Launching New Products and Services

Launching New Products and Services Rodney Overton Martin Books Success in Business First published July 2007 Publish...

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Launching New Products and Services Rodney Overton

Martin Books Success in Business

First published July 2007 Published by Martin Books Pty Ltd ACN 112 719 052 20 Blackwoods Road Boat Harbour NSW 2484 Australia Tel: (61 2) 6679 1051 Fax: (61 2) 6679 1535 Email: [email protected] Web: www.martinbooks.com.au Copyright 1994-2007 Martin Books All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage and retrieval system, without prior permission in writing from the publisher National Library of Australia Cataloguing- in-Publication entry: Overton, Rodney Launching New Products and Services ISBN 978-1-921360-30-5 • First published 1994 in soft cover • Fifth edition revised and reprinted 2002 • Reprinted August 2003 • Revised and enlarged February 2005 • eBOOK version July 2007

The writer - Rodney Overton is an international award winning writer (published in four languages) of more than twenty-five popular business skills ‘how-to’ books covering a wide range of business, human resources, management, planning and sales and marketing topics. Publishers in a number of overseas countries produce and distribute localised versions of these books. He works as business consultant and strategist and has wide experience in facilitating, writing and developing business training courses. [email protected]

Martin Books have a combined range of more than 100 books, CD ROMs and Training Facilitators Manuals available, covering areas of business such as Administration, Planning, Finance, Human Resources, Management, Marketing, Sales and Small Business. We also have a Training Facilitators Manual available for a training course titled BUSINESS PLANNING. Our books are distributed and published in four languages in a number of overseas countries.

Introduction Being involved in launching new products or services can be very exciting and stimulating, though at the same time fraught with untold perils and dangers. The results of success can be great, even immense, though the risk of failure is always very close at hand. This book sets out to address many of the issues involved in launching new products and services, from planning and budgeting, to making sales and collecting payments. It is especially aimed at those involved in launching new products or services, and will also be of immense assistance to anybody from an inventor to a sales and marketing professional. An essential part of launching a new product or service is creating sales. Many people approach product launches armed with copious cash flow statements and financial projections with no real idea where sales will come from or how to create sales. If you wait for the world to beat a path to your door you will probably be waiting a long time. Absolute professionalism is another major bonus when planning to launch new products and services, but this takes many years, even a lifetime to acquire and use to your advantage. Research and understand your market place before you commence. A working and proven prototype is a must, together with a business plan and a marketing plan. We currently have a combined range of more than 100 books, CD ROMs and Training Facilitators Manuals available, covering areas of business such as Business Administration, Business Planning, Finance, Human Resources, Management, Marketing, Sales and Small Business. Our books are distributed and published in three languages in a number of overseas countries. Finally some of our other publications may assist further with launching new products and services. For further information we recommend: Business Planning Made Simple, Feasibility Studies Made Simple, Marketing Made Simple and Starting a New Business. We also have a detailed training course available on this subject. We welcome your comments and suggestions. Rodney Overton July 2007 [email protected]

Table of contents 1

Planning...........................................................................page 1 • • • • • • • • • • • • • • • •

Reasons for planning.................................................................... 2 Marketing Planning....................................................................... 3 Promotion Plans...........................................................................4 What really matters in building a brand.............................................. 5 Strategic management.................................................................. 6 Registrations or expressions of interest............................................7 Rating your product...................................................................... 8 Goal planning.............................................................................. 9 Intellectual property.................................................................... 10 Business Planning...................................................................... 11 A Business Plan format................................................................12 Launching of new products........................................................... 13 Human Resources...................................................................... 14 Premises and identification...........................................................15 Crisis management..................................................................... 16 The strategic management process................................................17

2 Financing your new product............................................ 18 • • • • • • • •

3

Product development........................................................28 • • • • • • • • • • • • • • • • • •

4

How much money will I need...?..................................................... 19 A budget, Basic record keeping..................................................... 20 Attracting venture capital............................................................. 21 Quick ratio analysis.................................................................... 22 Business Law....................................................................... 23, 24 The Trade Practices Act...............................................................25 Inventory / stock management...................................................... 26 Getting paid...............................................................................27 Are these issues pertinent ........................................................... 29 A new product launch - issues to address................................... 30, 31 How will we market our new product?...............................................32 The buying process.....................................................................32 Value adding..............................................................................33 New product development............................................................ 34 Three levels of product................................................................ 35 Value selling..............................................................................36 Sales intelligence - Competitor activity............................................37 Would you have invested in this.....................................................38 Do markets continually grow?........................................................39 Quality..................................................................................... 40 Success..............................................................................41, 42 Intimidation............................................................................... 43 The Customer............................................................................ 44 Get the shopping list................................................................... 45 Identifying and influencing customer requirements............................ 46 What is your customer worth?....................................................... 47

Marketing...............................................................................48 • • • • • • • •

What is marketing?..................................................................... 49 Market research.........................................................................50 Marketing questions....................................................................51 What business are you in?............................................................52 Contrasts between selling and marketing.........................................52 Market segmentation...................................................................53 Marketing mix............................................................................ 53 Brand names............................................................................. 54

• • • • • • • • • • • • • •

A marketing plan format............................................................... 55 Implementing the marketing plan....................................................56 SWOT analysis.......................................................................... 57 Image.......................................................................................58 Sustainable competitive advantage................................................59 Choosing a product.....................................................................60 What if we increase our prices?..................................................... 61 Rules - Innovations..................................................................... 62 Where will you meet?................................................................... 63 The marketing audit.....................................................................64 Integrated marketing and advertising..............................................65 Advertising - 10 quick points......................................................... 66 Some sales and marketing basics.................................................. 67 Contributions to total cost............................................................ 68

5 Selling the product.............................................................. 69 • • • • • • • • • • • • • •

A Sales and Marketing strategy..................................................... 70 Targeting customers................................................................... 71 Creating demand - creating sales................................................... 71 Prospecting and finding customers................................................ 72 New customers.......................................................................... 73 Generating interest.....................................................................74 Why won’t my product sell?...........................................................75 Consumer / buyer behaviour......................................................... 76 Buying signals........................................................................... 76 The distribution chain.................................................................. 77 Price points...............................................................................78 Establishing credibility.................................................................79 Communications.........................................................................80 Selling your idea.........................................................................81

6 Case studies, Checklists.................................................. 82 • • • • • • • • • • • • • • • • • • •

7

Is your business well run?............................................................ 83 The conception period for some major innovations.............................84 Case study - Buildings................................................................. 85 Case study - You could have been................................................. 86 Case study - Engineering products.................................................87 Case study - Jams......................................................................88 Some pitfalls.........................................................................89, 90 Case study - Widget dealers......................................................... 91 What makes a company successful?..............................................92 Are you an entrepreneur?............................................................. 93 Do you have what it takes?........................................................... 94 An exercise - Selling your business................................................ 95 Time management.......................................................................96 An entrepreneur’s checklist.......................................................... 97 Launching a new product - opportunities and threats..........................98 Top 20 questions........................................................................99 A Checklist - New product development................................... 100-104 Foxtel casts a line to hoteliers..................................................... 105 Summary.................................................................................106

Index..................................................................................... 107

1 Planning

Launching New Products and Services

Remember that life is what you make of it. 100 percent of the shots that you don’t take, don’t go in. How many shots have you taken today?

Planning Planning is a key and essential issue when launching new products and services. REASONS FOR PLANNING The success of companies that plan their marketing programs has proved that it pays to predetermine future marketing action. Marketing planning is fast becoming a necessity in well-run corporations, because it is the way in which marketing objectives are matched with corporate resources. The shortening of the average product’s life cycle, the multitude of new products entering the market, and the intensifying of competition have all helped to increase the need for marketing planning. RELATIONSHIP BETWEEN PLANS AND OBJECTIVES A close relationship exists between plans and objectives. Planning activities are goal directed. Goals determine plans, and plans are ways of reaching goals. Once objectives are determined, management designs a plan that, in its opinion, will achieve them. Companies continually adjust and adapt their plans to changing conditions and opportunities. At times, objectives themselves must be changed - perhaps scaled down, if company resources are inadequate. Marketing goals and plans are inexorably intertwined, and changes made in one are very likely to affect the other. The key to success in battle One, you must have good intelligence - in every sense of the word - Two, you must have good organisation - your troops must be well trained, well supplied, and well motivated. Three, you must always have up your sleeve an enormous element of surprise because this can fox the enemy, give you the initiative, save lives, and provide an unforeseen bonus which it is up to you to identify and exploit before it disappears. Four - you must never give the enemy rest. Never let him rest. Always be doing something to which he has to react. If you don’t then he will be doing something to which you have to react and you have lost the initiative. No, never let him rest. And I mean that literally as well.

General Sir Richard McCreery 1965

2


"If one really wishes to be master of an art, technical knowledge of it is not enough. One has to transcend technique so that the art becomes an 'artless art' growing out of the unconscious."

Daisetz Suzuki

Marketing Planning Marketing planning yields decisive benefits to the company. For example: 1. It makes marketing management think through and sharpen its objectives, strategies and policies. The very act of planning necessitates clear and forwardlooking thinking. 2. It encourages the development of performance standards to control marketing programs. The need for the determination of the success or failure of marketing plans leads to the effective standards against which to judge marketing performance. Controlling to standards also points out weak areas in the marketing program that may need to be adjusted before the end of the operating period. 3. It leads to better coordination of the marketing program with other intrafirm programs. Financial, human, and productive resources can be matched to marketing needs to yield the best results. 4. It prepares the company to meet any sudden changes in its external environment. Competitive reactions, market conditions, economic conditions, and so on can be anticipated and incorporated into alternative marketing plans. Marketing planning is an essential function of progressive marketing management. It is the means by which the product, place, price, and promotion mixes are brought together to achieve marketing objectives. Without marketing plans, the marketing program becomes an unintegrated mass of crisis decisions that will waste scarce resources and ultimately put the company in an unfavourable competitive position. STEPS IN MARKETING PLANNING Although there is an art to marketing planning, certain steps should be followed to develop marketing plans successfully. These steps are: 1. Start with a sales forecast. The sales forecast is a projection of the revenue a company expects to receive in a specified time period. It is the key company forecast and affects other company forecasts, such as the production and finance forecasts. The sales forecast helps in planning company objectives, strategies, and programs. Sales forecasts are often made for one-, five-, and ten-year periods. 2. Establish potential sales volume and profit targets and expected market shares. These become the basis for guiding, evaluating, and controlling operations. 3. Translate the sales forecast into specific product, customer, market, territory, and volume goals. Each person involved in the marketing program must know exactly what is to be accomplished. 4. Plan to make changes in the marketing plan after it is put into operation. A changing market environment changes marketing opportunities and, therefore, plans. 5. Measure result against objectives periodically. Do not wait until the end of the 3


operating period to determine whether or not objectives are being reached, as it is then too late to make any meaningful changes. Usually, results should be checked against objectives at least every three months and any deviations from objectives noted. 6. Make necessary changes to bring results into line with objectives. At times, the objectives themselves may need to be changed to bring them into line with changing market conditions and situations.

