Marketing is a cornerstone in the success of any organization. However, successful marketing is not as wide spread in large part due to the lack of a marketing strategy and marketing plan. To ensure marketing is successful for an organization, companies need to compose long-term marketing strategies promoting their goals with specific actions. A short term marketing plan is also necessary to ensure actions taken are consistent and effective in achieving the long-term marketing strategy. Here we will be discussing the purpose of a marketing plan as well as key components of the design and elements of a good marketing plan.
Purpose
The purpose of a marketing plan is to create an outline for a company’s marketing efforts, usually over the span of a year. The marketing plan should outline a series of short-term marketing targets, aligned with a long-term marketing strategy. Ultimately, the purpose of marketing plans is making progress towards reaching and capturing the desired customer base and improving both the top and bottom line of financial statements. These plans should not be static – it is meant to be revised on an annual basis so as to remain flexible and avoid becoming irrelevant.
Most entrepreneurs could argue that a marketing plan is time-consuming and unnecessary, simply because they need to spend more time and effort running their business, which is an unfortunate mistake. A well-written marketing plan helps organizations remain focused in building the organization in a focused direction, and guides the stakeholders involved in helping to achieve its short term goals. Overall, the marketing plan is essential in supporting short-term business success and long-term business growth. Without this plan, short-term actions may not be compounding in the desired long-term direction, resulting in a sub-par performance.
Elements & Design
While the design and elements of a marketing plan will be focused on the unique desires and needs of each organizations’ goals, there are some aspects that are similar across all marketing plans. They should be driven by the long-term vision and strategic marketing goals. These elements are the marketing mix, also known as the 4 P’s of marketing: Product, Price, Place and Promotion. This marketing mix acts as a guide to help marketing managers create products, pricing, distribution and promotional campaigns for their products and services in a strategic manner. In order to create the right combination of the 4 P’s, the marketing plan focuses on the following elements:
1. Market Research: Research helps to identify the current situation in the marketplace that ultimately points towards opportunities and threats organizations should be aware of as they strive to move forward.
2. Target market: Find the target market through research and an understanding of the organization’s products and overall goals. This helps to focus and optimize efforts towards a particular customer.
3. Brand/Product Positioning: Here a perception of the brand or product is formulated for the target market. This is important as the perception of the brand/product will have an effect on sales and methods of marketing.
4. Competitive analysis: Similar to market research, this element helps to understand the competition within the market place. By doing so you identify the threats and opportunities your organization has relative to your competition.
5. Budget/Sales Forecast: Here a detailed month-by-month plan and tracking of actual results is done. This allows for decisions in financing, marketing and logistics to be made to better the return on investments.
6. Metrics for Evaluation: Finally, a method to evaluate the plan and efforts made to execute the plan are necessary. Specific metrics such as House hold penetration or more broad metrics like Return on Investment may be used to keep track of the organizations operations. Ultimately aiding in day-to-day decision making.
The Great Marketing Plan
Using these basic elements for a marketing plan, organizations can shape and execute a marketing mix based on their long-term marketing strategy. The format in which the marketing plan can be written and presented is all that remains. While this may seem a rather unimportant matter, the format is critical in the effective communication of a marketing plan. Communication is key, as having team members on the same page allows for a superior execution of the plan. Once again, each marketing plan will have a unique format based on business needs, however there are some common format features of a good marketing plan:
1. Situational Analysis: In this section of a marketing plan, the market research is discussed at length to get an in depth understanding of the marketplace. Reviews of the external environment, internal operations, product category and competition are all discussed in this section.
2. Short-term Marketing Strategy: Here, a discussion on the target market and efforts made to communicate with them are discussed. In addition, positioning remarks are also covered in this part of the written plan. It is vital to understand that this plan compounds on itself, therefore these discussions should be done with the previous situational analysis in mind. It is through this that an effective plan is created and executed.
3. Budget and Forecast: Here a detailed discussion on the financials related to the plan and forecasts based on the plan are made. Often it is recommended that a best case, worst case and most likely scenario be presented to give an understanding of all scenarios and the areas most sensitive to the success of the plan.
4. Controls and Evaluation: In this final section a discussion on the metrics for evaluation are made and the method of evaluation. It is also recommended that a risk and mitigation plan is detailed in this section to reduce the risk of failure.
All in all, a marketing plan plays a crucial role in the short-term success of any organization and ultimately the successful execution of the long-term marketing strategy. By understanding the elements of a marketing plan and communicating the plan through a well thought out design, the chances of success are elevated. When all members of the organization understand the marketing plan this leads to a higher likelihood of a successful execution.
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The tricky part is that there’s a chance some of these customers don’t come through on their payments. Typically, companies make an assumption that a portion of their accounts receivable will go unpaid and account for this using something called an allowance for doubtful accounts.
