The Market Plan

The marketing plan is a problem-solving document. Skilled problem solvers recognize that a big problem is usually the combination of several smaller problems. The best approach is to solve each of the smaller problems first, thereby dividing the big problem into manageable pieces. Your marketing plan should take the same approach. It should be a guide on which to base decisions and should ensure that everyone in your organization is working together to achieve the same goals. A good marketing plan can prevent your organization from reacting to problems in a piecemeal manner and even help in anticipating problems.

Before your marketing plan can be developed, research must give you the basic guidelines: for whom you are designing your product or service (market segmentation), and exactly what that product or service should mean to those in the marketplace (market positioning). Below are some guidelines to help you develop a marketing plan to support the strategy you have selected for your organization.

Market Segmentation

Your marketing plan should recognize the various segments of the market for your product or service and indicate how to adjust your product to reach those distinct markets. Instead of marketing a product in one way to everyone, you must recognize that some segments are not only different, but better than others for your product. This approach can be helpful in penetrating markets that would be too broad and undefined without segmentation. No matter what you are making or selling, take the total market and divide it up like a pie chart. The divisions can be based on various criteria such as those listed below.

Demographics

This is the study of the distribution, density and vital statistics of a population, and includes such characteristics as

- Sex.

- Age.

- Education.

- Geographic location.

- Home ownership versus rental.

- Marital status.

- Size of family unit.

- Total income of family unit.

- Ethnic or religious background.

- Job classification -- blue collar versus salaried or professional.

Psychographics

This is the study of how the human characteristics of consumers may have a bearing on their response to products, packaging, advertising and public relations efforts. Behavior may be measured as it involves an interplay among these broad sets of variables:

• Predisposition -- What is there about a person's past culture, heredity or upbringing that may influence his or her ability to consider purchasing one new product or service versus another?
• Influences -- What are the roles of social forces such as education, peer pressure or group acceptance in dictating a person's consumption patterns?
• Product Attributes -- What the product is or can be made to represent in the minds of consumers has a significant bearing on whether certain segments will accept the concept. These attributes may be suggested by the marketer or perceived by the customer.

Some typical ways of describing a product include

• Price/value perception -- Is the item worth the price being asked?
• Taste -- Does it have the right amount of sweetness or lightness?
• Texture -- Does it have the accepted consistency or feel?
• Quality -- What can be said about the quality of the ingredients or lack of artificial ingredients?
• Benefits -- How does the consumer feel after using the product?
• Trust -- Can the consumer rely on this particular brand? What about the reputation of the manufacturer in standing behind the product?

Life-Style

Statements consumers make about themselves through conspicuous consumption can be put to good use by research people who read the signals correctly. By studying behavioral variables, such as a person's use of time, services and products, researchers can identify some common factors that can predict future behavior.

ZIP Code Analysis

In his book, The Clustering of America,* Michael J. Weiss described the research efforts of the Claritas Corporation. In 1971, company president Jonathan Robbin started with the idea of analyzing the 254,000 U.S. census blocks and 36,000 ZIP code areas to find out what types of people live in each. Based on the theory that birds of a feather flock together, he reasoned that, as neighborhoods develop, the people who move in are attracted by a set of common life-style factors in a pattern called social clustering. He analyzed each ZIP code according to hundreds of characteristics under the headings of social rank, mobility, ethnicity, family life cycle and housing style. He found 34 key factors that accounted for 87 percent of the variation among U.S. neighborhoods. His computers then assigned each ZIP code to a cluster type and ranked them from highest to lowest standard of

living (see Table 1).

Table 1
Clustering of U.S. Neighborhoods According to Standard of Living
ZIP Median Median % % U.S. Home
qual Cluster income home college house- value/
ity-a value grads holds income
1 Blue Blood

