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SCORE ® Counselors to America’s Small Business Marketing for Success Describe your Product/Service (or figure out your product or service?) Identify Target Market All this Requires Understand your Customer Identify competition Market Research Determine your advantage Set Marketing strategies Forecast Sales and Margin Marketing is the process of Creating the Desire to Buy Marketing is EVERYTHING You Do To Promote Your Business …and More 01-05-09 2 Marketing Includes Sales Product Packaging Customer service Distributing Price Promotion Literature Advertising Market research Employees New product development 01-05-09 3 Key Points Small business success requires the ability to market products and services You can’t be all things to all people Key to success: – Segment, Differentiate, Promote 01-05-09 Market research reduces your risk 4 Key Questions What useful thing will you do or sell? – Who will pay you for it? – Competitor analysis Will you make enough to make it worthwhile? – 01-05-09 Target market Why will they pay you and not someone else? – Product or service description Forecasting sales volume & margin + CASH FLOW PROJECTION 5 Begin with Market Research Definition: Study and investigation into the characteristics, spending habits, location and needs of your business’s target market, the industry as a whole, and the particular competitors you face. Critical to reducing risk, making better decisions, and improving performance Always necessary and often ignored … …. at your own risk 01-05-09 6 Market Research Primary Research (bottom-up) – Experience and informed judgment – Interviews and questionnaire – Surveys, focus groups and observations – Your own records (for existing businesses only) 01-05-09 7 Market Research Secondary sources (top-down) – Trade associations, Publications – Local banks, Chambers of Commerce, – Consultants – Census, Government and Industry data – Libraries, Universities – INTERNET 01-05-09 8 Describe Products/Services People do not buy things They buy what things do First the benefits, then the features – Benefits - advantages & desirability – Features - Special attraction How is it different from competition? Can buyers easily understand differences? Will buyers value these differences? 01-05-09 9 Identify Target Market Segment the buying public Find a segment where you want to play Clearly understand and define: – Major trends in your market – What drives your product sales Discretionary/disposable income; GDP – Who will buy from you Use demographics to define buyer – What are their motivations 01-05-09 10 Understand Your Buyer Customers buy results (value) – What the product will do…not the product itself – Price is not the only determinant Understand their needs, desires, goals Maslow’s hierarchy of needs – – – – – 01-05-09 Basic life needs - air, water, food, warmth, shelter, sex Safety-Security - law, order, limits, money, stability Belonging/Love - family, affection, relationships Self Esteem - achievement, status Self Actualization - self growth & fulfillment 11 Understand Your Competition How many direct competitors? How many indirect competitor? Can you identify top three? What are their strengths and weaknesses? 01-05-09 12 Define Your Competitive Advantage* 1. Cost 3. – Buying power – Distribution – Technology 2. Quality/Performance – Technology – Features – Guarantees Service – – – – 4. Customer service Strong sales force Extra services Customization Convenience – – – – Location Broad line Product bundling Hours of service * Define this for your target market (or niche) 01-05-09 13 Define Your Strategies Selling Location Pricing Purchasing Promotion 01-05-09 14 Selling Strategy Wholesale or Retail (B2B or Consumer) Direct sales staff or Commissioned Agents or Manufacturer’s Representative Internet Sales or Telemarketing or Catalog or Direct Mail 01-05-09 15 Location Strategy Is location important to your customers? If customers come to your place of business: – Is it convenient? – Is it consistent with your image? – Is it what customers want and expect? Where is the competition located? Is it better for you to be near them or far? Many startups run successfully from home for a while 01-05-09 16 Pricing Strategy Key element in determining cash income Know the industries pricing practices – – – – 01-05-09 Cost plus – designed to cover all costs Mark-up (keystone) Bid Added value Understand competitors’ pricing strategy Select a strategy that is consistent with your image and understood by the customer Requires constant study There is a trade off between consistent pricing strategy and responsiveness to market changes (such as, Meet competition, Promotional/Seasonal) 17 Purchasing Strategy Inventory level, mix and buying price is often key to profits Carefully plan inventory mix – Must meet customers needs – Utilize vendor information for industry trends Determine total dollar of inventory required = [Gross revenue/ mark up] / inventory turns Select multiple reputable vendors Move obsolete inventory quickly 01-05-09 18 Promotion Strategy 1. Develop a clear, consistent, believable message – – – – – 2. Differentiate your product from competitors Emphasize benefits first, then features Support it with credible facts Make it easy to remember and understand Motivate the buyer to buy now Select the right media - must reach target customers and deliver your message 3. 