The marketing strategy is one of the most important sections of the Marketing Plan. This is what outlines the procedures, the product or service being marketed, in addition to the price, distribution strategies, and promotional plan.
You know your product and if you have more than one product or service that you are selling, you should have each of them listed in your marketing plan with each independent price, distribution, and promotional strategy. If the offerings are almost identical with only a few variances, you could have them all bundled into one outline. Keep in mind though that the more detailed you are, the effectiveness of the launch of either a product or the business increases.
You should define your product in this section as non-technical as possible. If you do have a very technical product this can be challenging. The reader of this plan should be able to understand the product even if they are not familiar with its background. If an investor asked to read your Marketing Plan, you want to make sure that it is described using plain terms. No matter the industry, attempt to do your best to avoid industrial terms, abbreviations, or phases that people outside of it would likely not understand.
As you describe your product, there is a very effective model that is very appealing and describes why your product is superior to other competing solutions.
This model is the feature, advantage, and benefit model. Some refer to it with the acronym FAB. To define your product with this method; create a spreadsheet with three columns as below:
Start by listing each feature individually. Once you have a good list of all the things your product features, outline the advantages to the consumer from the feature. Each feature should have multiple advantages. From there expand even further with the benefits that a customer will receive from the advantages that are driven by the feature.
If your feature is rapid customer service, the advantages could be: dedicated representative, two-hour response time, and/or next day delivery. With one feature we have three advantages. Now the benefits could include: Operations not hindered by long service waits, direct point of contact that understands your business needs, product delivered quickly for increased logistical value, quicker restocking of product, no long phone call waits, increased return on investment (ROI) by lowering time required to request orders or service, etc. This is a rather generic example, but remember that one feature yields many advantages, and even more benefits. Customers care about how a product or service will benefit them more than the specifics of the product itself. If we shift our focus from the “product” to the “value of the benefits”, the sales channel will be much stronger.
Knowing the benefits and advantages is also crucial to a sales or marketing team that will carry out this plan. They need to know how to answer hard questions that the customer may have. By focusing on the product benefits and establishing a larger perception of value, the sales process becomes much easier. The problem with most startup companies is that their inward focus towards their features or uniqueness blinds them from what the customers want to see from a purchase. They could care less about a product feature as it’s described in a technical nature, but they can easily understand and relate to the benefits that they will inherit with a purchase of the product.
Nobody wins a price war. If your value proposition is that your product is the lowest price, that is not a good position. Either consumers will perceive that your product or service is missing something to be cheaper, or your competition will lower their prices to remain competitive with yours. It is important to remain cautious when marketing based on the lowest price. If you are an eye surgeon, advertising the cheapest Lasik vision correction in town is not going to be the best marketing strategy.
A good focus to have in your marketing plan is on the value the customer is going to gain from using your product or service. If you can demonstrate the value, you can have a more lucrative business and set a higher price for your product.
Take the popular Fitbit fitness tracking devices. They are incredibly cheap to make, but are sold for over $100 and enjoy an incredible sales volume. Customers are not looking at the price, they are looking at the added value of a physically fit lifestyle and the innovative appeal of the product.
As you draft the pricing section of your marketing plan, focus on the added value to the customer and set the price accordingly. You may always lower the price of a product if you need to, but increasing prices can often upset consumers. Start a little higher, but don’t go crazy and focus on how much value your buyer will receive. In an early chapter, we talked about a fitness program. We could price our fitness program at a high price per month, but explain that in the long run our program can save hundreds of thousands in medical costs. The anticipated value of the program is much higher than the cost to the consumer.
Are you going to go door to door selling your product or do you have another method of distributing the product to consumers? There are several different distribution models and depending on the industrial vertical, your distribution strategy can vary.
There are three primary distribution channels that we will explore in this section: Intensive Distribution, Selective Distribution, and Exclusive Distribution.
Intensive Distribution is a common model for products that are everyday basic supplies, foods, snacks, magazines, and soft drinks. In the intensive distribution model, your objective is to have your product as widely available and accessible as possible. This includes having your products in the majority of sales outlets.
The logistics of this model varies. Some retailers require you to purchase shelf space and others “set” the price they will purchase from you for distribution. Walmart is a large purchaser for businesses in intensive distribution and their model is to get your product for as low-cost as possible. The advantage is in the volume. You will make less per product, but with proper marketing, you will get strong profits in volume.
Selective Distribution is another model, but more for specialized products such as tools, appliances, and brands. An example would be a Kenmore washing machine, it is carried by selective dealers. The same applies for products like Valspar paints. Instead of focusing on a majority of outlets, selective distribution relies on a few resellers to carry their products. In my personal business experience, we utilized a portion of selective distribution, where we would interview and choose strategic business partners to promote and distribute our product. Some of this was determined by region, population, and market for our product in their geographical location.
Exclusive Distribution is a model where the company uses very few areas of distribution. Typically, in this distribution model, the retailer is restricted to sell any other companies product. This is common among luxury goods such as Gucci and the Cellular Companies like Verizon, Sprint, or AT&T, who restrict retailers to only sell their service and no others. This model works best for strong and easily recognized brands, with retailers that know the products will sustain their operations on their own without the ability to sell other products.
From my experience, most startups utilize selective distribution or begin with direct distribution. With direct distribution, the producer or the company is the primary retailer of their good or service. From direct distribution, they tend to expand into selective distribution with a few limited partners and grow into other channels depending on the product.
How are you going to promote your product? There are so many options that vary greatly. A few examples of popular marketing promotions include:
- Sales Events
- Direct Mail or E-Mail
- Press Releases
- Chamber Memberships
- Video Advertisement
- Radio Advertisement
- Online Advertisements
- Search Engine Optimization
This list could go on for days! As a start-up, you likely cannot afford all of them and different market segments respond to different things. Take a family 50’s diner for example. They have two different locations. After trying several different options, they found that for their one location, newspaper advertisements worked great, but not for their other location. Their other location, with a different geographical demographic, responded best to radio advertising.
Establish a budget for what you can afford for promotion and advertising. Reach out to a mentor or someone you can trust and get their opinion. It may take a few tries on your promotion strategy before you find the most effective medium.
As you look into promotion and advertising, think in terms of, “if this doesn’t work, what cost will be sunk.” Sunk costs are costs that cannot be recouped. If you are looking at a billboard strategy that will cost $6,000 for 6 months, how will that effect your business if it is not successful. You must take risks, but try to make the best decisions based on your product’s market and your budget. Cost also shouldn’t be a determining factor. If it costs more for a strategy that may be the most effective then go for it, but make sure you do not go bust from your efforts and try to project, within reason, what your efforts will produce.