segments must be identifiable and targetable?
- The segments should be stable?
One of the critical elements of the marketing plan is determining who the competition is, and what threats or opportunities they present. Unfortunately, project/programs are not built in a vacuum. As soon as managers begin project/program, they will be affected by the competition. Therefore, in this section they must be sure to demonstrate that they understand the other players in the market.
The first task facing marketers as they analyze the competition is determining who that group entails. This is not as easy as it may appear. organizations define their competition in different ways. Some define the competition as other organizations that supply similar product. These competitors are identified based on their characteristics, such as how big they are, what products they produce, where their products are sold, etc. Others define the competition based on characteristics of the customers, such as where they shop, what they purchase along with the product, etc. Using this method substitutes are also key competitors. Substitutes are products that customers substitute for a organization's product in the marketplace. Finally, managers can broadly define the competition based on what other organizations touch their customers. Anyone who now has a connection to a organization's customer could easily become a competitor simply by engaging in an alliance.
Most marketing plans divide the competition into three categories: major competitors, minor competitors, and potential competitors.
- Major competitors - These players compete directly with the organization. Their products are extremely similar and customers in the marketplace often choose between them.
- Minor competitors - These players compete less directly with the organization. However, they provide an alternative to customers that can have an impact on the organization.
- Potential competitors - These organizations are in related or emerging markets that could eventually converge with the organization's market, causing them to be direct competitors.
At this point in the plan, the market has been defined and the opportunities it presents are clear. In addition, the market segmentation has highlighted the critical target segments and the competition has been delineated. The next step for an manager is detailing how these market opportunities will be exploited for the benefit of the organization. The authors must show how the project/program will organize and implement its marketing plans so that the desired sales results will be achieved. The following are the key areas of marketing strategy:
- Sales and Distribution Strategy – managers must be able to clearly discuss how they are going to deliver their products or services to their customers. What dealers, distributors, or sales force structure will be used? What incentive programs will apply?
- Advertising, Public Relations and Promotions – These three elements play a crucial role in building awareness of the product and communicating to the target the appropriate information and associations. Most early stage organizations will not have a large advertising budget, if any. Therefore, managers must be clever about how they are going to promote their project/program within their budget constrictions.
- Site Analysis – Discussing the location of the project/program is often critical to a organization’s marketing. This is particularly true or retail project/programs or service project/programs that rely on a certain community.
- Related Budgets – It is not enough to state what the marketing programs are, managers must also detail how much they will cost, and how these costs will be covered. Charts detailing spending, and how that spending will be divided are critical.
- Future Marketing Activities – In addition to the planned marketing activities, managers must also demonstrate that they are prepared to expand their activities as the project/program grows.
In addition to the previously mentioned elements of marketing strategy, pricing is also a critical element of marketing success. All project/programs want to price their product in such a way to provide substantial value to both the customer and the organization. However, managers must also take into account the margins needed to maintain operations, and the potential effective response to any pricing policy. Plus, once a product or service has been launched in the marketplace, pricing changes are difficult to make. Clearly, pricing can be the key element that can determine a young organization’s success. The following is a checklist for a successful pricing strategy.
- Design a pricing sheet for customers – This will make it clear what the purchase price is, any quantity discounts, shipping information, billing procedures, warranties, and maintenance contracts.
- Compare the pricing strategy to the competition – Does the competition leave open the opportunity for volume pricing, discounting, or pricing premiums?
- Determine a policy for large order purchases or discounts – Often new project/programs need to offer special pricing offers to penetrate the market. These should be clearly delineated so that the policies are clear to all involved.
- Describe the pricing procedure for the sector of activity – managers must be sure to highlight how the sector of activity has traditionally priced its products. This includes traditional discount and price increase structures. If the organization is planning on not following these procedures, they should explain why.
- Importing/Exporting costs and procedures – Many young organizations count on international markets for sales volume. In addition, other organizations require materials from abroad to build their offering. The costs of importing/exporting must be factored into the overall pricing policy.
