Your Marketing Strategy - Turnaround Tour ShopPros€¦ · Your Marketing Strategy ... buy from you Key marketing indicators, ... customer, so you can select the marketing mix that

Your Marketing Strategy Setting the course for customer satisfaction SNAPSHOT

The E-Myth Mastery Program Module 2: E-Myth Marketing Fundamentals

Business Development Process: MK-0060

"Success is a product of unremitting attention to purpose."

Your "marketing strategy" is the part of your overall strategy that focuses on your target markets and how you will attract and retain customers. You should have a distinct marketing strategy for each target market.

Your marketing strategy has six components:

Target market definition, including CDM, CPM, and trading area descriptions . Positioning strategy, including your USP and positioning statement . Sensory package description

Marketing mix, outlining

- Benjamin Disraeli, Br

Your "marketing mix" is the combination of marketing activities and techniques you use to attract and

Key product w Attributes w Packaging w Enhancements

Promotion Strategy

Publicity Advertising Selling . Special events Merchandising and sales support Pricing Strategy

f Reaffirm the \

Definition of Your Target Markets, Your

Positioning Strategy, & Your Sensory Package

I Define Your

Marketing Mix

I Analyze Your Competitors

I f Measure & \I

4ish statesman and novelist

The key marketing indicators are:

.Market size - the population of your target markets

w Market growth - any change in the size of your target markets

w Market potential - the maximum dollar amount of business available from the market . Market coverage - how completely, or incompletely, your marketing activities reach your targeted customers Lead generation - the number of motivated potential buyers you

all your marketing . Basic pricing strategy Monitor Your Key attract and their activities in each target . Base price and options u Marketing Indicators percentage of the target market Reductions market

Competitive analysis, . Terms and conditions . Lead conversion - the identifying your key Fulfillment Strategy number and percentage competitors and your of leads who actually standing among them Attitude and demeanor

e e e e e * buy from you

Key marketing indicators, Delivery . Market share - your with which you monitor . service share of the business and evaluate the . Facilities that's available in your effectiveness of your target markets marketing strategy Average sale - the dollar

amount of your average sale

A Business Development Publication of

E-Myth Worldwide Putting the Pieces Together"

Santa Rosa, California, USA

This document is confidential and proprietary to E-Myth Worldwide and cannot be used, disclosed or duplicated without the prior written consent of E-Myth Worldwide. This is an unpublished work protected by federal copyright laws and no unaumorized copying, adaptation, distribution or display is permitted.

The E-Myth Mastery Program Module 2: E-Myth Marketing Fundamentals Business Development Process: MK-0060

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Your Marketing Strategy Setting the course for customer satisfaction "Success is a product of unremitting attention to purpose."

- Benjamin Disraeli, British statesman and novelist

What Is "Marketing Strategy" and Why Is It Important?

Remember your Strategic Objective? That's your vision of what your business will be once it's all "done." Your marketing strategy is simply the part of your overall strategy that focuses on your target markets and how you will attract and retain existing and prospective customers. You'll also need financial and management strategies for your business - we'll get to those in the next two modules.

"Strategy" is the general approach you take to achieve something. It's any thinking or planning you use before you take action. Your marketing strategy determines the activities you'll undertake to attract and retain customers. Yes, it's true that everything your business does is dedicated to attracting and retaining customers, but marketing strategy is focused externally on customers while other strategies are focused internally on the business itself (and only indirectly on customers).

Your marketing strategy has six components: Target market definition with the Central Demographic Model (process MK-00 1 O), Central Psychographic Model (MK- 0030), and trading area (MK-0020) defined for each market

;%- i0C.k segment.

Positioning strategy with a description of your plan for ,, , positioning your business and its products, and your unique

selling proposition (USP) and positioning statement (process booklet MK-0040).

rn Sensory package that defines the total sensory experience customers have with your business, including the presentation of your company name.

rn Marketing mix outlining all marketing activities your business will undertake to attract and retain customers.

Competitive analysis that identifies your key competitors, their positioning , strengths and weaknesses, and your standing among them.

Key marketing indicators that help you monitor the success of your marketing strategy, using the concept of a "marketing funnel."