Estates $70,307 $200,000+b 50.7 1.1 2.8

2 Money &

Brains 45,798 150,755 45.5 0.9 3.3

3 Furs & Station

Wagons 50,086 132,725 38.1 3.2 2.6

4 Urban Gold

Coast 36,838 200,000+b 50.5 0.5 5.4

5 Pools/Patios 35,895 99,702 28.2 3.4 2.7

6 2 More Rungs 31,263 117,012 28.3 0.7 3.7

7 Young

Influentials 30,398 106,332 36.0 2.9 3.5

8 YoungSuburbia 38,582 93,281 23.8 5.3 2.4

9 God's Country 36,728 99,418 25.8 2.7 2.7

10 Blue Chip

Blues 32,218 72,563 13.1 6.0 2.3

11 Bohemian Mix 21,916 110,668 38.8 1.1 5.0

12 Levittown USA 28,742 70,728 15.7 3.1 2.5

13 Gray Power 25,259 83,630 18.3 2.9 3.3

14 Black

Enterprise 33,149 68,713 16.0 0.8 2.0

15 NewBeginnings 24,847 75,364 19.3 4.3 3.0

16 Blue-Collar

Nursery 30,077 67,281 10.2 2.2 2.2

17 New

Homesteaders 25,909 67,221 15.9 4.2 2.6

18 New Melting Pot 22,142 113,616 19.1 0.9 5.1

19 Towns & Gowns 17,862 60,891 27.5 1.2 3.4

20 Rank & File 26,283 59,363 9.2 1.4 2.3

21 MiddleAmerica 24,431 55,605 10.7 3.2 2.3

22 Old Yankee Rows 24,808 76,406 11.0 1.6 3.0

23 Coalburg &

Corntown 23,994 51,604 10.4 2.0 2.2

24 Shotguns &

Pickups 24,291 53,222 9.1 1.9 2.2

25 Golden Ponds 20,140 51,537 12.8 5.2 2.6

26 Agri-Business 21,363 49,012 11.5 2.1 2.3

27 Emergent

Minorities 22,029 45,187 10.7 1.7 2.0

28 Single City

Blues 17,926 62,351 18.6 3.3 3.5

29 Mines & Mills 21,537 46,325 8.7 2.8 2.2

30 Back-Country

Folks 19,843 41,030 8.1 3.4 2.1

31 Norma Rae-Ville 18,559 36,556 9.6 2.3 2.0

32 Smalltown

Downtown 17,206 42,225 10.0 2.5 2.5

33 Grain Belt 21,698 45,852 8.4 1.3 2.0

34 HeavyIndustry 18,325 39,537 6.5 2.8 2.2

35 ShareCroppers 16,854 33,917 7.1 4.0 2.0

36 Downtown

Dixie-Style 15,204 35,301 10.7 3.4 2.3

37 Hispanic Mix 16,270 49,533 6.8 1.9 3.0

38 Tobacco Roads 13,227 27,143 7.3 1.2 2.1

39 Hard Scrabble 12,874 27,651 6.5 1.5 2.1

40 Public

Assistance 10,804 28,340 6.3 3.1 2.6

National Median $ 24,269 $ 64,182 16.2 100.0 2.6

Source: PRIZM (Census Demography) Claritas Corporation 1987.

a = ZIP quality is a socioeconomic ranking based on income home value education and occupation a kind of pecking order of affluence. Although jobs have no social status per se they're rated in a complex weighting system on the basis of how much education and training they require.

b = Because the upper census limit for home values is $200,000+ the figure for Blue Blood Estates and Urban Gold Coast are estimates.

The important thing to recognize about the 40 groups in Table 1 is that each spends its money in particular ways because the people in that neighborhood have common values. As you move up the zip quality scale, it is obvious that people have more money to spend, but unless you have what that group thinks is important or desirable, they aren't going to buy. And, more important, if their friends and neighbors don't like what you have to sell, your chances of making the sale are pretty slim.

A sample analysis of the data in Table 1 follows. The average American spends 2.6 times his or her annual income on a home (calculated by dividing the median home value for each cluster by the median income). According to Table 1, the Bohemian Mix cluster spends almost twice the average on housing because, while its members earn less money than neighboring clusters, their higher education level gives them the confidence and desire to invest in a larger house. The business owner must learn how home purchase relates to all other purchases for each cluster and how all purchases fall into a pattern. The pattern has to do with how the people in each cluster place values on and gain acceptance and pleasure from purchases, leisure activities and memberships that contribute to the life-style of that particular neighborhood.

In 1978, Claritas launched PRIZM -- Potential Rating Index by ZIP Markets -- which refined the 40 rankings by cross-referencing with magazine subscription lists, new car buyer lists, TV viewing diaries, and warranty card, voting records and sales records for thousands of products and services. With this new level of data sophistication, marketing people obtained an amazingly accurate picture of who lives in the 40 types of neighborhoods.

The largest single cluster, for example, is No. 10 -- Blue Chip Blues. These are the top-of-the-line blue-collar folks who have parlayed a high school education and skilled-labor jobs into suburban comfort and active leisure lives. By comparing this cluster's life-style expenditures with those of other clusters and the national average, we can cumulate data such as those reflected in Table 2

Table 2
Life-Style Expenditures of Blue Chip Blues Cluster
High usage Index* Low usage Index*

Life-style

Campers/trailers 202 Jewelry 91

Above-ground swimming pools 197 Civic clubs 81

Watch ice hockey 173 Watch roller derby 77

Preferred stock in own co. 173 Imported champagne 76

Bicycles 154 Malt liquor 69

Hedge trimmer 153 Tennis 67

Second mortgages 153 Jazz records/tapes 54

Lawn tools 153 Movie cameras 51

Bowling 151

Automatic garage door opener 149

Racquetball 145

Desk-top calculators 137

Vans 136

Salt-water fishing 134

Push lawn mowers 132

Compact cars 132

Diet pills 129

Magazines/newspapers

Skin Diver 192 Wall Street Journal 77

Bride's Magazine 162 New Yorker 74

4 Wheel & Off Road 159 Harper's 69

Golf 154 Town & Country 54

Cars

Chevrolet Sprint 194 Saab 67

Buick Riviera 175 BMW 5 Series 49

Plymouth Turismo 174 Ferrari 46

Pontiac Grand Am 171 Jaguar 41

Ford EXP 171 Rolls Royce 23

Food

Children's vitamins 126 Canned corned-beef hash 94

Frozen pizza 125 Whole milk 92

Mexican food 122 Cold cereal 89

Powdered soft drinks 120 Canned stews 84

Source: SMBR and MRI data bases Claritas Corporation 1987.

