EXECUTIVE SUMMARY
With over 1.6 million pounds of non-degradable disposable diapers finding their way into garbage dumps across America, many Americans are turning toward a more environmentally safe diaper for their babies to avoid the continued build-up of non-degradable diapers. Americans spend approximately $2.7 billion dollars per year for disposable diapers, but that number has been shrinking due to the encroachment of cloth diapers and delivery services with an estimated $400 million in sales each year.
Needless to say, the disposable diaper market is a huge, billion-dollar industry. These products are especially attractive to dual-income families and single parents who don’t have the time to wash cloth diapers and don’t want to spend the extra money for a diaper delivery service. Competitors in the market all boast the same type of product with absorbent pads, surrounded by a snug-fitting plastic diaper that is secured using tape connectors. There is some product differentiation in packaging, non-allergenic claims, and pad size ranging from ultra-thin to thick, but other than that there is very little difference between products. Despite the popularity of disposable diapers, however, many consumers are turning away from disposable diapers because they are not biodegradable.
Given this gap in the market, Bio-Diapers has been developed to provide ecology-minded consumers with an environmentally safe disposable diaper. This new line of biodegradable disposable diapers will feature all the elements that are popular among users of disposable diapers, but will include that added benefit — biodegradability. The revolutionary new advancement in the disposable diaper market will attract consumers who are concerned about the environment as well as those consumers using cloth diapers and diaper services because the disposable diapers currently on the market are non-degradable.
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Bio-Diapers will be available for babies ranging from newborns all the way up to 30 pounds and over. We will offer them in a variety of colorful designs and pad sizes. Our marketing objectives and strategies are highlighted in the following pages. We anticipate placing Bio-Diapers on the market by the summer of 2000.
As you can see, the executive summary for Bio-Diapers is not a long, drawn-out account listing all the profit projections, strategies, tactics, etc. That is for the plan itself. It does provide a descriptive summary that grabs the reviewer’s attention and creates the curiosity necessary to impel the reader to the next section of the marketing plan.
PRODUCT DESCRIPTION
The purpose of this plan is to demonstrate the need for a high-quality, biodegradable disposable diaper that will fill a gap left in the marketplace by large disposable-diaper manufacturers. In a survey of 1,000 parents commissioned by Softie Baby Care Inc. and conducted by Timmons Research, over 60 percent of the respondents were extremely concerned about the environment and the effects of non-degradable diapers; 20 percent were mildly concerned; 15 percent were concerned; and 5 percent used cloth diapers or a service. Clearly this survey points to the importance parents are placing upon the environment.
The solution we are providing to these consumers is a biodegradable disposable diaper at a price point that is just 20 percent above that of regular disposable diapers. The “Bio-Diaper” will be produced in all standard diaper sizes and will feature various nursery designs to appeal to a more affluent, brand-name-oriented consumer. To reach these consumers, we will introduce the Bio-Diaper through specialty stores and mail order to begin with, slowly moving to large retail chains and supermarkets. It is our goal to supplant the need for regular disposable diapers.
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As you can see, the sample introduction starts with an explanation detailing the reason for the plan and quickly moves into supporting evidence that plainly illustrates the need described in the preceding sentence. From the first paragraph, the introduction moves into the second paragraph that details the whole thrust of the plan. The readers learn that the proposed product is a biodegradable diaper that is priced very competitively with regular disposable diapers. It also goes on to indicate an entry point into the market that provides a better understanding of the marketing strategy suggested to reach the goal listed at the end of the introduction.
MARKET ANALYSIS
Today, babies mean big business. Over the last few years, retailers of baby products have witnessed sharp increases in their profits. According to the latest figures from the Juvenile Products Manufacturers’ Association (JPMA), sales of infant products have topped the $1.6 billion mark. And that excludes clothing and some $12 billion worth of toys. It also doesn’t account for the $750 million baby-food market and the $3 billion diaper industry. Altogether, sales have grown close to $17 billion a year. Industry sales breakdowns are shown in figure 3502P1.
Sales seem to be linked more to changing needs than to a true boom in population, although baby boomers are reaching their peak childbearing years. But beyond these demographic factors, the changing attitudes and spending patterns of millions of baby-boomer parents are fueling the surge in the infant retail industry.
Closely linked to this surge is an increase in disposable-diaper sales. Currently, the disposable diaper market accounts for $2.7 billion annually according to the JPMA, up from 1979, when disposable diaper sales were only $700 million. That means that the disposable diaper market has grown by close to 400 percent since 1979. With projected growth for the upcoming year pegged at 15 percent, sales will reach an estimated $3.1 billion. Market growth in revenue is shown in Figure 3502P3.
While the overall disposable diaper market is projected to continue its growth in the foreseeable future, the market is beginning to level off and enter a mature stage. The primary concern of producers in the industry is to find gaps in the market that will create future trends. Studies commissioned by Softie Baby Care, Inc., and conducted by Timmons Research have revealed that both existing parents and prospective parents have a deep concern over the impact regular disposable diapers have upon the environment. Over 60 percent of the respondents were extremely concerned about the environment and the effects of non-degradable diapers, 20 percent were mildly concerned, 15 percent were concerned, and 5 percent used cloth diapers or a service. Clearly this survey points to the importance parents are placing upon the environment. Below are the results of the Timmons Research survey.
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Consumer Attitudes Regarding Non-Degradable Disposable Diapers
Extremely Concerned Mildly Concerned Concerned, Cloth Diapers
60% 20% 15% 5%
Using 1,000 parents as total population: 60 percent = 600 parents that are extremely concerned about the effects of non-degradable diapers upon the environment.
Based on statistics from the Census Bureau, over 1.6 billion pounds of non-degradable disposable diapers are ending up in garbage dumps across America annually. This alarming fact is a real concern for many parents — so much so that some are turning to cloth diapers and diaper delivery services.
Working Mothers
One of the reasons disposable diapers are enjoying overwhelming popularity compared to diaper-delivery services and cloth diapers is the increase in the number of working mothers. According to the Bureau of Labor Statistics, 50.4 percent of all married mothers return to work before their children’s second birthdays. The percentage of working women continues to rise, and by the end of the 20th century, women should make up 47 percent of the work force in the U.S.
This creates a multitude of problems for women with new babies. Caring for a baby is a time-consuming, monumental task. And for new mothers who also hold jobs outside the home, juggling work and family responsibilities can often prove overwhelming. With both the mother and father working, time is at a premium and parents can no longer afford to sit around waiting for the wash to finish. That is why disposable diapers have become the diaper of choice for parents.