Promotion Plans Promotion plans specify which promotion tools are to be used, how company resources are to be allocated among these tools, and what results are expected. Promotion planning determines the promotion mix and provides for the coordination of the elements of the mix with each other and the overall marketing program. Advertising plan. A company’s advertising plan should include the advertising target, objectives, strategy, appeal, copy theme, media schedule, budget, and methods for measuring advertising results. Publicity plan. The publicity plan should include the publicity target, objectives, schedule of company products and events with news value, media possibilities, budget, and means of measuring the results of publicity. Personal selling plan. Sales targets, objectives, strategies, major appeals, budget, and methods of measuring personal selling results should be included in the personal selling plan. Sales promotion plan. Sales promotion targets, objectives, strategies, schedule of events, budget, and methods of measuring the results of sales promotion efforts are necessary parts of the plan. Revenue growth - an 8 step approach 1. Review the performance of current growth projects. Are they relevant and appropriate? Are high-priority projects properly funded? 2. Overcome any barriers to growth. They may be individual, organisational or competitive. The leader’s attitude to growth is important. Leaders have to find new ways of increasing revenue, inside and outside the organisation, rather than rely on traditional streams such as advertising. 3. Develop a growth mindset and engage in finding new ways of achieving growth and commit to specific, tangible growth targets. Think outside markets and industries and concentrate on their own opportunities. 4. Make growth part of the timetable instead of treating it as a one-off exercise. Devote time, energy and resources to developing growth. Use outside assistance. 5. Break out from the traditional growth barriers of a modest annual percentage increase in annual revenue. 6. Use creative processes to find and develop growth opportunities. Rely on insight, intuition and passion. Experiment and take risks. 7. Create a growth budget and set aside sufficient funds to pursue growth. 8. Establish a growth team, develop new perspectives and objectivity, and be sure to include a maverick and an outsider. 4


What really matters in building a brand Adding a miracle ingredient may no longer improve a brand's prospects, but buyers do value certain attributes. A framework for evaluating their relevance and uniqueness helps marketers decide which of them could be important enough to invest in.

Antes Features that are important to consumers but are provided by all competitors at similar level

Drivers Features that are both important to consumers and highly differentiated from those of competitors

Neutrals Features that are irrelevant to consumers

Fools Gold Features that are distinctive but do not drive consumers’ loyalty to brand

Marketers can promote a brand's tangible attributes, such as low prices or assorted flavours, or its intangible attributes, such as image. The interplay is complex, but statistical techniques can help marketers home in on the appeal of each attribute, as well as reveal misconceptions about those that actually lead consumers to buy products. The exhibit presents a framework for categorising brand attributes. Those that marketers value as distinctive—but that buyers consider irrelevant—are the fool's gold of branding. Attributes that every brand has but are nonetheless essential to make consumers consider buying a product serve as the ante for getting into the branding game. Those worth investing in and promoting can differentiate a product from competitors and drive purchasing decisions. Source: The McKinsey Quarterly: Chart Focus Newsletter: May 2004

5


Selling to and reaching the market place How can you get your fabulous new idea to the market place? This is a major stumbling block facing most people with a new concept or idea. In the week of writing this I was approached by two partners, who after some two years and much expense and heartache had sold seven of their products. They had registered world wide patents, and taken and relied on advice from accountants who had never before been involved in new product development. A Business and Marketing Plan prepared by their accountants failed to set any goals or targets to address driving the growth and national and international sale of the product. Some alternatives which these people could use to drive and grow their product in the market place could include: 1. Market and sell it yourself - as the partners had no capital and lacked manufacturing facilities this was not an option. 2. Call for expressions of interest - don’t be frightened to spend money on a large advertisement in a major newspaper, probably around $1,000 to reach the right people and to convey the right image. This could generate enquiries from a range of people and organisations with sufficient funds and ability to drive the product. 3. Sell the entire concept - to a major company already operating in the industry with existing trade contacts. 4. Take on a partner with finance - always difficult and most people in this situation have problems ‘giving’ away equity for money. And very few partnerships succeed anyway! 5. Licence the concept - difficult because of very few sales to date to prove the concept. 6. Franchise the concept - very difficult to franchise a virtually unproven concept. 7. Use a manufacturers agent or trade broker to sell the product - a very slow, but steady and cost effective way of gaining market share. Some critical issues in launching new products The ability to source finance Management skills Contacts Technical skills Commercial skill A willingness to listen Winning with new products Expect to reduce costs 8 - 9% each year Be fast to market (seven months average) Expect to have a second generation within two years Improve value within two years Listen to customers Listen to your sales force Respond quickly Have your product approved by opinion leaders and reviewers Look for approval from standards bodies 6


Selling to and reaching the market place What do consumers want? Consumers want: • Value and convenience. • McDonald’s claim part of their success is more than just the food - it is the experience and feeling that you get when you go to their outlets. • Many brand name clothing manufacturers claim that their product is secondary to the ‘image’ people want to buy, and more importantly wear and be seen in. Registrations or Expressions of Interest An excellent and effective way of gaining interest and possible support for an entrepreneurial idea, new product or service is to place an advertisement asking for EXPRESSIONS OF INTEREST in a suitable newspaper or magazine. For instance a person or organisation seeking financial backing for a project might place an advertisement in a major newspaper. In a recent true case, a client placed an advertisement in a major newspaper seeking EXPRESSIONS OF INTEREST from people interested in a development project. A good deal of time, thought and effort was put into writing the advertisement, and a profile of ‘the ideal investor’ developed. It worked well! The client received three times as many replies from potential backers and investors than they had hoped. And the inquirers fitted the profile that had been thought out and developed. In another instance a Melbourne businessman had developed what he thought was a good idea and a very sound concept. It reached the point where it required a cash investment of around $100,000 to proceed to the final stage - a stage where if the idea and concept proved sound, it would generate a substantial, positive cash flow. The Melbourne businessman placed a small advertisement in the Sunday newspaper inviting EXPRESSIONS OF INTEREST from people who might be interested in using his idea/concept. When telephone enquiries were received - and there were hundreds - they were told that the idea/concept was to commence on a set date a few months ahead, and they were sent a REGISTRATION OF INTEREST form to fill in. The response was more than sufficient for the Melbourne businessman to start taking orders and deposits. With a renewed confidence generated from this response he then invested the $100,000 with a deal of confidence that would not have been possible without asking for the initial EXPRESSIONS OF INTEREST. An added bonus in this instance, was the generation of sufficient names to commence a data base of potential clients who could be phoned in the future to initiate a sale.

7


Launching a New Product TRY THIS SIMPLE TEST Rate each item x /10 Score o o o o o o o

GROWTH RATE / POTENTIAL BARRIERS TO ENTRY COMPETITOR RIVALRY BUYER POWER SUPPLIER POWER SUBSTITUTES YOUR PERSONAL SKILLS Add, then and calculate a

Try it on a:

%

• sports store • new car franchise • liquor store • your new product or pet project

A CONSENSUS of ADVICE from ENTREPRENEURS Research your market, but do not take too long to act. Start your business when you have a customer. Try your new venture as a side line first. Plan your objectives within specific time frames. Surround yourself with people smarter than yourself. Do not be afraid to fail. Use a good accountant / consultant / facilitator.

8


Goal Planning - a suggested plan to fill in AREA: DATE TODAY: DATE TARGET: DATE ACHIEVED: GOAL • Specific • Measurable • Attainable • Realistic, • Tangible

Possible Obstacles ❐ ❐ ❐ ❐ ❐

❐ ❐ ❐ ❐ ❐

Possible Solutions ❐ ❐ ❐ ❐ ❐

GOAL BENEFITS ❐ ❐ ❐ ❐ ❐

ACTION STEPS for achieving my goal ❐ ❐ ❐ ❐ ❐

Is it worth pursuing this goal time, effort, money? ❐ ❐ ❐ ❐ ❐

9


Intellectual Property - What is it? In Australia the Australian Industrial Property Organisation (AIPO) offers a range of products for the protection of intellectual property. In many instances Intellectual property will be of major concern and importance to entrepreneurs. A Patent Attorney should be consulted rather than trying to arrange protection yourself. PATENTS protect inventions, that is, a new or improved product or process. REGISTERED TRADE MARKS protect words, symbols or pictures, or a combination of these, and they distinguish the goods and services of one trader from those of another. REGISTERED DESIGNS protect artistic and literary works, such as books, paintings and music, but also protect computer programs and engineering drawings (this protection is automatic and does not need to be applied for). PLANT BREEDERS RIGHTS (PBR) protect new plant varieties. CIRCUIT LAYOUT RIGHTS protect the three-dimensional configuration of electronic circuits and layout designs (this protection is automatic and does not need to be applied for). TRADE SECRETS protect trade know-how and other confidential information. Intellectual property could be: • A patent that represents a new product line or forms the basis of further research. • A trade mark that underwrites marketing efforts. • Any type of intellectual property which could form the basis for a new partnership. • Copyright of books and articles, (this is managed by the Attorney General’s Department). • Plant breeding rights (P.B.R.) which are covered by the Department of Primary Industries and Energy. Intellectual property can be a valuable asset and should be addressed in the Business Plan. Intellectual property may require a special strategy of its own to ensure that each element is given the appropriate care and attention. When writing your Business Plan you should take stock of everything that has been created and is essential to your company. This should include the business name and logo, new ideas, new services, new products, new manufacturing techniques, promotional material, videos and the outcomes of research and development.

10


Business Planning A business plan is essential when you are planning to launch new products or services. It should tell the person reading it: What is planned Who will do it When it will be done How much it will cost WHAT, WHO, HOW, WHY, are key words in all planning decisions. The process of Business Planning can prove to be both therapeutic and cathartic. It will cleanse and refocus your thinking about business and thus help you develop your approach to it. In undertaking Business Planning you will learn a lot more about your business and thus acquire more confidence in how to manage it. Without a Business Plan you can only react to events, and as such your achievements will be limited. A Business Plan helps you focus on the future and will assist in identifying a clear course of action to lead you there. PLANNING FRAMEWORK Business Planning is a process and can be broken down into steps: 1. Establish objectives 2. Develop basic assumptions or premises 3. Identify alternative courses of action 4. Evaluate alternative courses of action 5. Implement the plan TYPES OF PLANNING MARKET PLANNING - the potential market FINANCIAL PLANNING - CASH FLOW CONTINGENCY PLANNING - what if ? LONG RANGE or STRATEGIC PLANNING - goals and objectives MANAGEMENT BY OBJECTIVES If you don’t want to spend your entire life locked inside your business, train competent people to handle any emergency and all day to day operations. At some point the owner’s best contribution should be managing the big picture. Some business schools stress that any entrepreneur who can’t leave for six weeks and come back never had a business in the first place. Sharon Kahn

Any new idea is sure to meet sales resistance. If it is not resisted, it is probably not a new idea.

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A Business Plan format

courtesy of SydneyBusinessCentre The PURPOSE of this PLAN • Tell the person reading your plan why you are writing it - to obtain finance, to expand, to address growth, to explain to potential shareholders what your business plans to do. EXECUTIVE SUMMARY • A summary of your Business Plan is written after you have completed the plan. This should briefly explain and summarise in 1 or 2 pages, to the person reading your plan, what your business is all about.

LEGAL • Registration of intellectual property • Corporate structure - future • Financial liabilities etc PERSONNEL MANAGEMENT • Names, responsibilities, position Provide an organisational chart • Conclusions FINANCIAL PLANNING • Sales forecast • Budget • Projected financial requirements • Capital requirements • Summary

BUSINESS EVALUATION • Structure • Profile • Aims and objectives • Resource evaluation • Financial status • Service providers • S.W.O.T. analysis

ACTION PLAN • Prepare a critical path analysis to tell the person reading the Plan WHAT will happen HOW it will happen WHERE it will happen WHEN it will happen WHO will make it happen

PRODUCT EVALUATION • Market sectors • Pricing structures • Packaging THE MARKET • Market profile • Competitor analysis • Customer profile • Product / market fit • Selling function / distribution • Pricing • Advertising and promotion • Expansion strategies

KEY INDICATORS • Measurements for the performance of the business APPENDICES • Business License report • BizHelp report • Supporting information

OPERATIONS PLAN • Current production capability and structure • Terms on purchasing • Supplier evaluation • Production process • Expansion plan

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Launching of New Products An easy and quick three point guide and checklist to apply to any new business, product, service or idea you are contemplating becoming involved in is: IS IT ? A GROWTH MARKET CORRECT PRODUCTS A VEHICLE FOR SALES Compare your product against this checklist. Try other products against this list, such as: • A new cigarette brand • What if marijuana were legalised tomorrow? • An inexpensive imported motor car. • On site caravans. • A kitchen manufacturing business. • Typewriters • Computer furniture U.S.P. Does your business or product have a UNIQUE SELLING POINT? Can you come up with one for it? In the time of Christopher Columbus, the advisory committee to Ferdinand and Isabella of Spain wrote: ‘So many centuries after the Creation, it is unlikely that anyone could find hitherto unknown lands of any value.’

