Marketing Plan 2

A-1

Overview > “What are our mission and goals?” > “Who are our customers?” > “What types of products do we offer?” > “How can we provide superior customer service?”

These are some of the questions addressed by a marketing plan—a detailed description of the resources and actions needed to achieve stated marketing objectives. Chapter 2 discussed strategic planning—the process of anticipat- ing events and market conditions and deciding how a firm can best achieve its organizational objectives. Marketing planning encompasses all the activities devoted to achieving marketing objectives, establishing a basis for designing a marketing strategy. This appendix deals in depth with the formal marketing plan, which is part of an organization’s overall business plan. At the end of this appendix, you’ll see what an actual marketing plan looks like. Each plan component for a hypothetical firm called Blue Sky Clothing is presented.

Components of a Business plan A company’s business plan is one of its most important documents. The business plan puts in writing what all of the firm’s objectives are, how they will be met, how the business will obtain financ- ing, and how much money the company expects to earn over a specified time period. Although busi- ness plans vary in length and format, most contain at least some form of the following components:

• An executive summary briefly answers the who, what, when, where, how, and why questions for the plan. Although the summary appears early in the plan, it typically is written last, after the firm’s executives have worked out the details of all the other sections.

• A competitive analysis section focuses on the environment in which the marketing plan is to be implemented. Although this section is more closely associated with the comprehensive business plan, factors specifically influencing marketing are likely to be included here.

• The mission statement summarizes the organization’s purpose, vision, and overall goals. This statement provides the foundation on which further planning is based.

• The overall business plan includes a series of component plans that present goals and strategies for each functional area of the enterprise. They typically include the following:

> The marketing plan, which describes strategies for informing potential customers about the goods and services offered by the firm as well as strategies for developing long-term relationships.

Developing an Effective Marketing Plan A p p e n d i x A

marketing plan Detailed description of the resources and actions needed to achieve stated marketing objectives.

strategic planning Process of anticipating events and market conditions and deciding how a firm can best achieve its organizational objectives.

business plan Formal document that outlines what a company’s objectives are, how they will be met, how the business will obtain financing, and how much money the company expects to earn.

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A-2 Appendix A D eveloping an Ef fe c tive Marketing Plan

> The financing plan, which presents a realistic approach for securing needed funds and manag- ing debt and cash flows.

> The production plan, which describes how the organization will develop its products in the most efficient, cost-effective manner possible.

> The facilities plan, which describes the physical environment and equipment required to imple- ment the production plan.

> The human resources plan, which estimates the firm’s employment needs and the skills neces- sary to achieve organizational goals, including a comparison of current employees with the needs of the firm; and which establishes processes for securing adequately trained personnel if a gap exists between current employee skills and future needs.

This basic format encompasses the planning process used by nearly every successful organization. Whether a company operates in the manufacturing, wholesaling, retailing, or service sector— or a combination—the components described here are likely to appear in its overall business plan. Regardless of the size or longevity of a company, a business plan is an essential tool for a firm’s own- ers because it helps them focus on the key elements of their business. Even small firms just starting out need a business plan to obtain financing. Figure A.1 shows the outline of a business plan for Blue Sky Clothing.

Creating a marketing plan Keep in mind that a marketing plan should be created in conjunction with the other ele- ments of a firm’s business plan. In addition, a marketing plan often draws from the busi- ness plan, restating the executive summary, competitive analysis, and mission statement to give its readers an overall view of the firm. The marketing plan is needed for various reasons:

• To obtain financing, because banks and most private investors require a detailed business plan—including a market- ing plan component—before they even consider a loan application or a venture capital investment

• To provide direction for the firm’s over- all business and marketing strategies

• To support the development of long- and short-term organizational objectives

• To guide employees in achieving these objectives

• To serve as a standard against which the firm’s progress can be measured and evaluated

In addition, the marketing plan is where a firm puts into writing its commitment to

“A corporation is a living organism; it has to continue to shed its skin. Methods have to change. Focus has to change. Values have to change. The sum total of those changes is transformation.”