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Industry studies indicate that over 70 percent of disposable-diaper purchases are made by households in which the mother works. They also indicate that the mother is the decision-maker in over 80 percent of the households when it comes to selecting diapers, and are also the buyers in 95 percent of the households.
Income Factors
Diapers are considered a necessity and not a luxury item to parents. Income is not a consideration when it comes to buying diapers, but it is a factor in determining what kind of diapers to purchase. Based on the Timmons Survey, there was a definite income-to-price relationship that influences the purchase decision of the household. Among more affluent homes with incomes of more than $30,000 annually, over 90 percent purchase name-brand disposable diapers, 9 percent purchase cloth diapers, and the other 1 percent utilized a diaper service. On the other hand, among households with incomes of less than $20,000 annually, 40 percent of the respondents used generic or store-brand disposable diapers, while the remaining 60 percent used cloth diapers.
Purchasing Factors
Equally important to the purchase decision, according to the Timmons Survey, is the place where disposable diapers are purchased, as well as the frequency, average quantity, and how they are purchased. As shown in figure 3502P4, 41 percent of purchases for disposable diapers are made in supermarkets, 19 percent of the purchases are made in specialty stores, 18 percent are made in discount stores, 13 percent are made through chain stores, and 9 percent are made through miscellaneous avenues like membership warehouses.
Disposable diapers are purchased an average of once a week by 92 percent of the buying market. The other 8 percent purchase disposable diapers an average of two times per week. In addition, the Timmons Survey also indicates that coupons are used heavily in supermarket purchases of disposable diapers, with over 70 percent of those households purchasing through this distribution channel using coupons.
The Product
Introduced in the 1960s, disposable diapers have gone through a number of changes including changes in fasteners, liner material, sizes of the pad, and even colored patterns, but the main appeal of disposable diapers is still the convenience, and this is very important to working mothers. Made of non-degradable plastic, disposable diapers are used once, then thrown away. This removes the extra work of washing cloth diapers.
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Plastic is by far the most expensive ingredient in the production of disposable diapers. The plastic is a highly durable material that is highly resistant to weather and chemicals. Because of the structure of disposable diapers, they cannot be broken down by sunlight or through natural deterioration, creating a huge amount of non-degradable waste.
Biodegradability, therefore, becomes a highly desirable added benefit to consumers. In fact, the major trend among manufacturers is the development of a cost-effective agent that can be included in the molecular structure of the plastic diaper to cause it to disintegrate upon extended exposure to environmental elements. This development would promote a significant change in the disposable-diaper industry and how it is viewed by consumers.
COMPETITIVE ANALYSIS
The disposable diaper market can be divided into several strategic groups starting with the primary competitors that make up the bulk of the market. These primary competitors include Pampers, Huggies and Luvs. These three companies control 70 percent of the entire disposable-diaper industry and target the middle- to upper-income markets. The second strategic group is made up of secondary competitors such as private-label marketers and smaller brand-name manufacturers who control 25 percent of the market and target the discount shopper. The last group of competitors in the disposable diaper industry consists of generic-brand marketers, who control 5 percent of the market and who primarily target lower-income consumers. Refer to figure 3502P5 for a complete breakdown of the disposable diaper market by market share.
Peripheral strategic groups consist of cloth-diaper marketers and diaper services. The cloth-diaper marketers are important because, as sales increase in this sector of the industry, volume in the disposable-diaper sector may be affected. Cloth-diaper marketers are geared mainly toward budget-conscious households in which the head of the household and the only wage earner in the family is male. Diaper services, on the other hand, directly encroach upon the disposable-diaper market because they offer convenience as well as the benefit of non-polluting cloth diapers. They target middle- to upper-income families with working mothers and a preference for an environmentally safe diaper.
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Primary Competitors
By far, the companies with the greatest market share in the industry are Pampers, Huggies and Luvs. All three target a more affluent customer and their price structure reflects this strategy. In a survey of five major supermarket chains in the Southern California area, the price differentiation between the three is very minimal.
These companies also distribute their products through the same channels, with supermarkets and specialty stores being the most prominent. All three attack the market very aggressively through their promotional campaigns by placing a large portion of their advertising dollars in television and magazines. Direct-mail campaigns featuring coupons and giveaways and cooperative advertising programs with hospitals that sponsor Lamaze programs offer additional marketing support.
Secondary Competitors
This strategic group consists of smaller disposable-diaper marketers as well as store-brand product lines. This group appeals to the discount shopper who doesn’t care about decorative designs on the diapers or the packaging. Competitors in this strategic group offer consumers good, quality diapers at a price significantly below those of the major competitors.
Store-brand diapers are of course distributed through the chains of stores that produce them. For instance, Toys R Us produces its own private-label disposable diapers, which are sold exclusively through Toys R Us. The major advertising for these diapers is through weekly flyers in the local newspaper featuring items that are currently on sale at those stores.
Smaller manufacturers differ in their distribution strategies and promotional campaigns. These brands are sold mainly through specialty stores and selected supermarkets. They generally rely on point-of-purchase displays and coupon offerings in the local newspapers. Rarely will you see them advertise on television or in magazines.
Generic-Brand Marketers
Geared toward the lower-income, budget-conscious shopper, generic-brand disposable diapers are the ultimate no-frills diapers. Their price points are very attractive to budget-conscious shoppers because they are often priced 45 percent below name brands and 25 percent below store brands.
The problem with these disposable diapers is their association with poor quality among the more affluent shoppers, and because their advertising support is nonexistent, there are no claims to counteract this assumption. Due to their price points, however, these brands of disposable diapers are often distributed through supermarkets and large discount stores.
Cloth Diapers & Delivery Services
Together, these two strategic groups equal a $300 million segment of the diaper industry. They are significant because both groups offer alternatives to parents and fulfill many of the needs that disposable diapers don’t.
For cloth-diaper manufacturers, the major competitive advantage is price. The cost of diapering a baby in disposables for 30 months is $2,000-$2,600 more than the cost of using cloth diapers for the same period. Combine this with the fact that some babies are allergic to materials used in disposable diapers and the objection some people have with the waste generated by disposable diapers, and cloth diapers become a considerable competitive force.
Cloth diapers are distributed through specialty stores, chain stores, membership warehouses, and mail order. Because of their cost advantage, cloth diapers are marketed mainly to a lower-income segment and households with only one working parent. They are also finding ready acceptance among more affluent households that have a deep concern over the environmental problem created by disposable diapers.