This tax supports retirement supplemental income and disability benefits for workers. The Social Security part of the FICA tax is 6.2% of the base salary.
The Medicare program supports healthcare for the elderly, and is the other half of FICA. The Medicare part of the FICA tax is currently 1.45% of base salary.
There are two types of bank loans – Secured and Unsecured. While the main difference is collateral, there are some other important distinctions as well.
Commercial paper is a debt instrument in which a firm issues an IOU to a bank, company, or wealthy individual, which provides funds to the firm. It typically makes up notes payable in current liabilities. Commercial paper has a maturity of 270 days or less, which exempts it from being registered with the SEC, providing an easy transference of funds.
The biggest reason companies use debt is for financial leverage. Financial leverage is simply the use of debt to purchase assets. A firm that borrows funds by issuing debt will, in effect, have extra cash that it can use as it wishes. This is akin to a credit card. For example, a firm can use $200,000 to buy equipment by using its cash, or it can multiply that $200,000 by borrowing additional $400,000 to buy $600,000 worth of equipment. While this allows firms the ability to use more cash than it has on hand, it comes with significant risk. The more the firm borrows, the more interest it will owe on outstanding debt. While this will lower the amount of taxes the firm must pay, the firm cannot neglect interest payments, which needs to be paid out regularly. The firm must strike a good balance between using cash on hand and leverage so that it benefits without too much added risk.
One of the first challenges auditors and regulators faced when developing the Generally Accepted Accounting Principles (GAAP) was trying to standardize how companies account for their revenues and expenses. Before GAAP, companies had (more or less) free reign on how and when revenue and expenses were reported, leading to general confusion when trying to compare balance sheets and income statements between companies. Today, all companies need to follow these general guidelines.
Collectability is probable
According to the matching principle, expenses should be recognized in the same period as the related revenues. If expenses are recorded as they are incurred, they may not match the revenues that they relate to. If an expense is recognized too early, the company’s net income will be understated. If an expense is recognized too late, a company’s net income will be overstated.
John owns a toy store and sells toys, usually for cash, to his customers. John generates revenue by selling toys to his customers. Occasionally, John will offer to sell his toys to regular and trusted customers on credit.
Mike owns a barbershop. Customers go to Mike’s barbershop to get their haircut for which they pay cash. In this instance, Mike is offering a service to his clients, and generating revenue from that service. Mike employs several other barbers at his barbershop. Mike pays other barbers monthly salary. This monthly salary is considered as expense for his business.
If companies are unable, or do not want to reduce its prices, it can still get the edge by adding unique features to the product, forming effective marketing strategies or developing any other strategy that differentiates the product and makes it more valuable for customers. This is called “product differentiation”, meaning what they make and sell is different from what any other company makes or sells. This could be derived from adding new features to their products, launching marketing campaigns that make more people aware of their products than the competition, or having a great reputation with customers that encourages them to keep coming back.
One of the most popular ways of looking at competitive advantage is conducting a SWOT analysis. SWOT is an acronym for strengths, weaknesses, opportunities, and threats. This is an analysis of a company’s internal and external environment. This tool enables managers to develop strategies to remain competitive. A company’s internal strengths and weaknesses is relative to its external opportunities and threats. While its core competence can be considered a strength, to stay competitive, the firm needs to exploit any opportunities available, work on minimizing its weaknesses and protect itself from potential threats. The business that can sustainably do so will survive in the long run.
Competitive advantage comes from superior performance which comes from a company having the right combination of resources. Resources can be both tangible and intangible. Tangible resources are physical things like land and machinery, whereas intangible resources are more abstract like intellectual property and goodwill. Companies can determine if it has the right combination of resources to be at a competitive advantage by using the VRIO framework.
Financial ratios are often categorized in four main categories. Activity ratios which provide investors with an idea of the overall performance of the organization. This includes inventory turnover, which is calculated by calculating cost of goods sold by average inventory. A high inventory turnover is a positive indicator as it shows that inventory is selling fast. Similarly, there is a receivables turnover and payables turnover that indicate how fast the company can collect from its debtors and how fast it pays back to its creditors, respectively. A high asset turnover ratio indicates that a firm efficiently uses its assets to generate revenue, which is a good indicator that a firm is currently enjoying a competitive advantage in its field.
Creditors and investors widely use liquidity ratios when deciding whether to extend a loan or make an investment. They include current ratio, quick ratio and cash ratio; all of which focus on a firm’s short term assets and liabilities. Creditors need to know if a firm is liquid enough to be able to pay back their short-term debts.
Solvency ratios focus more a company’s long-term obligations. Lenders give loans to businesses only if they’re sure that the business has the ability to make regular interest payments and that they’re not going to default. That is why ratios like debt-to-asset, debt-to-equity and interest coverage are used to measure solvency.
