Marketing Strategy? You May Be Throwing Your Money Away6 Jun, 2013 By: Harry Hecht, U.S. Bank Equipment Finance
Dealer Principals should avoid a reactionary marketing approach and strategically examine their business to ensure the best use of valuable resources.
I've been spending a lot of time meeting with executives from small to mid-market businesses to discuss their current marketing approaches and goals. In many instances most already had defined types of services they desired (i.e. ad development, PR sales coverage, website redesign, social media platforms, etc.). However, when I inquired about why they need, for example, a Twitter account, they have no specific reason other than "that’s what my competition is doing."
That may be the case - or - it may not. Just because it’s the ‘cool” thing to do, doesn’t mean you should copy it. Small businesses in particular need to be strategic in their marketing approach to ensure every last valuable dollar is spent in the most effective and productive way possible. This is impossible to do without spending a bit up front to conduct some basic research of your market - in other words, determine where you currently stand, and where you want to go (before implementing a plan).
According to the Small Business Administration (SBA), conducting a market analysis "is the process of analyzing data to help you understand which products and services are in demand, and how to be competitive.”
Market research can also provide valuable insight to help you:
* Reduce business risks
* Spot current and upcoming problems in your industry
* Identify sales opportunities
The SBA continues on to outline the components of an effective analysis:
Industry Description and Outlook – Describe your industry, including its current size and historic growth rate as well as other trends and characteristics (e.g. life cycle stage, projected growth rate). Next, list the major customer groups within your industry. Are you a B2b and retail player, or do you focus on major accounts, government and schools?
Information About Your Target Market – Narrow your target market to a manageable size. Many businesses make the mistake of trying to appeal to too many target markets. Research and include the following information about your market:
Distinguishing Characteristics – What are the critical needs of your potential customers? Are those needs being met? What are the demographics of the group and where are they located? Are there any seasonal or cyclical purchasing trends that may impact your business?
Size of the Primary Target Market – In addition to the size of your market, what data can you include about the annual purchases your market makes in your industry? What is the forecasted market growth for this group?
How Much Market Share Can You Gain? – What is the market share percentage and number of customers you expect to obtain in a defined geographic area? Explain the logic behind your calculation.
Pricing and Gross Margin Targets – Define your pricing structure, gross margin levels, and any discount that you plan to use. Are you a “Nordstrom” or a “Wal-Mart?” Price accordingly so your value is clear.
Competitive Analysis – Your competitive analysis should identify your competition by product line or service and market segment. A plan of attack that clearly communicates and defines your differential is important, so that your sales organization can bring this to light on their approach meetings.
In addition, you should also define what types of marketing activities your top competitors are doing, and doing well. Once you've gathered this information, you can then develop a plan for reaching new customers. It may involve an email newsletter, twitter account, or it may not, but without looking at the relative data, you'll never know for sure. As a successful business owner, why would you ever spend money on a guesstimate?
Market and business planning isn't just for start-ups, it's also for those businesses who have never undertaken the planning process. If it has been more than two years, most likely the market may have changed, it may be time to do a SWOT analysis. Just because you've been successful to date doesn't mean you won't benefit from strategic planning - and my bet is that you'll find ways to better spend your marketing dollars that you may have never considered.
In summary, business without market research is like stepping out onto a tightrope without bothering to check the tightness of the knots that are holding the rope in place – or even if there is a safety net. Alas, you’re halfway across when the knots begin to loosen, the rope wobbles; you lose your balance, and…you know the outcome. Thus, do your homework first.
Harry Hecht, Business Coach & Consultant, has more than 32 years of industry small business operational experience. His track record includes 22 years as VP US Dealer Sales for Konica Minolta Business Solutions; 5 years as VP/ General Manager for Global Imaging Systems, a Xerox Company. He’s an active member of the MPSA, with 10+ years in the development and growth of MPS programs throughout the independent dealer channel. Contact him at http://www.harryhecht.weebly.com