The Facts of Business Life (31 page)

Good things rarely come to those who sit and wait. Hoping that a great candidate to whom you can turn over or sell your business will come along just isn't realistic. As with every other stage in your business's life, in order to get what you want, when you want it, you have to make plans. You have to gather the appropriate information, analyze it, develop a plan, and then implement that plan. In a sense, the plan you develop at Level 5 will be the most important one you'll ever make for your business because it will determine whether all the work you put into the company, and all the time and effort you expended to build it into a successful business, was worth it.

At the beginning of this chapter, I suggested that you imagine you are standing at an intersection with cars coming at you from every direction. You know you're in danger where you are and that you have to move, but since all the roads look the same, you can't tell which one will get you where you want to go. Planning—as I said and have now shown—is what enables you to determine which road is the right one for you and your business. Regardless of which of the five levels your business is on, it is only by determining where you want to go and making plans for how you're going to get there that you will be able to achieve success. Most important, as I've demonstrated, you don't need a crystal ball to do it: planning is about preparing for the future, not predicting it.

Chapter 7
Fact 5: If You Don't Market Your Business, You Won't Have One

We have all heard marketing experts tell us not to think of marketing as an expense, but rather, as an investment. And what they say is certainly true. But instead of proclaiming the obvious, these so-called experts should be explaining to owners the two most important—and frequently forgotten—macro concepts regarding marketing. First, marketing is not a department. Marketing, in all its many aspects, is about capturing customers and doing all you can to keep them coming back, and achieving that is not just the responsibility of one department. It must be, either directly or indirectly, the responsibility of every employee in the organization. Second, marketing is ultimately about making more money—gross profit, to be precise. And that won't happen if the overall gross profit is not sufficient to cover costs and expenses. This might seem like a very elementary idea, but business failures occur far more often than business successes, and lack of gross profit is one of the main causes of those failures. One thing you can be sure of is that successful owners understand the importance of gross profits, and they battle hard, through pricing and product offering, to preserve them.

There is nothing pretty about marketing—it can be a blood sport. And its function is fairly straightforward—attract them, sell them, and keep them. That's the simple reality of marketing. Unfortunately, that definition is the only simple thing about it, because attracting customers isn't easy to do, and the ones you do attract won't all become loyal customers, even if you do everything right. That is, it takes marketing to bring customers in, but it also takes marketing—through businesses processes, selling skills, and employees' interactions with customers—to keep them. Having the right product, at the right time, at the right price is one thing, but delivering it to customers in a way that provides acceptable gross profits is something altogether different.

In other words, marketing is not one specific thing, like telling customers you exist, but a whole series of things, from offering products the public wants, to presenting and selling them profitably, to following up on sales, to making sure your employees are always knowledgeable and professional, just to name a few. Marketing is the vehicle that connects your products to the customer. What that means is that if it affects your customers, marketing is involved in some way. And it's this kind of customer focus that owners have to instill at every level of their companies.

As essential as marketing is, though, it's important to remember that no matter how good your marketing may be, unless you also have a good product, you may not be successful in the long term. General Motors and Coca-Cola are two well-known companies that forgot this and paid dearly for it. In the late 1970s and early 1980s, when GM redesigned their midsize, full-size, and some of their luxury vehicles as “look-alikes,” it became hard to tell a Chevrolet from a Pontiac or an Oldsmobile from a Buick. GM was a good marketing company, but as good as they were, customers revolted and moved to other companies because GM's cars were no longer distinctive, especially when compared to each other and some of their competitors' cars. Coca-Cola was another great marketing company, and its flagship product, Coke, was the undisputed heavyweight of all colas. But then they developed a product called New Coke to replace the original, and although they spent an enormous amount of money marketing it, their customers didn't like it and didn't buy it. Eventually, the company went back to its original product and New Coke disappeared from the shelves. The point here is that marketing is a powerful tool, but it can only do so much. Marketing needs a good product and a good product needs marketing.

Nike and Apple are two good examples of this. Both companies have great products, but so do their competitors. Both became successful by establishing strong brand awareness backed by solid products. Nike used the “swoosh” as its symbol, and its marketing showed creative, colorful, and attractive Nike running shoes, clothes, and other accessories just like the pros used, pitched by famous sports figures like Michael Jordan and Tiger Woods. In fact, the “swoosh” became a product of its own, getting customers to buy Nike's products just because of the symbol and the statement it made about them. Apple, of course, created the symbol of an apple with a bite taken out of it. They also strove to market products that were unique in some way, making them easy to identify as Apple products, and clearly differentiating them from their competitors' products, which appeared to be out of date by comparison. Apple's uniqueness of design and style, constant upgrading of products, cutting-edge technology, and willingness to not just create new products but completely new product categories all added to the company's mystique—and to its success.