STRATEGY TIP When formulating strategies, remember that a strategy which relies on price to win the the business, will not be a unique strategy. There is nothing unique about pricing!

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Negotiate with style Recognising your own negotiating style and that of the other party can help you anticipate their approach and avoid being hooked into an emotional response. Some basic negotiating styles: Competitor - attacks, looks for control. Goal: to win Problem-solver collaborates, looks for underlying problems. Goal: to reason together. Compromiser - nurtures the relationship, looks for fairness. Goal: to split the difference. Accommodator conciliates, looks to smooth things over. Goal: to solve other peoples problems. Avoider - hides, looks for escape. Goal: to avoid conflict. Source: www.ouellette-online.com


Human Resource Planning and Development People - Human Resources - will inevitably be an important part of launching your new product. An older definition of Human Resources is that Human Resources Management should be running their companies so people get more satisfaction from their work. DOES YOUR BUSINESS HAVE A MISSION STATEMENT? Could people issues be addressed more readily if you did? All members of the organisation should focus on and believe in that statement and vision, and set out to achieve that vision. The statement and vision should be founded on a set of values held by all members of the company. You will need to start by establishing the values of your organisation, and then develop and deploy the statement and vision throughout your organisation. Any business or company controls a portfolio of the most powerful tools for changing behaviour of the people working there, including: • Pay • Promotion • Training • Job rotation • Cross functional assignment • Performance evaluation • Supervision - all of these are strong tools to modify behaviour. Some organisational goals in the management of human resources:Productivity Promotability Innovation and flexibility Special skills Can management define what behaviours it wants in order to accomplish certain goals? Without such a specification we will not accomplish very much. There can be little growth and development for employees at any level in a sick and stagnant organisation. It is in the best interests of both the individual and the organisation to have a healthy organisation that can provide opportunities for growth. We offer some well known PEOPLE adages: If competent people are hired, they will be able to do the work that is required. If they are provided with challenging responsibilities, they will respond with enthusiasm and creativity, generally performing well beyond the technical relationship of a fair day’s work for a fair days pay. The secret lies in psychological gratification in addition to monetary rewards. Economies or efficiencies were never achieved by leaving employees feeling that they are slightly underpaid. They will respond to this feeling by slightly under working. Another important difference between developing behavioural skills and physical skills is that different personalities may require different approaches. Premises and Identification Your new product or service looks like a winner. What else do you have to do before you can commence selling? 14


PREMISES Some of the issues you will you need to address when looking for suitable premises: Accessibility to, and for your prospective clients Parking facilities Suitability of the premises for your business Security of the premises and the area The image the premises present - to your suppliers and potential customers The image the premises present - will it enhance your business Proximity and accessibility to suppliers Proximity and accessibility to suitable staff to man the business Are there similar, complimentary businesses in the area Long term prospects for the premises and the area Special requirements for you and your business SIGNAGE and IDENTIFICATION Before you commence selling from your business premises or shop to prospective customers what identification and signage will you attach to your premises and products? Will you display? Your logo Your company name and address A contact phone number Trading hours Signage identifying you with a brand supplier Your email and web address Others

Is part of capturing market share, capturing a share of the customer’s mind?

15


Crisis Management - Planning for the Inevitable LUCK Luck often comes down to being in the right place at the right time. Others claim luck is where preparation and opportunity meet. However to be in the right place at the right time the individual has most certainly done something to be there. Luck can be broken down into the mnemonic: L U C K

Labour Under Correct Knowledge

A POWER FAILURE Is a good example of crisis management. • If it happens at night you will need a torch to see into the meter box. • Do you know where the meter box is? • Do you have any spare fuses? • Do you know how to contact the power authorities? • Do you know how to contact an electrician? You may know what the problem is but without a torch you cannot identify the problem. You cannot solve the crisis without some pro-active preparation. IN A MAJOR BUSINESS CRISIS Do your employees have a (confidential) list of after hours phone numbers? Who is the back up person if you are unavailable? Which government agencies do you need to contact? Are their phone numbers on your list? Would the switchboard operator be able to handle incoming calls and questions in a crisis? Many larger organisations have 1800 phone lines which can be used in emergencies. SOME POTENTIAL PROBLEM AREAS • Product recalls • Industrial accidents • Environmental problems • Union problems / strikes • Rumours / media leaks • Government regulatory problems • Terrorism • Embezzlement • Bad debts • Loss of a key supplier • Loss of a major customer Statistics suggest once a crisis commences: • in 70% of cases it will escalate. • in 50% of cases it will interfere with business. • in 50% of cases it will effect profits. It is common sense to take a method and try it. If it fails, admit it frankly and try another. But above all, try something.

Franklin Delano Roosevelt

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The Strategic Management Process

ANALYSE THE ENVIRONMENT

IDENTIFY OPPORTUNITIES AND THREATS

IDENTIFY OUR CURRENT MISSION and OBJECTIVES

RE-ASSESS OUR MISSION and OBJECTIVES

ANALYSE OUR RESOURCES

EVALUATE RESULTS

IDENTIFY STRENGTHS and WEAKNESSES

IMPLEMENT STRATEGIES

17

FORMULATE STRATEGIES

2 Finance


How much money will you need?

Instead of just going by ‘gut feel’ it is essential that projected funding requirements be carefully considered and costed. Here is a simple table to assist with the process. ITEM

$$$

• Working capital • Capital works • New equipment • Research & Development • Business infrastructure • Staff recruitment • Staff training • Export research • Export marketing • Establishing distribution networks • Protection of intellectual property rights • Development of intellectual property rights • Others •. •. •. •. TOTAL

19


A Budget and basic record keeping Monthly (or daily, weekly, annual) budget and deviation Budget for month Sales Less - Cost of goods Gross profit on sales Less-Operating expenses Sales commissions Advertising Wages Power P.A.Y.E. tax Sales tax Superannuation Workcover Office supplies Insurance Maintenance Legal & Accounting Deliveries Licenses Telephone Others * * * * * * * Depreciation Interest Total expenses Net profit / loss Income Tax Net profit after Tax

20

Actual for month

Deviation for month


Attracting Venture Capital How are proposals evaluated by venture capitalists? 1. The people involved. It is virtually a unanimous consensus among venture capitalists that people are the most important aspect of a venture situation. A first rate man with a second rate idea is preferred to a second rate man with a first rate idea. The management team is the keystone of the new technically oriented business. Most venture capitalists feel that a major weakness on the part of the management team is grounds for the rejection of the proposal. The usual criterion for the management team appears to be ‘balance’ - the presence of both technical and managerial skills in complementary proportions. 2. Venture capital investors are less influenced by exciting technology than by actual demonstrations of commercial market viability. 3. The product. It is virtually impossible to attract backing for an entrepreneur with nothing but an idea. Some investors would not even consider a proposal unless the first sale had been made. Others will insist upon a working and well tested prototype. ... it is frequently necessary that a substantial investment has already been made by the entrepreneur, if not in money, then at least in time and energy. The product should have a natural product line or follow on product. (A single, stand alone product is obviously more difficult to sell, market and distribute, R.O.) An area for careful examination is market growth and market competition. The investor will look at the ground rules, the competition, the pricing structure, the distribution patterns and the industry averages for the market the company proposes to enter. 4. Venture capital investors usually have a strong sense of risk and use methods designed to avoid unnecessary degrees of risk. They will investigate the proposal in depth so that a set of highly individual standards may be applied to the situation. Typically 3 levels of screening exist for a new proposal. Initial-Highly informal, usually by phone or letter and sufficient to disqualify 80% 90% of proposals. Secondary-The real scrutiny starts here. Some groups require an applicant to complete questionnaires covering the technology,the product, the market and personal histories and finances. They will then check with the person’s associates, past employers, lawyers, accountants, suppliers, customers, dealers, competitors and the competitors’ customers. Perhaps 25% - 50% of the projects submitted pass this stage. Final screening-Usually a time delay of 6-12 weeks to conduct ‘a market survey’. Often such surveys often do not occur, but instead the venture capital investors will use this time to observe the management team performing under a range of circumstances, as well as relying on their business and technical contacts for feed back, in assessing the team. They may also commission an independent consultant to appraise the proposal. In spite of all the above a great deal of irrationality runs through the investment policies of many individuals. Such things as personality conflict can cause the rejection of a very good venture. Similarly, if an investor likes the entrepreneur, he may overlook much that would ordinarily call for the rejection of a proposal. It should be recognised that the vast majority of new businesses are not appropriate candidates for venture capital investors - although many would like to think they are. These items of importance to venture capital investors are important for good reasons. They tend to be the determinants of success. The business must be viable. There must be a return on the time, energy and money that is being invested. 21


Quick ratio analysis Ratio analysis is a useful tool for bankers and others evaluating the quality of loans and is also used by accountants, consultants and business owners. Ratio analysis involves a comparison of different categories of financial data and variables relating to a specific business. These ratios can be used to compare your business with others in your Industry and are a useful tool for establishing the relative merits of any business enterprise. It can be used as a control tool as well as a forecasting tool. LIQUIDITY RATIOS Quick ratio This is an acid test for most businesses. It is an indication of the ability of the business to meet it’s current liabilities quickly. i.e. ‘a fire sale’. Quick assets mean cash and securities and accounts receivable. Stock is not included. Could you turn your stock to cash quickly, without incurring a loss? QUICK RATIO =

Quick assets Current liabilities

(Average 1:1)

Current ratio Is a simple indication of the ability of a business to meet its current obligations. CURRENT RATIO =

Current assets Current liabilities

(Average 2:1)

Leverage ratios Debt to worth measures the ratio between funds contributed by creditors and funds contributed by shareholders. DEBT TO WORTH =

Total debt Net worth

(Average 1:1)

Debt ratio is a measure of the collateralisation DEBT TO WORTH =

Total debt Total assets

(Average 1:2)

Activity ratios Stock turn over measures the number of times per year you sell and replace stock. It is important to consider this ratio when starting a business. Stock turn over will vary for different businesses. Businesses selling fresh produce would be expected to turn their stock over very often, while some one such as a jeweller or antique dealer might only turn stock twice a year. Sales STOCK TURNOVER = Average stock at cost 22


or:

Cost of goods sold Average stock at cost

(Average 4 : 1)

Activity ratios Collection period This measures the average age of your accounts receivable, and is an excellent test which often surprises many businesses. The lower the number, the safer the receivables is the usual measure for comparison. Instead of collecting money later could you be paid at the time of sale by Credit card?

