Why Business Plans Don’t Connect?
Make Your Business Plans Compelling
By Following A (Marketing) Customer
Orientation
Dr. Danny Butler
Thomas Walter Professor
Auburn University
334-844-2464
Why Business Plans Don’t Connect?
Make Your Business Plans Compelling
By Following A (Marketing) Customer
Orientation
• What is A Customer Orientation?
• What is Perceived Value?
• What makes a valuable Business Plan?
• (Marketing) A Customer Orientation IS
the Business Plan?
• Fun-Fun-Fun and Take Aways
Topic: A Philosophy to
• What are the Goals of the plan or business model?
• Where are you going?
• Customer Orientation in all that is done.
• It is ALWAYS about what customers are willing to
pay for….their perception of value.
• What is their Perceived Value?
• Marketing the benefit(s) to the customer is key.
• Pictures are more clear than words and numbers.
Take Aways
Wayne Gretzky was, arguably, the greatest hockey
player in history. Asked about his secret for
continuing to lead the National Hockey League in
goals year after year
5
Gretzky replied,
“I skate to where the puck is going to
be, not where it has been.”
Habit 1: Be Proactive
.
Habit 2: Begin with the End in Mind
Habit 3: Put First Things First
Habit 4: Think Win-Win
Habit 5: Seek First to Understand, Then
to be Understood
Habit 7: Sharpen the Saw
External Orientation Focus on the Customer
Their needs and wants. They seek benefits.
The goal is to bring about voluntary
exchanges of value with target markets to
achieve organizational objectives.
Customer Orientation
Determine the needs and wants of the
target market and satisfy them through the
design, communication, pricing and
delivery of an appropriate and
competitive offer.
Your business plan must give the
investors what they want.
What A (Marketing) Customer
Oriented Company Must Do
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Benefit Concept
The benefit concept is what exists in the
consumer’s mind. It is the psychological bundle
of all attributes built into the product / service to
meet customer needs.
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Benefit Concept It includes the value the consumers psychologically receive.
The technology that goes into the product. The production
system that produces it on time. The distribution system
that delivers the product components, where they are
needed, in exact quantities. It is the billing system that
invoices appropriately, timely with no errors. It is
everything that each company does behind the scenes to
make sure the customer believes he / she is getting what
they are paying for. This is in addition to the final physical
product that any company delivers to the customer (e.g.,
fishing reels, automobiles, cell phones, furniture, hurricane
lamps, gas grills, clothing, software, insurance policies,
etc.).
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Benefit Concept – The Business Plan
For a business plan….
it is the perception that all information in the document
is accurate. It is the ability to demonstrate what the
concept is (make an intangible….tangible), where this
concept lives in the minds of potential customers,
where the concept lives in the competitive marketplace,
the road map of moving the product from the firm to
the paying customer, the financial returns expected, the
levels of associated risk, the sources and assumptions
used from which the plan constructed.
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Firms Should Never “Sell”
Products To Customers
• People buy holes, not drills!
• People buy fashion, status, reference groups approval, and warmth, but not coats!
• People buy security and on time delivery, not a missile.
• People buy memories,
not a cruise.
Principle of Customer Value
• Success in targeted market segments is directly
related to the firm’s ability to provide perceived
value to its customers
• Understanding the customer should be the basis
for the overarching strategic framework within
which the marketing offer is designed and
delivered. That must be communicated in your
plan!
Product vs Market-Oriented Definitions of a Business:
Columbia Pictures
Product definition: We make movies
Market definition:
We market entertainment
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Firms Should Never “Sell”
A Business Plan to Investors
• Investors (bankers and the lot) purchase returns for calculated risk, not your products.
• Investors (bankers and the lot) are in the game to make returns, not to make you happy.
• Investors want to understand the benefit to them of your business model. They want security.
Perception Of
the Quality of
Road Line
Painting
Firm?
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Principle of Customer Value
• Success in targeted market segments is directly
related to the firm’s ability to provide perceived
value to its customers
• Understanding the customer should be the basis
for the overarching strategic framework within
which the marketing offer (business plan) is
designed and delivered
Perceived Value
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The Perceived Value Equation B PV = P
Where:
PV= Perceived Value
B = perceived benefits – perceived costs
(what you get) - (what you give)
P = price (monetary amount paid)
What do Investors Want?
….
They are your customers.
Marketing Myopia Theodore Levitt; 1960 Harvard Business Review
• What Business are we in?
• Railroad business or transportation business?
• Movie business or entertainment business?
• Growth Industry or growth opportunities
• What do customers want?
• Who are your customers?
The Beginning of the End
• Industry should begin with the customer
and his / her needs, not with a patent, a
raw material, or a selling skill.
• First focus on delivery of customer
satisfaction…then create things that will
delivery those satisfactions.
The goal of
marketing, to sell
more product,
more often, to
more people at the
margins you want.
One Billion Coca Colas Everyday in 1999
• Annual Marketing Plan Meeting
• What is the GOAL?
Building a Successful Marketing Plan
Who are our target buyers?
What sources of uniqueness or positioning in the market do we
have?
Where will we implement our marketing plans?
When will marketing spending occur?
How much sales, spending, and profits will we achieve?
What are the on-going metrics to know you are on track?
1. Executive Summary
2. Situation Analysis
2.1. Market Summary
2.2. Target Market(s)
2.2.1. Market Demographics, Market Analysis, Market Needs
2.4. Market Trends, Forecasts & Market Growth
2.6. SWOT Analysis
2.7. Competitive Analysis
2.8. Product Description (Value Proposition, Unique Selling
Proposition, Value Equation)
2.9. Keys to Success - Critical Issues
2.11. Assumptions page basis for strategies - replicable
2.12. Macro Environment ,Channels of Distribution
Contingency Planning Unexpected issues and exit strategy
Building a Successful Marketing Plan
3. Marketing Strategy
3.1. Marketing Objectives
3.2. Financial Objectives
3.3. Target Market(s)
3.4. Product Positioning
3.5. Marketing Mix
3.5.1. Product marketing plan
3.5.2. Pricing Plan
3.5.3. Promotion plan
3.5.4. Service plan
3.5.5. Channels of Distribution plan
3.6. Marketing Research (what forms of information needed, when to
monitor progress on Market Strategy)
Contingency Planning Unexpected issues and exit strategy
Building a Successful Marketing Plan
4. Financials
4.1. Break-even analysis (explanation and graph)
4.2. Sales Forecasts – Cash Flows
4.2.1. Monthly sales forecasts for 5 years (explanation, grids)
4.2.2. Sales by channel member
4.2.3. Sales by market segment (final consumers)
4.2.4. Sales by region
4.2.5. Expense Forecast (explanation, graph, grids)
4.2.5.1. Monthly expense budget
4.2.5.1.1. Expense by channel member
4.2.5.1.2. Expense by market segment
4.2.5.1.3. Expense by region
4.2.6. Strategy and tactic linkage to expenses
4.2.6.1. Sales vs expenses monthly
4.2.7. Contribution Margins
4.2.8. Net Marketing Contribution
Building a Successful Marketing Plan
5. Controls
5.1. Implementation
5.1.1. Milestones / time lines / responsibilities
5.2. Methods employed to monitor tactics and strategies internal and
external
5.3. Marketing Organization (tied to 5.1.1) who is responsible for
what, when, where
5.4. Contingency Planning Unexpected issues and exit strategy
Building a Successful Marketing Plan
Targeting
Targeting is the process of
evaluating and selecting the most
viable market segment to enter.
Why should they
buy from me?
What does the
brand stand for?
For whom am I
trying to serve?
Unique Selling Proposition
What Does STP Mean?
S T P - not the oil additive
Segmentation
Targeting
Positioning
Competitors Advantage
What are we giving
Positioning is……
Who Target Customers
We offer …
this advantage
to this target
customer
better than
these
competitors
New Product Development
Pro Power Tool Landscape P
rice
Performance
Taken Share Due To Lowering Price Points
Demonstrably Equal Performance Demonstrably Lower Priced
Building a Successful Marketing Plan
Where will we implement our marketing plans?
When will marketing spending occur?
How much sales, spending, and profits will we achieve?
What are the on-going metrics to know you are on track?
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Market
Demand
(Customers)
Market
Share (%)
Revenue per
Customer
Variable Cost
per Customer
Marketing
Expenses
Operating
Expenses
Overhead
Expenses
Accounts
Receivable
Inventory
Plant &
Equipment
Fixed
Expenses
Current
Assets
Total
Assets
Business
Expenses
Customer
Volume
Margin per
Customer
Total
Contribution
Net Marketing
Contribution
Net
Profits
Return
on Assets
Customer-Based
Model of Return on
Assets
Internal vs. External and In-Process
vs End-Result Performance
Measurement
Perspective
Time of Measurement
In- Process Metrics End-Result Metrics
Internal
(in-company)
Product Defects
Late Deliveries
Billing Errors
Accounts Receivable
Inventory Turnover
Net Profit / Earnings
Return on Sales
Margin Per Unit
Return on Assets
Asset Turnover
External
(in-market)
Customer Satisfaction
Relative Product Quality
Relative Service Quality
Intentions to Purchase
Product Awareness
Market Share
Customer Retention
Relative New Product
Sales
Revenue per Customer
Market Growth Rate
Within Media spending, Television and Magazine offer
the best ROI for reaching Sophisticated Spenders
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Impact of Media Spending on Purchase Funnel Metrics
Very High Impact
High Impact
Medium Impact
Low Impact
Example of Results
from Media Mix
Modeling
Notes: Analysis is based on media spending (dollars) measured by Nielsen.
Factors are ranked in descending order according to impact on Preference.
Awareness Consideration Preference Purchase Conviction
As you work delve through the world of
marketing and customer orientation, you are
expected to develop a high tolerance for
ambiguity, a quality of all successful general
managers. You will learn there are NO right or
wrong answers to business problems, just some
are better than others. There are no simple (or
even complex) formulae in which to plug a set of
numbers to secure the “right” answers. Instead
you must approach complex and unstructured
business problems in a creative and measured
way.
Noel Capon and James M. Hulbert
Columbia School of Business
• What are the Goals of the plan or business model?
• Where are you going?
• Customer Orientation in all that is done.
• It is ALWAYS about what customers are willing to
pay for….their perception of value.
• What is their Perceived Value?
• Marketing the benefit(s) to the customer is key.
• Pictures are more clear than words and numbers.
Take Aways
Q & A
