Do you know exactly what the total market for your product or service is? Can you describe precisely how your product or service benefits your customers? And do you know without a doubt which features of your product or service will appeal to different groups of customers?

If you can’t answer these questions there is a good chance that you are relying mainly on your intuition when it comes to marketing your product. Of course, intuition has its place in the decision making process, but it won’t provide you with all the facts you need to achieve real marketing results, or the currency you need to improve your bottom line. It’s time to draw up a marketing plan and turn hunches into hard facts.

A marketing plan will help you define your business goals and develop activities to achieve them. It allows you to plan ahead and consider all the factors which may contribute to or hinder the success of your marketing activities.

Writing an effective marketing plan doesn't have to be a headache. Here are some tips on what you should include in your plan.

What’s happening in the market?

Begin by writing up an overview of the market which answers the following questions:

·       What is the size of your potential market in terms of sales?

·       Is the market growing or declining? How has it changed over the past 12 months?

·       How do you segment the market, i.e., by pricing, quality, demographics?

·       Who will you sell to, i.e., what is your target market?

·       Are there any competitors? If yes, who are they?

What are the competitors up to?

Here you describe both the companies and the different products you may be competing with. For instance, if you're selling fresh soup, are you also competing with instant soup or canned soup?

The more information you have on your competitors, the better. If you find it difficult to find this sort of information, ask your suppliers or visit your competitors' websites and exhibit booths at trade shows for example.

Why people should want to buy my product

Describe your product and its purpose, including its features, benefits, pricing, distribution channels, market positioning, promotions and advertising, and packaging.

Make sure the information is specific and accurate and that you make a clear distinction between your product’s features and benefits. A feature describes an aspect of your product, while a benefit describes the reason why someone should purchase your product. For example, if you sell food processors, a feature of the product may be an additional piece that allows people to make fresh juice. A benefit of the product would thus be that it provides the customer with two products for the price of one - a food processor AND a juicer.

SWOT

Here you write up all the strengths, weaknesses, opportunities and threats that you can come up with and categorize them in order of importance. The strengths and weaknesses relate to your business and its operations, while the opportunities and threats take into consideration your competitors, the market and the economy.

Sales goals and marketing objectives

Put down the hard facts that describe where you want to be a year, two years or five years from now - whatever your time frame may be. Start with your sales goals, which you can set by using your current market data, and your opportunities and threats data. You can estimate if your potential sales will be higher or lower than your current sales, and work from there to set your final sales goals.

Your marketing objectives help you achieve your sales objectives. You should have a marketing objective that addresses each group in your target market. For example, your marketing objective for existing customers could be to increase their buying rate by 20 percent, while your marketing objective for new customers could be to sell your product to 50 percent of the new market and get them to buy again from you at least twice per year.

Develop a 4Ps strategy

Now that you have a clear idea where you want to go, you have to determine how you are going to get there. These are the strategies you'll use in your marketing mix. Your marketing mix is the combination of elements that make up the entire marketing process. Traditionally, the marketing mix refers to the four Ps: product, price, place, and promotion. By developing a specific strategy for each P you create a clear marketing map for your business and make it easier for yourself to stay on track.

Set appropriate targets

Carefully consider your marketing strategy and the targets you have set for your campaign. Will these activities realistically allow you to meet your objectives for your long and short term goals? Are the costs of the activities below the projected benefits you hope to gain from them?

You may have admitted it to yourself at some stage … “In hindsight, our marketing campaign cost a bomb and didn’t work at all”. You ask yourself, “If I had done a little more initial analysis, could the outcome have been different?”

The answer is ‘yes’ - you need to get down to the nitty gritty. By evaluating the potential strengths and weaknesses of your campaign – and looking at them in terms of the cost versus benefit to the company - you could have recognized the weaknesses in the campaign before the damage was done. Here are some ideas on how to get down to the basics and develop a successful marketing campaign.