Average collection period =

Receivables Sales per day

(Average 20 days)

Profitability ratios Profit on sales Net profit after taxes Profit margin on sales = Sales

(Average 5% - 15%)

Return on total assets Return on total assets =

Net profit after taxes Total assets OTHERS Working capital is a critical factor. Without working capital a business can not function and is probably headed for insolvency. Working capital = Current assets - Current liabilities Net worth is the dollar value of the business. If the business has a negative net worth it is technically insolvent. Net worth = Total assets - Total liabilities Sales growth per year is an easy way of measuring and comparing sales growth over the previous year. Sales growth per year = or:

Sales of current year Sales of previous year Sales of current year -Sales of previous year Sales of previous year 23


Business Law There are a number of business laws and government requirements you will need to be familiar with if you are launching new products. You should also be aware that ignorance is no excuse in areas of the law. In most states, further information on government regulations can be obtained from organisations like The Office of Fair Trading (N.S.W.) and The Business Centre (in S.A.E.). You may need to address issues such as: • LICENCE and PERMIT REQUIREMENTS • Will you trade as a: SOLE TRADER PARTNERSHIP or LIMITED LIABILITY [Pty Ltd] COMPANY • G.S.T. Goods and services tax • B.A.S. Business activity statements • WORKERS COMPENSATION INSURANCE • A.S.C. - Annual returns to the Australian Securities Commission. • INCOME TAX - your business or company will be required to file an annual return. • PACKAGING and LABELLING - may have to meet special rules and / or requirements. THE TRADE PRACTICES ACT (TSP..) is administered by the Trade Practices Commission (T.P.C.) THE TRADE PRACTICES ACT (PTA) - is meant to prevent anti - competitive business practices. The basis of the PTA is the belief that, if there is genuine rivalry between competitors and if powerful companies do not abuse their market power, the result for consumers will be lower prices and better quality. In pursuit of this the PTA makes some business activities illegal. The PTA catches written and verbal contracts, and also mere arrangements or understandings [i.e. where no promises are exchanged]. Therefore, a nod of the head or a friendly, no - obligation arrangement could constitute an ‘arrangement’ or ‘understanding’. Some prohibited business activities under the PTA include: Arrangements involving competitors which limits or prevents access to goods or services. Competitors discussing Price fixing. Boycotts between competitors - e.g. an agreement between an oil company and a group of operators that the oil company will not supply a discounter. Eliminating or damaging a competitor. Preventing the entry of potential competitors into a market Deterring competitive conduct. Abuse of market power - e.g. deliberately pricing at an uneconomic low level to eliminate a competitor. Misleading and deceptive conduct. - e.g. false representation about products. Unjust or unfair conduct - e.g. to obtain a signature on a blank contract. 24


Exclusive dealing - e.g. a powerful supplier insisting the customer does not stock competitors’ products. Price discrimination - e.g. discriminatory for no acceptable reason. Resale price maintenance - preventing products being resold below a minimum price, which is specified by the supplier to the customer. Third line forcing - supplying products on the condition that the customer acquires other products from a third person nominated by the supplier. e.g. forcing the buyer of a motor car to insure with a third party nominated by the supplier. Refusal to supply - Some valid reasons to [independently] refuse to supply a new customer are: • Your existing network is satisfactory [subject to other issues, though]. • The customer has a bad credit history. • The customer uses unsatisfactory business methods. • It is not profitable to supply the customer. • You do not have the capacity to supply the customer. You cannot refuse to supply a customer if you know the customer plans to discount your product below a price you make known. RECOMMENDED PRICE LISTS Issued by trade associations to their members are viewed suspiciously by the TPC, on the grounds that the lists might be attempts to enforce uniform prices amongst members. BUYING GROUPS Where buyers get together to make group purchases at fixed prices is OK so long as the group does not also arrange the selling price of those goods. CONSUMER PROTECTION In relation to packaging and labelling. Use by dates Rates of interest for credit transactions Cooling off periods

SAFETY REGULATIONS For products such as motor cars, drugs, toys, textiles, foods, bath foams and baby walkers.

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Inventory / Stock Management When launching your new business or product you will need to address the amount of stock and materials that you will need on hand to service your prospective clients and their future needs. The ideal situation is to have the correct amount of the correct goods, in the correct place, at the correct time, to maximise sales and earn profits. Companies hold inventory (stock) for a number of reasons: To maximise sales opportunities To ensure an uninterrupted flow of operations Variable lead times for imported material Varying demand - seasonal etc. Inadequate information / poor planning By having Inventory (stock) costs are incurred: Cost of placing an order Cost of handling material Storage costs, rent, taxes, insurance, shrinkage, obsolescence, capital costs.

The cost of running out of stock Idle production line Customer dissatisfaction A lost sale if customer buys elsewhere A lost customer Over investment in stock is a waste of funds. Work in progress is also classified as stock on hand. By lessening inventory the money released could: • reduce overdraft / pay off loan • reduce insurance, depreciation and obsolescence

An estimate of Inventory costs is: • 7.5% of sales • 20% of assets • 10% of debtors

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Getting Paid Most people in business would generally agree that getting paid is one of the most difficult problems that they face in Business, whether small or large. Expected and traditional payment terms are, and have been for a long time ‘net 30 days’. Even this term is misunderstood and misused by many people. The usual definition of Net 30 days is generally accepted as being that any goods purchased during a calendar month are due for payment at the end of the next calendar month - i.e. on the 30th day of the next month. To explain further; if goods invoiced for $100 were purchased on the 9th of March, on a 30 day account, the invoice would be due for payment on the 30th April. Any goods purchased on say, the 1st of April would be due for payment on the last day of May. Thus it follows that the earlier in the month goods are purchased, the longer the interest free credit terms that are available, and if you are a buyer, the longer you have to sell or use the goods before they are due for payment. Purchase goods or services on the 1st of the month and you receive 60 days of interest free credit. Purchase on the last day of the month and you receive only 30 days of interest free credit. Many companies place orders well in advance, for delivery on the 1st of the month to maximise the use of interest free credit facilities. Anybody who has business experience soon realises that this system of ‘Net 30 days’, is frequently abused and payment of accounts often drags out to 60 and 90 days and more! If this money is owed to you, it is costing you money to fund these debts. Can your business improve its cash flow, bank overdraft and balance sheet by: Accepting payment by credit cards - even Government departments are able to pay by credit card. The small fee for instant payment is surely a better alternative than waiting for and chasing money. You cannot use money you do not have! Selling on a Cash on Delivery basis? If you offered a settlement discount for cash would more people pay C.O.D.? Instead of 30 day accounts can you sell on 7 day or 10 day accounts, and enforce this policy by diplomatic follow up? Asking for a deposit, before you proceed with any work or orders? Asking for a deposit and regular progress payments, with final payment on the day of completion or final delivery? Asking for payment up front for your goods or services? Selling Gift Vouchers to help your cash flow? Offer or tailor your goods and services in such a manner that customers readily agree to some of the above suggestions to benefit your cash flow? Factoring your accounts. Factoring is widely used by both large and small companies. As a guide, Factoring companies, for a fee, will advance around 80% of the face value of an invoice within days of the invoice being raised. Various companies offer different terms and conditions. Think about ways your business can justify asking for improved and quicker payments from your customers. Do your competitors collect payment from debtors better than you ? 27

4 Marketing


Are these issues pertinent to your New Product? Does change in the market place offer opportunity and challenge? Should you reassess the issues surrounding your product? Should you re-examine your business and product directions? Is your business and product focused? What business are you in? What is the main game? Are your customers’ trading terms realistic? Are you buying market share? Have you reviewed and defined your companies role into the new millennium? Does management revolve around day to day operations and issues? Or does management manage the big picture? Are you adding value to your product? Do your prospective customers operate in a different culture, with different needs to your business? Are you aware of your clients’ needs? Is your business marketing orientated? Are you aiming for market dominance? Have you lost your objectivity? What other issues would an outsider see as being important to your business activities? Are you amenable to change? Other issues? A good idea opens new opportunities and delivers benefits over an extended period and is developed so that it delivers its full potential. It takes into account its impact on people, the community, and environment; utilises existing capability; and does not require relearning or unlearning specialised skills. It simplifies work and enriches the meaning of work, and provides a return sufficient to sustain it. The path to successful implementation of a good idea relies on CROWS: Competency, Resources, Opportunity, Will and Support. Powerful innovations proceed from an awareness of available resources and possibilities. Resources determine momentum. The longer the innovation takes in approval chains and implementation, the more likely it is never to be delivered. Chris Russell, Principal, Innov8 Advisory

Good ideas cannot be forced, but they can be managed DIRECT MAIL Some common rules for Direct Mail selling is that: A letter is worth 65% of a 3 page submission A brochure is worth 25% of a 3 page submission An order form is worth 10% of a 3 page submission A 2% response rate is considered acceptable! 29


A New Product Launch - Some of the issues to address Do you need professional assistance and advice with starting your business and turning your idea into a business? A Business Plan to cover the product Some basic market research Investigation of potential market size and volumes Investigation and discussion of competitor activity Design and document a sales and marketing strategy tailored to your product Brand name selection, and packaging requirements Advice in complying with G.S.T. requirements Setting wholesale and retail pricing and price points Preparation of an attractive, illustrated, detailed easy to read Price List Integrated marketing and advertising campaigns, promotions and publicity Point of sale stands, displays and literature Setting up a national sales and distribution network Selling your product at trade / wholesale level Sales, invoicing and deliveries Setting trading and payment terms Obtaining trading capital and finance Ongoing sales, marketing and advertising of your product Australia wide networking Investigation of Licensing and Royalty opportunities. Export market development Consideration of alternate proposals and schemes Protection of Intellectual Property Assessing chances of commercial success The business risks Development costs Does the product meet government and statutory requirements Effects on society - environmental issues The payback period Market acceptance Commercial advantage Are you - the Ideas Person - suited to running this enterprise? Are you - the Ideas Person - prepared for this enterprise? Are you under capitalised Assess the chances of your survival Further opportunities for growth and profit Does the product out perform the competitor’s ? If it does, it has 3.7 times more chance of succeeding. Is the product dramatically different from the competitor’s? If it is, it has 2.4 times more chance of succeeding.

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A New Product Launch Screening When launching a new product you should carry out some screening on the new product or service which could involve asking the following questions : Is there adequate demand? Does management have the experience, time and ability to deal with the product? Do enough people really want the product? Can existing channels of distribution be used? Is adequate finance available? Will seasonal and cyclical stability be increased? Are the profit possibilities worthwhile? Can we use our present sales force? Will it suit our current production system? Is the product compatible with current environmental standards? Is the product compatible with current social standards? Are there any legal objections? Does the product suit the present marketing structure? Is the product consistent with existing image and objectives? Will the product increase/decrease our prestige and status?

How will you sell your new product? Though retailers Through distributors Through agents/brokers Through wholesalers By direct mail Personal selling Door to door Telephone sales - tele marketing

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A New Product How will we Market it and sell it? How can we establish the potential size of our target market? Australian of Bureau of Statistics Statistical measurement and projection Internet research Measure and project competitor’s market Who offers competitive products? What price range? How are they sold and marketed? What is the customers requirement? What are our competitors’ strategies? WE CAN CREATE DEMAND by: Advertising Point of sale displays - related to advertising Promotions / demonstrations Presentations Special offers Competitions / prizes Exhibitions Trade nights Newsletters / bulletins WE CAN CREATE and IMPLEMENT SALES by: Targeting specific markets (by a rifle approach, not by a shotgun approach) RETAIL WHOLESALE ROUTE TRADE PERSONAL SELLING DIRECT MARKETING SPECIAL EVENTS THE BUYING PROCESS Awareness of need. The search for methods of satisfying that need. Appraisal of alternatives offered / found. Analysis of comparative values. Purchase decision and action SUPPLY CHAIN MANAGEMENT We are entering an era where things will be very different - an era of intelligent alliances. The winners will be the organisations that have title to goods and ideas for the shortest time with the least investment, for the most profit.

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Launching of New Products Imagine that your business wants to increase the sales and distribution of its new product or service. How will you find customers for your products? Will you spend hundreds of dollars in newspapers and magazines, advertising in the hope that you will sell lots of product and be able to pay the newspaper? Or methodically think about: Writing a simple Business Plan outlining your objectives How big your potential market is? Who are potential customers for your goods? Who you like to do business with? Identifying what potential customers want from your products Who your competitors are? What makes your customers successful? What makes your competitors successful? What your competitors strengths are? Competitor activity in general What unique benefits you have to offer? Remember customers buy benefits, not features! Producing a simple leaflet / price list which tells potential customers: • all about you (a company profile), and what you have to offer • all about your products and their benefits Establishing, identifying and positioning your product or service as being different from the ‘me too’ alternatives. Obtaining free publicity Will the local paper give you a free plug, based on your uniqueness? Will radio talk shows give you a spot to talk about your product? Talk to special interest groups and meetings Will your product lend itself to a shopping centre display? Can you display your product at trade fairs in conjunction with.....? Can you establish strategic alliances to assist promotion of your.......? And, articulate your vision - constantly!

VALUE ADDING What can you do to add extra sales value (value adding) to your new product. Some suggestions: Premium or de luxe models Extra accessories Sell an installation service (factory installation?) Sell an after sales /care service Others - think about what a butcher shop does to value-add.

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New Product Development 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

Has the product been in development for a year? Does your company currently make a similar product? Does your company currently sell to a related customer market? Is the R&D at least one third of the product budget? Will the product be test marketed for at least 6 months? Will the advertising budget be at least 5% of anticipated sales? Will a recognised brand name be on the product? Does the person in charge have a private secretary? Would the company take a loss for the first year? Does the company need the product more than it wants it? Have 3 samples of advertising copy been developed? Is the product really new, as opposed to improved? Can the decision to buy it be made by only one person? Is the product made in fewer than 5 versions? Does the development team have a working code name? Will the product need service and repair? Will the CEO see the product leader without an appointment? Did the project leader make a go of the last 2 projects? Will the product be on the market for more than X years? Would the project leader quit and take the item with him if the company refused to back it ?