In direct competition with disposable diapers are diaper services. These are companies that are very price-competitive with the primary competitor group of disposable-diaper marketers. They deliver freshly laundered cloth diapers on a weekly or bi-weekly basis and collect used diapers. Customers can request more diapers if they choose. Diaper services usually target affluent households in which both parents work, both are very selective about the diapers they put on their babies, and they are very concerned about the environment.
PRODUCT DEVELOPMENT
The design and development effort of Softie Baby Care’s biodegradable diaper, Bio-Diaper, will include the development of the product to final version for marketing, a distribution system and sales promotion program to establish a solid customer base, and recruitment of key organizational team members.
Product/Market Development
1.0 Development of biodegradable plastic
1.1 Research
1.2 Development of plastic biodegradable shell in three sizes: small (up to 12 lbs.), medium (up to 24 lbs.), large (up to 36 lbs.)
1.3 Testing
1.4 Delivery
2.0 Pad development
2.1 Delineation of pad thickness and sizes for production of a thin and thick pad in three sizes: small (up to 12 lbs.), medium (up to 24 lbs.), large (up to 36 lbs.)
2.2 Delivery of raw material
2.3 Development of odor-reducing agent
2.4 Testing of pads for absorbency and odor reduction
2.5 Delivery of the specified pad sizes
2.6 Integration of pads into plastic shell for working prototype
3.0 Package creation
3.1 Creation of imprint designs that will require the recruitment of a marketing director who will oversee the operation
3.2 Integration of imprint designs onto working prototype
3.3 Creation of shelf packaging that will include the design, color scheme, and manufacture
4.0 Integration/Delivery
4.1 Component tests of shell, pad, and packaging
4.2 Product test of working prototype
4.3 Alpha test
4.4 Beta test
5.0 Manufacturing
5.1 Design modification as a result of alpha and beta tests
5.2 Pre-production run
5.3 Cost-reduction check to achieve pricing goal of $8.40 per package
5.4 Manufacturing run
6.0 Final delivery
6.1 Distribution development that will include the recruitment of a sales manager and sales force to obtain purchase orders from five national distributors that service major supermarket and drugstore chains, and enlist the aid of manufacturer’s representatives in the 10 major regional territories of the U.S.
6.2 Delivery of initial orders to distributors and retailers
6.3 The implementation of the sales promotion campaign that is budgeted at $15.3 million during the first year of operation and is geared toward raising consumer awareness at the supermarket and specialty-store levels.
The major benchmarks include:
A disposable plastic diaper shell that is biodegradable and available in three sizes: small (up to 12 lbs.), medium (up to 24 lbs.), large (up to 36 lbs.)
Thin and thick pads available in three sizes to fit the plastic shells. They must control odor effectively and be highly absorbent.
Imprinted designs of favorite nursery characters using pastel colors
Attractive pastel-colored package designs
Retail and distributor price points of $12 and $8.42 per package
The development of Bio-Diapers will be spearheaded by the following executives of Softie Baby Care:
Vice President of Production Roger Smith
Reporting directly to the CEO, Mr. Smith is responsible for the management of the research and development arm of the company. Mr. Smith has a strong background as a research and development director in the realm of industrial plastics.
Vice President of Operations Steve Smith
Reporting directly to the CEO, Mr. Smith is responsible for managing all purchasing and inventory-control operations. Mr. Smith has considerable experience in purchasing and inventory control operations for large manufacturers.
Risks
Since the development effort of Softie Baby Care is phased over a period of time, the risks are very few and very controllable. They include:
Product acceptance by consumers: Based on surveys commissioned by Softie Baby Care, Inc., we feel consumer acceptance will be high and present minimal risk.
Technical delays: With the expertise already present within the principal owners of the company, this risk will be greatly reduced.
Increased competition from major competitors: Most of the major players are in the process of developing their own biodegradable diapers. The risk of increased competition will be reduced through superior product quality and consumer recognition of Bio-Diapers as the first biodegradable diapers.
Financials
Table 3502P6 depicts the major development expenses.
DEVELOPMENT EXPENSES
Item Budgeted Amount
Materials $7,133
Direct Labor 7,254
Overhead 9,992
G&A 1,088
Equipment 806
Miscellaneous 300
Total $26,573
OPERATIONS
Softie Baby Care Incorporated is a disposable-diaper manufacturer that has been in existence for 10 years. We currently produce a product line of disposable diapers featuring three sizes and two pad thicknesses — thin and thick. Our line of disposable diapers is very price-competitive with current store-brand prices while offering the same packaging associated with the industry’s primary competitors.
Through aggressive marketing campaigns that include direct-mail giveaways, coupon offers, price discounts to retailers, and distribution through large and small specialty stores, chain stores, membership warehouses, and selected supermarkets, we have been able to build sales of $200 million. Currently, we control 7.4 percent of the disposable-diaper market.
Softie Baby Care Inc. is a privately held company that has grown very conservatively over its ten-year history. The principal officers of the firm include are its three founders: John Smith, CEO; Roger Smith, president; and Steve Smith, vice president of marketing. Before starting Softie Baby Care Inc., all three principals had been involved in the diaper industry for 10 years. Combined, they have 30 years of experience in the industry.
With this expertise, we have been able to build a company with over $300 million in total assets. Our company’s strengths include strong quality brand association with consumers, a firmly entrenched national distribution system, and the experience of upper management. Our weaknesses include limited capital resources as well as a limited product line.
The following structure is the basis for the operations of the business:
Marketing
Managed by the president and marketing art director, the responsibilities that this department will cover revolve around promotional support at the wholesale and retail levels. The marketing department will define the markets, outline the prospective customers within those markets, plan the various sales and promotional campaigns, measure response and analyze the market to produce competitive strategies that will generate sales leads, and supervise the development of the product in order to meet the needs of the customer base.
Sales
Sales for Bio-Diapers will take place on three levels: manufacturer to distributor, distributor to retailer, and retailer to consumer. At the manufacturer-to-distributor level, an inside sales force of 13 will be responsible for sales to distributors on a national level from the company’s headquarters in Sherman Oaks. Territories will be divided among the 10 major regions of the United States, and their responsibilities will include initiating sales contact, closing the sale, and servicing existing accounts.
At the distributor-to-retailer level, manufacturer’s representatives will be recruited by the sales manager to cover the 10 major regions of the United States. The manufacturer’s representatives will concentrate mainly on specialty stores and small grocers, while the distributors will handle chain supermarket accounts.
