Welcome to part 2 of our marketing mini-series.

If you missed out first installment you can check it out here – Market Research.

The most fundamental principle in marketing is knowing who your customers are and what they need.  Yet many small business operators do not understand this.  They decide on what they are going to offer, start the business and wait for the customers to come rolling in.  They see their customers as a crowd of people, out there somewhere, just waiting for this product or service.  They have not segmented their market.

For most products and services there is not just ‘one’ market but groups of sub-markets.  These sub-markets are groups of people who have some common characteristics or needs, but who differ in characteristics and needs from other groups.  These sub-groups are called market segments.

Many small businesses take a non-segmented approach and try to reach the whole market. These are often the businesses that find themselves in difficulty and without a suitable marketing strategy.  A weak appeal to the whole market is not as effective as a strong appeal to a specific segment.  In other words, you are better off saying something to someone than nothing to everyone.

The better you can segment your market, the more clearly you are able to identify what motivates those customers and the more accurately you can tailor your marketing mix to meet their needs.  This leads to a much more effective use of your marketing dollar.

The table below lists the factors that identify specific groups of customers.  When you analyse the customers within your industry, you will notice that they fall into groups with one or more of these factors in common.

Ways of Segmenting Your Market

Identifying Factors

GEOGRAPHICAL

• Location – urban, inner city, suburban, distance from your business

DEMOGRAPHIC

• Disposable Income – high, middle, low
• Age – child, teenager, adult, retired
• Sex – male, female
• Occupation – professional, clerical, white collar, blue collar, trade
• Education – secondary, tertiary, trade qualifications
• Special Characteristics – nationality, religion, race, cultural background

PSYCHOLOGICAL

• Lifestyle – image, preference, usage patterns
• Personal Preferences – hobbies, interests

WHAT IS PURCHASED

• Volume of purchases
• Type of purchase – wholesale, trade, retail

TYPE OF ORGANISATION

• Residential – flat, house, townhouse
• Business – partnerships, companies, sole traders, franchise, agents,
• Industry

For example, the market for dog food might be segmented and ‘labelled’ as follows:

‘Baby Substitute’ (10% of market)

• Demography – one small dog, no children, higher income, urban
• Psychological – dogs fragile indoor animals, owners very attached to dogs, dogs are finicky eaters, great desire to give what the dog wants

‘Nutritionist’ (15% of market)

• Demography – multiple dog owners, unlikely to have children, Australian urban, high/middle income
• Psychological – very personally attached to do, dog belongs to woman, interested in nutrition, food is varied, least interested in cost

‘Functionalists’ (40% of market)

• Demography – multiple dog ownership, usually children, lower income
• Psychological – dogs outdoor, hearty, eat anything, no bother, little attachment to dog, woman not involved in dog

I’m sure you can think of brands of dog food which target these different market segments.  Some brands appeal to ‘finicky eaters’, others promote their ‘nutritional content’ and other represent ‘value for money’.

Having segmented the market, you can better identify those segments that you can or should concentrate on, that is, which group to target.

Segmenting the market is a powerful tool.  Consider the case of two small manufacturers of paper plates.  If one manufacturer was market oriented, they may segment the market and find that there is a higher income group who would make more use of paper plates if they were more substantial, a more appealing range of colours and prints and a better finish.  The manufacturer can then create a marketing strategy to target this group and gain a competitive advantage over the other manufacturer.

Next issue we will look at the Product Life Cycle and this can dramatically impact your business.

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If you are a local business it is most likely that your greatest source of competition is other local businesses.  Online marketing is no longer the exclusive domain of the multi-national or big end of town business.  Whether you are a service oriented small business or a retail outlet, having a website is no longer a luxury – its a necessity.

The question on most business owner’s lips is – how do I compete with all the other business websites in my market?

The simple answer is -  You DON’T.  You only have to compete with similar businesses in your local area.

