Every component in your Business Plan is critical to the success of your business. First on the list is your Marketing Plan which sets out viability studies to explore market potential, maps out the marketing mix, budget and implementation.

First Step in your Marketing Plan is to conduct Viability Analysis, namely, Porter’s 5 Competitive Forces Model, P.E.S.T. Analysis, SWOT Analysis Matrix, Target Segment Analysis, Product Life Cycle Analysis, Competitive Advantage Model, Product Growth Directions, BCG Matrix. This is to qualify if the business in question is viable from a market demand and supply point of view.

The Marketing Plan is one of the two components in the Business Plan which allows you to apply certain level of creativity when you are exploring the market potential using respective analysis models. As with all analyses, modeling serves as only a basis for your reference and prediction of the business & market conditions.

Viability Analyses

1. Porter’s 5 Competitive Forces Model

Porter’s 5 Competitive Forces model is developed by Michael E. Porter, an important strategic analysis from a broad market environment perspective. It explores the 5 major factors namely Bargaining Power of Supplier, Customer Power/Buyer Power, New Entry Threats, Substitution Threats & Competition Rivalry.

These 5 forces are interdependent, influencing and interplaying with each other at any given point in time. This is a model which needs to be revisited on a consistent basis, usually, over a half yearly time frame for re-evaluation of market trend.

2. P.E.S.T. Analysis

Doing your "PEST control" ensures good health a strong pulse for your business. PEST analysis essentially means macro environmental evaluations such as Political & Legal, Economic, Social & Cultural, as well as Technological.

Economic environment could make or break your business. In 2008, the US sub-prime issue became a global financial crisis which not only affected the housing market but nearly every facet of the economy by virtue of its spillover effect. The interest rate at time of writing is 2%, a far cry from the 4% a year ago. Banks tighten their lending belts and business loan borrowing become more difficult. But if you manage to get that business loan, chances are that you would be incurring a much lower interest repayment.

!!! One Social factor which is growing in importance is the environment. Every large corporation nowadays are involved in one way or another in reducing carbon emission to the ozone and in dealing with climate change. For instance, Shell is executing plans in energy security, to be a socially responsible corporate citizen. Climate changes and energy management could well be the next wave for mankind as well as a key business potential area for your business.

3. SWOT Analysis Matrix

SWOT Analysis, in a nutshell, is the acronym for Strengths, Weaknesses, Opportunities & Threats affecting your business. Strengths component analyses internal capabilities throughout all business functions which could become unique propositions when mapping out business strategies. Weaknesses analyses the internal gaps in current state. Likewise, Opportunities & Threats analyse your business’s external environment which could give rise to opportunities or threats to your business. This is a fluid cheat sheet (not totally exhaustive & you should add on to it to cater to your own business type) which should be revisited annually as a reality business stop-check.

The TOWS Matrix, is a concept which you might adopt to formulate strategies at the market planning stage. By using your business’ Strengths, you leverage to overcome weaknesses, seize opportunities and ward off threats.

4. Target Segment Analysis

This is a very critical section of the marketing plan which helps you with your market segmentation and defines your target markets. You could adopt this approach. Define & segment your clientele-base into Primary & Secondary Target market groups using demographic and psychographic information. Demographic data includes age, income group, geographic location etc. Psychographic data includes life-stage needs, lifestyle, consumer purchasing behavior etc. Upon completion, you would have a better gauge on the potential size of your target segments. All is not cast in stone. You may adjust the segments to match your products, thereby expanding your segments for greater potential.

Many textbook instructions stop here, but I would reiterate that you need to match your target segments with a value proposition for your product offerings, expounding on your unique selling points (USPs) in order to position your product offerings with a compelling reason to buy.

5. Product Life Cycle Analysis
The Product Life Cycle Analysis helps you to identify the stage of your product. All products go through four stages, namely the Introduction, Growth, Maturity & Decline stage. Every product has a life cycle. You need to know each of your products’ life cycles thoroughly in order to plan to phase their life-stage across the horizon.

This analysis is a fluid document which needs to be revisited annually for planning purpose. In fact, if you believe that your product has other potential uses not maximized currently, you should pro-actively look to rejuvenating the life cycles of such products at their matured and declining stages. An example is baking soda, which the manufacturers made new product penetration into a whole new market by re-defining baking soda as an odor-removing agent. (check out my ebook on product life cycle rejuvenation and case studies)

6. Competitive Advantage Model

The Competitive Advantage Model by Michael E. Porter suggests 4 approaches benchmarking against your competitors namely, Cost Leadership, differentiation or focus with 2 variants.

Cost Leadership strategy means leading in a low cost pricing strategy within your industry. This is achieved from economies of scale. You must almost solely dominate this competitive space otherwise more than one company in this space will cause a price war.

Differentiation strategy indicates unique value proposition, namely in areas such as the product, service, image, distribution, marketing etc or a combination of them.

Focus strategy aspires to be the best in a focused segment, with 2 variants of cost focus and differentiation focus

7. Product Growth Directions

Product Growth Directions shed light on the possible growth approaches you can adopt in driving your product sales. This is a matrix which maps your product growth strategies across new vs existing markets and products. Potentially, the four segments are Market penetration, Market development, Diversification as well as Product Development.

Market penetration essentially denotes leveraging new markets with existing products. Market development means making inroads on existing markets & products. Diversification indicates leveraging on existing markets with new products. And of course, Product development is expansion into new markets with new products.

8. BCG Matrix

Boston Consulting Group developed this BCG Matrix which helps you to determine what priorities should be given in your product portfolio of a product. It has essentially two dimensions - market share and market growth rate, with 4 categories fitting into these quadrants.

Stars = Leaders of the Business - Products with high growth rate & high market share. Generates high cashflow and requires high cash input. Usually, Net cashflow is flat.

Cash Cows = Foundation of the Business (stars of yester years) - Products with low growth rate & high market share. Generates high cashflow with low cash input requirements.

Dogs = Drags of the Business - Products with low growth rate & low market share. Must be avoided whenever possible. Liquidate as many as possible.

Question Marks = Ambiguity of the Business - Products with high growth rate & low market share. Have high cash demand and low returns. If keeping question marks, you must ensure increase in market share and deliver cash.

It is in the identification of your products at the various categories that enlightens you to apply the correct growth & funding strategy. For instance, cash infusion could be provided to fund Question Marks &/or Stars to drive them towards the next level - Cash Cow positions.

And to End BusinessFast4ward Business Plan - Your Marketing Plan - Viability Analyses:

True application of all the above mentioned viability analyses is a cumulative interplay of the Target Segment, Product life cycle, Competitive Advantage Model, Product Growth Directions as well as the BCG Matrix. Although they are developed separately by separate strategists, I advocate a broad yet conjugative approach to the application as there lies great interdependence of each to the other.