- Show the profit potential – managers must clearly show the price of each product versus its direct costs so that readers can see the profit potential per unit of each of the organization’s products.
Every strong project/program plan should include in its marketing plan some sort of consumer research. Not only with this enhance the reader’s understanding of the market and the target consumers, it will also lend credibility and substance to the plan in the eyes of the reader.
There are two main types of consumer research - Secondary and Primary. Within Primary research there are two major divisions - qualitative and quantitative.
Data that were collected for another purpose and already exist somewhere.
Organizations can access or purchase the data without interacting directly with consumers. organizations use secondary research for the following reasons:
- It is less expensive than collecting information directly from consumers
- The third party may have cooperation from competitors - providing additional insight unavailable otherwise
- The research is unbiased by specific agenda
However, secondary research has its limitations, including:
- The purpose of the study is typically broader than organization goals
- The unit of analysis may be different than what the organization seeks to analyze
- The study may not be timely or up-to-date
Data gathered for a specific purpose or project.
It involves organizations interacting directly with consumers or another group they would like information from. Qualitative data collection is used when organizations desire information from customers but do not need to make a quantitative assessment (focus groups, interviews, etc). organizations use qualitative research because the relationship with respondents is flexible, and can be adapted quickly, it is less structured, and sample sizes are smaller
The goals of quantitative research are to gauge consumer response on a wider scale with concrete numbers. The goal of quantitative research is to maximize the response rate and response quality of testing so that the information will be predictive of consumer behavior.
While the projected financial performance of a organization is presented in detail later within the plan’s financial section, the marketing plan should contain some forecasts for the organization’s anticipated sales volume. This analysis can be presented in a number of ways. managers should select the method that most enhances the credibility of the forecasted performance. The primary methods include:
- Sales by period – Many managers prefer to show sales as a function of time. By showing sales by period of time, the forecast can highlight projected growth from period to period as well as any seasonality that exists. Since managers are stating their expectant sales, typically the most conservative forecasts are given.
- Sales by product or service – If more than one product or service is being offered, managers may want to show the expected sales for each product. This can serve to explain the organization’s priorities and the manner in which it will divide resources between product lines.
- Sales by customer group – organizations that are selling their products to multiple customer groups often prefer to forecast their sales among these different groups. This can illustrate the expected growth segments, segments in decline, and prospective new segments.
- Market share – One extremely common method of projecting sales volume is market share. managers often state their expected market share, which is the percentage of the total category sales the organization hopes to capture. By itself, market share is relatively meaningless. However, once the market and competition have been clearly defined, market share can become a very compelling metric.
Each of these methods has its own set of unique advantages and disadvantages.
The marketing plan is a critical element of any strong project/program plan. managers can insure their plans are as effective as possible by avoiding the following pitfalls and common mistakes made by many others.
- Believing the size of the market is equally distributed – Many managers mistakenly assume the demand for their product is spread evenly between various target markets or various geographic areas. They then spend too much on certain markets and not enough on key markets.
- Failure to prove the target market – It is all too common that managers select the wrong target market, ignoring the market that provides the majority of the sales.
- Unrealistic sales projections – One of the fastest ways to lose credibility with an audience is to predict sales levels that are unrealistic or impossible to achieve.
- Failure to demonstrate a clear understanding of the product or service – A poorly written marketing plan can demonstrate that the founders do not understand the product they are selling and the market they are targeting.
- No profit margins – without showing the profitability of each product, the reader has little information on the organization’s long-term chances.
- Basing sales on high output – Basing sales on a production level that has not been proven is risky.
- Pricing is out of line – If the pricing is too high for the target market, or too low to maintain margins, the plan will fail.
- Poorly assessing the total market potential – Many managers overestimate the market’s need for the product.
- Not placing the consumer first – Many plans show why the consumer needs the product, not how the product is going to meet a consumer need.
In other sections of this handbook
The projectized organization
The learning organization
The employee empowering organization
The Organization’s mission
The Organization’s vision