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Here you will find information necessary in preparing your marketing plan.
- COVER PAGE
- TABLE OF CONTENTS
- INTRODUCTION
- SITUATIONAL ANALYSIS
- The Market
- The Competitive Environment
- The Technological Environment
- The Socio-Political Environment
- Other
- PROBLEMS AND OPPORTUNITIES
- OBJECTIVES
- STRATEGY
- ACTION PLAN
- FINANCIAL DATA
APPENDICES
Appendix A - Market Share
Appendix B - How to Prepare a Breakeven Analysis
Appendix C - How to Prepare a Cash Flow
I. COVER PAGE
Include:
- Legal name of business
- Name of document ("Marketing Plan")
- Date of preparation or modification of the document.
- Name, address and phone number of the business or contact person.
- Name, address and phone number of the individual or business who prepared the plan.
II. TABLE OF CONTENTS
III. INTRODUCTION
- Describe product or service. (Emphasize unique or innovative features and/or
protection by patent, copyright or other legal means).
IV. SITUATIONAL ANALYSIS
The Market
- Description of your total potential market (ie.
your potential customers).
- How does your product/service satisfy the needs
of this market?
- Describe the particular customers that you will
target.
- Size of (1) total potential market (number of
potential customers), and (2) your target market. Support estimates with
factual data.
- Growth potential of (1) total potential market,
and (2) your target market. Look at local, national and
international markets. Support estimates with factual data.
- Your market share (See Appendix A).
Competitive Environment
- Major competitors: name, location, and market share.
- Compare your product/service with that of your major competitors (brand name, quality, image, price, etc.).
- Compare your firm with that of your major competitors (reputation, size, distribution channels, location, etc.).
- How easy is it for new competition to enter this market?
- What have you learned from watching your competition?
- Are competitors' sales increasing, decreasing, steady? Why?
Technological Environment
- How is technology affecting this
product/service?
- How soon can it be expected to become obsolete?
- Is your company equipped to adapt quickly to changes?
Socio-political Environment
- Describe changing attitudes and trends.
How flexible and responsive is your firm?
- New laws and regulations that may affect your business. What might be the
financial impact?
Other
- Include other situational factors that will affect your marketing plan.
V. PROBLEMS AND OPPORTUNITIES
- State each problem or opportunity and what you will do about each.
VI. OBJECTIVES
- State objectives in precise, quantifiable terms. (eg. "To obtain a sales volume of
3000 unites by the end of the fiscal year.")
VII. STRATEGY
- How will you reach your objective? (new market
penetration, expansion of market share, entrenchment, etc.). You
may wish to consult a book on basic marketing for an overview of the
various strategies that can be used.
- How have you taken into account the previously mentioned problems and opportunities, and
the reactions of your competitors?
VIII. ACTION PLAN
- How will you implement the above strategy?
- Product/service: Quality, branding,
packaging, modifications, location of service, etc.
- Pricing: How will you price your
product/service so that it will be competitive, yet profitable.
- Promotion/advertising: How, where, when,
etc.
- Selling methods: Personal selling,
mail-order, etc. Include number of salespersons, training
required, etc.
- Distribution methods
- Servicing of product
- Other: Add any other relevant information.
IX. FINANCIAL DATA
- Sales projections for the next 5 years
(optimistic, pessimistic, realistic).
- Breakeven Analysis (See Appendix B).
- Cash Flow Monthly for Year 1, quarterly for Years 2 and 3. (See Appendix
C).
APPENDIX A - MARKET SHARE
Market share is determined by dividing a firm's sales by total market sales.
EXAMPLE:
| Company Name |
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Annual Sales($) |
| ABC Company |
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50,000 |
| XYZ Company |
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40,000 |
| NEW Company |
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90,000 |
| RED Company |
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90,000 |
| MMM Company |
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25,000 |
| Total |
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295,000 |
Market share of Company A:= $50,000 / $295,000= .17
Multiply by 100 to determine percentage
Market share of Company A = 17%.
Sales of Company A account for approximately 17% of total market sales.
To determine sales volume:
To determine the sales volume of each firm, you should contact suppliers, retailers,
trade associations, or others who may be in a position to help you to form an estimate.
Other sources of information:
- Annual reports for each company
- Government reports on industry, market trends,
etc.
