The world wide web (www) has revolutionized the world, in particular the business world. The old business paradigm is now dead and the new business model is changing every minute. Let's go back twenty years, the Internet was in its infancy. If a small company had a great product very few people knew about it. The newspaper industry was strong, advertisers knew how to reach their targets. Now, let's move forward, in 2008, the newspaper industry is in chaos, the industry is losing money because fewer people are reading the newspaper. The newspaper main competitor is the Internet, you don't need to wait until tomorrow to read what is the latest news in Asia or Europe, the Internet brings it now. Advertisers are being challenge by generations X & Y. Advertisers are now reaching into mediums that are new to them, such as: FaceBook, Linkedin, MySpace, YouTube, etc. Industry giants such as Google, Yahoo and Microsoft are bidding to become dominant in online advertising with millions of dollars at risk.
The Internet has made it possible for small companies to create awareness for their products or services. Blendtech a small company unknown to people became the BUZZ when their video was posted in YouTube, millions visited the video and the company became overwhelm with so much traffic (http://www.willitblend.com/) How much did the video cost? $0 and in return the company had its best year after sells skyrocketed.
The Internet has also changed the way talent is found. The Ting Tings, the English electro-pop duo of Katie and Jules De Martino is now famous due to two songs they posted on their MySpace page. Andy Samberg from Saturday Night Live (SNL) was discovered because he posted his "Short" videos online on 101.com
When Andy Samberg along with Jorma Taccone and Akiva Schaffer developed "The Short" in collaboration with SNL and the video was posted in YouTube.com "it was an undeniable online phenomenon that amassed over one million hits on YouTube.com within days of airing on "SNL." The short "burrowed its way into the nation's cultural consciousness" (The New York Times, 12/27/05) and sparked its own legion of Internet imitations" http://www.nbc.com/Saturday_Night_Live/bios/Andy_Samberg.shtml
Many business owners continue to believe that it takes a lot of money to create a web presence, but the truth is that it does not. Your new business can have a web precesence with almost no cost. The only service you will need to pay will be to have access online through one of the many internet providers such as PacBell, Comcast, Earthlink, AOL, etc. then the cheapest way to begin is to create a BLOG, it is free if you use BlogSpot, you can create a free email account from Google, Yahoo, etc and Voila! you are ready to begin writing about your business. However, a BLOG is not a substitute for your website.
Tuesday, May 20, 2008
Tuesday, May 13, 2008
Placement and Promotion
A good promotional strategy lets consumers know what your product is, what it does, why it's better than anyone else's, and how they can buy it.
A great promotional strategy communicates your brand identity and your values. It doesn't just tell consumers why they need your product; it inspires their goodwill, trust, admiration, respect and loyalty.
A common misconception here is that promotion simply means paid advertising. That is just one method, but it is not the only one. Public Relations, networking, and other low cost/ no cost promotional tools.
The Who, What, When and Where of effective advertising.
Who: The Right Audience: With your customer profile in hand, you should know the characteristics of your target market, and can analyse media choices to see which of them are most likely to reach this audience.
What: The Right Message
Regardless of the type of advertising, the message contains the following elements:
Offer: What are you trying to sell?
Benefit: what this product will do for your customer?
Proof: Evidence that the benefit is real (pictures, testimonials, surveys, awards)
Call to Action: Ask the customer to do something, and give the information needed to take that action.
The Right Message
It grabs people's attention and holds their interest.
The headline should get your immediate attention and holds their interest.
The illustration or photo should attract your interest
The text should clearly identify benefits to your customer
The close (logo, last line, etc.) should provide a call to action and all the information needed to make contract and buy.
When: The Right Time
Timing, frequency, and consistency are the rules of thumb for deciding when to advertise.
Timing:is essential, since the average person is hit with over 5,000 advertising impressions each day. You need to maximize the potential for the customer to be paying attention.
Frequency: According to advertising experts, a customer usually must hear or see an advertisement four to nine times before the message sinks in.
Consistency: It takes an average of six months for a new business to get noticed, for people to change their buying behavior, and for competition to react. For this reason, consistency in advertising is essential. All promotional material should have the same look and feel, in order to communicate the business's brand identity.
Where: The Right Place
Ask the question: Where will people who are interested in your products be most likely to look for your ad?
Knowing the customer helps you make these decisions intelligently. That is why market research is so important!! Your industry information can be big help here, telling you whether your prospective customers are more likely to listen to the radio, watch TV, read the newspaper, respond to flayers, and so on.
Types of Advertising: Your Media Choices
A great promotional strategy communicates your brand identity and your values. It doesn't just tell consumers why they need your product; it inspires their goodwill, trust, admiration, respect and loyalty.
A common misconception here is that promotion simply means paid advertising. That is just one method, but it is not the only one. Public Relations, networking, and other low cost/ no cost promotional tools.
The Who, What, When and Where of effective advertising.
Who: The Right Audience: With your customer profile in hand, you should know the characteristics of your target market, and can analyse media choices to see which of them are most likely to reach this audience.
