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The Marketing Plan

How to Prepare and Implement It

New, Third Edition

The purpose of this book is to assist you in developing a sound and profitable marketing plan by creating a desirable positioning or personality for your business based on your Fact Book, which is an analysis of market economics, competition, customers and your own business, and then make that personality come alive with the execution of unique to your industry marketing tools.

The first edition of this book was published in 1982 and the second edition in 1992. In this third edition, I have stayed with basically the same planning structure I have previously recommended—your marketing plan need be no more than 10-15 pages, but supported by your Fact Book, which may number one to two hundred pages. Many marketing people still try to develop a plan with little knowledge of the market, and consequently their plan is just wishful thinking. Develop a sound Fact Book and I will guarantee you a sound plan.

However, in this third edition, about 95 percent of the copy is new. I have used more recent case history thumbnails to support my recommendations as well as provide examples of how to use the various marketing tools to their best advantage. I have added new insights I picked up from my consulting work and from marketing people that have attended by public seminars. And, I wanted to discuss your new marketing tool, the Internet.

The book begins with what you should know and do before you write your marketing plan and then goes into how to develop a memorable personality for your business. The rest of the book is devoted to showing you how to use all the various marketing tools to make your business a market leader. That’s where the money is. Marketing tools discussed include "what if" sales models, pricing strategy, advertising, direct mail, telemarketing, trade shows, merchandising, coupons, premiums, sampling, sweepstakes, contest, shoppertainment, electronic kiosks, public relations, Internet, sales management, and customer service. The book concludes on how to add accountability and complete your planning loop by the use of measurable objectives and market research.

William M. Luther

Cary, NC

wml@wml-marketing.com

Book will be mailed by US Postal Service

Chapter One: The Role of Marketing Within a Business

The Fact Book

Strategic and business plans

Operational plans

Positioning statement

Marketing plan

Action plans

Look out the window

Chapter Two: Should You Link Your Business to the Internet

The advantages and disadvantages of the Internet

It takes effective strategies to be a winner on the Web

Should you have a transaction site

Should you have a promotional site

Should you have a content site

Should you have a customer relations site

Should you purchase your supplies off the Internet

Should you have a combination site

Chapter Three: Your Strategic Plan Determines Where to Spend Your Marketing Dollars

Five possible market scenarios

Thirty-eight market characteristics that can influence profit potential

Exam: where to apply maximum marketing pressure

Follow the money

Chapter Four: Determining Who is Your Customer and What They Want

Step one: segmenting the market

Step two: establishing who is involved in the purchase process or buying decision

Step three: determining the relative importance of individuals in the purchase process

Step four: what features are sought

Step five: what features are delivered

Chapter Five: Aim at the Right target Using the Right Message

Aim at the right target

Deliver the right benefit

Chapter Six: Recommended Marketing Management

The role of product, service or brand manager

The role of marketing or market manager

Recommended role of the marketing coordinator

The role of consultants

Selecting or reviewing your current advertising consulting firm

Using your hockey sticks

Chapter Seven: How to be Creative in Your Brand Positioning

Use the right side of your brain

Make it easy to complain

Use your size to excel

Business is more like high school than college

Be just one thing rather than everything

Do the research yourself

Chapter Eight: Your Strategies Should Reinforce your Positioning

All promotional material should reflect your positioning statement

Strategies should be based on market position

Critique all markets, not just your own

Concentrate on where you can reach 98%

 

Chapter Nine: Your Product/Service Plan Sets the Specifics of Your Marketing Plan

Price your brand to reflect your positioning

Use "what if" revenue models to determine the specifics of your marketing plan

Setting up your marketing budget

Chapter Ten: Use Advertising to Build Awareness

What should be included in your communications strategy

Developing your basic selling line

Learn from popularity winners

Blame the product or service if you have problems writing a good ad

Formatting your ads

Developing your creative strategy

Determining your advertising budget using reach & frequency

Selecting your advertising media

Testing your advertising

Chapter Eleven: Use Direct Marketing to Sell or Produce Leads

What is direct marketing

Establishing a database

Compiling the database

Using your database for direct mail

Using your database for telemarketing

Chapter Twelve: Use Trade Shows to Demonstrate What You Are Selling

The advantages of trade shows

Determining whether you should use trade shows

Decisions to be made before the trade show begins

Actions to be taken during the show

Actions to be taken after the show

 