YES YES YES YES

answers to 11 or more - the idea should succeed. answers between 8 - 10 - the idea is borderline. answers less than 8 times - look into a chicken shop. answers less than 6 times - you couldn’t run a chicken shop.

Innovators of any kind are advised to plan costings, progress and revenues to the most precise extent possible, using care and caution. Then having arrived at : A money figure - double it. A time to be taken - double it, and double it again. A net cash flow forecast- halve it, if it is positive. If negative double that too. If the outcome still looks good, go ahead. If it doesn’t, duck.

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Value Selling - what does the customer want to buy? Are we talking to the right person about our new product? Is this person seen by his peers as capable of making decisions on new products? Are there written procedures and policies for new products? Will the customer resell or use the product? Is the customer buying commodities, special products,services or systems? Can we offer the delivery and service required? Can we save the customer money by less orders, and bigger quantity purchasing? Does your product meet the required standards? e.g. barcoding, import criteria, government regulations, expiry dates Sell satisfaction What credibility do you have? Do you understand the customers business? Do you understand your company’s back up service? Does the customer have a contact person to liaise with? Are you cost effective? Can you deliver on time? Will you service the product? What have you done for your customer today ? Price is an important part of any purchase decision. An important step in selling any product is selling: • The benefits of the product • The values of the product

VALUE SELLING CHECKLIST Product and service features Benefits and capabilities that satisfy requirements with cost effectiveness Stock holdings Delivery times / lead times Physical location Quality and Quality Assurance Warranties After sales service Reputation Conformity - Government requirements, bar coding, packaging, presentation.

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Sales Intelligence - Competitor Activity When calling on a prospective customer with your new product, do you observe the activity in their receipt and dispatch store? When calling on a prospective customer with your new product, are you aware of their requirements? Can you demonstrate how you will meet those requirements? When calling on a prospective customer with your new product, do you listen carefully to what they have to say about activity in the market place and your competitors? When calling on a prospective customer with your new product, are you aware if they can pay you for any potential orders? When calling on a potential customer do you know how much they could spend with you on your new product? • Per month • Per year • What they currently use instead of your new product? When calling on a potential customer are you responsive to their requests and listen to what is said as well as not said? When calling on a potential customer are you aware of how your competitors are performing and what their market share is?

GROWTH OPPORTUNITIES Can you promote a limited edition of your product? Should you focus on small customers? Should you focus on major customers? - with specialised strategies. Should you create different products for selected major customers? Using special promotions, special pricing. Should you transform a specialist service into a branded standard product? e.g. Car servicing, computer maintenance, hire plants, etc. What opportunities are there in your market sector in regions or niches which are not being pursued? Should you concentrate more on product design and point of sales display? Should you look at being a service company rather than......? Should you...........?

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It is 1973 - would you have invested in this business? A personal computer shop Plastic rubbish bins on wheels. A video shop, or video arcade. A fast food store - hamburgers, pizzas Bottled water Tele-communications shop (fax machines, mobile phones) Mobile car workshops Speciality auto repair shops A franchise business A theme park 24 hour medical centres Email and Internet technology Why did these ideas succeed? Focus, focus, focus and identifying market needs. A common theme of all these business operations is a speciality product delivered well, with easy access. And they have all spawned imitators!

Extracts from a May 1981 new product development newsletter offering a 25 year innovation forecast: Readily available artificial human organs,except the brain. A means of speedy transportation without a car,perhaps an individual flying machine. Drugs to cure cancer. Drugs to cure the common cold. A personal telephone,no larger than a cigarette packet,that can be used from any location. A pocket sized personal / business computer. Clothing that can be cleaned by placing it in ‘a cleaning chamber’ for one minute. A synthetic material to replace wood. A simple injection to determine the sex of an unborn child.

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Do Markets continually grow? LAWN MOWERS Lawn mowers are a good example to prove that consumer markets do not necessarily automatically grow, (natural growth as some people call it). In 1979-80 the Australian market for lawn mowers was 310,000 units, with a huge range of models and brands In 1983-84 it was 275,000 In 1986-87 it was 220,000 In the early 2000’s do you know anybody who owns a lawn mower? Why is this so? Many more people live in units More paved areas Smaller building blocks More lawn mowing services Benefits - let someone else do mowing and bear cost of the mower WHAT ABOUT THESE PRODUCTS? CARAVANS TYPEWRITERS TEA POTS RAILWAYS MOVIES / TV / VIDEO COMPUTER WORK STATIONS DRY CLEANING YOUR OWN PRODUCT or BUSINESS ? 80:20 - PARETO PRINCIPAL This is also known as the 80 / 20 rule, and it can be applied to a wide range of business situations. In most organisations: 80% of revenue or turnover is generated by 20% of the clients. 80% of revenue or turnover is generated by 20% of the products. 80% of queries and complaints are generated by 20% of the clients. 20% of purchase orders generate 80% of volume. 80% of bad debts will come from 20% of customers. 80% of wealth is held by 20% of the population.

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Quality and your new product It is generally accepted that Quality has replaced Price as a factor for sales success in recent years. A survey of manufacturers rated their capabilities thus:1. Quality conformance 2. On time delivery 3. Performance quality 4. Delivery speed 5. After sales service 6. Product flexibility 7. Wide distribution 8. Range of product 9. Volume flexibility 10. Price 11. Promotion Similar priorities exist when buyers assess the value of a new product.

Real quality and value will usually out rank and out weigh price! WHAT IS QUALITY SERVICE? RELIABILITY dependable and consistent RESPONSIVENESS willing and ready COMPETENCE skill and knowledge ACCESS easy to approach COURTESY polite, considerate, respectful, friendly FOCUS close focus on the core business and quality issues TANGIBLES evidence of the service SECURITY no danger, risk or doubt CREDIBILITY honest, believable, trustworthy COMMUNICATION understandable, listening UNDERSTANDING appreciating customer’s needs MEET T.Q.M. or are planning to meet those requirements

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What makes a company successful? Is it because they are prepared to: Have real commitment to their customers Have a ‘CAN DO’ attitude Want to achieve customer satisfaction Are flexible in attending to special requests (’can you deliver today’ - ‘yes’, not, ‘sorry,truck has left,too busy’,etc.) Respond to special requests Are positioned to handle special requests Use outside providers of services Place a premium on service Are prepared to use outside services more in future Monitor their service to see their people “doing it right” Monitor competitor activity Keep abreast with the latest technology Strive to be the best Focus on customer service

THE ROLE OF THE SALES TEAM IN LAUNCHING NEW PRODUCTS To persuade the customer of the benefits they will gain by using a new company or organisation and their products. To explain the policies and procedures of the company which will affect the business relationship between buyer and seller. To inform the company of any factors in the market place which affect or impose modifications on the company’s marketing effort. To create an image in the mind of the customer that the company is an efficient ethical organisation best suited to satisfy the customers’ needs. To assist customers in increasing their knowledge of the companies’ products so they can gain the maximum benefits from those products. To build [profitable], long term relationships.

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What else will help me be successful ? Positive thinking Set yourself GOALS and TARGETS Persistence Present benefits Passion, enthusiasm and emotion Plan your day - and work to your plan. Make as many calls as possible The more calls you make, the more orders you will write. Qualify the prospect Do they need your product? Can they pay for it? Do they have the authority to place an order? Tailor the proposal Describe the benefits Tell the prospect how it will benefit them Handle the objections Close the sale Obtain a commitment / order ASK FOR THE ORDER! PRESENTATION of DOCUMENTS and QUOTATIONS Do you hand write quotations? Or have them properly typed and stapled together? Would it be better still to present them in a folder to make an impression. At some business colleges, students automatically lose marks for poor presentation of submissions. They expect submissions to be well presented in a binder. Pages stapled together lose marks. HANDSHAKE DEALS Often in a selling situation a ‘deal’ will be agreed to on a handshake. Is this a satisfactory way of doing business? Would it be better to follow up with a polite letter outlining your understanding of the agreement? For instance you could set out your understanding of the price, time span, and other relevant details of the agreement.

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Intimidation When selling your new product there will probably be times when you will feel intimidated by the behaviour of the people you are trying to sell to. Some examples are:Are you intimidated by the person you are selling to? Why? Are you sitting at a lower level than the buyer? Are you sitting, or expected to make your presentation standing up? Are you outnumbered at the presentation - the buyer has other people to back them up? Is your seat poorly positioned, in a draught, facing the sun or it’s reflection, or in front of an open door through which other people can hear your conversation? You are kept waiting past the time of your appointment. Correspondence from your competitor’s is visible on the buyer’s desk. A ‘phone call’ from your competitor comes through while you are there. During your interview the buyer takes phone calls, speaks to colleagues, has constant interruptions and keeps looking at their watch. They tell someone they will be free in a few minutes and you have just started. They complain about your products, your service and your company. They praise the competition and appear to know all your competitors by name, but can’t remember yours. They do not appear to be paying attention, or showing any interest. They do not read your literature, answer your questions and appear indifferent. This type of behaviour is often aimed at forcing you into line with your competitor’s offerings.

It is generally accepted that: • 55% of a negotiator’s message is perceived non verbally. • Only 7% depends on what is said. • And 38% depends on how it is said.

A few people wonder how to make it happen, Some people wonder what is happening, Most people wonder what happened.

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The Customer What is the most important thing your business needs to survive? What is the one thing your business cannot possibly survive without? What does your business revolve around? Who pays your wages? In the real world a potential customer (tough prospect / suspect) may look you over and say to himself, and probably to you as well:I don’t know who you are I don’t know your company I don’t know what your company stands for I don’t know your company’s customers I don’t know your company’s products I don’t know your company’s reputation Now what was it you wanted to sell me? SOME TYPES OF SALES ORGANISATIONS Retail Wholesale Industrial M.L.M. (Multi level marketing) Direct mail Door to door Phone sales WHERE DO WE FIND CUSTOMERS? You want to launch your new product to the market place and win some market share. You set a target to win 80 new customers for the new product in the next 6 months. How will you find these 80 new customers ? Some of the issues you will need to address:The size of the potential market Your competitors The organisations you would like to do business with Your ability to service these potential customers Could your internal sales staff and warehouse staff handle the extra volume of business? What benefits are you offering? Their ability to pay you, on your terms! For resellers - their ability to sell your product to the market place Establishing long term working relationships with these organisations Can your company or organisation support 80 new customers? Then target the companies / organisations you want to do business with. What will these companies expect from your company? What can you offer that your competitors don’t? 44


Get the Shopping List You are pitching for business for your new product. Before you meet with the potential customer, what issues (preapproach planning), should you address, and be prepared to discuss? Whether selling, marketing or buying, always make sure you are dealing with a complete set of requirements and information. The evolution of a Customer 1. PROSPECT / SUSPECT 2. CUSTOMER / CLIENT 3. ADVOCATE for you and your new product

Is the playing field level?

