Appendix A A Marketing Plan Outline o help you tie together all the material presented in this book, following is a suggested format for a marketing plan. The examples given of objectives and strategies, without timing and controls, were written by my marketing seminar participants. In these examples, the timing, or completion date, would be relegated to a time management chart and the controls, or costs, for each component included in the budget summary. Copyright © 2001. AMACOM. All rights reserved. T Section I: Strategic Position, Marketing Personnel, Fact Book Summary, and Major Marketing Objectives and Strategies Section II: Product/Service Plan Section III: Marketing Communications Plan Section IV: Research Plan Section V: Internet Plan Section VI: Customer Service Plan Section VII: Sales Management Plan Section VIII: Budget, Timing, Plans, and Action Plans Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 266 APPENDIX A Section I Strategic Position, Marketing Personnel, Fact Book Summary, and Major Marketing Objectives and Strategies A. Strategic Position 1. Relative profit potential of this market within the company. 2. Critique of company versus competition as to current status as well as ability to acquire the critical business strengths needed to become major player in this market. 3. Definition of strategic position (market share objective) and payout. B. Marketing Personnel Copyright © 2001. AMACOM. All rights reserved. 1. State which components of the business are involved in the marketing function. 2. If you employ an advertising agency, state its role in the preparation of the plan. 3. State the name of the planning leader for the plan, the members of the planning team, the individual responsible for keeping the Fact Book up to date, and the individuals responsible for monitoring the various sections of the plan to be sure the strategies are executed correctly and the objectives are met. C. Fact Book Summary 1. 2. 3. 4. Statement on market economics. Statement on marketing strength of competition. Definition of target audience. Delineation of company marketing strengths and weaknesses for competing in this market. D. Major Marketing Objectives 1. Gross sales and market share objectives. 2. Distribution and depth of line objectives. 3. New product/service introduction objectives. Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. APPENDIX A 267 4. Awareness, preference, and sales closure rate objectives. 5. Repeat purchase rate and volume/profit per purchase objectives. 6. Marketing budget and timing. Copyright © 2001. AMACOM. All rights reserved. E. Major Marketing Strategies 1. Positioning statement. Example: Position the brand as the only one with preprogrammed options, thus extending the use and value of the brand. The target is the numbers-oriented person (e.g., the engineer, aviator, accountant, or retailer). 2. Distribution strategy. Example: Position the brand among dealers as the most attractive service to the above-mentioned target, one that is not currently being reached by brands Able and Baker and thus not a duplication of inventory. Develop in-store merchandising units to demonstrate and allow consumer to ‘‘work’’ new model, thereby reinforcing brand difference at point-of-sale. 3. Communications strategy. Example: Thrust of marketing communications will be consumer ‘‘pull’’ rather than dealer ‘‘push.’’ Build brand awareness and recognition of brand difference with target consumer, first through specialized media and later through mass media. 4. Internet strategy. Example: Use Web site as a promotional tool, rather than a transactional one, due to technicality of brand and possible damage to existing lines of distribution. 5. Pricing strategy. Example: Price competitively with major competition. Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 268 APPENDIX A Section II Product/Service Plan A. Product/Service Plan Objectives 1. Set objectives for allocation of marketing dollars per brand, distribution, depth of line, packaging, pricing, awareness, preference, and repeat purchasing. 2. Examples a. Models 1040 and 1041 will receive 90 percent of marketing dollars due to higher profit margins. b. Increase the average price to $1,961 on models 1040 and 1041. c. Expand distribution among chains from 29 percent to 50 percent, among department stores from 50 percent to 75 percent, and among independents from 17 percent to 35 percent. d. Reduce packaging costs to $22.50 for chains, $20.25 for department stores, $15.50 for owned-and-operated (O/O), and $13.00 for independents. Copyright © 2001. AMACOM. All rights reserved. B. Product/Service Plan Strategies 1. Set one or more strategies for each objective. 2. Examples a. All advertising and sales promotion will feature models 1040 and 1041. In addition, sales force will receive double bonus points on these two models. b. Prices will be raised for O/Os and independents to $2,100, coupled with the company’s pledge for greater advertising support. Chain and department stores pricing will remain the same. c. Major expansion in distribution will be obtained through a 35 percent increase in the sales force and a 25 percent increase in the communications budget. d. The new technology of vacuum packaging developed last year by R&D will be used for all models within the next two years. Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. APPENDIX A 269 C. Product/Service Plans Copyright © 2001. AMACOM. All rights reserved. 1. Develop at least one plan for each above strategy. The plan states how you plan to execute the strategy. 2. Summarize the plan in the marketing plan and put the details in action plans. The action plan should include each step or task, who is responsible for each step or task, and the date by which each step or task has to be completed. If the strategy is to use trade shows to accomplish a certain objective, then the action plan should delineate each step necessary to execute the strategy, including selecting the shows, booking the space, designing the exhibit, and determining who will attend. Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 270 APPENDIX A Section III Marketing Communications Plan A. Marketing Communications Plan Objectives Copyright © 2001. AMACOM. All rights reserved. 1. Include objectives on advertising, sales promotion, and public relations. 2. Advertising Plan Examples a. Increase awareness of Ryan minicomputer from 30 percent to 50 percent among senior data processing professionals in companies with sales over $20 million. Increase association with major selling point (more data storage per dollar) from 25 percent to 40 percent. b. Among dealers of small computer systems, increase awareness of brand from 25 percent to 45 percent and association with major selling point from 15 percent to 30 percent. 3. Sales Promotion Plan Examples a. Demonstrate high-impact resistance of new housing on energy monitors to 300 design engineers. b. Reduce sales time necessary to educate purchasing agents on specifications of thermocoupler line from an average of ninety minutes to thirty minutes. c. Generate $50,000 in direct sales of replacement parts. d. Reduce the number of unqualified leads sent to the sales force by 50 percent. 4. Public Relations Plan Examples a. Placement of two major articles in general business or weekly news magazines. b. Placement of major article on new Series 100 line in every data processing publication. B. Marketing Communications Plan Strategies 1. Set one or more strategies for each above objective. 2. Advertising Plan Examples Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. APPENDIX A 271 Copyright © 2001. AMACOM. All rights reserved. a. Creative Strategy (1) Major benefit: more data storage per dollar. (2) Copy points: Competitively priced; offers twice the number of circuits per chip; supports 30 percent more sectors per track versus competition. b. Media Strategy (1) Reach 65 percent of senior data processing professionals in companies with sales over $20 million with a frequency of eight over a twelve-month period. (2) Concentrate all media dollars in the leading trade vertical magazine, adding second magazine in the field only if necessary to reach required reach. 3. Sales Promotion Plan Examples a. To demonstrate impact resistance of new housing, take space in July WESPLEX show and design exhibit offering prize to anyone cracking housing with sledgehammer. Publicize exhibit and prize by direct mail to design engineers. b. Review brochures on thermocoupler line to incorporate complete specifications and clear explanation of differences between each item in the line. c. To build direct sales program for replacement parts, start with list of customers with models three to five years old. Set up system of twenty-four-hour handling of orders. Create approach to stress this fast service, resulting in less downtime for customer. 4. Public Relations Plan Examples a. Use the lure of an exclusive sneak preview of Series 100 line and/or set up exclusive interview with CEO for major business/newsweekly article. b. Fly in editors of all data processing publications for preview of Series 100 three months before introduction in order to secure major coverage in their May editions. Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 272 APPENDIX A Section IV Research Plan A. Research Plan Objectives 1. Set objectives for methods you will use to measure: the effectiveness of your marketing plan; changes in the market; and new product/service development. 2. Examples a. Conduct a statistically projectable study of the target audience to obtain current levels on awareness, registration of selling message, preference, and intent to buy. b. Determine needs of the company’s customers and the current ranking of the company’s customer service department relative to competition. c. Determine two leading benefits of new model 707 to the aircraft instrumentation industry. Copyright © 2001. AMACOM. All rights reserved. B. Research Plan Strategies 1. Set one or more strategies for each of your objectives 2. Examples: a. Conduct a benchmark study of 300 members of the target audience with a standard deviation of 2 and a precision of plus or minus 3 to obtain effectiveness levels of marketing communciations. b. Have an independent company conduct a free seminar on customer service for marketing personnel of current and potential customers; during the seminar, elicit from the customers their own needs and their current observations on performance of their suppliers, including our company. Conduct six focus group sessions among purchasing agents in aviation instrumentation companies as a guide to determining major benefits of model 707. Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. APPENDIX A 273 Section V Internet Plan A. Internet Plan Objectives Copyright © 2001. AMACOM. All rights reserved. 1. There are many marketing aspects of your Web site that should be addressed in your marketing plan. You can either address them here in the Internet plan or in one of the other appropriate sections of your plan. Probably the most important marketing aspect of your overall Internet plan is building traffic, using conventional marketing tools. This can be addressed here or in your marketing communications plan. However, there are other factors you should consider. If it is a promotional site that produces sales leads, then how these leads are handled should either be here in your Internet plan, or in your sales plan. If it is a customer service site, coordinate this activity with your offline operation in your customer service plan. If it is a transaction site, you should coordinate this means of distribution with your offline distributors, retailers, etc. 2. Examples a. Obtain an average of 2,000 ‘‘click-ons’’ per month by the end of the sixth month and 9,000 for the plan year. b. Maintain current offline distribution coverage of 60 percent. B. Internet Plan Strategies 1. Set one or more for each objective. 