Sustainable Business/Marketing your business
Remember, keep your business prinicples and value proposition in mind as you work through this method for marketing. Here you will explore in detail who your market is, as well as what is happening in the market that is beyond your control?
Marketing. Pages 5-16 of NZTE text Planning for Success
Most businesses spend from 0 to 6% of sales on marketing. Zero % may apply if you are cleaver enough and word of mouth has built to such an extent that you have the luxury of of not needing to promote (the ideal situation). Six percent is likely to apply if you have just started your business and need some awareness or are in a very competitive business.
How should the promotion budget be split among the different methods of promotion? Here is a guideline for a retailer in a good location:
Promotional Budget Split % Personal Selling 5% Direct mail/e-commerce 20% Publicity 5% Public Relations 5% Word of mouth 10% Sales promotion/merchandising 35% Advertising 5% Monitor impact of results 5% Contingency 10%
Break Even CalculationEdit
Marketing is best described as an investment that leads to future sales. Another way of deciding if the tactic worked is to calculate a break-even point.
NEED AN EXAMPLE.
Monitoring results is frequently not sone systematically. Regularly asking customers how thay found out about your business is crucial if you are to get good value from your investment in marketing.
Determining expected salesEdit
For existing businesses past sales are the best predictor of future sales, for new businesses it is less simple but once the businesses is established you will find you have a better understanding between the businesses products and its markets.
The value of sales is determined by the expected number of units we think we will sell multiplied by the expected sales revenue per unit sold.
The most important thing is to keep detailed records of sales as it is these records that provide you with the growing ability to forecast income accurately.
Use Statistics New Zealand Websiet to help profile the number of customers that might exist in the geographic area you choose to opeterate in.
Try doing the following
- Talk to industry experts
- Talk to potential customers
- Remember your capacity limits (management and staff section and fixed assets)
Expected units of saleEdit
We need to derive the number of units we expect to sell in 12 months. There is no precise science to this where there are no historic records for us to base our estimates on. The first step I use is to determine an annual sales pattern
click here for spreadsheetWork in progress - not yet active
from here we could assume that there are 4 weeks in a month this gives us expected units each week.
our next step is to consider the profile of our business within a week. Frequently leisure and retail businesses have a pattern of sales within a week. Typically with leisure activities 50% of the sales are on in Weekends and 50% on weekdays. Knowing this we can establish units of sale on in busy and not-so-busy periods. being able to focus on activity that occurs in a day is much easier to visualise realistically.
Expected per unit sale valueEdit
Always have some contingency funds as there will be times when even the best planning will not foresee events that you can take advantage of (a competitor going bust or some event like your local sports team winning the a competition).
e.g. new technology, a large competitor coming into your market, environmental concerns, new local authority regulations. In the evaluation section we have created a tool to help the new entrepreneur review their business and themselves in a holistic way so they are able to to take a proactive approach to these threats.
People who constantly react to competition are often not focused on their own business.
Identify the factors that keep enthusiasm and drive excitement levels high in your business for example realising you can sell in another market or that you can export
Be aware of what is happening locally and nationally and internationally in your business area. Ensure you identify key trends , will they last? Internet and technology changes. Will Copenhagen and the increasing awareness of environmental issues make a difference in your business. Check www.mfe.govt.nz for updates on this.
An emerging trend is the rise of the ethical consumer. An important question to address is how your product or service can sell into this market.
Marco Grix is completing research into the rise of the ethical consumer.
Perhaps try a PEST analysis
- Technological (impacts)
How will these issues affect your business?.
What is happening to your customers? People change over time – the population is aging, these is a more diverse ethnic mix. People are staying in education longer (than in 1980). Don't assume your customers or there preferences are the same even in as little time as two years.
The increase in the level of education achievement across society has resulted in a customer that thinks. Customers should never be assumed to be fools and businesses should never make extravagant claims about their products or services. Fore example sometimes this can happen through the ignorance of the business person trying to prove their credibility by belonging to a trade organisation that is weak or by claiming their business is is managed under sustainable practices when in fact there the are doing nothing different to a business not making the claim to sustainability.