Chapter Thirteen: Use Merchandising and Sales Promotion for Incremental Sales

Finally effective merchandising is coming back

Customer groups react differently to various promotional activities

Sampling best tool for inducing trial

Coupons can be used for any brand

McDonald’s has proven the value of premiums

Sweepstakes and contests can brandish your brand

Other promotional concepts to consider

Chapter Fourteen: Using Public Relations for Free Ads

What is public relations

State the situation

What research, if any, is needed

Developing your public relations plan

Executing your plan

Performing the evaluation

Using other types of public relations

Chapter Fifteen: Use the Internet for Instant Distribution

Developing your Web site

Suggestions on how to get listed by the search engines

Suggestions on how to promote your site

Chapter Sixteen: Only Use the Sales Team to Close the Sale

Using a sales team is not wise for all companies or prospects

Obtaining sales leads

Making the presentation

Handling objections

Always ask for a de-briefing

Chapter Seventeen: Use Customer Service to Increase Repeat Sales

Hire and train the right people

Provide information quickly

Policies should be for the benefit of the customer

Don’t treat all customers the same

Take advantage of after market sales

 

Feedback-- Using Controls and Market Research to Complete the Loop

Chapter Eighteen: Feedback--Using Controls and Market Research to Complete the Loop

Using controls for feedback

No cost market research

Benchmark studies

Internet online studies

Marketing communications research

Advertising research

Evaluating other communications activities

Appendix A: A Marketing Plan Outline

Appendix B: Thirty-eight Market Characteristics That Can Influence Profit Potential

Appendix C: Explanation of "What If" Sales Model

The book consists of six parts. They are:

Part One: The Role of Marketing Within a Business

Part Two: Decisions to be Made Before Developing Your Marketing Plan

Part Three: Developing your Brand Personality

Part Four: Developing Your Marketing Plan

Part Five: Feedback—Using Controls and Market Research to Complete the Loop

Part Six: Appendix

The reason this book on how to develop a marketing plan begins with the material show in Parts One and Two is because so many people begin writing a marketing plan, which is for just one area of a business, without first analyzing their entire operation. Before you make marketing decisions, you should decide which markets and products and services should be pushed, what is your Internet strategy, who is the customer and what do they want, how will competition react to your strategies, and whether you have the right people running your marketing program.

Therefore, Part One: The Role of Marketing Within a Business, discusses where marketing fits in with the other components and plans for a business. Part One consists of Chapter One, and covers what I believe are the seven components of planning and their interaction within a company. They are:

Fact Book: analyzing market economics, competition, your business and customers.

Strategic and or business plan: selecting markets with good profit potential and isolating critical business strengths needed to become competitive.

Operational plans: developing business strengths that can deliver a competitive business, products or services.

Positioning statement: determining how you want your business strengths to be perceived by prospective customers.

Marketing plan: translating the positioning statement into recognizable and preferred brands.

Action plans: detailed execution of strategies.

Feedback: using controls and market research to monitor existing and future conditions for inclusion in the Fact Book.

This discussion on the interplay of marketing within a business is continued in Part Two: Decisions to be Made Before Developing Your Marketing Plan. Part Two consists of Chapters Two through Six.

Chapter Two covers whether you should link your business to the Internet, and if so, which of five formats is most suitable to your business. Existing Web sites are used as examples. Chapter Three provides help on prioritizing your markets, analyzing competition, and determining which markets should be pushed and how much marketing pressure should be applied. It even includes an exam, where you are asked to select the right strategy for given situations. Chapter Four is on determining who is your customer and what do they want. A five-step customer analysis is included. Thumbnail case histories are used to emphasis the importance of this critique. Chapter Five shows you how to take the information from your customer analysis and aim it at the right target with the right benefit. Chapter Six is on recommended marketing management. It provides descriptions of various job descriptions and the role of consultants, including advertising agencies. I also give you my recommendations on how I believe marketing should be managed.

