Marketing Plan Writing

Market analysis is the foundation of the marketing plan

written by Tim Berry of Palo Alto Software

1 Comment

Every marketing plan should include a clear explanation of the market segmentation, target market focus, and a market forecast.

Essential Market Analysis

To develop an effective plan based on your customers’ needs and nature, you should be able to answer these questions:

  • Who are they?
  • Where are they?
  • What do they need?
  • How do they make their buying decisions?
  • Where do they buy?
  • How do you reach them with your marketing and sales messages?

Knowing the answers to these questions is critical no matter who your potential customers may be. This is also true when a nonprofit organization goes into a market looking for funding, in-kind contributions and volunteer participation.

The specific research related to this market analysis begins with statistics that provide total numbers of households, classrooms, businesses, and workers in a market. These are your basic demographics. What you need depends on whether you’re looking at businesses, households, or individuals as your main target groups. When possible, you should be able to segment households by income level, businesses by size, and workers by job type, education, and other factors. Employment statistics can add information about types of workers and their education and background. You can also divide your target customers into groups according to psychographics. This is your strategic market segmentation, a core element of your marketing strategy.

Build Your Assumptions

While estimating the total potential market, you must make some wide-reaching basic assumptions. You have to assume a price level for the new product, a relationship to substitutes, and certain economic justifications. You have to assume that the total market potential is a stable concept, not changing annually. This assumption allows you to project a gradual increase in penetration.

Use a market segment spreadsheet as you make your strategic selections to develop your target segment analysis. The table below is a simple spreadsheet to keep your market numbers organized. It helps you track the basic numbers of potential customers by segment, with columns to estimate growth rates and the projected future numbers.

Potential Customers Growth 2008 2009 2010 2011 2012 CAGR
US High Tech 10% 5,000 5,500 6,050 6,655 7,321 10.00%
European High Tech 15% 1,000 1,150 1,323 1,521 1,749 15.00%
Latin America 35% 250 338 456 616 832 35.07%
Other 2% 10,000 10,200 10,404 10,612 10,824 2.00%
Total 6.27% 16,250 17,188 18,233 19,404 20,726 6.27%

Research, Explore, Explain

For each of your market segments, the market analysis should explain as much as possible about the target customers included in that group. That normally includes the segment description, needs and requirements, distribution channels, competitive forces, communications, and keys to success. Each of these might be a topic in the plan:

Segment Description
You need a basic description of each target segment that includes attributes that characterize the segment, such as number of potential customers, annual growth rate, annual spending, and market value. The more detail you include, the better.

Needs and Requirements
The best marketing always focuses on customer needs. Why do they need your product or service? What is going to make them buy? Don’t get trapped into merely marketing what you have when you should be identifying a customer need and working toward fulfilling it.

Distribution Channels
What are the standard channels of distribution for this customer segment? How are they different from other segments? This is especially important for product businesses marketing through channels, but in all cases you need to know where your customers go to satisfy the needs and requirements you’ve identified.

Competitive Forces
Know the buying process for these target customers. What are the key decision factors? For example, some customers are more sensitive to price than others, some segments are more concerned about quality than price, and some care most about availability and convenience. In each case, those customers are willing to pay to realize the desired benefits.

Where do members of this segment go for information? What kinds of information will be most effective? Know where to send marketing communications, such as advertising and press releases, so that the right customers will find them. Know how to create those messages so that they will generate the right response.

Keys to Success
What factors make the most difference to success or failure with this market segment? Key factors will vary between segments, and may include price, value, availability, image, features, financing, upgrade or return policies, and customer service. List the three or four most important factors.

Getting Market Information

A great deal of market information is readily available. Look to the Internet first. This information is accessible, current, and much of it is free. Most of the sources listed should have websites, or publish information through search sites, in addition to more traditional methods of publication. Market research firms and industry experts publish much of their information in trade and business magazines. Reference works index these magazines and libraries stock them. Again, trade associations publish many listings and statistics. Public stock laws require detailed reporting of financial results, and stock market information sources compile industry statistics from financial reports. You can probably find everything you need at a local library. If not, you can turn to computerized database services, professional information brokers, United States’ and other nations’ government-supported publications.

Tim Berry

about the author

Tim Berry

Founder and President of Palo Alto Software and a renowned planning expert. He is listed in the index of "Fire in the Valley", by Swaine and Freiberger, the history of the personal computer industry. Tim contributes regularly to the bplans blog, the as well as his own blog, Planning, Startups, Stories. His full biography is available at Follow Tim onGoogle +


Getting ready to create
a marketing plan?

Get practical ideas and good models with dozens
of examples of successful marketing plans

1 Comment