Establishing Critical Success Factors

Under the Situation Analysis section of your marketing plan you should define your business Critical Success Factors (CSF). These are the vital elements for your strategy’s success, or in other words, the CSFs are the factors that you must focus on to achieve the company’s ultimate objectives. Reaching such factors will be decisive to whether your business will be a success or a failure.
The principle of identifying critical success factors was first presented by D. Ronald Daniel in 1961, but it was later in 1986 when J.F. Rockart developed the concept as we know it today.
Rockart defined critical success factors as “the limited number of areas in which results, if they are satisfactory, will ensure successful competitive performance for the organisation. They are the few key areas where things must go right for the business to flourish. If results in these areas are not adequate, the organisation’s efforts for the period will be less than desired.”
To make it clear on the areas that these CSFs will usually fall into, Rockart categorised them in different types:

• Industry CSFs: result from specific industry characteristics;
• Strategy CSFs: defined through the analysis of the business competitive strategy;
• Environmental CSFs: through the analysis of the business macro-environment resulting from economic changes, technological advancements, business climate or other related environmental factors.
• Temporal CSFs: specific to the organisation’s internal needs and changes.
  

The critical success factors are intrinsically related to the business mission and strategic goals, therefore, it will be through their combined analysis that the CSFs can be clearly identified, having in consideration the above mentioned types.
To help you identify your organisation’s CSFs you can follow the below stages:

1. Establish the business's mission and strategic goals.
2. Looking at the mission and objectives, brainstorm ideas regarding the areas of business that need attention so these two can be achieved. The result will be a list of potential critical success factors.
3. Narrow down your list by considering only the ones that are absolutely essential and that will be definite in whether your business is successful or a failure. Some examples of generic CSFs are cashflow; new product development; new customers’ attraction; secure financing; amongst others. Although there is no rule defining the number of CSFs you should try limiting them to five or fewer absolute essentials. By keeping a small number of CSFs it will be easier for you to have a direction and prioritise which ones are really important for your business.
4. Identify how you will monitor and measure each of the CSFs.
5. Communicate your CSFs within the organisation so everyone is focused on what needs to be achieved.
6. Keep monitoring your CSFs throughout time to ensure your business keeps moving towards its main aims.
   

The 80:20 rule (or the Pareto Principle)

You might have come across the 80:20 rule or policy (also known as the Pareto Principle) before, but do you really understand what it is all about? Basically it states that 80% of the effects come from 20% of the causes.
It emerged when an Italian economist Vilfredo Pareto verified that 80% of his country’s wealth was owned by 20% of the population. A few years later, the business management thinker Joseph Juran realised this principle could be applied to a broad set of work from the science of management to the every-day life.

• Project managers know that 20% of their work consumes 80% of their time and resources;
• Business managers know that 80% of their sales will come from 20% of their clients;
• Advertisers know that 80% of the enquiries will be generated by 20% of the advertising mediums;
  
• You know that 20% of your weekly activities represent 80% of your happiness;
  
• You spend 80% of your salary on 20% of things (such as rent, utility bills and transportation);
  

There are numerous situations where this rule can be applied, and even though it might not always be true, it is likely that it will still be a minority of actions that produce the majority of results. The way how the Pareto principle can be beneficial to a marketer is that it reminds you to focus on the 20% of activities that really matter and that will make the difference as they will produce 80% of your results. So if you will not have time to do everything you had planned to do, make sure you do not put aside any of the important 20% work that really matters. Work smart, not hard!

How can the 80:20 rule apply to a marketing plan?

It is crucial for a marketing plan to achieve the maximum impact; therefore it must be clear, concise and simple. It needs to concentrate on the 20% really relevant research and information to obtain 80% of its efficiency and consequently 80% of the business profits.

The Marketing Plan Structure

The marketing plan structure will depend on your type of business. Here I will highlight a standard outline for a marketing plan, however, depending on your market situation, whether you are selling products or services, whether you are targeting businesses or consumers, or if you are a not-for-profit organisation, sections may be added or removed accordingly to what is most suitable. Below follows the general structure:

1.0 Executive Summary
This section is a high-level summary of the marketing plan including the most important facts regarding the target, the strategy and the goals.

2.0 Situation Analysis
Brief the situation analysis by providing an introduction about your organisation, define where it stands in the market and what are its main advantages in relation to competitors or market opportunities.

2.1 Market Summary
General summary of the specific market characteristics in which the organisation is involved and highlighting the most important factors that may have a strong effect (either positive or negative) in the organisation.