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The E-Myth Mastery Program Module 2: E-Myth Makketing Fundamentals Business Development Process: MK-0060

Your Marketing Strategy

Page 2

In this business development process, you'll develop the "marketing mix" for your business that enables you to become more effective in attracting and retaining customers. Following that you'll do a quick competitive analysis to see where you stand among your competition. Then you'll set up the marketing funnel for your business, so you can measure and track your marketing effectiveness. Finally, you'll pull it all together into a written marketing strategy, using the worksheets provided.

Marketing Mix - the "Muscle" of Your Marketing Strategy

THE MARKETING

MIX

[ Product 'Jt7; Promotion v

3 Pricing d 4 Fulfillment

Marketing mix is a foundational marketing concept that has stood the test of time and for good reason. It's basic and makes sense - and it works. The marketing mix is any combination of marketing activities and techniques a company uses to attract and retain its customers. The essence of developing a marketing strategy is to find exactly the right marketing mix for your target market.

A company's marketing mix can have any number of elements, but they all fall into four categories - Product, Promotion, Pricing, and Fulfillment. For best results, all elements of your marketing mix must be firmly grounded in your positioning strategy and make effective use of your USP, positioning statement, and sensory package.

Always take the customer's point of view when making decisions about your marketing mix. The primary reason behind all the work you did on demographics, psychographics, and trading area was to provide you with an in-depth understanding of the customer, so you can select the marketing mix that works best for your customers and your business. Always keep in mind that the purpose of the marketing mix is to attract and retain customers. And accomplishing that requires your utmost attention to customer satisfaction, remembering. . .satisfaction is what the nlstoiner says it is, not what you think it should be.

Note: You may already be familiar with the marketing mix concept from textbooks or other sources. Conventional approaches take the marketing mix from the company's internal viewpoint and answer the question, "What do we have to do to attract and retain customers?" Their version of the marketing mix is Product, Promotion, Pricing, and Place, with "Place" having to do with distribution channels and matters of more concern to the company than the customer. That's wrong-way thinking. The E-Myth perspective asks the question a little differently: "What do customers need us to do in order to provide them with gratifying products and relationships?"

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Product - Redefining Your Product from the Customer's Viewpoint

Key product attributes. Recall that your product has six key attributes that are important to your customers: functionality, sensory impact, unconscious associations, conscious-mind conclusions, pricelvalue, and accesslconvenience. The challenge is to

unconscious make sure customers perceive your product Associations u conscious-~ind attributes in a way that motivates them to

I conciusions I purchase your product instead of competing I Pricmaiue I ones, as well as to ensure they experience the . -

Access/Convenience satisfaction and emotional gratification they want.

First you have to determine what specific product attributes appeal to your target markets, then make sure you enable your customers to perceive those attributes. In some cases that might require some redesign of the product itself, and it will certainly involve "fine-tuning" your promotional activities. Fortunately, you already have the raw information you need to determine the key attributes your products must have in the eyes of your customers. It's found in the worksheets you completed earlier in this module for your CPM, your positioning strategy, and your sensory package. The Product Redefinition worksheet at the end of this booklet will also help you redefine your product in terms of customer-perceived attributes.

Packaging your product or service can be almost as important as the product itself. "Packaging" is anything you do to add perceived value and greater emotional impact to your basic product. The simplest kind of packaging is any container that holds a physical product - the box or bottle and its colors, shapes, textures, etc. Packaging also applies to the way you assemble related products and services to create different buying perceptions. "Friends fly free" is the packaging of airline travel. Season tickets to a hometown sporting event is also a form of packaging. At the bank, the "bundling" of checking, savings, and credit card accounts is packaging too. And you can even package an idea by simply giving it a name. For instance, one-day response time to credit applications can be packaged by naming it your "Insta- Credit Program."

Enhancements. Adding both tangible and perceived value can also be done with modifications and enhancements to your basic product or service. No one knows this better than the automobile industry, with its "base model" and "base price" plus any number of "extras," "options," and "models." This approach is especially

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effective when it results in a product that is customized or tailored specifically to an individual's needs and preferences. What greater gratification could the customer have than a product made just for him or her?