Think of it this way….. Peter works in Kedron in Brisbane and needs to have film developed during his lunch break,  He jumps on Google and searches for “film developing Kedron”.  What shows up?  A Google map with a listing of local businesses in the area that do film developing that are located in Kedron.  The map even shows where these businesses are located.  Peter prints off the map and heads off to a conveniently located business.

What Peter has effectively done is used what is called a geographical modifier to limit the search results.  He has had to narrow down his search by nominating a specific location other wise he would be returned hundreds of thousands of useless results that are outside a sensible travel radius.

What this example highlights is, if you rely on local business, use location geographical keywords throughout your web pages.  This will dramatically increase your chances of your website ranking at the top of the search engines for your specific market.  Your competition is unlikely to be optimising their websites for local traffic.

Just remember, you can’t be all the things to all people all around the world.  Aim to dominate your local market and remember your competition is most likely local – not overseas, interstate or even across town.

Here is three Simple Ways to Optimise for Local Search Results.

1.     Use Geographical Keywords or Geo Keywords for short.

The first step is to decide on how specific you want to be with your location.  Are you targeting  single suburbs or are you able to target a wider area such as North Brisbane.  Just remember, the smaller the geographic location, the more targeted your customers will be, but you will appeal to a smaller audience.

Depending on your business, you may need to start a little broader and work your way in.  For example, our film developing business may start with Queensland or QLD, South East Queensland or SEQ, Brisbane, North Brisbane, Kedron and then surrounding suburbs.

When you’re deciding on which geographical keywords to use, think about how locals search for that location.  For example, Brisbane Residents refer to Fortitude Valley as just “The Valley”.  You’ve got to take this into consideration and make sure you are speaking their language.

When using your keywords on your website make sure you work your geographical keywords into the body copy and meta tags wherever possible.  Use you keywords in your headlines and subheads and throughout your copy for extra impact.

One of your pages should be a directions page with a copy of the Google Map with specific details on how to find your business – don’t leave it to chance.

2.     Prominently display you address and phone number on each and every page of your site.

There are many places you  can put your address and phone details on your site.  The two most common positions are in the header section at the top and also in the footer section of each page.  You can also place your details in the sidebar or work it in to the body copy of the page.   Including this information will ensure the search engines have every chance of finding and indexing this information and finding your location.

3.     Encourage and Get Inbound Local Links

One of the key search engine ranking factors is the number and quality of incoming links to your website and more importantly individual pages.  Search engines reward you for having links pointing to your site from other reputable sites and organisations.

Local directories not only offer you visibility to people using these directories but also an easy and cost effective way to build your inbound links.  Depending on your type of business there are all sorts of market specific directories and more general type of business listings and searchable directories.  A simple online search for “business directories” in your local area will turn up all the obvious ones to list in and will get you off to a flying start.  Some will offer free listing whilst others will be paid monthly or yearly services, the choice is yours.

We would suggest testing out the free services first before upgrading to paid listings.  Don’t forget to search for other local directories and networks by searching “location name + directories” and see what comes up.  You will be surprised as to how many local commerce chambers, retail associations and local business groups have business listings.

When filling out your directory listings make sure wherever possible to include your main business keywords, area names and product names so you can be found…. and obviously your location.

Follow these simple three steps and watch you local business website start to work harder for you and blow the competition out of the water.

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Are you ready to harness the opportunities of 2010?

As the economy recovers and forecasts indicate, 2010 is shaping up for renewed enthusiasm and confidence.  As a business owner or operator perhaps there was an area of your business that became the subject of scaling down or hibernating in an effort to ride out the wave.

If that is true for your business, 2010 certainly appears to be a time of awakening and re-gearing.  Are you ready to harness the opportunities?  At the intersection of preparation and opportunity lies what the Roman Philosopher Seneca called “Luck”. Will this be your lucky year?

Here are 5 tips that will improve your “luck” for 2010.

