2.3 Marketing Plan and 2.4 Identifying the Target Market — Comprehensive Notes

2.3 The Marketing Plan

  • Purpose and scope
    • A Marketing Plan is a written document that provides direction for marketing activities for a specific period.
    • It is a critical planning tool for any business, regardless of industry.
    • It helps determine the viability of the venture in the designated market.
    • It provides guidance to the entrepreneur in organizing planning activities.
    • It serves as an important tool in obtaining financing.
  • Who reads the business plan (3 perspectives)
    • Proponent
    • Customer
    • Investor
  • Key focus areas of the Marketing Plan (the 7 focus areas)
    • 01 The Product
    • 02 The Customer
    • 03 The Economy
    • 04 Target Market
    • 05 Market Distribution Channels
    • 06 Buying Trends
    • 07 Competitor Performance
  • Competition
    • Competition refers to rivalry between two or more businesses selling to the same customers or markets.
    • Impacts price points, product features, and marketing strategies as firms vie for consumer preference.
  • Types of competition
    • Direct competition: between sellers of similar products/services.
    • Indirect competition: between sellers that compete for the same share of consumers’ discretionary income.
  • Customers
    • Customers are the lifeblood of the business; they are the people who buy the products or services.
    • Customer Requirements: specific features and characteristics that customers need from a product or service.
  • Value Proposition (VP) vs Unique Selling Proposition (USP)
    • Value Proposition (VP): states why a customer should buy a product or service; the major driver in customer purchase decisions.
    • Unique Selling Proposition (USP): how you will sell the product or service to customers; addresses what the customer wants and desires.
  • Key questions and framing for VP/USP development
    • VP focus questions:
    • What do I get from buying this product?
    • What do I lose if I don’t buy your product or service?
    • USP focus questions:
    • Why should your customers choose you over your competitors?
    • What makes you different in the mind of the customer?
  • Tips for creating an effective VP
    • Prepare a situation analysis that details customer problems.
    • Make your VP straight to the point, simple, and specific.
    • Highlight the value of your product or service.
    • Adapt to the language of your market.
    • Differentiate your VP from competitors.
    • KISS: Keep It Short and Simple.
  • Tips for creating an effective Unique Selling Proposition (USP)
    • Identify and rank the uniqueness of product or service attributes (7 P’s framework below).
    • Be specific.
  • 7 P’s and 4 main strategic levers
    • 7 P’s: Product, Place, Price, Promotion, People, Packaging, Process.
    • 4 MAIN STRATEGIES: Innovation, Cost, Quality, Speed.
  • Process for USP development (summary)
    • Identify unique attributes, rank them, and articulate how they differentiate you from competitors.
  • Practical note
    • The material emphasizes clear, concise, and market-language-aligned VP/USP to drive communication with customers and investors.

2.4 Identifying the Target Market

  • Marketing research (definition)
    • Marketing research is a comprehensive process of understanding customers’ intricacies and the industry they revolve in.
  • Core concepts: market size and market share
    • Market size: the number of potential buyers of your product or service within a given market (approximation).
    • Market share: a key indicator of how well one company is performing against competitors within the marketplace.
  • Case example: CJ Cansino rice retailing in Barangay Milwaukee Heat
    • Given data:
    • 500 families in the barangay; average family size = 5.
    • 475 families eat rice; average consumption = 1 kilo per day.
    • 3 retailers with 10 years in operation; each has 20% market share.
    • The remaining 20% of the market buys in bulk from grocery stores.
    • Average net profit per kilo of rice = ₱10.
    • Market size calculation steps:
    • Market size in kilos = 475 families × 1 kilo/day × 365 days =
      extMarketSize=475imes1imes365=173,375extkilosext{Market Size} = 475 imes 1 imes 365 = 173{,}375 ext{ kilos}
    • Market size profit (annual) = 173{,}375 kilos × ₱10 =
      extMarketSizeProfit=173,375imes10=₱1,733,750extperannumext{Market Size Profit} = 173{,}375 imes 10 = ₱1{,}733{,}750 ext{ per annum}
    • Market share (20%) of profit = 0.20 × ₱1{,}733{,}750 =
      extMarketShare=₱1,733,750imes0.20=₱346,750ext{Market Share} = ₱1{,}733{,}750 imes 0.20 = ₱346{,}750
  • Market intelligence and market segmentation
    • Market intelligence includes customer profiling to guide strategy and tactics.
    • Market segmentation: grouping similar or homogeneous customers by demographic, psychographic, geographic, and behavioral characteristics.
    • Target markets can be divided into primary and secondary targets.
  • Process of segmenting and targeting customers
    • Step 1: Divide the general market or industry into smaller groups.
    • Step 2: Segment those groups based on customer characteristics or buying situations.
    • Overall process name: PROCESS OF SEGMENTING AND TARGETING CUSTOMERS.
  • A. Characteristics of Customer; B. Buying Situation; C. Select segment(s) to target; D. Develop a plan for integrating the marketing mix
  • A. Characteristics of Customer (geographic and demographic segmentation)
    • I. Geographic segmentation: grouping customers by location (region, province, municipality, barangay).
    • II. Demographic segmentation (socioeconomic segmentation): groups by relevant socioeconomic variables.
    • Demographic variables include:
    • a. Income range and social class
    • b. Occupation
    • c. Gender and age group
    • d. Religion and ethnicity
  • Income and market stratification (illustrative brackets)
    • Based on the provided material, commonly cited monthly income brackets are:
    • Low income but not poor: P10,957 to P21,914 per month
    • Lower middle class: P21,914 to P43,828 per month
    • Middle class: P43,828 to P76,669 per month
    • Upper middle class: P76,669 to P131,484 per month
    • Upper income (not rich): P131,483 to P219,140 per month
    • Rich: ₱219,140 and above per month
  • Detailed income group table (referenced data)
    • The material includes a detailed table of income groups with per capita income ranges, corresponding monthly family income bands, and the number of households in each band (2018 prices). Key takeaways:
    • The table divides households into groups from Poor/Low income up to Rich.
    • It provides per capita income ranges and monthly family income bands for a family of five.
    • It lists the approximate number of households in each band (e.g., tens of millions across lower bands and smaller counts in the upper bands).
  • Psychographic segmentation
    • Process of grouping customers according to perceptions, way of life, motivations, and inclinations:
    • Perceptions: how individuals interpret external stimuli.
    • Way of life: entrepreneur’s view on which products/services best fit problems.
    • Physiological motivations: needs to avoid pain and gain pleasure.
    • Psychological motivations: customer preferences; motivations are affected by aspirations and deprivations.
    • Inclinations: preference for one product over another due to a better experience.
  • Behavioral segmentation
    • Process of grouping customers according to actions and behaviors:
    • Actions triggered by occasions
    • Desired benefits
    • Loyalty
    • Usage of products or services
  • Market aggregation note
    • The material references “Market aggregation” in the context of segmentation and targeting, implying the consolidation of segments for planning and strategy.