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To succeed, entrepreneurs must attract and retain a growing base of satisfied customers. Marketing programs, though widely varied, are all aimed at convincing people to try out or keep using particular products or services. Business owners should carefully plan their marketing strategies and performance to keep their market presence strong.
A new home business usually doesn't have a big budget for marketing and
advertising, yet these steps are essential to draw initial customers and
to build your reputation. Until you have an established clientele,
you will probably have more time than money available to devote to marketing.
You must dedicate both time and energy to promote your business;
in the absense of a big budget, creativity is key.
What is Marketing?
Marketing is based on two principles:
1. All company policies and activities should be directed toward satisfying
To address these principles, a small business must:
a. Determine the needs of their customers through market research
Successful marketing requires timely and relevant information about the product or service being offered and the buying habits of the targeted consumer. An inexpensive research program, based on questionnaires given to current or prospective customers, can often uncover potential opportunities for a new business, including dissatisfaction or possible new products or services.
Market research will also identify trends that affect sales and profitability. Population shifts, legal developments, and the local economic situation should be monitored to quickly identify problems and opportunities. It is also important to keep up with competitors' market strategies.
A marketing strategy identifies customer groups which a particular business can better serve than its target competitors, and tailors product offerings, prices, distribution, promotional efforts, and services toward those market segments. Ideally, the strategy should address unmet customer needs that offer adequate potential profitability. A good strategy helps a business focus on the target markets it can serve best.
Owners of small businesses usually have limited resources to spend on marketing. Concentrating their efforts on one or a few key market segments - target marketing - gets the most return from small investments. There are two methods used to segment a market:
a. Geographical segmentation - Specializing in serving the needs of customers in a particular geographical area. For example, a neighborhood convenience store may send advertisements only to people living within one-half mile of the store.
b. Customer segmentation - Identifying those people most likely to buy the product or service and targeting those groups.
Managing the Market Mix
Every marketing program contains three key components:
1. Products and Services
Products and Services - Product strategies may include concentrating on a narrow product line, developing a highly specialized product or service, or providing a product/service package containing unusually high quality service.
Promotion - Promotion strategies include advertising and direct customer interaction. Good salesmanship is essential for small businesses because of their limited ability to spend on advertising.
Price - The right price is crucial for maximizing total revenue. Generally, higher prices mean lower volume and vice-versa; however, small businesses can often command higher prices because of their personalized service.
After implementing a marketing program, an entrepreneur must evaluate its performance on a quarterly basis. The key questions to consider are:
1. Is the company doing everything it can to be customer-oriented?
Marketing research is the systematic gathering, recording, and analyzing of data about problems relating to the marketing of goods and services. Every small business owner-manager must ask the following questions to devise effective marketing strategies:
a. Who are my customers and potential customers?
Marketing research is not a perfect science because it deals people's constantly changing feelings and behaviors, which are influenced by countless subjective factors. To conduct marketing research, you must gather facts and opinions in an orderly, objective way to find out what people want to buy, not just what you want to sell them.
Why do it? It is impossible to sell products or services that customers do not want. Learning what customers want, and how to present it attractively, drives the need for marketing research. Small business has an edge over larger concerns in this regard. Large businesses must hire experts to study the mass market, while small-scale entrepreneurs are close to their customers and can learn much more quickly about their buying habits. Small business owners have a sense their customers' needs from years of experience, but this informal information may not be timely or relevant to the current market.
Marketing research focuses and organizes marketing information. It ensures that such information is timely and permits entrepreneurs to:
a. Reduce business risks
There are many sources of research material at your local libraries, colleges, trade and general business publications, and newspapers.
Business takes place in a highly competitive, volatile environment, so
it is important to understand the competition. Before launching your business.
consider the following questions:
a. Who are your five nearest direct competitors?
Start a file on each of your competitors including advertising, promotional materials, and pricing strategies. Review these files periodically, determining how often they advertise, sponsor promotions, and offer sales. Study the copy used in the advertising and promotional materials, and their sales strategies.
What to address in your competitor analysis
1. Names of competitors - List all of your current competitors and research any that might enter the market during the next year.
2. Summary of each competitor's products - This should include location, quality, advertising, staff, distribution methods, promotional strategies, customer service, etc.
3. Competitors' strengths and weaknesses - List their strengths and weaknesses from the customer's viewpoint. State how you will capitalize on their weaknesses and meet the challenges represented by their strengths.
4. Competitors' strategies and objectives - This information is best obtained by reviewing their annual report, which should summarize their strategies and objectives.
5. Strength of the market - Is the market for your product growing sufficiently so there are enough customers for all market players?
Internet - View the web sites of competitors; evaluate their online advertising techniques.
Personal visits - If possible, visit your competitors' locations. Observe how employees interact with customers. What do their premises look like? How are their products displayed and priced?
Talk to customers - Your sales staff is in regular contact with customers and prospects, as is your competition. Learn what your customers and prospects are saying about your competitors.
Competitors' ads - Analyze competitors' ads to learn about their target audience, market position, product features, and benefits, prices, etc.
Speeches or presentations - Attend speeches or presentations made by representatives of your competitors.
Trade show displays - View your competitor's display from a potential customer's point of view. What does their display say about the company? Observing which specific trade shows or industry events competitors attend provides information on their marketing strategy and target market.
General business publications
Preparing a Marketing Plan
A sound marketing plan is key to the success of your business. It should include your market research, your location, the customer group you have targeted, your competition, positioning, the product or service you are selling, pricing, advertising, and promotion.
Effective marketing, planning and promotion begins with current information about the marketplace. Visit your local library, talk to customers, study the advertising of other businesses in your community, and consult with any relevant industry associations. This interactive tool will help you assess your marketing strengths and weaknesses.
Once you have all the necessary information, write down your plan:
1. Define your business
Your product or service
2. Define your customers
Your current customer base: age, sex, income, neighborhood
3. Define your plan and budget
Previous marketing methods you have used to communicate to your customers
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