Low-cost high-impact marketing strategies for SMEs

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1.Marketing Differs between Small Businesses and Larger Companies

Extract from the book High Impact Low Cost Marketing Strategies for SMEs. The complete resource book is available at Innov8 Bookshop, 23 G.Silundika Street Harare and othe selected bookshops. To get a copy delivered COD in Harare ($6 only), please call Christine on 0772 854 301, or email admiralharare@gmail.com. See here for other books available.
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If you’re going to be thinking, you may as well think big.”

-Donald Trump

When Apple Computer launched its new iMac personal computer in 1998, it staged a massive marketing blitz to promote the machine.

Apple’s launch of the iMac, the sleek, egg-shaped computer with one-touch Internet access, was dramatic. For starters, the iMac was a closely guarded secret until May 6, 1998, when Jobs literally unveiled the machine to awestruck reporters.

The buzz continued to mount, on-line and off, until the machine went on sale in August. On the weekend of August 14, computer retailers prepared Midnight Madness sales featuring 20-foot-high
inflatable iMacs flying above the stores. Radio stations across the country began an iMac countdown, topped off with iMac giveaways.

Jobs personally signed five “golden” tickets and placed them in the boxes of five iMacs, with the winner receiving a free iMac each year for the next five years. Apple augmented these efforts with a $100 million ad campaign, its biggest ever, to promote iMac through TV, print, radio, and billboards.

-Jim Carlton, “From Apple, a New Marketing Blitz,” Wall Street Journal, August 14, 1998, p. B1.

If you are like the majority of small business owners your marketing budget is limited. You cannot afford to splash out hundreds of millions of dollars when launching your products. That is the realm of big corporations.
The spending habits of the big companies on marketing are so astronomical that we cannot begin to compare them with those of small companies. Most large companies have well staffed and well funded marketing departments. Look at the annual reports of big firms such as Delta Corporation, Astra Corporation, Dairibord Zimbabwe and many others, and you will notice that the marketing function is represented at very senior or even board level.
The following are the amounts spent on advertising in the United States in 2008 by some of the largest firms in the world, according to data made available by Advertising Age magazine.
Berkshire Hathaway $1.2 billion
Coca Cola Company $752 million
Anheuser-Busch InBev $1.1 billion
AstraZeneca $1.6 billion
Bank of America Corp $3.1 billion

Burger King $906 million
Dell Computers $401 million
Spending on promotion varies considerably between industries; companies in the cosmetic industry may budget 30- 50% of sales, while those in industrial and equipment may spend 5-15%.
Firms have to choose the most effective among the different media for placing their advertisements. For example in the United States, 30 seconds of advertising on network television can cost $154,000 for a popular prime-time show such as Law and Order, $650,000 for especially popular programs like Frasier and ER, or $1.3 million for an event like the Super Bowl.
In Zimbabwe, a quarter page advertisement in the newspaper costs about $500, while a television spot may cost thousands of dollars.
Advertising is big business
Advertising is an almost $500 billion industry globally, contributing about 1.5% of the gross national products of most developed countries. The German Advertising Association stated that in 2007 30.78 billion Euros were spent on advertising in Germany, 26% in newspapers, 21% on television, 15% by mail and 15% in magazines. In 2002 there were 360.000 people employed in the advertising business. The internet revenues for advertising doubled to almost 1 billion Euros from 2006 to 2007, giving it the highest growth rates.
Spiegel-Online reported that in the USA in 2008 for the first time more money was spent for advertising on internet (105.3 billion US dollars) than on television (98.5 billion US dollars). The largest amount in 2008 was still spent in the print media (147 billion US dollars). For that same year, Welt-Online reported that the US pharmaceutical industry spent almost double the amount on advertising (57.7 billion dollars) than it did on research (31.5 billion dollars). But Marc-André Gagnon and Joel Lexchin of York University, Toronto, estimate that the actual expenses for advertising are higher yet, because not all entries are recorded by the research institutions. Not included are indirect advertising campaigns such as sales rebates and price reductions. Few consumers are aware of the fact that they are the ones paying for every cent spent for public relations, advertisements, rebates, packaging etc. since they ordinarily get included in the price calculation.
Advertising helps to sell products and services. To sell big, firms have to spend big in advertising and promotion. Firms that skimp on marketing typically fail to grow and succeed.
Marketing basics for the small business
Small businesses typically have a limited marketing budget if any at all. Does that mean you can’t run with the big dogs? Absolutely not! It just means you have to think a little more creatively.

