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Developing a Marketing Plan

Developing a Marketing Plan. John D. Lawrence, Ph.D. Extension Livestock Economist Iowa State University. Definitions. Market What, When, Where, Who Plan Forethought Written Decisions Implementation. Why develop a marketing plan. Internal audience Support business goals

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Developing a Marketing Plan

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  1. Developing a Marketing Plan John D. Lawrence, Ph.D. Extension Livestock Economist Iowa State University

  2. Definitions • Market • What, When, Where, Who • Plan • Forethought • Written • Decisions • Implementation

  3. Why develop a marketing plan • Internal audience • Support business goals • Provide decision framework • Budgets, analysis • External audience • Exhibit management ability • Demonstrate stability of cash flow

  4. Components of a marketing plan • Current operation • Goals • Objectives • Decision rules • Evaluation

  5. Support business goals • Identifies needs of business • Long-term profitability • Short-term liquidity • Quantifies and manages risk • Incorporates current market environment • Marketing alternatives • Market outlook

  6. Incorporate Current Information • Market outlook • Raw data and information • Analysis • Advice • Sources • Public: Universities and USDA • Private companies

  7. Market Outlook • Time horizon • Multi-year • Annual or crop year • Quarterly • Monthly • Weekly • Daily • Within day

  8. Market Outlook • Avenues • Newsletters • Mail, electronic, call-in • Advisory services • Real-time comments • Prescription • Marketing services

  9. Examples of Services http://www. aces.uiuc.edu/~agmas econ.iastate.edu/faculty/lawrence/ exnet.iastate.edu econ.iastate.edu/publications/ifo/ mannlib.cornell.edu/reports/erssor/ http://lmic1.co.nrcs.usda.gov/

  10. Managing market risk • Sources of price risk • Futures • Basis • Types of risk • Sinking the ship • Missing the boat

  11. Define current operation • Quality and quantity • Marketings • Purchases • Marketing philosophy • Attitude toward risk

  12. Marketing goals • Consistent with business goals • Long-term focus • Achievable and measurable • Examples: • Average 5% over Iowa top by 2005 • Sort loss under $0.30/cwt in 2003 • Average $10/profit 2003-2005

  13. Marketing objectives • Procedures to reach goals • Short-term focus • Incorporate current • Production levels • Production costs • Market conditions • Balance profitability, liquidity, and risk

  14. Risk objectives • Acceptable probability of failing to meet a price objective • Examples: • 90% sure of covering direct costs • 60% sure of covering overhead costs

  15. Price objectives:Cattle Feeding Example Cost item Cost $/cwt Feeder $47.60 Feed 61.04 Interest 62.96 Trucking 64.16 Vet Med 65.28 Yardage 69.60

  16. Decision rules • Triggers • Indicate that a decision is needed • Actions • Predetermined decision to implement • Examples: • Hedge 50% if futures fall below $42 • Buy 10,000 bu corn if below $2.30

  17. Risk management alternatives • Education and experience essential • Courses and marketing clubs • Otherwise tuition can be quite high • Futures • Options on futures • Forward deliverable contracts • Long-term packer agreements

  18. Marketing plan evaluation • Track market information • Compare to stated goals and objectives • Hindsight is discouraging • Decisions versus implementation • Learn from mistakes

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