Don't spend too much time on the competition – you are managing your own destiny (vision). Much competitor analysis can be completed by simple observation – so remember to:
- read newspapers and watch adds on TV (listen to radio)
- read trade magazines
- search competitors (direct and indirect) websites, subscribe to their websites
- Join industry associations
- read other companies annual reports
- visit competitors businesses.
- Listen to business associates and friends(twitter)
- listen to your own sales people
Don't forget the power of the internet
After this process you should be able to answer the following questions:
- how can I sell more to an existing customer?
- should you be aiming at new markets?
- who else can you sell your products to?
- are there any other products (or services ) you can provide the compliment whet you do?
- Are there other businesses you should be getting into?
Made up of two componentsEdit
- a long term look at the business (strategic plan)
- an action plan for the next 12 months
- the value proposition
- An important aspect of the business plan. It is your vision of why you are still in business when your competitors are not.
- Strategic planning sets up future profit streams it affords a vision that goes beyond a short term unstable market.
- Few small businesses plan strategically. Strategic planning is difficult to explain and hard to implement (because there are more pressing short term issues)
Come back to this On going change creates on going opportunities that can be used to your advantage. The most successful business people foresee the trends and position their business accordingly.
Our definition of strategic planning it is concerned with what to change in your business to survive the future market beyond your control.
Strategy compared to tacticsEdit
- How to complete a strategic plan
- As some/all the following:
- who will buy or use my products or services
- what price will I charge]
- is there any demand for my new product (service)
- what may happen or change in the future that will affect the business.
- What is the best way to distribute your service of product.
- Are we in the right location
- can we make and sell sufficient to produce a profit.
Any business that does not think long term runs the risk of the market changing to such a degree that they go out of business.
Get information from current or potential customers. No amount of discussions with professionals, friends or colleagues will replace information from real customers. (this is seldom done by small businesses)
when you are dealing with existing or potential customers strike up a conversation with them and informally ask them.
Gather a small number of customers, sit them down and discuss a range of issues relevant to your business. The advantage of using this over a questionnaire id you get more detailed answers)
Ring and ask a couple of questions over the phone.
Distribute a one page questionnaire that ask some key questions and encourage customers to fill them out.
NB – never assume anything – especially how your customers feel about your business.
The most common form of gathering business feedback. Collecting market research is crucial but often overlooked by small businesses. Set out below are example of what a questionnaire could be used for:
- would your customer use a toll free phone service
- do customers find it easy to park in the area
- would customers mind if you were closed on a Monday
- how many times a year do your customers take a holiday
- what do your customers like about your business
- what do your customers think you could improve on.
- Are they more likely to buy from a business that is more socially/environmentally aware.
- be as brief as possible
- be sensitive when asking personal details
- know exactly what you want to find out.
- Chose the right type of question (open – closed)
- use normal language
- avoid using words that indicate bias
- do not ask more then one question at a time
- survey the people you need to survey
You must know some of the fundamentals in your industry. If you are already in business then this comes from your existing records. If you are starting a new business then you need to finds information from other sources. Review the statistics New Zealand website, and talk to others – for example an accountant, a bank manager or business advisor will be able to give you “rules of thumb”.
Critical success factorsEdit
What must happen in your business to make it work. This requires identifying some basic issues. For example a business may have 4 critical success factors:
- customers are aware of your business and contact you
- customers see your products or services as value for money
- customers are happy to pay the price you are asking
- customers remain happy and buy from you again
alternatives might be calculating the average customer spend then attempting to increase it
KPI's come later. (consider broad business types - retail, service, manufacturing and KPI's that may be relevant)
Who are your best customersEdit
80/20 rule – 20% of your customers provide 80% of your sales. This is referred to as the Pareto principle. (link to wikipedia)
Other Location lease terms staff turnover key relationships morale – you – your staff