Developing your Marketing Plan: Part III

Building a Marketing Budget

We have considered all of our marketing options, set our marketing goals, identified our marketing objectives, and prepared the tasks to be performed; however, our marketing plan is not complete until we determine the costs of implementing each of these elements. A marketing budget is an important part of our marketing plan.

The marketing budget is an estimation of the costs associated with the various tasks.

The tasks could be:

1. Staff time
2. Compensation
3. Related Expenses

The goal of the budgeting process is to distribute expenses over a period of time, typically by month and year, to assure moneys are available, as needed.

Budget Format
The easiest way to arrange financial information is to establish a format on a spreadsheet. Here is a simple example form: (Click to see it larger)

Across the top of the spreadsheet, list the headers for each marketing expense. For example: salaries, office expenses, development expenses, rental expenses, design expenses, promotion expenses, public relations expenses, technical design/support, etc. Along the left side of the spreadsheet is a wider than usual column to list each project, tasks and sub-tasks discussed in Part II.

The arrangement of your budget format will be dependent upon how you plan to use the information displayed. Make sure you give careful attention to items included during this phase of formatting your marketing budget.
 
Designing the Budget to Meet Your Business Needs
Your marketing budget will vary depending upon the type and size of business you own. Thus, if you own a small retail store, you may need only a few headers, along the top of your spreadsheet, for staff salaries, product promotion, newspaper advertising, direct mail advertising, web design/support, etc. On the other hand, if you operate a large, complex business with several product lines or plan to expand into a new marketing area, you will require a far more complex approach that may require more than one marketing budget plan for the various projects.
Another factor to consider is how do you plan to use your marketing budget? If you are only interested in anticipating monthly or annual expenditures, a simple chartof expense categories may be sufficient.
If you intend to monitor your marketing efforts over a period of years, you may want to consider a historical method of measuring each expenditure category by changes in business trends, market conditions, or alterations in your marketing approach. This will requireadditional columns that track percent changes or dollars of sales, or volume of sales, or costs from year to year. A comparison of sales volume to budgeted expenditures is a practical first step in this regard. Whatever comparative factors you use, keep the standards realistic and related to specific outcomes.

One Final Thought
For best results, connect the marketing budget to the company’s volume of sales and profit margins. Using past financial data, which measures marketing expenses as they relate to product or service performance, can be very useful in predicting future sales as well as potential problems.
Once you have identified the budget method and format, stay within the framework you have selected, this will assure a consistent and easy to follow financial history as you implement your marketing strategy.

Part IV will focus on evaluation tools that may assist in considering future marketing plans. Please let us know if this has been of any help and, as always, your comments and suggestions are welcomed.

Develoing Your Marketing Plan - Part II

The Elements of a Marketing Plan

First things first, preparing a marketing plan is not rocket science. It is, however, a thoughtful process for identifying those business practices that are considered most important to you for the success and survival of your company. The complexity or simplicity of your plan is strictly up to you. For the purposes of this example, we will provide a simple marketing plan. A marketing plan, typically, consist of three key elements: goals, objectives, and tasks.

Goals

The purpose of goals is to focus your attention upon the strategic efforts that have the highest priority to improve, protect, or enhance your business. Draft your goals in clearly understood terms to convey the most important aspects of your company’s success in the future. Goals are broadly stated and indicate the direction the company intends to pursue to be successful in overcoming competition, enhancing profits, improving market share, and /or increasing staff, product, or service performance. Whether you have just started or have been in business for many years, the changing economic forces affecting all of use requires adapting, modifying, and controlling our situation. Two goals that illustrate the initial development of a simple marketing plan are:

1. Increase the company’s volume of sales by 15%
2. Improve community awareness of our company’s new service

Objectives

Objectives are directly linked to specific goals. In other words, they are the tactical steps to the achievement of a specific goal. They need to focus the efforts of the company by stating the path the company will take in achieving a goal. In many cases there are more than one objective in reaching a specific goal. Examples of objectives to achieve the sample goals stated above might include the following:

1. Establish a direct mail advertising campaign
2. Establish an in-house telemarketing program
3. Establish a Network of business associates and community outreach programs
4. Develop a public relation campaign that focuses on the quality of our new service

Tasks

Tasks are defined as clearly stated pieces of work assigned to assure completion of a specific objective. Each task has a measurable outcome that leads to or supports other tasks in accomplishing an objective. Some tasks have “subtasks” that are required to support or complete the main task. Examples of tasks to achieve the objectives described above might include such steps as the following:

1. Talk with three direct mail advertisers
2. Solicit employee applications for a telemarketing position

Follow a Specific Pattern

The drafting of a marketing plan should follow a specific, consistent pattern that guides the reader through a series of steps, such as:
I. Increase the company’s volume of sales by 15%
A. Establish a direct mail advertising campaign
1. Identify three direct mail advertisers