What: The Right Message
Regardless of the type of advertising, the message contains the following elements:
Offer: What are you trying to sell?
Benefit: what this product will do for your customer?
Proof: Evidence that the benefit is real (pictures, testimonials, surveys, awards)
Call to Action: Ask the customer to do something, and give the information needed to take that action.
The Right Message
It grabs people's attention and holds their interest.
The headline should get your immediate attention and holds their interest.
The illustration or photo should attract your interest
The text should clearly identify benefits to your customer
The close (logo, last line, etc.) should provide a call to action and all the information needed to make contract and buy.
When: The Right Time
Timing, frequency, and consistency are the rules of thumb for deciding when to advertise.
Timing:is essential, since the average person is hit with over 5,000 advertising impressions each day. You need to maximize the potential for the customer to be paying attention.
Frequency: According to advertising experts, a customer usually must hear or see an advertisement four to nine times before the message sinks in.
Consistency: It takes an average of six months for a new business to get noticed, for people to change their buying behavior, and for competition to react. For this reason, consistency in advertising is essential. All promotional material should have the same look and feel, in order to communicate the business's brand identity.
Where: The Right Place
Ask the question: Where will people who are interested in your products be most likely to look for your ad?
Knowing the customer helps you make these decisions intelligently. That is why market research is so important!! Your industry information can be big help here, telling you whether your prospective customers are more likely to listen to the radio, watch TV, read the newspaper, respond to flayers, and so on.
Types of Advertising: Your Media Choices
Word of Mouth
Print Advertising
Broadcast Advertising (Radio & TV)
Signage
How many signs do you see today?
Signage doesn't just advertise, it also gives directions, and provides other services.
ABC's of Signage:
Attracting new customers: Every year, a certain amount of your customers will move away or change their buying habits. That means you must restock your customers, just like you restock your inventory.
Branding your business: Signs are vital to branding. They trigger emotional responses. They make promises about quality and service. They either beckon or repel customers. Just as with dress, personal hygiene, and etiquette, FIRST IMPRESSIONS COUNT!!!
Creating impulse sales: Studies show that impulse sales make up 68% of total sales. Signage must attract impulse buyers; only then can your service and value turn them into repeat customers.
Public Relations see previous Blog about Public Relations
Networking see previous Blog about networking
Contests
Sponsor events
Be a guest speaker
Trade Shows and Consumer Fairs
Cross Promotions
Pricing Your Product or Service
You need to familiarize with some basic pricing concepts.
Value: is what your customer believes the product is worth.
Price: is the amount you charge customers for the product.
Cost: is what you spend to produce your product.
Profit: is what's left over after you subtract costs from price.
Pricing: is the process of figuring out how much to charge per sales unit. A bookstore's sales unit would be a single book, while a housecleaner's sales unit could either be an hour of work ($10 an hour) or a specific job (clean the garage for $50.00)
In pricing, the cost is often called the floor. You can't go below it, otherwise you will be given the product away.
Value: is the ceiling. It's the maximum your customers will pay, based on what they think your product is worth. That means your costs should be as low as your brand identity (i.e. quality, and positioning) permits, and your value should be as high as possible. One perfect example is real estate: If a 1,200 sq ft home located in the best school district and in a very desirable area, this house will have a premium, high value and a high demand.
Demand: refers to the amount your product that customers are willing and able to buy at a specific price. A customer who has $10 to spend might be willing to buy two pillows if your price is $5 per pillow, but only one if your price is $7 per pillow. Being able to afford the product is an essential part of demand; just wanting the product doesn't count!
Check out what is happening to the auto industry with high price of petroleum. As the price per gallon of gas increases the demand (driving) decreases. Also, customers will look for alternatives such as smaller cars versus SUVs.
Pricing Objectives:
The pricing objectives depend on a variety of factors, including your production costs, brand identity, competitive environment, and so forth. The most common pricing objectives are:
Value: is what your customer believes the product is worth.
Price: is the amount you charge customers for the product.
Cost: is what you spend to produce your product.
Profit: is what's left over after you subtract costs from price.
Pricing: is the process of figuring out how much to charge per sales unit. A bookstore's sales unit would be a single book, while a housecleaner's sales unit could either be an hour of work ($10 an hour) or a specific job (clean the garage for $50.00)
In pricing, the cost is often called the floor. You can't go below it, otherwise you will be given the product away.
Value: is the ceiling. It's the maximum your customers will pay, based on what they think your product is worth. That means your costs should be as low as your brand identity (i.e. quality, and positioning) permits, and your value should be as high as possible. One perfect example is real estate: If a 1,200 sq ft home located in the best school district and in a very desirable area, this house will have a premium, high value and a high demand.
Demand: refers to the amount your product that customers are willing and able to buy at a specific price. A customer who has $10 to spend might be willing to buy two pillows if your price is $5 per pillow, but only one if your price is $7 per pillow. Being able to afford the product is an essential part of demand; just wanting the product doesn't count!