1. Review and revise your business strategy.  Staying in a holding pattern this year could be mean the difference between growth and stagnation.  It is time to be proactive in order to take advantage of every growth opportunity.
2. Leverage technology.  Technology is not the exclusive domain for leverage however; it is such a gargantuan of an opportunity to be harnessed.  This is one item that can be delegated to specialists and so website design and content, SEO, internet marketing and social media presence is a “must have” in the age of technology.
3. Refocus on the “3 keys” of “Lead, Lift & Leverage”.  The “Lead” key is all about the organization’s leadership and management. The “Lift” key is all about lifting the business’ turnover through better sales and marketing. And the “Leverage” key is about improving the business’ productivity and efficiency in all areas of the operation.  Find out more about this in Thinking Business by Brett Chamberlain.
4. Have a workforce plan. If you down sized or right sized for the hibernation then it is time to be pro-active about hiring before the “War for Talent” is re-ignited.  In particular, if you are within an industry where talent shortages affected your ability to keep up with demand then the time is right to consider having a workforce plan running parallel to your business plan. In an article by the online business magazine “Business Spectator”, CommSec chief economist Craig James is quoted as saying “Australian businesses are frantically trying to fill positions before the labour market really begins to tighten.”
5. Get to the root cause of a niggling problem. It has been said that the more we look at our own problems the less we are able to find a solution.  If you have a problem that you can’t put your finger on then the answer could lie in some one else’s “view”.  There are currently Government incentives available to help diagnose and solve business problems.  Your Business Adviser Network is available to evaluate your eligibility to access these incentives.

The advantage of working through Business Advisor Network is that regardless of your business issue, we have a network of expertise that will assist in every area of your business.  So get your business “market ready” to harness every opportunity in 2010 and click here if you need help.

Virtual Business Advisor

How to book a meeting with a business advisor, mentor or coach?
Find out about Government Grants for Queensland business?
Would you like to become an Accredited Advisor?
Need information on how to prepare a business plan?
Do you want a step by step guide to growing your business?
Become a sponsor or partner of BAN and connect with small business decision makers?
I wish to make a donation to help small business.

Many small business owners are frightened by the term market research.  Market research is seen as something that a large company does, not a small business.  yet nothing is further from the truth. 

Successful small business operators are constantly analysing the market, the competition and the needs of their customers.  They probably don’t call it market research though.  They call it “sharp business practice” or “being one step ahead”.  The effect is the same; they understand the market they operate in.

Market research is also seen as being too expensive.  But you should view it as an investment not as a cost.  It is possible for you to do your own research.

Whether you wish to research the market to start a new business or develop a strategy for your existing business, you do not need a marketing degree to gather the basic information.  What you do need is time, energy and a determination to develop a winning marketing strategy from the information you collect.

What then is market research?  Put simply, market research is the means by which you find out about the size, characteristics and nature of a market.  A market is any identified group of people who could use your product or service.  Valid market research may be as simple as talking to potential customers and finding out what they want.

There are many things that market research can tell you.  For example, you can:

• see if a market exists for your product or service
• define the size of that market
• determine customer profiles and target markets
• analyse market trends
• keep up with changes in the competition
• investigate customer needs
• ensure your price and product/service mix is realistic
• make sure your promotion is appropriate
• evaluate new product opportunities
• determine better ways of getting your product to the customer.

Market research helps you avoid one of the most common mistakes made in small business – producing a product or service and then trying to find customers for it.  By using market research, you can be sure you will be selling what customers want rather than just what you want to product/sell.

Be careful.  It is a trap to make assumptions about consumer needs based on your own values and behaviour, or those of your family and friends.  Your market research should extend further than family and friends which will soon verify or discount such assumptions.

Market research will give you the information necessary to create effective marketing strategies.  However, it is frequently difficult to sift through all the information you collect to come out with a clear picture of where you are now and where you want to be.  There are a number of techniques to help you interpret your research, the three most helpful to small business being:

• segmenting the market
• analysing the product life cycle
• conducting a SWOT analysis.