Profitability ratios are the most popular when it comes to financial ratios and they are also very easy to understand. They measure how profitable a business is by calculating gross-profit margin or net profit margin, return on assets or return on equity. Higher returns provide a positive indicator for firms.
The purpose of financial reporting is to provide users with information about a company.
Predictive value is relevant because it helps users forecast and set their own expectations for the future.
Assets are resources resulting from past events or transactions in which future economic benefits are expected. Assets may be short-term (cash, accounts receivable, pre-paid assets) or long-term (building, land, office equipment), but either way, they will benefit the company in the future.
Monetary unit assumes that money is the constant in accounting; everything in the financial statements must be expressed in dollars or “monetary terms.” If an economic activity cannot be expressed in dollars, it is not recorded. Additionally, this assumes that the U.S. dollar is stable, therefore, no adjustments need be made for inflation.
Revenue recognition principle details how a company records its revenue. Under this principal, revenues are recorded in the period that they are earned and not necessarily when cash is received. This is important to understand when customers pay you on credit. Even though you don’t have cash-in-hand, you still earned the revenue, and therefore need to record it on that day (not the day you receive payment!).
Your biggest investment you will ever make is investing in yourself. Being part of student and professional accounting organizations are essential to market yourself and it stands out to employers on your résumé, and on interviews.
The American Institute of CPAs is the world’s largest member association that represents accounting professionals and has a goal to set ethical standards. When you join as a student, it is completely free. You will receive special discounts for review courses, training, guidance and networking opportunities.
The National Association of Enrolled Agents is an organization dedicated to Enrolled Agents, most commonly referred to as America’s Tax Experts. Being a member gives you access to special review courses, monthly tax magazines, free membership to students, and discounts for CPE courses.
Wealth managers manage and invest people’s money to help them become financially secure in their future. They offer retirement, savings, investment, and estate advice for the benefit of their clients. Wealth managers take on the responsibility to analyze individual tax returns or high net worth individuals to create future savings plans for them.
Accountants also work on computers and with various types of software, so knowing computer language and information technology is important in case there is a glitch in the software or if you make a mistake. Knowing your computer and software very well will allow you to fix minor problems easily. There are also certifications for Quickbooks (popular accounting software), which can allow you to teach courses, be a representative, and receive higher pay at your job.
Communication skills are also very important. You will be talking to handfuls of people almost every day, so knowing how to interact with them is important in order to get complete information. Not only will you have to communicate with clients, but with upper management as well. Being friendly and explaining complicated tax law to clients in a way that they can understand is key to building a respective client base.
Working in the accounting field, you will be analyzing financial statements, tax returns, and supplemental client data. Having strong analytical skills is very important because you will be able to find any type of misstatement or find wrongly classified information on the clients’ books. Being able to analyze financial statements and know what you are looking for is very important to succeeding in your field of work.
Franchising is a form of ownership far different from the ones previously mentioned. This form of ownership allows a franchisee to borrow the franchisor’s business model and brand for a specified period. It comes with a list of advantages including: training on how to operate your franchise, systems and technologies for day-to-day operations, guidance on marketing, advertising and other business needs, and a network of franchise owners to share experiences with.
When a company suffers from low employee efficiency, the biggest culprit is usually “job ambiguity”. This is where individual employees do not have their roles in the organization clearly defined. Employees need precise job descriptions to be liable for their performance – by reducing uncertainty, employees can develop skills to better perform their job, and gives managers more accurate ways to measure performance.
Specific
Retained earnings is one of the most useful numbers taken off the balance sheet. It shows how much money the firm keeps after all other payments and expenses have been accounted for. “Retained earnings” is basically net income minus any cash dividends the company pays out to shareholders. On the balance sheet, retained earnings is added to an account known as “accumulated retained earnings”. These earnings are “retained” by the company to invest in growth projects, pay off debt, etc.
Preferred stock is a less common form of equity. Preferred stock acts somewhat like debt because it has no voting rights and typically earns a fixed dividend. Unlike debt, owners of preferred stock get these dividends forever. Preferred stockholders also have a claim on a firm’s assets before common stock holders do. This means preferred stockholders always get paid dividends first. If the company goes bankrupt, preferred stockholders also get “first claim” on any remaining assets after all debts are paid.
Other Comprehensive Income (OCI) is all the income a company makes that is not on the 
Gross margin compares the first two lines on the income statement: sales and cost of goods sold. Cost of goods sold is the amount a company spends to obtain the goods they are selling. Let’s say I own a hat company. My cost of goods sold would be the money I spend either buying the hats from a supplier or on the materials and direct labor necessary to produce them myself. For many companies, cost of goods sold is the largest expense.
Whereas those profitability ratios focused on income statement items, liquidity and solvency are mainly concerned with the strength of a company’s balance sheet. The concept of liquidity centers upon a business’s ability to handle short-term obligations like accounts payable, accruals, and debt that is due within one year.
