Book SummaryThe Marketing Plan, by William Luther

1-Page Summary1-Page Book Summary of The Marketing Plan

In The Marketing Plan, management and marketing expert William M. Luther asserts that an effective marketing plan should encapsulate your business goals for the next five to ten years and the strategies you’ll use to achieve them. However, he argues that before you can define where you want to be and how you’ll get there, you first need to understand three key variables that will impact your venture’s success.

This guide walks you through these three variables and...

The Marketing Plan Summary Variable #1: Market Size and Market Share

According to Luther, before developing a product or service, you first need to assess how profitable your intended market is. He argues that there’s a very high correlation between the size of your target market, your market share, and the amount of profit your product or service can make. Understanding this correlation will help you determine whether there’s sufficient demand for what you’re offering and how much profit you could potentially make. Let’s explore the correlation between market size, market share, and profits in detail.

Market Size

Luther explains that market size indicates the total number of potential customers for your product or service—the larger the size, the more potential there is to make a profit. Use the following three-step process to define your market size:

1. Consider what benefits your product or service offers. For example, your product helps people whiten their teeth.
2. Customer groups turn to a common pool of competitors and distribution channels who offer products that claim to fulfill their needs. Determine your market by finding a group of potential customers who are seeking the exact benefits you’re offering. For example, your...

The Marketing Plan Summary Variable #2: Market Life Cycle and Growth Rate

Now that you understand how to calculate your target market’s size and your ideal market share, let’s discuss how these figures fluctuate according to the market’s life cycle and growth rate. Luther argues that understanding the market’s life cycle and growth rate will help you predict two things about the market you intend to enter: First, if demand for your product or service is currently on the rise or in decline. Second, what operational procedures you’ll need to focus on to maximize your profits.

According to Luther, every market moves through three stages that reflect the amount of consumer interest (the market size) in a particular type of product or service: introductory, early growth, and late growth to decline. Let’s explore how entering the market during each of these three stages impacts your venture’s success.

Life Cycle Stage #1: Introductory

During the introductory stage, a new product or service enters the market. The market size is small since customers are not yet aware of this commodity. Luther argues that businesses that enter the market at this stage benefit from fewer competitors. This gives them the chance to dominate the market as consumer...

The Marketing Plan Summary Variable #3: The Competition

Up until now, we’ve discussed how consumer interest impacts the success of your product or service. We’ll now explore how other businesses offering similar benefits to yours impact your market share and profits. Understanding how many competitors you have and what their capabilities are will help you determine effective strategies to outmatch them.

Luther argues that the ideal market has few competitors providing adequate substitutions for your product or service—this commonly occurs during the introductory stage of the market’s life cycle. During this early stage, potential customers are more likely to buy from you because they have less choice. This makes it easier for you to gain market share, drive your costs down, and strengthen your position before other competitors begin to invade the market. Further, because they can’t find suitable alternatives, customers automatically perceive your product or service as more valuable. This lets you raise prices, increase your profits, and further strengthen your hold over the market.

(Shortform note: How can you come up with ideas for a unique product or service that has no substitutions? In _[Blue Ocean...

The Marketing Plan Summary Resources to Complete Your Marketing Plan

Now that we’ve discussed the three main variables that impact the success of your product or service, let’s explore how to use this information to complete your marketing plan.

Once you’ve completed the research to determine how each of these variables will affect your venture’s success, you’ll have a good idea about which market you should target and the strategies you need to use to beat the competition. Luther suggests that you should test these ideas by calculating the profitability of different pricing, budgeting, and sales strategies for your product or service—the published edition of The Marketing Plan provides access to online software to help you achieve this.

(Shortform note: In addition to using Luther’s software to calculate the profitability of different strategies, consider developing prototypes of each strategy to test consumer responses. According to management experts, prototypes are the most effective way to gather real-world data that tests the viability of different strategies. For example,...

Shortform Exercise: Create an Overview of Your Target Market

Create a brief overview of what you’re selling and to whom, the size of your target market, and your market share goal.

Think of one product or service you intend to profit from. What specific benefits does it offer?

Shortform Exercise: Determine Your Competitive Strategy

Consider your competitors and the strategies you can use to outmatch them.

Describe one product or service you intend to profit from and your target market. Write down the name of at least one of your competitors.