Building a Strategic Marketing Plan

A strategic marketing plan will cover the following elements in a step by step process:

Step 1: Situation Analysis

Step 2: SWOT Analysis and Key Success Factors

Step 3: Strategic Marketing Plan

Step 4: Tactical Marketing Strategies

Step 5: Marketing Budget

Step 6: Action Plan and Timeline

Step 7: Performance Evaluation

Step 1: Situation Analysis

The first step in building your marketing plan is to analyze and understand the internal and external factors that characterize the market in which your company will compete.  Your situation analysis should include the following information:

Market Demand: current and projected levels of customer demand, company/product sales and segment sales

Market Segmentation: a profile of the market segments in which your company will compete.  For each segment, include information on the approximate size, the unique needs of customers, growth prospects and revenue potential. 

Industry Analysis: an overview of the forces that affect the industry in which your company operates.  Porter's is a good model for industry analysis and includes an overview of supplier bargaining power, customer bargaining power, competitive rivalry, barriers to entry and threat of substitution.

Market Share Breakdown: if possible include a pie chart of your company's market share relative to your competition.  For most small companies this may be difficult, if you have some information on total industry/market sales you may be able to estimate sales in your region by looking at market size in terms of potential customers.

Competitive Analysis: identify your main competition and your company's position in the competitive landscape (using a positioning map to simulate a visual representation can be helpful).

Sales Channels: illustrates how products/services are sold to customers and the systems setup in the market.  Include information on direct sales, resellers and distributors and the different ways a customer can buy your products/services. 

The most important point when building a situation analysis is to outline important facts relevant to your company.  There will probably be an enormous amount of information to summarize,  avoid the trap of over-analyzing by focusing on information that will have the biggest impact on your company strategy. 

Step 2: SWOT Analysis and Key Success Factors

Your SWOT analysis is an outline of the implications the information from the situation analysis will have on your company.  A good question to ask yourself when preparing your SWOT analysis is: So What? This will help you state why a given piece of information is relevant to your situation and identify how it will affect you.  The components of the SWOT as as follows:

Strengths: internal factors that provide your company with an advantage (ex: new technology, size, distribution, flexibility).

Weaknesses: internal areas of weakness (ex: financial position, product inferiority).

Opportunities: external factors that present your company with an opportunity for success (ex: growth in demand, limited competition).

Threats: external factors that threaten your company's prospects for success (ex: market saturation, downward pressure on price, economic downturn). 

Step 3: Strategic Marketing Plan

Relying on the key issues presented  in the situation analysis and the implications from the SWOT analysis, it is now time to build a strategy for your company (you may need to create different strategies for different market segments).  Based on the relative importance of market attractiveness, competitive position and other factors a strategic direction must be set for your company.  You must also include short-term and long-term performance objectives (i.e. sales, market share, # of customers, repeat users).  There is often no right answer, based on your judgment you must devise the optimal strategy given your companies resources and opportunities.

Step 4: Tactical Marketing Strategies

The tactical marketing strategy outlines how your company will achieve the objectives set forth in the strategic marketing plan.  The tactical marketing plan should focus on Product, Pricing, Distribution and Promotion (also known as the 4 P's).  Here, it is important to include the right amount of detail and identify the specific tactics your company will employ to achieve the highest possible level of success.  An important point to remember is that the decisions regarding the  4 P's need to be consistent with one another.

Step 5: Marketing Budget

Preparing the marketing budget is the point at which you will need to decide if your plan to date makes economic sense.  Without adequate financial support the tactical marketing plan may not be feasible.  The following are 2 frequently used budgeting methods: 

Top-Down Budgeting: the budget is determined based on projected sales objectives and then using past marketing expenses as a percentage of sales.  

Example: 

Past sales = $100,000

Marketing expense = $10,000 (or 10%)

Projected sales = $1,000,000

Marketing expense required (10%) = $100,000

Bottom-Up Budgeting: set a specific task for each marketing tactic and attached the required budget necessary to complete that task.

Example:

Tactics: Direct Marketing

Task: acquire 100 new customers

Budget: adequate to support the acquisition of 100 new customers (could be 1000 leads or 5000 depending on response rate)

Step 6: Action Plan and Timeline

Your action plan and timeline should outline exactly when the various tactics will be initiated and by what dates certain performance levels will be met.  Use a spreadsheet to map out the execution of your marketing plan over the course of one year and establish firm dates for what has to happen when and what results should be achieved.

Step 7: Performance Evaluation

Once the marketing plan is complete, you should include a final section explaining how you intend to evaluate the performance of the plan.  The evaluation is directly tied to the objectives.  If the plan was designed to increase sales by 20% from current customers within 18 months and after 16 months sales have increased 30% the plan looks like a great success.  However, if the objective of the plan was to increase sales from new customers by 20% within 18 months and after 16 months sales from current customers have increased by 30%, it may be time to re-evaluate your strategy.

This step by step process provides you with a general framework to building a solid marketing plan.  Many marketing professionals rely on tools like marketing plan pro that help build more effective plans and that make the process of building a marketing plan more efficient.