Marketing and Research

1. What market research have you conducted or found about your customer?  Detail either the sources of your information or how you deduced it.
2. Who are the potential buyers for your products? Describe the customer according to any of the following or any combination: demographics. psychographics. sociologically. geographics.
3. How many potential customers are there?
4. What percentage can you realistically capture? This is critically important to the justification of the financial forecasts that will follow.
5. Why do they buy?  What is their primary purchase criterion: price, quality, availability, convenience, or…?  Are there price tiers in the target market?  What features do they seek? What benefits do they want?  Do they have a preference as to how and where they buy? How strong is it?
6. What are the potential annual purchases?  How do the customers decide to buy?  How often do they buy?  What is the buying cycle? Is there seasonality to your market?  Is demand tied to any other product/service, i.e. online music sales to MP3 player sales?
7. What do they buy?  Price–how much will changes in price affect your customers’ purchases? Important to know in advance.  Quality–will they pay more for better quality?  Image– is brand name important?  Are customers brand loyal?
8. Describe the overall market.  Does the research show a profitable market for your business, product/service? (Remember size or lack of service to a market does not automatically imply opportunity. No one may be serving that market for a reason.)
9. How might the economy affect sales of your product/service?  What is the economic forecast for your geographic area for the next year, the next  five years?
10. How might government programs, policies, or legislation affect your industry, business, or product/service?
11. How might technological factors affect your product/service sales?
12. What social/cultural factors might impact your sales?  Changing demographics of market segment: aging, moving, increasing/decreasing incomes.  Changing social structure, i.e., increase in single working parents, might result in an increased need for quick, inexpensive prepared meals that can be heated and eaten.  Changing values.
13. How will you track these trends?  How will you continually evaluate customer needs?

Suggestions for writing this section (You do not need to answer these questions.  They are just here as helpful suggestions.)

• In real estate the key is location, location, location. In a business plan the key is evidence, evidence, evidence. The content here will make or break your plan. This shows whether you know what you are writing about or not.
• There are a number of resources available to the small businessperson that are either free or relatively inexpensive.  Trade associations and journals.  Chamber of Commerce.  Competitors’ sales literature.  People–customers and sales representatives.
• Venture capitalists look for a well-thought-out plan. Thoroughness here demonstrates the degree of effort of thought and “homework” done on the business.  Be specific when describing the target market. Explain in detail.  Document, prove, cite evidence.
• Write in terms of benefits sought by the customer as much as possible. Customers buy benefits.
• Be enthusiastic and realistic when describing the potential market. No one can capture 100% of any market.
• The market research you present here is critical. You need solid evidence to back up your business plan. While market research may be a relatively brief part of this section, it is the backbone of your plan. Don’t hesitate to use others’ studies. There are numerous marketing publications, journals, and government/academic studies available in local libraries on almost any market segment.  Your local Chamber of Commerce may have a demographic/economic/socio-graphic study for your community or region as a service to local small business.
• You may identify your market a number of ways. Be sure the way you choose fits your business and product/service.  Demographics–quantifiable characteristics: age, income, education, gender, etc.  Psychographics–interests, values, beliefs, etc.  Sociological–family structure, ethnic values, etc.  Geographics–location, location, location.
• What you write here will be important to your marketing plan, your timeline, and the explanation of critical risks sections of the rest of your plan.

Resources needed to write this section

• Any market research studies you’ve conducted or secondary market research you’ve collected about your business and market.
• A customer profile consisting of a picture or verbal description of your target market. Advertising professionals often create a portfolio, complete with a picture of their ‘”typical customer” in order to keep focused and in tune with the customer.
• A copy of your company goals and objectives, to ensure your marketing effort stays in line with your company strategy.
• An outline of your competitive advantage(s).
• An analysis of your advantages over your competitors in the same categories listed above.

Pricing

1. What is your pricing strategy? How price sensitive is the market? Why did you choose this strategy? (6 points)
2. How did you determine your price?  Give me the numbers! (6 points)
3. What are your margins? How will you make a profit?  Show me the numbers. (6 points)

Competitive Advantage

4. How will you build your competitive advantage?  Which of the following?  (NOT ALL, just pick one or two.) (2 points)

• Close relationship to customers.
• Devotion to quality.
• Attention to convenience.
• Dedication to customer service.
• Flexibility
• Other

5. Explain your competitive advantage/competitive edge. (Describe in detail about the one or two competitive advantages you selected in question 4.) (10 points)