Put simply, marketing is any activity that gains the attention of prospective customers in order to secure new business. Your marketing efforts will be one of the major catalysts for the success of your business. A sound marketing approach will help get your business name “out there”, will let potential customers know exactly what you sell and the benefits they will receive by shopping with you rather than your competitors.
If you are not willing to put in the necessary groundwork when it comes to marketing your new business, you could find customers just don’t know you exist. You may also find you have wasted money on a misguided marketing campaign because you failed to target the appropriate customer base. You need to use every opportunity to market and promote your business.
There are four distinct aspects to marketing. These are activities to do with:
Your customers – Identifying your target audience and marketing to them. You should know your target audience through your preliminary market research and planning.
Building a business image – You cannot promote your business until you have established a business image. Your advertising and promotional efforts will hinge on your business image.
What makes you unique – Your marketing efforts should revolve around this pivotal point. This should convey to customers why they should use your business. Whatever makes you special or better than others, or if you cover a niche market, should be reflected in your advertising efforts.
Your advertising – Every advertising avenue should encourage customers to use your business and buy your products. Advertising provides an important publicity tool to help get your name out in the market place.
Now, your first task is to take a mental step back, consider your business as a whole and decide what you want to achieve.
Developing your marketing campaign
It may seem daunting but developing a successful marketing campaign is not difficult. The key is to know your audience, create a sound business image and research the possible advertising and promotional options available.
To begin with, you need to decide whether your marketing needs will be best served by hiring an agency to take care of your campaign or to do it yourself.
Agencies vs Do-It-Yourself Marketing
An agency may be able to pinpoint aspects of your business which would make it interesting to the public. They can also take the pressure off you by handling most of the work involved in developing an efficient marketing campaign.
Agencies are usually either PR or advertising driven. It depends what you want to achieve through your marketing campaign as to which agency you will choose. More often than not, a PR agency will handle every aspect of your campaign and will contract out your advertising creative services or will have an in-house team to do the work.
However, when using an agency, they usually want a minimum term contract, say six months, so it can be very expensive. This is one of the main disadvantages to using an agency, the cost. Considering you are just starting a business you may not be able to justify the expense of running a full-scale marketing campaign through a PR or advertising agency.
The cost of using agencies
According to most public relations agencies, the minimum price for a full-service public relations program can start from $3000 a month. Before you can decide on an agency, you also need to understand how they will charge you. Public relations agencies generally have two methods of billing their clients:
Progressive billing, in which the agency bills on an ongoing basis for time spent on each project
Flat-fee billing, in which the agency bills the client a flat fee each month.
Both methods are based on year-long public relations campaigns with an annual budget for both time spent and out-of-pocket expenses.
Out-of-pocket expenses cover anything the agency purchases or produces on your behalf, such as brochures, stationery, press-kit folders, photographs or postage. All out-of-pocket costs should be itemised on your invoice, so that if you have any questions you have an easy reference.
Compare the campaign costs to the expected outcome (such as higher visibility or increased sales) and decide whether an agency’s rates seem reasonable. Of course, considering you are just starting your business you may not have the money to spend on expensive marketing tasks. If that is the case, you can develop your own marketing strategy.
Creating your own marketing strategy will still cost money, however, you have much more control of how that money is spent. To create a campaign you must have a sound understanding of how advertising works and the marketing avenues available to you will help make the task easier.
As part of a do-it-yourself marketing campaign, in a nutshell, you will need to:
Create a business image
Develop your marketing budget
Know where, what and when to advertise
Decide what advertising medium to use
Know the various promotional outlets.
Creating a marketing budget
Once you have laid the groundwork and decided what you need to market, you should then consider marketing costs. Deciding how much money to spend on advertising can be difficult, especially for a new business.
There are basically two choices when it comes to marketing:
Basing it on funds you have available and tailoring it accordingly, such as only running ads in the local rather than city/state newspapers, until you can afford more, or
Working out exactly what type of marketing campaign you want and allocating whatever funds you need to it, such as TV ads as well as newspaper ads.
The amount you spend during the business start-up phase will be considerably more than what is needed once your business is up and operating. In the beginning, you will need a relatively substantial outlay to advertise and get your name “out there”. However, as months pass you will be able to assess what advertising mediums and promotional paths are proving the most cost-effective and you can then tailor your spending.
However, when starting a business it is wise to keep a tab on how much money you will allocate for your marketing efforts. This can be done by developing a marketing strategy, which not only covers the expenses during the start-up phase, but also addresses the next six months of advertising/promotions.
This budget can be altered as your advertising needs arise and you have seen results and identified the best advertising/promotional methods for your business. Most companies base their advertising budgets on a percentage of projected gross sales, usually from two to five per cent (bear in mind though, that this figure will be higher in the “start-up” stage).This is generally referred to as the “cost method”, which theorises that an advertiser can’t afford to spend more money than he/she has.
For example, if projected gross sales for the first year are $225,000 based on your business plan, then, using the cost method to determine the advertising budget (figuring five per cent), you would have $11,250 for the year or $937.50 per month to work with.
For a grand opening, you would use twice your monthly amount or $1,875 in this case, to advertise your opening.
Using the task method
For some businesses, using the “cost method” to determine advertising budgets won’t work as it doesn’t provide them with enough money to reach their audience. These companies base their advertising budgets on the amount of money needed to move the product.
This is called the “task method”. There are many different ways to determine the amount of money needed to attract customers; the most common way is through experience. Businesses just starting out, however, won’t have past records to guide them.
In this case, you will need to refer to your business plan and market surveys to determine your advertising budget. It is also helpful to find out what the competition is spending and the advertising medium they find most effective.