This is where the three steps of marketing we discussed in the previous chapter come in: market segmentation, target marketing and positioning. Understanding and making full use of this three phase marketing strategy is the key to successfully marketing your products and services on a low budget. Your objective is to know what customers want and need; and satisfying those needs while making profit is what we call successful marketing.
If we had some magic wand which would tell us what each customer needs exactly, when, where and how they need it, we could just have our products ready for presentation to willing and ready buyers and effortlessly make money. Unfortunately, such a silver bullet does not exist. We have to do some work to find out what customers want. The following steps will help you know your customer and be able to successfully market to them at low cost.
Know your product
The more you know about yourself, your products and services, and your customers, the more effective you can be at marketing. The question is not what physical good or service you are selling, but what unique product concept or value proposition you are offering. Anyone can supply the same product or service that you supply. The days of competing on price and service alone are over as customers can get the same product elsewhere at a cheaper price and with better service.
To succeed, you need to differentiate yourself from competitors, make your business special in the eyes of customers and prospects. You need to define your unique selling proposition, the one thing that makes your business unique and distinct. Why should people buy from you and not from your competitors? Do you promise great value, benefits or service?
Your USP must be truly unique. It must be strong enough to excite your target market and get them talking about it. And it must not be easily copied. Anyone can claim to provide the best service in town- “We are the number one service provider in Zimbabwe”. But it does not sound credible. It’s lukewarm and it’s an empty promise because you cannot measure it and you cannot hold them accountable for it. Your USP needs to pack a punch.
How about: “Your parcel delivered the very next day or it’s for free!” This is a measurable USP developed by FedEx, and they made themselves accountable for the promise. Pizza Inn has a similar slogan: “Your Pizza in ten minutes or you don’t pay.” Such a powerful USP can make your company stand head and shoulders above the competition. Take the time to examine your product and articulate your offering as a unique selling proposition. A “me too” business will not bring you sustainable success.
Do you know why customers buy whatever they are buying from you? It is important to know that, so that you can focus and improve on it; ideally so that you can do it better than anyone else. Talk to your customers. Carry out surveys regularly so as to ascertain their views and comments about your company and its products. The more information you can garner from your customers about your company the more customers you will have.
If yours is a service business, you should be able to describe what you do in a single sentence as follows: “These are the clients we work with; these are the areas where they have problems; this is the solution we provide; this is how it works and this is what it costs.”
Understand the market you are serving
You need to focus and define your market as narrowly as possible. Your small firm does not have unlimited resources available for marketing. Using the segmentation we discussed earlier, you should narrow down and define the target market that you want to reach. That way you can apply focused and effective marketing programs that reach your target customers.
To properly define your market segments, you need to carry out some research. Some information, such as on population sizes and demographics, are available from data released by the Central Statistical Office, Chambers of Commerce and Industry Associations. The other information can be obtained from various publications, or can be obtained from market research firms for a fee.
To cut costs, you may do the market research yourself; surveying samples of the population you want to target so as to understand their various needs and habits.

Know the size of the market
The data from your research should enable you to estimate the size of your targeted market. Say you want to market a new cosmetic product to the target market defined in our earlier example in the first chapter. Research may inform you that the total population in Harare is 1.5 million people. Half of that number are women, 40% of whom fall within the 18-35 age range, which is 300 000 people. One third of those hold professional jobs, i.e. 100 000. You further estimate that one third meet the rest of your segmentation criteria, giving you a potential target market of 33 000. Assuming that two third are loyal to competitors’ products, your market then is 11 000 people.
Estimating market size is very important because it enables you to judge whether the market is large enough to justify your investment.

Understand pricing
Pricing is important in two ways. First, it is a competitive tool. Second, it directly affects your bottom line.
To successfully sell your products, you must charge a price that customers are willing to pay. How do you find this price? You let the customers tell you. Your 
market research should tell you what customers are already paying for similar products being sold by your competitors.
For products that are already available in the market, your price should be competitive while allowing you to make a profit. This means you must know your cost structure so as not to sell at too low a margin, a scenario that could plunge your business into failure. On the other hand, charging too high a price, while good for your margins, can price your products out of the market.
Growing your business
The essence of marketing is to understand your customers’ needs and develop a plan that surrounds those needs. Let’s face it anyone that has a business has a desire to grow their business. The most effective way to grow and expand your business is by focusing on organic growth. You can increase organic growth in four different ways. These are:
Acquiring more customers
Persuading each customer to buy more products
Persuading each customer to buy more expensive products or up selling each customer
Persuading each customer to buy more profitable products
All four of these increase your revenue and profit. Let me encourage you to focus on the first which is to acquire more customers. Why? Because by acquiring more customers you increase your customer base and your revenues then come from a larger base.

How can you use marketing to acquire more customers?
Spend time researching and create a strategic marketing plan.
Guide your product development to reach out to customers you aren’t currently attracting.
Price your products and services competitively.
Develop your message and materials based on solving customers’ problems and fulfilling real needs.
Keep in mind the importance of target marketing. Because not everyone is going to like your product, directing your marketing efforts to the correct niche will save you time, effort and money.
Read more in the complete book Low Cost High Impact Marketing Strategies for SMEs, available now at Innov8 Bookshops Harare and other selected book stores. The price is $6. We also deliver on COD in Harare, please call Christine on 0772 854 301 to order your copy.
For more publications available from SME BusinessLink, go here.
***See more marketing and business articles in the SME Businessink CD Magazine, also available from Innov8 or on COD for $5. You can save 60% by subscribing for 12 or 6 months. To subscribe go here.

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