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In this section of the elements of a business plan, the subject of competitive analysis is dealt with in detail. All businesses will have to face competition in some form. Whereas some competitors may sell products that are similar, some others may sell products that serve the same function. It is, therefore, important to establish in the business plan as to where you stand as far as competition is concerned because established businesses are likely to view the entry of a new business into the market seriously. Moreover, a properly drawn out competitive analysis will serve to support the claim about the potential of the business for securing an investment.

When dealing with the competitive analysis, which is one of the key elements of a business plan, define the competitors and meticulously profile them. The competitors are to be assessed in terms of not only their strengths, but also weaknesses. A thorough understanding of the operations of its competitors will enable the business to judge its position in the market in relative terms. When establishing the market position of the business, the following aspects have to be kept in view:
The customer profile and needs that were created in the section on marketing strategies.What the competitors are doing to meet the needs of the customers.What the new or expanded business is planning to offer.The competitive advantage of the business.

In order to establish the market position of the business through competitive analysis, one of the important elements of a business plan, there are two ways of identifying the competitors. The first option is to group all the competitors by market share and the second option is to group them according to competitive strategies employed by them. After grouping the competitors suitably, an analysis of their strategies can be carried out to determine their strengths and weaknesses. Typically, the analysis will reveal the presence or absence of key assets as well as skills that are essential to establish a position in the market place.

The key skills and assets required to compete in the market place can be determined by focusing efforts in four major areas as recommended by David A. Aaker in his book ‘Developing Business Strategies’. The four areas that are required to be looked at in order to lay out the competitive analysis as part of the elements of a business plan are:
Primary factors that motivate customers,Major cost components,Mobility barriers in the industry, andReasons that contribute to the success of a business.

A competitive analysis will enable the business to develop its marketing strategy that provides specific advantages over the competition. It is a good idea to create a strength grid in terms of all the key skills and assets of the business with respect to its competition which make it absolutely clear to the readers of the business plan as regards the market standing of the business.

Summarizing, this section of the elements of a business plan must make it clear to the readers that the business is well positioned in the market place to not only handle most of its nearest competitors, but also to maintain a watch on them.

Among the key elements of a business plan, the section on marketing strategies assumes a lot of importance. This is because customers, backbone or lifeline of any business, are created through marketing efforts. Businesses work out their marketing strategies on the basis of a meticulously carried out market analysis. This enables the business not only to clearly define the target market, but also strategically position it to garner optimum sales. A market analysis also helps a business to establish product pricing, methods of promotion to be adopted and its distribution strategy.

Having done the background work, this section of the business plan can be prepared starting with a definition of the company’s marketing strategy for the additional capacity being created or the new product being introduced to the market. It is important to be aware that a single marketing strategy cannot make any business successful. Typically, a combination of strategies unique to the business will be required to capture the intended market share. Therefore, this section should touch upon four areas:  product or service offered, pricing, distribution methodology and details of promotional efforts.

Products and Services

In the business description section, a general description of the product or service of the business is provided. However, the details of the product or service offered in regards to its features and benefits, how will it be used by the customers and what problems or needs of the market are being addressed are to be indicated.

If products are being offered, it is important to also include drawings, pictures or technical images that will provide a better understanding to the readers of the business plan. Other aspects of the product such as size, color, shape, price, quality, design, patents, if any, warranties and packaging can also be highlighted.

If services are being offered, explain in detail how the service is going to be delivered: whether on site, through the Internet, telephone or any other method. It is also important to explain as to what makes the service unique and what materials and equipment are required in the execution of the service.

Pricing

Pricing strategies are generally worked considering the following aspects:  Perceived value of the product or service being offered by the business.Cost of running the business.Marketing goals of the business.Competition in the market place.

Pricing strategies ranging from the simple thumb rule to highly sophisticated approaches are available. Irrespective of the strategy adopted, the pricing model that you design for your product or service should demonstrate to the readers of the business plan that the business will create profits.

Distribution Methodology

As far as distribution is concerned, the key points to be touched upon include the following:  Geographical area that will be covered.Channels of distribution (traditional, direct, ecommerce, etc.). Issues related to cost, timeliness, efficiency, customer service, etc., that control the choice of the distribution channel are also required to be mentioned.Logistics management.

The concluding paragraph of the distribution strategy can have details pertaining to the current arrangements and licensing agreements with distributors, if any.

Promotional Activities

The purpose of promotional activities is to communicate the value of products and services to the customers. This will help them to decide to buy the product or service offered by the business. A broad range of promotional tools are available. These include advertisements and personal selling and public relations efforts, among many others. Apart from explaining the activities planned to reach the message across to the target segment, other aspects that should be touched upon in this section are the budget for promotional activities, timeline for activities, etc.