In the coming weeks we will look deeper into these techniques and examine in details the best approach for small business.  In the meantime, have a think about your own business “intelligence gathering” practices: are you listening to your customers regularly, are you surveying your customers, do you keep a look out for emerging trends and are you aware of changes in industry and governance issues that will effect your business.

Until next time.

Virtual Business Advisor

Most business owners – and their advisers – know that they should do some planning around what will happen to the business when they decide to step back from it.  As we get older and the time frame shortens, the sense of urgency may increase but often it is something that can be put off to another day. It is something that is not needed tomorrow, is it?

Consider the following, perhaps not your particular situation, but I am sure you can see some common elements:

In the beginning…

• Business succession planning doesn’t seem a priority (or indeed, relevant) when your first set up in business. Generally you don’t have a lot and you just want to get on with starting your business. 
• Maybe you get some advice about business structures from your accountant but you don’t really know how it will go and you don’t have a lot of cash so you keep it simple and inexpensive. 
• Over time you get busy, your business grows and you accumulate “stuff”.  Things are going well and you have more important things to do than worry about business structures and what happens to the business when you retire.

Time passes and one day…

• you decide you’ve had enough; or you die; or a business partner dies or has had enough or gets divorced or gets sick. All common stuff. You need to sell the business and:

(a) You negotiate a great price. You get paid. The tax office gives you a bill!

(b) You can’t get the price you want. The market price is markedly lower than what you think the business is worth.

• Your business partner makes a mistake and someone is injured or a customer loses money.  They sue your business and win.  Your partner, recently divorced, has nothing but his/her interest in the business which is now not worth much. You on the other hand have lots of “stuff”!  Who pays?
• Unexpectedly your businesses partner dies.  He/she personally own half of the business.  He/she has a will which leaves everything to his/her spouse and adult children.  What happens now?  What if you don’t have the funds to buy your late partner’s share out, or cannot agree to the price that they want or…horror of horrors, one of the adult children – who has never been involved in the business – decides that he/she wants to get involved because he/she thinks he/she can do great things with it!

You get the picture. Not a pretty one but all too common.

Why you shouldn’t put off planning for succession and exit

Every business owner will one day exit their business. The exit may be voluntary or involuntary but it will happen. There are two certainties in life: Death and Taxes. They alone are reasons enough to address business succession and exit planning if you want to: 

• manage your business risk and preserve your wealth, and
• you want to know what will happen to your business (and your wealth and your family) if something happens to you and/or your partner.

As you have no say as to when that first certainty of life will occur, it is imperative that estate planning be undertaken as soon as possible, if you haven’t already done so.

There are essentially three stages in estate planning:

¨ Creation of the estate

¨ Preservation of the estate

¨ Distribution of the estate

This is not something that is done overnight — and one second post-mortem is too late.

What does “Business Succession and Exit Planning” involve?  

In the corporate world, succession planning means ensuring there is a smooth transition of personnel for a business role ie having the right person to fill a position when it is vacated, whether voluntarily or involuntarily by the incumbent.

For a privately owned business, management succession is important  and indeed critical if it involves family within the business. However, succession and exit planning for the private business owner goes far beyond this.

Have you considered what your exit options for you as a business owner?

• Sale pursuant to a management buyout or buy in?
• Sale of the business as a going concern via trade sale or public listing?
• Pass on the business to family members or to other stakeholders?
• Merge the business with others?
• Close the business down and sell off assets?

What are the implications of the various exit options? What strategies do you have to put in place to achieve the desired outcome for your  post-business years?

Effective succession and exit planning involves addressing a vast number of complex issue —legal, tax., strategic planning to achieve the desired exit path etc. Further, as the process inevitably involves other people, particularly family and key stakeholders, it can become emotionally charged.

Addressing all these issues sounds messy and time consuming but it doesn’t have to be if approached in a methodical fashion with professional guidance and advice. Don’t put it off any longer.

Where do I start?

