2.0.

Situation Analysis

The Situation Analysis sets the scene as you develop your marketing plan. This is where
you look at your company's situation and its market. Consider what your company offers
and why, what you do well, and why, and introduce your marketing situation and the main
components of the marketing plan. These components include your:

• Markets
• Competition
• Services
• Distribution channels
• Microenvironment, and
• Historical results

Additional Detail
The most important single point is the market need. Every marketing plan should take a
market-oriented strategic planning approach that focuses on the market need. Another very
useful section is the SWOT analysis, where you look strategically at your company and its
market.

2.1. Market Needs

This may be the most important topic in your marketing plan. For each of your main target
markets, emphasize the market need that you seek to fill with the products and/or services
you offer. Focus on the benefits you are providing your customers rather than the benefits
you are realizing.

Value is realized in tangible and intangible forms:

• Are you saving your clients time, effort, or money?

• Are you enhancing their net worth, their self-confidence, or their potential?
• Are you enriching their skills, their sense of security, or their self-esteem?
• Are you minimizing their real or perceived risks, fears, or liabilities?

Additional Detail
Think in broad terms of the benefits you offer. For example:

• An automobile provides not just mobility; it may also offer drivers excitement,
security, even status. Is a family minivan serving the same need as a two-seat sports
car?
• A personal computer fills different needs as a productivity machine in an office than
as a game machine at home.
• A computer consulting business might really provide security and reassurance to its
clients, rather than simply computing know-how.
If you are managing several important segments, you might use this topic as a summary
topic, and then add sub-topics for examining the needs of each segment.

Explain the target market needs that relate to the products or services you provide:

• Did the need exist before the products or services were offered?
• Are there other products or services that offer different ways to satisfy this same
need?
• Do you have market research related to this market need?

It is always a good idea to try to define your offering in terms of target market needs, so
you focus not on what you have to sell, but rather on the buyer needs you satisfy.

2.2. The market

This paragraph is a summary about your market(s). Be concise. You should generally
describe the different groups of target users included in your market analysis, and refer
briefly to why you are selecting these as targets. You may also want to summarize market
growth and cite highlights of some of your growth projections, if this information is
available.

Additional Detail
One technique is to skip this topic until you have finished the sub-topics that follow, then
come back here to write the highlights.

Normally this topic is linked to the Market Analysis table, which you use to develop a
market forecast for your specific target market segments. Use the table to develop specific
numbers for total potential markets and market growth for each of your target segments.

Remember, the market analysis focuses on potential customers, not actual customers.
Depending on the scale of your projections, you may want to round your numbers to
thousands, so your table does not have the formatting problems associated with too many
zeros.

Market analysis

Use this table to define your target market segments and estimate how many potential
customers are in each segment. We recommend that the market analysis focus on potential
customers, not actual customers. You might measure it as adults, households, or households
and businesses.

The growth rate column establishes a straight-line growth rate that will be applied to the
first year to create the estimated growth for future years. You can also override the standard
calculations by simply typing in the market numbers you want to show for future years,
regardless of growth rates.
Additional Detail
Once you understand the idea of potential customers, then your problem is information
gathering and making estimates.

For example, if you have a movie theater in a town of 100,000 people, then your total
potential customers is 100,000 even if you sell to only half of them. Or, if you have an
expensive auto dealership in that same town, then the total potential is probably some
portion of the population whose income level would allow purchasing an expensive car.

Market analysis (pie)

The data for this chart comes from your Market Analysis table. It shows your projected total
potential market, by segment (each row is assumed to be a segment), for the first year
included in your plan. This is considered to be the present total potential market.

Because of the built-in math and the basic scale of the numbers, your chart may not show in
great detail when there is a lot of difference between the numbers in each segment. For
example, if you have millions of potential customers in one segment, then the automatic
scaling will make a segment with just a few thousand users look like it is just a line. This is
a matter of scale in business charts.

