What is Marketing and marketing Plans
Marketing is the process of finding, attracting and retaining customers while marketing plans are the strategies and activities that are used in this process. Unless your business is a monopolist, most businesses’ goods or services have to be driven out of the shops of the businesses to the shelves of consumers. The thing that does this is well thought out and executed marketing, sales, distribution and customer service plans, and activities. You, therefore, have to prepare marketing plans when starting a business. Even when the business is ongoing, you also need to engage in strategic think and prepare marketing plans for continuous improvement as things are ever-changing and need to keep innovating to stay competitive. Marketing is the process that makes sure that the right product gets to the right market place at the right time at a competitive price. It is about attracting attention and building a loyal customer base for the product or service. To do this, you need to research potential customers to understand their needs and pitch your product and marketing strategies towards satisfying their needs.
Again, not all businesses require elaborate marketing and sales plans but carefully thinking about these before business commences can only help. Going into business to provide creative solutions and genuine customer help would make sales and marketing strategies and plans unnecessary. If your products and services require to be marketed, then you require developing marketing strategies. To do so, you need to engage in the following activities:
- Industry analysis (synopsis).
- Market research and analysis.
- Competitor analysis.
- Marketing plans (7Ps of marketing).
- Customer service.
In business planning and to formulate effective marketing strategies, you need to understand the industry you play in so that you can plan when you know your position in the industry. Armed with this information, you can then plan and describe, in the business plan, your intended position in the overall industry. To make credible plans within this area, you need the following information:
- The size of the industry as a whole and the sectors within the industry.
- The major players in the industry and the ones who may be your direct competitors.
- The main customers of the industry and the ones you are targeting.
- The products or services you plan to put in the market and what will be your competitive advantage? How will you be different from the competition?
- The current sales and estimated future sales in the industry.
- Current and future trends that might shape the industry.
- Any barriers to entry and how will you beat the barriers.
- What is the market share of your competitors?
- The market share of your close competitors and your estimated market share.
- Protections that you have such as patents, copyrights, trademarks, franchise or license rights or trade secrets.
What is a Market Research and Analysis?
Market research and analysis is the practices of studying a market you are interested in to gain knowledge about your potential customers and their needs. This is done to facilitate the development of effective marketing strategies. Unless you are a monopolist or selling a necessity that is in short supply, you have to make marketing plans to help you push your product from your shelves to the end-user shelves.
“Marketing aims to know and understand your customer so well that the product or services that you offer fit them and products sell themselves”. Peter F. Drucker.
Making a product without fully knowing its probable place in the potential customers’ minds is like shooting in the dark. Market research should minimize or eliminate this problem.
Marketing involves making marketing plans to help find, attract and retain customers. A market is a cluster of prospective customers who are willing and can buy a certain product. You access such people or businesses through marketing. The main goal of marketing is to inform, persuade, call to action and retain. To be able to conduct effective marketing that achieves the aims as stated by Peter F. Drucker, you need to conduct market research.
The main aim of market research is to discover potential customers of your products or service and to learn more about those customers. Once you know them, you can then come up with creative marketing activities to reach and persuade them to buy your products. You have to identify your target market and how you can best sell to that market. Market research is about finding out what the customers need or where they are under-served by other suppliers in terms of products/services, delivery systems, and customer care and putting together appropriate strategies to reach and serve them. Market research helps you to understand your target market, the potential customers and their needs and problems, and the competition within that market. Once you understand all these, you are then well-placed to pitch your product/services and your marketing activities in a way that the products fit the customers and sell themselves.
You need to engage in market research to support any product value proposition you may make and to develop a rational market access strategy. You will need to search about your potential customers and their needs, possible market share and segmentation, current competitors and what they are up to, the value proposition of your product, the strategic price for your product, promotional material needed, and whether you can mobilize resources and capabilities to enter the market competitively at minimum cost. All these should be informed by your mission and vision.