With the wide range of issues that must be addressed for sound succession and exit planning, it is clearly an area where getting good advice will greatly assist and ensure that when the plan needs to be actions, “what is meant to happen does happen”.

Seeking advice after you have given thought to key matters is highly recommended. You will  then be in a position to ask educated questions of your advisors and ensure that the strategies and plans developed with them are reflective of what you — and most likely, your family – actually want.

We have listed some questions that you should be asking yourself as the start point. [See Box on page 4] Try and work through them in order.

If they make you uncomfortable, that’s a good sign. They should. Don’t despair if the picture is not as rosy as you may have thought. At least you now have a better idea about the issues and can engage the right experts to draft agreements, wills, look after taxation issues, assist with retirement planning, estate planning etc.

How do I choose an advisor?

You should be aware that  the perspective of an advisor will influence how that advisor approaches the subject of business succession and exit planning; in particular:

• accountants tend to focus on taxation issues;
• business advisors may see it simply as an extension of a business plan or process improvement;
• business brokers and investment bankers may view it in terms of structuring a “transaction”;
• lawyers often see it in terms of legal agreements and structures around succession in a business; and
• too often, financial planners see it as putting insurance policies in place to fund a “buy/sell” agreement.

There is no one perspective that is more important than the other.

 You need to be particularly wary of any “expert” who professes to know everything and tells you that you do not need to consult any other advisors. Whilst a key advisor  may be able to guide and a business owner through the process of succession and exit planning, including estate planning, it is likely that they will only do this effectively when they stick to the things they do best and co-ordinate and collaborate with other specialist professionals. 

 If you decide to co-ordinate the process yourself, make sure that the ‘right hand’ always knows what the ‘left hand’ is doing if you are to achieve a cohesive effective succession plan.

QUESTIONS FOR SUCCESSION & EXIT PLANNING ^{Note 1}: A Starting Point

The following questions are a good place to start. No adviser can answer these questions although some can help you work through them.

1. What are your personal goals around family, work, location etc?

a. Consider: You are now financially secure, you have enough money to take care of your needs now and into the future, how would you live your life?  What would you do?  What would you change?

b. Consider: You know definitely that you have 5-10 years left to live and that during these years you will always be healthy; what you don’t know is exactly when you will die.  What would you do with your life?  Would you change anything and if so what?

c. Consider: The doctor tells you that you have one day to live?  How do you feel?  Ask yourself: What would I do in the time left?  What do I wish I had finished or had been? What do I wish I had done? What did I miss?

2. Now consider what are the things that are stopping you achieving the things considered above?  How many of these are related to your business … really?

3. What are your financial goals?

4. Where does my business (really) fit into me being able to achieve my personal and financial goals?

5. What do I want to happen to my business:

a. If I die or can no longer work in it?

b. When I choose to retire?

c. Do I want my children etc to take over the business?  Do they want to?  Are they really capable or is someone else better to run it? 

6. Right now, could the business be sold or handed on to a successor? If something happened to me, would the business fold or be sold for a song?

7. What needs to be done to make the business saleable?  If I were a buyer and it were offered to me:

a. Would I buy it?

b. What would I pay for it?  Really!

c. What could I do with it?

8. Would my family and/or business partner(s) answer these questions differently?

While the answers to these questions will not create either your estate or business succession plan, they will provide you with insights into what your personal goals are and where your business supports – or conflicts – with these. 

It will also give you some sense around some of the issues which may currently need to be worked on in the business to improve your position and make succession possible.  It is a sound basis on which to find an adviser who can assist you to work through the process, work with other professionals, and ultimately assist you to develop and implement estate and business succession plans.

Note 1:  These questions have been adapted from work by the Kinder Institute.  See Kinder, GD and Galvan, SE “Lighting the Torch—The Kinder Method^TM of Life Planning”, FPA Press, Denver, Colorado, 2006

by Chris McGlinn

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This week we look at Part 2 of 7 Strategies to Generate More Business.

