Most people shy off from starting their own business because of fear of failure. Given the grim statistics of startup business failure, this fear is understandable.
What makes some businesses fail while others succeed? Is it because the idea wasn’t great? Or is it because of insufficient capital? Although insufficient capital, poor management, and poor business location are significant contributors to why businesses flop, on top of the list is the absence of a marketing plan.
Just like a business plan is central to any successful business, a marketing plan is at the core of any sound business. A business plan, devoid of a solid marketing one, only tells half the story. Where the business plan covers the "what and who" of the business, the marketing plan tells us "how to" and "when to." Thus, a comprehensive business plan that has a very clear-cut marketing plan is an absolute must for businesses that want to thrive.
In detail, here are seven reasons that will help you understand why your business needs a marketing plan.
1. Helps You Identify the Target Market
The popular, "Aim at the sun even if you miss you’ll land among the stars” by Les Brown is not applicable in business.
In business, when you don’t know who your target is, you end up spraying bullets in blank spaces where no one exists, a move that is both dangerous and expensive.
The target market refers to the specific individuals most likely to use your goods or services. Since the marketplace has become so differentiated, you can’t afford to be general in your marketing efforts. There are three main ways of zeroing down on your target market.
- Demographic segmentation: This refers to differentiating your market basing on aspects such as gender, race, religion, age, education level, income level, and marital status. For instance, if you decide to use age demographic, you can divide the market into ranges such as 18-25; 26-36; 37-50 and so on.
- Geographic segmentation: Where are you customers located? Are they in the rural, urban or suburban areas? This method is common with businesses that have international markets. This because consumers in different regions have different cultures, values, wants and needs.
- Psychographics: Where your target market appears to have radically different demographics, breaking them into psychographic segments is the way to go. Here, you divide the market into groups basing on their values, attitudes, personality, interests and lifestyles.
Painting a picture of your customers helps you position yourself strategically as well as build brands that will appeal to your target market.
2. Assists You Budget and Spend Wisely
Howard Luck Gossage, a copywriter who influenced ad makers worldwide, and one of the most brilliant practitioners of advertising aptly said, "A marketing strategy guides you on pathways and footholds that apply your limited marketing budget more effectively".
Think about this: How many emails do you receive every day? And, how many do you open and read? It’s obvious that we only read what we find relevant, what has meaning to us; the rest undoubtedly goes to the trash bin.
Instead of throwing all sorts of haphazard tactics out there, a marketing strategy helps you identify your audience then curtail messages that meet their needs and select the most efficient medium to reach this audience. As a result, you make informed decisions in regards to advertising buys. Simply put, having a strategy saves you money you would have otherwise spent on audience that doesn’t value your messages.
3. Helps You Identify New Opportunities in The Market and Potential Threats
A SWOT analysis is one important component of a marketing plan which basically involves looking at your businesses strengths, weaknesses, opportunities open to you and threats you might face. The knowledge from this analysis helps you take advantage of your talents, guard against potential threats while at the same time work on to minimizing your weaknesses.
A competitor’s analysis, another critical component of a marketing plan gives you a peek into your competitors’ strengths and weaknesses. By exploiting this knowledge (your rivals flaws), you craft marketing strategies that exploit emerging opportunities by filling in the empty gaps. By use of effective marketing plan tools and strategies, you can identify your giants and come up with reactive approaches to slay them.
4. Gives You Sharp Focus
In a world where new ideas emerge from left, right, and center, it’s easy to get caught up in distractions that divert you from your mission. But how would you know you’ve diverted if you didn’t have a plan in the first place?
Creating a market plan ensures that you stay focused on your short-term and long-term goals. Remember that even the most promising ideas come with their challenges and demands resource allocation. This is not to say that you shouldn’t explore new opportunities, rather critically evaluate any new ideas to see it they have potential. Then, see how you can effectively integrate them without hurting your budget.
5. A Marketing Plan a Vital Ingredient to the Success of Small Businesses
Although creating marketing plan is crucial for all businesses- big or small, it’s particularly critical for startups and small businesses.The difference between successful businesses and the small businesses caught up in survival mode is having a good marketing plan. The truth is, whether you’re selling a product or service, for the business to get off the ground, it has to make sales.
This is what marketing is all about. Business dictionary defines marketing as the managing process that through which goods or services moves from concepts to consumer. Creating a good marketing plan, therefore, helps you figure out how to make sales.
By ensuring you stay focused, a marketing plan guards you against reacting to changes and competition in the market. Instead, it ensures that you stick to your budget, narrow down your services or products to suit your target and make more sales.
6. Financiers Assess the Business Plan
That you’re a good person who has no criminal record is not reason enough for the bank to lend you money.
Of course, interest on loans is one way how banks make profits. So, obviously, the bank needs to know that you will not default. The bank also needs to know that it won’t need to auction your property to recover its cash. Since the business plan predicts where your business is headed, the bank will be analyzing its every detail.
Here are some things the bank will be looking for:
- History of the business
- The marketing plan
- The management team and why they should trust them to run a successful business
- How you generate revenues
- Financial history
A comprehensive business plan drastically improves your chances of acquiring a loan (it’s a must have for small businesses)
7. A Marketing Plan Formalizes Ideas and Plans
"If your memory is anything like most peoples, it’s a leaking bucket."
Awesome ideas have a way of showing up at the strangest of times but beware because they don’t last long in your head; quickly they come, quickly they go. Not only does writing down your goals bring clarity and focus, it also reaffirms them. Furthermore, as you write down the ideas, new insights and perspectives arise. Written ideas also act as reminders and keep you on the right track.
Ideas that have no action plan to back them up are usually deemed useless. This is because an idea only becomes useful once you implement it. When you create a marketing plan, your ideas begin to take shape and consequently inspire action. It acts as a foundation that turns pale ideas into reality; it sets the momentum. Recording all your ideas in one place organizes your thought process, and the clarity that comes with this helps you generate new ideas.
These essentials should be part of your marketing plan
- Market research – The goals of a market research is to collect valuable information to find out if there is a market for your proposed products. It involves looking at the market dynamics (price patterns from the changing shifts in demand and supply).
- Marketing plan budget - The marketing budget, controls expenditure and assists to coordinate marketing activities. A realistic one keeps you on the right track and acts as an indicator when there is a need to modify the marketing plan.
- Marketing goals – This involves turning our ideas into plans and further quantifiable, achievable and timely goals.
- Market plan strategies - By analyzing the market research, a good marketing strategy combines all the marketing goals to birth one comprehensive plan.
- Competition – It should have a detailed competitors’ analysis and a plan on how to take competitive advantages to set your business apart.
If you own a small business, you’re not doomed to stay in the shadows of the market leaders. As you dedicate your efforts on acquiring funds and looking for a strategic business location, to achieve remarkable success, direct some of these efforts to creating a marketing plan for your small business. If your business is beyond startups, you still need a marketing plan to help you retain or increase your market share. Ultimately, customer retention requires effective marketing strategies that are up-to-date.