Customer Relations/Service
Customer service will involve two layers of personnel: one layer to deal with problems originating at the manufacturer-to-distributor level, and another layer to handle problems originating at the retail level. The sales manager and account executives will service their accounts to ensure that the distributors and reps receive their shipments and that the billing and payment schedules are consistent with the agreements signed between both parties.
The second layer of personnel will handle problems originating at the retail level. Most complaints from consumers will be handled at the retail level and passed along through the distribution channel. That means the distributors and reps will interface with the manufacturer, Softie Baby Care, Inc. The customer-service staff will handle all of these problems.
Production
The function of production is to coordinate the actual manufacturing of the product. The production requirements for Bio-Diapers can be broken down into several operational procedures:
1. The first is purchasing of raw material and inventory control
2. The second is pad and shell production, which includes cutting, integrating components, attaching tape fasteners, and imprinting the shell
3. The third is packaging, which includes counting, stuffing, and sealing
4. The final procedure is shipping to the designated distributors and retailers.
Embedded within the production process is a commitment to quality control that is measured by designated quality assurance agents that are employees of the company.
The costs associated with the production of the product are detailed in the cost of goods table. The cost of goods breakout is based on two elements: materials and labor. During the manufacturing process, the product may be in any one of four stages:
1. Unassembled or just raw material (U)
2. Partially assembled (PA)
3. Fully assembled (FA)
4. Sold (S)
Merchandise that is sold is expensed as a cost of goods, while merchandise that isn’t sold is placed in inventory.
Year 1995 1996 1997
Units Sold 18,400 53,875 108,875
Begin FA 0 11,040 32,325
FA% Sales (Units) 60 60 60
End FA 11,040 32,325 65,325
Change/FA 11,040 21,285 33,000
Begin PA 0 4,600 13,469
PA% Sales (Units) 25 25 25
End PA 4,600 13,469 27,218
Change/PA 4,600 8,869 13,749
Begin U 0 2,760 8,081
U% Sales (Units) 15 15 15
End U 2,760 8,081 16,331
Change/U 2,760 5,321 8,250
Units Sold 18,400 53,875 108,875
Units FAI 11,040 21,285 33,000
Units PAI 4,600 8,869 13,749
Units UI 2,760 5,321 8,250
Total Units Mat 36,800 89,350 163,874
Mat/Unit ($) 1.19 97 .97
Mat Costs 43,792 86,670 158,958
Units Sold 18,400 53,875 108,875
Units FAI 11,040 21,285 33,000
Units PAI 4,600 8,869 13,749
Total L&OH Units 34,040 84,029 155,624
Labor/PA% (Units) 50 50 50
Labor/Unit ($) .52, .52, .52
OH/Unit ($) 2.49 2.49 2.49
Labor Costs ($) 16,505 41,389 77,350
OH Costs ($) 79,033 198,190 370,386
Total L&OH ($) 95,538 239,579 447,736
Change/U ($) 3,284 5,161 8,003
Man Costs ($) 136,046 321,088 598,691
Change/PAI ($) 12,397 21,951 34,029
COG Man ($) 123,649 299,137 564,662
Change/FAI ($) 46,368 84,714 131,340
COG Sold ($) 77,281 214,423 433,322
COGS/Unit ($) 4.20 3.98 3.98
Begin UI ($) 0 3,284 8,445
Change UI ($) 3,284 5,161 8,003
End UI ($) 3,284 8,445 16,448
Begin PAI ($) 0 12,397 34,348
Change PAI ($) 12,397 21,951 34,029
End PAI ($) 12,397 34,348 68,377
Begin FAI ($) 0 46,368 131,082
Change FAI ($) 46,368 84,714 131,340
End FAI ($) 46,368 131,082 262,422
Begin Inventory ($) 0 62,049 173,875
Change Inventory ($) 62,049 111,826 173,372
End Inventory ($) 62,049 173,875 347,247
Revenue/Unit ($) 8.42 8 8
Revenue 155,000 431,000 871,000
Inventory Turn 2.49 2.47 2.50
Much of the production process for Softie Baby Care will be automated through the use of cutting, pressing, assembly, and packaging machines. There will be a staff of 27 during the first year of operation that will control the entire production process. The investment costs for the manufacturing equipment are shown in the capital requirements table.
CAPITAL REQUIREMENTS
Capital Summary
Year 1995 1996 1997
Initial Capital $0 $0 $0
Net Capital $0 1,111 3,989
Testing Equipment
No. Units 18,400 53,875 108,875
TE/Unit 12,000 12,000 12,000
TE Cap $161 $161 $161
TE Cap Req. $247 $721 $1,460
New TE Cap $247 $474 $739
Assembly Equipment
No. Units 18,400 53,875 108,875
AE/Unit 12,000 12,000 12,000
AE Cap $403 $403 $403
AE Cap Req. $617 $2,764 $3,655
New AE Cap $617 $2,147 $891
Packaging Equipment
No. Units 18,400 53,875 108,875
PE/Unit 12,000 12,000 12,000
PE Cap $242 $242 $242
PE Cap Req. $370 $1,084 $2,195
New PE Cap $370 $714 $1,111
Total New Cap $1,234 $3,335 $2,741
Total Capital $1,234 $4,446 $6,730
Depreciation $123 $457 $731
Research & Development
Research and development will be in charge of improving the existing products and developing new ones to expand the product line of the company. This division of operations will continually test new technology for applicability and then define new prototypes.
Administration
Administration is in charge of those overhead functions that support operations such as accounting, legal, human resources, and other functions related directly to internal operations.
The expenses for Softie Baby Care are illustrated in the operating expenses table. They are divided according to the functional lines detailed above.
OPERATING EXPENSES
Expenses
Year 1995 1996 1997
M&S Expenses $16,690 $47,405 $94,375
Prod Expenses $9,615 $28,115 $56,815
R&D Expenses $3,216 $6,240 $9,648
Admin. Expenses $3,828 $8,164 $16,848
Overhead $45,859 $121,741 $249,876
Total Expenses $79,331 $212,655 $428,282
OBJECTIVES AND GOALS
The objective of Softie Baby Care Inc. is to obtain 25 percent of the disposable-diaper market within a three-year period with the introduction of its new biodegradable disposable diaper line, Bio-Diapers. During the first year of business, our goal will be to concentrate on marketing and distribution to raise awareness among consumers and retailers. Projected sales for the first year, at an average retail cost of $12 for a large bag of Bio-diapers ,total $155 million, which is a five-percent market share. To reach this goal, it will be necessary to increase our marketing staff by 10 percent and our production staff by three percent.
