MARKETING STRATEGIES FOR YOUR BUSINESS
Marketing is a complex subject but one of the most important contributing factors to the success of your business. Without customers there are no sales and therefore no profits.
An effective marketing strategy will be the cornerstone of your success as an entrepreneur. The classic elements included in the marketing strategy revolve around what is known as the 4 “Ps”: Product, Price, Promotion and Place. However, before addressing these elements you must clearly defining the need you wish to fulfill with the product or service you are offering, the target market you are going to reach and your marketing objectives. Finding the market need and developing a service or product to fill the gap in the market place will be key to your overall strategy.
Finding the need
You must do your homework to find the need or market opportunity upon which you want to base your business. Although the process may begin with assumptions you are making about the market, you need to support your idea with data through market research. Research will help to confirm or challenge your idea of who your best customers are and what they are seeking in a product or service.
The next step is to take a close look at your competition. This is a very important step in the process of defining your marketing strategy. You need to know what you are up against in terms of competition. The factors you need to examine include:
Who can you expect to compete with?
What market need do they fulfill?
What are the specific attributes of the product or service they fulfill?
V At what price do they offer their products or service?
What has been the key to their success in the marketplace?
You need to examine each of these factors in order to be able to clearly differentiate your product or service in the market. After competitive analysis the next step is to define the target market.
The target market
A target market is defined as a relatively homogeneous group of potential customers. Your business can target either consumers or other businesses. Regardless, you are trying to reach individuals who are either making a buying decision on their own behalf or on the behalf of the organization for which they work. It is very important to know who these individuals are and how they are motivated to make buying decisions. To define your target market you should consider the following variables:
demographics-age, gender, income, occupation, education
geographic-where they live or are located
psychographics -lifestyle characteristics including activities, interests and opinions
Marketing Objectives – The Four “Ps”
In order to ensure that your business is on the track, you must set out objectives for your efforts. At their most basic, these objectives should include a forecast for your sales for your first year in business and projected growth for the years thereafter. These forecasts will be based on the results of your business to fulfill the demand.
Clearly define the product or service you are providing including a description of the market need you are satisfying. List the specific attributes of your product and service and focus on what is unique about it in the marketplace. By focusing on your unique marketing proposition, you will be able to clearly differentiate your product or service.
Once your product is defined you must set a competitive price for it. A number of factors come into play when setting your price. You must look at the competitive environment and what your competition is charging. As well, you must consider the price your market can bear by referring back to the market research you undertook. You must also make sure that the price you will charge is one that is profitable for you.
Place refers to your distribution strategy which includes your business location and how you will distribute your product or service. Distribution options include:
personal selling – usually most appropriate when you are reaching other businesses
wholesalers – who will in turn sell the product to retailers who reach end consumers
mail order – fulfilled either by you in your place of business or through a mail order house you retain
retail stores – where you contact retailers directly rather than going though a wholesaler
sales agents – where you hire someone to sell your product and you pay them a commission
Regardless of which option is appropriate for your business, the key is to ensure that your end customers can easily access your product or service.
This is the element of your marketing strategy where you communicate to your target market to make them aware of the product or service you are offering.
There are number of ways or tactics to reach your market including:
Advertising through various media including television, radio, newspaper, magazine and outdoor (billboards, bus boards, and transit shelters);
Point of purchase advertising.
Establishing a plan of action for the marketing strategy will increase the likelihood of actually implementing and achieving your goals.
Clearly outlining month to month activities will allow you to budget for the expenses involved and will help you in predicting revenues.
Outlining your specific objectives related to promotional activities and develops a promotional mix-spending calendar.
A budget is a formal statement of the financial resources set aside for carrying out specific activities in a given period of time.
It helps to co-ordinate the activities of the organization, e.g. the advertising or sales force budget.
- A control technique whereby actual results are compared with budgets.
- Any differences (variances) are made the responsibility of key individuals who can either exercise control action or revise the original budget.
Advantages of budgeting and budgetary control
- Compels management to think about the future, which is probably the most important feature of a budgetary planning and control system. Forces management to look ahead, to set out detailed plans for achieving the targets for each department operation and (ideally) each manager to anticipate and give organization purpose and direction.
- Promotes coordination and communication.
- Clearly defines areas of responsibility. Requires managers of budget centers to be responsible for achievement of budget targets for the operation under their personal control.
- Provides a basis for performance appraisal (variance analysis). A budget is basically a yardstick against which actual performance is measured and assessed.
- Enables remedial action to be taken as variances emerge.
- Motivates employees by participating in the setting of budgets.
- Improves the allocation of scarce resources.
- Economizes management time by using the management by exception principle.
Problems in budgeting
- Budgets can be seen as pressure devices imposed by management, thus resulting in bad labour relations and inaccurate record keeping.
- Department conflicts may arise due to disputes over resource allocation and departments blaming each other if targets are not attained.
- It is difficult to reconcile personal/individual and corporate goals.
- Waste may arise as managers adopt the view, “we better spend it or we lose it”. This is often coupled with “empire building” in order to enhance the prestige of the department.
- There may be a conflict of interest on responsibility versus controlling, i.e. some costs are under the influence of more than on person, e.g. power costs.
- Managers may over-estimate costs so that they will not be blamed in the future should they overspend.
Characteristics of a budget
A good budget is characterized by the following:
• Participation: involve as many people as possible in drawing up the budget.
• Comprehensiveness: embrace the whole organization.
• Standards: base it on established standards of performance.
• Flexibility: allow for changing circumstances.
• Feedback: constantly monitor performance.
• Analysis of costs and revenues: this can be done on the basis of product lines, department or costs centers.
Budget organization and administration
In organizing and administering a budget the following characteristics may apply:
(a) Budget centers: Units responsible for the preparation of budgets. A budget center may encompass several costs centers.
(b) Budget committee: This may consist of senior members of the organization, e.g. departmental heads and executives (with the managing director as chairperson). Every part of the organization should be represented on the committee, so there should be a representative from sales, production, marketing and so on. Functions of the budget committee include:
- coordination of the preparation of budgets, including issue of manual
- issuing of timetables for preparation of budgets
- provision of information to assist budget preparations
- comparison of actual results with budgets and investigation of variances
(c) Budget officer: Controls the budget administration by: liaising between the budget committee and managers responsible for budget preparation; dealing with budgetary control problems; ensuring that deadlines are met; educating people about budgetary control.
(d) Budget manual: This document charts of the organization; details the budget procedures; contain account codes for items of expenditure and revenue; timetables process and clearly define the responsibility of persons involved in the budgeting system.