The Necessity of Developing a Marketing Plan: Key Considerations and Benefits

Introduction

Marketing touches every aspect of an entrepreneur’s business operation. It is usually a series of activities designed to identify what the customers really want or are looking for in your good or service. These activities include a market research and analysis, publicity, advertising, sales, customer service among others. Developing a good and feasible market plan is thus a necessary procedure for anyone who wants to succeed in penetrating the market (Kleiner & Adams, 2003).

However, while developing a feasible business marketing plan is very important. Most of business entrepreneurs never design one or if they design they never follow it to the book; either because they do not know its importance or they are just ignorant. Most economic and business experts attribute the benefits of developing a good business plan as important due to the facts that; the business person or the entrepreneur is able to identify the target market, the entrepreneur can develop both the short term and long term marketing strategies, it helps in allocation of resources which have the greatest returns and also provide a measure, progress, and the outcome the business is likely to follow (Luther, 2001).

Despite all the benefits, most entrepreneurs think or believe research and analysis are only done by professionals but this is not usually the case, if a business persons could invest their time on developing a marketing plan they could realize that a marketing research is simply an orderly, objective way of learning about their potential customers and the likely competition to be faced.

A marketing research does not have to be complex and expensive, it can simply deal with people and how they are likely to change their tastes and preferences as new goods and services are introduced in the market. There exist two types of developing a successful market research. A secondary market research, that involves searching for information from the already published surveys, magazines and journals. The primary research as opposed to secondary research (which seeks to review what has been done) can be as simple as developing a structured or a non structured questionnaire and ask people what their reactions are about certain business idea.

Literature Review

Geishener (2009) indicates that behind every successful product or service that is flowing in the market, a well researched market plan was designed: A market plan that guided the company step by step on how it marketed its product or service and became successful. Goshen further indicates that by not preparing a marketing plan, an entrepreneur leads his or her business to certain failure and thus a need to design one. The importance of a market plan is further explained by Murra (nd) who describes the marketing plan as one’s good or service blue print in marketing to the customers who are willing to buy your products.

Murra further describes a marketing plan as a management strategy for realizing the full potential of your product or service as it allows the entrepreneur to market his or her products according to the marketing objectives; however despite all these benefits “according to the U.S. Small Business Administration, more than half of all new businesses will fail within the first five years”, (Sinclair, Par 1) with the main factor being attributed to the reason that many small businessmen enter the market practically with nothing except the feeling that the market will be favorable to them and while most of them might be well equipped with the business model most fails to take a systematic approach which can act to the benefit or advantage of the entrepreneur.

In contrast to the perceived benefits of designing and following a market plan, Longnecker, Moore, Petty, & Palich (2005) indicates that whether a business plan is needed or not depends on the business environment. In some situations, “the environment might just be too turbulent for extensive planning to be beneficial”. Entrepreneurs may find that there is no enough information to allow them to plan (Longnecker, Moore, Petty, & Palich p118, 2005).

They goes further and stresses the fact that planning may pose a problem when time factor is a very critical component sometimes and also when becoming operational as quickly as possible can be beneficial compared to in depth planning however entrepreneurs ought to be very careful in not using time as their main excuse of not developing a business plan. Thus, it can be concluded that sometimes lack of planning makes sense to some companies especially if the company is capital constrained and the market survey is expensive. The limited profit potential that some companies are faced with and the high uncertainty of the market also makes the benefits compared to the costs that would have been involved.

Longnecker, Moore, Petty, & Palich (2005) goes further and gives the following “Pizza Hut, Mrs. Field, and Crate and Barrel (pg 118) as some of the companies that have succeeded beyond what many investors would have thought with very little market planning. Their main success factor was that the entrepreneur’s main concern was trapping an opportunity rather than developing a marketing plan. While some have succeeded without necessarily developing a marketing plan, this does not mean a marketing plan is not important. Experts in marketing and economics claim that most of us need the guided discipline which comes in writing a good business plan in order to succeed. It may be just a small proportion of entrepreneurs who have instincts to succeed without following the designed order.

If one is an entrepreneur who is seeking to introduce a new product or service in the market it becomes important to know from where the research will be conducted. Baskerville (2010) notes that innovation is the mainstay of most entrepreneurs’ actions and thus by definition an entrepreneur sees what does not exist and as opportunities appear in the market and does not stay for long thus entrepreneurs usually gain their marketing research from introducing and launching a semi test mode and then adapting depending on how the market reacts thus the traditional business plan which asks a business person to sit and plan for the next 5 or 10 years to come is not a necessity to most entrepreneurs.

While the need to develop or not to develop a marketing plan may be a topic of discussion, if one decides to develop a successful one, a business persons needs to be very careful as from a survey done by Angel Investor, it was found out that among the interviewed business persons, 27% of the failed businesses were attributed to unrealistic business plans which are not realistic and pragmatic with most of them under estimating the time and the money needed to develop a product fully.

A further 16% of the investigated sample attributed 16% of the failed business plans due to lack of clarity, unclear and over optimistic projections of the expected results while a further 15% failed due to the failure of the business plan being complete. When a business plan is incomplete, it exhibits lack of timelines for the expected profits and insufficient explanation of the marketing strategy among other factors. A further 10% attributed the failure to business plans which lacks valuation and exit strategies with further 8% each attributed to financial projections, market need, and competition and 4% was attributed to the management team (Power& Hill, 2001)

If writing a business plan is as beneficial as we have seen in some of the aspects, the reason as to why entrepreneurs do not write them remains a puzzle. Experts in marketing have tried to explain this by using several theories in trying to understand the puzzle. The first theory is called the Ignorance Theory, in this theory; experts explain that most of the entrepreneurs fail to understand what researchers and practitioners try to understand and what they figure out in a marketing plan. The theory explains further that if the entrepreneurs were not ignorant some simple mistakes that they make could be avoided if they had learned about the benefits of a marketing plan earlier.