So you start with a product whose attributes appeal to the customer. Then you communicate it, price it, and deliver it with the sole purpose of providing a completely satisfying experience to the customer. And that's what the marketing mix is all about. Now let's look at the rest of the marketing mix.

Promotion - Communicate, Communicate, Communicate! The essence of promotion is communication - communication of the right kind, at the right time, in the right place.

Promotion includes publicity, advertising, selling, and supporting activities such as special events and merchandising (merchandising involves extra services and items you give customers at no charge to induce them to purchase your products/services).

It's especially important to make sure all promotional activities are grounded firmly in your positioning strategy. In fact, many of these activities should directly use your USP and positioning statement.

There are five generic components of any company's promotional efforts:

w Publicity

w Advertising

Selling

w Special events

w Merchandising and sales support

Publicity is any nonpaid, news-oriented presentation of a product, service, or business in the mass media. The good news about publicity is that it's free, and it's the most believable form of promotional communication (except for word-of-mouth). Publicity is highly believable to customers because the medium (newspaper, television, radio, magazines) has no financial stake in promoting your products, but it does have a stake in promoting its own reputation for telling the truth.

The downside of publicity is that it's not under your control. News-oriented media just want "the story" and if they have integrity, they're only interested in printing an unbiased version of the story. You can tell them what you want them to say about your

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ELEMENTS OF ADVERTISING AND

MARKETING COMMUNICATIONS

Audience Selection

Media Selection

Message

Presentation

business and its products/services, but they have no obligation to tell your story. To the contrary, it's in their best interest not to be perceived as making your case.

Advertising and other marketing communications. Advertising hardly needs a definition - it's paid communication through mass media of ideas, products, or services by an identified sponsor. Advertising is under your control, so you can put forth any message you like with very few limitations, but it is not free and it has credibility problems. People generally believe that advertising can be misleading and should not be trusted for the complete truth.

Nevertheless, advertising is still where most people get their information about new or improved products and are reminded about familiar products. It's the single most important way to generate awareness, which is the first link in the Purchase Decision Chain.

There are four elements in the advertising and marketing communications part of your promotion activities:

Audience selection. Identification of the target market(s) that will be the audience for your advertising and other marketing communications.

Media selection. The "vehicle" that will carry your communications to your selected audience, including:

w Print media (newspapers, magazines, handouts)

w Direct mail

Radio

Television

w Telephone

w Outdoor (signage, billboards, posters, etc.)

Electronic (the Internet and other computer-based channels)

Message. The information, ideas, and emotional impact you want to convey to your selected audience. Your positioning strategy, USP, and positioning statement are your strategic messages. Later, when creating your advertising and other marketing communications, you will be concerned with the details of attention-getting messages, persuasive messages, and informational messages.

Presentation. Sometimes called "execution," this element comprises writing, layout, graphics, artistic design and images - in general those items that give the communication its feel and emotional impact.

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Page 6

You have already done the analytical work necessary for audience selection - your target markets are defined by their CDMs, their CPMs, and their geographic location (your trading area). You have also completed your strategic messages - your USP and positioning statement. And you have made some initial decisions related to presentation - your sensory package.

Selling is familiar to all of us - we know what it is. But it's worth taking a few moments to think about; specifically what the selling process can do for your customers, as well as how to use that information to help design your marketing strategy.

From the customer's point of view, the selling process can be a blessing or a curse. The negative side of selling is high pressure, misrepresentation, and an attitude of "anything to make the sale." The positive side is helpful, informative, reassuring, and "anything to help the customer make the right decision."

If you think in terms of what your customers need from your selling process, then translate that into what you have to do to help them through the process - in other words, base your selling process on their needs - you have the basis for a sound sales strategy. Let's look at what a needs-based selling process does for the customer. There are seven kinds of needs, and they translate into seven "selling functions":

Information. The facts. Providing information about the NEEDS-BASED SELLING product or service, how to get it, what it does - anything the

FUNCTIONS customer wants to know.

INFORMATION Understanding. For many products and services - and for many types of customers - facts alone are not enough. They

UNDERSTANDING want interpretation of the facts. They want to know what

NEEDS CLARIFICATION conclusions to draw. They want to understand what it means for them. This is especially critical for complex products

ADVICE such as insurance, investments, loans, real estate purchases,

ASSISTANCE computers, automobiles, and so on.