—Andy Grove Co-founder and former CEO,

Intel Corporation

The Blue Sky Clothing Business Plan

I. Executive Summary

• Who, What, When, Where, How, and Why

II. Table of Contents

III. Introduction

• Mission Statement

• Concept and Company

• Management Team

• Product

IV. Marketing Strategy

• Demographics

• Trends

• Market Penetration

• Potential Sales Revenue

V. Financing the Business

• Cash Flow Analysis

• Pro Forma Balance Sheet

• Income Statement

VI. Facilities Plan

• Physical Environment

• Equipment

VII. Human Resources Plan

• Employment Needs and Skills

• Current Employees

VIII. Résumés of Principals

Figure A.1 Outline of a Business Plan

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Appendix A D eveloping an Ef fe c tive Marketing Plan A-3

customers and to building long-lasting relationships. After creating and implementing the plan, marketers must reevaluate it periodically to gauge its success in moving the organization toward its goals. If changes are needed, they should be made as soon as possible.

Formulating an overall marketing Strategy Before writing a marketing plan, a firm’s marketers formulate an overall marketing strategy. A firm may use a number of tools in marketing planning, all of which are described in Chapter 2. These include business portfolio analysis, SWOT analysis, and the BCG matrix; executives may take advantage of a strategic window, study Porter’s Five Forces model as it relates to their business, or consider adopting a first- or second-mover strategy.

In addition to the planning strategies discussed in Chapter 2, marketers are also likely to use spreadsheet analysis, which lays out a grid of columns and rows that organize numeri- cal information in a standardized, easily understood format. Spreadsheet analysis helps plan- ners answer various “what if ” questions related to the firm’s financing and operations. The most popular spreadsheet software is Microsoft Excel. A spreadsheet analysis helps planners anticipate marketing performance given specified sets of circumstances. For example, a spread- sheet might project the outcomes of various pricing decisions for a new product, as shown in Figure A.2.

Once general planning strategies are determined, marketers begin to flesh out the details of the marketing strategy. These include identifying the target market, studying the marketing environment, and creating a marketing mix. When marketers have identified the target market, they can develop the optimal marketing mix to reach their potential customers:

• Product strategy. Which goods and services should the company offer to meet its customers’ needs?

• Distribution strategy. Through which channel(s) and physical facilities will the firm distribute its products?

• Promotional strategy. What mix of advertising, sales promotion, and personal selling activities will the firm use to reach its customers initially and then develop long-term relationships?

• Pricing strategy. At what level should the company set its prices?

“A strategy delineates a terri- tory in which a company seeks to be unique.”

—Michael Porter American management

theorist and writer

spreadsheet analysis Grid that organizes numerical information in a standardized, easily understood format.

Manufacturing

$100,000

$100,000

$100,000

Marketing

$120,000

$230,000

$120,000

R & D

$90,000

$90,000

$90,000

Total

$310,000

$420,000

$310,000

Fixed Costs Per-Unit Variable Cost

$5

$5

$4

Sales Price

$10

$10

$9

Break-Even Point

$62,000

$84,000

$62,000

Figure A.2 How Spreadsheet Analysis Works

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A-4 Appendix A D eveloping an Ef fe c tive Marketing Plan

the executive Summary, competitive analySiS, and miSSion Statement Because these three elements of the business plan often reappear in the marketing plan, it is use- ful to describe them here. Recall that the executive summary answers the who, what, when, where, how, and why questions for the business. In the early days of Google, the executive summary of the company’s business plan included references to its strategic planning process for its search services, which involved “developing the perfect search engine … [one that] understands exactly what you mean and gives you back exactly what you want.”1 The summary also answered questions such as who was involved (key people and organizations), what length of time the plan represented, and how the goals would be met.

The competitive analysis focuses on the environment in which the marketing plan is to be implemented. Trenton, New Jersey–based TerraCycle manufactures a wide variety of products, all made from recycled materials. Believing the green movement will eventually hold sway in consumer products, TerraCycle’s business goal is to become the leading eco-friendly organic brand in each of the product categories in which it competes. It doesn’t attempt to overpower the category leader; instead, it aims to beat other eco-friendly competitors. For example, TerraCycle differentiates itself in the collection and reuse of nonrecyclable waste. Recently it even devised a process for recycling a commodity widely considered to be nonrecyclable: cigarette butts.2

The mission statement puts into words an organization’s overall purpose and reason for being. According to Nintendo’s corporate mission, the company is “strongly committed to producing and marketing the best products and support services available.” Not only does Nintendo strive to manu- facture the highest-quality video products, but it also attempts “to treat every customer with atten- tion, consideration and respect.” Nintendo is similarly committed to its employees and believes in treating them “with the same consideration and respect that we, as a company, show our customers.”3

deScription oF the company A company description is included near the beginning of the marketing plan, typically following the executive summary and before the mission statement. The company description may include a brief history or background of the firm, the types of products it offers or plans to introduce, and recent successes or achievements. In short, it consists of a few paragraphs containing the kind of informa- tion often found on the home page of a company’s website.

