1 GO-TO-MARKET PLAN (OAP3)Marketing Plan (4P’s) Product – describe the product/service, its features, and the benefits for the target market Price – indicate your price scheme and pricing method Place – indicate where your product will be distributed, delivered, and/or purchased Promotion – create a promotional plan which will allow you to achieve the 6 key marketing goals Preliminary Financials Conduct research to identify and estimate start-up costs associated with your business Create a revenue forecast and cost estimate for year 1; determine profit potential Identify sources of funding to launch and operate the business Competitive Strategy Identify the sources of competition, what they offer, comparative prices (grid format) Apply the 5 Forces Framework to demonstrate your understanding of the competition Indicate which competitive advantage strategy you will adopt to face the competition Use the Business Model Canvas to depict and explain your business model
2 Marketing Mix Product Price Place Promotion Channel InventoryLogistics Distribution Advertising Sales force Publicity Sales promotion List price Discounts Bundling Credit Terms Functionality Brand Packaging Services Product Price Place Promotion Product refers to the product or service and its attributes as well as what we want it to mean to the customer. We influence this through the functionality that is incorporated into the product as well as how we package it and our brand. A brand is the meaning or identity we wish to convey about our product in the mind of the customer. Price refers to how we will price our product and it takes into account whether we will offer discounts too. In general there are three ways to price our product. Cost-based involves identifying the cost to produce and sell the product or service and then add a markup percentage. For example, suppose it costs you $10 to make a customized tumbler. You may add a 50% markup to sell it at $ Value-based pricing is focused on what consumers are willing to pay. The third way to price the product is competition based. Understanding how a competitor prices the product can give us an idea of how to price our own product. Many businesses factor all three pricing methods into their pricing strategy. As part of OAP 3 you will have to determine your pricing strategy. What are the pros and cons of each pricing strategy? Cost plus – Simple. Usually not a great way to go for a new startup. WHY? Leads to lower margins and can result in price-based competition. Moreover, customers can come to believe the product or service is cheap (lower quality). Competition-based pricing – provides a reference point for the customer to value our product or service. The downside of this approach is that if we are focused on the competition, we may be missing our customers’ needs (we may be able to price much lower in a way that could really develop customer loyalty for our product/service – much like Southwest Airlines has done). With the value based approach, the willingness of customers to pay a particular price is difficult to gauge with a new product or service. Place refers to how we will sell our product and where we will sell it. By place we are asking whether we are going to sell directly to customers or through intermediaries. If we sell directly to customers, are we going to sell only through a website, through a brick and mortar location, a traveling shop? What are some benefits to selling through intermediaries? They cover many parts of the selling process that you do not have to do such as negotiating with retailers and getting the product to the retailer, providing sales support and transportation of product to retailers. What are some drawbacks? (They can extract value from you). Promotion refers to the activities the firm takes to communicate the merits of its product to its target market.
