No Marketing Strategy? You're Throwing Money Away.... Got Some to Waste?
Business owners should step back from a reactionary marketing approach and strategically examine their business to ensure the best use of resources.
I've been spending a lot of time meeting with executives from small- to mid-market businesses to discuss their current marketing approaches and needs. Many times they already have a defined idea of what types of services they need (i.e. ad development, PR coverage, website redesign, social media platforms, etc), although when I inquire about why they need, for example, a Twitter account, they have no reason other than "everyone is doing it."
That may be the case... or it may not. Small businesses in particular need to be strategic in their marketing approach to ensure every last valuable dollar is spent in the most effective way possible. However, this is impossible to do without spending a bit up front to research the market - in other words, determine where you currently stand, and where you want to go.
According to the Small Business Administration (SBA), conducting a market analysis, "is the process of analyzing data to help you understand which products and services are in demand, and how to be competitive. Market research can also provide valuable insight to help you:
* Reduce business risks
* Spot current and upcoming problems in your industry
* Identify sales opportunities
The SBA continues on to outline the components of an effective analysis:
Industry Description and Outlook – Describe your industry, including its current size and historic growth rate as well as other trends and characteristics (e.g., life cycle stage, projected growth rate). Next, list the major customer groups within your industry.
Information About Your Target Market – Narrow your target market to a manageable size. Many businesses make the mistake of trying to appeal to too many target markets. Research and include the following information about your market:
Distinguishing characteristics – What are the critical needs of your potential customers? Are those needs being met? What are the demographics of the group and where are they located? Are there any seasonal or cyclical purchasing trends that may impact your business?
Size of the primary target market – In addition to the size of your market, what data can you include about the annual purchases your market makes in your industry? What is the forecasted market growth for this group?
How much market share can you gain? – What is the market share percentage and number of customers you expect to obtain in a defined geographic area? Explain the logic behind your calculation.
Pricing and gross margin targets – Define your pricing structure, gross margin levels, and any discount that you plan to use.
Competitive Analysis – Your competitive analysis should identify your competition by product line or service and market segment.
I would add that you should also define what types of marketing activities your top competitors are doing, and doing well. Once you've gathered this information, you can then develop a plan for reaching new customers. And it may involve a Twitter account, or it may not, but without looking at the data, you'll never know for sure. As a responsible business owner, why would you ever spend money on a guesstimate?
And strategic planning isn't just for start-ups, it's also for those businesses who have never undertaken the planning process or who have, but it's been more than three years and the market may have changed. Just because you've been successful to date doesn't mean you won't benefit from strategic planning - and my bet is that you'll find ways to better spend your marketing dollars that you may have never even considered.
BusinessKnowHow.com provides the following colorful analogy, "business without market research is like stepping out onto a tightrope without bothering to check the tightness of the knots that are holding the rope in place. You’re halfway across when the knots loosen, the rope wobbles; you lose your balance, and fall to the ground with a splat."
Don't let that puddle be you.