Marketing 102: What Do I Need to Know for My Small Business?
Starting a small business is a huge goal to accomplish. Whether you are still mapping out that goal or have already begun, you’ll need to learn the basics of marketing in order to be successful.
The Four P’s of Marketing
Product: What is your small business selling? Whether it’s a tangible product like a homemade candle or a service like lawn care, your product is what you want people to buy. One of the most important things to remember about your product is how to differentiate yourself from another business that might sell something similar (or the exact same product). Maybe you have the widest selection of candles in the state. Differentiating within your product line is important, too. Maybe you offer a deluxe lawn care package complete with edging and weeding, and you also offer a distinct, more standard lawn mowing package. Consumer Package Goods, or CPGs, generally have some of the best examples of product differentiation. Look at Lysol as an example. They claim to kill more germs than any other cleaner, and they also offer a wide variety of sprays at different prices.
Price: Often, the price seems like the only thing that matters to your customer. But don't slash prices indiscriminately. Offer discounts that really register with your customers. For example, $20 off may carry more meaning if it's a $20 loyal customer discount.
Placement: This fundamental principle of marketing usually pertains to physical location: the geography of your store(s), the location of your product, or exact placement of your advertisement. Location can be very important. Is your store on a corner lot? Is it on the better side of the street for walkable traffic? Do you offer ample parking?
Lots of businesses develop location strategies or models to mirror their competition. Think of Burger King and McDonald's. You rarely see one without the other close by. Also, consider what requirements a community must meet before a Neiman Marcus will open up a location there.
Promotion: Every product needs a great promotional plan. How will you get the word out about your goods or services? Will you use TV advertising, a display ad campaign, search engine marketing, radio, direct mail, affiliate marketing partnerships or social media? The possibilities are endless. However you reach your customers, be sure to develop a comprehensive and sensible strategy to promote your product and your business.
Return on Marketing Investment (ROMI)
ROMI is a way to calculate what you get for the money you spend on marketing. Most marketers calculate ROMI based on either revenue (your sales figures) or profit (the money you keep after expenses). It can be difficult to recognize which portion of your sales result from from your marketing investment. The process is called attribution. A common method of attribution is to look for a lift in sales that corresponds with your marketing investment.
Consider this scenario. A landscaping business averages $10,000 in sales per week. The owner decides to run $1,000 worth of Facebook ads during a given week. That same week, sales increase to $12,000. The lift in sales is $2,000 ($12,000 minus the $10,000 weekly average). In this example, revenue-based ROMI is 200% ($2,000 incremental revenue divided by $1,000 advertising). The landscaper typically makes 15% profit. From a profit standpoint, ROMI for this scenario is 30% ($2,000 incremental revenue times 15% profit margin divided by $1,000 advertising).
Focus on Your Customers
The most important thing for any business is to understand customer needs. Does your lawn care staff need to be faster than everyone else, or do they need to be sure not to cut any corners? Should you invest in the latest technology that allows you to effectively treat sick shrubbery, or does your customer want the bare minimum for his or her hedge? Knowing your clientele will lead you to the best answer.
If you're a small business owner using your personal vehicle for business operations, you could be at risk. Find out more by visiting our material misrepresentation article. If you use any commercial vehicles for your small business, get them insured through Infinity’s Commercial Vehicle Insurance. Call an agent for more information at 1-800-INFINITY.
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