Effective Marketing Gets Product to Customer

After finding your management team and analyzing how you will develop and produce your business' unique product or service, the next step is marketing.

Marketing is everything that happens to get your product or service to the customer. Although marketing is commonly thought of as only advertising or promotion, it is a comprehensive strategy for positioning your product or service in the marketplace.

"Marketing is everything," says Debra Esparza, head of USC's Business Expansion Network, a project that helps local businesses plan for growth.

A business can have a great product or service, but if advertising doesn't reach the target audience, the business won't succeed, Esparza said. And if the product has been priced too high or low, potential customers won't buy it.

A good marketing plan combines the four Ps: product, price, promotion and placement. It should consider these elements and include a budget, timeline and people to carry out the plan.

The first step is to describe the benefits of your product or service and relate it to customer need. If you have already defined how your business is unique, this should be relatively easy.

For example, the unique feature of a bakery could be the 37 varieties of muffins it sells. The benefit to customers that the marketing campaign would emphasize could be choice, healthy ingredients and the fun of experimenting with exotic tastes. A tax preparer's unique business feature could be 24-hour-turnaround time. The benefits to the customer would be peace of mind, help in making tax deadlines and security that the forms are professionally prepared.

Once you have figured out the benefit to the consumer, you compare it to what other people are offering in the market. From that comparison, you will discover how your product or service fits into the marketplace and how it should be priced.

The baker with 37 varieties of muffins might decide that his product, which includes mango, lime, papaya and other exotic fruits, is a specialty item that people will pay more for. The tax preparer might discover his competitors already offer a 24-hour turnaround on tax returns, but she can undercut their prices by hiring cheaper help.

But remember that the price of your product or service is different than the cost.

"The cost is how much you pay to make it, which is entirely different from the perceived value that clients will get," Esparza said. "The perceived value dictates how much clients are willing to pay for it."

For example, George Industries, a metal-finishing company in East Los Angeles, devised a way to make designs on flashlight bodies and earn more money. As part of the regular manufacturing process, the aluminum flashlight cylinders were anodized--that is, dipped into chemicals to make a protective, anti-rust coating. But owner George Gering realized that for only pennies, designs could be added at the same time. The finished flashlight could then be sold for dollars more because they had a higher perceived value.

Now that you've established the benefit to the customer from your product and set a price, how do you let people know about your product?

Some business owners fail to promote their product, believing ads cost too much. Or they plunge into a shotgun promotion campaign, creating fliers, attending expos and running ads that are inconsistent, contain mistakes or fail to target their customers.

An effective marketing plan, by contrast, sets objectives. You must ask yourself what you are trying to accomplish, such as increased sales, more awareness of your business or new business leads. And you have to make sure you are targeting the right people to meet your objectives.

For example, a neighborhood gift shop owner who seeks more sales and puts fliers on windshields of cars in a nearby corporate garage may see little result if those employees never venture on the streets outside their building. The business owner might be better served putting those same fliers on cars in the surrounding residential streets. Or he could give the fliers to executive assistants at the corporation who might need to buy gifts for clients.

Your marketing plan should include money to cover necessary expenses related to advertising. Additional expenses might include promotional gifts and extra workers to demonstrate the product, give away the gifts or answer phone lines if you've advertised an 800 phone number.

For example, a software maker who offers free games to customers who make a purchase on a certain day needs to have a plentiful supply of the games, staff to handle crowds and the expertise to answer questions about how to operate the software.

Some typical promotional methods include direct mail, fliers, free gifts with purchase, discounts (preferably for returning, not new, customers) and broadcast and newspaper ads. Other ideas can be found in the classic book "Guerrilla Marketing," by Jay Conrad Levinson, or his subsequent books.

Keep in mind that marketing includes not just how you promote your product but how you package it, whether you're selling something in a container or bundling services for sale. For example, a tax preparer might offer his April 15 tax services for a basic fee but market, for an additional cost, a fall tax checkup. A game manufacturer might use vibrant colors and graphics for his products aimed at teenagers but use expensive, simple packaging for his high-end games geared to corporate executives.

Marketing costs typically average 2% to 5% of annual estimated revenue.

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Exercise: For your product or service, outline the target customer, the benefits, features, price, your promotional methods and placement of those methods. To help you, The Times has created an online grid at http://www.latimes.com/smallbiz

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The Bottom Line

"Entrepreneurship 101" is a tutorial on how to choose, start, finance, plan and grow a business. The program, written by Times staff writer Vicki Torres, was developed by Debra Esparza, a faculty member at the Entrepreneur Program of USC's Marshall School of Business. Esparza also heads USC's Business Expansion Network, a community and economic development project that has counseled more than 5,000 small-business owners in the Los Angeles area over the last six years. BEN provides help with financing, business planning, accounting, marketing and other issues. The tutorial can also be found on The Times' Small Business Web site at http://www.latimes.com/smallbizA

Entrepreneurship 101

Chapter 1: HOW TO CHOOSE A BUSINESS

Chapter 2: HOW TO START A BUSINESS

Chapter 3: HOW TO DEVELOP A BUSINESS PLAN

* Know the Value of a Plan

* Create a Management Team

* Define Your Products or Services

* Develop a Marketing Plan

* Master Operations

* Draft a Financial Plan

Chapter 4: HOW TO FINANCE YOUR BUSINESS

Chapter 5: HOW TO GROW YOUR BUSINESSM

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