2. Examples a. The Web site will be promoted in all ads and brochures. b. A three-part direct mail campaign will be sent to all listings in our database promoting the Web site. We will offer a red Jaguar convertible to the first customer who can decipher our new basic selling line from clues posted periodically on the site. c. Offline distributors will receive 10 percent of gross profit from all Internet sales made to customers in their distribution area. Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 274 APPENDIX A Section VI Customer Service Plan A. Customer Service Plan Objectives 1. Set objectives for the performance of customer service (e.g., effectiveness ranking within the industry, management involvement, marketing involvement, knowledge of product/service line, number of telephone rings before response, cost of handling returns, and expertise of technical personnel). 2. Examples a. Company will be ranked number one in the industry in customer service effectiveness within two years. b. All phones will be answered by the third ring. c. Customer service personnel will be knowledgeable in all company brands by August. Copyright © 2001. AMACOM. All rights reserved. B. Customer Service Plan Strategies 1. Set one or more strategies for each objective. 2. Examples a. All customer service personnel will be given a free weekend trip to either Disneyland or Disney World to permit them to observe the finest customer service organization in the world. b. An independent company will be commissioned to answer any customer service phone after three rings. The customer service department will be charged the complete cost, which will be deducted from customer service employees’ bonuses. c. All customer service personnel responsible for brand knowledge will have access to a computer database that will allow them to punch in a few numbers to bring up on the computer monitor any type of information on any brand sold by the company. Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. APPENDIX A 275 Section VII Sales Management Plan A. Sales Management Plan Objectives 1. Set objectives on subjects such as sales goals per product/ service line, sales closure rate, cost per sales call, number of sales calls per day, and sales training. 2. Examples a. Maintain current field force of twenty people on service A and increase sales from $910,113 to $995,000. b. Increase average sales closure rate from current 22 percent to 28 percent. c. Average 20 percent of sales force calls by field force on service B to frequent travelers to speed up penetration of this market. d. Increase division profitability by increasing sales of service C from 30 percent to 35 percent. Copyright © 2001. AMACOM. All rights reserved. B. Sales Management Plan Strategies 1. Set one or more strategies for each objective. 2. Examples a. Improve field sales force productivity on service A through a combination of efforts including: form home office unit with 1-800 telephone number lines to take over customer tracking and routine reorders and create a series of direct mail pieces to qualify inquiries before sending to field. b. To increase closure rate, a minimum of one-third of the entire sales force will be sent to a new one-week session on sales training that will incorporate a new concept of ‘‘town meeting’’ dialogue to improve each individual’s ability to close. c. To increase penetration of service C, hire ten new salespeople to work as a task force rolling out service as each new region is targeted. d. To increase proportion of sales of service C, create bonus compensation plan based on points awarded according to margins on various services. Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 276 APPENDIX A Section VIII Budgets, Timing, Plans, and Action Plans A. Budgets All objectives should be measurable to enable you to determine whether you meet them. That means they usually require a goal, a control, and timing or date. In the preceding pages there are several examples of objectives with goals. You can put the control (usually the amount of money to be spent) or the budget, in each objective, or you can put the control for each objective in summary form at the end of the plan. After you have approved goals and controls, monitor them each week to be sure you are on target. If you are off target sometime during the year, you have to change the goal or the control or alter the strategy. Copyright © 2001. AMACOM. All rights reserved. B. Timing Timing refers to the completion by which an objective must be achieved. Like controls, the timing can be inserted in each objective or can be summarized at the end of the plan. Like controls, timing has to be continuously monitored. C. Plans or tactics Plans or tactics are the execution of the strategies. They should be summarized in the marketing plan. After the complete marketing plan is approved, action plans should be written to provide the details. If you include all the details of executing a strategy in the marketing plan, you may be confronted with three possible problems: 1. You end up with a 50- to 200-page document that no one will read, and the plan just gathers dust on the shelf. 2. If the plan is not approved, you have wasted time developing all the details. 3. Using a separate action plan lets the people who will actually execute the plan decide for themselves how they should do it. Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. APPENDIX A 277 D. Action Plans An action plan contains the detailed execution of one or more strategies and should include at least three factors: 1. Each necessary step or task 2. Who will be responsible for accomplishing each step or task 3. The required completion date of each step or task Copyright © 2001. AMACOM. All rights reserved. For each marketing plan, you may have between five and twenty action plans. The sum of all your action plans is your milestone calendar or PERT chart. A milestone calendar keeps you on target relative to timing. A PERT chart determines which completion dates for certain steps or tasks are the most critical and have to be watched most closely. These critical steps or tasks are the ones that influence the beginning of another step or task. Keep your action plans in separate binders. Your Fact Book should also be in a separate binder. This will enable you to have a short, concise, operational marketing plan that you can refer to each week. If your marketing plan is not operational, the preparation is nothing more than an exercise. Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. Copyright © 2001. AMACOM. All rights reserved. Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. Appendix B Thirty-Eight Market Characteristics That Can Influence Profit Potential igure B-1 lists 38 market characteristics that can have a major impact on whether a particular market offers profit potential to a company. A description of each follows. The key phrase here is ‘‘profit potential.’’ These characteristics determine whether a market offers a business the potential to make good money. Even if a market scores favorably on this type of analysis, it doesn’t necessarily mean a participating business will succeed. In order to do so, it will also need the business strengths required in this market to become a major player. The market characteristics discussed here are not meant to form a complete list, but they should give you an idea of the things you should consider when determining whether a market or segment can become profitable to your company. The factors you select may not necessarily be the ones your competitors would use. For example, if the greatest strength, or basic thrust, of your corporation is manufacturing, the market characteristics you select Copyright © 2001. AMACOM. All rights reserved. F Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 280 APPENDIX B Figure B-1. Thirty-eight market characteristics that can influence profit potential. 1. Pricing sensitivity 21. Promotion costs (% of sales) 2. Captive customers 22. Social attitudes 3. Customer concentration 23. Environmental attitudes 4. Economies of scale 24. Raw materials availability 5. Barriers to entry 25. Sales costs (% of sales) 6. Regulatory exposure 26. Distribution costs 7. Ability to sell off the Internet 27. Customer relations costs 8. Ability to promote off the Internet 28. Service costs Copyright © 2001. AMACOM. All rights reserved. 9. Ability to handle customer relations off the Internet 29. Demand cyclicity 10. Ability to buy off the Internet 30. Demand seasonality 11. Foreign operations 31. Potential for functional substitution 12. Foreign investments 32. R&D costs (% of sales) 13 Opportunity to segment the market 33. Gross margins 14 Stage of the life cycle 34. Growth rate 15 Number of major competitors 35. Size of industry/segment 16. Level of technology 36. Need for capital 17. Value added (% of sales) 37. Aggressiveness of competition 18. Manufacturing costs (% of sales) 38. Trendiness 19. Investment intensity (% of sales) 20. Inventory (% of sales) to critique a market would be different from those chosen by a company whose basic thrust is marketing. Because the potential profitability of each market in which you participate should be judged by the same set of criteria, the final decision on which factors to use should be made by top management. None of these factors should be viewed separately. It is the sum of Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. APPENDIX B 281 Copyright © 2001. AMACOM. All rights reserved. the profit potentiality positives and negatives that count. For example, a company could be in a market that is insensitive to price (usually a positive ingredient for profit potentiality), but one that also contains many aggressive competitors (a negative ingredient). Consequently, the company could have a rough time becoming profitable. 1. Pricing Sensitivity. A market may be very sensitive to price increases or decreases, very insensitive, or somewhere in between these two extremes. In a market that is very sensitive to price, a price increase of 10 percent would result in a decrease in volume greater than the 10 percent. Conversely, a price cut of 10 percent would result in an increase in volume exceeding 10 percent. Examples of highly price-sensitive markets are industrial and consumer paper products, metals, and industrial chemicals. A market is considered insensitive to price if, say, a 10percent price cut results in a volume increase of less than 10 percent and, conversely, a 10-percent price increase causes a volume decrease of less than 10 percent. Examples of markets that are relatively insensitive to price are medical services and cigarettes. The question for you is which situation would be more profitable to your business. Usually companies would prefer to operate in markets that are insensitive to price, but if you are, or have the capability of becoming, the low-cost producer, then you may prefer a market where price sensitivity is high. 2. Captive Customers. Most companies would prefer to do business in a market where the customers are captive. That means that the customers don’t have much choice other than to buy from you. Microsoft has enjoyed this situation for years. Their operating systems run over 90 percent of all personal computers in the world. However, their enviable captive customer position may change in the near future due to the current federal and state antitrust suits they are now fighting, and the recent growth in popularity of the Linux operating system. Some of the large Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 282 APPENDIX B defense manufacturers also have a relatively captive customer in the United States government. If the federal government needs more nuclear submarines, aircraft carriers, or advanced aerospace technology, it has very few suppliers to choose from. Copyright © 2001. AMACOM. All rights reserved. 