When you meet with a potential client for the first time you should ensure that you are are negotiating on a level playing field, by addressing issues such as those below: o o o o o o o o o o o o o o o o o o o

PRICING ARRANGEMENTS TRADING TERMS DELIVERY TERMS - J.I.T., once a month, on demand PACKAGING IMPORT REQUIREMENTS BAR CODING REPEAT ORDERS INVOICING REQUIREMENTS BACK UP SERVICE WARRANTIES MERCHANDISING ADVERTISING DISPLAYS EXPIRY DATES GOVERNMENT REGULATIONS WHAT ARE THE EXPECTATIONS ? PAYMENT TERMS WHAT OTHER SPECIAL CIRCUMSTANCES APPLY? REMEMBER - EVERYTHING IS NEGOTIABLE

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Identifying and influencing customer requirements Consumer buyers buy new products and services to satisfy needs and wants. These are personal, physical and psychological. They are direct expressions of each individual’s concerns with survival and well being on both the material and emotional level. Industrial buyers buy to satisfy requirements. These requirements are impersonal and derived and flow from demands imposed by: • The products they produce and sell and the services they perform and supply. • The processes - marketing, distribution, etc. used to produce the product. • The market and competitive environment in which they operate. HANDLING OBJECTIONS Objections from potential buyers when selling are an inevitable part of the job and an essential part of the buyers negotiating tactics. Some basic and common objections are: PRICE Price can usually be negotiated, though even ‘give away’ prices may not win the business for the reasons which follow. LOYALTY TO AN EXISTING SUPPLIER Offer trials, suggest that their current monopolistic supplier may be costing them money. UNABLE TO MAKE A DECISION Endeavour to find out why. Can it be addressed now? Should you set a time for another meeting. Follow up with data if necessary to help a decision. YOUR PRODUCT IS NOT GOOD ENOUGH You will need to use your technical knowledge of the product and be aware of all the benefits your product offers. Some sales people counter with why questions. DON’T LIKE YOUR COMPANY For various reasons Find the problem and offer solutions and/or fixes and cures. Point out your company’s success with other customers. Ask them to suggest a solution. DON’T LIKE THE SALESPERSON Try and establish and improve a relationship over a period of time and a number of meetings and perhaps social occasions. However you can’t win them all. Be aware that the objections you are hearing may not be the real ones. Perhaps the prospect’s brother is in competition with your product! There may be many other obstacles which will not be easily apparent. 46


What is your Customer worth? If your customer spends: $100 per week = $5,000 per annum = $50,000 over 10 years = $125,000 over 25 years

If your 10 customers spend:

$100 per week = $50,000 per annum = $500,000 over 10 years = $1,250,000 over 25 years $125,000 over 25 years

If your 100 customers spend: $100 per week = $500,000 per annum = $5,000,000 over 10 years = $12,500,000 over 25 years

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4 Marketing


What is Marketing? When a man sends his new girlfriend (or vice versa) a card or a bunch of flowers he is engaging in MARKETING. On another scale the Airbus company in Europe engaged in MARKETING when they recognised that airlines needed quieter, more fuel efficient aircraft, then developed, sold and delivered them. An old and simple definition of MARKETING is: supplying the customer what they want, when they want it, at the price they want to pay (at a profit). An interpersonal or inter organisational relationship involving an exchange (or transaction) is MARKETING. The essence of marketing is a transaction - an exchange - intended to satisfy human needs or wants. BUSINESS MARKETING involves: Finding out what the customer wants. Planning and developing that product. Finding the best way to price, promote and distribute that product. WHAT IS A MARKET? A market is people with: Needs or wants Money to spend Willingness to spend it A formal definition of Marketing: Marketing is a total system of business activities designed to plan, price, promote and distribute want-satisfying goods and services to present and potential customers. Marketing is a comprehensive concept. Another definition of Marketing is: The process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational objectives. TYPES OF MARKETING • CONSUMER • INDUSTRIAL • SERVICE • DIRECT • CHARITY Basic Marketing questions What business are we really in? Who are the potential customers? - be specific. - how are they segmented. How do they perceive their needs in relation to the type of service we provide or could supply. How can we meet those perceived needs? What is the best way to communicate with the target audience?

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Market Research Market research is the tailored collection of information to assist decision makers achieve risk reduction in future marketing and management decisions. Market research can involve: • Determining the size of an existing market. • Determining the potential size of a market. • Determining what the market place really wants. • Determining if there is need for the product or service. • Determining who the target audience is and if they will buy the product or service. • Determining the best way of packaging the product or service. • Determining the price points the product can be sold at. • Primary and secondary research. Market research can be carried out by: • Contacting prospects by telephone - this method is usually quick, cost effective and has the benefit of being anonymous. Some disadvantages are that it is random and not face to face. • By mail - this method has no bias, is economical and anonymous. Some disadvantages are a lack of reliability, low response rate and complications with mailing lists. • Personal surveys - this method is flexible, can provide more information, probe deeper and has the benefit of personal observation. • Some disadvantages are the time it takes, cost and the selection of people to be interviewed. • By asking consumers to respond to newspaper questionnaires, etc. • Mechanical / computer surveys • Some very effective market research on, for instance, hardware products, can be carried out by contacting the sales staff on the shop floor. • Valuable information can be gleaned quickly and cost effectively. Market research will: • Help establish market focus. • Gain valuable information. • Save time and money long term. • Demonstrate if there is a need for the product or service. • Identify customer needs. • Assist in developing appropriate products. • Assist in setting price points. • Assist in establishing distribution policies, channels and arrangements. Focus Groups Focus Groups are an interviewing technique used by market researchers. They consist of an informal, unstructured group of people who are asked questions about a product or service. A focus group is expected to provide qualitative answers, as opposed to quantitative answers which would be obtained in a survey. Because more people are interviewed at the same time, a focus group should be more efficient by saving both time and money. The interviewer can probe beyond insufficient or incomplete answers. Focus groups offer a great deal of flexibility. 50


Marketing Questions Some basic research questions: What do think of this new product? Would your company stock it? What price would you like to see it sell for? Is the packaging effective? What mark up does your industry require? How many do think you could sell? Market research must be: • Valid • Reliable • Objective What business are we really in? Who are are potential customers - be specific - how are they segmented? How do they perceive their needs in relation to the type of service we provide or could supply. How can we meet those perceived needs? What is the best way to communicate with the target audience? Economic factors The total supply available. The elasticity of demand. Substitutes for this product. The demand for related products. Government policies and regulations. The prevailing economy. The Marketing Concept can be examined under 5 headings 1. Marketing research information 2. Product and distribution strategies 3. Sales promotion strategies 4. Customer service strategies 5. Pricing strategies THE TOTAL MARKETING CONCEPT The total marketing concept is one of providing goods and services to the consumer, but with these goods and services: Available conveniently to the customer, in the form required by the customer Under conditions specified by the customer At trade and pricing arrangements acceptable to the customer Analysing products and services currently available, and which may become available. Analysing (niche) market areas which could be serviced profitably. Assessing needs and wants of present and potential customers in the various market areas to be serviced. Analysing the organisation’s ability to service customer requirements on a postsale basis. Gearing the organisation’s resources - staff, physical (including plant and layout) and finances - to satisfy customer needs. Arriving at a pricing structure which meets with customer acceptance and also provides a viable business operation in terms of profits and rewards to the owners. 51


What Business are you (really) in? When some one asks you that question about your new business, you may answer “we sell drills”, but what you are actually selling are the benefits those drills provide. • No one really wants a drill - they want the hole it provides. • You are selling benefits and satisfying needs.

What business are you (really) in? - consider these: Company

Production answer

Marketing answer

Film Studio Cosmetic Co. Optus Air Conditioning Ski resort

We make movies We make cosmetics We operate a phone co. We make air conditioners We run a ski resort

S.T.A. Builder

We run trains & buses We build houses

We market entertainment We market hope We market tele communications We provide a comfortable climate We market recreation and life style We offer a transport system We provide shelter and prestige

CONTRASTS BETWEEN SELLING and MARKETING

SELLING Emphasis on product

MARKETING Emphasis on customers’ wants

Company makes and tries to sell the product

Company determines needs and delivers appropriate product.

Management is sales-volume orientated

Management is profit orientated

Planning is short term, for today's products and markets.

Planning is long term orientated, in terms of new products,tomorrows markets and future growth.

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Market Segmentation Market segmentation involves selecting as the target market, one group from within the total market. Some examples: • A TRAVEL AGENT offering round the world luxury cruises, would probably target older, financially well off people with time to travel. • MOTOR CAR makers have a range of models aimed at different market segments. • SOAP POWDER makers have more than one brand priced for different market segments. • JENNINGS HOMES have homes for different market segments. • BOEING AIRCRAFT would not bother trying to market its Jumbo jets to small, regional airlines. Thus a small specialist supplier of a product, say an Information Technology organisation specialising in jobs in the accounting industry would aim their Marketing at a select target audience. SOME OTHER MARKET • Urban - Rural population • Family life-cycle • Education • Social classes

SEGMENTS • Age • Sex • Religion • Ethnic background • Occupation • Cultural groups • Special interest groups • and many more

What segment would aim your marketing for the following at? • Premium quality wine • Power tools • Stereos • Sports cars • Hair accessories • Car radios • Bottled water • Water filters • Fountain pens

The MARKETING MIX - the four P’s PRODUCT • Quality • Features • Options • Style • Brand name • Packaging • Sizes • Service • Warranties • Returns

PROMOTION • Advertising • Joint advertising • Personal selling • Sales promotion • Publicity

PRICE • List price • Discounts • Allowances • Payment period • Other terms

PLACE • Channels of distribution • Coverage • Locations • Inventories / stocks • Transport

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Brand Names Are brand names important for a new business or product? • A brand name should help sell both the business and the product. • A poor name may detract from the business and product. A good brand name should: Say something about the product, its use, benefits or action. Such as: • COOL CHARM • QUICKEASE • EXIT MOULD • WEIGHT WATCHERS • Mr SHEEN • PINE O CLEAN Be easy to remember, spell and pronounce, e.g. • MUM • GLAD • COKE • IBM • APPLE - (Macintosh) Be distinctive: • STAR brand, • STANDARD brand, • IDEAL brand - are not distinctive. • FRIGIDAIRE is good for refrigerators and cold-image lines, but not other appliances. WHY DO DEPARTMENT STORES SELL MAINLY BRAND NAMES? Because the Manufacturer will promote the brand and maintain quality, and in most cases provide a very high level of service to the store, in some cases visiting the store daily. The brand name may have a lower profit margin than generic stock, but a higher turnover will generate more profit. Next time you visit a supermarket or department store look out for representatives making brand name displays, replacing damaged stock and generally promoting their brand and doing work to save the store time and make money for both parties. Most stores recognise that the supplier has more interest in their product than the store ever will, and gives them a reasonably free hand. DEVELOPMENT OF A BRAND NAME A brand name is usually reinforced by a strong design identity which is applied to all the visual elements. 1. A logo is the focal point for this identity, 2. together with special colours 3. and a corporate type face. The combination of these three elements gives the brand a number of qualities: • It is immediately recognisable • Easily distinguished from its competitors - and memorable • The identity is applied to packaging, displays and all communications material so that there is consistent and strong brand identity. A brand is more than a name or a logo. It is an emotional set of values in the mind of the consumer. A strong brand has impact, passion and a unique personality. 54


A Marketing Plan format / outline 1. BACKGROUND 2. DIRECTION 3. MARKETING PLAN SUMMARY • Business definition • Business direction 4. MAJOR BUSINESS STRATEGIES 5. FINANCIAL OBJECTIVES 6. ASSUMPTIONS and RISKS 7. KEY SUCCESS FACTORS 8. SWOT ANALYSIS 9. PRODUCT BY COMPETITION 10. COMPETITOR STRENGTHS and WEAKNESSES 11. STRATEGIES 12. ACTION CALENDAR and REVIEW 13. SUPPORTING APPENDICES a) Introduction Economic factors Social / cultural issues Demographic issues Technological Ecological b) Industry analysis c) Customer analysis d) Competitor analysis

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Implementing the Marketing Plan some prompts for selecting your marketing medium Advertising agencies Advertising media - print, radio, T.V., billboards Advertorials Articles Awards - publicise your awards Balloons and Blimps Barter Billboards Board of Directors - market them as a resource Brochures Budgets - set one! Bulletin boards - supermarkets, restaurants Bundling (piggy backing) combine your product with another Business cards - it does convey your message? Business meals Catalogues Charities - work with them and donate product Contests Co-operative advertising - advertise with your vendors Co-op referral lists Coupons Cross promotions Customer appreciation programs birthday cards, letters Customer of the week, month, year Customer service Customer surveys Demonstrations Direct mail Direct response advertisements Directories Displays Expanded business hours Fairs - local and national Flyers Gift certificates Give aways Grand opening Guarantees Help lines Host or hostess to greet customers 56

Image Incentives Inserts In-service training Lead boxes Leads clubs Letters to the editor Logo Mailing lists Name of your business New business requests Newsletter Novelty items Off pricing Packaging Phone hold messages Point of sale displays Premiums - value added extras Press (media) kit Public service announcements Quality Radio programs Rebate programs Reprints of press articles Sales letters Sampling Seminars, speeches, workshops Serial appointments Shop your competitors - what do you do better? Signage Sponsorships Stuffers - put information about your business with every item you sell Take - one displays Telemarketing Testimonials Tracking - where did the customer hear about you? Trade shows T-shirts U.S.P. - Unique selling points Value-added service - warranties, charging for delivery Word of mouth Writing - articles for books, magazines, journals Yellow pages


SWOT ANALYSIS Strengths, Weaknesses, Opportunities, Threats As part of the Business Planning process an analysis and assessment of the organisations Strengths, Weaknesses, Opportunities and Threats (SWOT) should be undertaken. This can assist management in identifying the organisation’s distinctive competence, skills, culture and resources. Below are some things that a SWOT analysis might say about a retail furniture shop. STRENGTHS • Excellent high exposure main road, near city location. • Established in same location 10 years • Good cash flow business only • Specialist expertise in small, limited, product range. • High levels of stock rotation • Deposits provide working capital. • Strong consumer base in area. • Good return on owners’ funds.