Statement oF goalS and core competencieS The plan then includes a statement of the firm’s goals and its core competencies—the things it does extremely well or better than anyone else. The goals should be specific and measurable and may be divided into financial and nonfinancial aims. A financial goal might be to add 75 new franchises in the next 12 months or to reach $200 million in revenues. A nonfinancial goal might be to enter the European market or to add a new product line every other year.

Core competencies make a firm stand out from everyone else in the marketplace. Costco’s core competency is offering a wide variety of goods at low prices, including unexpected bargains like luxury-brand watches and Dom Perignon champagne. Costco leadership regards its workforce as a significant differentiator in the company’s success and, for that reason, pays above-market wages. The average Costco hourly wage is nearly $21—35 percent higher than the highest minimum wage in the United States.4

Small businesses often begin with a single core competency and build their business and repu- tation on it. It is important for a new firm to identify its core competency in the marketing plan so investors or banks understand why they should lend the firm money to get started or to grow to the next stage. As a college student, David Kim found he enjoyed tutoring children. When he discov- ered a real demand for skilled tutoring, he decided to launch a tutoring business, which he named C2 Education. Because C2’s core competency is helping students to excel, employees are hired and trained according to rigorous standards. Today, C2 Education serves students from elementary through high school, operating in 110 locations in the United States and Canada.5

“Failing to plan is planning to fail.”

—Alan Lakein American time management

expert; author of How to Get Control of Your Time and

Your Life

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outline oF the marketing environment (Situation analySiS) Every successful marketing plan considers the marketing environment—the competitive, economic, political–legal, technological, and social–cultural factors that affect the way a firm formulates and implements its marketing strategy. Marketing plans may address these issues in different ways, but the goal is to present information that describes the company’s position or situation within the marketing environment. J. Crew, for instance, has a well-known brand name and a CEO with an impressive track record, Mickey Drexler, who previously headed The Gap. The retail environment for stores such as J. Crew is highly competitive. Merchandise that doesn’t appeal to enough custom- ers ends up on a clearance rack and hurts the bottom line. According to Drexler, the key to J. Crew’s success is that it sells merchandise that cannot be sold elsewhere. Drexler pushes his buyers to “out- product” their competitors.6 A marketing plan for J. Crew would include an evaluation of competing stores, such as The Gap and Urban Outfitters; any technological advances that would affect factors such as merchandise distribution or inventory; social–cultural issues such as fashion preferences and spending habits of customers; and economic issues affecting a pricing strategy.

One such method for outlining the marketing environment in the marketing plan is to include a SWOT analysis, described in Chapter 2. SWOT analysis identifies the firm’s strengths, weak- nesses, opportunities, and threats within the marketing environment. A SWOT analysis for J. Crew might include strengths such as its corporate leadership, brand name, and upscale target market. Weaknesses might include the risks inherent in the business of correctly spotting fashion trends. A major opportunity lies in the fact that J. Crew can expand almost anywhere. For example, after J. Crew acquired Madewell, a retailer that sells hip, casual clothes to an upscale audience, it expanded the chain to more than 75 stores and launched an e-commerce site. Threats for J. Crew could include competition from other trendy stores, sudden changes in customer preferences, and financial crises that affect spending. A SWOT analysis can be presented in chart format so that it is easy to read as part of the marketing plan. The sample marketing plan in this appendix includes a SWOT analysis for Blue Sky Clothing.

the target market and marketing mix The marketing plan identifies the target market for the firm’s products. The Cute Overload web- site (www.cuteoverload.com) contains photos and videos of animals that visitors can share and about which they can post comments. But the site also offers a page-a-day desk calendar of the same name featuring images of puppies, kittens, birds, and chipmunks with humorous captions. Cute Overload targets women ages 18 to 34 who need a laugh and a brief escape from the real world. The calendars are also offered for sale on Amazon.com, and the retailer’s inventory recently sold out in one day, which astonished the developer.7 Weight Watchers has long regarded women as its primary target market and, in fact, females currently make up 90 percent of its clientele. However, as the company saw increasing interest from men, marketers for Weight Watchers began to tap into that segment, launching a men-only website and a $10 million advertising campaign directed solely at men.8

