‘How’ you sell is just as important as ‘what’ you sell

There’s an old adage that says, “Nothing happens ‘til somebody sells something.” The last section of your marketing plan should do just that—describe how your firm’s products and services, your “thingamajigs,” will be sold. The sales section of your plan must clearly and convincingly demonstrate that your firm—and you—have the marketing savvy and aggressiveness necessary to successfully and profitably sell into your targeted markets.

Here is where you should describe, in detail, the ways in which you will actually sell products or services you intend to provide. You must put pencil to paper to sketch out the tactics you will employ to move aggressively and profitably into the market. Consider the following questions:

• What sales methods and techniques will be necessary to market my product?

• What channels of distribution will I use? Wholesalers? Distributors? Retailers? Catalogs? Internet?

• What is the availability of the channels I have selected and what are the costs associated with the channels I prefer?

• What kind of sales force will I need? How will I structure my sales team? What will it cost? What forms compensation will I use? How will I allocate the territories?

• What reporting and monitoring mechanisms will provide me with the proper oversight and control?

• What am I going to budget to implement the marketing program I envision in my business plan? What are my support budgets for expenditures related to individual products, services and specific marketing programs?

• What advertising and promotion will I employ? What media will be employed?

• What collateral materials will be needed? Brochures? Price lists? Signs? Displays? Booths?

• What agencies and consultants will be utilized? What public relations and product promotion programs will be necessary?

In addition to all of the above mentioned sales and marketing tactics you will bring to bear, there is another element of your marketing package that will determinatively affect the success of your market “sorties.”

All of the sales clout you can muster will not overcome the liability of a poorly priced product or service. As a consequence, the sales section of your marketing plan must also outline a pricing strategy that is reasonable in relation to both the attitudes of your intended customer and your firm’s desired bottom line.

Such a strategy begs a number of important questions:

• What is the price I will assign to my thingamajig? What will be my price structure for the thingamajig at each level of distribution?

• What is the price structure I require? What are the price points according to channels used and markets targeted?

• To what degree is my business vulnerable to price, interest rate and disposable income changes that can occur in the market?

• What price practices currently prevail in my target markets?

• How much control will I have over pricing?

• What will be my pricing strategy if low-price competition emerges?

• Can I afford to be competitive on the basis of price over the long-term? For how long?

• How will demand for my product change and how will my revenue be impacted as the price moves up or down—my thingamajig’s price elasticity?

The final step in the process of creating a marketing plan involves generating an estimate of how your marketing initiatives will impact the bottom line of your enterprise. How will your proposed pricing, sales forecasts and anticipated purchasing or production costs for your thingamajig affect your firm’s gross profit margin?

The gross margin is the difference between what your firm will sell the product for and the cost of producing or otherwise obtaining the product. Here is where all direct costs are counted. The resulting margin — or difference — between selling price and cost will be the amount of money you have available to cover all other indirect costs like rent, advertising, office expense, your salary, insurance and the like.

If your envisioned marketing program doesn’t result in a top line and a bottom line that produce a worthwhile return and justify the time, effort and capital you must invest, it’s time to go back to square one.

Paul Willax is a professor of entrepreneurship and chairman of the Center for Business Ownership Inc., Amherst, N.Y. He is also the author of the book, “Brass Tacks Tips for Business Owners,” available at barnersandnoble.com. If you have a question or suggestion for his column or to receive a free, weekly e-mail newsletter, “Brass Tacks Brainfood,” write to Willax@TheBrassTacks.com.

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