The remaining part of the book is devoted to the development of your marketing plan, but before getting into your various marketing tools, the umbrella of your plan—positioning-- is discussed. Part Three: Developing Your Brand Personality, is covered in Chapters Seven and Eight. (Businesses, products and services are sometimes referred to as a brand.) Chapter Seven covers how to be creative in developing your positioning statement or brand personality—one that it is unique, memorable, desirable and believable—and provides thumbnail case histories of companies that have, and have not, done so. Chapter Eight provides reasons why all your strategies should reinforce your positioning and once again gives examples of companies that have, and have not, done so.

Part Four: Developing Your Marketing Plan, includes Chapters Nine through Seventeen. In these nine chapters, I use many business examples to both support my recommendations, as well as illustrating how to use marketing tools to their best advantage. Chapter Nine is on the product or service plan and discusses pricing strategy and the calculation of your marketing budget. It also presents a "what if" revenue model that you can use to set up the objectives for the remaining components of marketing. The remaining chapters in this Part Four illustrate the best use of your various marketing tools.

Chapter Ten illustrates how to use advertising to build awareness and explains how to use reach and frequency to be sure you have sufficient advertising weight. The chapter includes a critique of what I believe are ineffective ads as well as ones I believe are on target. Chapter Eleven is on how to use direct marketing to sell or produce leads. It shows you how to establish and compile a database and use it for direct mail and telemarketing. Chapter Twelve concerns using trade shows to demonstrate what you are selling. It includes determining whether you should use trade shows, and if so, what decisions should be made before the show opens, actions to be taken during the show, and actions to be taken after the show.

Chapter Thirteen is on using merchandising and sales promotion for incremental sales. It discusses sampling, coupons, premiums, sweepstakes, contests, kiosks, and shoppertainment. Also included is an analysis of the five types of customers you should and should not go after. Chapter Fourteen is devoted to using public relations for free ads. It covers how to outline the situation, determine whether research is needed, developing your plan, executing your plan, and performing the evaluation. Some case histories of successful public relations campaigns are displayed.

Chapter Fifteen discusses how to use the Internet for instant distribution. It includes how to develop you Web site, suggestions on how to get listed by search engines, and how to promote your site. Several Web sites are analyzed to illustrated what did and did not work for them. Chapter Sixteen recommends that you only use your sale team to close the sale. It includes a simple financial analysis system that you can use to determine whether you should send a salesperson out to call on certain targets, or handle them in a less expense manner. Chapter Seventeen discusses how to use customer service to increase repeat sales. It includes reasons why so many companies are weak in customer service as well as the type of people you should hire to make this part of marketing work.

Part Five: Feedback—Using Controls and Market Research to Complete the Loop, is covered in Chapter Eighteen. It emphasizes why you must have measurable objectives for each component of your marketing plan so that you can monitor them, and then feed back the results into your Fact Book to complete your planning loop. It discusses the various types of market research to use to keep current on market economics, competition and customers, and how to test the effectiveness of your advertising.

Part Six: Appendix, contains three appendixes. Appendix A: A Marketing Plan Outline, includes a recommended outline for your marketing plan, along with hypothetical objectives and strategies for each component. Appendix B: Thirty-eight Market Characteristics That Can Influence Profit Potential, will help you critique your markets so that you can apply your marketing pressure in the right place. Appendix C: Explanation of "What If" Sales Model, provides a detailed example of how to us the model discussed in Chapter Nine.

Most books and seminars on marketing plan begin with how to develop the marketing plan. I believe this is a mistake. You should not begin thinking about how you are going to market something until you first determine if you have something customers want, you have the ability to develop or service it, it will work the way you say it will, there will be no adverse legal ramifications, and you can sell or offer it at a profit. If you judge marketing effectiveness by the amount of brand awareness it creates, then Coca-Cola’s marketing campaign for New Coke was a success. The problem was their customers didn’t want a new Coke and the company lost millions of marketing dollars because consumers decided to stay with the existing brand.