WEAKNESSES • No other complimentary businesses close by. • Limited parking • Accessible from one side of street

MAINTAINING THESE STRENGTHS What should I do to maintain these strengths?

OVERCOMING THESE WEAKNESSES What can I do to overcome these weaknesses?

OPPORTUNITIES • To revamp existing premises and create a new improved image. • To increase product range and mix • To motivate and train sales staff • To take on new dealerships • To form strategic alliances

THREATS • Many major national furniture retailers within 3 kilo radius • Increased parking restrictions • Increased competitor activity in area

TAKING ADVANTAGE OF THESE OPPORTUNITIES What can I do to take advantage of these opportunities?

OVERCOMING THESE THREATS What can I do to overcome these threats?

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• Building looks tired. • Showroom needs new image • Sales staff lack motivation • Poor sales facilities in store • No sales contact point in store • Concentrated product range • No ‘add on’ business and sales • No leadership or motivation • No goals or targets • No advertising or marketing plans


What type of IMAGE does or will your new company or product project? FIRST IMPRESSIONS REALLY ARE IMPORTANT and DO COUNT! Does your business have a Company Profile, which you can give to prospective clients? • Outlining experience, skills, qualifications, products, service, warranty, specialities, features, benefits, etc. When a customer opens a letter or receives promotional literature from your company: • Is it well presented? • On quality paper? • Well printed? • Present your company and products in its best light? When a customer receives an invoice from your company: • Is it easy and inviting to read and easy to understand? • Does it stand out from the flood of other invoices? • Does its appearance encourage the customer to pay the invoice? When a customer visits your premises what impression do they get? • Are there cobwebs on the front door? • Are the premises inviting? Is the reception area cluttered? • How does the receptionist greet them? • Do they feel welcome? • Do they feel like doing business with you again? Do you use your reception area to: • Highlight and display your company’s products. • Display special qualifications. • Display trade and industry awards. • Display company literature. Does your shop or store have a total concept? • How are your products packaged? • Could your packaging be improved? • What would it take you to present a better image? • What would it cost you to present a better image? • The presentation and image of your company and its products, can and probably will, have a marked effect on increasing sales. CORPORATE IMAGE Corporate image can be most important to those launching new products. It has many aspects and can be measured in many different ways. For instance: • Awareness of the company. Spontaneous descriptions of the company • Knowledge of the company • Meaningful, detailed ratings at buying stage • Typical customers, as perceived by buyers Buyers of Industrial supplies are greatly influenced by image, company size, the way negotiations are conducted, and the response time to phone enquiries and letters.

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Sustainable Competitive Advantage

Create value for customers

Select markets where you can excel

Present a continually moving target to competitors by continually improving position

UTILISING Innovation

Quality

Cost reduction

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The main criteria for choosing a product COMPANY IMAGE • Competence • Helpfulness • Continuity SUPPORT and SERVICES • Price • Sales techniques

MARKET NICHE An associate of ours - a marketing strategist , likes to remind his clients that, ‘You have done your job when you have established in precise terms the strategic position, image, and reputation of your organisation, product and services such that in the mind of the targeted market place there can be no acceptable alternative available anywhere regardless of price.’

UNIQUE SELLING POINTS (U.S.P.) • Does your business or product have a UNIQUE SELLING POINT? • Would it gain market acceptance more readily if it had a UNIQUE SELLING POINT? • Would it sell better with a UNIQUE SELLING POINT? • Can you come up with a UNIQUE SELLING POINT for it?

We list some well known products and businesses with arguably unique selling points: Colorbond fencing and roofing Half Court tennis David Jones Apple Macintosh computers One Day Cricket QANTAS QE 2 Steel belted radial tyres TAFE The Australian Grand Prix

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What if we increase our prices? Many companies when faced with competitors dropping their prices for various reasons counter with the obvious tactic of dropping their prices to match the competition. What if the company raised their prices instead? The sales staff would protest about how much business would be lost virtually overnight by not having a ‘me too’ price. Imagine a hypothetical case where a product is selling for $100.00, with a variable cost of $75.00, and thus a contribution margin of 25%. Management want to raise the price by 15%, against stern protests from all the sales staff, who are convinced sales volume will fall. Their sales manager is asked by the manager to quantify just how much business will be lost with this proposed price rise, and accordingly asks his sales team to report back with some figures. In due course the sales manager tells the manager that on average the sales team reckons that sales volume will fall 22% with the 15% increase in price. The manager now has some figures to do some simple calculations with. He multiplies the price (100.00) by the percentage increase in price (15) to get 1500. This he divides by the percentage contribution (25) plus the percentage price rise (15), which adds up to 40. Divide 1500 by 40 and the answer is critical volume loss of 37.5%. That is, the company’s sales would have to fall by 37.5%. Much more than the sales staff estimates, before the benefits from the price increase would drop to break-even point. That is, the company’s sales would have to fall by 37.5% before the benefits from the price increase would drop to break even point.

The formula is: X = decrease or increase in price as a percentage C = percentage contribution 100 times X divided by X+C = CVL (critical volume loss) For an equation to measure when you want to cut prices, 100 times X divided by C-X = CVG (critical volume gain)

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Rules - Innovations Old rule The best contact with a potential buyer is personal contact. New rule The best contact with a potential buyer is effective contact.

Innovations that exploit changes in industry structure are particularly effective if the industry and its markets are dominated by one very large manufacturer or supplier, or by a very few. Even if there is no true monopoly, these large, dominant producers and suppliers, having been successful and unchallenged for many years, tend to be arrogant. At first they dismiss the newcomer as insignificant and, indeed, amateurish. But even when the newcomer takes a larger and larger share of their business, they find it hard to mobilise themselves for counteraction. Those who suggest anything new, or even a change in the way things are being done, whether in respect to product or process, to market or service, should be expected to go to work . They should be asked to submit, within a reasonable period, a working paper to the presiding senior and to their colleagues in the session, in which they try to develop their ideas. • What would it look like if converted into reality? • What in turn does reality have to have to look like for the idea to make sense? • What are the assumptions regarding customers and markets? • How much work is needed? • How much money? • How many people? • How much time? • And what results might be expected? Peter F. Drucker

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Where will you meet? You are going off to a strange, new city to meet people for the first time who are interested in doing business with you. Being an entrepreneur, you are as usual a little short of money and cannot afford to stay in a five star hotel - in fact you are staying at a cheap motel out in the suburbs. The people you are going to meet for the first time could be very important to your business and it is imperative that you convey the ‘right impression’ at this meeting. Obviously the people you will be meeting will be sizing you up also, and will leave this meeting with lasting impressions gained at this meeting. Where can you arrange to meet your potential clients in order to give the right impression, at minimal cost, without travelling all over a strange city to their premises, which would involve great expense and considerable time?

How about the lobby, foyer or coffee shop of a prestigious five star hotel? Some people use facilities provided by the airlines as part of special travel privileges which usually involve extra cost.

ENTREPRENEURIAL PROGRESS

Since the beginning of human existence:

There have been 800 generations

650 of these lived in caves

More than half of the world’s inventions and developments have come in this, the 800th generation.

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The Marketing Audit - a preliminary questionnaire What business are you (really) in? What are your business objectives? What are your personal objectives? What are the strengths of your business? What are the weaknesses of your business? What are the opportunities? What are the threats - current and future? What makes your competitors stand out? Who needs you? How do customers find you? How do customers find out about your competitors? Your top 20 clients represent what proportion of your business? Who is the contact point for potential customers? (Partner, secretary, answering machine, etc.) Can you demonstrate the effectiveness of your product to consumers? - How? Do you accept credit cards? Do you offer a bonus? Are there new products you can offer? What are they? Is your business seasonal? If yes, when is the peak period? Do you follow up customers (by phone or mail), asking if they are satisfied? What are your average monthly sales? Is any product significantly more profitable than others? If yes, which product or service? Is any product significantly less profitable than others? If yes, which product or service? What are the most critical issues hindering the achievement of your business objectives? ADVERTISING • Attach copies of your current or past advertising • Attach copies of your competitors advertising PROMOTIONS • Brief details of your past and current promotions DELIVERIES • How do you deliver your goods / services? DISTRIBUTION • How do you distribute your goods / services? • What assistance will be of special benefit? 64


Integrated Marketing and Advertising For best results and maximum sales opportunities, a new product launch in our experience should have: A proposed integrated Marketing and Advertising strategy and campaign planned at the time of the product launch. An allocated cost budget for advertising and marketing. This could be a % of budgeted sales (say, 2 - 5%) or could be a set $ amount. The required outcome of this expenditure has to be the ‘education’ of the target consumer in the benefits of your product. You want the consumer to ask for, and buy your product, at the point of sale. Prospective stockists and resellers of your product should be given details and a copy of the proposed advertising programme at the initial sales presentation interview. Select the appropriate media. e.g. Newspaper - Sports pages, business pages, Sunday press, T.V., radio, specialist magazines, trade publications. Advertise and promote the name of the stores and stockists involved. Offer advertising and promotion deals for quantity buys. Are appropriate Point of Sale displays and material provided for in store success? Marketing ideas and promotions Will a newspaper give the product a free story? Will Radio/TV give the product a free story if you use a press release? Should the product have a press release? What promotions, special events and publicity will create interest and sales? Bumper stickers, badges, T shirts, caps, etc. Integrated ‘in store’ promotions of your product. Retailers as a rule are happy to have you marketing and selling your product in their store and creating sales for them. You have more expertise, knowledge and interest in selling your product than the retailer! Remember - You have to do the creative work for the retailer!

What makes you competitive? ❈ POSITION ❏ Yes ❏ No ❈ PRICE ❏ Yes ❏ No ❈ SERVICE ❏ Yes ❏ No ❈ QUALITY ❏ Yes ❏ No ❈ UNIQUENESS ❏ Yes ❏ No ❈ EXPERIENCE ❏ Yes ❏ No ❈ CONTACTS ❏ Yes ❏ No ❈ PAYMENT TERMS ❏ Yes ❏ No ❈ WARRANTY ❏ Yes ❏ No ❈ OTHERS ❏ Yes ❏ No 65


Advertising - 10 quick points 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

What are you advertising? What should be the NICHE message? Is co-operative advertising appropriate? Should you use the same advertisement in all media? Does the advertisement hold and attract attention? Does the advertisement have a catchy headline? NEW, FREE are good words to use in your copy. Photographs or graphics add interest. Media selection is important. What integrated promotions can you run in conjunction?

ONE PAGE MARKETING To market yourself or your new product or service you can create a one page marketing brochure. Some of the things to include: 1. Tell customers what sets you apart from all the other players out there in the market place. 2. Show your staff, or yourself in a photograph. 3. What customers can expect from you - promptness, courtesy, etc. 4. Some testimonials from happy customers. 5. How can you be reached? - your address, phone, fax, etc. 6. What do you specialise in?