The marketing plan also discusses the marketing mix the firm has selected for its products. Hollywood studios are known for implementing lavish strategies for promoting their films. Not only did Walt Disney Studios use traditional means to launch its recent movie, Frozen, but it also ran a Disney Movie Rewards promotion. Under the promotion, moviegoers could score free admission to the movie by buying selected Disney DVDs or Blu-Rays and registering a “magic code” online at DisneyMovieRewards.com.9

Budget, Schedule, and monitoring Every marketing plan requires a budget, a time schedule for implementation, and a system for moni- toring the plan’s success or failure. At age 21, entrepreneur Joe Cirulli of Gainesville, Florida, made a to-do list of ten life goals, which included “Own a health club” and “Make it respected in the community.” By age 33, Cirulli had achieved all ten of his life goals, including the opening of his Gainesville Health & Fitness Center. As Cirulli’s business grew, however, he discovered a larger mission: to make Gainesville the healthiest community in America. Today, Gainesville is the first and only city to win the Gold Well City award from the Wellness Council of America, and Cirulli’s

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A-6 Appendix A D eveloping an Ef fe c tive Marketing Plan

fitness center is widely regarded as one of the best in the industry. Whether or not he realized it at the time, Cirulli’s life and business plan at age 21 had the makings of a marketing plan, with goals and budgets, a timeline, and measurements of progress—a formula for business success.10

Most long-range marketing plans encompass a two- to five-year period, although companies that do business in industries such as auto manufacturing, pharmaceuticals, or lumber may extend their marketing plans further into the future, because it typically takes longer to develop these prod- ucts. However, marketers in most industries will have difficulty making estimates and predictions beyond five years because of the many uncertainties in the marketplace. Firms also may opt to develop short-term plans to cover marketing activities for a single year.

The marketing plan, whether it is long term or short term, predicts how long it will take to achieve the goals it sets out. A goal may be opening a certain number of new stores, increasing mar- ket share, or achieving an expansion of the product line. Finally, the marketing program is moni- tored and evaluated for its performance. Monthly, quarterly, and annual sales targets are usually tracked; the efficiency with which certain tasks are completed is determined; customer satisfaction is measured; and so forth. All of these factors contribute to the overall review of the program.

At some point, a firm may implement an exit strategy—a plan for the firm to leave the mar- ket. A common way for a large company to do this is to sell off a business unit. A number of these strategies have been implemented recently. For years, Sony Corporation’s PC business struggled in the highly competitive industry before the company decided to exit and sharpen its focus on mobile devices, including smartphones. Sony sold its Vaio brand to Japan Industrial Partners, a Tokyo– based investment firm.11

Sample marketing plan The following pages contain an annotated sample marketing plan for Blue Sky Clothing. At some point in your career, you will likely be involved in writing—or at least contributing to—a market- ing plan. And you’ll certainly read many marketing plans throughout your business career. Keep in mind that the plan for Blue Sky is a single example; no one format is used by all companies. Also, the Blue Sky plan has been somewhat condensed to make it easier to annotate and illustrate the most vital features. The important point to remember is that the marketing plan is a document designed to present concise, cohesive information about a company’s marketing objectives to managers, lend- ing institutions, and others involved in creating and carrying out the firm’s overall business strategy.

“In marketing I have seen only one strategy that can’t miss— and that is to market to your best customers first, your best prospects second, and the rest of the world last.”

—John Romero American video game

designer, programmer, and developer

Five-Year Marketing Plan Blue Sky Clothing, Inc.

Table of Contents

executive Summary This five-year marketing plan for Blue Sky Clothing has been created by its two founders to secure additional funding for growth and to inform employees of the company’s current status and direction. Although Blue Sky was launched only three years ago, the firm has experienced greater-than-anticipated demand for its products, and research has shown that the target mar- ket of sports-minded consumers and sports retailers would like to buy more casual clothing than Blue Sky currently offers. As a result, Blue Sky wants to extend its current product line as well as add new product lines. In addition, the firm plans to explore opportunities for online sales. The marketing environment has been very receptive to the firm’s high-quality goods— casual clothing in trendy colors with logos and slogans that reflect the interests of outdoor enthusiasts around the country. Over the next five years, Blue Sky can increase its distribution, offer new products, and win new customers.

The executive summary outlines the who, what, where, when, how, and why of the marketing plan. Blue Sky is only three years old and is successful enough that it now needs a formal marketing plan to obtain additional financing from a bank or private investors for expansion and the launch of new products.