- Trade publications or journals
NOTE: You may find it useful to display market share values in a pie
chart as shown below.
ABC COMPANY
MARKET SHARE
APPENDIX B - BREAKEVEN ANALYSIS
The breakeven analysis determines at which sales volume your firm will start making
money.
The breakeven formula:
Fixed
Costs
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| (Revenue per unit - Variable costs
per unit) |
- Fixed costs: Costs that must be paid whether or not any units are
produced. These costs are fixed only over a specified period of time or
range of production.
- Variable costs: Costs that vary directly with the number of products
produced. (Typically: materials, labour used to produce units, percentage of overhead)
EXAMPLE:
| Fixed cost |
$50,000/year |
10,000-30,000 unit production range |
| Variable cost |
$1.60 |
materials |
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3.00 |
labour |
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.60 |
overhead |
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$5.20 |
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10,000-30,000 unit production range |
| Selling Price |
$9.00/unit |
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| No of Units to break even |
$50.000/year
($9.00/unit-$5.20/unit) |
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13,160 units/year |
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In this example, 13,160 units must be sold for a price of $9.00 before the firm will
begin to realize a profit.
A breakeven analysis is most clearly illustrated in a chart such as the one shown on
the next page.
You may use the breakeven analysis to determine how price changes, sales level changes,
or cost increases or decreases will effect profitability.
APPENDIX C - THE CASH FLOW STATEMENT
WHAT IS A CASH FLOW STATEMENT?
- A cash flow statement identifies monthly inflows and outflows of cash. It reveals
whether a company will have enough money to meet its needs on a monthly basis.
HOW IS A CASH FLOW STATEMENT PREPARED?
- The cash flow statement is displayed in the
following format. You may add different receipts or disbursements which
are appropriate for your business.
- The cash receipts for each month of the first year should be provided. The heading notes
the date of the end of the period covered by the cash flow statement.
ABC COMPANY
Cash Flow Forecast
For the Year Ended December 31,2006
| Opening Cash Balance |
JAN |
FEB |
MARCH |
| RECEIPTS |
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Accounts Payable***
Supplies
Rent
Utilities
Purchase Fixed Assets
Insurance
Professional Fees
Advertising & Promotion
Wages
Salaries
Long Term Debt
Taxes
(specify others...)
TOTAL DISBURSEMENTS |
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| SURPLUS (DEFICIT) |
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*Method for recording sales
Some sales will be made for cash while others may be made on credit.
Because sales made on credit will not result in the receipt of cash until a later date,
they must not be recorded until the month in which the cash will actually be received.
Therefore, the percentage of sales to be made for cash and the percentage to be made on
credit must be estimated. The percentage of credit sales should be further broken down
according to the business's different collection periods (30 days, 60 days, etc.).
The following example will illustrate this. Sales of ABC Company are 10% cash received
immediately, 65% received in 30 days, and 25% in 60 days.
1. January's sales are expected to be $100,000.
- $10,000 (10% of 100,000) is recorded in
January, under "Cash Received from Sales".
- $65,000 (65% of 100,000) is recorded in
February, under "Cash from Receivables Collected".
- $25,000 (25% of 100,000) is recorded under "Cash from Receivables Collected"
in March.
| |
JAN |
FEB |
MAR |
APR |
| Cash Received from Sales |
10,000 |
0 |
0 |
0 |
| Cash from Receivables Collected |
0 |
65,000 |
25,000 |
0 |
2. Sales in February are expected to be $200,000.
- $20,000 (10% of 200,000) is recorded under
"Cash Received from Sales" in February.
- $130,000 (65% of 200,000) is recorded in March under "Cash from Receivables
Collected". $25,000 from January sales has already been recorded in March so the two
figures are added together and the total is recorded (25,000 + 130,000 = 155,00.
Therefore, $155,000 is recorded in March under "Cash from Receivables
Collected". $50,000 from February sales is recorded in April under "Cash from
Receivables Collects".
| |
JAN |
FEB |
MAR |
APR |
| Cash from Sales |
10,000 |
20,000 |
0 |
0 |
| Cash from Receivables Collected |
0 |
65,000 |
155,000 |
50,000 |
**Loan Proceeds
When a deficit appears on the final line, the amount of the deficit will need to be
borrowed. Record the amount appearing on the deficit line on the loan proceeds line, then,
change the deficit to zero. This shows investors when you will have a cash shortage that
will require you to borrow additional funds.