2.1.1 PEST Analysis
Identify here the Political, Economical, Social and Technological macro-environmental factors that can affect your business.

2.1.2 Target Market
Identify who are your customers/audience you want to reach and characterise them.

2.1.3 Market Analysis
Identify the market growth during the last few years, prevision for the future along with any other market insights.

2.1.4 Market Needs
Explain the market needs you wish to fill and what specific values your organisation will provide to fill these needs.

2.1.5 Market Trends
What factors seem to be affecting changes to your market and how these might affect your business or your target’s response to your products/services?

2.2 SWOT Analysis

• Strengths: List all the advantages or strong points within your organisation or regarding the product/service itself.
• Weaknesses: List all the disadvantages or weak points within your organisation or regarding the product/service itself.
• Opportunities: List all the market advantages and strong points regarding your organisation’s macro environment beyond your control that may benefit your business, product or service.
• Threats: List all the market disadvantages or weak points regarding your organisation’s macro environment beyond your control that may affect negatively your business, product or service.

2.3 Competition
Define a list of your direct and indirect competitors describing each main strengths and weaknesses along with their market share, the marketing strategy they use and any other relevant information about them.

2.4 Critical Success Factors/ Keys to Success
List the three or four key priorities for your business. These must be the priorities you need to focus on as the main key advantages that will differentiate your business/product or service from the competitors.

2.5 Critical issues
Taking in consideration the SWOT analysis, list the issues that you find crucial to take in consideration in order to minimize the weaknesses and surpass the threats while prioritising your business strengths. By doing this, categorise your organisation into its current life cycle.

3.0 Marketing Strategy
Write a brief summary of the strategies to take in order to achieve specific goals.

3.1 Mission
Write a good mission statement to reach all stakeholders that describes the company’s business and its value proposition.

3.2 Objectives
List here your marketing objectives, not only with the aim to generate sales but also any other relevant objectives such as relating to the brand awareness, employee motivation, among others. They should, however, all be interlinked with each other and try to focus on no more than 5 objectives so that each and every one of them are SMART (Specific, Measurable, Attainable, Realistic and Tangible).

3.3 Target
List here specifically the type of customers your company will be focused in reaching. Specify the targets demographics, habits, income or any other relevant characteristics. Before identifying these groups you must ensure that you know very well this audience and that you will be able to communicate to them effectively.

3.4 Positioning
This should be a strong statement that will clearly identify your company’s approach to the market focusing on the most important market need the company will cover and how it plans to satisfy that need differentiating itself from the competitors.

3.5 The Marketing Mix
Identify here what you plan to achieve in terms of branding and value proposition to compete effectively in the marketplace through the use of the various marketing mix tools.

3.5.1 Product
Describe here your long term product/service strategy taking in consideration all its characteristics, such as branding, labelling, packaging as well as any features and attributes.

3.5.2 Promotion
Describe how the product will be promoted in terms of advertising, sales promotion, public relations and personal selling, summarising the methods used and the spending involved for each method.

3.5.3 Distribution
Here you will specify where and when your customers will be able to find your products/services, in which quantities and delivery times.

3.5.4 Pricing
Define the price of your products/services which should be based on the analysis of the cost of production/delivery, demand, image and competitors prices. Here can also be identified if any discounts can be applied to the price at any given situation.

4.0 Marketing Budget and forecasts
Determine the marketing budget, break-even analysis and financial sales forecasts required to implement the plan as defined in the previous topics for at least the period of 1 year. The use of visual graphics and tables is advised throughout this section.

4.1 Marketing Budget
Define the spending involved in the implementation of the marketing plan breaking down each tactical marketing decision and its total cost over the period of at least one year.

4.2 Break-even Analysis
The Breakeven analysis will indicate the level of sales required before the company realises a positive marketing contribution.

4.3 Sales Forecasts
Define the sales forecasts in time taking in consideration the marketing plan implementation. Present your forecasts in a table followed by an illustrative graphic and provide consistent reasons for the forecast, highlighting what the expected progress in sales will be throughout the year.

5.0 Controls and Evaluation
In this section define how you will make sure that the marketing plan is implemented throughout time. Also identify the methods used to measure the effectiveness of each marketing tactic and how the results will be evaluated.

5.1 Contingency planning
Taking in consideration unexpected issues that may come up such as economic or market factors, or following the failure of certain tactics, define how the company will respond to these industry changes or provide alternative marketing actions to take.

6.0 Timeline
Define in a chart all the actions to take place throughout time in order to implement the marketing plan, allocating the frequency of each activity and the person responsible for each one, as well as highlighting any deadlines or important dates to consider.

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