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Here you will find information necessary in preparing your marketing plan.
I COVER PAGE
II TABLE OF CONTENTS
III INTRODUCTION
IV SITUATIONAL ANALYSIS
- The Market
- The Competitive Environment
- The Technological Environment
- The Socio-Political Environment
- Other
V PROBLEMS AND OPPORTUNITIES
VI OBJECTIVES
VII STRATEGY
VIII ACTION PLAN
IX FINANCIAL DATA
APPENDICES
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Explanation of Market Share
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How to Prepare a Breakeven Analysis
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How to Prepare a Cash Flow Statement
The Marketing Plan
I COVER PAGE
Include
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Legal name of business
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Name of document (“Marketing Plan”)
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Date of preparation or modification of the document
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Name, address and phone number of the business or contact person
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Name, address and phone number of the individual or business who prepared the plan
II TABLE OF CONTENTS
III INTRODUCTION
IV SITUATIONAL ANALYSIS
The market
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Description of your total potential market (your potential customers).
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How does your product/service satisfy the needs of this market?
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Describe the particular customers that you will target.
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Size of (1) total potential market (number of potential customers), and (2) your target market. Support estimates with factual data.
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Growth potential of (1) total potential market, and (2) your target market. Look at local, national and international markets. Support estimates with factual data.
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Your market share (See Appendix A).
Competitive environment
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Identify major competitors: name, location, and market share.
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Compare your product/service with that of your major competitors (brand name, quality, image, price, etc.).
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Compare your firm with that of your major competitors (reputation, size, distribution channels, location, etc.).
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How easy is it for new competition to enter this market?
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What have you learned from watching your competition?
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Are competitors’ sales increasing, decreasing, steady? Why?
Technological environment
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How is technology affecting this product/service?
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How soon can it be expected to become obsolete?
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Is your company equipped to adapt quickly to changes
Socio-political environment
Other
V PROBLEMS AND OPPORTUNITIES
State each problem or opportunity and what you will do about them.
VI OBJECTIVES
VII STRATEGY
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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.
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How have you taken into account the previously mentioned problems and opportunities, and the potential reactions of your competitors?
VIII ACTION PLAN
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How will you implement the above strategy?
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Product/service: Quality, branding, packaging, modification, location of service, etc.
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Pricing: How will you price your product/service so that it will be competitive, yet profitable?
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Promotion/advertising: How, where, when, etc.
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Selling methods: Personal selling, mail-order, etc. Include number of salespersons, training required, etc.
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Distribution methods.
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Servicing of product.
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Other: Add any other relevant information.
IX FINANCIAL DATA
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Sales projections for the next five years (optimistic, pessimistic, realistic).
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Breakeven Analysis (See Appendix B).
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Monthly cash flow for Year 1, quarterly for Years 2 and 3. (See Appendix C).
The Marketing Plan
APPENDIX A
Market Share
Market share is determined by dividing a firm’s sales by total market sales.
Example
Company Name Annual Sales ($)
ABC Company 50,000
XYZ Comany 40,000
NEW Company 90,000
RED Company 90,000
MMM Company 25,000
Total $295,000
Market share of Company ABC:
= $50,000 = .17
$295,000
Multiply by 100 to determine percentage
Market share of Company ABC = 17%
Sales of Company ABC 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 other sources who may be in a position to help you 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 on this page.
APPENDIX B
Breakeven Analysis
The breakeven analysis determines at which sales volume
your firm will start making money.
The breakeven formula:
Fixed costs
_____________________________
(Revenue/unit - Variable costs/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
$3.00 labour
.60 overhead
$5.20
Selling price = $9.00/unit
No. of units to break even = $50,000/year
_____________________
$9,00/unit - $5.20/unit)
= 13,158 units/year
In this example, 13,158 units must be sold at 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 following page.
You may use the breakeven analysis to determine how changes in price and sales level, or cost increases or decreases will affect 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, 2004
JAN FEB MAR
Opening Cash Balance 15,000 10,040 3,440
RECEIPTS
Cash Received from Sales* 0 900 1,000
Cash from Receivables Collected 0 0 2,700
Loan Proceeds* 0 0 660
_____________________________________________________________________
DISBURSEMENTS
Accounts Payable* 2,500 2,500 3,500
Rent 400 400 400
Supplies 120 30 30
Utilities 190 190 190
Telephone 50 30 30
Insurance
Advertising & Promotion 500 500 400
Wages 1,800 1,600 2,000
Salaries 1,500 1,500 1,500
Taxes
Loan repayment 0 500 500
Miscellaneous 200 200 200
TOTAL DISBURSEMENTS 4,960 7,500 7,800
________________________________________________________________________
SURPLUS (DEFICIT) $10,040 $3,440 $0
* See the following pages for more information about methods for recording sales, loan proceeds, and method for recording “Accounts Payable”.
Method for recording sales
Some sales will be made in 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 in 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’ different collection periods (30 days, 60 days, etc.).
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.
The Marketing Plan
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.
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. Sales in January 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 in March, under “Cash from Receivables Collected”
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 in February, under “Cash Received from Sales”
• $130,000 (65% of 200,000) is recorded in March, under “Cash from Receivables Collected”. Since $25,000 from January sales has already been recorded in March, the two figures are added together and the total is recorded (25,000 + 130,000 = 155,000)
• 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 Collected”
JAN FEB MAR APR
Cash Received from Sales 10,000 20,000 0 0
Cash from Receivables Collected 0 65,000 155,000 50,000
A Commitment to Sustainable Development
At ACOA, we believe that a healthy environment is essential to the development of a strong, growing and sustainable economy. We are committed to protecting the environment of this region by promoting sustainable businesses and communities in Atlantic Canada and by setting an example in the environmental management of ACOA's own operations.
Head Office:
Atlantic Canada Opportunities Agency
644 Main Street
P.O. Box 6051
Moncton, NB
Toll Free: 1-800-561-7862
Telephone: (506) 851-2271
Fax: (506)851-7403
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Atlantic Canada Opportunities Agency
570 Queen Street
3rd floor
P.O. box 578
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E3B 5A6
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Telephone: (506)452-3184
Fax: (506)452-3285
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Atlantic Canada Opportunities Agency
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Suite 600
P.O. Box 2284, Station "M"
Halifax, NS
B3J 3C8
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Telephone: (902)426-6743
Fax: (902)426-2054
Enterprise Cape Breton Corporation
4th Floor, Commerce Tower
15 Dorchester Street
P.O. Box 1750
Sydney, NS
B1P 6T7
Toll Free: 1-800-705-3926
Telephone: (902) 564-3600
Fax: (902) 564-3825
Newfoundland & Labrador
Atlantic Canada Opportunities Agency
John Cabot Building
11th Floor, 10 Barter's Hill
P.O. Box 1060, Station "C"
St. John's, NL
A1C 5M5
Toll Free: 1-800-668-1010
Telephone: (709)772-2751
Fax: (709)772-2712
Prince Edward Island
Atlantic Canada Opportunities Agency
Royal Bank Building
100 sydney Street, 3rd Floor
P.O. Box 40
Charlottetown, PEI
C1A 7K2
Toll Free: 1-800-871-2596
Telephone: (902)566-7492
Fax: (902)566-7098
Web Site: www.acoa-apeca.gc.ca