Our second-year goals are to reinvest profits to increase our marketing staff by close to 200 percent and our production staff by close to 300 percent while continuing with a strong research and development program aimed at reducing the component costs of the Bio-Diaper product by five percent, leading to a five-percent reduction in the suggested retail price. With these elements in place, our goal is to increase sales from the first year by seven percent, resulting in $431 million in sales and a 13-percent market share.
With volume expected to double in the third year, our goals are to increase our production staff by 100 percent and marketing by another 100 percent. Our goal in the third year is to increase sales by 12 percent to $871 million in order to reach our objective of a 25-percent market share.
First-Year Sales Goals
Industry Sales $3,100,000,000
Bio-Diapers Sales $155,000,000
Market Share 5%
Marketing Costs $15,500,000
Unit Sales 18.4 million
Second-Year Sales Goals
Industry Sales $3,317,000,000
Bio-Diapers Sales $431,210,000
Market Share 13%
Sales Growth 7%
Marketing Costs $41,300,000
Unit Sales 53.9 million
Third Year Sales Goals
Industry Sales $3,482,850,000
Bio-Diapers Sales $870,712,500
Market Share 25%
Sales Growth 12%
Marketing Costs $85,000,000
Unit Sales 108.9 million
MARKETING TACTICS
In order for Softie Baby Care, Inc. to reach our projected objectives and goals, the following key items of our marketing strategy must be closely followed.
Product
The main emphasis of our product strategy will hinge on the added value of a biodegradable diaper. This fulfills one of the unmet needs of consumers of disposable diapers — environmental safety. Bio-Diapers will eliminate the continued build-up of non-degradable waste as a result of disposable diapers. At the same time, all the key elements that have made disposable diapers so attractive to the modern generation of parents will still be firmly in place. Therefore, our product strategy is to enter the market strongly with an emphasis on creating brand loyalty through the benefit of our environmentally safe diapers.
In order to build the brand loyalty of Bio-Diapers, we will take advantage of this distinct feature by implementing the following:
Obtain support from environmental protection groups (Sierra Club, EPA, and Greenpeace)
Invite product testing from consumer groups to substantiate our claim
Place one of our campaign slogans on the package: “The First Biodegradable Diaper.”
A secondary emphasis will be placed upon the colored designs printed on the actual diapers. Many parents like to maintain a color scheme and motif throughout their nursery such as ducks, bears, kangaroos, etc. Bio-Diapers will be available in a number of colored prints that correspond to the popular colors and themes used in a child’s nursery. This added feature to the actual product design is a crucial appeal for our primary consumers, who are mothers in upper-income households.
Packaging will also appeal to the upper-income groups by consisting of a cardboard box with a convenient plastic handle. The boxes will come in three colors to denote the size and quantity of the diapers:
A pastel yellow will signify sizes of newborn to 14 pounds
A pastel green will signify 14 pounds to 25 pounds
A pastel purple will signify 25 pounds and up.
While Bio-Diapers will be vastly different from the diapers produced by our competitors, we will be entering into competition with the major brand-name producers such as Pampers, Huggies and Luvs. Although many of these manufacturers have plans in the works to create their own biodegradable diapers, they will try to counteract Bio-Diapers through claims of poor quality. This will appear mainly in print ads attacking the pad absorbency of Bio-Diapers. We will counteract this strategy by commissioning pad absorbency tests between Bio-Diapers and our major competitors. We will then publish the results and send them out in a direct-mail campaign.
Distribution
Bio-Diapers will be marketed primarily as a convenience item, just like regular disposable diapers. Distribution, therefore, is a critical element to obtaining the coverage we will need in order to effectively reach our primary customers.
As our research has indicated, the most effective distribution strategy for reaching the primary customers of Bio-Diapers is selling through large grocery and drugstore chains, independent baby-goods stores, department stores with baby departments, major toy-store chains, and membership warehouses.
Since Softie Baby Care Inc. is a small manufacturer in comparison to giants like Kleenex (the manufacturer of Huggies), we will employ a three-tiered channel of distribution that will assure the presence of Bio-Diapers in the right place at the right time and in the right quantities. Our four-tiered approach will flow from manufacturer to wholesaler, from wholesaler to retailer, and from retailer to consumer.
To achieve our stated first-year sales goals, we will need to build national distribution in quarterly stages that will span the entire year.
During the first quarter, we will concentrate on distribution through all major grocery and drugstore chains, as well as the larger independent baby-goods stores. This will produce the national coverage needed to properly capitalize on the aggressive advertising campaign we will undertake in order to create consumer awareness. To meet initial production quotas, the production staff will have to be increased at this point. To ensure sufficient stock on hand to meet expected consumer demand, retailers will be offered stock allowances.
During the second quarter, we will expand our distribution from major grocery and drugstore chains to smaller independent baby-goods retailers. Due to increased market coverage, we will need to increase our marketing staff at this time and add more wholesalers.
During the third and fourth quarters, we will continue to expand our distribution to the remaining outlets such as department stores, membership warehouses, major toy-store chains, etc. To handle the increased distribution, more wholesalers will need to be added.
Pricing
Our pricing strategy will correspond with our product strategy. Since Bio-Diapers will enter the market as a premium-brand product targeted toward the upper-income consumers of disposable diapers, we will employ a premium price for Bio Diapers due to the added value of a biodegradable agent that will make the diapers environmentally safe. The suggested retail price for the product will be an average of 20 percent higher than that for regular disposable diapers. A premium price will be applied to the product for these reasons:
1. The distinct product differentiation between Bio-Diapers and other brands will warrant a higher price based on its premium value.
2. Due to high research and development costs to produce the patented agent responsible for the molecular breakdown of diapers upon prolonged exposure to the sun, initial prices will be higher.
3. Since Bio-Diapers will be a new concept, there will be a need for considerable advertising support to introduce the product and the price will reflect that cost.
4. Higher initial component costs will also demand a higher price.
Through the first sales year, the prices for Bio-Diapers will remain stable due to lack of competition from the major disposable diaper producers. Starting in the second year of sales, the price for Bio-Diapers will drop by roughly five percent. We will incorporate this pricing strategy for several reasons:
1. Lower material costs in the production stage due to higher volume.
2. Reduced costs of key components through continued research and development.
3. Introduction of biodegradable diapers from major competitors at a higher price. (Undercutting them will help increase sales and market share.)
The Bio-Diaper price will remain steady at this point for the second and third sales years.
