Business Opportunities: On-Line Articles - Marketing Plays a Central Role In theUltimate Success of Any Business

Marketing Plays a Central Role In theUltimate Success of Any Business
By Michael J. McDermott

There has been much written about the dismayingly high failure rate for new business ventures, but have you ever wondered what's behind that lack of success? There are many reasons that some new businesses fail, ranging from lack of a viable customer base to poor location. According to the U.S. Small Business Administration, however, the single greatest cause of small business failures can be traced to a lack of planning.

No matter how great a business idea might be, it still needs a thorough, well-planned marketing program to make it work. A marketing program is the means by which an entrepreneur lets his or her potential customers know just what the new business has to offer. It is worth the time and resources required to make sure your marketing plan meets your needs.

A good marketing plan starts with identification of your business's target audience, an objective commonly achieved using demographics and psychographics. Demographics has to do with the physical and material characteristics of your target audience, such as age, income, education level, sex, ethnicity and geographic location. Psychographics is related to the lifestyle attributes of your customers, things like hobbies, taste in music, social preferences, political leanings, etc.

Demographic profiling helps you identify potential customers most likely to be interested in purchasing the products or services you offer. That, in turn, makes it possible for you to target your advertising, promotions and other marketing efforts most effectively. For example, if you know that your product or service is most likely to appeal to traditional families with a high level of disposable income, you can place your ads in the media they are most likely to see. You can avoid wasting valuable resources putting your message in front of consumers who are unlikely to patronize your business.

Lack of planning is behind more small business failures than any other cause.

Adding psychographics to the mix helps you refine your efforts to reach your target market most effectively. Virtually all major consumer products companies use psychographics in their marketing efforts, but the strategy can be just as effective for small companies. For example, automobile makers tend to advertise rugged, four-wheel-drive vehicles during football games and similar sporting events likely to appeal to their "macho" target audience. Similarly, financial newspapers and magazines often advertise on cable TV shows that cover the business world.

The idea behind psychographics is that consumers tend to identify most closely with people and situations that remind them of themselves. That's not rocket science. In fact, it's a pretty basic notion. But as advertisers from cosmetics companies to cruise lines have learned, it is an extremely effective foundation on which to build a marketing program.

MARKET RESEARCH

All good marketing programs have to start with some research. Just what you will research will depend in large part on the nature of your business, the products or services it offers and its target market. In general, however, marketing specialists talk about the "four Ps" of market research: product, price, place and promotion. Most marketing plans will involve all or most of those elements to some extent.

The objective of your market research efforts is straightforward. You want to make sure you are offering the right product (or service), at the right price, in the right place and that you promote it properly to the right people. Failure to follow through on this effort is one of the most common causes behind small business failures.

Most new products fail for one of three reasons (or a combination of several of these): the target market is poorly defined, the product is poorly positioned, or the product is too similar to other products already in the marketplace. If you expect customers to patronize your business, you have to give them a compelling reason to do so. Consumers are bombarded with "me too" products and services. Standing out in the crowd is one of the biggest challenges facing entrepreneurs today.

If the business you are starting lends itself to this approach, you should consider test marketing the product or service you will be selling before proceeding with a full-scale launch. Begin by offering your product or service to a small, targeted market. If it does well, expand the test to include a larger group. At each stage in the process, attempt to gather feedback.

A test-marketing program also gives you an opportunity to research some other important aspects of your new business. For example, you can try offering your product or service at several different price levels to determine which will give you the best combination of consumer acceptance and high profits. You can also experiment with different ways of presenting your product or service to potential customers.

All good marketing programs start with some basic research activities.

There are two basic types of market research, primary and secondary. Primary research is original, customized market research that you conduct yourself or hire someone else to conduct specifically for your company. Secondary research involves consulting existing sources of information such as surveys, trade publications and other data. Secondary research is less expensive and time-consuming than primary research.

One very basic objective of your marketing program is to position your company as one that customers will want to patronize. That effort starts with determining what is unique and compelling to customers about your products or services. That should be the central point of all your marketing efforts. You must constantly remind your customers why they should choose what you have to offer.

"Because there is so much competition in virtually every type of business and industry these days, convincing consumers that what you have to offer is truly unique can be quite a challenge," says marketing consultant Fred Avery. "It can be done, but it takes hard work and perseverance."

Quality and superior customer service are two attributes that always have strong appeal to consumers, no matter what the product or service involved might be, Avery adds. He points to the success of companies such as Lexus (quality) and Nordstrom (superior customer service) as examples.