• Make an appointment with each
• Collect information on pricing, mailing areas and number of homes included in each mailer
• Ask for their mailing calendar
• Select one company
• Develop ad copy and offer

B. Establish an in-house telemarketing program
1. Develop a job description, work schedule, and script
2. Solicit employee applications for a telemarketing position

• Place employee ads in newspapers
• Contact employee agencies
• Post employee opportunity flyers at local colleges

3. Interview applicants
4. Select and employ an applicant
5. Train applicant

II. Improve community awareness of our company’s new service
A. Establish a Network of business associates and community outreach programs
1. Join the local Chamber of Commerce
2. Join a local nonprofit community service organization
B. Develop a public relation campaign that focuses on the quality of our new service
1. Identify public relation firms that successfully serve your community
2. Interview three such firms

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Try using this model to develop your own marketing plan, or select another model that best suites your needs. A number of companies have developed computer based marketing plan models that you can order. But I would start with a simple pencil and paper exercise to identify the key elements that you require to meet your business needs.
The point is to prioritize your goals, objectives, and task. Make sure your entire goal, objective, and task statements are specific and consistent. Once you have identified the plan model, stay within the framework of your plan, this will assure a consistent and easy to follow chain of thought as you implement your marketing strategy. Part III will focus on the preparation of a budget and work plan that relates to your marketing plan. Let us know if this has been of any help and, as always, your comments and suggestions are welcomed.

Developing Your Marketing Plan: Part I

“How Much Should I Spend on Marketing?”

How effectively you market your business depends on how much you spend and how successfully you promote your company. Of course, the amount you spend on advertising will vary by type of business and how long you have been in business. A good rule of thumb is to budget between 2% to 10% of sales income. Start-up businesses have, typically, less money to devote to marketing, but, generally, have to spend more than well-established companies, which have the leverage of prior customer satisfaction to sustain a company’s cash flow, thus keeping marketing costs at a lower level.

Begin with Two Major Factors

So, lets say, for the purposes of this presentation, that you fall within the 2% to 10% range. You are now faced with the very tricky task of determining how to spend your money wisely on a marketing approach that meets your income goals. The key to any expenditure of your resources is to remember that they have a direct bearing on your potential revenue. But, before you can think about how much you need to spend on advertising you must give serious consideration to a couple of major factors: (1) the development of the marketing brand or image your company wants to project, and (2) the type of promotion and advertising programs that best increases the sales of your products or services to existing customers and prospective customers.

Do Your Homework

As an initial step, if possible, look at what your competition, especially “market leaders”, are spending to promote their business. Identify the types of advertising media your competitors use, such as, direct mail, newspapers, magazines, radio, television, websites, social media, etc. Contact the respective advertising sources to learn how much they charge for their services based upon the type of ads your competitors have used. The objective should be to:

1. Allocate sufficient funds to position your business successfully to out perform the competition
2. Increase awareness of your company Increase revenue
3. In other words, if you want to succeed in business, you will have to aggressively invest in your business’ marketing efforts to achieve your revenue objectives.

Consider the Ultimate Low Cost Marketing Option

One way some business owners try to avoid a major cash outlay for marketing is to grow their business through word of mouth. This can be a very effective, cost efficient method to initially grow; however, most people discover that, sooner or later, their business stops expanding at a sufficient rate of growth to sustain their capital needs. At that point, they will need to develop a branding campaign to increase business. This, of course, will cause them to expend more of their income while at the same time they must now begin to develop a marketing plan. With that said, word of mouth advertising can still be a very important part of your growth strategy, and should be a part of your overall business approach to build your company.

Thus, to determine how much to spend on marketing, which assures your business survives in this challenging economy; you should begin by developing a marketing plan. In Part 2 we will explain the elements of a marketing plan, and how to develop a marketing plan that provides the most information for growing your business successfully. From the simple examples of how to prepare a marketing budget, you will be able to determine how much to spend on marketing your business.

Let me know your thoughts on how you have approached your advertising costs projections in the past as well as your experience in setting marketing goals and budgets. Your opinions and questions are always welcomed.

Americans look to small business owners for help in growing the economy

Many people in America are expecting owners, of small businesses, to provide the leadership and energy to guide our country out of this economic situation, thus lowering unemployment rates.. How likely we will be able to achieve these expectations rest upon more than the country’s money supply and availability of credit.

People have to have confidence in the future direction of the government and financial institutions, the availability of jobs, and the security that comes with a regular paycheck. However, there are a few things we, as business owners, can do to help. The following suggestions may strike you as being too general, but they represent the bedrock of a successful business owners approach to managing and growing a company. Further, every successful company has employed the six factors described below, to one degree or another, since the founding of our country.

