Appendix C Sample Marketing PlanAPPENDIX CSample Marketing PlanThis sample marketing planfor a hypothetical companyillustrates how the marketingplanning process described inChapter 2 might be implemented. If you are asked to create amarketing plan, this model maybe a helpful guide, along withthe concepts in Chapter 2.The Executive Summary,one of the most frequentlyread components of a marketingplan, is a synopsis of the marketing plan. Although it does notprovide detailed information, itdoes present an overview of theplan so readers can identify keyissues pertaining to their roles inthe planning and implementation processes. Although this isthe first section in a marketingplan, it is usually written last.1Copyright Houghton Mifflin Company. All rights reserved.The Environmental Analysis2 presents informationregarding the organization’s current situation with respect to themarketing environment, the current target market(s), and thefirm’s current marketing objectives and performance.This section of the environmental analysis considersrelevant external environmentalforces such as competitive, economic, political, legal and regulatory, technological, and sociocultural forces.3C1C1Star Software, Inc.Marketing Plan1 I. EXECUTIVE SUMMARYStar Software, Inc., is a small, family-owned corporation in the first year of a transition from first-generation to second-generation leadership. Star Software sellscustom-made calendar programs and related items to about 400 businesses, whichuse the software mainly for promotion. Star’s 18 employees face scheduling challenges, as Star’s business is highly seasonal, with its greatest demand duringOctober, November, and December. In other months, the equipment and staff aresometimes idle. A major challenge facing Star Software is how to increase profitsand make better use of its resources during the off-season.An evaluation of the company’s internal strengths and weaknesses and externalopportunities and threats served as the foundation for this strategic analysis andmarketing plan. The plan focuses on the company’s growth strategy, suggestingways in which it can build on existing customer relationships, and on the development of new products and/or services targeted to specific customer niches. SinceStar Software markets a product used primarily as a promotional tool by its clients,it currently is considered a business-to-business marketer.2 II. ENVIRONMENTAL ANALYSISFounded as a commercial printing company, Star Software, Inc., has evolved into amarketer of high-quality, custom-made calendar software and related business-tobusiness specialty items. In the mid-1960s, Bob McLemore purchased the companyand, through his full-time commitment, turned it into a very successful family-runoperation. In the near future, McLemore’s 37-year-old son, Jonathan, will take overas Star Software’s president and allow the elder McLemore to scale back hisinvolvement.3 A. The Marketing Environment1. Competitive forces. The competition in the specialty advertising industry is verystrong on a local and regional basis but somewhat weak nationally. Sales figures for the industry as a whole are difficult to obtain since very little businessis conducted on a national scale.The competition within the calendar industry is strong in the paper segment and weak in the software-based segment. Currently paper calendars hold adominant market share of approximately 90 percent; however, the software-1C-1

Appendix C Sample Marketing Planbased segment is growing rapidly. The 10 percent market share held bysoftware-based calendars is divided among many different firms. Star Software,which holds 30 percent of the software-based calendar market, is the only company that markets a software-based calendar on a national basis. As softwarebased calendars become more popular, additional competition is expected toenter the market.2. Economic forces. Nationwide, many companies have reduced their overall promotion budgets as they face the need to cut expenses. However, most of thesereductions have occurred in the budgets for mass media advertising (television,magazines, newspapers). While overall promotion budgets are shrinking, manycompanies are diverting a larger percentage of their budgets to sales promotionand specialty advertising. This trend is expected to continue as a weak, slowgrowth economy forces most companies to focus more on the “value” theyreceive from their promotion dollar. Specialty advertising, such as can be donewith a software-based calendar, provides this value.3. Political forces. There are no expected political influences or events that couldaffect 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 distributedby mail, and some of these products are considered “junk.” Although this labelis attached to the type of products Star Software makes, the problem of junkmail falls on the clients of Star Software and not on the company itself. Whilelegislation may be introduced to curb the tide of advertising delivered throughthe mail, the fact that more companies are diverting their promotion dollars tospecialty advertising indicates that most companies do not fear the potential forincreased legislation.5. Technological forces. A major emerging technological trend involves personalinformation managers (PIMs), or personal digital assistants (PDAs). A PDA is ahandheld device, similar in size to a large calculator, that can store a wide variety of information, including personal notes, addresses, and a calendar. SomePDAs even have the ability to fax letters via microwave communication. As thistrend continues, current software-based calendar products may have to beadapted to match the new technology.6. Sociocultural forces. In today’s society, consumers have less time for work orleisure. The hallmarks of today’s successful products are convenience and easeof use. In short, if the product does not save time and is not easy to use, consumers will simply ignore it. Software-based calendars fit this consumer needquite well. A software-based calendar also fits in with other societal trends: amove to a paperless society, the need to automate repetitive tasks, and the growing dependence on computers, for example.2Copyright Houghton Mifflin Company. All rights reserved.C-2