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company deScription Blue Sky Clothing was founded three years ago by entrepreneurs Lucy Neuman and Nick Russell. Neuman has an undergraduate degree in marketing and worked for several years in the retail clothing industry. Russell operated Go West!—an adventure business that arranged group trips to locations in Wyoming, Montana, and Idaho—which he sold to a partner. Neuman and Russell, who have been friends since college, decided to develop and market a line of clothing with a unique yet universal appeal to outdoor enthusiasts.

Blue Sky Clothing reflects Neuman’s and Russell’s passion for the outdoors. The com- pany’s original cotton T-shirts, baseball caps, and fleece jackets and vests bear logos of differ- ent sports, such as kayaking, mountain climbing, bicycling, skating, surfing, and horseback riding. But every item shows off the company’s slogan: “Go Play Outside.” Blue Sky sells clothing for both men and women, in the hottest colors with the coolest names—sunrise pink, sunset red, twilight purple, desert rose, cactus green, ocean blue, mountaintop white, and river rock gray.

Blue Sky attire is currently carried by small retail stores that specialize in outdoor cloth- ing and gear. Most of these stores are concentrated in northern New England, California, the Northwest, and the South. The high quality, trendy colors, and unique message of the clothing have gained Blue Sky a following among consumers between ages 18 and 39. Sales have tripled in the last year alone, and Blue Sky is currently working to expand its manufacturing capabilities.

Blue Sky is also committed to giving back to the community by contributing to local conservation programs. Ultimately, the company would like to develop and fund its own envi- ronmental programs. This plan will outline how Blue Sky intends to introduce new products, expand its distribution, enter new markets, and give back to the community.

Blue Sky’S miSSion and goalS Blue Sky’s mission is to be a leading producer and marketer of personalized, casual clothing for consumers who love the outdoors. Blue Sky wants to inspire people to get outdoors more often and enjoy family and friends while doing so. In addition, Blue Sky strives to design programs for preserving the natural environment.

During the next five years, Blue Sky seeks to achieve the following financial and nonfinancial goals:

Financial Goals

1. Obtain financing to expand manufacturing capabilities, increase distribution, and introduce two new product lines

2. Increase revenues by at least 50 percent each year 3. Donate at least $25,000 a year to conservation organizations

Nonfinancial Goals

4. Introduce two new product lines: customized logo clothing and lightweight luggage 5. Enter new geographic markets, including Southwest and Mid-Atlantic regions 6. Develop a successful Internet site, while maintaining strong relationships with retailers 7. Develop its own conservation program aimed at helping communities raise money to

purchase open space

core competencieS Blue Sky seeks to use its core competencies to achieve a sustainable competitive advantage, the value of which its competitors cannot match. Already Blue Sky has developed core

The company description summarizes the history of Blue Sky— how it was founded and by whom, what its products are, and why they are unique. It begins to “sell” the reader on the growth possibilities for Blue Sky.

It is important to state a firm’s mission and goals, including financial and nonfinancial goals. Blue Sky’s goals include growth and profits for the company as well as the ability to contribute to society through conservation programs.

This section reminds employees and those outside the company (such as potential lenders) exactly what Blue Sky does so well and how it plans to achieve a sustainable competitive advantage over rivals. Note here and throughout the plan: Blue Sky focuses on relationships.

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A-8 Appendix A D eveloping an Ef fe c tive Marketing Plan

competencies in (1) offering a high-quality, branded product whose image is recognizable among consumers; (2) creating a sense of community among consumers who purchase the products; and (3) developing a reputation among retailers as a reliable manufacturer that deliv- ers orders on schedule. The firm intends to build on these competencies through marketing efforts that increase the number of products offered as well as distribution outlets.

By forming strong relationships with consumers, retailers, and suppliers of fabric and other goods and services, Blue Sky believes it can create a sustainable competitive advantage over its rivals. No other clothing company can say to its customers with as much conviction, “Go Play Outside”!

Situation analySiS The marketing environment for Blue Sky represents overwhelming opportunities. It also con- tains some challenges the firm believes it can meet successfully. Figure A illustrates a SWOT analysis of the company conducted by its marketers to highlight Blue Sky’s strengths, weak- nesses, opportunities, and threats.