To meet the challenges of our current economic crisis, business owners need to:

1. Adapt to the current situation: If you haven’t rethought your costs, refocused your marketing plan, adjusted your business plan to account for shifts in the economy, you are already behind the curve. Business owners should look for ways to meet the changing needs of your customers. Start by presenting a revised pricing strategy and a new advertising and marketing program of information that addresses your customers’ current expectations.
2. Anticipate future changes: As you have probably noticed, the economic landscape is shifting rapidly throughout the world. Even though, our market may be located, for the most part, in one or more counties of the Bay Area, the economic decisions reached in Europe, Asia, South America, and the Middle East are directly impacting us as well. We need to stay informed and look beyond our borders to anticipate, as best we can, how the economic decisions in other parts of the world, as well in the United States, may impact businesses tomorrow.
3. Strive to insure a strong work ethic in yourself and your employees: Productivity, either by new technology or manpower, requires a constant focus on the output of the resources we have at hand. This means making sure the products and services our businesses offer achieve the results required to best meet the needs of our customers at a profit margin that will sustain a company’s viability. This will mean extra effort by everyone concerned with the business surviving.
4. Enhance the general well being and education of all in your community: This should begin with you and your employees by learning as much as you can about changes occurring in your field and other areas of interest. By increasing your knowledge, you can gain an edge on your competition while improving your chances for surviving the current economic downturn. As for the rest of the community, focus on their improved awareness of educational services offered in secondary and college courses. Finally, always remain involved with the education of the youth in your community. They may very well be future employees or customers, thus their economic success will benefit your business in the future.
5. Provide incentives for excellence: Set high standards for yourself and your employees, make sure you meet, or, better yet, exceed them. And, never accept excuses or explanations that are lame or inappropriate. The challenge for you and your employees is to understand the importance of the problems facing your business as well as the fragile nature of your current situation to stay afloat during these trying times.
6. Encourage a sense of perseverance and frugality: Don’t quit! Hold on as long as you can, continue to find ways to shave costs, consider options to meet your customers’ needs, and look for ways to add new products or services. Of course, you have to be practical, so, focus on changes or modifications, which have a proven record of success or, to the best of your knowledge, have the highest possibility of succeeding.

Those are my thoughts. What’s your opinion on how we, as business owners, can help in solving our current economic situation? I look forward to learning your thoughts on this topic. Until next week stay positive, persevere, we will get beyond our current problems and be in a position to take advantage of the next growth cycle.

Creating an Effective Ad (Part 2)

This is a continuation of the Creating an Effective Ad post from Dec. 2; please read that one first, if you haven't already.

Advertising is effective if you follow a few basic rules. Part 1 focused on customer needs. Part 2 will suggest a few practical steps to assure you a successful ad campaign. These steps should be used no matter if your ad is; on a card, a letter, a coupon, or some other format.

Here are a few common sense advertising practices that will improve your advertising program:

Credibility

You want your customers’ loyalty; your customers want a fair deal. Your credibility is based upon how you relate with customers, this needs to come through in all your advertisements. Your attitude and sense of a fair deal must be evident in all your ads to build successful customer relationships.

Offer

To get a potential customer’s attention, you need to give them a reason to consider your product or service. The best, and easiest, way to get attention is to make a special offer. However, the offer must be clearly stated, simple to understand, and able to draw people into your business. Discounts or something free are typical examples.

Copy

Keep written copy in your ad brief, to the point, timely, and engaging. Make sure you carefully proof read every ad that goes out several times with your eyes wide open and your brain completely focused on the topic matter, offer, and any possible misunderstandings in the copy.

Target

Make sure you have selected the correct market population that is close to your place or places of business if you have fixed locations; if a service business, make sure you have targeted the correct homes or apartments in your service area.

Follow Through

If your ad has generated a potential customer, make sure you have given them the maximum attention required to make a sale, and always attempt to continue an on-going dialog, even if they did not use your service or product after their initial inquiry. They originally came to you for a reason; timing is every thing, the following months may allow for a better opportunity for you to assist them. Never quit following up on past customers or potential customers, I am amazed how many times a simple phone call a year or two after an initial contact has lead to a successful sale.

Cultivate People

Don’t try to close sales too quickly. By engaging a potential customer into a conversation, when practicable, will, in some cases, lead to larger sales or additional opportunities to provide other services or products.

Repetition

The key to any effective ad campaign is repetition. I cannot stress this enough. Write on your note pad, post it on your desk, paste it on your bathroom mirror, remember to say it at least every morning, noon and night . . . REPETITION, REPETITION, REPETITION. In other words, send the same message or offer or variations of an offer, and always keep your business name in front of your target population as frequently as financially possible.

O.K, that’s it for me. How effective your ads are depends on a number of things, but this brief list is a very good start. Now, you have my opinion. What are your thoughts on effective advertising? Many people are starting to comment on my weekly ramblings, I welcome your comments as well.