Use of demographics and psychographics in marketing
It does not make sense to target all types of customers. So you need to define your target market or ideal customer, for example, in terms of demographics and psychographics. Demographics are the dry and static data of an individual or population. These factors include age, income, education, gender, disabilities, occupation, employment status, language, religion, mobility, location, contacts, etc. The factors usually explain who the person is and to use marketing language, who your buyer is. Psychographics, on the other hand, are the soft facts about a consumer which include behaviour, personality, values, interests, opinions, attitudes, tastes, hobbies, etc. These factors explain why the individual behaves the way he does or in marketing language, why he buys what he buys. Other important factors include customers’ influencers (e.g. doctors and pharmacies), and above all, the size of the market.
It has been proven that once you have known a person’s demographics, you can tell their psychographics well enough. When you know who buys your product or service and why they buy, you can target your marketing messages appropriately and you will not miss the target. Using the information gathered, you can choose what products or services to provide, how to reach possible customers, and where to carry out your marketing. You can tailor your products to suit the customers.
How do you know which customers to target and research? Start with the ones you have or if you are a start-up, figure out what your business idea is aimed at. How do you know what customers think? Ask them appropriate questions about your product or service through paper and online surveys. Look at the competition as well. Here are some tools that you can use to determine demographics and psychographics of your target or ideal customer: GFK MRI, Ipsos Mendelsohn, Media Audit, Neilsen Scarborough, Comscore, Google Analytics, Sizmek, Burreles Luce, Cision, and SM2. Try them, big companies like Macdonald’s use them, so why not you.
To do your research well, you have to define the precise problem or information you want to look for and why, where you can get the information and how, and the budget for the research. Once this is done, you select the research method, construct sample size and collect and analyze the data. Apart from demographics and psychographics, you can analyze the market for the following as well:
- Market trends. Market trends are factors that influence people to buy a product or pay for a service.
- Market growth rate as an industry and by segment in terms of percentage, volume and value.
- Industry cost structure.
- Market profitability checking to see the powers of buyers and suppliers, barriers to entry, the extent of competition, and the existence of substitutes.
- Distribution channels.
- Key success factors in the industry or market.
In doing your research, you need to remember that there several players in the purchasing process: One is the end-user who may be interested in the handling aspects of the product and the price; two is the one who makes the specifications such as functionality, delivery, and other such factors; third is the buyer who may be interested only in delivery logistics and price as the budget holder and the fourth is the influencer such as a doctor who prescribes your product. You need to gather relevant information from these players and decide whom to target with your product. You cannot target every potential customer as different classes of customers have different needs. You, therefore, have to segment the market and see which market segment works best for your business line, strengths and resources.
Market research and analysis as already noted is mainly about finding out where the customer is and what they want. However, there comes a time when it is not necessary to listen to what the customer wants. If yours is a disrupting technology like Uber’s, for example, you should just proceed and lead the way for a product, service or market that does not yet exist. That is how blue oceans are created.
Competitor analysis is not important just for writing a complete business plan but also for developing strategies to beat or avoid competition. You also want to know what messages competitors are sending to your customers or to the consumers of the product you want to introduce. For this, there is no option but to investigate them, find out who they are (local, international and online) and discover the following:
- The markets and segments the competitors operate in and their market share.
- The features and benefits the competitors provide to their customers.
- Most importantly, why do consumers purchase from them?
- Their pricing structure and promotion activities.
- Messages that the competitors are sending to your customers or to the consumers of the product you want to introduce.
Another major source of information about competitors is their customers, employees, suppliers, and service providers (vendors). Talking to these people can reveal a lot about your competitors. Visiting where your competitors go to like trade shows and seeing what they exhibit will also tell you a lot. The good old way of looking at newspapers, magazines, and the internet is a great source of information too. Gathering information about competitors is not the end-goal. The information should be analyzed to discover gaps where you can pitch your competitive advantage. You have to analyze the information to see where customers are under-served by competitors so that you can step in to fill the void.
The competitor analysis section of the business plan features the competition situation, focusing on who the competitors are, their products, market share, and any other pertinent information regarding the rivals. It should also present how you plan to be different from the competition with your competitive advantage. The idea is to be clear enough to yourself and readers of your business plan like a lender who needs to be convinced that your proposals are viable and deserve financial support. As you write, it is important to include the sources of the information in the plan as other readers of the plan may need to be comfortable with the information in your market analysis.