*Index numbers indicate percentages of users in each cluster indexed against the national average. An index of 100 equals the U.S. average for that category. An index of 300 means the cluster has three times the national average for that category

Such information is indispensable to direct mail marketing firms, but almost any growing business can benefit from better information about past and present customers. Start by recording ZIP codes from checks you receive, ask your customers to write ZIP codes on your charge card slips and categorize your cash sales by ZIP code. Such information gathered over time will give you clues to such questions as

• Where do your present customers live?
• What areas are growing or declining?
• What is the influence of tourists, students, military or other specialized populations?
• Does advertising increase sales in certain areas?
• What is the effect of competitive activities on your sales?
• How can you find more customers like the ones you have now?

The real key to successful marketing is to identify the market segments you wish to reach and then tabulate the results of your marketing efforts until you find out what works best for you -- and then keep repeating your successes.

Market Positioning

You must realize that your product or service cannot be all things to all people. Very few items on the market today have universal appeal. Even when dealing in basic commodities like table salt or aspirin, marketing people have gone to all sorts of extremes to create brand awareness and product differentiation. If your product or service is properly positioned, prospective purchasers or users should immediately recognize its unique benefits or advantages and be better able to assess it in comparison to your competition's offering. Positioning is how you give your product or service brand identification.

Positioning involves analyzing each market segment as defined by your research activities and developing a distinct position for each segment. Ask yourself how you want to appear to that segment, or what you must do for that segment to ensure that it buys your product or service. This will dictate different media and advertising appeals for each segment. For example, you may sell the same product in a range of packages or sizes, or make cosmetic changes in the product, producing private labels or selecting separate distribution channels to reach the various segments. Beer, for example, is sold on tap and in seven-ounce bottles, twelve-ounce cans and bottles, six-packs, twelve-packs, cases, and quart bottles and kegs of several sizes. The beer is the same but each package size may appeal to a separate market segment and have to be sold with a totally different appeal and through different retail outlets.

Remember that your marketing position can, and should, change to meet the current conditions of the market for your product. The ability of your company to adjust will be enhanced greatly by an up-to-date knowledge of the marketplace gained through continual monitoring. By having good data about your customers, the segments they fit into and the buying motives of those segments, you can select the position that makes the most sense. While there are many possible marketing positions, most would fit into one of the following categories:

Positioning on specific product features -- A very common approach, especially for industrial products. If your product or service has some unique features that have obvious value this may be the way to go.

Positioning on benefits -- Strongly related to positioning on product features. Generally, this is more effective because you can talk to your customers about what your product or service can do for them. The features may be nice, but unless customers can be made to understand why the product will benefit them, you may not get the sale.

Positioning for a specific use -- Related to benefit positioning. Consider Campbell's positioning of soups for cooking. An interesting extension is mood positioning: Have a Coke and a smile. This works best when you can teach your customers how to use your product or when you use a promotional medium that allows a demonstration.

Positioning for user category -- A few examples: You've Come a Long Way Baby, The Pepsi Generation and Breakfast of Champions. Be sure you show your product being used by models with whom your customers can identify.

Positioning against another product or a competing business -- A strategy that ranges from implicit to explicit comparison. Implicit comparisons can be quite pointed; for example, Avis never mentions Hertz, but the message is clear. Explicit comparisons can take two major forms. The first form makes a comparison with a direct competitor and is aimed at attracting customers from the compared brand, which is usually the category leader. The second type does not attempt to attract the customers of the compared product, but rather uses the comparison as a reference point. Consider, for example, the positioning of the Volkswagen Dasher, which picks up speed faster than a Mercedes and has a bigger trunk than a Rolls Royce. This usually works to the advantage of the smaller business if you can capitalize on the American tradition of cheering for the underdog. You can gain stature by comparing yourself to a larger competitor just as long as our customers remain convinced that you are trying harder.

Product class disassociation -- A less common type of positioning. It is particularly effective when used to introduce a new product that differs from traditional products. Lead-free gasoline and tubeless tires were new product classes positioned against older products. Space-age technology may help you here. People have become accustomed to change and new products and are more willing to experiment than was true ten years ago. Even so, some people are more adventuresome and trusting than others and more apt to try a revolutionary product. The trick is to find out who are the potential brand switchers or experimenters and find out what it would take to get them to try your product. The obvious disadvantage of dealing with those who try new products is that they may move on to another brand just as easily. Brand loyalty is great as long as it is to your brand.

Hybrid bases -- Incorporates elements from several types of positioning. Given the variety of possible bases for positioning, small business owners should consider the possibility of a hybrid approach. This is particularly true in smaller towns where there aren't enough customers in any segment to justify the expense of separate marketing approaches.