4. 5. 01-05-09 Communicate quickly, cleanly & concisely Repeat it often Do not Stop & Start - Develop affordable, annual budget 19 Annual Budget start-up + maintenance Avoid start / stop advertising Set affordable ad budget as % of revenue Perform cost/ benefit analysis – Track sales outcome from each ad strategy – Compare it to the cost – Decide if it is worth it 01-05-09 20 Low Cost Marketing 01-05-09 Easy to remember Company name/Tag line Business cards Website Brochures Flyers Thank you notes Signage Samples Guarantees Newsletters; e-mail blasts 21 Creating your Brand What’s in a name? – – – – – Make sure you can legally have it; register it Visualize it in a headline “Your Name here” Reports Rapid Growth Make sure your name tells what you do Make it easy to remember Do you want to be listed first in the yellow pages? Convert your differentiating points to customer benefits … This can become a slogan Design your logo …. This can becomes your identity Consistency is beauty – Your Name, Logo and Slogan appear on everything! – Your Benefits appear wherever practical 01-05-09 REMEMBER A brand without an image is only a name22 … About Service business Service is customized and tailored to meet customer’s specific needs Service provider sells on performance Often difficult for customers to value service Service providers must educate customer Key differentiators – – – – 01-05-09 Credentials; Experience Evidence of performance to satisfy the customer Ease of communications Support facilities; Technology 23 More Low Cost Marketing Networking Word of mouth Referrals Testimonials Recruit cheerleaders Public relations Alliances 01-05-09 24 Marketing Strategies Quickest to slowest results Direct contact & follow up (telephone, cold canvas) Networking-Referrals Public Speaking Writing-Public Relations Promotional events Advertising 01-05-09 25 Service business Marketing Keep track of leads Follow up (But do not be pushy) Keep in touch Establish chemistry Don’t criticize competition Limit range of options or choices; know how to say no (without losing prospect) Keep client SOLD after the sale – Don’t Over-Promise; Over-Deliver – If you exceed estimate let client know in advance; not after the fact Keep good records: discussions, decisions and correspondence Five commandments 1. 2. 3. 4. 5. 01-05-09 Listen to the prospect Ask Questions that uncover real needs and concerns Prepare what you will say Demonstrate experience and need Be flexible in your presentation to reflect reaction and concerns 26 Internet Communicate Educate Advertise Sell (e.g. ebay) Easy to navigate Relevant and concise An information source Links Promote web address in all communication 01-05-09 27 Forecast Sales & Margins Educated view of the future with data which can be defended Start with Market Research Disaggregate product lines or services for improved estimates Make reasonable assumptions (list them) – Census data Demographics & competition Spendable income and growth patterns – Industry data RMA, D&B, Bizstats, Trade Association data Vendor input and own or other data – Constructive estimates 01-05-09 Pre-sold contracts / Commitments from buyers Market research and focus groups Historical experience – own or others 28 Sales Volume-Margin Forecast Month 1 2 3 4 5 6 7 8 9 10 11 12 YEAR Number of units you expect to sell Average sales price Average cost of sale Gross margin = price - cost Gross Profit =Sales units x gross margin Develop it here and reuse it in the Cash Flow Forecast in the Financial Section 01-05-09 29 Customer Buying Fears Can I get the product/service cheaper some where else? Money’s worth. The product won’t do the job as promised What other people think Procrastination Overcome them with proof, testimonials, and guarantees. Answer in your presentation 01-05-09 30 Close the Sale Buyer must understand your message Briefly summarize the benefits Quote your price and ask for the order Be clear and direct - then shut up When you get your order - LEAVE Sell honestly and with integrity 01-05-09 31 Success Marketing You can’t be all things to all people so Segment, Differentiate and Promote - Find a niche and become known for it Choose simple, effective strategies and do them over and over and over Rely on Persistence Effect, not on Wishes Market the RESULTS of your work, not the process you use Ask the people you already know for help 01-05-09 32 Use Free Counseling from Our mission is to help small businesses succeed. We accomplish this mission by Educating Counseling Mentoring 01-05-09 33 SCORE ® Counselors to America’s Small Business Congratulations & Thank You! Keep in touch. www.scorehouston.org