The SWOT analysis presents a thumbnail sketch of the company’s position in the market- place. In just three years, Blue Sky has built some impressive strengths while looking forward to new opportunities. Its dedicated founders, the growing number of brand-loyal customers, and sound financial management place the company in a good position to grow. However, as Blue Sky considers expansion of its product line and entry into new markets, the firm will have to guard against marketing myopia (the failure to recognize the scope of its business) and quality slippage. As the company finalizes plans for new products and expanded Internet sales, its management will also have to guard against competitors who attempt to duplicate

The situation analysis provides an outline of the marketing environment. A SWOT analysis helps marketers and others identify clearly a firm’s strengths, weaknesses, opportunities, and threats. Again, relationships are a focus. Blue Sky has also conducted research on the outdoor clothing market, competitors, and consumers to determine how best to attract and keep customers.

Strengths

Blue Sky's dedicated founders understand the target market

and product.

Blue Sky has achieved distribution in several markets

with quick acceptance.

The firm has very little debt, with great potential for growth.

Blue Sky works with a single manufacturer, ensuring

maximum quality control.

Weaknesses

Blue Sky's founders may lose sight of the potential scope of

their business.

A limited number of consumers around the country are aware of

the Blue Sky brand.

The firm has limited cash flow.

Blue Sky relies on a single manufacturer, which limits

production capacity if the firm wants to expand.

Threats

Consumers may tire of the concept; the firm needs to keep it fresh.

Large competitors such as REI, Timberland, and Patagonia may soak

up consumer dollars or launch a similar product line.

Clothing sales nationwide have generally been flat the past few years.

Relationships with retailers might deteriorate if they believe they face internal competition in the form of

Internet sales.

Opportunities

Blue Sky's loyal consumers are likely to buy new products.

Gaps exist in the market that can be filled with new products,

such as customized clothing items and luggage.

Blue Sky has a chance to expand across the United States into new markets.

The firm can reach more consumers via its website.

CO NS

TR AI

NT S

ProblemsLeverage

VULNERABILITIES

Figure A SWOT Analysis for Blue Sky Clothing, Inc.

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Appendix A D eveloping an Ef fe c tive Marketing Plan A-9

the products. However, building strong relationships with consumers, retailers, and suppliers should help thwart competitors.

competitorS in the outdoor clothing market The outdoor retail sales industry sells about $5 billion worth of goods annually, ranging from clothing to equipment. The outdoor apparel market has many entries. L.L. Bean, Dick’s Sporting Goods, REI, Timberland, Bass Pro Shops, Cabela’s, The North Face, and Patagonia are among the most recognizable companies offering these products. Smaller competitors such as Title Nine, which offers athletic clothing for women, and Ragged Mountain, which sells fleece clothing for skiers and hikers, also capture some of the market. The outlook for the industry in general—and Blue Sky in particular—is positive for several reasons. First, con- sumers are participating in and investing in recreational activities near their homes. Second, consumers are looking for ways to enjoy their leisure time with friends and family without over- spending. Third, consumers tend to be advancing in their careers and are able to spend more.

While all of the companies listed earlier can be considered competitors, most of them sell performance apparel in high-tech manufactured fabrics. With the exception of the fleece vests and jackets, Blue Sky’s clothing is made strictly of the highest-quality cotton, so it may be worn both on the hiking trail and around town. Finally, Blue Sky products are offered at moder- ate prices, making them affordable in multiple quantities. For instance, a Blue Sky T-shirt sells for $15.99, compared with a competing high-performance T-shirt that sells for $29.99. Consumers can easily replace a set of shirts from one season to the next, picking up the newest colors, without agonizing over the purchase.

A survey conducted by Blue Sky revealed that a high percentage of responding con- sumers prefer to replace their casual and active wear more often than other clothing, so they are attracted by the moderate pricing of Blue Sky products. In addition, as the trend toward health-conscious activities and concerns about the natural environment continue, consum- ers increasingly relate to the Blue Sky philosophy as well as the firm’s future contributions to socially responsible programs.

the target market The target market for Blue Sky products is active consumers between ages 18 and 39—people who like hiking, rock climbing, bicycling, surfing, figure skating, in-line skating, horseback riding, snowboarding, skiing, kayaking, and other such activities. In short, they like to “Go Play Outside.” They might not be experts at the sports they engage in, but they enjoy them- selves outdoors.