Needs clarification. Surprisingly, many customers don't understand their own needs and desires, and are grateful for any help clarifying their needs. Think, for instance, of a young couple purchasing their first life insurance policy: They're not sure they need insurance at all, and the details of how much, what kind of life insurance, and numerous other questions are a mystery to them.

Advice. Customers want guidance on whether or not to buy, from what company, how to make payment, which options to

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choose, and so on. They want the advice to come from a source that is either objective and impartial or biased in their (the customer's) favor. They look to friends, family, coworkers, professional advisors - and yes, even salespeople - for their advice.

Assistance. Sometimes customers need help in addition to information and advice: finding the right size and right style suit in a clothing store, filling out the forms for a small business medical insurance plan, getting a demonstration on how to use a new compact disc player, finding the ripest melon in the produce section of a grocery store.

Reassurance. All customers want to feel they are making the right purchase decision, but not all customers have the self- confidence necessary to provide their own reassurance. Providing them with the reassurance they're looking for - based on their stated (and unstated) needs - ensures a "win- win" situation.

Transaction processing. This is the sales transaction itself - money in exchange for goods or services. It can be as simple as paying for a candy bar at a checkout counter, or as complex as preparing and executing all the paperwork involved in the purchase of a new home.

Not all customers have all seven needs for all products and services. Their needs depend on two factors: 1) the purchase impact a particular purchase will have on them (its price and importance) and 2) personal confidence in their ability to make a good purchase decision.

The higher the purchase impact as perceived by a customer, the more selling functions are needed to get through the sales process. High-impact purchases are those that have a significant emotional impact on the customer and/or those that are perceived as expensive. Thus, a new home, a diamond ring, shares in a mutual fund, and elective surgery are high-impact purchases for most people. Groceries, dry cleaning, office supplies, and a new teapot are examples of low-impact purchases.

The higher the personal confidence of a customer, the less selling functions are needed to get through the sales process. For example, while a young, first-time investor in mutual funds may need all seven of the selling functions, an older, experienced investor might need only information and transaction processing. The following chart provides some guidelines.

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Selling Functions Needed at Differing Levels of Purchase Impact and Personal Confidence

IMPACT

" ASSISTANCE :a ASSISTANCE I I ASSISTANCE 11 REASSURANCE I REASSURANCE

NEEDS CLARIFICATION '@ NEEDS CLARIFICATION I I NEEDS CLARIFICATION

ASSISTANCE ASSISTANCE I I ASSISTANCE

INFORMATION

NEEDS CLARIFICATION W NEEDS CLARIFICATION

ESSENTIAL @. DESIRABLE ' ' NOT NEEDED

There are two more pieces needed to round out your selling strategy - people and channels. What kind of people will be doing your selling (or no people at all), and what channels will they use to communicate with your customers. Here's a simple, three-step process to answer those questions:

I . Determine from your demographic and psychographic information whether your target market views your product as a high, medium, or low impact purchase, as well as the degree of personal confidence target market customers are likely to feel about their purchase decision (i.e., high, medium, or low confidence).

2. Using the above chart as a guideline, choose the selling functions that are needed by your target market customers to help you isolate which selling functions to include in your selling process.

3. Decide on the configuration your selling process will take in terms of the following types of salespeople and sales channels:

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Page 9

Automated: no human involvement at all; for example, vending machnes, computerized order-taking systems

Order-taking: cashiers, servers, telephone operators, service personnel

Conventional: such as those typically found selling men's and women's clothing, automobiles, encyclopedias, medical supplies

Consultative: such as financial planners, insurance agents, full- service stockbrokers, interior decorators

In-house or external: inside staff or outside agents and representatives

Telephone: inbound and outbound telemarketing

Mail: direct mail, catalog sales

Direct response print media: magazines, handouts, newspapers Face-to-face: meetings at your business location or at the customer's location

Store or other on-site outlet: customer visits your store, office, or outlet

If you're like most small business owners, you already have a clear idea of what the selling process should be in your line of business. You may not feel the need to rethink it from the most basic level as we are asking you to do. However, rethinking your selling strategy - and, in fact, your entire marketing strategy - does two things for you: 1) it fine-tunes your understanding of your existing process and helps make it much more effective and 2) more importantly, it opens the door to innovation and more effective selling methods.