POSITIONING STRATEGIES

There are many ways you can position your company and its products or services to maximize the effectiveness of your marketing program. They include:

Focus on Features: Shine the spotlight on some particular features or physical characteristics of what you are selling. Obviously, this applies more to products than to services. Is your product more pleasing to the eye than your competition's products? Is it more colorful? Does it have a unique shape or package? Anything that sets it apart as being "different" can be a positive thing when it comes to marketing.

Boast about Benefits: What can your product or service do for your customers that competing products or services cannot? Is it easier to use? Is it more effective? Is it simpler to assemble? Hone in on specific benefits and hammer them home in your marketing.

Underline Unusual Uses: If you can take a product or service that already exists, modify it in some way-or even modify people's perception of it-and present it as being just the right thing for a different use, you just might have the makings of powerful marketing campaign. Does that sound far-fetched? Well, consider the case of Arm & Hammer baking soda. The product's primary use is as a baking ingredient, but the clever marketers at Arm & Hammer has successfully positioned it for many other uses-for cleaning teeth, neutralizing unpleasant odors in the refrigerator and freshening up the garbage disposal, to name a few.

You must constantly remind your customers why they should choose you.

Compromise Competitors: This approach takes some daring, and your product or service better have what it takes to back up any promises made. But if you can tell your customers that what your are selling does a better job than what your competitors are selling, that is a powerful marketing proposition. This approach has been very effective for an upstart Korean carmaker that boasts of having "the best warranty in the industry." That marketing program has played a major role in allowing the company to win a significant share of the U.S. auto business in a very short period of time.

Pound on Price: Everybody loves a bargain, but this is one of the most cut-throat and dangerous approaches to marketing there is. In a free economy, markets are inherently efficient, meaning the forces of supply and demand tend to push prices down to the lowest level the market will bear while still providing enough incentive for companies to remain in that business. If you are entering a market where there is already existing competition, finding a way to under-price your competitors while still making enough of a profit to survive can be nearly impossible. If you can find a way, however, offering the lowest price on a particular product or service remains a very effective marketing tool.

A well-rounded marketing program encompasses several elements, usually including advertising, promotion, public relations and one-on-one prospecting and/or selling. Collectively, these activities are marketing communications.

Advertising can have a positive effect that continues long after the ad has run.

Advertising plays a major role in most marketing programs, and with good reason. Properly done, advertising is a very effective means of communicating your message to your target market. Advertising tells customers and potential customers about your company and its products or services. It builds recognition for your brand among consumers, and it helps them understand how what your company offers can be useful to them on a personal level. Advertising also serves to enhance your company's credibility among consumers, which makes them feel more comfortable about doing business with you.

Crafting an effective advertising campaign often requires the services of a professional advertising agency, but there are some general rules that apply to all types of advertising. For example, large ads tend to attract the attention of more customers and potential customers, resulting in more inquiries and, ultimately, sales. While advertising is an immediate medium, generating most of its response within a relatively short period of time after the ad runs, a business can continue to benefit from an ad for months after it runs.

There are many different types of advertising media, and choosing the right mix for your business may require some help from an advertising professional. The choices include direct mail, trade publications, consumer magazines, newspapers, radio, network television, cable television, Yellow Pages and other directories, billboards and other outdoor media (such as signs on buses) and the Internet.

Public relations is another highly effective way to communicate your message to your target market. Some marketing experts believe it is even more effective than advertising under certain circumstances, and it can be less expensive. A good public relations program can build consumer awareness of your company and its products or services and boost the buying public's faith in what you have to offer. Public relations can be as effective for a small business as it can be for a very large one.

IMPLIED ENDORSEMENT

One of the keys to the success of public relations is that it implies a third-party endorsement of the message you are trying to deliver, since you are not paying to deliver that message, as you would with an ad. "When a customer hears something positive about you, your company or your product on the local news, that can mean a lot more to that customer than the paid ad he or she saw in the newspaper that day," says public relations expert Jack Parnell.

In today's high-tech world, many businesses also find it necessary to interact with their customers through new media, such as the Internet. Jim Sterne, president of Target Marketing of Santa Barbara, offers the following suggestions for doing so effectively:

Recognize that the world has changed. Most businesses can benefit from a Web site, and this is a strategy that must be embraced at every level of the company.

Post a frequently asked questions (FAQ) document on your Web site. A very large percentage of inquiries to most companies address the same handful of issues. A FAQ addressing those issues can be an efficient marketing tool.

Consider adding a Web component to boost your overall marketing program.

Respond to your e-mails. Make sure your customers get the same level of attention when contacting you by e-mail as they do if they contact you by phone or in person.

Provide access to as much information as possible. Use your Web site to provide a value-added experience for your customers. Offer them updated product information, advice, tips, pointers and other information they can use.

Give customers access to live information. Make sure they have an easy way to get in touch with a live person.