3. Customer Concentration. Customer concentration can be interpreted in many ways; two of them are geographical concentration and concentrated customer profile. When your customers are concentrated in a limited geographical area, it normally results in savings in activities such as distribution and selling expense. Customer-profile concentration can also lead to more efficient marketing. For example, Hewlett-Packard became a billion-dollar corporation by selling only to engineers. It was a case of engineers selling to engineers. Today, Hewlett-Packard has expanded into computers, printers, software, and hardware for e-commerce. 4. Economies of Scale. Economies of scale are applicable in some markets but not others. Where they are applicable, it means that as a company gets larger, its manufacturing, operations, and marketing costs per unit decrease. This concept was originally based on the learning curve, and in subsequent years on the experience curve. The premise behind the learning curve is that as employees keep doing a task over and over, they are able to do it more quickly. In addition, as volume increases, the individual tasks can become more specialized or limited in scope, which once again normally results in increased productivity. The experience curve is a broader conceptualization than the learning curve, and takes into account more factors than just employee learning and specialization. If a 10-million-ton oil refinery would cost $10 million, then a 20-million-ton refinery would not incur a construction cost of $20 million, but most likely around $15 million. If it takes 5,000 employees to run a 10-million-ton refinery, it would not take 10,000 to run a Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. Copyright © 2001. AMACOM. All rights reserved. APPENDIX B 283 20-million-ton facility. Once again, it probably would require only a 50 percent increase, or 7,500 employees. In addition, as companies get larger, they are able to hire better managers, not only because they can afford higher salaries, but also because they have a prestigious name. Which would you prefer, to be a manager at Dell or at some unknown computer hardware/software company? Larger companies usually are able to negotiate a better price from suppliers just through the sheer volume of their purchases. All these factors are components of the experience curve. The premise behind the experience curve is that every time you double your volume, you experience the same percentage savings in costs, measured in real dollars. You can determine the slope of the experience curve or costsavings percentage by plotting on logarithm/logarithm paper the historical relationships between costs (in real dollars) and quantity produced, from year one to the present. Some industries or markets, such as random-access computer chips, realize a very steep slope. The question you have to ask yourself is whether or not your company can be profitable in a market where economies of scale or the experience curve is operative. Many Japanese manufacturing companies are masters at what is referred to as ‘‘pushing the experience curve.’’ What they do is go for volume by pricing their product very low. Sometimes the price is even below their cost. By so doing, they push themselves down the experience curve, taking advantage of the cost savings each time they double their volume. They eventually get their cost down so low that they are then able to price their product at a level below competitors’ costs, and still have sufficient margins to earn a respectable profit. In such a situation, competitors have no other choice but to close their doors. This is the way the Japanese have destroyed several American industries, including motorbikes, consumer electronics, and ball bearings. Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 284 APPENDIX B Copyright © 2001. AMACOM. All rights reserved. 5. Barriers to Entry. Companies with capital muscle usually prefer markets that have high barriers to entry. What that means is that it costs a lot of money to get into the market. If you are in a market that has high barriers to entry and you are doing well, it is more difficult for new competitors to enter. Conversely, companies with limited capital would prefer markets with low barriers to entry, although this does mean that if they are successful, it is much easier for competitors to enter. Exit barriers should also be taken into account. There is a strip-mining company that would like to close its doors because it is losing millions of dollars each year. However, the day it stops operations, it has to go back and refurbish the landscape as prescribed by federal regulations. It doesn’t have enough capital to cover this expense, so it is stuck in a market it would prefer leaving. Industries such as steel, aluminum, and automobiles have high barriers to entry, whereas many of the service companies, such as real estate brokers, distributors, jobbers, manufacturers’ representatives, and consulting firms, operate in markets with very low entrance barriers. 6. Regulatory Exposure. Most companies would prefer markets or industries with little or no regulatory exposure. Examples of markets that would receive a negative score on this factor are nuclear power, public utilities, shipping, and federal defense contractors. 7. Ability to Sell off the Internet. In markets where brand characteristics are viable for selling off the Internet, you can possibly extend your distribution at a relatively small cost. Where in the past, customers may have been required to either go to your store, contact a distributor or retailer, or negotiate with your sales force, now they could complete the sales transaction on the Web. However, to successfully use this vehicle, you have to be noticed on the Web, which can be difficult. Also, if you are Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. APPENDIX B 285 not up to speed in using Web technology, and your competitors are, this market trait could be a major negative for you. Copyright © 2001. AMACOM. All rights reserved. 8. Ability to Promote off the Internet. If you can promote your brand on the Internet, it could possibly reduce your overall marketing costs. For example, you could present your brochures and sales literature on your Web site, which would save printing costs. A Web site could also replace other marketing expenses such as advertising in trade magazines and on radio and television. Once again, however, you have to drive traffic to your Web site for it to be effective, and that may take more advertising expenditures than you are currently spending in nonInternet media. 9. Ability to Handle Customer Relations off the Internet. Handling customer service by telephone representatives has not worked well for many companies. The problem is that many times customers have to wait an extended period of time to be connected, and even after this occurs, they may be transferred several times to other representatives. Oftentimes in the end, no answer or solution to the customer’s inquiry is reached. Therefore, in markets where customer service inquiries can be resolved on the Internet, this can result in improved customer relations and a substantial savings in customer service costs. For example, if in the past you used Federal Express for distributing your merchandise, you would have to call a toll-free number for tracking. Today, you just go to their Web site. It saves you time as well as saving Federal Express millions of dollars in lower customer service costs. 10. Ability to Buy off the Internet. In markets where you can purchase your supplies off the Internet you can engage suppliers from around the world. 11. Foreign Operations. Companies with international expertise would welcome markets that require foreign operations, Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 286 APPENDIX B whereas smaller companies that currently have only domestic operations would view this as a negative. Also to be considered is the fact that many markets that are mature in the United States are growth industries overseas. Considering that growth markets are usually more profitable than mature markets, this could be an important factor. (See Factor 14.) Copyright © 2001. AMACOM. All rights reserved. 12. Foreign Investments. The distinction between foreign investments and foreign operations is that in foreign investments, the company has a nonoperating relationship with a foreign company. Examples would be selling your patent rights to companies offshore or purchasing part ownership in a foreign corporation that would assure you a supply of critical parts or services. 13. Opportunity to Segment the Market. Normally, the opportunity to segment is a positive market characteristic relative to profitability. In years past, Schlitz was the number-one selling beer and Anheuser-Busch’s market share was only about 20 percent. Today, Anheuser-Busch’s market share is approximately 48 percent, and Schlitz, where it is still sold, is only a price beer. (A price beer is one that is priced lower than major brands, and sells only due to its low price.) The major reason for the rise of one and the fall of the other is segmentation. Anheuser-Busch did and Schlitz did not. Anheuser-Busch segmented the market with such brands as Bud Light, Busch, Michelob, and LA. Conversely, if you are in a market where a nail is a nail is a nail— which means there is limited opportunity to introduce new models, sizes, shapes, brand names, and so on—then this would be considered a negative. 14. Stage of the Life Cycle. If they had their choice, most companies would prefer participating in markets that are in the growth stage of the industry life cycle. All industries go through four basic stages. When industries first come on the scene, they are said to be in the embryonic or introductory stage, such as ge- Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. Copyright © 2001. AMACOM. All rights reserved. APPENDIX B 287 nome therapeutics. The embryonic industries that are fortunate to be winners kick into what is referred to as the growth stage, such as cellular communications. This is the period of maximum annual growth—substantially higher than the growth in the Gross National Product (GNP). Eventually, all industries cool off and enter the mature stage, in which there is little or no growth. An example would be life insurance. Finally, industries inevitably are replaced by new technology and fall into decline, such as vacuum tube manufacturers. Most companies would prefer operating in growth industries, because during the growth period you can increase your share of market without taking business directly away from competitors. Your competitors could be increasing their sales and feeling happy while, unknown to them, you are gaining market share because your sales are increasing at a faster rate. The embryonic or introductory stage normally is the second choice, especially if the company believes it will be a winner. The third choice usually is mature industries because products or services are less distinct between competitors. Essentially, they are commodities. In addition, the only way a company can increase its share of market is to take business directly away from competitors, which could mean a real dogfight. The fourth choice would be declining industries. 