Appendix C Sample Marketing Plan4 B. Target Market(s)The analysis of currenttarget markets assessesdemographic, geographic, psychographic, and product usagecharacteristics of the target markets. It also assesses the currentneeds of each of the firm’s target markets, anticipatedchanges in those needs, andhow well the organization’s current products are meeting thoseneeds.4By focusing on commitment to service and quality, Star Software has effectivelyimplemented a niche differentiation strategy in a somewhat diverse marketplace. Itsability to differentiate its product has contributed to superior annual returns. Its target market consists of manufacturers or manufacturing divisions of large corporations that move their products through dealers, distributors, or brokers. Its mostprofitable product is a software program for a PC-based calendar, which can be tailored to meet client needs by means of artwork, logos, and text. Clients use this calendar software as a promotional tool, providing a disk to their customers as anadvertising premium. The calendar software is not produced for resale.The calendar software began as an ancillary product to Star’s commercialprinting business. However, due to the proliferation of PCs and the growth in technology, the computer calendar soon became more profitable for Star than its walland desktop paper calendars. This led to the sale of the commercial printing plantand equipment to employees. Star Software has maintained a long-term relationshipwith these former employees, who have added capabilities to reproduce computerdisks and whose company serves as Star’s primary supplier of finished goods. Star’sstaff focuses on the further development and marketing of the software.Copyright Houghton Mifflin Company. All rights reserved.C. Current Marketing Objectives and PerformanceA company must setmarketing objectives,measure performance againstthose objectives, and then takecorrective action if needed.55C3Star Software’s sales representatives call on potential clients and, using a templatedemonstration disk, help them create a calendar concept. Once the sale has beenfinalized, Star completes the concept, including design, copywriting, and customization of the demonstration disk. Specifications are then sent to the supplier, locatedabout a thousand miles away, where the disks are produced. Perhaps what most differentiates Star from its competitors is its high level of service. Disks can beshipped to any location the buyer specifies. Since product development and customization of this type can require significant amounts of time and effort, particularly 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 anapproximate 90 percent annual reorder rate and an average customer-reorder relationship of about eight years. The first year in dealing with a new customer is themost stressful and time consuming for Star’s salespeople and product developers.The subsequent years are faster and significantly more profitable.The company is currently debt free except for the mortgage on its facility.However, about 80 percent of its accounts receivable are billed during the last threemonths of the calendar year. Seasonal account billings, along with the added travelof its sales staff during the peak season, pose a special challenge to the company.3C-3

C-4Appendix C Sample Marketing PlanThe need for cash to fund operations in the meantime makes it necessary for thecompany to borrow significant amounts of money to cover the period until customer billing occurs.Star Software’s marketing objectives include increases in both revenues andprofits of approximately 10 percent over the previous year. Revenues should exceed 4 million, and profits are expected to reach 1.3 million.III. SWOT ANALYSISStrengths are competitive advantages or corecompetencies that give theorganization an advantagein meeting the needs of itscustomers.66 A. Strengths1. Star Software’s product differentiation strategy is the result of a strong marketing orientation, commitment to high quality, and customization of products andsupport services.2. There is little turnover among employees who are well compensated and likedby customers. The relatively small size of the staff promotes camaraderie withcoworkers and clients, and fosters communication and quick response to clients’needs.3. A long-term relationship with the primary supplier has resulted in sharedknowledge of the product’s requirements, adherence to quality standards, and acommon vision throughout the development and production process.4. The high percentage of reorder business suggests a satisfied customer base, aswell as positive word-of-mouth communication, which generates some 30 percent of new business each year.7 B. Weaknesses1. The highly centralized management hierarchy (the McLemores) and lack ofmanagerial backup may impede creativity and growth. Too few people hold toomuch knowledge.2. Despite the successful, long-term relationship with the supplier, single-sourcingcould make Star Software vulnerable in the event of a natural disaster, strike, ordissolution of the current supplier. Contingency plans for suppliers should beconsidered.3. The seasonal nature of the product line creates bottlenecks in productivity andcash flow, places excessive stress on personnel, and strains the facilities.4. Both the product line and the client base lack diversification. Dependence oncurrent reorder rates could breed complacency, invite competition, or create a4Copyright Houghton Mifflin Company. All rights reserved.Weaknesses are limitationsa firm has in developingor implementing a marketingstrategy.7

