What Makes a Good Business Plan: How Will You Sell Your Product?
Someone said once that all business is marketing. All businesses, by definition, sell something, with success determined by how much you sell. Marketing being the art of selling, you can see the truth of that nostrum.
Keep in mind, again, that your business plan is an advocacy piece, a document by which you are trying to convince an investor that your business has a good chance of making money. Smart investors know that you will only make money if you can convince other people to pay you for your goods or services. You have to show your investors that you have a plan, a strategy, for getting consumers to give you a part of their hard-earned cash. Your investor will want you to answer these questions: Who will buy your product, and why? How do you plan to locate those buyers? How do you plan to tell those buyers about your product? How do you plan to persuade those buyers to buy?
The answers to those strategic questions will then spawn a host of tactical questions. How do I most effectively communicate with my most likely customers? What kind of advertising should I run? What kind of public relations campaign should I wage? How do I direct my salespeople? Which distribution channels should I affiliate with? How much should my product cost? Is packaging style important? Should my product be bundled with another product?
All these questions and more are dealt with in a document called a marketing plan, and the marketing plan, or at least a good synopsis of it, is an essential part of your business plan. You must show not merely that you have a good product, but that you have thought hard about how you are going to sell that product. A good product that sits on the shelf is trash.
Here, again, it is important to be objective, and not to trust yourself too much. Entrepreneurs have a tendency to be overly attached to their products. Because they put so much energy and time into the creation and development of a product, they often fail to consider whether the consuming public at large will share their enthusiasm.
Neat ideas do not very often translate into successful sales. Successful products invariably feed a need. The most successful products fill a need that exists, but is not understood to exist by the consumer. Consider one of the most successful new products in recent history--3M Corporation's Post-It Note. Before Post-Its, we all wrote notes on documents, and either stapled or paper-clipped notes written on memo pads to documents. In other words, there was a preexisting demand for a way to attach one paper to another in a way that was secure but at the same time removable. But everyone assumed that the problem was solved with staples and paperclips, and everyone had learned to live with the small inconveniences and inefficiencies of stapling and paperclipping. The Post-It Note was immediately recognized as a better way of doing what we had always done before--the proverbial better mousetrap.
Now this story may be apocryphal, but here is how I heard it. Some brilliant marketing guy at 3M decided that the best way to introduce Post-It Notes to the market was to give them away. He (or she, who knows?) sent free samples to the secretaries of senior executives at the Fortune 500 companies. The secretaries immediately saw the benefit of Post-It Notes, and in effect became addicted to them. When the free samples ran out, they ordered more, and when other secretaries and executives saw the new-fangled things, they all wanted them, too. The rest, as they say, is history.
It is not easy to divine what will capture the consumer's imagination. Some products, like the Post-It Note, seem inherent winners; all 3M had to do was demonstrate them to an obvious group of consumers. But what about others? Who could predict that a company like Starbuck's could succeed by selling coffee for ten times the going price? Who could predict that Ben & Jerry's could take a generic product--ice cream--and turn it into a winning business just by creating new flavors, something that any other ice cream maker could have done just as well? Who could have predicted that Barnes & Noble could revolutionize the book selling business by making book stores look like cozy college libraries, complete with lounge chairs and coffee bars, instead of old-style grocery stores? All those represent marketing at its best, not by selling revolutionary products, but the utterly mundane--coffee, ice cream and books--by making them seem new. And the secret, you will notice, is that Starbuck's, Ben & Jerry's and Barnes & Noble are not really marketing their core products at all--they are marketing something else, an experience that is unique to them, some intangible that makes them irresistable. As the old sales adage goes, they are selling the "sizzle and not the steak."
A good marketing plan will at least contain some intelligent discussion of the number of prospective customers, including demographic data to back up your numbers. It will also articulate what makes your product different from others that do the same thing or satisfy the same need, and, most important, why that difference will appeal to consumers. Experienced marketers will tell you that the winning "difference" will rarely be price. Remember Starbuck's $5 cup for coffee. It will set a reasonable goal of what percentage of the prospective market you expect will buy your product over what span of time. And, finally, it will describe in detail how you plan to introduce your product to your identified market, and how you will persuade that market to buy it.
Remember that no one expects you to predict the future with total accuracy. Rather, you will be judged on how thoroughly you have thought out the problem, how reasonable you are in your assumptions and goals, how logical are your strategic plan and how realistic you are in how you plan to execute your strategy. As in most of life, there is no "right" answer; but you had better have one that seems likely to work.
Alas, marketing is not my expertise, so I can't tell you how to be another Starbuck's. But I hope that I have at least made you think about the supreme importance of marketing to your business success. There are marketing experts out there, by the way, and one would be wise to consult them in putting a marketing plan together. Marketing professionals can evaluate your product or service and help you define what is irresistible about it. They can research the market, perform market tests to help refine the message, and otherwise ensure that when your product is rolled out, your customers will grasp quickly at least why your product is good for them, if not its irresistibility. But more important than that, perhaps, a professional marketing team will provide objectivity to balance your natural tendency as an entrepreneur to overrate your baby, or to focus on one aspect of it which you thing is cool, and ignore other features that may better appeal to the market at large.