The Benefits of Marketing

  • Marketing lets prospective customers know that your company exists and what you do.
  • Marketing allows you to shape customer perception of your company.
  • Marketing differentiates your business from your competitors.
  • Marketing allows a business to deliver your “why buy here” and “why buy now” message.
  • Marketing helps your company capture market share and maintain success.
  • Marketing enables you to develop brand recognition and expand your product lines.
  • Marketing can help reinforce, or shore up, your business's reputation.
  • Marketing enables your company to protect itself from competitors by promoting a competitive edge or advantage they can't duplicate.

The Realities of Marketing

  • Everyone in the company has to have marketing in his or her job description in one form or another and be able to deliver on the business's marketing promise, one customer at a time, and every time.
  • All the various elements of marketing—advertising, public relations, community activities, and others—are useful tools, but they must be coordinated if your marketing is to be as effective as possible.
  • As an owner, you have to make sure your company's marketing efforts, message, and—especially—money are clearly aimed at your target market.
  • It is essential for you to keep up with the market, if not be on its leading edge, as well as be able to “read the tea leaves” to predict which products will be “hot” and which will cool off in the future.
  • Everything you do in marketing must be designed to attract the customer, sell the customer, or keep the customer—that's why your business exists.
The Elements of Marketing

Marketing is an enormous challenge for many people. It often seems like the more you learn about it, the more you need to know. But like anything that's complicated, the easiest way to understand it and gain confidence in dealing with it is to break it down into manageable elements. And marketing can be easily broken down into three such elements: attracting the customer, selling the customer, and keeping the customer. These three elements have remained largely unchanged since people started marketing products and services, and they form the backbone of any marketing activity.

Attracting customers means getting their attention, and the first step in doing so is finding out where they are. This is not always easy to do, and often requires some trial and error. Pfizer, one of the world's leading biopharmaceutical companies, does not advertise Viagra on MTV, because the people who watch rock videos are not concerned about erectile dysfunction. However, they do advertise it on cable TV sports shows and in health magazines that cater to older men, among other places. They do this because they know their target market, which consists largely of aging baby boomers who are interested in any product that will help their flagging libidos.

Once you have the customers' attention, the next step is to hit them with a powerful message that will motivate them into action. Marketers know they have very little time for their messages to hit home, and that the message can be quickly forgotten, even by those who are interested. That's why they repeat advertisements again and again—it's through repetition that the message makes an impact and prompts a prospective customer to go out and buy whatever it is you're selling.

It's at this point that the process shifts to selling the customers. However, those responsible for attracting customers still have one more task to perform—analyzing which message attracted the most customer interest, which media generated the most traffic, and which message and media produced the most actual sales. These and other analyses are a major part of finding out what works and what doesn't in terms of media and message, and are essential in developing appropriate advertisements and choosing appropriate media in the future.

Selling the customer, the second element, is paradoxically something that owners sometimes forget is the main purpose of marketing. They spend a lot of time, effort, and money on trying to attract customers, but once they have their attention, they neglect to close the sale. That is, they don't pay sufficient attention to how customers are handled—from the time they come into the store, open the Web page, or start talking on the phone to a staff member, to the time they leave, log off, or hang up. When your company has an opportunity to sell, your employees have to be ready to do that—sell. And it won't happen unless you train your staff to do it and make sure there are appropriate sales processes in place.

The third element, keeping the customer, is similar to selling the customer, in that it's also something owners don't pay as much attention to as they should. In fact, developing a tracking system so you can contact customers or potential customers after they leave your business is an essential part of effective marketing. Creating loyal customers is important because they cost so much to get, and they are a limited resource. Moreover, once they have bought something from you, they are far less expensive to connect with, as well as easier to market and sell to. They already know who you are, where you are, and what you sell, and if your staff has done a good job attracting and selling them, a bond is formed. It's a fragile bond at first, but one that grows stronger with every purchase. Developing these kinds of repeat customers not only enables you to build a solid foundation for your business and provides you with a strong competitive edge, it may even be a game changer for your company.

Level 1: Ownership and Opportunity

At first glance, common sense would seem to suggest that marketing would have little impact on the decision process regarding ownership or opportunity. And this is true for ownership. But as far as helping distinguish a good opportunity from a bad one is concerned, marketing—particularly marketing research and analysis—can be extremely helpful. In fact, the research that goes into developing a marketing plan can provide a wealth of knowledge about the market, its strengths and weaknesses, its complexities, its challenges, its competitiveness, and how much money will have to be invested in marketing to have an impact in the marketplace. Each of these elements can have a significant effect on which opportunity you choose to pursue, so they should all be researched thoroughly. There is also, however, an additional item prospective owners, owners who are expanding their businesses, and owners who are reengineering their companies often tend to forget: how much gross profit can be generated. Gross profit has to be at the core of any marketing analysis, because ultimately, the reason your business markets and sells its product or services is to generate gross profit. Marketing always seems to concentrate on sales, but the fact is that sales are important only in terms of the gross profit they bring in.

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