Check out what is happening to the auto industry with high price of petroleum. As the price per gallon of gas increases the demand (driving) decreases. Also, customers will look for alternatives such as smaller cars versus SUVs.
Pricing Objectives:
The pricing objectives depend on a variety of factors, including your production costs, brand identity, competitive environment, and so forth. The most common pricing objectives are:
Maximizing Profits
Maximizing Sales Volume
Return on Investment
Meeting or beating the competition
Quality leadership
The marketing approach to pricing is based on the 4 C's. From the buyer's viewpoint, the four P's might be better described as the 4 C's.
Customer Solution
Customer Cost
Convenience
Communication
Customer: Your target customer's income, lifestyle, and values affect your price.
Customer Cost: To set a price that will earn a profit, you will know your total variable and fixed cost.
Convenience:Place, locations, channels
Communication: Advertising, Personal Selling, Sales promotion, Public Relations.
Pricing Strategies
Cost Plus Pricing: Very common and simple pricing method. It's based on the known factor of cost. It involves totaling your fixed and variable costs, and adding a target return to determine your sale price. The Target return is usually expressed as a percentage of total cost.
Competition Based Pricing: Not a great strategy. The competition could have an entirely different cost structure to guide their pricing. It is better to use competition based pricing as a general guide only; DO NOT assume that you have to price either as low or as high as your competition. My advice is do not compete on price.
Value Based Pricing: The goal is to charge an above average price, while leaving customers with the feeling that they've gotten a good deal. Here are some reasons why consumers may pay more for your product:
Customers like you and trust you
You were recommended by someone they like and trust
You offer convenience or faster service
You offer security or reduced risk
Your products confer social status or distinction
Buying from you aids a cause or supports a philosophy
Your products are unique, artistic, or of higher quality
Retail Pricing: Retail pricing is used when merchandise is purchased from a manufacturer or wholesaler, and then sold again to the end user. Although retailers don't produce the goods they sell, they still have overhead costs. Their price must cover all these costs, and offer an acceptable profit.
To get a retail price you multiply the wholesale price by a certain percentage (called a markup)and add that to the wholesale price. A retailer using a 25% markup might buy a t-shirt at $8, and sell it for $10 ($8 + $2) Many retailers double or triple the wholesale price.
Your markup is the difference between the price you pay for the product, and your final selling price. This can either be a percentage of the cost, or the retail price.
Suggested Retail Pricing: Many wholesalers and manufactures have established what they think are the best prices to charge for their products, which is often referred to as "suggested retail price." This can be a guide for your pricing strategy, but you still need to analyze your costs to be certain that it will allow you to make a profit.
Monday, May 12, 2008
The Marketing Mix
Once you have decided your business strategy, you will be ready to begin planning the details of the marketing mix. What is the marketing mix? The Marketing Mix is defined as: The set of controllable tactical marketing tools: Products, Price, Place, and Promotion that the firm blends to produce the response it wants in the target market.
Product Price
Variety List Price
Quality Discounts
Design Allowances
Features Payment period
Brand Name Credit Terms
Packaging
Services
Advertising Channels
Personal selling Coverage
Sales Promotion Assortments
Public relations Locations
Inventory
Transportation
Logistics
Product Price
Variety List Price
Quality Discounts
Design Allowances
Features Payment period
Brand Name Credit Terms
Packaging
Services
Promotion
Advertising Channels
Personal selling Coverage
Sales Promotion Assortments
Public relations Locations
Inventory
Transportation
Logistics
Price
List price
Discounts
Allowances
Payment period
Credit terms
Place
Channels
Coverage
Assortments
Locations
Inventory
Transportation
Logistics
Product: the goods and services combination the company offers to target the market.
Price: The amount of money customers have to pay to obtain the product.
Place: includes company activities that make the product available to target consumers.
Promotion: activities that communicate the merits of the product and persuade target customers to buy it.
Your Product Line:
Inventory control is one of a retailer's biggest challenges, and depth and width have a significant impact on the ability to control inventory.
Positioning
Positioning means developing strategies that will place your product in a particular position relative to competitors.
How have Toyota: Prius and Corolla positioned their respective products in the automobile marketplace. Why? Think about it?
Smart positioning requires understanding the benefits of your products, what those benefits are worth to the customer. You can position your products based on price, quality, availability, uniqueness, etc.
Packaging
It helps to communicate your product's image, it also serves the basic function of protecting products, and providing information about use, ingredients, quantity and so forth.
Packaging can also reduce shipping cost, earn goodwill, and increase your access to overseas markets. Make your packaging decisions carefully!
Products are not the only thing that can be packaged, services can be package as well. Bookkeeping services, Legal services, Shipping services, Banking services, etc.
Branding
Branding is about creating a consistent message for your business, and making sure it comes through whenever and wherever you interact with the public.
It includes benefits, packaging, advertising, and services. You can look at brand identity as a promise. When customers see your name or logo, it promises them certain things. Each time you deliver on that promise, your brand is strengthened. Any time you break the promise, it's weakened. So, Under promise and Over deliver!!
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