Today we are going to examine 4 strategies that are simple to implement that will generate new business, increase business from your existing client base and build repeat business.  Let us remind you that you may not be able to use all of them in your business but you can certainly use some of them.

Packaging Different Products or Services Together

This is a marketing strategy usually used to increase the average purchase size in a business.  I recently saw an example of bundling in a book store.   The book was called “How to Buy Property – Cheaply” and sold for $32:95.  They store was also selling an audio CD called “Property and the Law – How to Save on Legals” and it sold for $29:95.  Packaged together they were selling for $49:95 – quite a saving.  I ask the store manager about the sales of the products and she indicated that they sold roughly a third each.

Prepay Agreements

You’ve probably seen this strategy used in the Health and Fitness markets.  You pay say $300 for a membership that entitles you to use the Gyms facilities for X amount of times over X period rather than paying for each individual visit.

This same idea can apply to many different businesses and it even presents an interesting opportunity for the small business owner to raise operating capital.  with this strategy, capital can actually be raised from customers by collecting in advance for future purchases.

Let’s use a restaurant as an example.  The restaurant owner could sell membership cards good for 10 meals anytime from a selected menu for $249.  If purchased one at a time the total cost may be $300.  So by purchasing the card in advance the customer saves about $50.   You may also want to tie in preferential reservations on short notice or offer some other bonus such as free parking or discount vouchers to your partner businesses.  If the restaurant sells 50 of these memberships, that’s over $12,000 up front to put back into the business as you see fit.

The Acceptance of Major Credit Cards

Every business should consider accepting Mastercard, VISA, American Express and Diners Club.  Of course retail stores, online marketers and restaurants almost HAVE to honour  these cards, but just about any business should.

Businesses including Doctors, Lawyers, tradesmen and professionals of all shapes and sizes should use credit cards as a way to increase their business, implement price increases with less client resistance and reduce collection problems.  The concept is quite simple – the easier you make it for your customers to buy and the more payment options you offer the customer the better.

Other extended credit options via finance facilities are growing in popularity outside of the traditional car, furniture, health equipment, computer and white goods suppliers.  It may be worth considering offering this facility in your market.

Regular Contact with Past & Present Customers

One of the most effective marketing strategies that any business can use to build customer loyalty, retain customers and to stimulate more frequent purchasing is the publication and distribution of direct mail.  A monthly newsletter is an extremely powerful, cost effective marketing method.  When you keep in touch with your clientele via your newsletter you do all of these valuable things.

1.  You create a habit on the part of your customers.  They expect to receive your newsletter and they get in the habit of reading it.

2.  You remain top mind for your category.

3.  You can pass along useful information and ideas that you customer appreciate.

4.  You can continue to demonstrate your expertise in your field.

5.  You can stimulate word-of-mouth advertising

6. You can advertise sales, special offers, new products, new services, new locations and anything you feel is relevant, adds value to your customer and increases the experience of doing business with you.

Now that you have these 7 strategies that can help you stimulate new business, increase business from existing customers and build repeat business, you need to give some thought into how to use them effectively.  We will look closer at implementing these strategies in later editions so stay tuned.  So you don’t miss any of this series or any of the blog posts, make sure you subscribe to updates via the RSS link at the bottom of the page.

Virtual Business Advisor

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How would you react if you got a call from the panel beater a week after having you car repaired just to make sure that everything was OK?  You got a call from the pool shop after you purchased chemicals to balance the pH in your pool, just to check that the levels recommend turned out fine.  You got a questionnaire in the mail from a restaurant you dined at asking for your comments and suggestions and offering you a special deal.

Some business owners think its asking for trouble.  It is really the opposite – it’s looking for rapport, loyalty, satisfaction and repeat business.  If follow up turns up a lot of dissatisfaction you need to make some changes.  The truth of the matter is that there is dissatisfaction whether you discover it or not.