15. Number of Major Competitors. Most businesses would prefer an industry or market with relatively few competitors, because it is easier to estimate their reaction to your own business strategies. If you are in a market with just two or three competitors, and you are considering increasing your price, you should be in a relatively good position to ascertain which competitors will follow. The problem with doing business in a market with many competitors or in a fragmented market is that it is virtually impossible to read competitors’ reactions to your plans and programs. Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 288 APPENDIX B 16. Level of Technology. There are three broad stages of technology: evolving, stable, and revolutionary. Most companies prefer an evolving technology because it permits new products and services, and the market is normally in a growth stage. Revolutionary technology can be a negative because by the time you get your product or service to market, it could be replaced or outdated by competitive brands. A stable technology is usually the middle choice between evolving and revolutionary. Computer software, telecommunications, and banking may represent evolving technology; biotechnology and the Internet represent revolutionary; and automobiles and insurance represent stable. Copyright © 2001. AMACOM. All rights reserved. 17. Value Added (Percentage of Sales). In most instances, high value added results in high profit. If a company pays $100 per unit for raw materials, fashions the components into a complex machine, and then sells it for $1,000, the value added is 90 percent of sales. Compare that with a distributor, who purchases the machine for $1,000 and sells it to a jobber, retailer, or end user for $1,200. The distributor is experiencing a value added equal to only 20 percent of sales. Everything else being equal, the manufacturer has a much greater opportunity than the distributor to obtain a large gross profit. (Gross profit is defined as the difference between the selling price and the cost of goods.) 18. Manufacturing Costs (Percentage of Sales). High manufacturing costs could be a positive indicator for profitability to some businesses, and a negative one to others. If a company’s basic thrust is manufacturing, and it is or can become the low-cost producer through pushing the experience curve, or the effective use of automation, robotics, and the like, then high manufacturing costs could be an incentive for market entry. Conversely, undercapitalized businesses or those that have let their plant and equipment deteriorate would have a severe problem competing. 19. Investment Intensity (Percentage of Sales). High investment intensity drives down return on investment. Return on investMarketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. APPENDIX B 289 Copyright © 2001. AMACOM. All rights reserved. ment (ROI) is calculated by dividing the net profit of a business by the total investment in that activity. If a market demands large investments in plant and equipment, then the denominator will be very large and will necessitate a large numerator or profit to yield a decent ROI. The main incentive for participating in markets that are investment-intensive is that productivity should also be high. Unlike investment intensity, the higher the productivity rate, the more profitable the operation. Therefore, high investment intensity is not necessarily a negative as long as you have high productivity. The businesses that get themselves in trouble are those that have a high investment with little or no increase in productivity. 20. Inventory (Percentage of Sales). The lower the inventory, as measured as a percentage of sales, the greater the profit. This is the reason for the development of ‘‘just in time’’ delivery, which was pioneered by the Japanese. Today, the winner is Dell Computer, which carries no inventory. Each computer is made to order by suppliers and then shipped to the customer. Unlike distributors, jobbers and manufacturers’ representatives do not take title to the manufacturers’ merchandise they sell nor do they keep an inventory. Therefore, although they, like distributors, have a low value added (which is a negative profitability factor), they have little or no inventory costs, which has a positive effect on profitability. To be successful in a market that demands extensive inventory, you have to be able to obtain high profit margins per unit, or turn over the inventory several times during the year. For example, a grocery supermarket has high inventory costs and low margins, but it can be profitable if it is able to turn over its inventory many times during the year. The petroleum industry has a different situation. In this market, inventory costs are excessive and turnover is slow. Therefore, to be successful, very high margins per unit are required. Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 290 APPENDIX B 21. Promotion Costs (Percentage of Sales). Because promotion costs are an expenditure, the higher the promotion costs, the lower the profit. However, as with so many of these market characteristics, what may be a negative for one company could be a positive for another. Procter & Gamble experiences high promotion costs in practically every market in which it competes. However, because it does such an excellent job in the creation of its commercials, it obtains much more customer impact per promotional dollar than the competition. The result has been good earnings year after year. Nevertheless, these earnings could be even greater if the company was in at least some markets where promotion costs were not so prohibitive. The market situation to be wary of is one that requires high investment intensity, high inventory, and high promotion costs. This leaves very few dollars for other expenditures and profit. Copyright © 2001. AMACOM. All rights reserved. 22. Social Attitudes. Everything else being equal, it would be easier to market solar energy than nuclear energy, health foods than cigarettes, and computers than guided missiles. Don’t underestimate the power of social attitudes and their possible effect on taxation, tariffs, and employment desirability. 23. Environmental Attitudes. Environmental attitudes are similar to social attitudes. The bottom line of businesses in mining, chemicals, petroleum, forestry, automobiles, and many manufacturing activities is greatly affected by environmental attitudes. The automobile industry spent millions of dollars to develop and manufacture smaller cars in order to meet the federal requirements on miles per gallon of gasoline. Even so, it appears that they will suffer heavy fines in the years ahead because the American public is once again buying larger cars such as SUV’s. 24. Raw Materials Availability. Guaranteeing raw materials availability sometimes necessitates vertical integration. That means that if you are a manufacturer, you may have to become your Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. APPENDIX B 291 own supplier or buy the companies that are currently providing the raw materials. IBM originally got into the computer chip business just to guarantee supplies for their computer hardware. It was a smart move. Not only did it guarantee supplies, but today they sell their chips to many other computer hardware companies at a profit. If you are in a similar situation, but undercapitalized, you could be at the mercy of your suppliers. Copyright © 2001. AMACOM. All rights reserved. 25. Sales Costs (Percentage of Sales). The average cost of a sales presentation today is somewhere between $400 and $600. That is an average, which means that some industries or markets have a much lower sales cost, and others have one that is much higher. Doing business in a market where you can sell by telemarketing or over the Internet has a strong advantage over operating in marketplaces where the sales force incurs airfare, hotel, and meal expenditures. 26. Distribution Costs. If you were a distributor, you probably would prefer markets that have high distribution costs, and if you were a manufacturer, you would opt for low distribution costs. Why manufacturers would prefer low distribution costs is readily apparent, but why most distributors should select markets with high distribution costs may be questioned. A distributor in New Jersey had always put emphasis on markets that had low distribution costs until I suggested that the company do just the opposite. The reasoning is simple: If distribution costs are low in a market, it usually means that the distributors do not provide many services or much value. Consequently, they can be easily replaced. Conversely, markets with high distribution costs reflect many distributor activities that greatly enhance the distributor’s importance. In addition, there is more room for the distributor to cut his costs. 27. Customer Relations Costs. Markets with high customer relations costs are usually a negative for any business. High costs in this area usually mean that the brand is either not of the highest Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 292 APPENDIX B quality, or is highly technical. In either case, the interface with the customer is performed by employees who normally lack the ability to satisfy the customer. Invariably it’s a no win situation, unless you are a master like the staff at Disney theme parks. 28. Service Costs. High service costs, such as sending technicians out into the field to fix what you sell, is invariably a negative. Customers appreciate the service, but rarely appreciate the charge. Copyright © 2001. AMACOM. All rights reserved. 29. Demand Cyclicity. Demanding cyclicity is a negative. Automobiles, defense, metals, and construction are cyclical industries. Food, banking, medicine, and law are not. Simple logic tells you that if you have a few good years followed by a few bad years, you have to make considerably more during the good years to equal the profitability of a business that does not experience cyclicity. Some corporations look for counter-cycle markets to balance out their businesses in cyclical markets. For example, when the economy is sick, real estate and machine tools are down, and liquor, movies, and discount merchandising are up. 30. Demand Seasonality. Demanding seasonality is similar to demanding cyclicity, except that the demand fluctuates within a twelve-month period. Soft drinks, ice cream, skiing, and Christmas trees are seasonal. In the ski industry, if a ski resort operator doesn’t have substantial ski lift sales volume during the twoweek Christmas holiday and the one-week spring school break, the best she can do, even if there are great snow conditions the rest of the season, is break even. As with cyclicity, seasonality is considered a negative. 