Set appropriate targets

Carefully consider your marketing strategy and the targets you have set for your campaign. Will these activities realistically allow you to meet your objectives for your long and short term goals? Are the costs of the activities below the projected benefits you hope to gain from them?

Think twice before running the same campaign

It worked last year, so let’s do it again! Possibly … but never assume repeat success without a full review of the current situation. Changes in competitor activity, the economy, interest rates, industry regulations, technology and even product surplus or redundancy can occur in a very short period of time and have a major impact on the success of a repeat campaign.

Reduce ‘low yield’ activities

Good service is one thing, but are low yield customers consuming a large amount of your time? You and your team could be spending that time sourcing new business, or servicing higher yield customers. Of course, it can be difficult to measure this time/cost imbalance. One idea is for your team members to complete timesheets for a few weeks, so you can see exactly where the time is going. And remember, it’s usually quality, not quantity, that matters. Who wants 1,000 semi-interested leads from a campaign needing multiple follow-ups, when you could have 300 red hot ones?

Increase ‘high yield’ strategies

Try to pinpoint the buying habits and other characteristics of your most profitable customers. How can you focus your marketing message on similar individuals? It’s all about knowing your customer.

Ask the experts

Sometimes, the best marketing ideas can come from the people who know your product best – your customers. What do they like about your product or service? Why did they choose your business initially? Why do they keep coming back?

This information can prove invaluable in selecting areas to promote, areas to change and even the marketing voice you choose to use. After all, appealing to your customers with a message they understand is what marketing is all about. Just make sure the time and cost spent attracting them is worthy of the profits they bring and you’ve got your campaign nailed.

Say you own a small manufacturing firm. You produce two technically sound products, Product A and Product B, which you deliver on time. Your customers are happy, your productivity lies above industry average and your company has grown substantially in the first few years after you founded it. Great scenario, isn’t it?

However, there is one problem - your profitability has been at a very low level for quite some time now. You have sought reasonable explanations. Maybe you don’t sell enough products to be profitable and the world economy is in a slump, which is affecting your business. You should just try and sell more products, right?

Not necessarily! The reality is that an increase in your sales does not always mean that your profit will go up as well. In fact, one of the products you manufacture may be a money maker, while the other may be a money loser. As your profit is suffering, you may be producing too many money losers. You thus have to find out where exactly you are making and losing money, i.e., you have to determine the true cost of each product.

So how you do gain a good understanding of the contribution that each product makes to your overall profitability? Through a costing model named Activity Based Costing (ABC).

What is Activity Based Costing?

Activity Based Costing is used to identify, describe, assign costs to, and report on your business operations. ABC helps you identify opportunities to improve the effectiveness and efficiency of your business processes by determining the true cost of your products or service.

The basic premise of ABC is that cost objects (products, services) consume activities. These activities in turn consume resources and these resources drive costs. ABC thus focuses on work rather than workers.

ABC determines which activities add value to your business, i.e., which activities will best accomplish a mission, deliver a service, or meet customer demand. ABC allows you to measure the costs of each activity and compare those costs against the importance of that activity in your business. It identifies where the real cost drivers in your business are and it shows where you are using resources most effectively, and more importantly, least effectively.

How does ABC work?

Going back to the example of the small manufacturer, if you decided to apply ABC to your business you would first examine all the steps involved in producing product A and product B (these steps could include using and maintaining machines, receiving supplies etc), after which you determine the costs involved with these steps. These costs include tangible and intangible costs. Tangible costs are costs such as equipment, computer hardware, which are quite easy to measure. Intangible costs, however, can be hard to measure and include productivity loss, employee absenteeism, and corporate overhead and management time for example.

The next step is to gather information on the activities that are connected to the steps involved in producing product A and product B, but which you wouldn’t readily associate with those steps. For example, when you receive supplies somebody has placed an order for these supplies. When they order supplies, how long does it take them? And do your sales reps spend a lot of time on the phone talking to your customers about product A? You are likely to take these activities for granted, while in fact they can cost you a considerable amount of money.