Appendix C Sample Marketing Planfalse sense of customer satisfaction. The development of a product that wouldmake the software calendar obsolete would probably put Star out of business.5. While the small size of the staff fosters camaraderie, it also impedes growthand new-business development.6. Star Software is reactive rather than assertive in its marketing efforts because ofits heavy reliance on positive word-of-mouth communication for obtaining newbusiness.7. Star’s current facilities are crowded. There is little room for additional employees or new equipment.Opportunities arefavorable conditions in theenvironment that could yieldrewards for an organization ifacted on properly.88 C. Opportunities1. Advertising expenditures in the United States exceed 132 billion annually.More than 25 billion of this is spent on direct-mail advertising, and another 20 billion is spent on specialty advertising. The potential for Star Software’sgrowth is significant in this market.2. Technological advances have not only freed up time for Americans and broughtgreater efficiency but also have increased the amount of stress in their fastpaced lives. Personal computers have become commonplace, and personalinformation managers have gained popularity.3. As U.S. companies look for ways to develop customer relationships rather thanjust close sales, reminders of this relationship could come in the form ofacceptable premiums or gifts that are useful to the customer.Copyright Houghton Mifflin Company. All rights reserved.4. Computer-based calendars are easily distributed nationally and globally. Theglobalization of business creates an opportunity to establish new client relationships in foreign markets.Threats are conditionsor barriers that may prevent the organization fromreaching its objectives.99 D. Threats1. Reengineering, right-sizing, and outsourcing trends in management may altertraditional channel relationships with brokers, dealers, and distributors or eliminate them altogether.2. Calendars are basically a generic product. The technology, knowledge, andequipment required to produce such an item, even a computer-based one, areminimal. The possible entry of new competitors is a significant threat.C53. Theft of trade secrets and software piracy through unauthorized copying aredifficult to control.5C-5

C-6Appendix C Sample Marketing Plan4. Specialty advertising through promotional items relies on gadgetry and ideasthat 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 buyersupplier relationship is damaged or if the supplying company has financialdifficulty.6. Competition from traditional paper calendars and other promotional items isstrong.During the development of a marketing plan,marketers attempt to matchinternal strengths to externalopportunities. In addition, theytry to convert internal weaknesses into strengths and external threats into opportunities.1010 E. Matching Strengths to Opportunities/Converting Weaknesses and Threats1. The acceptance of technological advances and the desire to control time createa potential need for a computer-based calendar.2. Star Software has more opportunity for business growth during its peak seasonthan it can presently handle because of resource (human and capital) constraints.3. Star Software must modify its management hierarchy, empowering its employees through a more decentralized marketing organization.4. Star Software should discuss future growth strategies with its supplier anddevelop contingency plans to deal with unforeseen events. Possible satellitefacilities in other geographic locations should be explored.5. Star Software should consider diversifying its product line to satisfy new market niches and develop nonseasonal products.The development of marketing objectives is basedon environmental analysis,SWOT analysis, the firm’s overall corporate objectives, and theorganization’s resources. Foreach objective, this sectionshould answer the question,“What is the specific and measurable outcome and time framefor completing this objective?”1111 IV. MARKETING OBJECTIVESStar Software, Inc., is in the business of helping other companies market their products and/or services. Besides formulating a marketing-oriented and customerfocused mission statement, Star Software should establish an objective to achievecumulative growth in net profit of at least 50 percent over the next five years. Atleast half of this 50 percent growth should come from new, nonmanufacturing customers and from products that are nonseasonal or that are generally delivered in theoff-peak period of the calendar cycle.6Copyright Houghton Mifflin Company. All rights reserved.6. Star Software should consider surveying its current customers and its customers’ clients to gain a better understanding of their changing needs anddesires.

