Business Planning Basics Tooele SBDC 4 Week Program

1. Business Planning BasicsTooele SBDC4 Week Program Week 2 Marketing Ryan Murray, MBA, CBA Elora McGovern

2. After this class you should: • Understand the relationship between your market and your sales and how to create a successful company • Understand your competition and develop a strong competitive advantage for your business • Know the basics of market research and how to do it correctly • Become familiar with the 5 steps to marketing • Correctly identify a good market opportunity • Be able to create a feasible marketing strategy

3. 3 Keys to Success • Management Team • Do I have the right people in place doing the right things • Market Opportunity • Is there a demand for my Product/Service in my market area • Marketing Strategy • Is my business positioned to seize the market opportunity • (do a have a legitimate competitive advantage and is the market aware of it)

4. Marketing is a Function of ROI Sales Product Service Market Profits “Sales is a function of your market, marketing drives sales”

5. Competitive advantage • As of April 2011, Google had 65.4% of the market share, Yahoo had 15.9% and Bing had 14.1%. Yahoo and Bing together made up just less than half of what Google had. http://imprezziomarketing.com

6. Competitive Advantage • Olympics! • Win the gold by tenths of a second • Watch: 2008 Men’s 4X100 freestyle relay 2008

7. What is • Competitive Advantage? • Value? • Differentiation? • Core Competencies?

8. Competitive Advantage • A superiority gained by an organization when it can provide the same value as its competitors but at a lower price, or can charge higher prices by providing greater value through differentiation. Competitive advantage results from matching core competencies to the opportunities.

9. Value in Marketing • The extent to which a good service is perceived by its customer to meet his or her needs or wants, measured by customers willingness to pay for it. It commonly depends more on the customers perception of the worth than on its basic value.

10. Differentiation • Result in efforts to make a product or brand stand out as a provider of unique value to customers in comparison with its competitors. • Car Dealer • “I sell cars.” • How is he different from the others? • "My name is Mike from Competitive Motors. We've found that there is a lot of confusion in the automotive market today because there have been over 150 new models introduced in just the past three years. We've developed a computer book that profiles everything the buyer wants in a car and in less than five minutes, identifies the models most likely to fit their needs."

11. Core Competencies • A unique ability that a company acquires from its founder or develops that cannot be easily imitated. Core competencies are what gives a company one or more competitive advantages, in creating and delivering value to its customers in its chosen field. • A secret successful product • Competitors secret to great hair: Shampoo. Rinse. Conditioner- leave for 3 minutes. Rinse. • My secret: Wouldn’t you like to know? My hair is still better.

12. What is your Competitive Advantage? • What are you best at? • Why will your customers buy from you and not your competition? • What can I do for my customers that my competitors do also, but I can do it better and I CAN PROVE IT!

13. Developing your Competitive Advantage • Erica Olsen– How to Develop your Competitive Advantage

14. Where do you begin? • Think: What are you best at? • What makes you greater than your competitors? • Solve: Why are you better than your competition?

15. Understanding Competition Competition is defined as “ANYTHING that eats into your revenue” 4 Types of Competition • Direct Competition • Businesses that provide the same product/service • Indirect Competition • Businesses that provide a different product/service that meets the same need • Open Market • Customers in your market area that should be buying your product /service but aren’t • Yourself • Customers that already buy from you but should or would buy more

17. Fruit Tree Theory • Pick the low hanging fruit first • Go for the abundant fruit next • (Don’t worry about the other 2)

18. Why Market Research? • Identifying your target market • Decision making guidance • Provide fact based analysis • Eliminates intuition and emotion • Reduces Business Risk • Identify opportunities and threats

19. What to Research for • Competitor research • Research other industries • Look at what BIG business are doing • Up sale strategies • AutoZone phone and shelves strategy • Trends • What are people talking about? • Anti-bulling push

20. Google Said So… • Be efficient navigating the internet by using reliable sources • .com (When was it updated?) • .gov • .org • Blogs and social media sites • Wikipedia

21. Getting Started • Clearly define your key objectives and goals • knowing will help you identify your path and keep you from chasing squirrels • Target Market or Location for your business? • Type of research and data • Surveys, reports or statistics

22. Secondary Data • Secondary data—data previously collected for any purpose other than the one at hand • Annual reports or other reports within your firm • Government departments agencies • Periodicals • News media • University and non-profit organization studies

23. Secondary Data Disadvantages • Mismatch between the researcher’s unique problem and the purpose for which the secondary data was originally gathered. • Who gathered the data? • Why was the data obtained? • What methodology was used? • When was the data gathered?