For the purpose of developing your selling strategy, this is as far as you need to go. You have determined the selling functions your sales process should include, as well as its configuration in terms of the type(s) of salespeople and sales channels. Later in Module 6: Foundations of E-Myth Lead Conversion, you will create and implement the actual lead conversion (sales) process to put this strategy into action.

Special events include such activities as trade shows, sales, seminars and conferences, celebrity appearances, sponsorship of high-visibility community activities - the possibilities are unlimited! When developing your marketing strategy, it is necessary only to identify the types of events, if any, you want to include in your marketing activities.

Merchandising and sales support. This is the "catch-all" component of your promotional strategy. It includes the various things you can do to support your other marketing efforts: free samples, coupons,

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Page 10

premiums (giveaway items), point-of-purchase displays, contests, games, people wearing sandwich-boards on the street or giving out handbills, etc. Once again, the options for merchandising and sales support are unlimited, and your task is to identify the types of supporting elements you want to include in your marketing strategy.

Pricing - Striking the Right Balance

Some believe pricing is a marketing function; others believe it's financial. Actually, it's both, but for now let's focus on the marketing aspects of pricing. In Module 3: E-Myth Money Fundamentals, you'll look at the financial side of pricing.

Customers need to feel they can afford the products and services they buy, and that their purchase was worth the money. They also want to feel the price was comparable to or better than the price of similar products and services. How payment can be made and the availability of credit are often important elements of pricing too.

However, price isn't simply a matter of affordability, value, and terms. Some customers, regardless of the price they pay, get satisfaction from feeling they got the "best deal" possible. Others feel that price is an indication of value, prestige, or status. Inappropriate pricing can be the ruin of a marketing strategy. That's why you never hear of discount heart surgeons, a sale on Ferraris, or two-for-the-price-of-one deals on mink coats.

Basic pricing strategy. There are three basic approaches to developing your pricing strategy:

klue-drillen pricing reflects the willingness of a target market to purchase what it perceives as value. When your business and its products/services are unique or highly differentiated, and there is very little competition - or when your products/services are in high demand but short supply - you generally have the ability to charge premium prices and earn correspondingly high profits.

Cost-drillen (or margin-driven) pricing reflects the financial dynamics of your business. The idea is to cover all your costs of doing business, plus realize a profit margin that is acceptable to you. In essence, you decide on the profits you want your business to generate and structure your pricing accordingly, given the cost dynamics of your business and its products.

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Page 1 1

Mm-kt.1-driven pricing reflects the competitive situation. When you're not very well differentiated from your competitors - or when the market is flooded with products like yours - customers make their buying decisions in favor of the lowest price. Generally this results in lower profit margins, and in extreme situations, it drives weaker companies out of business. One of the greatest benefits of effectively positioning and differentiating your business and its products/services is that you avoid the pressures of market-hven pricing, along with its correspondingly thin or nonexistent profit margins.

Whenever possible, you should choose either the value-driven or the cost-driven pricing strategy. If your situation forces you into a market-driven pricing strategy, make it a high priority to achieve the differentiation that will enable you to switch to a more profitable pricing strategy. Also, your pricing strategy should be based in part on the psychographics of your target markets.

Base price and options. Once you've selected your pricing strategy, you can set the base price for your products and services. That's the basic price for a single product or service with no options or enhancements. With the base price f d y set, you can then consider all the ways you can adapt the pricing to meet the varying needs of your customers. Product or service enhancements like options and add-ons justify price increases. High-volume purchasers deserve discounts that correlate with the size and frequency of their purchases.

Reductions. Various types of price reductions (e.g., sales, discounts, rebates, and coupons) can be used to attract business during slow periods, clear out old inventory, or reward loyal customers and encourage repeat business. Price reductions are invaluable selling tools, but they can be a "double-edged sword," so take time to understand the profitability implications of any reductions you're considering or you may be "giving away the store."