***Method for recording "Accounts payable"
Accounts payable must be broken down according to your suppliers terms of payment For
example, items purchased in January may have to be paid in 30 days or 60 days-meaning that
the actual cash disbursement would not occur until March and April respectively. Accounts
payable are recorded in the month that they will actually be paid.
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ABC COMPANY
Cash Flow Forecast
For the Year
Ended December 31, 2006
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Jan |
Feb |
Mar |
Apr |
May |
June |
July |
Aug |
Sept |
Oct |
Nov |
Dec |
TOTAL |
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OPENING CASH BALANCE |
$15,000 |
$10,040 |
$3,440 |
$0 |
$710 |
$3,050 |
$5,290 |
$8,930 |
$17,670 |
$26,540 |
$29,270 |
$35,900 |
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RECEIPTS |
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Cash rec'd from sales |
0 |
900 |
1,000 |
1,200 |
1,200 |
1,800 |
1,900 |
1,600 |
1,200 |
1,600 |
1,400 |
1,000 |
14,800 |
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Cash from receivables |
0 |
0 |
2,700 |
8,400 |
9,600 |
10,800 |
12,600 |
16,500 |
16,200 |
10,800 |
14,400 |
13,800 |
115,800 |
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Loan proceeds |
0 |
0 |
660 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
660 |
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TOTAL RECEIPTS |
0 |
900 |
4,360 |
9,600 |
10,800 |
12,600 |
14,500 |
18,100 |
17,400 |
12,400 |
15,800 |
14,800 |
131,260 |
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Disbursements |
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Accounts payable |
0 |
2,500 |
2,500 |
3,500 |
3,500 |
5,500 |
6,000 |
4,500 |
3,500 |
4,500 |
4,000 |
2,500 |
42,500 |
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Rent |
400 |
400 |
400 |
400 |
400 |
400 |
400 |
400 |
400 |
400 |
400 |
400 |
4,800 |
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Supplies |
120 |
30 |
30 |
30 |
30 |
30 |
30 |
30 |
30 |
30 |
30 |
30 |
450 |
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Utilities |
190 |
190 |
190 |
180 |
150 |
150 |
150 |
150 |
150 |
180 |
180 |
180 |
2,040 |
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Telephone |
50 |
30 |
30 |
30 |
30 |
30 |
30 |
30 |
30 |
30 |
30 |
30 |
380 |
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Insurance |
150 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
70 |
80 |
80 |
80 |
460 |
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Advertising & promo |
500 |
500 |
400 |
500 |
400 |
400 |
400 |
400 |
500 |
400 |
400 |
300 |
5,100 |
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Maint'nce & repairs |
50 |
50 |
50 |
50 |
50 |
50 |
50 |
50 |
50 |
50 |
50 |
50 |
600 |
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Wages |
1,800 |
1,600 |
2,000 |
2,000 |
1,700 |
1,600 |
1,600 |
1,600 |
1,600 |
1,800 |
1,800 |
1,600 |
20,700 |
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Salaries |
1,500 |
1,500 |
1,500 |
1,500 |
1,500 |
1,500 |
1,500 |
1,500 |
1,500 |
1,500 |
1,500 |
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16,500 |
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Taxes |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
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Loan repayment |
0 |
500 |
500 |
500 |
500 |
500 |
500 |
500 |
500 |
500 |
500 |
500 |
5,500 |
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Miscellaneous |
200 |
200 |
200 |
200 |
200 |
200 |
200 |
200 |
200 |
200 |
200 |
200 |
2,400 |
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TOTAL DISBURSEMENTS |
4,960 |
7,500 |
7,800 |
8,890 |
8,460 |
10,360 |
10,860 |
9,360 |
8,530 |
9,670 |
9,170 |
5,870 |
101,430 |
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SURPLUS (DEFICIT) |
$10,040 |
$3,440 |
$0 |
$710 |
$3,050 |
$5,290 |
$8,930 |
$17,670 |
$26,540 |
$29,270 |
$35,900 |
$44,830 |
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