These active consumers represent a demographic group of well-educated and successful individuals; they are single or married and raising families. Household incomes generally range between $60,000 and $120,000 annually. Despite their comfortable incomes, these consumers are price conscious and consistently seek value in their purchases. Regardless of their age (whether they fall at the upper or lower end of the target range), they lead active lifestyles. They are some- what status oriented but not overly so. They like to be associated with high-quality products but are not willing to pay a premium price for a certain brand. Current Blue Sky customers tend to live in northern New England, the South, California, and the Northwest. However, one future goal is to target consumers in the Mid-Atlantic states and Southwest as well.

the marketing mix The following discussion outlines some of the details of the proposed marketing mix for Blue Sky products.

Blue Sky has identified its customers as active people between ages 18 and 39. However, that doesn’t mean someone who is older or prefers to read about the outdoors isn’t a potential customer as well. By pinpointing where existing customers live, Blue Sky can plan for growth into new outlets.

The strongest part of the marketing mix for Blue Sky involves sales promotions, public relations, and nontraditional marketing strategies, including attending outdoor events and organizing activities such as day hikes and bike  rides.

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product Strategy Blue Sky currently offers a line of high-quality outdoor apparel items, including cotton T-shirts, caps, and fleece vests and jackets. All bear the company logo and slogan, “Go Play Outside.” The firm has researched the most popular colors for its items and given them names that consumers enjoy—sunset red, sunrise pink, cactus green, desert rose, and river rock gray, among others. Over the next five years, Blue Sky plans to expand the product line to include customized clothing items. Customers may select a logo that represents their sport—say, rock climbing. Then they can add a slogan to match the logo, such as “Get Over It.” A cap with a bicyclist might bear the slogan, “Take a Ride.” At the beginning, there would be ten new logos and five new slogans; more would be added later. Eventually, some slogans and logos would be retired and new ones introduced. This strategy will keep the concept fresh and prevent it from becoming diluted with too many variations.

The second way in which Blue Sky plans to expand its product line is to offer lightweight luggage—two sizes of duffel bags, two sizes of tote bags, and a daypack. These items would also come in trendy and basic colors, with a choice of logos and slogans. In addition, every product would bear the Blue Sky logo.

distribution Strategy Currently, Blue Sky is marketed through regional and local specialty shops scattered along the California coast, into the Northwest, across the South, and in northern New England. So far, Blue Sky has not been distributed through national sporting goods and apparel chains. Climate and season tend to dictate the sales at specialty shops, which sell more T-shirts and caps during warm weather and more f leece vests and jackets during colder months. Blue Sky obtains much of its information about overall industry trends in different geographic areas and at different types of retail outlets from its trade organization, Outdoor Industry Association.

Over the next three years, Blue Sky seeks to expand distribution to retail specialty shops throughout the nation, focusing next on the Southwest and Mid-Atlantic regions. The firm has not yet determined whether it would be beneficial to sell through a major national chain, as these outlets could be considered competitors.

In addition, Blue Sky plans to expand online sales by offering the customized product line via the Internet only, thus distinguishing between Internet offerings and specialty shop offerings. Eventually, the firm may be able to place Internet kiosks at some of the more profit- able store outlets so consumers could order customized products from the stores. Regardless of its expansion plans, Blue Sky fully intends to monitor and maintain strong relationships with distribution channel members.

promotion Strategy Blue Sky communicates with consumers and retailers about its products in various ways. Information about Blue Sky—the company as well as its products—is available via the Internet, through social media and direct mailings, and in person. The firm’s promotional efforts also seek to differentiate its products from those of its competitors.

The company relies on personal contact with retailers to establish the products in their stores. This contact, whether in person or by phone, helps convey the Blue Sky message, demon- strate the products’ unique qualities, and build relationships. Blue Sky sales representatives visit each store two or three times a year and offer in-store training on product features for new retail- ers or for those who want a refresher session. As distribution expands, Blue Sky will adjust to meet greater demand by increasing sales staff to make sure its stores are visited more frequently.

Sales promotions and public relations currently make up the bulk of Blue Sky’s pro- motional strategy. Blue Sky staff works with retailers to offer short-term sales promotions tied to events and contests that are communicated via social media sites such as Twitter and Facebook. In addition, Nick Russell is currently working with several trip outfitters to offer

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Appendix A D eveloping an Ef fe c tive Marketing Plan A-11

Blue Sky items on a promotional basis. Because Blue Sky also engages in cause marketing through its contribution to environmental programs, good public relations have followed.