Once you have sufficient information on these cost drivers, you need to analyze them to see where you are spending the most money and whether this money is being spent with reason. You can now rate the costs of activities in your business against their importance and determine if there are steps that you can modernize or get rid of completely. For example, would it be more cost efficient to order supplies online rather than by filling out a form which has to be faxed to your supplier?

Would ABC work for your business?

Before you embark on a mission to change to ABC, you must realize that implementing ABC will require a considerable investment in time and money. You will have to change the organization of your business, prepare your team members and get them to accept the change, and invest in computer hardware and software.

However, ABC could be particularly useful to you if:

·       You have high overheads,

·       You produce diverse products or services,

·       The cost of errors is high, and/or

Competition is tough.

Basic requirements

One of the first things a potential lender will look at is the credit history of the business’ principals. Before you approach a lending institution, get a copy of your credit history from a credit bureau. These records often contain inaccuracies, and it’s important to clear these up before applying for a loan.

The next thing a financial institution will look at is how much you’ve invested in your business before applying for the loan, or your equity. If you haven’t invested much - or anything - banks can take this to mean you are not committed to your business and may decline your application. If, however, other credit factors measure up, this may not be a deal breaker.

On a personal level, lenders will also look at your own character. They want to know how much management experience you have, your business history and your motivation to succeed.

When you’re in business, the expression ‘never a borrower or a lender be’ just doesn’t stack up. Most businesses will at some stage need to borrow money to grow, to purchase plant or equipment, or for any number of other reasons.

When it comes time to borrow money for your business, being prepared is the key to success. Here are a few tips on getting yourself organized.

Basic requirements

One of the first things a potential lender will look at is the credit history of the business’ principals. Before you approach a lending institution, get a copy of your credit history from a credit bureau. These records often contain inaccuracies, and it’s important to clear these up before applying for a loan.

The next thing a financial institution will look at is how much you’ve invested in your business before applying for the loan, or your equity. If you haven’t invested much - or anything - banks can take this to mean you are not committed to your business and may decline your application. If, however, other credit factors measure up, this may not be a deal breaker.

On a personal level, lenders will also look at your own character. They want to know how much management experience you have, your business history and your motivation to succeed.

Paperwork

Getting ready to apply for a loan means making sure your paperwork is well and truly up to date. Unless you have a proven track record in another business, or a guarantor who’s prepared to fully back you, you need to have at least two years’ worth of financial statements before a financial institution will even look at you. Make sure you have balance sheets and income statements for at least two years’ operations, as well as personal financial statements for you and your business partners. A well articulated business plan is another document most lenders will want to see.

You also need cash flow projections to show the bank that you are capable of repaying the loan, including an explanation of the underlying assumptions on which the projections are based. An assessment of working capital (the excess of current assets over liabilities) is another document a lending institution is likely to want.

Most finance houses won’t lend without collateral or some security over which they have access in case of a loan default. This can be either business or personal assets, but make sure you get an independent assessment of the collateral you plan to use to secure your loan before you start talking to the bank.

Be professional

If a salesperson just showed up at your door with uncombed hair and their presentation material handwritten on some paper, would you take them seriously? Make an appointment with the lender - don't just show up. Compile the proposal, including all of the paperwork mentioned above, neatly in a binder and make sure you dress in business attire.

Lending options

Applying for a business loan takes attention to detail and hard work. Don’t be discouraged if you are refused by the first institution you approach - there are a variety of options when it comes to securing business finance. The more conservative institutions will require a high level of detail about your financial history, something many businesses - particularly start-ups - just can’t produce.

Less traditional financial firms are sometimes more lenient when it comes to lending money to less established businesses - but will also generally charge higher interest rates to cover the higher level of risk they are prepared to stomach.

If you’re in the market for a business loan, consider contacting a broker, who will be able to talk you through the lending options available to you and give you advice about the right option for you.

“The answer is no until you ask the question.”[

–Alexander Hamilton