As a final comment, a word of caution is in order here. Market research works very well where the product and the market already exists. There is nothing to analyze if the market does not yet exist. However, if your product is new, you can still do research and poll potential customers to gauge the acceptability of the proposed product or service.
Market forecasting is a branch of market research that focuses on information in the market that can be turned into sales estimates. This is also known as market demand forecasting which is a way of finding market requirements and how these requirements could be turned into sales volumes. The forecasting seeks to know how many customers might buy your product, what are the quantities that might be bought, what is the value of those quantities by segment, what drives them to buy or not to buy, etc. In marketing forecasting, you have to define the target market, segment the market into two to four parts of interest, define the drivers in each segment and estimate the possible volumes and values of each segment. Demand drivers are both controllable and uncontrollable factors that influence people to buy a product or service. Examples of market drivers include:
- Cost savings and price.
- Performance and a solution to a problem
- Ease of ordering, delivery, and use of the product.
- Size of income, and family.
- Unique benefits, customer satisfaction, and after-sale support.
- The functionality of the product, usage of the product, reputation, and location.
- Government policies. An example of a market driver in this area is the legalization of a drug that was hitherto illegal, such as marijuana in some states in the USA.
Market forecasting should go as far as to say if we launch in December and organize four targeted promotional activities in January, we can expect ten leads by end of March, five real prospects in May, and three fresh clients for US$10,000 of sales by end of quarter 2. Market forecasting works with market research and analysis to create information that can be used to formulate effective marketing strategies. This information is eventually used to prepare sales forecasts for purposes of estimating sales numbers that can go into the proforma statement of income as forecasted and budget sales for each year of the budget.
See https://smallbusiness.chron.com/methods-market-forecasting-62491.html for methods that can be used to perform market forecasts.
After you are done with market research, you now apply the knowledge gathered about the market to develop market access strategies. Marketing plans are about strategies and activities that help you to find, attract, sell to and retain your customers. In this respect, the plans have to describe the product features and its benefits, the pricing strategy, sales, and delivery plans, promotion and advertising and other factors. All these factors are usually grouped as the Ps of marketing or the marketing mix which are aspects that are within the control of a business. The Ps consist of four original factors and these are product, promotion, place, and price (i.e. 4 Ps of marketing). Three other Ps have since been added which are people, processes, and physical evidence. In reality, there other factors that are outside the control of the business which includes changes in legislation, state of the economy, new and powerful market competitors, and changes in technology.
As you develop your plans in these areas, you have to refer to the overall strategic or business plan and the other information in the industry overview, market research, and competitor analysis report. The 7Ps that have to be well-mixed in market access strategies are as follows:
A self-selling product would be wonderful to have. But if you do not have such a product, you can use the knowledge gathered from market research to create something close. The factors that make a good product are features and benefits. Features include design, specified functionality, range, brand name, performance, reliability, quality, consistency, colour, smell, touch and feel, safety, packaging, appeal, availability, delivery, payment terms and methods. Benefits of a product include saving time, saving money, reducing worry, getting rid of a problem, enhancing status, after-sale service, ease of use, portability, durability, etc. When marketing a product, you have to explain these features and connect them to benefits that the features will give to the customer. Whereas features may appeal to buyers, customers buy benefits. The benefits that people look for include means to acquire wealth, power, influence, and fame; relationships; knowledge and information; security and defence; and entertainment and pleasurable experience.
An emerging product or service that is less expensive than those of rivals or simple to use or more superior will take over the market without much effort. In their book: Simplify: How the Best Businesses in the World Succeed (2016), Richard Koch and Greg Lockwood argue that you should simplify your product not a little better but a lot better, with some art if you can. It should be not just easy to use but also a lot more useful. If you combine ease of use, reliability, and affordability, the product will be unbeatable, they said. They give the example of Henry Ford’s simplified Model T car whose demand rose by 700 times by 1917 from only 8,423 pieces in 1907. This was all due to simplification and a 40% price reduction from US$600-750 apiece to US$360. Present-day analogies of this phenomenon are Uber, iPhone, and Airbnb.
Whereas features may appeal to buyers, customers buy benefits. The reason why a customer buys a light bulb is for it to produce light in their home. If a customer could buy light directly from the store, they would not buy the light bulb. This being the case, any marketing activity to promote a light bulb should focus on how good the light produced by the bulb is and not the features of the bulb. If you have to talk about features, please connect them with benefits. Benefits of a product include saving time, saving money, reducing worry, getting rid of a problem, enhancing status, after-sale service, ease of use, portability, durability, etc. To succeed in marketing, focus on what the customer wants a product to do for them and set to explain how your product provides that benefit or does that work for them.
It should be remembered that business is for solving problems and satisfying the customer and not for selling a product or a skill. In an article in Harvard Business Review (1960) entitled Marketing Myopia, Theodore Levitt pointed out a problem that can badly affect a business and its focus. He argued that the great railroad companies of the USA declined because they focused on being in railroad business instead of the transport business. The American film studios made the same mistake too by thinking that they were in movie business instead of entertainment, period. The moral of these examples is that you should focus on the utilitarian value the customer derives from your product and not the item or the or the industry you think you are selling or operating in.
This concerns thinking about the rationale for the chosen price, which should take into account the costs of bringing the product into being, competition, and the desired or target return on investment. The basic formula for pricing is: variable costs + Indirect costs (or fixed or overhead costs) + Profit + Tax (value-added tax) = Selling price. Market research should guide you on a possible pricing strategy. Pricing strategies include:
- Cost-based/cost plus markup: The price is based on the cost of production or how much it would cost to replace the product.
- Market-based: The price takes into account the price of other similar products in the market. It can also take into account demand (demand-based) and this can be changing on a real-time basis.
- Net present value: This pricing method takes the net present value of the series of cash inflows generated by the product over its useful life as the price.
- Unique characteristics of the product: A product in an affluent neighbourhood or with connections with a celebrity may fetch a higher price than one that is in a less prestigious location. This method can be used in conjunction with the above methods.
Furthermore, there are three basic pricing strategies:
- Demand-based- based on the maximum price that customers are willing to pay.
- Competition- based on what the competition is charging.
- Cost-based- based on what it costs to produce the product also known as cost-plus.
Other strategies include low, moderate, prestige, competitive, skimming, and real-time pricing strategies.
Again Richard Koch and Greg Lockwood offer Henry Ford’s strategy of reducing prices from US$600-750 to US$360 as a good example of what affordable prices can do to demand. Their other example is that of the Lane Brothers (Stuart Kells-2015: Penguin and the Lane Brothers: The Untold Story of Publishing Revolution) who wildly succeeded in the 1930s by simplifying the cover of Penguin books to reduce costs to make penguin books affordable to the masses. Due to this strategy, the company was selling 17 million copies a year, from 60,000 copies in the early years. When the company was listed, shortly thereafter, £100 million worth of bids were received against £450,000 worth of shares! That is the power of a simplified product and affordable price.
This is about defining and strategizing on how the product will be distributed and delivered and where the customers will find the product. Location is critical for products that cannot sell online like a hotel. A hotel can be so great but if it is in a remote location with no attraction around it, the site will be its ruin. The focus is on the location or place of sale, distribution and delivery channels and the rationale for preferring one channel instead of another, which could be:
- Great location.
- Cost and effort required to motivate customers to sign up.
- Ease of reaching customers etc.
- Chance of locking out competitors out of a channel.
- Durability or perish-ability of the product.
- Your image, competitor or industry ways of distribution.
- Cost-effectiveness of the distribution channel and the terms involved.
- Availability of adequate mark-up for all agents in the distribution channel,
- Push and pull (advertising and promotion) effort required of you by your distribution agents.
- Distribution logistics, and cash flow flexibility in each channel.
- Packaging-this should take into account appeal, durability, labelling needs, such as product description, user instructions, and price.
- Delivery systems- this should consider inquiry, ordering, shipping, billing, and payment methods. Credit terms, return/refund conditions, after-sale support, warranties, and customer feedback are part of this.
Another major factor that should not be ignored is the ease of access to the product by customers. Here we have in mind online systems where customers can enquire, place orders, pay, get the receipt and receive the product without leaving their locations. The above and these are all aspects of distribution that should be carefully considered.
Distribution channels include wholesale, retail (supermarket), cash and carry, mail order, door-to-door (hawking), and of course a website. Product or service can be delivered directly from the manufacturer to the end-user, manufacturer to wholesaler then en-user, or manufacturer-wholesaler-retailer-end-user.
3. Promotion and Advertising
Promotion is about the methods that will be used to inform the customer about all the other aspects of the marketing mix (product, place, and price). Without promotion, customers would not know about the product, its features and benefits, and the price it sells for and where it can be found (place). It can take as many as 10 times of seeing an advert before a customer considers buying the product. The main aims of promotion are to:
- Inform, introduce new products, create a brand image, compete with competitors, improve company image and generally attract and retain customers.
- Get attention- attention-grabbing imagery is necessary here. That is why celebrities are used to advertise products.
- Grab the mind, sustain the interest, arouse desire, and call to action.
The points to consider in the promotion include what you want to happen, how much this would be worth, what message would make this happen, the best media for this, and how effectiveness will be measured. Promotion mix includes:
- Promotion- this includes giving of samples, coupons, discounts, product demonstrations, business cards, brochures, pamphlets, and complimentary slips.
- Advertising- newspapers, magazine, radio, TV, direct mail, flyers, directories, billboards, and transport modes.
- Visual merchandising- displaying merchandise in a shop, supermarket, flea market, hawking, etc.
- Publicity/Public relations- charitable or social activities, product launches, social media, testimonials, talk shows, speeches, interviews, and writing of articles.
- Direct one-to-one selling.
- Trade shows you exhibit and explain your product and display all the above methods.
- Online marketing through the website, email and social media channels like Facebook.
This is about the delivery of service that will satisfy customers and give them a positive experience. This boils down to the people assisting you to operate the business which includes employees, financiers, professional consultants, and suppliers. The employees that you require should be knowledgeable, skilled and with the right attitude. They are then to be trained, motivated, regularly appraised and rewarded. They are to work under clearly written terms of service, clearly written roles, simple processes, operating manuals, systems that work, and staff code of conduct that all comply with the applicable labour laws (e.g. OSHA).
If the employees are not well trained about the product and effective customer service, the business may fail to attract and retain customers. If your financiers and suppliers are unreliable, you may be let down. You have to think about all the people you will work with and train them on what you want them to do. Happy customers served by the people you work with will become repeat customers and will refer new business.
If everyone in the business is working as a team and pulling in the same direction, achieving goals will be like child play. People can pull in one direction if they work in an environment where they can freely exchange ideas, accommodate one another, collectively make decisions, and are all responsible for company-wide performance results as opposed to pursuing silo goals.
This is about having processes and systems that allow you to effectively and efficiently produce and deliver your products or services to the customers. You have to think about facilities and processes that allow you to easily produce or process products and deliver efficiently. Effective and efficient accounting systems are part of processes. Processes are also about processes and systems that make it easy for customers to interact and do business with you. An example is a system that allows customers to make inquiries, place orders, pay for the orders online and receive the products without setting foot in your premises. Not to be forgotten is return and refund procedures including complaint lodging and resolving procedures. Having good processes in place allows you to deliver the same standards of service to customers and save them time and money.
You want to organize all your systems and processes, from production to delivery systems and systems that are used to sell and gather information for analysis, measuring, reporting, and decision-making. HR management systems should be orchestrated too. These systems should be well-coordinated and system-based as opposed to people-based to minimize errors, omissions, discretion, inconsistencies and ensure good quality.
6. Physical evidence
This refers to everything that a customer sees when interacting with your business including cleanness or neatness of your environment and employees, packaging, branding, and the evidence that lets the customer confirm that product or service has been delivered to them.
What is Branding?
A brand is an identity like unique features such as name and logo usually with a positive reputation which differentiates the business from other businesses. One of the main success factors of starting and operating a business fruitfully is branding. Branding is burning or stamping your business name and logo on the product and engaging in marketing activities to popularize the brand. Elements of branding such as name and logo should be carefully considered at the formation stage. Branding can be in two phases:
1. Creating an identity
To form a brand or identity, you create and combine the business name and things like, logo, tagline, colour schemes and letter fonts or styles to form a combined name and logo for the business which now becomes the identity of the product and the business.
- Name: The chosen name should be catchy, brandable, extendable to include a URL, and easy to pronounce, read and write. See the section above on selection of a name.
- Logo: The logo is formed of designs, symbols, marks, clour schemes, and letter styles. It should be unique, attention-grabbing, easy to identify, and mirror the nature of the business.
- Colour schemes: Font (letter styles) and background colour schemes form part of the identity.
- Tagline: This a short and catchy words that are placed beneath the logo which portray a philosophy or a promise. A central bank which has a mandate of keeping inflation in check might have a tagline like- protecting the value of your money.
- Contacts: These are things like mailing and physical address, telephone, email, a website domain, and social media channels (Facebook, Twitter, Linkedin, etc).
- Tax and other identification numbers for registration of the business for statutory collections and levies.
- Bank account.
2. Project the identity
Later on, once the business is up and running, it will be necessary to project the identity as a marketing strategy. This phase involves performing marketing activities that establish a connection in the eyes of the consumers between a thing that identifies the product such as a logo, the business’s name, or the product’s name and the product’s benefits that consumers have come to perceive and like. The first line of projection is to have all the above identity marks reflected on all stationery such as letterheads, quotation forms, invoices, credit notes, delivery notes, receipts, application forms, envelopes, complimentary slips, writing note pads, packaging materials, and business (calling) cards. Other areas of reflection include uniforms, dress codes, displays, marketing materials, signs and on strategic places and surfaces around the premises including walls, furniture, fittings, equipment, tools, etc. All the prints in all stationery documents and other items must be consistent in font, colour, and design and that all documents carry the same business colours, signage, slogans and logo. The second part of the projection is to perform marketing activities that are aimed at bringing awareness and creating a connection between the identity and the features and benefits of the business or product so that consumers can make the association and create a trust.
Name, logos, and packaging establish the identity of the product. Quality, performance, durability, consistency of quality and performance, prestige, image, saving time and money, boosting social status, solving a problem, providing entertainment, reducing worry, etc are benefits that give a product reputation and brand status. Consumers should be able to connect these two aspects i.e. identity and benefits and that is the trick in marketing.
What is Sales?
This aspect of a business is about developing strategies for selling. Marketing is the strategic thinking and activities behind and supporting selling. Ordinary selling is getting the customer to order, sign the paperwork, pay and carry the product. But this is only part of the process. A lot more should be involved. Effective selling should identify consumer-salesperson interaction stages which usually involve the following:
- Calling or finding the customer by any means.
- Seeking an appointment to have a meeting with the customer.
- Using the meeting to cleverly but usefully explain the benefits of your product to the customer and how the product solves their problems. This opportunity can also, if necessary, be used to prequalify the customer.
- Getting the customer (negotiating) to say yes and place the order.
For this to be successful, you need to research the target customer to understand him or her, discover individual needs, reach out by calling and making an appointment, present solutions to their problems, subdue any opposition, negotiate, and close the sale. This can easily happen if you understand the product, its features, and benefits, how it works, the costs, terms of payment, warranties and guarantees, after-sale service, delivery alternatives and return and refund policy.
To make the process more effective and efficient, the above selling actions should not be left up to the salesperson to act as the way they wish. All these actions should be scripted into a structured selling process. The script should cover all actions in these steps including what the salesperson should say in each stage, how they should say it, what they should wear, how they look as they talk, the materials to be used in each stage, etc. All these should be documented as a process that can be learnt by heart and used by anyone without prior exposure or know-how in selling. The process should embody attributes such as positive attitude, listening skills, persistence, effective communication, truthfulness, problem solving and reliability.
The selling efforts should be supported by the following other aspects:
- Selling systems: One of the most important things about selling is the ease of interaction and actual way of purchase. A customer must be able to easily enquire, place an order, pay, get a receipt and get the product-if all these can take place online, much the better. You need to look at all issues and hitches that can frustrate a customer or hinder buying before purchase, during purchase, and after purchase and address them all before they occur. As you look at them, compare the issues with those of competitors and customer expectations and remove the pains.
- Look and feel (visuals): By this is meant aspects like packing materials and their colour schemes, and colour schemes on all objects around the office (floor, walls, equipment, tools, furniture, etc). Clours should be determined scientifically to suit the psychographics of the target or ideal customer and not the preferences. Messages in advertisements and brochures and all promotional materials should be crafted carefully. These are elements of marketing but they help when these are aligned with selling efforts.
- Gathering and reporting systems: There should be systems to record, track, measure, analyze and report all selling efforts. These help to measure the effectiveness of the selling activities for purposes of continuous improvement.
All the above activities should be documented in detail and all the processes and systems should be organized into one seamless interdependent and supportive system.
You can learn a lot by reading How to Sell Anything to Anybody by Joe Girard (1977-renewed 2005).
Sales forecasting is the exercise of estimating potential sales of a business. It is the business’ plan for future revenue. Sales forecasting is largely informed by previous performances, the market trends as informed by market research and forecasting, and the planned reactions of these market information by the business. A market trend is an apparent propensity of markets to shift in one direction or another over a period. It is something that changes the market that one is playing in. To play effectively in a market, it is necessary to carry out a market analysis to discover trends in the market and formulate a new direction for the business in line with what the analysis reveals.
The data that is used to prepare sales volumes are derived from the strategic plan and market research and forecasting. The main uses of sales figures include:
- Sales figures are used to prepare the revenue, manufacturing, and inventory budgets and purchasing schedules.
- The sales budget is also used to allocate resources as dictated by the strategic plans and sales forecasts that need to be achieved.
- Sales forecasts are used together with the market forecast to determine the extent of advertising and promotion required to achieve the sales.
- A sales forecast is also a tool for planning for growth.
Market Forecasting and Sales Forecasting
The main difference between market (demand forecasting) and sales forecasting is that market forecasting a process that focuses on market requirements and the potential demand of a product or service. Sales forecasting, on the other hand, is an effort that to uses market forecasting information to predict sales for a specific future period such as a year or more. Quite often, the two works together and complement each other to provide a business with a good picture of the future demand for its products and how much revenue may be generated from the products.
Negotiating is parting of selling and it is important for business success. You, therefore, need to think about it as you plan to start and run your business and learn how to negotiate. Negotiation is about compromising and not winning against your opponents. I order to do well; you should lay down your goals and set your lower and upper limits before going into any negotiation. You should also consider your opponent’s interests, show your keenness to negotiate and remember you are there to solve a problem and not to outwit each other.
In conclusion, when starting a business, making marketing plans that are included in the business plan is essential. As the world of business is never static and customer needs are ever-evolving, continuous improvement of customer plans for an ongoing business is also essential.
What is Customer Service?
Customer service is the quality of help and courtesy granted to the customer during service and after service delivery and the degree to which the customer is satisfied with that service. Customer service is the act of serving, helping and assisting those who buy or plan to buy from your business. But ultimately what counts is the level of satisfaction the customer feels when they walk out of the door having been served. Customer service has more to do with the customer’s satisfaction with the service than with the process of offering the service. If the customer is highly satisfied and happy, the customer services offered can be said to be excellent. In this sense, therefore, customer service can be graded as poor, acceptable, normal, good, great and excellent service. Excellent service is where the customer has been served in such a way that he or she is satisfied and feels that the service was beyond normal expectations. This is where the customer feels that he or she got a quality product and the service accompanying the product went the extra mile to ensure complete customer satisfaction. That extra mile can sometimes be as simple as offering a good service and adding something more like thank you, a smile, and a good wish such as “Have a good day” or any positive compliment.
Customer service has both tangible and intangible aspects. Tangible aspects have to do with offering a quality product at where the customer wants it, at the time they want, in the manner they want it and at a competitive price. It also includes features and performances like function, look-and-feel, fitness, product finish, reliability, serviceability, guarantees, and resale value. Intangible aspects are about how the customer is treated in the course of being serviced. This includes the image of the business, helpfulness, information, empathy, courtesy, and respect. In a restaurant, for example, tangible aspects are things that can be seen, touched and measured like ambience, neatness, cleanliness, the cosiness of the room, tables and chairs, stylish tableware and of course tasty food. Intangible aspects, on the other hand, are about the helpfulness and courtesy of the employees as they serve the dinners. Customer service will be wholesome if the said intangible aspects that bring about customer satisfaction are supported by the tangible aspects about the nature of the product, place, time, price and the neatness of the place of operation. All these hard and soft aspects add up to make a great customer service.
A customer can easily be satisfied by a quality product that is fit for purpose, competitive price, prompt action when one is called for, great service and appreciation. Your strategies should focus on how to provide these 5 basic needs. Visit our Shop to download an article on how to provide great customer service.
Who is a customer?
Every business normally has two categories of customers:
- External Customers: These are customers who are outside the business and purchase a product or service from the business or deal with the business in some other ways. These would also include stakeholders and key associates like suppliers, lenders, and other service providers/contractors.
- Internal Customers: An internal customer is anyone within the business who is dependent on someone else within the business. A good example of this is employees and their various internal interactions with other colleagues and sections.
Importance of a Customer
Most businesses exist to sell products and services to customers and in the process make some profit. They exist because of people (customers) who want their products and services and hope to make money out of the people. If these people do not walk through the door to buy their goods and services, sellers go out of business. Customers are that important and without them or enough of them, business doors will have to close. It is that simple. The focus should be on the external customer or the buying customer. A business exists only for the customer and not the other way round. The first order of any business should be to create and keep this external customer.
Importance of Customer Service
In business, profit can be boosted by having a desirable high-quality product, boosting sales through superior marketing and advertising strategies, cutting prices or costs. These methods can indeed deliver results but up to a point. Beyond this point, competitors can copy and produce a more superior product or engage in high-powered marketing that out-smarts your ways. Competitors can cut prices too. There is also a limit as to how far you can spend on advertising or can cut costs to boost profits. Customer service on the other hand as a way of boosting the bottom line is unique, equally effective and is hard to copy. This is why excellent customer service is a much better method for boosting and maintaining sales. Marketing and advertising costs are not only more than the cost of offering customer service but it is also much easier to provide excellent customer service than to engage in excellent marketing. It is also certainly much easier to provide good customer service than to cut costs that may already be too tight.
In an organization, it is employees who mostly dispense customer service but customer service is so important it cannot be left just to employees. Customer service culture should be driven by the CEO through managers to everyone in the organization. Customer service should have a home as in a persona, a unit, a section or a department in an organization to coordinate and ensure that everybody in the organization lives and breathes customer service.
Great customer service is achieved when you identify customer needs, place these needs above everything else and design all business processes and systems to serve the needs. You should also track changes in customer needs and what rivals are doing to anticipate what needs to change and constantly enhancing all that is being done in the name of the customer. All these, employees should be very well-trained in customer service and should follow a well-laid out customer service charter and customer service policy. The charter is about promises of service made by the business to the customers and customer service policy is about how customers will be treated by the internal employees of the business.
Handling Customer Complaints
Complaints in business are inevitable and they are good feedback for early correction before something worse happens. Have procedures for handling complaints and make it easy for customers to lodge complaints which you then follow up, apologize and urgently resolve them without apportioning blame and with empathy. Have a clear product return and refund policy. Avoid words like we will call you tomorrow, call another number or office, I don’t know, we don’t do that, that is not possible, it is the policy, I don’t care, you are wrong, I am the expert and so on. Don’t argue back or defend yourself or your position.