Apple Computer’s Newton message pad was something customers wanted and the marketing campaign resulted in initial sales in the millions. Apple even set up a separate division to handle the brand. The problem here was that the product could not live up to all the promises made by the company and soon the brand sank into oblivion. Microsoft has spent millions of marketing dollars on their Pocket PC, but a superior product, The Palm, still retains 70 percent market share. The companies that have been selling the Fen-Phen appetite suppressant now wish they had never heard of the diet-pill, due to all the current adverse legal ramifications. Even Amazon.com, after spending millions of dollars in promotion and receiving an exorbitant amount of free publicity, has yet to have a profitable quarter.

Therefore, someone in you company should be sure you have all your ducks in a row before you start your marketing campaign. Considering that this someone could be you, I am beginning my book on marketing with this one chapter in Part One, which is titled "The Role of Marketing Within a Business." This is followed by Part Two, which is titled, "Decisions to be Made Before Developing Your Marketing Plan." Let’s begin this chapter with the components of planning.

Figure 1-1 shows what I believe are the seven components of planning. Starting at the top is what I refer to as the Fact Book. The Fact Book is a document in which you insert data and your subsequent analysis of the four components of a market-- market economics, competition, your own business, and customers -- to determine the direction of new planning documents, as well as monitoring existing activity.

The purpose of the market economics section is to determine whether you can make money in a particular market. The economic data includes market factors such as size, growth, margins, pricing sensitivity, distribution costs, regulatory exposure, brand and market life cycle, economies of scale and barriers to entry. An explanation of these types of factors is in Appendix B.

The purpose of the competition and your business section is to determine which business strengths are needed to be competitive in the market, and how you believe competition will react to your strategies. Examples of business strength factors are product or service quality, pricing strategy, distribution, performance on the Internet, and the number of new brands. Information you include to analyze competition is each competitor’s market share, their current strategy, future goals, where they are vulnerable, and what will provoke their retaliation, as well as copies or photographs of all their marketing material, such as brochures, point-of-sale, print ads, TV and radio scripts, and trade show exhibits.

The purpose of the customer analysis section is to determine how you want your business strengths to be perceived by current and prospective customers. This desired perception is detailed in your positioning statement. It’s the personality of either your company, products or services, which I refer to as brands. The purpose of your marketing program is to translate your positioning statement into a recognizable and preferred brand(s), which should result in increased sales or revenues, and subsequent profit. This customer section includes a four-step analysis. First, you determine your target audience within the market. Second, you list the job titles or demographics of the various groups in the buying decision within this target audience. Third, your prioritize this list, putting the most important groups at the top. Fourth, you insert next to the name of each group, the hot button, or major benefit, each one is seeking from your brand category, paying special attention to those groups at the top of the list. You then determine whether your business strengths allow you to deliver these key benefits, and if so, you have the basis for developing your positioning statement and marketing plan. If not, you then consider whether you should either change markets, develop different business strengths or go after a more appropriate target audience in the market.

If you want to check your current status in a market, you use a fifth step, which is to conduct research to determine how your are perceived by the various groups in the buying decision. If the results are favorable, you marketing plan is on target. If the results are unfavorable, you have to reexamine all the other components of planning. All steps in this customer analysis is discussed in greater detail in Part Three: Developing Your Brand Personality.

The soundness of all your planning documents, as well as any revisions, is based on the soundness of your Fact Book, so please do not overlook this critical first step. The only time-consuming part of planning is the preparation of the Fact Book. However, after the initial setup, keeping it up-to-date is relatively easy. After the completion of a current Fact Book, the actual development of plans will not take more than a week or two.

Your Fact Book will get up to 100 plus pages after a while, so keep it separate from your plans. The reason is you want to keep your plans short and concise so they can be operational documents. Your best bet is to put the Fact Book data on your computer using spread sheets, data bases and your word processor. Market information and business financials can go on a spread sheet. Customer data can go on a data base and word processor. For the section on competition, you can scan competitors’ brochures, ads, etc., into your word processor. The data on their strategies, goals, etc., as well as information on your business can also be inserted into the word processor. You can then print copies of your data on the computer and insert them into a three-ring binder for easy review and group meetings. Put the appropriate data behind four dividers labeled economics, competition, my business and customers.

