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Part VI--Operations

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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


Goals & objectives

Marketing tactics

Financial projections



In the operations section of the marketing plan, you need to describe how the product will be integrated into the continuing operations of the company. Start by listing all the various products or services your company offers and your motivating factors behind your current proposal. After you've done this, provide some background information on yourself and your management team. Include your experience, projects you've supervised, education, etc. Give the reader a good idea of who he or she will be dealing with and what type of expertise this proposal is based on.

Basically, you want to make your investors comfortable with you and your track record so they have confidence should they decide to fund your project.

You should also include a discussion highlighting your business's financial resources and human resources, and its strengths and weaknesses. These are essential elements for letting the reader know how solvent your company is, what type of expertise within your company will aid in the implementation of your marketing plan, and how you perceive your company's strengths and weakness.

As with the business plan, you should also include the operating expense table, the capital requirements table, and the cost of goods table. The operating expense table should include all fixed and variable expenses associated with the operations of the business. This is important because it will illustrate how the introduction of the new product will affect the company's operating expenses. The same is true of the capital requirements table. It will show what the required investment will be for new equipment to produce the product. If the equipment is already in place, the investment into equipment and shown in this table might be nominal or even nonexistent. For most companies, however, new equipment will need to be purchased in order to accommodate the production of the new product.

The cost of goods table is mainly for manufacturers, merchandisers, and service companies that utilize a great deal of material in servicing their clients. This table will show the material, labor, and overhead expenses associated with the production of the product on a continuing basis.

Before you begin writing this section, you may want to answer the following questions:

1. What are your strengths and weaknesses?

2. Are you asset-rich?

3. What type of expertise do you have in this industry?

4. What is your past track record like?

Sample Operations Section

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:


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 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.


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.

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 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 below.


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


Total Expenses--$79,331--$212,655--$428,282

In part VII of our Marketing Plan series, we'll be covering Goals and Objectives. Tips are updated daily at 5:00a.m. PST.

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