2.2.1. Market demographic

Markets can be described in terms of geographic, demographic, psychographic, and

behavioral attributes. Analyzing your market from this perspective can be a useful way to
categorize what you know about the people that you want as clients and lead to identifying
and confirming opportunities the market presents.

You may find that your information is limited, and just capture what you know. This can
also be an area that can help identify areas needing additional research.

Additional Detail
Market Demographics - Demographics consider information about your market's age,
gender, nationality, education, household composition, occupation and income.

Market Geographics - This factor addresses where your customers are physically located. A
landscape architect may serve those people within a specific climate or region. If you are
marketing your services over the Internet, your client's physical location may be irrelevant.

Market Psychographics - Psychographics categorize people on the basis of their lifestyle or

personality attributes. For example, the lifestyles and personality attributes of people in a
large metropolitan city are going to be quite different from those of a small agricultural-
based community.

Market Behaviors - Buyers can also be analyzed based on their knowledge, attitude, use, or
response to a product. These behavioral variables may include the occasions that stimulate
a purchase, the benefits they realize, the status of the user, their usage rate, their loyalty, the
buyer-readiness stage, and their attitude toward the products you offer.

Document what you know about each of these areas. If you have an existing client base or
previous experience with this market, think about your "best" clients. If you do not have
historical information, check to see if there are resources that you can use to help you
understand and describe the attributes of your market.

For example, a market may be described in these terms:

Geographic - This area has a population of 65,000.

Demographic - Of this predominately female group, most have attended college, are
between the ages of 35 and 50, and have children at or out of the home.

Psychographic - They consider time as their most limited resource and security, both
physical and financial, is important.

Behaviors - After checking with people they know and trust, they choose professionals and
services that have been "tested" and remain loyal to service providers that offer good value,
regardless of cost. The relationship they develop with the professional is critical to a
successful ongoing experience.

Market demographics

Use this table to keep track of important keys to marketing that vary by segment. For
example, consumer-oriented marketing plans might track the age, income level, education,
readiness to purchase, etc. For a business-to-business oriented marketing plan, you might
track the industry, number of employees, important needs, and other important segment
factors.

You can change these factors by simply clicking on the green cells and changing the name
of the column. Tracking doesn't necessarily mean numbers. This table assumes short texts,
such as what is shown in the example. Lengthy discussions should be placed in a
corresponding topic, with this table linked to the topic.

Additional Detail
Don't take this table as a difficult task. Remember this is your plan, and you should use the
tables to your advantage. If you don't have information you want to track, then leave this
one out.

2.2.2. Market trends

Market trends could involve changes in demographics, changes in customer needs, a new
sense of style or fashion, or other factors that may influence purchasing behavior of your
market. Much of this depends on what business you are in. For example:

• A construction business might note the trend toward more rooms in larger houses,
despite smaller families, because of home offices, dens, media rooms and exercise
rooms.
• A restaurant business might note a trend toward fresher, healthier foods, or
development of a new restaurant district in a different part of town.
• An accounting practice might note demographic trends, as baby boomers age,
leading toward more need for estate planning and retirement planning.

Additional Detail
Understanding market trends may enable you to "get ahead" of your market and allow you
to know where it is going before it gets there.

Research regarding trends can be a tremendous help. Your industry's association may be
able to provide information on key trends. Magazine publications that address industry
issues are another potential source. Financial analysts track trends for investment purposes
and you may find this information useful.

Some markets, particularly in larger metropolitan areas, have detailed market trend
information that may be available through your local library or university. Remember that
the Internet can be an efficient source of information for inexpensive and accurate market
trend research.

Once you have acquired this information, adapt it to what you know about your market. If
your market tends to be an early adopter of these trends, incorporate them into your current
strategy. If your market lags behind the pace setters, you will want to adapt the impact to
your business.

Market analysis (trends)

The data for this chart comes from your Market Analysis table. It shows your projected total
potential market, by segment (each row is assumed to be a segment), for the years included
in your plan.