Considering Financial Risk & Judgment

Judgment is a mere lottery, sometimes you are right, and sometimes you are wrong. For most of us it is more likely that 2% of us are right 50% of the time; and, even if I am wrong, which is most likely, the odds are not very good even if 50% of the population are right most of the time. Benjamin Franklin, the author of Poor Richard’s Almanac, wrote, “At twenty years of age, the will reigns; at thirty, the wit; and, at forty, the judgment.” Luckily, research is identifying specific actions, to help those of us who are judgment challenged at any age, to make better decisions.

A new field has emerged over the past few decades that may hold the key to unlocking how we evaluate and determine the appropriate course of action in making a broad range of economic decisions. This new discipline is called behavioral economics, and studies the impact of our decisions on our lives.

Today, people, typically, consider our economy in one of two possible ways: some people are saying taxes are too high and regulations are stifling the economy; thus, businesses have no incentive to invest or create new jobs; while, others are saying: demand is too low, if wages were higher, consumers would buy more and businesses would then produce more and hire more employees. But, in a new book entitled Think, Fast and Slow by Daniel Kahneman, suggest a different factor is at play. He describes how our judgment and levels of risk taking affects our behavior. The book presents a number of interesting experiments, conducted by Dr. Kahneman and his colleagues, to understand how people make decisions. Kahneman’s findings indicate our minds operate in two distinct ways: one is fast and emotional, while the second is slower, study and more logical. The former is more uncertain in its decision making and obsessive. The latter is slow in making choices. Each day we use these two forms of thought, shifting from one to the other, without even thinking about it. Situations determine our choices, but, just as often, external factors can stimulate one method of thinking against the other.

One chapter, entitled “The Engine of Capitalism”, will probably be of interest to business owners because it focuses on “the blessing and curse” of optimism. Kahneman’s studies show that people, typically, exaggerate their ability to predict the future. This leads people to believe their goals are achievable when, in fact, they are not even closely obtainable; in the same way, personal confidence leads many of us to become entrepreneurs when statistically a little over a third of the small business startups survive the first five years in operation; while, almost two-thirds of those who start a small business believe they will succeed!

A positive attitude does have advantages: it breeds endurance in the face of obstacles, it tends to enhance the chances you will be an effective leader that enables you to motivate employees and close deals. Entrepreneurs energize people to provide money and resources to expand and development new businesses, and create enormous growth in our economy. Without a group of positive thinking, risk takers, our economy would have less growth, our society would have less innovation, and our citizens would certainly have a lower standard of living.

All this is good, in small doses, which is why a variety of small businesses are beneficial to our country, the failures are small enough to be absorb by the economy; whereas, misguided optimism by large business owners or government executives, who use our money to invest in high risk projects that fail, cause extraordinary losses and negatively impact our economy. The point is: we recover from many small failures that are spread over the country-side. Whereas, one very large, complicated project can have a huge financial impact on our economy when it fails.

So, go slow, realistically evaluate your options, tackle projects in manageable proportions, and don’t believe everything you read or hear about yourself; stay optimistic in relationship to your capabilities and the limitation of your resources.

Creating an Effective Ad

Part 1 of a 2 part article.

Every person in business wants to increase sales, enhance product or service awareness, and improve their image. The trick, however, is to make your product or service out shine the noise of countless other advertisers competing for ad space, airtime, or web site. The following might help you in promoting your business.

Take time to think about the benefits your product or service offers, Identify your customers’ needs, expectations, and how much they know about your product or service. Consider the effectiveness of past advertising efforts, for example, which ads brought you the most customers, what was it about previous ads that appealed to them, what modifications would you make to previous ads, and, the kicker, what wording, graphics, colors, and customer interpretations were most effective in promoting your business?

The point is: You cannot force a sale through advertising without first considering customer needs. Your existing customers come to you or use your services because you offer something they need. It is as simple as that!

Advertising does not make sales; Understanding customer needs does

Advertising is very good at giving your company name and brand recognition through associating your ability to meet customer needs. Your loyal customers may not be able to explain their positive feelings, but they know they like and use your products or services.

Meet your customer’s needs and you will, in most cases, make a sale; However, It is not enough to just meet a specific need of your customer.

To get a person to use your product or service, you need to demonstrate, some how, you can meet their needs. This can be with the right message, an appealing offer, or, in some cases, a simple color scheme. Whatever it is that moves your customers to select your business, you must be able to understand and appreciate the key customer needs you meet that cause your sales success.

Once your customers’ needs are understood, DON’T OVER DO IT.

Meeting customer needs is a very effective way to increase sales and grow your business because you have established credibility in your customers’ eyes. However, meeting customer needs is like predicting the weather . . . it is always changing.

So, stay flexible and know you customers’ needs. At the same time, make sure you communicate your understanding of those needs as often as you can in as many ways as you can afford. Advertising does work, just use it effectively.