How would you react if you got a thank you note a few days after buying a new suit from a clothing store, you got a birthday card from your insurance agent, you got a free dinner gift certificate as a thank you from a hotel chain, you got a personalised luggage tag in the mail as a gift from your travel agent?

Recognition and appreciation can be very powerful and very inexpensive as a marketing strategy.  It is true that comprehensive follow up and follow through may reveal some inadequacies in your business operation and that’s good if you use those discoveries as impetus for improvement.

Of course every business, no matter how well managed, will have to deal with dissatisfied even angry customer from time to time.  Sometimes the customer is justified in their complaints, other times they are not, but the handling of the dissatisfied customer can have a far reaching impact on your business.

Virtual Business Advisor

How to book a meeting with a business advisor, mentor or coach?
Find out about Government Grants for Queensland business?
Would you like to become an Accredited Advisor?
Need information on how to prepare a business plan?
Do you want a step by step guide to growing your business?
Become a sponsor or partner of BAN and connect with small business decision makers?
I wish to make a donation to help small business.

Now before we start, a word of warning…. Not all of these strategies are going to be suitable for every business.  Consider your product or service offering carefully and make a judgement call.  However don’t be afraid to give something a go.  Just because it hasn’t worked for someone else or hasn’t been used in your industry before, doesn’t mean it won’t work for you.  Dare to be different and stand out from the crowd.

Today we are going to examine 3 strategies that are simple to implement that will generate new business, increase business from your existing client base and build repeat business.

Frequent Buyers Program

We’ve all seen the major airlines introduce these types of programs over the years and now it has become an expectation of their overall service offering.  Hotel chains have also jumped on board in an attempt to encourage repeat business.  For the coffee drinkers amongst us the local coffee shop has even adapted this strategy.  It need not be anything fancy.  A simple business card or conveniently shaped card that fits neatly into the wallet will do just fine; it need not be anything complicated.

The idea is too not dazzle your customers with brilliant designs but encourage them to return to your place of business rather than spreading their patronage around town.  To make the incentive even more effective, you should tie it to an expiration date so that the stamps, punched holes, points or credits on the card have to be accumulated and redeemed within a certain time period.

You can make this type of program even more effective by ensuring you capture the details of the customer you are issuing the rewards card too.  The most effective way to do this is to capture the details of the customer before you issue the card, or at least when they redeem their reward when the card has been filled or the promotional period has ended.  This then enables you to communicate with them on an ongoing basis and add more value and enhance their experience with your business.

Discounting

Discounting is probably one of the most commonly used marketing strategies.  At some point in time I would guess every business in Australia has had at least one discount promotion… however, if overused it can quickly lose its effectiveness.

There are many examples of markets where the discount promo has been done to death and is now having adverse effects.  The jewellery business is one that comes to mind.  The public has been trained to expect huge discounts on retail jewellery and as a result, is reluctant to pay full retail price.  Rugs are another example – who has ever bought a rug at full price?

This customer mindset has also been created by artificial discounting.  This is the practice of quoting high retail prices only to discount the product to seal the deal.  Be very careful when using this tactic.  It can come around and bite you, as customers realise your sticker price is meaningless and everything becomes negotiable.

One company that has effectively managed the discounting in a very competitive market is David Jones.  DJs is not renowned for its discounting.  However, when they run their “Once Yearly Sale”, the discounts are genuine, it generate attention and gets results.

If you are going to use discounting as a strategy, it is important to have a logical reason tied to the promotion.  Otherwise you run the risk of essentially admitting that your regular prices are excessive and you diminish your value statement.  Inventory overstock, bulk purchase, an anniversary, introductory offer or, new release are examples of acceptable reasons for discounts.  I’m sure you could come up with many more.

Premiums

A premium offer is essentially, “Buy this, get this free”, or variations thereof.   This strategy can work well both on the B2C level and the B2B level.