3 3 Pricing Methods Cost Based Competitive Value Based
4 The Customer Purchasing ProcessProblem Recognition Information Search Evaluation of Alternatives Purchase Decision Post-Purchase Evaluation
5 Key Goals of Promotional MarketingCreate Awareness Goal 1 Goal 2 Provide Knowledge Goal 3 Create a Favorable Impression Goal 4 Stay in Customer’s Mind Promotional marketing can be viewed as a series of sequential goals. The first goal is to create awareness with the customer. What are some ways that a company can create awareness? (social media, news articles, trade shows, advertising). The second goal is to provide knowledge. Potential customers may not know what you sell or where you are located or what makes your product or service different. That knowledge is important because it also provides the customer with a reminder about their own need. Goal 3 and Goal 4 are creating a favorable impression and staying in the customer’s mind. Your potential customer may not need to purchase yet so you need to try to position yourself in their mind so that they will go to you when they are needing to purchase. The fifth goal is create a purchase intention. Finally, we want to make a sale. Goal 5 Create a Purchase Intention Goal 6 Make a Sale
6 Marketing Communications PlanningUnderstand the Current Context CUSTOMERS - Current - Former - Potential New COMPETITORS Direct Indirect - Communications - Consumer behavior Decide How to Segment and Target Customers SEGMENTING - Demographics - Psychographics - Geography - Benefits - Usage - Industry - Income/Education TARGET MARKET(S) - Distinct - Profitable - Reachable Decide How to Position in the Marketplace VALUE PROPOSITION: - How your product will/should be perceived by your target market COMPETITIVE DIFFERENTIATION - How your product will be different and better than the competition Establish Objectives - Web Traffic - Leads - Sales Volume - Sales ($) - Market Share - Profit - Branding Develop Budget TYPES OF BUDGETS - Percentage of sales - Meet the competition - What we can afford - Objectives & tasks - Payout Planning - Quantitative models Determine Components - Trade Promotions - Consumer Promotions - Advertising TRADITIONAL MEDIA - Television Newspaper Magazines - Radio - Outdoor DIGITAL MEDIA - Social Media - Marketing - On-line/Mobile
7 Benefits of a Strong BrandCompetitive Advantage Customer Loyalty Strong brands: Charge higher prices because customers are willing to pay more Have higher margins = more profit for the business Have greater distribution channel leverage because more stores want to carry them A strong brand can be leveraged for brand extensions
8 Establish One Clear “Voice” Across All CommunicationsUtlize all these elements to cut through the noise and reach your target customer
9 Marketing Campaigns Fill the Sales Funnel…Generating Leads: Referrals, networking, cold calling, campaigns, social media, trade shows, etc.
10 Sample Revenue ForecastYear 1 Best case sales quantity sold * price = revenue Midrange sales Low sales Years 2 & 3 Sales % scenarios (high/low) New geographic markets? New market segments? Use a spreadsheet to build your revenue forecast
11 Market Sizing Blinker Backpack Test Market28,000 = OSU Student Population 9,000 commute to campus on bikes (~32%) estimated sales (5%-10% likely to purchase) Use research to determine the size of the market
12 EXAMPLE FORMAT
13 Types of costs Fixed Costs Variable Costs Non-Recurring CostsRent, insurance Manager salaries Variable Costs Production/materials Labor Sales commissions Non-Recurring Costs Equipment/fixtures Tenant finishes Fixed costs: annual rent, manager salaries (As you sell more units, the per unit cost decreases) Variable costs: production material costs; labor costs, commissions (the per unit cost may decline as you achieve economies of scale) Non – recurring costs (infrequent or irregular costs) – purchase of a factory, equipment, etc. Unit Cost Decrease: fixed costs are spread over a higher number of output Reaching the Limit – Unit Cost Increase: Saturating the regional supply, demand and production facilities – higher shipping costs Higher defect rate
14 Cost Estimate – Example
15 Determine the Balance to Achieve ProfitabilityCost Cutting Generating Revenue
16 Competitive Analysis & 5 Forces FrameworkRefer to pages in the textbook
17 What is a Business Model?Describes how a company delivers value to their customers at an appropriate cost Describes how a company makes money A business model is a firm’s plan or recipe for how it creates, delivers, and captures value for its stakeholders.
18 Importance of Designing A Winning Business ModelGO Ability to acquire high value customers Ability to offer significant value to customers Products/services have high margins A bad or mediocre business model is a recipe for failure. The proper time to determine a company’s business model is following the initial validation of the idea and prior to outlining operational details. High-value customers doesn't mean rich customers, but customers who meet the following requirements: Are easy to locate Allow you to charge a profitable price Are willing to try your product after minimal marketing expenses Can generate enough business to meet your sales and profit objectives Customers don't necessarily need to be the end users of your product or service. They could be retailers, distributors, catalogs or whomever you sell your product or service to. There are a number of ways to offer value, including the following: Unique advantages in features and benefits Better distribution through retail or distribution More complete customer solutions through alliances with other companies Lower pricing due to manufacturing efficiencies or pricing options Faster delivery, broader product line or more customization options Source: https://www.entrepreneur.com/article/176530
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