What is Market Planning?
Market planning is the process of organizing and defining the marketing aims of a company and gathering strategies and tactics to achieve them. A solid marketing plan should consist of the company’s value proposition, information regarding its target market or customers, a comparative positioning of its competitors in the market, promotion strategies, distribution channels, and budget allocated for the plan. All relevant teams in the organization should refer to the marketing plan.
Market Planning for Small Businesses
Over the last few decades, more individuals have been starting a journey as a small business entrepreneur. Unfortunately, many fail to reflect on their marketing strategy and plan. Like other things in a project, marketing the organization is an essential decision that starts with a plan every time. In order to get noticed in the market with a unique and consistent promotional strategy, becoming knowledgeable about market planning and its facets is crucial.
Stages of Market Planning
The first stage of market planning involves sales projections and evaluations of past promotional activities to assess their effectiveness. The process of analyzing a product enables a company to identify which areas of the plan should carry a heavier focus or which areas should be adjusted. The analysis not only involves evaluating the company’s competitive position in its respective market but also considering how to implement new strategies for its business goals.
The second stage is to organize marketing objectives and strategies. It is crucial here to establish the relationships between the proposed activities so the plan can be carried out efficiently.
Top Market Planning Concepts
Although there are a number of marketing planning concepts to be considered, the following are a few important aspects that should be included:
Market Segmentation and Target Markets
Knowing who makes up the market the product or service plays in is crucial, yet the importance of this aspect is often overlooked. Market segmentation involves assessing the whole population that could be potential customers of your product and then segmenting them based on varying criteria. Some examples of aspects to filter for are purchase behavior, psychographics, age, and average income.
After the market has been segmented, the company must choose the group that it believes its product can best serve and is within the budget to advertise to. This segment then forms your target market. It is generally recommended for businesses to have one target market and then a few secondary ones if they see fit.
To illustrate, a company that sells colored contacts may have a primary target market of makeup artists in the film and theater industry. However, they may find that there is significant revenue to be found in entering more mainstream channels and marketing to women in their twenties who wish to experiment with new eye colors on special occasions. They would then spend the majority of their resources marketing to their primary target market, but also allocate some marketing budget to the latter segment for additional revenue.
The main reason why market segmentation and targeting is important is that a company should always be focusing its resources on the most profitable group of customers, so knowing which group that is, is a prerequisite.
Budgeting may be the most important term in marketing planning when it comes to execution. Often, in order to secure funds from top management or banks, sufficient proof of your advertising plan’s success is needed. It requires accurate forecasting of returns generated by individual advertising expenditures. It is important that returns are not overestimated to avoid spending too much and running out of money early on.
Learn more in CFI’s Budgeting and Forecasting Course.
The marketing mix is a combination of elements that influence customers to purchase a product. The marketing mix includes four main factors – Product, Price, Place, and Promotion. Product refers to either the tangible good that your business offers or the intangible good, referring to services. Key decisions made under this umbrella are branding, product design, package and labeling details, warranties, and more.
Price can quite simply be the quantitative price the company’s customers must pay to acquire its product. However, thorough marketing plans will also consider other sacrifices a customer must make, such as travel time, shipping costs, or research time before they find the product. Customer perceived value is also a key consideration when it comes to price. Key decisions under this umbrella include price-setting, pricing strategies, discounts, accepted payment methods, and more.
Place refers to where customers can contact the business and purchase its products. Providing convenience and access to the company’s customers is the goal. Key decisions under this umbrella include distribution, channels, partnerships, locations, transportation, and logistics.
Promotion covers all the marketing communications the company undertakes to make its product known and shape the customers’ image of its product. Key decisions here involve promotional mix, message content, message frequency, media strategies, and more.
Customer Relationship Management (CRM)
Customer relationship management (CRM) is a key factor in maintaining loyalty after a company has achieved a sustainable number of customers. There are numerous software solutions on the market to handle CRM for a company. For small businesses, however, keeping such activities in-house may be recommended to keep the company lean. Things such as offering warranties and return policies can help keep customers satisfied and let them know that the company cares about their use of the product post-purchase.
Market planning is a constructive process that facilitates careful consideration of a company’s marketing objectives and product mix so that resources allocated to advertising plans and branding yield optimal returns. While some facets may be unique for each business, key concepts such as market segmentation, target markets, marketing mix, budgeting, and CRM, are applicable in all cases.
CFI is the official provider of the global Financial Modeling & Valuation Analyst (FMVA)™ certification program, designed to help anyone become a world-class financial analyst. To keep learning and advancing your career, the additional CFI resources below will be useful: