This presentation, for those of you just starting out in launching your own business as well as you experienced marketers, will cover the marketing rules of thumb for success and demonstrate how to make your advertising investments more targeted and accountable.

Start at the beginning…
The Marketing Mix (every business must be examined to define that these 5 critical elements are strategically in place in your marketing orientation):

1. Product
* If your business is targeted to the consumer market or to the business market, your orientation must be customer-centric. Make sure that there is a market for your product or service before you invest any dollars in marketing. Gain consumer feedback on your product/service. Make modifications based on that feedback. Do it either with an ad hoc survey or through professional market research, but make sure that people or businesses want what you have to offer. Beta test your product to get the bugs out and also to create testimonials for your product/service. If your product is consumer centric and live tested with testimonials, you are ready to launch the new or improved version.
* Who are you and what do you stand for? What is your promise to the market about your product or service (your brand)? What makes you unique? What is your unique selling proposition (USP)? Why should the target customer even consider your product let alone actually spend money for it and then return to spend more money? Who is your competition and what are the competitive products in the market currently? Why are people buying competitive products? What is your edge over those products? You must answer all of these questions to define your marketing strategy and communication messages.
* Do a SWOT (strength, weakness, opportunity, and threat) analysis of the market and your self in the market. What macro-environmental influences are there to define how best to posture your company, product or service.
2. Price
* Do a financial analysis of your business before you look at pricing strategy. “financial analysis” does not just mean looking at your accounting statement. That’s the start. You must separate fixed and variable costs so that you can ultimately calculate your variable profit and your breakeven. Your “variable profit” is the incremental profit that you make on each item you sell. Know what the economics of your business are before you get into pricing decisions.
* Calculate your own breakeven and create a variable profit paradigm for defining break even so that you can determine “fair” pricing. “Fair” means don’t charge too much to your new business for existing levels of business. The new products do not have to absorb 100% of the overhead. Part of that is already being absorbed by existing services/products. Don’t penalize your new product launch with a pricing structure that prevents competitive pricing or low pricing.
* In other words, when you price an item, if you are a going concern, there is no need to absorb overhead costs into the pricing formula. The question to be raised is what is your variable cost to produce and deliver a new product. What is your current variable profit? Your average price for a product less the variable costs or direct cost to make/buy and deliver to your customer, equals variable profit. Take your fixed costs in running your business, divide by the variable profit percentage and the result is the break-even dollar amount of total sales needed to cover overhead. Divide that by the average dollar price and you find the break-even unit sales level.
* Know what the competitive environment is like. What pricing is competition using. What price incentives are they giving. Are you better offering a discount on price or a rebated promotion. Which will maintain better perceived value.
* Do some studies to evaluate the pricing discrimination of your customer. Do some price testing to determine which price is the best price. Define the perceived value of your product or service. Knowing that, combined with the financial analysis discussed above, you will know what your range of flexibility is in setting the market price.
* Do you want to have a high penetration into the market or do you want to reap or skim the profits earned from early adopters among your customers. High penetration is low pricing; skimming the profits is high pricing. Your choice here is based on your beta test & testimonials, the quality and quantity of competitors in your space and your available promotion budget.
3. Place
* Get to the customer where they want to be gotten; get to the customer where they are. Define what their touch points are. Physical. Virtual. In person. On line. In the mail. Where and how do they want to conduct business? Determine the logistics of your channel to your customer based upon how the customer wants to buy or receive information. Let the customer tell you where and how they want to not only buy from you but to receive marketing communication messages from you. Can you sell them by using direct marketing methods or do you need shelf space in a physical shopping environment. If you need shelf space, define how you are going to get that space. What incentives do you need to get that space. Are there mixed channels of delivering your message that are available.
* Who is your target market and how are you going to reach it? How well do you know your target? Why do they behave the way they do and what motivates them to buy. Where are they and how do you reach them. What other clutter are they faced with and what do we know about them that would indicate the type of breaking through the clutter you will have to do?
4. People
* What kind of training have you given to your people so that they are customer oriented? Have you established good CRM (customer relationship management) practices so that when the phone rings and is answered by your staff they are making the caller feel right at home and comfortable for calling? Do they speak English well or other language depending upon your targeted prospect? When was the last time you reviewed their scripts? When was the last time you cold called your own customer service number to see how you would be treated as a customer or prospect? Would you want to call back or just go onto another vendor?
* Are your people aware of cross selling and trading up practices? Are they aware of your product lines and office directory so that they can clearly service any caller? Do they know how to ask your customer “do you want fries with that burger….” related to your product lines or services?
5. Promotion
* Taking all of the above into consideration, have you structured your integrated marketing message to be consumer centric and need driven? Your strategy must be about solutions and the subject of your communication must be your target not you.
* Surround your target with your message. Don’t just rely on one type of communication medium to reach your target. Create your message so that you will maximize interest where the target is. SPAM existed long before email marketing. Just think of all the 5,000 (according to Ad Age) messages that you get each day from marketers vying for your attention. How many do you respond to? You reject the majority. But you respond to the one that breaks through the clutter.
* Know how to manage the creative effort, objectively, so that your marketing message gets translated into the proper creative representation.
* Know the media that you use and the value that each has to deliver your message. Make certain that you understand the difference between “awareness” media and “response” media and how to exploit each for your purposes. Know how to measure each. If you want response, then strategically you want to do direct marketing. Remember, direct marketing is not just direct mail and that direct mail is not necessarily direct marketing.
* You want your message to be accountable. If you spend a dollar, what do you get in return? You must be able to track it and see it result in a response. A negative response counts. That tells us its not working to the specific target it was sent to.
* Test, test, test variations of your message, creative and delivery in a scientific manner.
* Set up your relational data base to track messages and responses to your targets.

Next issue: “Creative Plan - Think Out of the Box.”

As a Corporate marketing executive Harvey Markovitz favorably impacted profits in retail and direct response merchandising, recorded music marketing, book publishing, music copyright marketing and sales force development. As a Corporate financial executive he created profit improvement, management development, management information systems and personnel administration programs that favorably impacted profits. As a Professional Management Consultant since 1981 he has developed an expertise in creating opportunities for and facilitating problem solving in closely held companies and family businesses.

He is a specialist in profit improvement through organization development and restructuring, marketing and media planning, financial and administrative procedures, sales and management training; he facilitates communication amongst members of family owned businesses. Mr. Markovitz is a 1999 recipient of the Master of Science Degree (with distinction) in Direct and Interactive Marketing from New York University. He is also an adjunct on the graduate faculties of Baruch and Mercy colleges teaching marketing and business development.

Harvey Markovitz can be reached at hbm1@rcn.com.