Appendix C Sample Marketing PlanTo accomplish its marketing objectives, Star Software should develop benchmarks to measure progress. Regular reviews of these objectives will provide feedback and possible corrective actions on a timely basis. The major marketing objective is to gain a better understanding of the needs and satisfaction of currentcustomers. Since Star Software is benefiting from a 90 percent reorder rate, it mustbe satisfying its current customers. Star could use the knowledge of its successeswith current clients to market to new customers. To capitalize on its success withcurrent clients, benchmarks should be established to learn how Star can improve theproducts it now offers through knowledge of its clients’ needs and specific opportunities for new product offerings. These benchmarks should be determined throughmarketing research and Star’s marketing information system.Another objective should be to analyze the billing cycle Star now uses to determine if there are ways to bill accounts receivable in a more evenly distributed manner throughout the year. Alternatively, repeat customers might be willing to placeorders at off-peak cycles in return for discounts or added customer services.Star Software also should create new products that can utilize its current equipment, technology, and knowledge base. It should conduct simple research andanalyses of similar products or product lines with an eye toward developing specialty advertising products that are software based but not necessarily calendar related.V. MARKETING STRATEGIESThe marketing plan clearlyspecifies and describes thetarget market(s) toward whichthe organization will aim itsmarketing efforts. The difference between this section andthe earlier section covering target markets is that the earliersection deals with present targetmarkets, whereas this sectionlooks at future target markets.Copyright Houghton Mifflin Company. All rights reserved.1212 A. Target Market(s)Target market 1: Large manufacturers or stand-alone manufacturing divisionsof large corporations with extensive broker, dealer, or distributor networksExample: An agricultural chemical producer, such as Dow Chemical, distributes its products to numerous rural “feed and seed” dealers.Customizing calendars with Chicago Board of Trade futures or USDAagricultural report dates would be beneficial to these potential clients.Target market 2: Nonmanufacturing, nonindustrial segments of the business-tobusiness market with extensive customer networks, such as banks, medical services,or financial plannersExample: Various sporting goods manufacturers distribute to specialtyshop dealers. Calendars could be customized to the particular sport, suchas golf (with PGA, Virginia Slims, or other tour dates), running (with various national marathon dates), or bowling (with national tour dates).C77C-7

C-8Appendix C Sample Marketing PlanTarget market 3: Direct consumer markets for brands with successful licensingarrangements for consumer products, such as Coca-ColaExample: Products with major brand recognition and fan club membership, such as Harley-Davidson motorcycles or the Bloomington GoldCorvette Association, could provide additional markets for customizedcomputer calendars. Brands with licensing agreements for consumerproducts could provide a market for consumer computer calendars inaddition to the specialty advertising product, which would be marketed tothe manufacturer/dealer.Target market 4: Industry associations that regularly hold or sponsor tradeshows, meetings, conferences, or conventionsExample: National associations, such as the National Dairy Association orthe American Marketing Association, frequently host meetings or annualconventions. Customized calendars could be developed for any of thesegroups.13 B. Marketing Mix1. Products. Star Software markets not only calendar software but also the service of specialty advertising to its clients. Star’s intangible attributes are its ability to meet or exceed customer expectations consistently, its speed in respondingto customers’ demands, and its anticipation of new customer needs. Intangibleattributes are difficult for competitors to copy, thereby giving Star Software acompetitive advantage.2. Price. Star Software provides a high-quality specialty advertising product customized to its clients’ needs. The value of this product and service is reflectedin its premium price. Star should be sensitive to the price elasticity of its product and overall consumer demand.3. Distribution. Star Software uses direct marketing. Since its product is compact, lightweight, and nonperishable, it can be shipped from a central locationdirect 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 inselling its products.4. Promotion. Since 90 percent of Star’s customers reorder each year, the bulk ofpromotional expenditures should focus on new product offerings throughdirect-mail advertising and trade journals or specialty publications. Any remaining promotional dollars could be directed to personal selling (in the form ofsales performance bonuses) of current and new products.8Copyright HoughtonMifflinCompany.MifflinAll rightsreserved.Copyright HoughtonCompany.All rights reserved.Though the marketingmix section in this plan isabbreviated, this componentshould provide considerabledetails regarding each elementof the marketing mix: product,price, distribution, andpromotion.13