31. Potential for Functional Substitution. There is usually a greater opportunity for functional substitution in mature markets than in growth industries. Functional substitution is where a brand from another industry can be a substitute. For example, a snow shovel can be a substitute for a snow blower. This is another Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. APPENDIX B 293 reason growth industries are preferred over mature markets. However, you can have a brand in a mature market in which many people believe there is no substitute, such as Häagen-Dazs ice cream. 32. R&D Costs (Percentage of Sales). The fact that a market necessitates great R&D efforts is a negative in itself, because this is an expenditure. However, if your company thrives on R&D and you believe that you can do it better than the competition, as Boeing and Citibank did, then this could be a positive. When sales of new products/services account for a large percentage of total sales, it is a very strong positive factor in profitability, but developing this situation usually means high R&D expenditures, which is a negative. Copyright © 2001. AMACOM. All rights reserved. 33. Gross Margins. This one is self-explanatory. Markets with high gross margins are obviously preferable to markets with low margins. The only possible negative is that markets with high margins invite competition. 34. Growth Rate. As with gross margins, markets with a high growth rate are normally preferred to markets with low or negative growth experience. As previously stated, it’s much easier to increase your share of market in a growth market than in a mature market. However, a high growth rate does not necessarily mean high current profits. Normally, during the growth stage, high expenditures are required to stay competitive, but a high share in a growth market should eventually lead to high profitability. Notwithstanding the preceding, you may want to put a cap on your preferred growth rate. For example, some companies do not want to participate in markets that are growing at a rate faster than, say, 10 percent because they simply can’t handle it. They may also get beaten up by a competitor that is better capitalized, such as Microsoft. 35. Size of Industry/Segment. The ideal size of an industry or segment will vary from business to business. The ideal marketplace Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 294 APPENDIX B for IBM would be many times larger than the ideal marketplace for a new computer manufacturer. You normally want to be in a market or a segment in which you can become a major player. Experience indicates that when a market or segment reaches maturity, only three businesses will remain profitable, and in order for the smallest of the three to be successful, its share of market has to be at least 25 percent of the market leader’s share. 36. Need for Capital. If you have limited capital available, you do not want to fight your battles in a market where competitors are owned by huge conglomerates. Minnetonka Corporation in Minnetonka, Minnesota, had a very successful introduction of its new product, Soft Soap. The only problem was that it was too successful too fast. Procter & Gamble, the king of soaps, witnessed this rapid sales increase, and decided that it ought to get into the market. In a short period of time, it practically blew Minnetonka Corp.’s product out of the stores. Copyright © 2001. AMACOM. All rights reserved. 37. Aggressiveness of Competition. Even though Netscape had been aggressive in developing its Internet browser, the company could not compete with Microsoft. It is normally wise to stay away from markets that have competitors that act like Microsoft, General Electric, Citibank, and Procter & Gamble, because they may eventually eat your lunch. 38. Trendiness. Trendiness in a market is not a favorable attribute, because it is almost impossible to constantly predict the next trend. Many toy and clothing companies and restaurants have gone under due to this factor. Even Mattel is struggling. Of course, there are exceptions, like The Gap. But there are so many other common detriments to making money in a market, why pick one where your complete line of merchandise can go out of favor overnight? Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. Appendix C Explanation of the What-If Sales Model marvelous tool for tying all your marketing factors or variables together is the ‘‘what-if’’ model. A what-if model allows you to calculate one or more major objectives, such as sales revenue and resulting market share based on the performance of various market variables. The objectives go at the end of the model, and all the market variables that you believe will influence these objectives are inserted in front of them. You then develop mathematical equations that indicate how the various market factors interact with the objectives. If you structure the model correctly, obtaining the market variables you use in your model should deliver the resulting objectives. The objectives used in this model for a hypothetical business are sales volume and market share. Some examples of the market variables used are size of market, awareness of your product or service, level of distribution, sales closure rate, and the percentage of customers that make repeat purchases. You can keep making changes in the variables you control until you obtain the desired volume and share figures. Then when you write your Copyright © 2001. AMACOM. All rights reserved. A Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. Copyright © 2001. AMACOM. All rights reserved. 296 APPENDIX C marketing plan, you insert the level of the various variables and include marketing strategies and plans on how to reach them. If your strategies and plans work as predicted, you will obtain your volume and share numbers. However, if you subsequently believe you cannot reach the levels needed in the model, then you have to go back to the model and change the variables to levels you can reach. Installing a what-if model on a computer enables you, by the use of simple formulas, to make changes in the variables, and then review the automatically calculated revisions in the objectives. See Figure C-1, which is the same as Figure 9-3 in Chapter Nine. Notice that the formulas are simple addition and multiplication. However, if you are not into computers, you can use a calculator or keep asking ‘‘what if’’ with a pencil and sheet of paper. You don’t need models or other types of mathematical equations to develop an effective marketing plan, but as mentioned above, it can be very helpful. In addition, you should have some method to determine how a change in one market variable will influence others, and once again, a model could be beneficial. This will be illustrated below. Two plans are used in the model to show the interplay of the variables. Only two relatively minor revisions have been made in Plan 2 versus Plan 1, but the results are significant. There is a 41 percent increase in sales. The two variables are the sales closure rate or conversion awareness to trial and percent triers customers repeating once. The sales closure rate is increased from 28 percent in Plan 1 to 33 percent in Plan Figure C-1. Mathematics of a ‘‘what if’’ model for projecting market share. Market X Awareness X Conversion X Distribution = Trial + Repeats = Purchases X Units/Price = Sales / Market = Market Share Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. APPENDIX C 297 Copyright © 2001. AMACOM. All rights reserved. 2, and the percent triers repeating once is increased from 40 percent in Plan 1 to 50 percent in Plan 2. That is the beauty of a what-if model. You keep asking, ‘‘Can I do this, can I do that, and if I can, how does it affect my sales?’’ Putting the model together is quite simple, as will be shown, but if you are interested in purchasing the model ready for use, e-mail me at wml@wml-market ing.com. The model consists of four sections or ranges as shown on charts that are titled Figures C-2 to C-5 for Plan 1 and C-2A to C-5A for Plan 2. The market variables are shown at the tops of the charts or as column headings. The other column headings refer to the calculations resulting from the interplay of the variables. The four ranges are as follows: FIGURE RANGE TITLE C-2 & C-2A One Trial Transactions C-3 & C-3A Two Repeat Purchases C-4 & C-4A Three Unit & Dollar Volume C-5 & C-5A Four Share of Market Figures C-2 & C-2A— Range One: Trial Transactions here are four marketing variables involved. The first is ‘‘A. Total Number of Potential Buyers.’’ This is shown at the top of the chart, and is the total number of potential buyers in your market for the type of brand you and your competitors sell. Fifty thousand is shown for both Plan 1 and 2. The second is ‘‘B. Conversion Awareness to Trial.’’ This one is also at the top of the chart, and is the percentage of the potential buyers who become aware of your brand, and who you believe will subsequently purchase it. Twenty-eight percent is shown for Plan 1 and 33 T Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. Copyright © 2001. AMACOM. All rights reserved. 298 APPENDIX C percent for Plan 2. Variable three, ‘‘C. Potential Buyers Aware,’’ is in column C. It is the percentage of potential buyers that you expect to become aware of your brand over a period of time. The anticipated levels for this variable show the awareness climbing to 61 percent by the end of the third year for both plans. Variable four is ‘‘F. Distribution,’’ and is shown in column F. Distribution is the percentage of your market in which the potential customer can easily and conveniently buy what you sell. If your store or sales force covers 50 percent of the territory, you have a 50 percent distribution level. The distribution level shown here increases to 66 percent by the end of the third year for both plans. To calculate the number of potential customers who become aware of the brand for Plan 1, you multiply variable ‘‘A. Total Number of Potential Buyers’’ by variable ‘‘C. Potential Buyers Aware.’’ The answers are in column ‘‘D. Newly Aware.’’ At the end of 36 months, 30,500 potential buyers have become aware of the brand, as shown in column ‘‘E. Cumulative Aware.’’ To calculate the number of buyers who will try the brand, you multiply column ‘‘D. Newly Aware’’ by variable ‘‘B. Conversion Awareness to Trial,’’ and the resulting answer by variable ‘‘F. Distribution,’’ as shown in column F. For example, during the first month in Plan 1, 1,500 potential customers become aware of the product (column D), of whom it is estimated that 28 percent (variable B) will try the brand. If the company had 100 percent distribution, that would mean that 420 customers would purchase (1,500 times 28 percent). However, the company has only 20 percent distribution at this time, so you have to multiply 420 by 20 percent, which gives you 84 buyers for the first month as shown in column ‘‘G. New Trial.’’ For the 36-month period, 4,220 customers will purchase as shown in column ‘‘H. Cumulative Trial,’’ which is 8.4 percent of the market as shown in Column ‘‘I. Potential Buyers Trying.’’ As mentioned, only one variable has been changed in Plan 2 as shown on Figure C-2A. The sales closure rate (B) has been increased from 28 percent in Plan 1 to 33 percent in Plan 2. This increases the total number of customer buying at the end of 36 months from 4,220 in Plan 1 to 4,973 in Plan 2. This is an 18 percent increase. In addition, Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. APPENDIX C 299 Figure C-2. ‘‘What if’’ model for projecting market share (trial transactions). Copyright © 2001. AMACOM. All rights reserved. A. Total Number Potential Buyers: 50,000 B. Sales Closure Rate: 28% Trial **************** ************Aware *************** ***** C. D. E. F. G. H. I. Potential Newly Cumulative Distribution New Cumulative Potential Buyers Aware Aware Aware Trial Trial Buyers Month % % Trying 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 0% 3% 6% 10% 13% 16% 19% 22% 25% 28% 31% 34% 37% 38% 39% 40% 41% 42% 43% 44% 45% 46% 47% 48% 49% 50% 51% 52% 53% 54% 55% 56% 57% 58% 59% 60% 61% 0 1,500 1,500 2,000 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 500 0 1,500 3,000 5,000 6,500 8,000 9,500 11,000 12,500 14,000 15,500 17,000 18,500 19,000 19,500 20,000 20,500 21,000 21,500 22,000 22,500 23,000 23,500 24,000 24,500 25,000 25,500 26,000 26,500 27,000 27,500 28,000 28,500 29,000 29,500 30,000 30,500 10% 20% 25% 29% 33% 36% 39% 42% 45% 48% 51% 54% 57% 58% 59% 60% 61% 62% 63% 64% 65% 66% 66% 66% 66% 66% 66% 66% 66% 66% 66% 66% 66% 66% 66% 66% 66% 0 84 105 162 139 151 164 176 189 202 214 227 239 81 83 84 85 87 88 90 91 92 92 92 92 92 92 92 92 92 92 92 92 92 92 92 92 0 84 189 351 490 641 805 981 1,170 1,372 1,586 1,813 2,052 2,134 2,216 2,300 2,386 2,472 2,561 2,650 2,741 2,834 2,926 3,018 3,111 3,203 3,296 3,388 3,480 3,573 3,665 3,758 3,850 3,942 4,035 4,127 4,220 Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 0% 0% 0% 1% 1% 1% 2% 2% 2% 3% 3% 4% 4% 4% 4% 5% 5% 5% 5% 5% 5% 6% 6% 6% 6% 6% 7% 7% 7% 7% 7% 8% 8% 8% 8% 8% 8% 300 APPENDIX C Copyright © 2001. AMACOM. All rights reserved. Figure C-2A. Plan 2: ‘‘What if’’ model for projecting market share (trial transactions). A. Total Number Potential Buyers: 50,000 B. Sales Closure Rate: 33% ********* Aware *************** **************Trial************ C. D. E. F. G. H. I. Potential Newly Cumulative Distribution New Cumulative Potential Buyers Aware Aware Aware Trial Trial Buyers Month % % Trying 0 0% 0 0 10% 0 0 0% 1 3% 1,500 1,500 20% 99 99 0% 2 6% 1,500 3,000 25% 124 223 0% 3 10% 2,000 5,000 29% 191 414 1% 4 13% 1,500 6,500 33% 163 578 1% 5 16% 1,500 8,000 36% 178 756 2% 6 19% 1,500 9,500 39% 193 949 2% 7 22% 1,500 11,000 42% 208 1,157 2% 8 25% 1,500 12,500 45% 223 1,379 3% 9 28% 1,500 14,000 48% 238 1,617 3% 10 31% 1,500 15,500 51% 252 1,869 4% 11 34% 1,500 17,000 54% 267 2,137 4% 12 37% 1,500 18,500 57% 282 2,419 5% 13 38% 500 19,000 58% 96 2,515 5% 14 39% 500 19,500 59% 97 2,612 5% 15 40% 500 20,000 60% 99 2,711 5% 16 41% 500 20,500 61% 101 2,812 6% 17 42% 500 21,000 62% 102 2,914 6% 18 43% 500 21,500 63% 104 3,018 6% 19 44% 500 22,000 64% 106 3,123 6% 20 45% 500 22,500 65% 107 3,231 6% 21 46% 500 23,000 66% 109 3,340 7% 22 47% 500 23,500 66% 109 3,449 7% 23 48% 500 24,000 66% 109 3,557 7% 24 49% 500 24,500 66% 109 3,666 7% 25 50% 500 25,000 66% 109 3,775 8% 26 51% 500 25,500 66% 109 3,884 8% 27 52% 500 26,000 66% 109 3,993 8% 28 53% 500 26,500 66% 109 4,102 8% 29 54% 500 27,000 66% 109 4,211 8% 30 55% 500 27,500 66% 109 4,320 9% 31 56% 500 28,000 66% 109 4,429 9% 32 57% 500 28,500 66% 109 4,538 9% 33 58% 500 29,000 66% 109 4,646 9% 34 59% 500 29,500 66% 109 4,755 10% 35 60% 500 30,000 66% 109 4,864 10% 61% 500 30,500 66% 109 4,973 10% 36 Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. APPENDIX C 301 when you increase the sales closure rate, almost all the dollars from the increased sales go right down to the bottom line. The major tool for increasing the sales closure rate is additional sales training, which is a relatively low expenditure. Figures C-3 & C-3A— Range Two: Repeat Purchases f you have a brand that the buyer purchases only once, you would skip this part of the model. The first variable is ‘‘J. Average Repeat Purchase Cycle.’’ This is the amount of time a buyer stays out of the market in between purchases. That could be a week for coffee, six months for a suit, or two years for a computer. Two months is the figure used in the model. The second variable is ‘‘K. Percentage Triers Repeat Once.’’ This is the percentage of those buyers that tried the brand, and that you expect will make a second or repeat purchase. For Plan 1, 40 percent is used in the model. The third variable, ‘‘L. Percent Triers Repeat Twice,’’ is the percentage that repeated once, and that you expect to repeat a second time. The fourth variable, ‘‘M. Percent Repeat Continuously,’’ is the percentage that repeated twice, and that you expect to continue to repurchase. For Plan 1, 60 percent are expected to repeat twice, and 70 percent three and more times. Obviously, these repeat rates determine whether your brand will be a success or failure. Measuring repeat purchase rates not only provides you with a strong indication of the level of future sales, but also tells you whether or not your service or product lives up to the promise made in your promotional campaign. Continuing with Plan 1, column N in this range is titled ‘‘N. New Triers,’’ and the numbers shown are picked up from range one. Column O is titled ‘‘O. First Repeat,’’ and the numbers shown are calculated by multiplying the number of new triers by the percentage indicated for variable ‘‘K. Percentage Triers Repeat Once.’’ This rate of 40 percent is multiplied by the 84 new triers shown in column N for the first month. Copyright © 2001. AMACOM. All rights reserved. I (text continues on page 304) Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 302 APPENDIX C Figure C-3. Plan 1: ‘‘What if’’ model for projecting market share (repeat purchases). Average Repeat Purchase Cycle (months): 2 Percent Triers Repeat Once (%): 40.00% Percent Triers Repeat Twice (%): 60.00% Percent Repeat Continuously (%): 70.00% N. O. P. Q. R. S. New First Second Cumulative Repeat Total Triers Repeat Repeat Second Contin. Repeat Month Repeat Copyright © 2001. AMACOM. All rights reserved. J. K. L. M. 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Total 0 84 105 162 139 151 164 176 189 202 214 227 239 81 83 84 85 87 88 90 91 92 92 92 92 92 92 92 92 92 92 92 92 92 92 92 92 4,220 0 34 42 65 55 60 66 71 76 81 86 91 96 32 33 34 34 35 35 36 36 37 37 37 37 37 37 37 37 37 37 37 37 37 37 1,614 0 0 20 25 39 33 36 39 42 45 48 51 54 57 19 20 20 20 21 21 22 22 22 22 22 22 22 22 22 22 22 22 22 22 924 0 0 0 0 0 20 45 84 118 154 193 236 281 329 381 435 493 512 532 552 573 593 615 636 658 680 702 724 747 769 791 813 835 857 880 902 924 0 0 0 0 0 0 14 32 59 82 108 135 165 197 230 266 305 345 358 372 386 401 415 430 445 461 476 492 507 523 538 554 569 585 600 616 10,666 0 0 0 34 42 85 81 114 131 166 197 231 266 304 344 317 357 358 399 413 428 443 458 474 489 504 520 535 551 566 582 597 613 628 644 659 675 13,204 T. U. Total Repeat Transactions % Total 0 84 105 196 181 236 244 290 320 367 411 457 506 385 426 401 442 444 487 503 519 536 551 566 581 597 612 628 643 659 674 690 705 721 736 752 767 17,424 Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 76% APPENDIX C 303 Figure C-3A. Plan 2: ‘‘What if’’ model for projecting market share (repeat purchase). J. K. L. M. Average Repeat Purchase Cycle (months): Percent Triers Repeat Once (%): Percent Triers Repeat Twice (%): Percent Repeat Continuously (%): Copyright © 2001. AMACOM. All rights reserved. N. New Triers Month 0 0 1 99 2 124 3 191 4 163 5 178 6 193 7 208 8 223 9 238 10 252 11 267 12 282 13 96 14 97 15 99 16 101 17 102 18 104 19 106 20 107 21 109 22 109 23 109 24 109 25 109 26 109 27 109 28 109 29 109 30 109 31 109 32 109 33 109 34 109 35 109 109 36 Total 4,973 2 50.00% 60.00% 70.00% Q. U. T. S. R. P. O. Repeat Total Total Repeat First Second Cumulative Second Continously Repeat Transactions % Total Repeat Repeat Repeat 0 0 0 0 0 0 99 0 0 0 0 124 50 0 0 0 50 241 62 0 0 0 62 225 96 30 30 0 125 304 82 37 67 0 119 312 89 57 124 21 167 375 97 49 173 47 192 415 104 53 227 87 244 482 111 58 285 121 291 543 119 62 347 159 340 607 126 67 414 199 392 674 134 71 485 243 448 544 141 76 561 290 506 604 48 80 641 340 468 567 49 85 726 393 526 627 50 29 754 449 527 629 50 29 784 508 587 691 51 30 813 528 609 715 52 30 843 549 631 738 53 31 874 569 653 762 54 31 905 590 675 784 54 32 937 612 698 807 54 32 969 634 720 829 54 33 1002 656 743 852 54 33 1035 678 766 874 54 33 1067 701 788 897 54 33 1100 724 811 920 54 33 1133 747 834 943 54 33 1165 770 857 966 54 33 1198 793 880 989 54 33 1231 816 903 1,012 54 33 1263 839 926 1,035 54 33 1296 861 949 1,057 54 33 1329 884 971 1,080 54 33 1361 907 994 1,103 2,378 1,361 15,714 19,453 24,426 80% Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 304 APPENDIX C Copyright © 2001. AMACOM. All rights reserved. The answer of 34 (84 times .40) is inserted in the third month of column O because the purchase cycle is two months. To calculate the second and third and more repeats, the rates for variables L and M are used. Total repeats during the first year are 13,204, as shown in column ‘‘S. Total Repeat.’’ This figure is added to the 4,220 new triers to arrive at 17,424 total buyers or transactions as shown in column ‘‘T. Total Transactions.’’ Once again, just a slight increase in one of your variables can have a dramatic effect. In Plan 2 , the percentage of triers repeating once (variable K) has been increased from 40 percent in Plan 1 to 50 percent in Plan 2. A 50 percent repeat rate is not excitingly high, but combined with the minor improvement made in Plan 2 in range 1, total transactions increase from 17,424 in Plan 1 to 24,426 in Plan 2, as shown in column ‘‘T. Total Transactions’’ in Figure C-3A. That is a 40 percent increase. If you have a brand that does not satisfy the customers’ needs, then your repeat purchase rate is going to be low. But as previously mentioned, perception is what counts. Designer jeans don’t wear as long as regular Levis, and Marlboro cigarettes (number one in the world) tastes the same as other cigarettes if you blindfold the smoker. In both these cases, high repeat sales is due to dynamic positioning. Figures C-4 & C-4A— Range Three: Unit & Dollar Volume his range multiplies the number of transactions from range two by the number of units purchased and the price per unit, as shown in this range, to arrive at total sales in units and dollars. Three variables are used, and the same level is used for both plans. The first is ‘‘V. Average Number of Units Trial Transaction.’’ The number 1.1 is used. This means that most buyers are expected to purchase only one unit, but a few will buy several, resulting in an average of 1.1. The second variable is ‘‘W. Average Number Units Repeat Transactions.’’ The number 1.3 is shown. A higher number is used on repeat business on the theory that T Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. APPENDIX C 305 customers are now more familiar with the brand, and that some are likely to purchase higher quantities. The third assumption is ‘‘X. [Manufacturer’s] Price per Unit.’’ The price indicated is $.89. To arrive at total units, the model multiplies the average number of units purchased as shown in the first two variables (V and W) by the number of transactions from range two. To calculate total dollars, the model multiplies total units by the price shown in the third variable (X). The previous minor improvements made in Plan 2 in ranges one and two result in a 41 percent increase in total estimated dollar volume. Total dollar volume for Plan 1 is $19,408, as shown in column ‘‘DD. Total’’ on C-4 and $27,375 for Plan 2, as shown in column ‘‘DD. Total’’ on C 4A. Figures C-5 & C-5A— Range Four: Share of Market here are three variables. The first is ‘‘FF. Average Retail Selling Price.’’ In the last range, the manufacturer’s selling price to the trade of $.89 was used to calculate total revenues. When you calculate market share, you normally use the price to the end user; therefore, the price of $1.39 has been inserted into the model. This is the price the trade charges the end user. If your company sells directly to the end user, you would use the same price to calculate both revenues and share. The second variable is ‘‘GG. Total Market in Units,’’ and the third is ‘‘HH. Total Market in Dollars.’’ These two variables refer to the total expected monthly sales in units and dollars of the type of brand the company sells by the company, its competitors, and all potential buyers who have not yet made a purchase. In the model, the size in units is 10,000, and in dollars is $13,300. To calculate monthly unit market share as shown in column ‘‘II. Unit Market Share,’’ the model takes the monthly sales in units from column ‘‘AA. Units Total’’ in range three and divides it by monthly Copyright © 2001. AMACOM. All rights reserved. T (text continues on page 310) Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 306 APPENDIX C Figure C-4. Plan 1: ‘‘What if’’ model for projecting market share (unit and dollar volume). Copyright © 2001. AMACOM. All rights reserved. V. Average Number Units Trial Transaction: 1.10 W. Average Number Units Repeat Transaction: 1.30 X. Price Per Unit: $ 0.89 Y. Z. AA. BB. CC. DD. -------------- Units-------------------------------- Dollars----------Trial Repeat Total Trial Repeat Total Month 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Total 0 92 116 179 152 166 180 194 208 222 236 249 263 89 91 92 94 95 97 99 100 102 102 102 102 102 102 102 102 102 102 102 102 102 102 102 102 4,642 0 0 0 44 55 111 105 148 170 216 256 300 346 395 447 413 464 465 518 537 557 576 596 616 636 656 676 696 716 736 756 776 797 817 837 857 877 17,166 0 92 116 222 207 277 285 342 378 437 492 549 610 484 538 505 558 560 615 636 657 678 697 718 737 757 777 797 818 838 858 878 898 918 939 959 979 21,807 $0 $82 $103 $159 $136 $148 $160 $173 $185 $197 $210 $222 $234 $79 $81 $82 $84 $85 $86 $88 $89 $90 $90 $90 $90 $90 $90 $90 $90 $90 $90 $90 $90 $90 $90 $90 $90 $4,131 $0 $0 $0 $39 $49 $98 $93 $131 $151 $192 $228 $267 $308 $352 $398 $367 $413 $414 $461 $478 $495 $513 $530 $548 $566 $584 $601 $619 $637 $655 $673 $691 $709 $727 $745 $763 $781 $15,277 $0 $82 $103 $198 $184 $247 $254 $304 $336 $389 $438 $489 $542 $431 $479 $449 $497 $499 $548 $566 $584 $603 $621 $639 $656 $674 $692 $710 $728 $746 $764 $782 $799 $817 $835 $853 $871 $19,408 Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. EE. Repeat %Total Dollars 79% APPENDIX C 307 Figure C-4A. Plan 2: ‘‘What if’’ model for projecting market share (unit and dollar volume). Copyright © 2001. AMACOM. All rights reserved. V. Average Number Units Trial Transaction: 1.10 W. Average Number Units Repeat Transaction: 1.30 X. Price Per Unit: $ 0.89 Y. Z. AA. BB. CC. DD. ********** Units ******** ******* Dollars ********* Trial Repeat Total Trial Repeat Total Month 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 Total 0 109 136 211 180 196 212 229 245 261 278 294 310 105 107 109 111 113 114 116 118 120 120 120 120 120 120 120 120 120 120 120 120 120 120 120 120 5,470 0 0 0 64 80 163 154 218 250 318 378 442 510 582 658 608 684 685 764 792 820 849 878 907 936 966 995 1,025 1,055 1,084 1,114 1,144 1,174 1,203 1,233 1,263 1,293 25,288 0 109 136 275 260 359 367 446 495 579 655 736 820 687 766 717 794 798 878 908 938 968 998 1,027 1,056 1,086 1,115 1,145 1,174 1,204 1,234 1,264 1,293 1,323 1,353 1,383 1,412 30,759 $0 $97 $121 $187 $160 $174 $189 $204 $218 $233 $247 $262 $276 $94 $95 $97 $99 $100 $102 $103 $105 $107 $107 $107 $107 $107 $107 $107 $107 $107 $107 $107 $107 $107 $107 $107 $107 $4,869 $0 $0 $0 $57 $72 $145 $137 $194 $222 $283 $336 $393 $454 $518 $586 $541 $608 $610 $680 $705 $730 $755 $781 $808 $833 $860 $886 $912 $939 $965 $992 $1,018 $1,045 $1,071 $1,097 $1,124 $1,150 $22,507 $0 $97 $121 $245 $232 $320 $326 $397 $441 $515 $583 $655 $730 $612 $681 $638 $707 $710 $782 $808 $835 $862 $888 $914 $940 $966 $992 $1,019 $1,045 $1,072 $1,098 $1,125 $1,151 $1,178 $1,204 $1,231 $1,257 $27,375 Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. EE. Repeat % Total Dollars 82% 308 APPENDIX C Figure C-5. Plan 1: ‘‘What if’’ model for projecting market share (share of market). Copyright © 2001. AMACOM. All rights reserved. FF. Average Market Selling Price: GG. Total Market in Units: HH. Total Market in Dollars: $1.39 10,000 $13,300 Month II. Unit Share Market JJ. Dollar Share Market 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 0.00% 0.92% 1.16% 2.22% 2.07% 2.77% 2.85% 3.42% 3.78% 4.37% 4.92% 5.49% 6.10% 4.84% 5.38% 5.05% 5.58% 5.60% 6.15% 6.36% 6.57% 6.78% 6.97% 7.18% 7.37% 7.57% 7.77% 7.97% 8.18% 8.38% 8.58% 8.78% 8.98% 9.18% 9.39% 9.59% 9.79% 0.00% 0.97% 1.21% 2.32% 2.16% 2.89% 2.98% 3.57% 3.95% 4.57% 5.14% 5.74% 6.37% 5.06% 5.62% 5.28% 5.83% 5.86% 6.43% 6.65% 6.86% 7.08% 7.29% 7.50% 7.71% 7.91% 8.12% 8.33% 8.54% 8.76% 8.97% 9.18% 9.39% 9.60% 9.81% 10.02% 10.23% Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. APPENDIX C 309 Figure C-5A. Plan 2: ‘‘What if’’ model for projecting market share (share of market). FF. Average Market Selling Price: GG. Total Market in Units: HH. Total Market in Dollars: Copyright © 2001. AMACOM. All rights reserved. Month 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 II. Unit Share Market JJ. Dollar Share Market 0.00% 1.09% 1.36% 2.75% 2.60% 3.59% 3.67% 4.46% 4.95% 5.79% 6.55% 7.36% 8.20% 6.87% 7.66% 7.17% 7.94% 7.98% 8.78% 9.08% 9.38% 9.68% 9.98% 10.27% 10.56% 10.86% 11.15% 11.45% 11.74% 12.04% 12.34% 12.64% 12.93% 13.23% 13.53% 13.83% 14.12% 0.00% 1.14% 1.42% 2.87% 2.72% 3.75% 3.83% 4.66% 5.17% 6.05% 6.85% 7.69% 8.57% 7.18% 8.00% 7.49% 8.30% 8.34% 9.18% 9.49% 9.80% 10.12% 10.43% 10.74% 11.04% 11.35% 11.65% 11.96% 12.27% 12.59% 12.90% 13.21% 13.52% 13.83% 14.14% 14.45% 14.76% $1.39 10,000 $13,300 Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 310 APPENDIX C Copyright © 2001. AMACOM. All rights reserved. market volume (‘‘GG. Total Market in Units’’). To obtain monthly dollar share, as shown in column JJ, the model takes monthly unit sales, also from column ‘‘AA. Units Total’’ in range three, multiplies it by the price shown in variable ‘‘FF. Average Market Selling Price,’’ and divides the answer by total market monthly dollar volume (‘‘HH. Total Market in Dollars’’). The monthly market share for the hypothetical business used in the model in Plan 1 reaches a high of 9.79 percent in units, and 10.23 percent in dollars. For Plan 2, it’s 14.12 percent in units, and 14.76 percent in dollars. The fact that this business has a higher share in dollars than in units means that its selling price is above the average for the market. So there is an increase of about 41/2 share points—about a 40 percent increase—just by adjusting two market variables. You should be using a what-if model like this one. It makes you, as Leo Burnett said, ‘‘reach for the stars.’’ Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. Copyright © 2001. AMACOM. All rights reserved. Index ABC, 33, 146 accounting professionals (in ad agencies), 87–89 Ace Hardware Corporation, 121 action plans, 13–14, 276–277 advertising, 136–161, 260 assessing effectiveness of, 160–161 and basic selling line, 137–143 budget for, 150–154 and communications strategy, 136–137 creating a competitive edge with, 147 and creative strategy, 150 examples of successful, 141, 144–146 formatting, 147–150 magazine, 156, 160 newspaper, 159 outdoor, 156 radio, 156–157 selecting media for, 154–160 television, 157–159 on Web site, 217–218 writing, 146–147 see also public relations advertising agency(-ies), 85–96, 138 account service provided by, 87–89 client’s relationship with, 95–96 compensation of, 91–94 creative group of, 90–91 management of, 86–87 media buying services provided by, 90 media department of, 89–90 selection/review of, 85–86, 95, 97 after-market sales, 237–238 airline carriers, 42 Alka-Seltzer, 144, 145 Amazon.com, 4, 24, 26, 213 American Cancer Society, 53–54 American Express, 118 American Express Platinum Card, 75–76 American Marketing Association, 106 America Online Inc. (AOL), 23, 28, 118, 120 Anheuser-Busch, 286 AOL, see America Online Inc. Apple Computer, 3, 8, 105, 117, 119 Ask the Builder, 25, 32, 215, 219 AT&T, 62, 113, 139–140 Avis, 119, 120 Back Roads, 28 Bacon’s Information Inc., 204 Bacon’s Magazine Directory, 177 Banff Mountain Film Festival, 186 banner ads, 23 barriers to entry, 284 basic selling line, 137–143, 138 benchmark studies, 245–246 benefits features vs., 73–76 listing of, in direct mail, 167–168 Best-Buy, 28 Bloomingdale, 103 Bly, Robert W., on motivating sequence, 168 Boeing, 293 Bose Corporation, 163, 164 bounce-back-cards, 169–170 Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 312 Copyright © 2001. AMACOM. All rights reserved. brand manager, 78–79 brand(s), 6 me-too, 147 positioning of, see positioning British Airways, 141, 142 browsers, 23 BRP (business-reply permit), 169 budget advertising, 150–154 marketing, 133–135 Burke Marketing Research Inc., 251, 254 Burnett, Leo, 102, 117, 310 business plan, 9, 257, see also strategic plan business-reply permit (BRP), 169 business strengths, 4 Business Week, 197 buying decision, determining people involved in, 58–63 California Raisin Advisor Board, 144 Campbell Soup, 190–191 captive customers, 281–282 Carter, Tim, 25 Cassette House, 212, 219 CBS, 33 Center for Exhibition Industry Research, 178–179 CEOs (chief executive officers), 171 channels of distribution, 60–61 Charmel, Patrick, 123 Chevrolet Lumina, 128–129 chief executive officers (CEOs), 171 Christensen, M. Clayton, 16, 43 Chrysler, 66, 189 Chrysler 300M, 128–129 Cisco, 121 Citibank, 120, 293, 294 CNBC, 146 Coastal Tool and Supply, 24–25, 212, 215, 219 Coca-Cola, 3 commissionable media, 92 communications strategy, 136–137 Compaq Computer Corporation, 98, 119, 120 competition section (of Fact Book), 4, 5 competitors, number of major, 287 CompuServe Corporation, 118 concept testing, 249–251 Conner Peripherals, 16–17 INDEX consultants, marketing, 84–85 content Web sites, 32–33 contests, 192 co-op sampling, 189 copywriters, 138 cost per thousand (CPM), 155–157, 160 cost-plus basis (for paying ad agencies), 93 costs customer relations, 291–292 distribution, 291 mailing, 173 manufacturing, 288 promotion, 290 R&D, 293 sales, 291 service, 292 Council of American Survey Research Organizations, 247 Council of Regional IT Associations, 27 Country Hobbies, 186 coupons, 189–191 Cowen, Henry, on direct mail, 168 CPM, see cost per thousand creative group (of ad agency), 90–91 creativity and advertising, 86–87, 150 in direct mail, 172–173 in positioning, 102–103 credit card transactions, 209–211 crises, public relations, 206 cross selling, 166 CrossWorlds Software, 146 currently unprofitable markets, 42–43 custom-built displays, 181 customer analysis section (of Fact Book), 6 customer concentration, 282 customer relations costs, 291–292 customers analysis of, see market analysis captive, 281–282 changes in, 43 communicating with, 103–104, 107–108 loyalty of, 188 policies benefiting, 235–236 providing information to, 235 targeting potential, 71–75 treating targeted, 236–237 customer service