As you can see from the discussion above, the Fact Book sets up the next five planning components shown in Figure 1-1, and the last component, feedback, measures the performance of these four components and keeps your Fact Book up-to-date. Feedback will be discussed in greater detail in Part Five. Let’s switch to Figure 1-2: Nomenclature of Plans, to discuss these five planning components in more detail.

Strategic and Business Plans

The first and most overreaching of your plans is the Strategic Plan and there appears to be a lot of confusion about its purpose. I believe it is deciding "what are the right things to do." By that I mean selecting the right markets to be in based on the profit potential of a market and whether you have, or can acquire, the business strengths needed to be competitive. Many companies skip this step and start immediately to plan on what to do with what they have. The problem with this is, what they have may not be right. Two examples previously given were Apple Computer’s Newton and Microsoft’s Pocket PC. Apple Computer did not have the business strengths to make the Newton do what was promised in marketing and Microsoft’s new operating system for the Pocket PC has not been embraced either by the trade or consumers.

In your the strategic planning, you want to envision the parameters of your markets and field of operations three to ten years into the future, based on the analysis of the data in your Fact Book. Based on this foresight, you develop your Strategic Plan, stating what you should start doing now to end up where you want to be in the future. It includes subjects such as which markets will be pushed and which ones phased out; what, if any, new technology is needed; do you need more or fewer employees; and what type of new brands should be developed. You should also address your status on the Internet. If you currently have a Web site, the question is, is it working? If you don’t have a Web site, should you? If so, which type of site is best for you? For example, will you sell off the site or just use it for promotional activity?

The Strategic Plan is long term, involves all parts of your business, and is the only plan in which you decide "what are the right things to do." All other plans, such as the Business Plan, are concerned with "doing things right." That is, given the direction of the Strategic Plan, what should you be doing right, short term, to get there?

Your Business Plan, which also involves all parts of your business, details what you are going to do during the next couple of years to achieve the long term objectives of the Strategic Plan. For example, if your Strategic Plan calls for a doubling of volume in five years for Brands A and B in market X, your Business Plan lays out the specific details on what has to be done during the first two to three years of the five-year plan.

Now you may say that two long-term plans is a lot for your business. Well, neither have to be fancy. You may want to combine the Strategic Plan and Business Plan into one document. If you do combine them, just remember to first decide what are the right things to do before you decide how you are going to do them. If you have a relatively small firm, your plans, except for the measurement of your objectives, don’t even have to be in writing unless you are looking for financing. The thought process is what is important in planning. The plan, itself, is only for communication purposes and if you can get everyone on the same page by oral communications, there is no need to submit the plan to writing. This is especially true for start-up companies, where the ability to quickly change direction is more important than a written plan with all the "T’s" crossed.

However, whether you have one employee or 10,000, you have to look ahead to beat competition. The life of brands is getting shorter. Some survive less than a year. Therefore, you always want to think about tomorrow, and you should do it when business is good. The best time to alter your operation is when you are the strongest. Deal from strength. Don’t wait until you are weak.

Just as the Strategic Plan sets up the Business Plan, the Business Plan sets up Operational plans. Operational Plans are the ones that run the business. They cover each area of the company, including finance, Internet, manufacturing, operations, human resources, research and development (R&D), and, of course, marketing. Let’s say your Business Plan calls for $50 thousand in revenue for the first year of the five-year plan. Based on this information, you then develop Operational Plans, including a Marketing Plan, to support the $50 thousand objective. Notice that the main objectives of the Marketing Plan are set up by the Business Plan. If you start your planning process with the Marketing Plan, you will not know in which market to participate in; which brands to feature; how many units operations can produce; what sales objectives to set; and how much to spend on advertising; sales promotion; and so on. Hopefully, you will agree that you can’t start your planning with the Marketing Plan until you first decide the overall direction of your business. Before we discuss the components of the Marketing Plan, let’s talk about the Positioning Statement.

If you are positioning a company, the Positioning Statement is developed in your Strategic Plan or Business Plan. If you are positioning individual brands, it belongs in your Marketing Plan. In either case, the Positioning Statement has to be compatible with the entire business operation. For example, I believe the Positioning Statement for Wal-Mart is something like, "Brand names at ridiculously low prices." To obtain and retain this positioning entails the efforts of the entire Wal-Mart operation. However, it is the responsibility of marketing to convey this personality to all potential customers. For companies that are positioning individual brands, like Crest toothpaste, positioning development becomes the responsibility of marketing, although the support, like the ingredient for tartar control, involves the entire operation. Part Three discusses developing your brand personality.