Sales Promotion
The promotional strategy Softie Baby Care Inc. will use is to obtain maximum reach within our target market group to promote initial purchases and sustain repurchases.
Our strategy to stimulate initial purchases will revolve around in-store displays in major grocery and drugstore chains, coupon programs initiated through print advertising and direct mail, and a giveaway program targeted toward existing and prospective parents, hospitals, and baby-care education classes.
During the first year of sales, 10 percent of projected sales will be set aside for promotional purposes. This will total $15.5 million. Of this total, 65 percent will be budgeted for advertising, 30 percent for sales promotion, and the remaining 5 percent will be held in a contingency fund.
Through our sales promotions, the objective of Softie Baby Care, Inc. is to stimulate initial purchases of the product and maintain those customers through repurchases. Our sales promotion strategies to achieve these objectives are:
1. Obtain in-store display and price-feature support from retailers by implementing a merchandising allowance program. We will make contractual payments of $15 for a 10-package in-store display. This merchandising allowance program will only be established at major grocery and drugstore chains, and larger independent specialty baby-goods stores.
2. A coupon program will be instituted through advertisements in local newspapers and baby magazines, a direct-mail campaign, and through Lamaze classes. The coupons will offer a discount of 75 percent off the regular price. Twenty million coupons will be distributed through newspapers, magazines, and the mail.
3. Along with the coupon program, we will initiate a giveaway program to existing and prospective parents of babies. They will receive a free sample of the diaper along with their coupons. In addition, we will supply hospitals and baby-care education classes with free samples. This giveaway program will create greater product awareness and stimulate product use.
Competitors will react to our aggressive sales promotion campaign by increasing their own efforts, mainly through point-of-purchase displays. This will be done through merchandising allowance programs designed to provide incentives for retailers to provide more in-store display space. We feel this should be easily counteracted by our own merchandising allowance programs in major grocery and drugstore chains.
Advertising
Our advertising strategy will be an aggressive campaign that will be geared toward accomplishing the following objectives:
1. To effectively reach our primary purchase group of married women between the ages of 26 and 34 with one or more children still in the diapering stages and household incomes above $30,000. These customers are both the decision-makers when it comes to diapers, and the purchasers.
2. To increase awareness by attaining a 60-percent penetration level among our target market. We will commission a penetration study one year after the introduction of Bio-Diapers.
3. To generate product awareness and support among wholesalers and buyers, merchandisers, and store managers of retail outlets.
The total advertising budget for the first year will be $10 million.
Advertising support will be used aggressively throughout the first and second years with major pushes during the introductory period and major sales promotion activity — January to July of 1995. From August to the end of the year, advertising will be reduced to evaluate results from earlier efforts.
We will concentrate our efforts on a print media. Our print ads will be full-page, four-color pieces that will emphasize the comfort, absorbency, and “snugness” of the diaper and its primary advantage of being environmentally safe. The head will read: “Finally, a diaper that is truly disposable.” In the bottom right hand corner of the ad, we will also include a coupon. Production expenses will be limited to one percent of the total advertising budget.
Our media strategy will be to purchase space in national and regional baby care magazines, which total 19 publications. We will purchase a minimum of nine insertions in monthlies, six insertions in bimonthlies, and four insertions in quarterly magazines in order to generate frequency and provide support throughout the year. Whenever possible, we will try to secure preferred positions in the magazines in order to increase our total reach. Total exposure is estimated at 92.6 million with a net unduplicated coverage of 45 percent of the primary target group.
ADVERTISING IN BABY MAGAZINES
Magazine No. Inserts
American Baby 9
Baby Talk 9
Baby Times 6
Baby! 3
Chatelaine’s New Mother 4
Chicago Parent News 6
Child 6
Dallas Child 9
Expecting 4
Lamaze Parents’ Magazine 2
Metro Parent 6
Mothers Today 6
Parenting 9
Parents’ Magazine 9
Rodale’s Children 6
Today’s Parent 6
Twins 6
Working Mother 9
Working Parents 6
SUMMARY
This business plan on 5 Years Marketing Plan">marketing plan has presented the introduction of Bio-Diapers — the first disposable diaper that is completely biodegradable. Because it is such a unique concept within the disposable-diaper industry, we strongly believe that an initial investment of $80.6 million dollars to cover start-up inventory costs would provide Softie Baby Care Incorporated with the additional strength needed to strongly enter the market.
Given this capital and the successful execution of this marketing plan, a market share of 25 percent over a three-year period is more than possible.
BUSINESS NOTESAssociations
Association of Small Business Development Centers, 1050 17th St. NW, Suite 810, Washington, DC 20036; (202) 887-5599
Center for Entrepreneurial Management, Inc., 180 Varick Street, 17th Floor, New York, NY 10014; (212) 633-0060
National Small Business United, 1155 15th Street NW, Suite 710, Washington, DC 20005; (202) 293-8830
Small Business Network, 10451 Mill Run Circle, Owings Mills, MD 21117; (410) 581-1373
Small Business Service Bureau, 554 Main Street, P.O. Box 15014, Worcester, MA 01615-0014; (508) 756-3513
Magazines
Barron’s National Business & Financial Weekly, 200 Liberty Street, New York, NY 10281; (212) 416-2700
Business Marketing, 740 N. Rush Street, Chicago, IL 60611, (312) 649-5260
The Business Owner, 383 S. Broadway, Hicksville, NY 11801; (516) 681-2111
In Business, 2718 Dryden Drive, Madison, WI 53704; (608) 246-3580
Journal of Small Business Management, West Virginia University, College of Business Economics, Bureau of Business Research, P.O. Box 6025, Morgantown, WV 26506-6025; (304) 293-5837
Marketing News, 250 South Wacker Drive, Suite 200, Chicago, IL 60606; (312) 993-9517
Nation’s Business, 1615 H Street NW, Washington, DC 20062-2000; (202) 463-5650
MARKETING PLAN
For a lot of entrepreneurs, the business plan is the only strategic planning tool they will use to document the strategies of their company. They’ll create it once, and hopefully update it at least on an annual basis. As the company grows, so will the thickness of the business plan. But there is another planning tool to document a company’s strategy that entrepreneurs either don’t know about, or fail to utilize. It’s called the marketing plan.
During the formative stages of a small business, the marketing plan isn’t that critical to the success of the venture and it can easily be incorporated into the business plan; however, as the company grows and adds new concepts to its business, the marketing plan becomes a very important tool, because it will serve to chart the strategies and goals of those new concepts. That’s the primary difference between a business plan and a marketing plan. The business plan will deal with the entire business, while the marketing plan will encompass a specific product or service that the company decides to expand into.