An example of premiums in the B2C markets would include retail offers of free gifts with purchase.  The smarter marketers don’t give away the same product as the gift, they introduce new products as a way to encourage uptake of new inventory items.  For example, a free lipstick (new range) with every foundation purchased.  All parties win.  You’ve maintained the value and the integrity of your pricing and have planted a new product in the hands of the customers which can encourage repeat purchase; you’ve also built a relationship with your customer.  The customer also wins as they have benefited from an increase in perceived value and get to experience a new product.

Another example of premiums is discounted products for additional purchases.  E.g. Second item half price.  The concept is simple, the client was likely to be purchasing only one unit anyway and the second sale would’ve been missed.  The idea is to protect the full retail value of the initial product and discount or giveaway the margin on the second.  Once again a win win result.

An example of a B2B premium strategy would be the targeting of individuals responsible for the purchase of business products and services.  A free gift of a colour TV, DVD or holiday voucher are becoming popular with the purchase of office supplies, consumables and business related products.  In effect this type of offer let’s the business customer spend tax deductible business dollars for supplies and receive free and tax-free a gift they will use personally.

Have a close look at your market, is it dominated by one type of promotion, is there a lot of discounting or premiums offered?   Perhaps it’s time to have a look at breaking the mould and trying something different.

More next week.

Virtual Business Advisor

How to book a meeting with a business advisor, mentor or coach?
Find out about Government Grants for Queensland business?
Would you like to become an Accredited Advisor?
Need information on how to prepare a business plan?
Do you want a step by step guide to growing your business?
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I wish to make a donation to help small business.

When business owners engage the support of a business advisor, they’re actually receiving two very important things, experience and innovation.  Experience is gained in only two ways, via your own direct involvement or by reading or hearing about other people’s involvement.  Being able to tap into a vast well of experience that an accredited advisor brings to the table can open up a of wealth of opportunities.

The business problems and growth issues that you are experiencing are no different to those difficulties being faced by other businesses.  In other words, you are not alone.  There have been people that have been through what you have been through, adapted, changed, redesigned or reinvented themselves and/or their businesses and lived to tell the story – more often than not, this is the experience that an accredited business advisor draws from; they have been there and done that.

Innovation however is a method of thinking.

This method is formulated in its approach.  When thinking about business, a common approach is to run through the same fundamental principles of success that govern all aspects of business.  A good checklist and resource is the book “Think and Grow Rich” by Napoleon Hill.

It contains thirteen principles based on common traits possessed by over five hundred super successful business people.  The book itself is a remarkable success story.  It was first published in 1937 and as recently as 1996 appeared in the non-fiction best seller book list.  Perhaps he was onto something?  You’d be hard pressed to find another book other than the bible that has stood the test of time that well.  The obvious reason for its success – the principles were valid back in 1937 and are still relevant today.

Unfortunately for small business, most owners think creativity and innovation is something that just happens.  Somewhere an overpaid ad agency has a group of zealous creative types in fancy clothes, mod haircuts, and attitudes to match locked in a room smoking some dried-out exotic plant material waiting for inspiration to pay them a visit.  Wrong (as funny as it is…)

Actually, creativity and innovation is a systematic process of checking off possibilities.  To be an innovator you should build yourself a checklist of basic success ideas and principles, such as those in Napoleon Hills book.  You should review them each time you want to apply innovative thinking to your business processes, advertising, packaging, marketing or any other area of your business.

Give your ideas definite purpose; ask yourself, What do I want to accomplish with my efforts?  How can we give our customers perceived value that is much higher than the cost?… and the list goes on.

An accredited advisor will be able to assist you in developing an innovative approach to your business and guide you along the path to invention without the potholes of adverse discovery.  The old adage – “two heads are better than one” could just be the difference between your business success and failure – think abut it.

Virtual Business Advisor

How to book a meeting with a business advisor, mentor or coach?
Find out about Government Grants for Queensland business?
Would you like to become an Accredited Advisor?
Need information on how to prepare a business plan?
Do you want a step by step guide to growing your business?
Become a sponsor or partner of BAN and connect with small business decision makers?
I wish to make a donation to help small business.