Terms and conditions of the purchase transaction also affect customer perceptions of price. Therefore, your policies on things like availability of credit, payment cycles, grace periods, deferred payments, and layaways can "feel" like price cuts to many customers - especially when positioned in the right way. For instance, convenient, customer-friendly purchasing terms make it easier for a customer to buy, even when the actual amount paid is greater than the base price.

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Fulfillment - Keeping the Promise Making the sale isn't the end of it. In fact, it's just the beginning. A sale is a promise, and fulfillment is your ability to deliver on that promise in a way that provides satisfaction to the customer.

Customers want to be treated well, respected, appreciated, accommodated, even pampered in some cases. They expect their relationships and purchase interactions with your company to be at least professional, and preferably friendly and courteous. They enjoy being served by people "who know their stuff," as well as selling processes that are efficient and devices that are "customer friendly." Customers like to deal with a responsive company whose products are readily available (i.e., good distribution and delivery), and whose representatives are also readily available (i.e., in-person or through appropriate communications media).

And most importantly, customers want to feel that your company is working for their benefit.

The four key fulfillment components of your marketing strategy are:

w Attitude and demeanor

Delivery

w Customer service

Facilities Attitude and demeanor. The manner in which things are done in your business, as well as the way you treat your customers (e.g., efficient, friendly, responsive, knowledgeable, anyth~ng-for-the- customer).

Delivery. Getting your product or service into the hands of the customer is "delivery." Consider all aspects of delivery fiom simple, physical conveyance of product to customer (in-store pickup, home delivery, mail, or even electronic delivery) to more sophisticated aspects such as how your product or service is presented and how that impacts your customer's overall experience of your company.

Customer service. The main considerations for your customer service are:

w Customer communications and information (e.g., telephone information and inquiry lines, statements and statement "stuffers," mail, newslettem)

Product maintenance (e.g., repairs, replacements, upgrades, and customization)

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Problem and complaint resolution

General facilitation and support (e.g., after-the-sale assistance, credit options, technical support)

Flawless follow-up - always do exactly what you've promised you're going to do

Facilities. Another important part of the customer's experience is your place of business. Its location either provides easy access, convenience, and visibility - or their opposites. Your facilities' environment and functionality, inside and out (e.g., layout, signage, temperature, decor), add or detract from your customer's sensory experience. Refer to Your Company's Image and Sensory Package (process MK-0050) for more information about the impact your facilities have on the customer.

What's the "Best" Marketing Mix for Your Business?

That's for you to say. And whatever it is for the moment, it will likely be different in the future. Your marketing mix is a growing, changing, dynamic thing. It has to be because it serves a growing, changing, dynamic world. For many business owners, marketing strategy and the challenge of keeping their marketing mix ahead of their ever-changing markets is the most enjoyable part of the game of business. And when it's done right, it's the most rewarding.

You're about to create your own marketing mix, which will be the centerpiece of your marketing strategy. But first there are two key pieces missing from the puzzle: 1) an understanding of your competition and 2) how to quantify the results of your marketing efforts. Once you look at these two components, you'll pull everything together into a cohesive marketing strategy using the Marketing Strategy worksheet in the Worksheets section of this booklet. To help you develop your marketing strategy, you'll find a chart (Elements of the Marketing Mix) on the next page, which summarizes the various components and elements of the marketing mix mentioned earlier in this booklet.




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Elements of the Marketing Mix

PRODUCT STRATEGY . Message

Kcy product aitrihutes m USP and positioning

Functionality statement Sensory impact Attention-getting mes- Unconscious associations sages Conscious-mind Persuasive messages conclusions . Informational messages Price and value Presentation Access and convenience Selling - conversion of

Packaging Enhanccnlents prospective customers ("leads") into actual customers ("sales")

Customization & tailoring Selling functions Options

Information Guarantees and warranties Understanding

PROMOTION STRATEGY . Needs clarification Advice I 'uhlicity - nonpaid

communication to large Assistance

audiences, usually through . Reassurance news and information media Transaction processing

Press releases Salespeople Publications m Automated (no people) Word-of-mouth Order-taking