Appendix C Sample Marketing PlanVI. MARKETING IMPLEMENTATIONThis section of the marketing plan details howthe firm will be organized—byfunctions, products, regions, ortypes of customers—to implement its marketing strategies. Italso indicates where decisionmaking authority will rest withinthe marketing unit.14 A. Marketing OrganizationThis component of themarketing plan outlinesthe specific activities required toimplement the marketing plan,who is responsible for performing these activities, and whenthese activities should beaccomplished based on a specified schedule.15 B. Activities, Responsibility, and Timetables for Completion14Copyright HoughtonCopyrightMifflin HoughtonCompany.MifflinAll rightsCompany.reserved.All rights reserved.15Because Star’s current and future products require extensive customization to matchclients’ needs, it is necessary to organize the marketing function by customergroups. This will allow Star to focus its marketing efforts exclusively on the needsand specifications of each target customer segment. Star’s marketing efforts will beorganized around the following customer groups: (1) manufacturing group; (2) nonmanufacturing, business-to-business group; (3) consumer product licensing group;and (4) industry associations group. Each group will be headed by a sales managerwho will report to the marketing director (these positions must be created). Eachgroup is responsible for the marketing of Star’s products within that customer segment. In addition, each group will have full decision-making authority. This represents a shift from the current highly centralized management hierarchy. Frontlinesalespeople will be empowered to make decisions that will better satisfy Star’sclients.These changes in marketing organization will enable Star Software to be morecreative and flexible in meeting customers’ needs. Likewise, these changes willovercome 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 monitor the activities of competitors.All implementation activities are to begin at the start of the next fiscal year onApril 1. Unless specified, all activities are the responsibility of Star Software’s nextpresident, Jonathan McLemore. On April 1, create four sales manager positions and the position of marketingdirector. The marketing director will serve as project leader of a new businessanalysis team, to be composed of nine employees from a variety of positionswithin the company. By April 15, assign three members of the analysis team to each of the followingprojects: (1) research potential new product offerings and clients, (2) analyze thecurrent billing cycle and billing practices, and (3) design a customer survey project. The marketing director is responsible. By June 30, the three project groups will report the results of their analyses. Thefull business analysis team will review all recommendations.C9 By July 31, develop a marketing information system to monitor client reorder patterns and customer satisfaction.9C-9

C-10Appendix C Sample Marketing Plan By July 31, implement any changes in billing practices as recommended by thebusiness analysis team. By July 31, make initial contact with new potential clients for the current productline. Each sales manager is responsible. By August 31, develop a plan for one new product offering along with an analysisof its potential customers. The business analysis team is responsible. By August 31, finalize a customer satisfaction survey for current clients. In addition, the company will contact those customers who did not reorder for the 2001product year to discuss their concerns. The marketing director is responsible. By January, implement the customer satisfaction survey with a random sample of20 percent of current clients who reordered for the 2001 product year. The marketing director is responsible. By February, implement a new product offering, advertising to current customersand to a sample of potential clients. The business analysis team is responsible. By March, analyze and report the results of all customer satisfaction surveys andevaluate 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 VII. EVALUATION AND CONTROLA. Performance Standards and Financial ControlsA comparison of the financial expenditures with the plan goals will be included inthe project report. The following performance standards and financial controls aresuggested: The total budget for the billing analysis, new-product research, and the customersurvey will be equal to 60 percent of the annual promotional budget for the coming year. The breakdown of the budget within the project will be a 20 percent allocation tothe billing cycle study, a 30 percent allocation to the customer survey and marketing information system development, and a 50 percent allocation to new-businessdevelopment and new-product implementation. Each project team is responsible for reporting all financial expenditures, including personnel salaries and direct expenses, for their segment of the project. Astandardized reporting form will be developed and provided by the marketingdirector.10Copyright Houghton Mifflin Company. All rights reserved.This section details howthe results of the marketing plan will be measured andevaluated. The control portionof this section includes thetypes of actions the firm cantake to reduce the differencesbetween the planned and theactual performance.16

Appendix C Sample Marketing PlanC-11 The marketing director is responsible for adherence to the project budget and willreport overages to the company president on a weekly basis. The marketing director also is responsible for any redirection of budget dollars, as required for eachproject of the business analysis team. Any new product offering will be evaluated on a quarterly basis to determine itsprofitability. Product development expenses will be distributed over a two-yearperiod, by calendar quarters, and will be compared with gross income generatedduring the same period.B. Monitoring ProceduresTo analyze the effectiveness of Star Software’s marketing plan, it is necessary tocompare its actual performance with plan objectives. To facilitate this analysis,monitoring procedures should be developed for the various activities required tobring the marketing plan to fruition. These procedures include, but are not limitedto, the following: A project management concept will be used to evaluate the implementation of themarketing plan by establishing time requirements, human resource needs, andfinancial or budgetary expenditures. A perpetual comparison of actual and planned activities will be conducted on amonthly basis for the first year and on a quarterly basis after the initial implementation phase. The business analysis team, including the marketing director, willreport their comparison of actual and planned outcomes directly to the companypresident.Copyright Houghton Mifflin Company. All rights reserved. Each project team is responsible for determining what changes must be made inprocedures, product focus, or operations as a result of the studies conducted in itsarea.C 1111

ing plan. Although it does not provide detailed information, it does present an overview of the plan so readers can identify key issues pertaining to their roles in the planning and implementa-tion processes. Although this is the first section in a marketing plan, it is usually written last. 1 2 3 Star Software, Inc. Marketing Plan I. EXECUTIVE .