Nontraditional marketing methods that require little cash and a lot of creativity also lend themselves perfectly to Blue Sky. Because Blue Sky is a small, flexible organization, the firm can easily implement ideas, such as distributing free water, stickers, and discount coupons at outdoor sporting events. During the next year, the company plans to engage in the following marketing efforts:

• Create a Blue Sky Tour, in which several employees take turns driving around the coun- try to campgrounds to distribute promotional items, such as Blue Sky stickers and dis- count coupons.

• Attend canoe and kayak races, bicycling events, and rock-climbing competitions with our Blue Sky truck to distribute free water, stickers, and discount coupons for Blue Sky shirts or hats.

• Organize Blue Sky hikes departing from participating retailers.

• Hold a Blue Sky design contest on Facebook, selecting a winning slogan and logo to be added to the customized line.

pricing Strategy As discussed earlier in this plan, Blue Sky products are priced with the competition in mind. The firm is not concerned with setting high prices to signal luxury or prestige, nor is it attempting to achieve the goals of offsetting low prices by selling large quantities of products. Instead, value pricing is practiced so customers feel comfortable purchasing new clothing to replace the old, even if it is just because they like the new colors. The pricing strategy also makes Blue Sky products good gifts—for birthdays, graduations, or “just because.” The customized clothing will sell for $2 to $4 more than the regular Blue Sky logo clothing. The luggage will be priced competitively.

Budget, Schedule, and monitoring Though its history is short, Blue Sky has enjoyed a steady increase in sales since its introduc- tion three years ago. Figure B shows these three years, plus projected sales for the next three years, including the introduction of the two new product lines. Additional financial data are included in the overall business plan for the company.

An actual plan will include more specific financial details, which will be folded into the overall business plan. For more information, see Appendix B, “Financial Analysis in Marketing.” In addition, Blue Sky states that at this stage, it does not have plans to exit the market by merging with another firm or making a public stock offering.

0

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

201920182017*201720162015

$3.2 million

$2.0 million

$1.2 million

$750,000

$250,000 $140,000

*Projected sales

Figure B Annual Sales for Blue Sky Clothing: 2015–2019

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A-12 Appendix A D eveloping an Ef fe c tive Marketing Plan

The timeline for expansion of outlets and introduction of the two new product lines is shown in Figure C. The implementation of each of these tasks will be monitored closely and evaluated for its performance.

Blue Sky anticipates continuing operations into the foreseeable future, with no plans to exit this market. Instead, as discussed throughout this plan, the firm plans to increase its pres- ence in the market. At present, there are no plans to merge with another company or to make a public stock offering.

YEAR 1

New outlets added: 20 Customized items: 5 slogans/10 logos Luggage items: 0

YEAR 2

New outlets added: 50 Customized items: 10 slogans/10 logos Luggage items: 2 (duffels and totes)

YEAR 3

New outlets added: 100 Customized items: 5 slogans/5 logos Luggage items: 1 (backpack)

Figure C Timeline for First Three Years of Marketing Plan

n o t e s

1. Company website, “Our Products and Services,” www.google.com, accessed April 1, 2014.

2. Company website, www.terracycle.net, accessed April 1, 2014; “TerraCycle to Recycle Cigarette Waste,” Consumer Goods, accessed April 1, 2014, http:// consumergoods.edge.com.

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Approves $15,” Forbes, accessed November 7, 2014, www.forbes.com; Aaron Taube, “Why Costco Pays Its Retail Employees $20 an Hour,” Business Insider, accessed November 7, 2014, www.businessinsider.com.

5. Company website, http://c2educate.com, accessed November 7, 2014.

6. Leslie Price, “Mickey Drexler Vows J. Crew Will Be Less Pricey This Spring,” Racked, accessed April 2, 2014, http://racked.com.

7. Company website, http://cuteoverload.com, accessed April 2, 2014. 8. E. J. Schultz, “Weight Watchers Picks a New Target: Men,” Crain’s New York

Business, accessed April 2, 2014, www.crainsnewyork.com. 9. Eric Faulkner, “Want to See ‘Frozen’ for Free? Check Out This Disney Movie

Reward Promotion,” Rotoscopers.com, accessed April 2, 2014, www.rotoscopers .com.

10. Company website, http://www.ghfc.com, accessed April 2, 2014. 11. Tim Hornyak, “Sayonara, Vaio: Sony Sells off PC Business to Focus on Mobile,” PC

World, accessed April 6, 2014, www.pcworld.com.

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   2. Preflight Ticket Signature