24. Primary Data • Primary research is used when specific information is needed. It is data gathered for the first time. • Surveys (be effective) • Experiment • Observation research • Mystery shopper

25. Dig Deep • Strengths Weaknesses Opportunities Threats • SWOT for self/business/industry • Identify your competitors

26. Dig Deeper with Segmentation • Demographics (Age, gender, family size, life-cycle, income, education, religion, and nationality) • Geographic (Areas in the word, city, small town, density, climate) • Physiographic(moral values, lifestyle, culture, personality) Facebook! A flaw is assume—look at behavior • Behavioral(Occasions, benefits, loyalty, attitude, and user rate) when or how do people buy?

27. How to put it all together • Don’t over think it, but be creative • Utilize “Business English” practices • Analyze • Always have a sources page • Build a mini data base with the work you find while conducting research • Yes, it can be tedious, but you will move forward

28. Example • http://www.tooelebusiness.org/marketing-and-market-research.html

29. 5 Points to Market • Product/Service • Relative Price Point • Target Market • Market Mediums • Marketing Strategy

30. 5 Points to Market • Product/Service • Relative Price Point • Target Market • Market Mediums • Marketing Strategy These Become Your Market Opportunity Your Marketing Strategy is unique to your business, but the Market Opportunity is the same for everyone

31. 5 Points to Market • Product/Service • Relative Price Point • Target Market • Market Mediums • Marketing Strategy These are used to develop Your Marketing Strategy Your Marketing Strategy is unique to your business, the Market Opportunity is the same for everyone

32. Relative Price Point $ $$ Relative in terms of your competition

33. Target Market • Is Your Market Big Enough • Geographical Area • Let’s me know how many people • Best Customer Theory • (Chet Holmes, Ultimate Sales Machine) • Price is a key factor • (Why medium income?)

34. Market Mediums • Internet • Google Ad Words • Facebook • Youtube • Newspaper • Yellow Pages • Word of Mouth • Billboards • Direct Mail • Etc, etc

35. Mid-Point Homework • Describe your competitive advantage and rate it on a scale of 1 to 5 • Create a competitor list with their strengths and weaknesses and price point • Based on your relative price point, identify your target market in detail • Identify whether or not your target market is a small, medium, or large market to sell to (Bonus: calculate the minimum size target market needed for your business)

36. Developing Your Strategy Price Quality Differentiation

37. Developing Your Strategy Price $ Relative Price Point $$$ Quality Differentiation

38. Developing Your Strategy Price Quality Differentiation

39. Developing Your Strategy Price • The key is • Being able to beat the competition • Serve a market that isn’t being adequately addressed by the competition Quality Differentiation

40. Rate Your Company’s Competitive Advantage • Competitive Advantage • Rate your company’s competitive advantage from 1 – 5 • (1 being little to none and 5 being virtually untouchable) 1 through 3: little to no chance of being profitable in the long run 4 or 5: good competitive advantage

41. Discussion Points • Market Mediums • Marketing ROI • Measuring your results • Using a “control group” in your marketing • Marketing Budgets • Marketing Mistakes • Not doing it consistently • Not budgeting for it • Not planning • Buying “whatever” • Not buying anything

42. Homework • Establish a marketing budget and implement it into your financial forecasting. Make sure that your sales forecast is a function of marketing and write the relation as part of your business plan. • Determine whether you are focusing on price, quality, and/or differentiation. • If your competitive advantage is below 4, brainstorm with your management team ways to strengthen your competitive advantage. • Provide a written description of your marketing strategy. Make sure that it is well enough written that someone outside of the business could implement the strategy based on your description.