Ideally, the business plan and marketing plan will work together. Since a marketing plan is essentially created to document the goals and strategies for a new product or service, that information can readily be transferred to the business plan during its revision period. In fact, the structure of the marketing plan is not that much different from that of a business plan, making these two tools that much more compatible when it comes to the strategic planning process.
The marketing plan, just like the business plan, is an outgrowth of the strategic planning process. It formalizes the strategic planning process by mapping out a business’s plan to diversify into other product areas. More than this, however, it forces the entrepreneur to do the following:
Chart industry growth
Define the market(s)
Determine the strengths and weaknesses of the competition
Project sales
Chart the marketing strategies to achieve its sales goals
Identify capital equipment requirements
Determine investment requirements
Provide direction for the assignment of responsibilities
Produce financial projections.
As mentioned, many entrepreneurs fail to use a marketing plan. They either don’t know of the marketing plan concept, feel their business plan is more than adequate to deal with new product development, or think that they can enter into an ambitious project with a plan formed in their head.
But, just as you wouldn’t start a business without first planning it out and writing it down, you shouldn’t enter into the business of expanding your product line or arena of services without the benefit of mapping out your goals and strategies.
In this section, we’ll show just what is involved in the preparation of a product marketing plan.
THE CONCEPT
The first thing you should do when forming a marketing plan is define the structure in which it will be presented. The structure of the plan should allow the presentation of strategic information in a logical and progressive manner. This structure should be prepared in a written outline detailing the progression of topics and how they will appear in the marketing plan.
The structure of a marketing plan will usually vary according to the business, its product or service, and the objectives of the marketing plan. Generally, however, each marketing plan will include the following information:
Executive summary
Product description
Market analysis
Competitive analysis
Product development
Operations
Goals & objectives
Marketing tactics
Financial projections
Summary
Keep in mind that the outline illustrated above is just an example. Go through and determine just what topics will be appropriate for your own marketing plan. You’ll find that some of the items listed above will not be relevant to what you are proposing, or will require a different approach in order to define them in your marketing plan.
To determine just what you do need to include in your marketing plan, let’s take a look at each topic and its significance to the overall plan.
EXECUTIVE SUMMARY
The first item listed in the outline is the executive summary of the marketing plan. The executive summary is a brief synopsis of the entire marketing plan. It provides the reader with the following information:
A short description of your product or service
Why it is different from your competitors’ products or services
Your objectives and goals
The competitive advantage your product or service has over your competitors’ products or services
The amount of expansion capital needed to meet your objectives
Financial results (i.e. return on investment, sales, profits, market share, etc.) and strategies that will be utilized to reach your objectives.
A solid, hard-hitting executive summary is an important element of a marketing plan, especially if you are trying to raise capital to fund the product. It provides busy investors and lenders with a quick glance of your proposed idea. It can be a few paragraphs long, but should be no longer than a page and a half. The idea is to present a well-thought-out and succinct executive summary that will grab the reader’s attention within the few minutes allotted to review the plan. It must convey the impression that you are a responsible individual who can get things done, and that your plan has potential and a good chance for success.
Although the executive summary is usually prepared after the plan has been drafted, we are including it at the beginning of this section because that is where it will be placed in the presentation of the marketing plan. You want to prepare your executive summary after the plan has been completed because it is impossible to summarize a plan if you haven’t formed it yet.
An executive summary is developed by reading through your marketing plan after it is completed and extracting the information you feel is key to the success of your proposal, such as size of the market, growth forecasts, relative competition, and your objectives. Start your summary with an attention-grabbing statement that describes your market, product, and any unmet customer needs. Follow this up with the specific thrust of your marketing strategy. What are you trying to accomplish?
For instance, suppose you’re in the business of manufacturing disposable diapers. It’s a huge market with several major players and many minor ones including private-label manufacturers and direct marketing companies. This doesn’t even take into account peripheral competitors like diaper services and cloth diaper manufacturers. Through your research, you’ve come across a little-exploited gap in the market, and based on that information have developed a biodegradable disposable diaper. You want to act fast and place this product on the market to develop product brand association with your company before your competitors launch themselves into this market segment.
Given this situation, your executive summary might look like the following:
SAMPLE EXECUTIVE SUMMARY
With over 1.6 million pounds of non-degradable disposable diapers finding their way into garbage dumps across America, many Americans are turning toward a more environmentally safe diaper for their babies to avoid the continued build-up of non-degradable diapers. Americans spend approximately $2.7 billion dollars per year for disposable diapers, but that number has been shrinking due to the encroachment of cloth diapers and delivery services with an estimated $400 million in sales each year.
Needless to say, the disposable diaper market is a huge, billion-dollar industry. These products are especially attractive to dual-income families and single parents who don’t have the time to wash cloth diapers and don’t want to spend the extra money for a diaper delivery service. Competitors in the market all boast the same type of product with absorbent pads, surrounded by a snug-fitting plastic diaper that is secured using tape connectors. There is some product differentiation in packaging, non-allergenic claims, and pad size ranging from ultra-thin to thick, but other than that there is very little difference between products. Despite the popularity of disposable diapers, however, many consumers are turning away from disposable diapers because they are not biodegradable.
Given this gap in the market, Bio-Diapers has been developed to provide ecology-minded consumers with an environmentally safe disposable diaper. This new line of biodegradable disposable diapers will feature all the elements that are popular among users of disposable diapers, but will include that added benefit — biodegradability. The revolutionary new advancement in the disposable diaper market will attract consumers who are concerned about the environment as well as those consumers using cloth diapers and diaper services because the disposable diapers currently on the market are non-degradable.
Bio-Diapers will be available for babies ranging from newborns all the way up to 30 pounds and over. We will offer them in a variety of colorful designs and pad sizes. Our marketing objectives and strategies are highlighted in the following pages. We anticipate placing Bio-Diapers on the market by the summer of 1995.
As you can see, the executive summary for Bio-Diapers is not a long, drawn-out account listing all the profit projections, strategies, tactics, etc. That is for the plan itself. It does provide a descriptive summary that grabs the reviewer’s attention and creates the curiosity necessary to impel the reader to the next section of the marketing plan.
PRODUCT DESCRIPTION
Unlike the executive summary, the product description is not a synopsis of the overall plan, but a detailed discussion of your proposed project. In the product description, you need to explain what your product or service is, the specific thrust of your plan, and the main strategies that will be used to accomplish your objectives. The whole idea behind the product description is to make sure that you communicate the purpose of your plan so there is a clear explanation of what your product or service is and what you intend to do with it.