A d v e r t i s i n g - paid .Conventional communications to large . Consultative audiences for the purpose of . In-house staff or exter- generating awareness. nal agents and represen- triggering purchase motivation, and attracting prospective tatives

customers Sales channels

Audience selection w Telephone w Media selection Mail

m Print media Direct response print

Direct mail media

m Radio and television Face-to-face

m Telephone Store or other on-site outlet

Outdoor

Special events

Sales Community events Seminars Trade shows

Merchandising and sales support

Premiums and "giveaways" Free samples

m Special offers Contests

Hasic pricing strategy

Value-driven Cost-driven Market-driven

Base price and options

Base price Options and add-ons

B Volume pricing Reductions

Sales and discounts Rebates and coupons

Terms and conditions

w Availability of credit Payment cycles and grace periods

a Deferred payments and layaways

Attitude and demeanor - the manner in which things are done and how you treat your customers

Delivery

m Physical delivery In-store pickup

w Home delivery Mail Electronic

Presentation Customer service

Customer communications Telephone information lines Statements and "stuffers" Mail

Newsletters

Product maintenance, including repairs, replacements, upgrades, customization

General facilitation and support

Flawless follow-up

Facilities

Location, including access, convenience, visibility . Environment, including appearance and decor; sensory elements

Functionality, including layout, displays, signage, directions




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How Do You Stack Up against Your Competition?

Competition can be the spice of your life or the bane of your existence. Your competitors will drive you crazy if you let them, but they can get your competitive juices flowing and inspire you to greater achievements than you would otherwise reach.

Who do your target customers buy from when they don't buy from you? And what do they buy? That's your competition. Your competition isn't always in the same business you are. Keep alternatives and substitutes in mind. Once upon a time railroad companies dominated the transportation market. Competition was other railroads, or so they thought. It turned out that the real competition was the automobile and, later, airplanes. Now railroads are an afterthought in the transportation industry. Movie theaters compete with bowling alleys and books. Health food stores compete with fitness centers. Plumbers compete with hardware stores.

The idea is to understand who your competitors are, how effective they are, and your competitive standing in your target markets. Then you can determine how to compete better.

The first step is to identify your main competitors - the five or ten who do the best job of attracting the customers you want to attract. Then you are going to evaluate their positioning as well as their major strengths and weaknesses. Finally, you'll determine your own competitive effectiveness and decide where you rank among them. This competitive analysis, plus the insights you have already gained from studying your target markets, will enable you to select the marketing mix you'll need to excel in your markets.

The Competitive Analysis worksheet in the Worksheets section will guide you. Make out a separate worksheet for each competitor. You'll start by evaluating your own business. Then, in any order, evaluate each of your competitors. After you have thought about all your main competitors in depth, evaluate your own business again. When you evaluate your own business, be brutally honest about your weaknesses, and be sure your strengths are perceived as strengths by the marketplace. You'll be surprised how much more insightful your second evaluation of your business will be than the first.

Key Marketing Indicators - Tracking Your Marketing Strategy

At the simplest level, all you have to do to understand if your marketing strategy is working or not is to look at your sales. If sales are up, it's working; if not, it's not.

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But that's not enough. Sales dollars alone give you no feeling for your marketing dynamics, and no way to focus on the key elements of your marketing operation. Let's look at a better way to measure and track your marketing strategy - it's called the

The Marketing Funnel The idea is simple. You start by looking at the size of the market as a whole. Then you look at what part of the market you "cover" with your marketing activities. Then you see how much of your market coverage can be converted into interested potential buyers. And finally, you measure how many of those potential buyers actually convert into customers. It's like a funnel that narrows at each step of the process. And you can quantify each level of the funnel with indicators of marketing effectiveness - your key marketing indicators - and track how well your strategy is working.

The key marketing indicators are:

Market size - the population of your target markets

Market growth - any change in the size of your target markets

Market potential - the maximum dollar amount of business available from the market

Market coverage - how completely, or incompletely, your marketing activities reach your targeted customers

Lead generation - the number of motivated potential buyers you attract and their percentage of the target market

Lead conversion - the number and percentage of leads who actually buy from you

Market share - your share of the business that's available in your target markets

Average sale - the dollar amount of your average sale

You should measure and evaluate your marketing strategy monthly. There's too much daily variation to get a clear idea of the underlying dynamics of your market and business practices if you look only at daily or weekly numbers, and you lose track of the fast-changing market and competitive situation if you only look at quarterly or yearly numbers. So monthly is best.