Because of the built-in math, and the basic scale of the numbers, your chart may not show
in great detail when there is a large difference between the numbers in each segment. For
example, if you have millions of potential customers in one segment, then the automatic
scaling will make a segment with just a few thousand users look like it is just a line. This is
a matter of scale in business charts.

2.2.3. Market growth

Use this topic to explain and discuss market growth. Is the market growing, is it static, or is
it shrinking?

Documented market growth enhances the implied value and potential of your organization.
Ideally you will be able to cite experts, a market research firm, trade association, or credible
journalists describing projected growth. This may be particularly important when your plan
is used to communicate with those outside the marketing department or outside the
organization, such as for investors, board members, or advisors.

Cite growth rates in terms that fit the available information and your industry. Determine if
growth is best expressed in the number of potential customers, projected sales, projects
completed, website projects, tax reporting hours, yards to landscape, or whatever best fits
your business and your audience.

Additional Detail
Whenever you can, relate the growth rates cited in expert forecasts to the growth in
potential customers that you have included in the market analysis table. This will calculate
total market growth over a five-year period, using the assumptions in your marketing plan
forecast.

If you are projecting the market will experience growth, briefly describe how you are going
to leverage your strengths to take advantage of the market growth. If the market is static or
shrinking, your task is much more challenging. You will need to take away market share
from your competitors to experience growth in your business.

Check for reality. Are your growth rates reasonable, based on the characteristics of your
market? Are they believable? Can you defend them? Unreasonable growth rates can create
unrealistic expectations and a marketing plan that is doomed to fail. Grossly understated
growth rates may minimize the potential of your marketing plan and make this process
more difficult for you next year.

Market analysis (C.A.G.R)

The data for this chart comes from your Market Analysis table. It shows your projected
annual growth in total potential market, by segment (each row is assumed to be a segment),
for the years included in your plan.

C.A.G.R. stands for Compound Annual Growth Rate, which Marketing Plan Pro calculates
automatically and places in the far-right column of your Market Analysis table.

2.2.4. Macroenvironment

This section describes the broad macroenvironment trends that may affect your ability to
generate revenue. This considers the demographic, economic, technological, political/legal,
and social/cultural changes that impact the potential market worth of your products in the
future.
Briefly address factors that may include market acceptance, social perceptions, saturation
levels, consumer trends, economic changes, competitive activity, or technology
advancements. What trends in the larger environment may impact the course of your
business? You may want to review your comments in the "Opportunities" and "Threats"
sections of your SWOT analysis for ideas and validation.

2.3. The company

This is a summary of your company, group, division, team, or project. Be concise. Who is
involved, what does it do, for whom? When did it start, and why? If you're developing a
specific marketing plan for a specific project or task, focus on the part of the company that
is involved. Set the background.

Additional Detail
Remember that form follows function. Don't describe your company to your company.
Include only what you need to set the context and details of this marketing plan. One
technique is to skip this topic until you have finished the sub-topics that follow, then come
back here to write the highlights.

2.3.1. Mission

2.3.2. Product offering

List and describe the product(s) your company offers. For each business offering, cover the
main points including how much it costs, what sorts of customers make purchases, and
why?

Initially, think in terms of customer needs and customer benefits as you define your product
offerings, rather than the products you sell. As you list and describe your products, you may
run into one of the serendipitous benefits of good planning, which is generating new ideas.

Additional Detail
The length and detail included here depends on the purpose of your plan. Normally a
marketing plan is not written for people outside the company, so you do not need to
describe products as if you were developing sales literature or collaterals. Still, this is a
good place to list the benefits offered and pricing points. Use your judgment, and make sure
the plan matches its purpose.

If you have different lines of products and a lot of detail, you can create sub-topics.

2.3.3. Positioning

Your marketing positioning statements should include:

• A strategic focus on the most important target market

• That market's most important market need
 • How your product meets that need
• What is the main competition
• How your product is better than the competition

Additional Detail
Consider this example:

For [target market description] who [target market need], [this product] [how it meets the
need]. Unlike [key competition], it [most important distinguishing feature].

