Market research allows entrepreneurs to answer questions such as: Who are my customers and potential customers? To which age group(s) do they belong? What is their income level? Where do they live? Do they rent or own their own homes? What features are they looking for in the products or services I sell? How often do they buy these products or services? What models, styles, colors, or flavors do they prefer? What radio stations do they listen to? Which Web sites do they visit? What factors are most important to their buying decisions? How do the strengths of my product or service serve their needs and wants? What hours do they prefer to shop? How do they perceive my business? Which advertising media are most likely to reach them? How do customers perceive my business versus competitors? This information is an integral part of developing an effective marketing plan.When marketing its goods and services, a small company must avoid mistakes because there is little margin for error when funds are scarce and budgets are tight. Small businesses simply can- not afford to miss their target markets, and market research can help them zero in on the bull’s eye. This usually requires conducting market research up front, before launching a company. One of the worst—and most common—mistakes entrepreneurs make is assuming that a market exists for their products or services. The time to find out whether customers are likely to buy a product or a service is before investing thousands of dollars to launch it! Market research can tell entre- preneurs whether a sufficient customer base exists and how likely those customers are to buy their products and services.

PriceAlmost everyone agrees that the price of the product or service is a key factor in the decision to buy. Price affects both sales volume and profits, and without the right price, both sales and profits will suffer. As we will see in Chapter 11, “Pricing and Credit Strategies,” the right price for a product or service depends on three factors: (1) a small company’s cost structure, (2) an assessment of what the market will bear, and (3) the desired image the company wants to create in its customers’ minds.For many small businesses, nonprice competition, focusing on factors other than price, is a more effective strategy than trying to beat larger competitors in a price war. Nonprice competition, such as free trial offers, free delivery, lengthy warranties, and money-back guarantees, intends to play down the product’s price and stress its durability, quality, reputation, or special features.

The man who stops advertising to save money is like the man who stops the clock to save time.—Anonymous

Write copy that will get results.Try the following proven techniques:  Promise readers your most important benefit in the headline or first paragraph.  Use short “action” words and paragraphs and get to the point quickly.  Make the copy look easy to read with lots of “white space.”  Use eye-catching words such as free, you, save, guarantee, new, profit, benefit, improve, and others.  Consider using computerized “handwriting” somewhere on the page or envelope; it attracts attention.  Forget grammatical rules; write as if you were speaking to the reader.  Repeat the offer three or more times in various ways.  Back up claims and statements with proof and endorsements whenever possible.  Ask for the order or a response.  Ask attention-getting questions such as “Would you like to lower your home’s energy costs?” in the copy.  Use high-quality copy paper and envelopes (those with windows are best) because they stand a better chance of being opened and read.Brown envelopes that resemble government correspondence work well.  Envelopes that resemble bills almost always get opened.  Address the envelope to an individual, not “Occupant.”  Avoid mailing labels, which shout “direct mail ad piece.” The best campaigns print addresses directly on the envelopes.  Use stamps if possible. They get more letters opened than metered postage.  Use a postscript (P.S.)—always; they are the most often read part of a printed page. Make sure the P.S. contains a “hook” that willencourage the recipient to read on. This is the perfect place to restate the offer’s unique selling proposition.  Include a separate order form that passes the following “easy” test:  Easy to find. Consider using brightly colored paper or a unique shape.  Easy to understand. Make sure the offer is easy for readers to understand. Marketing expert Paul Goldberg says, “Confuse ’em andyou lose ’em.”  Easy to complete. Keep the order form simple and unconfusing.  Easy to pay. Direct mail ads should give customers the option to pay by whatever means is most convenient.  Easy to return. Including a postage-paid return envelope (or at a minimum a return envelope) will increase the response rate.  Build and maintain a quality mailing list over time. The right mailing list is the key to a successful direct mail campaign. You may have to rent lists to get started, but once you are in business use every opportunity to capture information about your customers. Constantly focus on improving the quality of your mailing list.

?Marketing Defined What is marketing

 Many people think of marketing as only selling and advertising. We are bombarded every day with TV commercials, catalogs, sales calls, and e-mail pitches. However, selling and advertising are only the tip of the marketing iceberg. Today, marketing must be understood not in the old sense of making a sale—“telling and selling”—but in the new sense of satisfying customer needs.If the marketer understands consumer needs; develops products that provide superior customer value; and prices, distributes, and promotes them effectively, these products will sell easily 

In fact, according to management guru Peter Drucker, “The aim of marketing is to make selling unnecessary. Selling and advertising are only part of a larger “marketing mix”—a set of marketing tools that work together to satisfy customer needs and build customer relationships. Marketing The process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. Broadly defined, marketing is a social and managerial process by which individuals and organizations obtain what they need and want through creating and exchanging value with others. In a narrower business context, marketing involves building profitable, value laden exchange relationships with customers. Hence, we define marketing as the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return

Building the Right Relationships with the Right Customer

 Companies should manage customer equity carefully.They should view customers as assets that must be managed and maximized.But not all customers,not even all loyal customers, are good investments.Surprisingly,some loyal customers can be unprofitable,and some disloyal customers can be profitable.Which customers should the company acquire and retain? The company can classify customers according to their potential profitability and manage its relationships with them accordingly. One classification scheme defines four relationship groups based on potential profitability and projected loyalty: strangers, butterflies, true friends, and barnacles.Each 33 group requires a different relationship management strategy. For example, “strangers” show low potential profitability and little projected loyalty. There is little fit between the company’s offerings and their needs. The relationship management strategy for these customers is simple: Don’t invest anything in them. “Butterflies” are potentially profitable but not loyal. There is a good fit between the company’s offerings and their needs. However, like real butterflies, we can enjoy them for only a short while and then they’re gone. An example is stock market investors who trade shares often and in large amounts but who enjoy hunting out the best deals without building a regular relationship with any single brokerage company. Efforts to convert butterflies into loyal customers are rarely successful. Instead, the company should enjoy the butterflies for the moment. It should create satisfying and profitable transactions with them, capturing as much of their business as possible in the short time during which they buy from the company. Then it should cease investing in them until the next time around. “True friends” are both profitable and loyal. There is a strong fit between their needs and the company’s offerings. The firm wants to make continuous relationship investments to delight these customers and nurture, retain, and grow them. It wants to turn true friends into “true believers,” those who come back regularly and tell others about their good experiences with the company. “Barnacles” are highly loyal but not very profitable. There is a limited fit between their needs and the company’s offerings. An example is smaller bank customers who bank regularly but do not generate enough returns to cover the costs of maintaining their accounts. Like barnacles on the hull of a ship, they create drag. Barnacles are perhaps the most problematic customers. The company might be able to improve their profitability by selling them more, raising their fees, or reducing service to them. However, if they cannot be made profitable, they should be “fired.” The point here is an important one:Different types of customers require different relationship management strategies.The goal is to build the right relationships with the right customers.