The marketing section of your business plan is made up of two separate components: A strategic plan and a tactical plan. A strategic plan is long-term look at your business and the surrounding business environment. A tactical plan is an action plan for the next twelve months.
Strategic planning is one of the most important aspects of your business. It helps ensure that you will remain in business when your competitors may not. Strategic planning allows the visualization of future profit streams and allows you to negotiate in a fluctuating, unreliable and unstable market.
However, few small businesses plan strategically. Strategic planning is sometimes difficult to explain and hard to implement, which is why it is often not completed. Also, the marketplace changes so fast that what you thought was a good idea two years ago is now out of date. It is all too easy to say to yourself, “Long-term strategic thinking is not going to improve my profit next year, so why bother?”
But consider the fact that ongoing change creates opportunities can be used by you as a small business operator. The most successful business people are those that sense or foresee future trends and adapt their businesses to exploit these coming changes.
There are many definitions of strategic planning. Our definition is: “strategic planning is concerned with what to change in your business to survive the future market changes beyond your control.”
Strategy versus tactics
People often ask, “What’s the difference between a strategy and a tactic?”
Strategy involves your future vision for your business. Tactics involve the actual steps you need to take to achieve that vision. The strategy always comes first, followed by the tactics.
For example, if you run a motel a marketing strategy might be to target travel agents, and develop a business package for them including an e-commerce solution.
Tactics are the practical steps required to implement the strategy. For example, the tactics for the travel agents’ strategy might be to:
build a list of local travel agents
prepare a business incentive scheme
outline how they can use your website to order from you and keep up to date
personally visit the agents and follow up
monitor the response to determine if the sales target is met.
Check that your planned strategy and tactics are consistent with your business values. For example, a value based commitment to environmentally responsible hospitality could be reflected strategically by working towards Green Globe certification, and tactically, incorporating energy efficient appliances in the motel fit-out.
How to complete a strategic plan
A strategic plan looks at the overall viability of the business. The plan answers questions like:
Who will buy or use my products or services?
What price should I charge?
Is there any demand for my products or services?
What may happen or change in the future that will affect my business?
What should I sell or provide?
What is the best way to distribute our products or services?
Are we in the right location?
Can we make and sell sufficient products to produce a profit?
Even if you are already in business these topics still need to be addressed to ensure you stay competitive. The biggest threat to existing business is ‘change’. Luckily the biggest opportunity for existing businesses is also change!
Any business that does not think long term runs risks. The market or the industry may change to such a degree that the business becomes no longer competitive. Therefore, it is advisable to revisit the strategic issues of your business at least once every year (more often if you are in a rapidly changing industry).
The first step is to collect customer feedback.
It is essential to obtain information from your current or potential customers. No amount of discussing with professionals, friends or colleagues will ever replace the information from a real customer. Market research using your customers is one of the most important aspects of being in a small business—and probably one of the least likely things ever to be completed!
What do they like, what do they dislike? How can things be improved? How much will they pay for something? Is convenience important? Should items be packaged together? Do you need EFTPOS? Is after-sales service critical? If you cannot answer any of these questions, then you will not be in business very long.
The easiest methods to get this information are:
When you are dealing with existing or potential customers, strike up a conversation with them and informally ask them.
2. Focus groups
This involves you gathering a number of customers, sitting them down and discussing a range of issues relevant to your business. The advantage of using this method over a questionnaire is that you will get more detailed information and feedback, rather than ‘tick the box’ style responses from a questionnaire.
Call your customers and ask a couple of questions over the phone.
The point is, never assume anything—especially how your customers feel about your business.
You might distribute one-page questionnaires that ask some key questions and encourage customers to fill them out.
Questionnaires are used to survey customers and potential customers, and are the most common form of gathering business feedback. Because collecting market research is crucial but often overlooked by small businesses, we have included a section on how to design an effective questionnaire.
Questionnaires can be used to answer questions such as:
Would your customers use a toll-free phone service?
Do customers find it easy to park in your area?
Would customers mind if you were closed on Mondays?
How many times a year do your customers take a holiday?
What do the customers like about your business?
What do customers think could be improved?
Would your customers shop via your website if you had one?
Are they more likely to buy a product or service that is environmentally preferable than one that is not?
Are they more likely to buy from a business that is socially and/or environmentally responsible?
1. Be as brief as possible
You are asking people to give up their free time. Tell them how long the questions will take to answer. You may have to offer them an incentive (for example, a prize draw).
2. Be sensitive when asking for personal details
For example, name, address, age range, income range. Only ask for these details if they are going to provide you useful information and make sure you store such information in a secure manner. You will need to assure the respondent regarding confidentiality.
3. Know exactly what you want to find out
Carefully craft your questions to the answers people give can be used in a meaningful way.
4. Choose the correct type of question
What type of information do you want (qualitative or quantitative)? Be aware of the difference between:
a. Open ended questions
“Explain your impressions of our after-hours service.”
b. Closed questions
“How would you rate our after-hours service?’
a) excellent b) very good c) good d) quite bad e) very bad
c. Use normal language
Avoid technical jargon or slang. Also be careful to avoid ambiguity.
d. Avoid using words that indicate bias
For example, don’t ask: “What don’t you like about this particular product?”
This automatically suggests there is something wrong with the product, which may influence the answer. Try to avoid words such as ‘like’ and ‘dislike’. A better way to ask this question would be “Explain what you think about this particular product.”
e. Do not ask more than one question at a time
For example, “Do you think the sales person was friendly and helpful?” Split this into two questions.
f. Who to survey?
If possible try to screen people in your target market first. You need to ensure that the people your survey are people who will have relevant information for you.
g. How many people should you survey?
Generally speaking, a sample of one hundred people should be adequate for a small geographical area. Professional market research companies generally use samples of between three hundred and one thousand people. A sample size of three hundred will give a maximum error range of about five percent.
As you gather strategic information you can determine how your business is positioned.
Defined simply, positioning is how your business fits into the market compared to the competition. Positioning is very important because the message you give out to consumers will impact on their decision to use your business rather than a different one.
How customers position your business
It is the customer (not you) who usually decides your position in the marketplace. Furthermore, once an opinion is set it is extremely difficult to change the perception people have of your products or services.
Once a customer decides that your goods or services are expensive, then this is the position your business has, regardless of any other evidence you may offer to defend yourself.
It is likely that this customer will now believe that everything you provide and sell is over the average price. Hence the danger of positioning: a certain position on one product can spread to other products and services that may, in fact, be cheaper than the competition.
Every consumer “positions” a business without even thinking about it. So once you have decided where you want to be positioned in comparison to the competition, you must:
If necessary, change any aspect of the business in order to fulfil the promise of your positioning statements.
Constantly remind staff and customers about your competitive advantages and publicize each differentiation point.
Remember that your brand must also convey a sense of market position. A piece of jewelry from Tiffany’s will command a premium price because of the brand, where a similar piece from a local jewelry store will not sell at that price point.
After you have worked your way through all of the above suggestions, the information you have collected will help you to complete the tactical plan, especially in the selection of your targets.