For example, the positioning statement for the original Business Plan Pro, in 1994, was:
"For the businessperson who is starting a new company, launching new products or seeking
funding or partners, Business Plan Pro is software that produces professional business plans
quickly and easily. Unlike [name omitted], Business Plan Pro does a real business plan,
with real insights, not just cookie-cutter fill-in-the-blanks templates."

2.3.4. SWOT summary

Your situation includes your company's strengths, weaknesses, opportunities and threats
(SWOT). This topic summarizes the SWOT analysis, highlighting its most important
insights. Although it appears in print before the SWOT table, you normally develop this
topic after finishing the table.

2.3.4.1. strenghts

2.3.4.2. weaknesses

2.3.4.3. opportunities

2.3.4.4.. threats

2.4. competition

Use this topic to summarize your competition. Is it direct competition you can name and
describe, or indirect competition that's harder to identify? How strong is the competition?
How much does it affect your business?

Additional Detail
You do have competition. Even the newest most innovative brand-new product or service
has to deal with potential competition from other providers whose position would be
affected. If nobody is in your market and nobody will ever enter it, then you must have an
extremely unattractive market. What other businesses could be affected by your offering?
How would they react? How would their customers react?

Some would say that rule number one of marketing planning is that you do have
competition. If you don't have competition, review rule number one.
2.4.1. direct competition

Direct competitors offer similar or identical products. Use this topic to list the
specific competing products, and the strengths and weaknesses of each.

Describe your major competitors in terms of the factors that most influence their impact.
This may include their size, the market share they command, their comparative quality,
their growth, available funding and resources, image, marketing strategy, target markets,
and any attributes you consider important.

Additional Detail:
Industry associations, industry publications, media coverage, information from the
community, and their own marketing materials and websites may be good resources to
identify these factors and "rate" the performance of each alternative provider. You might
also discuss how your product compares to the others. What, if any, special features and
benefits does your product offer, to whom, and how does your mix compare to others?
Think about specific kinds of benefits, features, and market groups, comparing where you
think you can show the difference.

Growth and share analysis

If you have appropriate data, you can use this table to analyze your market position and
compare it to the positions of your main competitors. Start by listing your own company
and your main competitors in the label column at the left. Then insert your estimates for
average price for each competitor, growth rate (in percent), and market share (also in
percent) for each competitor.

When you have the appropriate data, this table and its companion chart, Competitor by
Growth and Share, give you an excellent view of the competitive situation. However, don't
be surprised if you don't have all the data you need, and don't be afraid to leave this table
out.

Additional Detail
We estimate that 7 out of every 10 companies won't be able to find this information. When
you are a small local business, competing with other small local businesses, you have no
outside source to go to. You might decide to estimate the numbers yourself, using your own
knowledge.

Competitive analysis

This table gives you a place to list and compare important features, benefits, strengths, and
weaknesses of your company and your competition. The information here is intended to be
very flexible, and the already-named rows are suggestions only. Feel free to add and delete
rows as needed so you can focus on the right factors of competition.
Additional Detail
You may want to determine a rating scale, such as 1-5 for example, where 1 is Lowest and
5 is Highest. This would let you show how each competitor compares within your analysis.

Competitor by growth and share

This chart illustrates the competitive position of your competitors. Growth rate is on the
vertical axis, average price on the horizontal, and market share is indicated by the size of
the circle. The data comes directly from the Growth and Share table.

2.4.2. Indirect competition

Don't ignore indirect competition. Other products compete with your product, or will
compete in the future. For example, business planning software competes with books, local
courses, and Internet websites. Automobiles compete with mass transit, bicycles, and
telecommuting programs.

Additional Detail
Particularly if you don't have much direct competition, you should use this section to look
at comparative offerings, the strengths and weaknesses of each, the potential benefits and
attractiveness to your buyers. Comparison is critical; include as much comparison as you
can because that leads you to strategy.