The purpose of the Marketing Plan is to translate the Positioning Statement into recognized and preferred brands. To do so, I recommend that the Marketing Plan consists of six areas of marketing, although how you group them is up to you. As shown in Figure 1-2, they are as follows.

The Product or Service Plan, which sets up the objectives of the various marketing components through the use of a "what if" revenue model. It also addresses pricing strategy, depth of line (number of sizes, shapes, models, policies, etc.), packaging and your marketing budget.

The Marketing Communications Plan, which includes advertising, sales promotion, direct mail, merchandising and public relations.

The Sales Plan, which covers the sales team, whether they are your own employees, distributors, commission representatives or manufacturers’ agents. It includes sales goals, sales training and sales literature.

The Customer Service Plan, which includes the activities of all employees who interact with the customer, directly or indirectly, and who are not covered in the Sales Plan. Examples are technical support, telephone operators, nurses, bus boys, waiters and airline stewardesses.

The Research Plan, which includes market research to keep your Fact Book current, marketing communications research and the marketing team’s liaison with R&D.

The Internet Plan, which includes the marketing of your Web site.

When people in some companies talk about their marketing plans, they are referring to just their Marketing Communications Plan. In these cases, the sales personnel do not converse with marketing communications people and visa versa; marketing managers usually just concentrate on technical issues; research people are tied up analyzing surveys; and customer service personnel are not even considering marketing people. This situation doesn’t make much sense, considering that all groups have a common denominator and that is to translate the Positioning Statement consistently and effectively in order to sell more of something.

A company will never excel in marketing until it gets all five groups—and now the Internet makes six-- talking together, working together, and promoting the brand together. A shining example of a company that does is Nordstrom department stores. Their sales clerks and customer service personnel know more about promoting a brand than individuals in most advertising departments. What you want to try to do is to out Nordstrom Nordstrom. Part Four discusses the six marketing components and Appendix A contains an outline for a marketing plan.

Every plan you develop should contain objectives, strategies and tactics. An objective is the what, the strategy the how, and the tactic the execution. Objectives state what you want to accomplish. They should be measurable so you know whether or not you achieve them by the end of the plan year. Therefore, each objective should have a goal, a control, and a completion date. An example for direct mail could be, "To deliver 200 qualified leads at a cost of $3,000, by 12/31/xx". In this case, the goal is the 200 qualified leads, the control is the expenditure of $3,000 and the completion date is 12/31/xx. The reason for the control is that anyone can accomplish a goal with unlimited expenditures. Without the control, a person may accomplish the goal while bankrupting the business. A consultant may be able to obtain 200 qualified leads for you at the cost of $5,000, but if the value of 200 qualified leads is only $4,000, it’s a bad buy.

A strategy states how you are going to achieve the objective. For example, it could relate to an objective pertaining to exhibiting at a particular trade show, developing a dynamic personality for the business or introducing a new service. A tactic is the execution of the strategy. If a strategy calls for exhibiting at a trade show, the tactic provides the details, such as who will book the space and who will build the exhibit.

Each section of a plan should have 1-3 objectives (what do you want to accomplish). That’s all. If you have more than that, you are not focused. For each objective, you need 1-2 strategies (how you are going to accomplish the what). For every strategy, you need 1-5 tactics (how you are going to execute the how).

For example, suppose you had a high-resistance housing you wanted to display at a trade show. Sections of your sales promotion plan could look like this:

Objective: Demonstrate high-impact resistance of new housing on energy monitors to 300 design engineers with an expenditure of $5,000 by 12/31.

Strategy: Exhibit at July WESPLEX trade show. Offer prize to anyone checking housing with a sledge hammer.

(1). Tactic: Bill Johnson to order show space by October to obtain
good location.

(2). Tactic: Lewis to contact Dynamic Displays, Inc., by November to
request initial exhibit design.

