Do Business Well

Many inexperienced entrepreneurs expect too much from marketing in too short a time, e.g. they place one small advertisement in the paper or they distribute one leaflet and they expect immediate and significant increases in sales. When the results do not materialize, they lose faith. Remember, perseverance conquers all. The right marketing campaign is consistent communication directed in the right media at the right price to the right people at the right level over a sustained period of time.

From our experience, we have often found that entrepreneurs have not developed a marketing culture in the company because they don’t know how and don’t want to admit it. So here are six simple steps to follow when building an effective marketing plan:

Step 1: Establish your marketing budget

You must establish the amount of money you are prepared to spend on marketing. This is an important amount because it will help you formulate your budget. There is no magic formula that establishes the right amount but as a guideline it should be between 3% and 5% of your forecasted sales depending on your projected gross profit e.g.

Remember marketing is not an expense but an investment because: -

• With good marketing you will achieve higher sales at higher price levels
• Your brand name will become a valuable asset in your balance sheet - e.g., How much value would you put on the Coca-Cola brand name?

If you think that you are saving money by cutting down on marketing, it’s the same as thinking that you will win time by stopping your watch. Sooner or later this mistake will catch up with you.

Both of us invest big chunks of our own capital in marketing our services. In fact, we spend even more when times are tough because we know the competition is backing down. As a result, we are both perceived as the leaders in our fields. Our point here is that success in business is a function of how others think of you. If you are constantly in front of their eyes, day in and day out, you and your business will stand out. Every Rand you invest in marketing is an investment in your most valuable business attribute - your brand ore corporate image. As a rule, if you’re in doubt, overinvest in marketing.

So go ahead, work out your marketing budget. This step means that you have to know what your sales and margins are going to be. Of course, we know you prepared your overall business plan from the previous session. If you haven’t, go back and do it.

Step 2: Understand the market in which you operate and select the segment you want to sell to:

As an example let us imagine we are selling motor cars to the market. It is impossible to produce one motor car that will appeal to everyone in the market e.g. an Opel Corsa might be just ideal for a university student but it would be useless for a taxi owner.

We can segment the car market according to the following demographics‑

• Age
• Sex
• Income bracket
• Education levels
• Language
• Urban/rural
• Occupation
• Aspirations
• Lifestyle
• Tastes

Now lets assume we would like to sell to the upper income bracket. We can still break that category down by age, e.g.

Mercedes Benz would appeal to the older, more conservative consumer while BMW would appeal to the younger, flashier consumer. Therefore the

Mercedes Benz target market might be the older more conservative customer in the upper income bracket.

As another example, Eric defines his target market for Seattle Coffee Company as upper income, urban consumers who love good coffee and appreciate the finer things in life. Mike defines his target market as ambitious, progressive urban consumers of all ages who really want to maximize their own potential and be the best they can be.

Now go ahead: segment your market and select your target market i.e. the most viable segment for your product.

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