The second theory that tries to explain why entrepreneurs do not make business plans is the Just do It theory. This theory explains that writing business plans does not have the action oriented appeal of hiring and thus this step is usually skipped by most entrepreneurs who are usually in a hurry to realize their business goals.

The third and the final theory is the Don’t look Under The Hood theory. This theory explains that most of the times, business entrepreneurs fail to write business plans due to the fact that they do not want to test their ideas very much or due to fear that if tested, their business ideas may not withstand the scrutiny. This is due to the fact that taken seriously, a business plan can show that a business should not be started; a possibility most entrepreneurs face being confronted with and thus avoid (Shane, 2009).

General Objective

The overall objective of the research is to assess the necessity of developing a market plan. While the specific objectives are

1. Understanding how a market plan helps a businessperson in marketing, especially market penetration.
2. Understanding how a market plan prepares a businessperson with the challenges he or she may face in the market
3. Understanding the disadvantages of a marketing plan

Research Questions

1. Does a market plan help a business plan in marketing especially penetrating the market?
2. Does a business plan prepare a businessperson on the expected challenges?
3. What are the disadvantages of using a business plan?

Methodology

Research Design

A survey study will be conducted with the main aim being that of understanding the necessity of designing and using a marketing plan in business in the state of New York as well as what business persons view as the advantages and disadvantages of using a marketing plan when doing a marketing study. Qualitative data will be collected by the use of both structured and nonstructured questionnaires whereby individual interviews and focus group interviews will be conducted in order to obtain the required data from the businessmen in the state of New York

Population and Sample

The research setting for this study will be in the state of New York in the United States of America. In this state, there are many individuals and companies conducting business and with business sizes varying across the state, it will provide a good population size to get a sample from.

In the qualitative research, the study will try to verify the importance of a marketing plan in penetrating and preserving business customer share by targeting the following groups:

• The small business people
• Partnership businesses
• Mid-level companies
• Large companies.

Data for the target groups will mostly be obtained from the four target groups indicated above each consisting of 50 members depending on their availability and the required scrutiny. In all groups, we shall try and target both genders equally to avoid being gender biased or factors associated with one gender which might make our research not reveal the required credible results. The time spent on each group is projected to depend with the cooperation of the target group and also time allocated by the management.

Research Tools

Questions for the four focus groups and in-depth interviews will be similar and will be as attached in the questionnaire. We intend to design a questionnaire by developing questions of our own interest on the factors which to us seem reliable and then seek professional assistance from the professors and marketing experts to review the questionnaire. We shall then proceed and use a team of 50 able-bodied persons to conduct the interviews who will have been trained on what is required from them we shall then compile the data and enter it into an MS Excel software for analysis once the interviews are over.

Data Collection

The data will be collected between March and April of 2011. The data will be collected through the four different focus groups and the in-depth interviews will be conducted by use of audio tape if the businesspersons being interviewed allow. Most of the locations of the four different groups are likely to be in the place of business so we do not intend to keep them for long and this will be achieved by making our questions brief and well understandable for both the interviewer and the respondents.

Limitations of the study

In each of the four target groups the population will be sampled into 50 members per each group, since the population of the state of New York is very high it will not be possible to interview every businessperson in each town in the state, thus we shall choose from the selected major towns. In some settings, it might also be difficult to interview the owners of the big companies in the state of New York due to their unavailability or claims of being busy.

Plan of Analysis

After collecting the data, we intend to enter it into MS Excel software in the spreadsheet and then analyze data according to groups and their different characteristics. For example according to the ages, how they view market plans, capital endowments, level of education and then represent the analysis in form of charts, graphs, and tables

Timescale

• Jan1st to 15^th: review the literature
• Jan16th to 31^st: draft the literature review
• Feb: present the review to the supervisor for perusal
• March 1^st to 15^th: compile the questionnaire
• March 15^th to 31^st: administer the questionnaire
• April: administer the questionnaire
• May: final collection of the questionnaire and data analysis
• June: final writing of the project

Resources

Reference List

Baskerville, P. 2010. Traditional business plan: 8 reasons why it is not necessary for entrepreneurs. Web.

Geisheker, P. C. 2009. How to Write a Marketing Plan. Web.

Kleiner, E; and Abrams, R. 2003. The successful business plan: secrets & strategies.4^th Edition. The Planning Shop.

Longnecker J. G; Moore, C, W; Petty, J. W; Palich, L. E. 2005 Small business management: an entrepreneurial emphasis. 13^th Edition, Cengage Learning.

Luther, W. M. 2001. The marketing plan: how to prepare and implement it. AMACOM Div American Mgmt Assn.

Murra, G. E. Not Dated. Market plan. Web.

Power, D., Hill, B. 2001. Entrepreneurs Survey: How to Avoid Business Plan Mistakes. 

Shane, S. 2009. Why Don’t All Entrepreneurs Write Business Plans? Web.

Sinclair, N. 2010. Market Research & Analysis to Develop a Small Business Strategy. Web.