Like the executive summary, the product description can be a few paragraphs in length to a few pages, depending on the complexity of your plan. If your plan is not too complicated, keep your product description short, describing your product or service in one paragraph and your objectives and strategies in another. While you may need to have a lengthy product description in some cases, a short product description that conveys the required information in a succinct manner is the most effective. It doesn’t attempt to hold the reader’s attention for a extended period of time. If your product description is long and drawn-out, you will lose the reader’s attention, and possibly any chance of receiving the necessary funding for the project.
When writing your product description, you should use any support statistics from the body of your plan. Make sure that you credit any secondary or primary sources so the reader knows that your statistics aren’t just arbitrary figures.
To continue with our example of the biodegradable diapers, your product description would look like the following:
SAMPLE PRODUCT DESCRIPTION
The purpose of this plan is to demonstrate the need for a high-quality, biodegradable disposable diaper that will fill a gap left in the marketplace by large disposable-diaper manufacturers. In a survey of 1,000 parents commissioned by Softie Baby Care Inc. and conducted by Timmons Research, over 60 percent of the respondents were extremely concerned about the environment and the effects of non-degradable diapers; 20 percent were mildly concerned; 15 percent were concerned; and 5 percent used cloth diapers or a service. Clearly this survey points to the importance parents are placing upon the environment.
The solution we are providing to these consumers is a biodegradable disposable diaper at a price point that is just 20 percent above that of regular disposable diapers. The “Bio-Diaper” will be produced in all standard diaper sizes and will feature various nursery designs to appeal to a more affluent, brand-name-oriented consumer. To reach these consumers, we will introduce the Bio-Diaper through specialty stores and mail order to begin with, slowly moving to large retail chains and supermarkets. It is our goal to supplant the need for regular disposable diapers.
As you can see, the sample introduction starts with an explanation detailing the reason for the plan and quickly moves into supporting evidence that plainly illustrates the need described in the preceding sentence. From the first paragraph, the introduction moves into the second paragraph that details the whole thrust of the plan. The readers learn that the proposed product is a biodegradable diaper that is priced very competitively with regular disposable diapers. It also goes on to indicate an entry point into the market that provides a better understanding of the marketing strategy suggested to reach the goal listed at the end of the introduction.
THE MARKET ANALYSIS
Within the market analysis section, you need to define the market that the product will be targeted toward. The market definition will start from a broad study of the industry and eventually conclude with a narrow definition of the market share which the product can reasonably attain.
The basis for this information will be drawn from your market research as detailed in the “Market Research” chapter. Through the market analysis, you want to chart items like sales history, current demand and future trends for your product or service based on the customer base you have targeted. From this information you need to draw conclusions regarding the demand for the product or service: Is the demand for your product or service increasing, leveling off, or declining?
In addition to demand, you will also have to define the decision-makers who will buy your product or service. For instance, with disposable diapers, the wife is often the decision-maker as well as the buyer. You also need to address motivating factors behind a purchase. Why do these potential customers buy this particular type product or service? How do they buy it? When do they buy it? Where do they buy it? And what brands do they buy?
With these questions answered, you need to include information about the social and cultural aspects of the industry. This incorporates the demographic study of age, sex, income, educational background, homeowner or renter, and the economic conditions of the period covered by the plan.
The industry discussion should also cover the technological condition of your product class within the industry. Is your product high-tech, low-tech or no-tech? If high-tech, how often are new products introduced? This will have a direct bearing on the product life-cycle, which you also need to cover in this section of the marketing plan. In general, you want to provide a clear idea of just how technology affects the product or service and its marketability.
The distribution channels used in the industry should also be described in detail, along with any applicable laws and regulations.
From a broad discussion of the industry, the market analysis section should also serve to define the target market. This can be done in the same fashion as described in the “Business Plan” chapter. In the “Business Plan” chapter, we used a market equation to define the market share of the business. This market equation can also be used for the marketing plan as well.
Much of the market equation is based on defining specific market segments that fit the demographic profile of your prospective customers. Within the scope of the marketing plan, concentrate on describing these segments, providing a complete description of exactly who these people are. It may help to answer the following questions before proceeding with a segmentation of the industry:
1. What is the geographical location of the target market?
2. Is the geographical location subject to any special climatic changes or topography?
3. What is the predominant cultural, ethnic, religious and racial background of your target customers?
4. What is the social class of your target customers?
5. What is the sex of your target customer base?
6. What is the age range of your target customer base?
7. What is the education of your target customer base?
8. What is the income range of your target customer base?
9. What is the average household size of your target customer base?
10. What is the marital status of your target customer base?
11. What is the work status of individuals within the household?
12. What is/are their occupation(s)?
13. What member of the household is the decision-maker for purchasing your particular product or service?
14. What member of the household does the actual buying for your particular product or service?
15. How much disposable income is available to the average household?
16. What are the wants and needs of the target market?
17. What are the key traits of your product of service?
18. How frequently is your product or service used?
19. What is the size of the market?
20. What are the growth trends of the market?
21. What is the technological environment of your product or service?
22. Are new products introduced frequently in this industry?
23. Are there any laws or regulations that will affect the marketing of the product or service?
Confining the description of your target market to that segment of the industry that is most desirable for your proposed product or service will also allow you to maximize your resources more effectively. If you try to market your product or service through too many market segments, you will squander your resources without effectively reaching any of them.
In your target market analysis, you should include arguments indicating the advantages of focusing this market over other segments. You should also include the overall size of the target market in relation to the industry, as well as demographic characteristics, geographics, psychographics and lifestyle. Developing a thorough understanding of your customers is as important as knowing your own capabilities and those of your firm or department.
Illustrated below is a market analysis section developed for the biodegradable-diaper example.
SAMPLE MARKET ANALYSIS
Today, babies mean big business. Over the last few years, retailers of baby products have witnessed sharp increases in their profits. According to the latest figures from the Juvenile Products Manufacturers’ Association (JPMA), sales of infant products have topped the $1.6 billion mark. And that excludes clothing and some $12 billion worth of toys. It also doesn’t account for the $750 million baby-food market and the $3 billion diaper industry. Altogether, sales have grown close to $17 billion a year. Industry sales breakdowns are shown in figure 3502P1.
Sales seem to be linked more to changing needs than to a true boom in population, although baby boomers are reaching their peak childbearing years. But