plan, 11, 231–238, 274 Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. INDEX Copyright © 2001. AMACOM. All rights reserved. customer service Web sites, 34–35 Cyber Cash, 210–211 cyclicity, demand, 292 database, direct marketing, 163–166 Davidowitz, Howard L., on shoppertainment, 186–187 Dell, Michael, 146 Dell Computer Corporation, 24, 76, 117, 119, 289 Delta Airlines, 207 demand cyclicity/seasonality, 292 demographics, 55–56 Digital Equipment Corporation, 119 DigitalWork.com, 209 direct mail, 166–173, 260 benefits listed in, 167–168 bounce-back-cards in, 169–170 call to action in, 168–169 and creativity, 172–173 envelope for, 166–167 gifts in, 170 inside package for, 167 mailing costs for, 173 structure of copy in, 168 target audience for, 170–172 testimonials in, 167–168 direct marketing, 162–177 definition of, 162 establishing a database for, 163–166 interactive, 162–163 by mail, 166–173 via telemarketing, 173–177 Direct Marketing Association (DMA), 162, 177 direct-response television (DRTV), 158–159 DISC, 57 disk drives, 16 displays, trade shows, 180–182 disruptive technologies, 16 distribution costs, 291 DMA, see Direct Marketing Association Do-It-Yourself Advertising and Promotion (Fred E. Hahn and Kenneth G. Mangun), 174–175 domain name, 208, 210, 214–215 Doubleclick, 209 Dow Chemical Company, 20, 202 DRTV, see direct-response television 313 Duke Veterinary Hospital, 110 Dun & Bradstreet, 165 Easton, Jaclyn, 24–26, 211 e-commerce, 24 economies of scale, 282–283 Editor & Publisher, 204 Electrasports, 216, 218, 219 electronic kiosks, 193–194 electronic transfers, 210–211 e-mail, 208, 210, 213 end users, 61–62 Engineered Protection Systems Inc., 158 Enterprise-Rent-A-Car Inc., 55, 117, 119–120 Entrepreneur magazine, 66, 138 environmental attitudes, 290 Essigs, Rich, 26–27 Ets-Hokin, Judith, 104 Excite, 22 Exhibitor Magazine, 181 Fact Book, 4–8, 14, 37, 257, 258 FAQs (frequently asked questions), 235 features benefits vs., 73–76 choosing, for delivery, 67–70 customers and desired, 65–68 Federal Aviation Agency, 244–245 Federal Express, 122, 212, 285 Federal Trade Commission (FTC), 248 feedback, 241–256 from advertising research, 249–255 from benchmark studies, 245–246 from concept testing, 249–251 from in-house data, 243–245 from marketing communications research, 247–249 from online studies, 247 from posttesting, 252–255 from pretesting, 251–252 using controls for, 241–243 Florida, 53 Flower Aviation, 103, 108–109, 117 Forbes, 146, 197, 245 Ford Motor Company, 36, 66 Ford Taurus, 128–129 foreign operations/investments, 285–286 Fortune, 146, 201, 245 Fox (network), 33 Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 314 Fox News, 146 FragranceNet, 217–218, 219 frequency, 151–154 frequently asked questions (FAQs), 235 FTC (Federal Trade Commission), 248 functional substitution, potential for, 292–293 Copyright © 2001. AMACOM. All rights reserved. The Gap, 294 Garnett, Katrina, 146 Gates, Bill, 146 GE, see General Electric Geek Squad, 103 Geneen, Harold, 119 General Electric (GE), 35–38, 44, 118, 120, 294 General Foods, 78–79 General Motors Corporation, 36 gifts, direct mail, 170 graphics, 211–212 Griffen Hospital, 123 gross margins, 127, 293 gross number of impressions, 151–153 growth rate, 293 Hahn, Fred E., 174–175 Hallmark Cards, 102, 117, 144, 145 Harris, Gardiner, on marketing via the Internet, 27–28 Hertz, 119, 120 Herzigova, Eva, 200, 201 Hewlett-Packard, 203–204 High Point (North Carolina), 140 hiring, 233–234 ‘‘hockey sticks,’’ 96, 98 HomeChef, 104 Home Depot, 121, 137, 146, 148 home page, 211–212, 215–216 hospitals, 122–123 HTML, 215–216 Iacocca, Lee, 189 IBM, see International Business Machines Corporation Icverify, 210–211 industry life cycle, 286–287 industry segment size of, 293–294 Information Technology Industry Association of America, 27 Infoseek, 22 INDEX InfoUSA, 165 in-house market data, 243–245 The Innovator’s Dilemma (Clayton, M. Christensen), 16, 43 InterAdNet, 209 interior marketing, 196 internal marketing, 207 International Business Machines Corporation (IBM), 27, 63, 107, 119, 139– 140, 291 Internet, the, 21–38, 261 achieving profitable presence in, 24–26 advantages/disadvantages of, 22–23 content sites on, 32–33 customer service sites on, 34–35 and profitability, 284–285 promotional sites on, 28–29, 31 purchasing supplies on, 35–36 transaction sites on, 26–30 see also Web site(s) Internet plan, 11, 273 Internet service providers (ISPs), 190, 208, 210, 211 interviews, 245–246 Intuit, 15 inventory, 289 investment intensity, 288–289 iPrint, 218 Ipsos-ASI, 254 ISPs, see Internet service providers ITT, 119 Jager, Durk, 121–122 Japan, 283 Jobs, Steve, 105 Johnson & Johnson, 206 Joy, Nicki, 228 Just for Feet, 186 keywords, 215, 216 Khubani, Anand, on direct-response TV ads, 158 kiosks, electronic, 193–194 KISS strategy, 212 Kittyhawk disk drive, 203–204 Kmart Corporation, 28, 158 The Knot, 25 Kohler, 112–116 KoreaLink, 212, 219–220 Kroc, Ray, 105 Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. INDEX Copyright © 2001. AMACOM. All rights reserved. leave-behind displays, 181 Leno, Jay, 192 Leo Burnett Company, 102 Letterman, David, 192 Levi Strauss & Company, 54, 56 life cycle, industry, 286–287 line extensions, 106–107 links, Web, 218–219 Liz Claiborne, 101 load time, 211–212 lotteries, 192 Lowe’s, 148 loyalty, customer, 188 Lycos, 22 magazines advertising in, 156, 160 targeting by, 89 mail advertising, see direct mail management, marketing, see marketing management Mangun, Kenneth G., 174–175 manufacturing costs, 288 market analysis, 53–70 determining features sought as step in, 65–68 determining features to deliver as step in, 67–70 determining people involved in buying decision as step in, 58–63 determining relative importance of individuals as step in, 63–65 segmenting the market as step in, 55–58 market economics section (of Fact Book), 4 marketing budgets, 133–135 marketing communications plan, 11, 270–271 marketing consultants, 84–85 marketing coordinator, 80–84 marketing management, 77–98 consultants’ role in, 84–96 marketing coordinator’s role in, 80–84 marketing/market manager’s role in, 79–80 product/brand manager’s role in, 78–79 marketing manager (market manager), 79–80 315 marketing plan, 11–13, 257, 259–260 customer service plan in, 274 Internet plan in, 273 marketing communications plan in, 270–271 outline of, 265–277 product/service plan in, 268–269 research plan in, 272 sales management plan in, 275 marketing pressure, deciding where to apply, 48–51 market profiles, 41–45 market(s), 40–48 and changes in customers, 43 currently unprofitable, 42–43 definition of, 40 new, 44–45 profitable, 43–44 and profit potential, 45–48 unprofitable, 42–43 market variables, 127 Marlboro, 103 Marriott, Bill, 122 Marriott Hotels, 122 Mars, 192, 200 Mattel, 197, 294 Mazda Miata, 130 McDonald’s Corporation, 105, 120, 122, 146, 191 McKinsey & Company, 44 media, advertising, 154–160 media department (of ad agency), 89–90 Medicaid, 197–198, 202 merchandising, 185, 260 merchant accounts, 209 Merck-Medico, 27 message, marketing aiming, 72–73 delivering the right, 73–76 me-too brands, 147 Metromail Corp., 165 Metroville, 165 Michigan State University, 133 Microsoft, 3–4, 8, 27, 28, 138–139, 294 Microsoft Access, 166 Microsoft Explorer, 23 Midwest Express, 233 milestone calendar, 14, 277 Minnetonka Corporation, 294 M&M’s, 192, 200 modems, 211 Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. 316 Mogren, Todd, 212 Morrisville Hangers, 43 motivating sequence, 168 Motorcycle Online, 218, 219 Nationwide Data Services, 165 NBC, 33, 121 Neiman Marcus, 102–103 Netscape Communications Corporation, 16, 118, 294 Netscape Navigator, 23 networking (Web site), 218–219 Network Solutions, 210 New Coke, 3 Newman Outfitters, 186 new markets, 44–45 newspapers advertising in, 159 targeting by, 89 Newton (message pad), 3, 8 The New York Times, 33, 245 Nike, 15, 103, 107, 146 Nissan, 144, 145 Nordstrom, 12, 101, 233 North Carolina magazine, 140 Copyright © 2001. AMACOM. All rights reserved. off-the-shelf displays, 181 Ogborne, Dave, 104–105 online marketing studies, 247 operational plan, 10 outdoor advertising, 156 Palm, 4 PENgroup.com, 28–29, 31, 217, 218 perk chart, 14, 277 Pillsbury Doughboy, 146 Planet Ocean Communications, 214 Pocket PC, 3–4, 8 policies, reviewing your, 235–236 positioning, 101–123 and advantage of small size, 104–105 and avoidance of line extensions, 106–107 and communicating with customers, 103–104, 107–108 creativity in, 102–103 ‘‘high school factor’’ in, 105–106 and marketing research, 107–110 and pricing, 127–130 strategies for reinforcing, 112–123 INDEX positioning statement, 10–11, 101, 112, 257, 259 postcard decks, 170 posttesting, 252–255 Power-Packed Direct Mail (Robert W. Bly), 168 premiums, 191–192 presentations, sales, see sales presentations press kits, 204 press parties, 204–205 press releases, 196–197 pretesting, 251–252 pricing, and positioning, 127–130 pricing sensitivity, 281 Printronix, 163 PRISM, 57 Procter & Gamble, 43, 54, 78–79, 121– 122, 146, 160, 189, 290, 294 product manager, 78–79 product plan, 11, 268–269 profitability, 279–294 and aggressiveness of competitors, 294 and barriers to entry, 284 and captive customers, 281–282 and customer concentration, 282 and customer relations costs, 291–292 and demand cyclicity/seasonality, 292 and distribution costs, 291 and economies of scale, 282–283 and environmental attitudes, 290 foreign operations/investments, 285–286 and gross margins, 293 and growth rate, 293 and industry life cycle, 286–287 and inventory, 289 and investment intensity, 288–289 and manufacturing costs, 288 market characteristics influencing, 45–48 and need for capital, 294 and number of major competitors, 287 and opportunity to segment the market, 286 and potential for functional substitution, 292–293 and pricing sensitivity, 281 and promotion costs, 290 Marketing plan : how to prepare and implement it. (2001). Retrieved from http://ebookcentral.proquest.com Created from ncent-ebooks on 2017-10-29 07:35:41. INDEX and raw materials availability, 290–291 and R&D costs, 293 and regulatory exposure, 284 and sales costs, 291 and service costs, 292 and size of industry segment, 293–294 and social attitudes, 290 and technological level, 288 and trendiness, 294 and using the Internet, 284–285 and value added, 288 profitable markets, 43–44 promotional Web sites, 28–29, 31 promotions, see sales promotions psychographics, 55–57 public relations, 196–207, 261 crises in, 206 definition of, 196 developing a plan for, 199–200 evaluating effectiveness of, 205 executing the plan for, 200–205 guidelines for, 206 and marketing coordinator, 82 and press releases, 196–197 researching for, 198 stating situation in, 197–198 Public Relations Society of America, 197 Purple Moon, 197–201 pyramid style, 203 Copyright © 2001. AMACOM. All rights reserved. Quantum, 16 QVC, 159 radio advertising, 156–157 raw materials, availability of, 290–291 R&D, see research and development reach, 151–154 regulatory exposure, 284 rental displays, 181 research, marketing, 107–110 research and development (R&D), 81, 293 research plan, 11, 272 restaurants, 42, 122 rifle approach, 160 Rocky Mountain Radar, 141, 143, 149 Roper Starch Worldwide Inc., 252 ROP (run of paper) ads, 217 Royal Crown Cola, 41 317 run of paper (ROP) ads, 217 Ruttenberg, Harold, 186 sales after-market, 237–238 costs of, 291 sales leads, obtaining, 223–227 sales management plan, 275 sales plan, 11 s...
Purchase answer to see full attachment