Monitoring these key indicators will tell you what is and isn't working in your marketing strategy. You'll know if your market is




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growing or shrinking, and how much business is out there for you and your competitors. You'll know if your advertising and other marketing communications are bringing in sufficient numbers of qualified leads (probable buyers), if your market coverage needs to be "beefed up" or not, and if your salespeople are converting leads into customers effectively. You'll understand the trends of your business, and you'll be able to spot areas that need attention. Coupling your key indicators with your competitive analysis will give you a solid feel for ways to increase your share of the target market pie.

"Base Data" for Your Key Marketing Indicators - Only Six Numbers!

Surprisingly, you only need six bits of information, or "base data," in order to calculate your key marketing indicators. There's a Key Marketing Indicators worksheet in the Worksheets section to help you. You'll have to create processes for collecting the information you need within your business, and you'll have to do some estimating or market research for some of the hard-to-get information, but it's all fairly simple and you'll get tremendous mileage from collecting just six numbers a month. Here are the six pieces of base data you need:

Market size - the population of your target markets

Average frequency of purchase - number of times per month the average person in the target market purchases your type of product, regardless of from whom they purchase

Marketing exposures - total number of times in a month people in the target market are "touched" by your marketing activities

Leads generated - number of people contacting your business in the month with a motivation to purchase and an interest in your product

Leads converted to sales - number of purchase transactions in the month

Sales dollars - total dollar value of all sales transactions in the month

Here's how you can go about collecting the base data for your key marketing indicators:

Market size. It's the number of people in your target market who meet your Central Demographic Model requirements. You get this information from the same sources you used to gather your CDM information (refer back to your work in Your Most Probable Customer, process MK-0010). Usually, this kind of information is

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updated annually rather than monthly. Since you still want to track your key marketing indicators each month, simply use the latest CDM information you have.

Average frequency of purchase for your type of product. Unless you have pretty good market research information, you'll have to estimate this one based on your knowledge of your markets and common sense. For instance, if you were in the grocery business, you'd know about how frequently people shop for groceries - probably about once a week. Thus the average frequency for a month would be about four times. Or if you were in the life insurance business, you'd know that people tend to purchase a life insurance policy on the order of once every seven or eight years, so their frequency of purchase on a monthly basis would be about once every 90 months, which calculates to about .011 purchases per month (one purchase divided by 90 months = .011). Of course nobody can make .011 purchases at one time, but this calculation lets you estimate the average number of purchases per month in your target market. So, if the insurance agent has a target market of 45,000 CDM people, and their average frequency of purchase is .011 purchases per person per month, then she knows that her target market makes about 495 purchases of life insurance per month. That's a very useful number as you'll see below when you estimate your market potential.

Marketing exposures. An exposure happens when your marketing reaches someone in your target market. That person is "exposed to your message. For instance, if you send a mailer to 2,500 people, you've created 2,500 exposures (ignoring nondeliverable and returned items). If you do this twice, now you've created 5,000 exposures. If you also run an advertisement in a local business magazine that reaches 20,000 of your target market customers, then you've created a total of 25,000 exposures. And if you continue to circulate 1,000 newspaper inserts per week for 4 weeks, that's another 4,000 exposures for a grand total of 29,000.

Leads generated. A "lead" is any person who has expressed interest in your business or its products/services by walking into your store, submitting e-mail, responding to your mail, making a telephone inquiry indicating interest (not just asking for general information). That person is more than just someone in your target market because they have exhibited two precious characteristics - the motivation to buy and an interest in your product. Leads are people who have already begun to work their way through the Purchase Decision Chain.

This document is confidential and proprietary to E-Myth Worldwide and cannot be used, disclosed or duplicated without the prior written consent of €-Myth Worldwide. This is an unpublished work protected by federal copyright laws and no unauthorized copying, adaptation, distribution or display is permitted.

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