Marketing

Marketing is the process of planning and executing the conception, pricing, promotion and distribution of your ideas, goods or services. The goal is to produce services or goods that satisfy the needs of individual consumers or organisations.

At the Start-Up Stage, your potential business must continue to spend time in researching your target market. You need to continue to work long and hard at understanding the needs and wants of consumers and why they will buy your product or service instead of alternatives already in the marketplace. Remember that consumers do not buy the features of your product or service. Significantly, they buy the benefits they believe that product or service has.

The essential marketing components of the Start-Up Stage are to:

• have a marketing plan
• adequately profile target customers
• undertake market tests of your product or service with potential consumers
• begin to build into your marketing various strategies for gaining customer loyalty and retention

Marketing Plan

A Marketing Plan is a written document that describes the needs of the consumer, and how the product or service will meet their needs in the short or longer term.

A key part of the business plan involves analysis of the market and the preparation of a marketing plan. Your initial marketing plan should serve to introduce your company and its products and services to potential lenders and partners. Like other documents you will prepare, the marketing plan will grow and change over time. Once you are past the feasibility stage, the marketing plan will need to become more comprehensive.

A marketing plan should detail the following areas

• purpose of the plan
• marketing objectives
• SWOT (strengths, weaknesses, opportunities, threats) Analysis
• competitor analysis
• target audience
• positioning and unique market niche
• marketing and promotional tools to use (eg advertising, newsletters, brochures, publications, websites etc)
• pricing
• packaging
• distribution
• budget
• schedule detailing activities and timeframes.

A marketing plan also needs to be followed through. This means you should:

• action the marketing plan
• give it time to work

As part of this process, and in order to improve on your marketing plan’s success, you should:

• ensure that key people are fully involved
• monitor the business and economic environment carefully to allow for changes to be managed
• make your plan realistic
• ensure that the marketing group communicates activities with the rest of the team
• encourage your staff to be open to new ideas, products and services and the idea of introducing them successfully to the market

Finally, the marketing plan is an investment. Like all investments, it takes time to mature. You can expect to do many marketing plans over the lifetime of your new venture.

Profiling Target Customers

Profiling Targeting Customers involves aligning the product or services of the business with the customers’ current and future needs.  You need to establish an understanding of the demographic profile and needs of your target market.  There are many sources of information to assist you:

• Visit your local council or university library.
• Search data bases such as the Australian Bureau of Statistics.
• Seek advice from small business associations and entrepreneur support groups.
• Visit your competitors to witness how they deal with these customers and why. How can you provide this service differently and better meet customer needs?
• Read magazines and business newspapers that profile the successes of other new products or services in similar or related markets.
• Talk to potential customers either individually or in small groups. Individual interviews can be done face-to-face or by telephone. Work through a list of questions you have prepared. Give the customer plenty of time to talk. Listen and learn, taking down notes. For small group discussions, meet with four to six potential customers. Offer them a free or discounted product or service for their help. Again, have four or five set questions. Listen and take notes. Leave time to follow up on issues raised by customers in the individual or small group interviews.

Key questions would include:

• What do they typically buy, and how do they hear about it?
• How do they like to buy this product or service?
• How would they like to buy it differently or more easily?
• How often do they buy?
• How does a major competitor meet their needs?
• How can your company meet the customers’ needs better or differently?

If you have the funds available, there are also many professional businesses that specialise in providing market research and advice. The tools available include:

• Questionnaire surveys either by mail, face-to-face, by telephone or the internet
• Focus groups, which are meetings with groups of four to eight people who represent potential customers. Focus groups are a much cheaper option than surveys. They can also be used to market test your product or service.

Have You Tested Your Product or Service in the Market?

An idea that is good in theory needs ultimately to be tested in the market to determine its overall long-term viability. Employing research tools such as consumer focus groups and surveys will help you determine if your commercialisation efforts are on track. It will also help to determine what changes are required for the product or service to sell effectively and profitably for your business.

Market Tests

Market Tests take the product or service to potential consumers in order to determine whether they will buy the benefits that the product or service offers.

You can invite a group of potential customers to be part of a focus group. Set up from three to five focus group meetings. Control the membership of each focus group, so that one group might be younger consumers, another group middle aged customers and so on. Or you might segment your focus groups by other characteristics such as gender, regular users versus heavy users of the product or service and so on.

Some hints:

• Do three to five focus groups in total
• Have a list of four to five questions
• Allow plenty of time for discussion
• Be time conscious – move the group onto the next question
• Give 60-90 minutes for the group discussion
• Take notes or have someone do this for you

If you have a product or service that can be easily demonstrated or shown (or presented by video), show that in the second half of the focus group session. Then talk about it.

Customer Loyalty and Retention

Customer Loyalty and Retention efforts focus on methods of building on the product loyalty and product satisfaction of customers. Some studies suggest that it is at least five times more expensive to find a new customer than to retain a current customer.

About 80 per cent of companies use customer satisfaction as a proxy for organisational performance. In recent surveys, companies state maintaining or increasing the levels of customer satisfaction as one of their major challenges.

Importantly, satisfied customers are loyal customers. Loyal customers tell others and advertise the benefits of your products and services. This is an important additional marketing tool for your business.

In short, having loyal customers:

• creates great word-of-mouth referral (leading to the potential of reducing advertising costs)
• means repeat use of your services and products
• increases their chances of staying with your business
• creates more stable demand for your services and products
• may reduce the negative reactions by customers when there is a breakdown in the delivery of your product or service

Flowcharting Service Delivery

Flowcharting Service Delivery is a tool for examining the links between what a customer expects, having staff that are trained to deliver the service and the success of the service in meeting customer expectations.

This is a simple and useful process for identifying the processes used in your business to deliver a service to customers. Flowcharting helps to identify service gaps or areas for improvements.

Take a piece of paper or a white board and draw a set of maps and figures to describe how the service is delivered, where things can go wrong, and what is done when there is a service failure. Flowcharting tends to identify service gaps not only at the front stage (where the staff interact with the customer) but also at the backstage (behind the scenes).

Marketing experts propose four actions to close such service gaps.

Action 1. Learn what the customer expects by:

• doing customer research, studying customer complaints
• using information from customers to try new ways to deliver the service
• getting your managers talking to your customers

Action 2. Establish service quality values and standards by:

• establishing values and standards that are realistic, clear and achievable
• regularly talking to and appraising staff using these service standards
• knowing what tasks in particular are the most important in maximising customer satisfaction (e.g. reduce queues, deliver on time)

Action 3. Ensure that staff are adequately trained by:

• providing staff with the technical training that allows them to meet the service standard
• building teamwork among staff
• empowering staff to be able to take appropriate action (within certain limits) to resolve customer concerns

Action 4. Ensure the service matches the promises by:

• making sure that all advertising material actually reflects the nature of the product or service
• making staff aware of all advertising and promotional activities so they know what customers are expecting
• offering customers different levels of service for different prices and explaining the differences between the service level