(3). Etc.

Tactics should just be summarized in the Marketing Plan. After the complete Marketing Plan is approved, Action Plans should be written to provide the details. If you include all the details of executing a strategy in the Marketing Plan, you may be confronted with three possible problems:

If you put your Fact Book on the computer, you may want to do the same for your plans. Put your objectives on a spread sheet, your strategies on your word processor, and your tactics on time management software. However, you should have a hard copy on the top of your desk to be sure you monitor your plans frequently. That completes an overview on the six components of planning.

Whether you have a written plan or not, the key thing is to think about the market, competition, customers, and your business every day. Many managers put what they call their plans in three-ring binders, which is usually a combination of the plan, Fact Book and action plans. It usually numbers 150 to 200 pages, and the effectiveness is generally judged by how much the plan weighs. Most even emboss their company name in gold ink on the cover. After they present their plan, they put it up on the shelf someplace. It looks cool up there, but invariably no one looks at it until a year later.

When the year is up and the managers go into their planning mode again, having neglected to keep the plan in mind and constantly compare it to reality, they’re already in trouble. They have been looking in the window at their own operation, and made decisions based on what they see within the company such as their existing technology, type of equipment, processes, policies, employees and current customers. Don’t make the same mistake. Their type of critique is only half of the planning process. You also have to look out the window to see who is passing by.

When you are looking out the window, keep asking yourself the following types of questions. Is there a change in what the customer looks like? Is he older? Younger? Is she richer or poorer? Does he still have the same importance in the buying decision? Have her needs, wants or desires changed, as they have in medicine, stocks and bonds, the Internet and telecommunications? Is the market growing faster or slower? Is my competition getting stronger or weaker? Do they plan to introduce new brands? Are they doing something I can take advantage of, like Intuit selling their software direct at a higher price than you can purchase it at retail. Am I competitively priced based on the value I offer? Is new technology available? Are fashion trends changing? Are there new life styles? Does my selling line really have a zing to it or can I improve it so it catches peoples’ attention, like Nike’s "Just do it." Nike may have more marketing dollars than you, but that doesn’t necessarily mean you need a lot of money to be creative.

Looking out the window means critiquing every strategy you see on television, hear on the radio, read in a newspaper or magazine or encounter in the business world. The type of product or service is academic. What you are looking for is an effective strategy from another industry that you can steal, give it a fresh coat of paint, and be the first to run it in your market. That is the way to develop fresh and dynamic strategies. An example of the execution of a dynamic strategy is when Netscape introduced their browser. They proclaimed in the media, "Use our software to explore the wonderful world of the web." Not bad, but then they added the kicker. "You can download it free." That was dynamite. Can you repaint that one for your business?

When you look out the window, you also want to be sure there are no emerging markets on the horizon that may replace yours. In his book The Innovator’s Dilemma, Clayton M. Christensen talks about disruptive technologies precipitating the failure of many leading firms. His definition of disruptive technologies are those that under perform established products or services in mainstream markets, but that have other features that a few, and primarily new customers, value. They are usually cheaper, simpler, smaller, and frequently more convenient to use. Consequently, they represent a new or emerging market.

One of the many examples he provides is the computer disk drive industry, where rarely did the market leader in one stage of technology become the market leader in the next. The reason was that at each stage of technology, the market leader’s customers did not heed the continuous downsizing of computers. For example, Winchester Drive led the market with the 14 inch disk drive. This was fine for their main frame computer manufacturing customers, but then different manufacturers started making minicomputers. They needed a smaller-sized disk drive. Winchester kept making the 14 inch to satisfy their current customers, but with the eventual shift to minis, Shugart Associates and Quantum became the leaders with the 8 inch. Then the shift was to microcomputers. Shugart and Quantum did not look out the window. Consequently, Seagate led with the 5.25 inch and Conner Peripherals with the 3.5 inch. None of the above saw laptops and hand-held computers coming, so it is no surprise that they are not a factor in the 1.8 inch market. Ninety-eight percent of the sales for 1.8 inch drives are by new entrants.

The market leaders of tomorrow are those that are looking out the window today. So keep looking. Keep your plans on your desk and your head out the window.

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