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Some Sales and Marketing basics for launching your new product Marketing success depends on the quality of the product and the ability of the salesperson. Attitude is more important than aptitude for sales and marketing success. For others to believe in your business and product - you must believe in it. An effective marketer views change as a challenge and opportunity. How can I do it better next time? In a fiercely competitive market place, the sales persons commitment is often the deciding factor. Better communications will improve your selling power - be sure your message is received the way you intended it to be. Selling is creative problem solving - how best to get what you want while satisfying the customers’ needs. Marketing must be consistently future oriented for a product or service to survive in a world of change. Interdependence and trust are the essential relationship builders. The more you know about your business and product, the easier it becomes to sell. Success comes from building on your strengths, not from correcting your weaknesses. People buy BENEFITS - but they want to know about FEATURES. You sell a product best by selectively targeting qualified prospects. Effective marketing is the result of careful planning. A successful marketing plan is based on understanding current economic trends. You increase the odds of making a sale by knowing what the public wants and needs. The odds continue to increase by knowing specifically where your buyers are located. The art of closing a sale is the ability to sell to the right person, in the right place, at the right time. The secret desire of every prospective customer is, ’Make me an offer I can’t refuse.’ Individual customised sales approaches will fare better than mass marketing. Packaging can have a major impact on why a customer purchases a product or service. The only way to close a sale is to get to the real decision maker. A sale is a series of planned questions to uncover needs, build trust, answer objections and gain commitment. The person who asks the questions controls the sale. A successful negotiation is a WIN-WIN situation - but the person who asks for more usually gets it. Marketing yourself is a life long process - the harder you work at it the better and luckier you get! 67


Contributions to Total Cost

PRIME COSTS

FACTORY OVERHEADS

OTHER OVERHEADS

Direct materials

Indirect materials

Marketing Advertising Selling Research and development

+

Direct labour

=

TOTAL PRODUCT COST

+

= TOTAL COST

Indirect labour Distribution

Direct expenses

Indirect expenses

Administration

What is the real cost of getting a product to the market place? Many people embarking on a manufacturing program for the first time, (and many people with vast experience), fail to appreciate the expenses of getting a product, especially a new product to the market place and the consumer and end user. This is compounded if the product is to be sold through a wholesale chain and retail outlets. This simple chart shows the steps in the manufacture and sale of a new product and the increasing costs in each step of the process, including MARKETING, ADVERTISING and SELLING.

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5 Selling The Product


A Sales and Marketing Strategy A NEW PRODUCT or SERVICE MARKET RESEARCH

• Is there a need for the product • How is it currently being met • Is it a growth market • How big is the potential market • How much market share can you capture • Who are the potential customers • Will they deal with you • What are their expectations • What does the customer want to buy • Product differentiation • Benefits - can you demonstrate the benefits

COMPETITOR ACTIVITY

• Who are the competitors • What is their market share • Why do consumers use their product

RESEARCH & DEVELOPMENT

• Will it perform • Will it meet Industry and Government regulations

SALES and MARKETING STRATEGY MARKETING MIX

• Retail, Wholesale, Direct, M.L.M. etc. • PRODUCT • PRICE POINTS • PROMOTION • PLACE

TRADING TERMS

• What are the industry standards? • Can you afford to meet the customers terms • Can you offer alternate, attractive payment schemes

ADVERTISING & PROMOTION

• What is the best medium, Print, Radio, TV • Can you get free editorials and media exposure • Would specialist groups welcome you as a speaker?

U.S.P.

• Does your product have a UNIQUE SELLING POINT?

DISPLAY / PACKAGING

• How will you package and merchandise your product for maximum impact.

WARRANTIES and BACK UP SERVICE

• Can you meet industry requirements • Can you offer innovative service

VALUE ADDING

• Can you ADD VALUE to your product to increase its saleability, profitability and market share?

COMPETITION

• How will your competitors react to your new product. • What will you do about it?

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Targeting customers What business are you really in with your new product or service? Who would you like to do business with? Be specific! How are they segmented? What is the potential size of the market? Who are those with the potential to buy and pay for your goods or services? Who would welcome doing business with you? How do they perceive their needs in relation to your product? Who offers competitive products, and what are their strategies? How are they sold and marketed? What is the best way to communicate with the target market? Contact and talk to the potential customers for your goods, using a rifle approach as distinct from a scatter gun approach. Put a map on your wall which shows your area of operations or influence. Insert a pin in the appropriate spot each time you get a new customer. Would you achieve better results by phoning 20 prospects for an appointment, rather than spending money on newspaper advertising, or perhaps delivering 1,000 leaflets? Be pro active: Approach people from newspaper advertisements Approach people from magazine advertisements Approach people from Trade advertisements Prospect continually - be constantly on the look out for leads Talk to special interest groups Articulate the vision - constantly Live and breath your business ideas Always have a business card or leaflet in your pocket ready to give to a prospect. And a pen to write details of new leads. Ask for the business And have an order form to write it on! Don’t forget to keep a record of your prospects and make regular follow up calls.

CREATE DEMAND by

CREATE SALES by

• Advertising • Point of sale displays related to advertising • Promotions, demonstrations, presentations • Special offers • Competitions and prizes • Exhibitions • Trade nights • Newsletters and bulletins

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• Targeting specific markets • Targeting niche markets • Retail • Wholesale • Route trade • Personal selling • Special events


Prospecting, and finding Customers A sale of your new product can be broken down into various steps PROSPECTING Who is an ideal prospect / potential customer? Leads from newspapers, magazines, directories. Networking at clubs, breakfasts, organisations etc. Observation of new business start ups. BUILDING RAPPORT People buy from people they like, trust and respect. You need to be concerned about the customers needs as well as your own. If you are forthright and honest, confident about yourself and your product, it shows through. People will respect you if you treat them with respect. QUALIFYING - Is about Selling to the right person Finding the customers needs Understanding the benefits of the product Matching the needs and benefits of the customer Determining whether the prospect has the authority to buy Determining whether the prospect will be able to pay for the product A buyer is qualified when they have the need or desire for what you have to offer, have the necessary budget, and the authority to buy. HANDLING OBJECTIONS Price - ask “What is the specific problem?” Sell value. Procrastination - what is it the prospect wants to think about? - price, product, service, etc.? Prejudice - ‘I am sorry you feel this way. May I ask why you feel like this?’ CLOSING THE SALE All parties should benefit. The sales person financially and the buyer finds a solution to a problem. Show the customer how your product will benefit them Handle any objections. Ask for the order. THE SELLING GOAL

Turn the prospect into a customer, then turn the customer into an advocate for your new product or service

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New Customers You should be constantly on the look out for new business and customers for your new products NEW CUSTOMERS should Increase market share Increase sales Increase profits Replace lost customers QUALIFYING a LEAD to a PROSPECT Do they have a need? Can they benefit from buying our product? Can they afford to purchase and pay for the product? Do they have the authority to buy or influence the purchase? METHODS of PROSPECTING Cold canvassing - knocking on doors or using the telephone to find prospects. Personal observation - using all the senses to find leads. Spotters - asking friends to generate leads for you and your product, usually for a ‘spotters’ fee. Direct mail - mailing letters to prospective customers, seeking responses, developing a data base. Networking - developing social contacts through community and social clubs etc. Centre of influence - developing contacts in the market who can influence other people to buy, although they may not use the product themselves. Endless chain - ask satisfied customers to provide the names of others they feel would be interested and have a need for the product. PRE-APPROACH PLANNING Can help provide additional qualifying information Provide information to build the presentation Provide an insight into how to best approach the prospect Prevent the salesperson making serious errors Provide the salesperson with confidence ADVERTISING Should create an awareness of the product Should create an awareness of where the product is available Stimulate interest and generate attention for the product Advertising, will not replace the function of the sales person, but enhance it.

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Generating Interest in your new product A well known and widely used selling concept is AIDA. A Attention - getting an appointment I Interest D Desire A Action - the presentation and sale A sales person should generate all of the above in direct mail letters and when securing appointments as well as in face to face communication. Some methods of approaching potential customers are: • INTRODUCTION • PRODUCT • CUSTOMER • BENEFIT • CURIOSITY • SHOCK • SHOWMANSHIP • QUESTION • STATEMENT • PREMIUM • SURVEY • COMPLIMENT THE SALES PRESENTATION A sales presentation can be in the form of a: CANNED PRESENTATION One that never changes - can also be called the memorised or standard presentation. OUTLINE PRESENTATION One in which the heading never changes and will follow each point in order. However what is said after each point heading will relate to the buyer. PROGRAMME PRESENTATION Is one that is put together after a survey and is a one off for each customer and their particular needs. VISUAL AIDS Are designed to assist in helping the buyer understand the presentation and retain the information. Visual aids could include: • Brochures • Graphs • Photographs • Product samples • Videos • Overheads • Factory / warehouse visits • Letters and testimonials from satisfied clients

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Why won’t my product sell? There are surprisingly few explanations why a product will not sell as expected in the market place, and make a reasonable profit for those involved. Try these : There is no effective market for the product The product is not being sold in the right way The product is not being sold in the right market The product is not competitive in terms of price, quality, or service There is ‘unfair’ competition, possibly because of subsidies or tariffs The company has internal weaknesses - thus, costs are too high, productivity is too low, quality control or delivery are poor, etc What else? Always put the organisation above the person - especially yourself Never believe that anybody is indispensable - especially yourself Always listen first for the bad news - especially about yourself Always be highly critical of performance - especially your own Never take your eye off the main objective - especially one you have set yourself

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Consumer / Buyer behaviour CUSTOMERS DON’T BUY THINGS FEATURES PRICE

THEY BUY NEEDS SATISFACTION. BENEFITS VALUE

SHOES

WALKING COMFORT and DISTINCTIVE STYLING

A BED

A GOOD NIGHTS SLEEP

STEREO SYSTEMS

MUSIC and ENTERTAINMENT

SUPERANNUATION

PROTECTION and FUTURE LIFE STYLE

A MOTOR CAR

PERSONAL TRANSPORTATION and STYLE

CUSTOMERS DON’T BUY THINGS THEY BUY NEEDS SATISFACTION

BUYING SIGNALS

When making a sales presentation you should always be on the look out for buying signals from your prospect. Some buying signals could be: Assumptive ownership - “I’ll make this room my study” (selling a house). “We could put the new (object) in the corner.” Issuing delivery instructions, or asking about delivery. Disappointment about lead times for possession. Concentrated attention on buying details. Asking questions that relate directly to usage of the product. Looking intently, touching, feeling, hearing, trying, ‘smelling’, - every glance is another signal Asking about payment terms and methods. Asking their spouses, partners, superiors opinion. Showing good humour - the euphoria of the purchase. Any positive response to an assumptive close. Open body language.

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Channels of Distribution To make products accessible to customers, marketers must decide upon Channels of Distribution. A Channel of Distribution for a product consists of the set of people and firms involved in the flow of the title as the product or service moves from producer to the ultimate consumer or business user. A Channel of Distribution is the route that a product and/or the title to the product takes as it moves to its market. A Channel of Distribution always includes the producer, the final customer (consumer) or industrial user for the product, as well as all intermediaries involved in the title transfer in this route.

Marketers need to decide on Channels of Distribution to ensure their goods are available to consumers and to provide a competitive edge. Channels of Distribution often include intermediaries (agents or wholesalers) to ensure maximum market coverage. A manufacturer based in Sydney will usually find it more cost effective to have an agent or wholesaler based in each Australian state, rather than try to sell to all outlets from Sydney. This applies particularly in the case of organisations selling a wide range of lower priced consumer goods. Marketers have the choice of five basic Channels of Distribution to facilitate distribution of their products.

Producer

Consumer

This is the shortest and simplest Channel of Distribution. Examples include selling by mail order or door to door, and expensive technical products, and growers direct from roadside stalls It is often used for bulky heavy goods, e.g. bricks.

Producer

Retailer

Consumer

Examples are retailers buying large quantities directly from manufacturers, or manufacturers of bulky goods such as mattresses. Perishable goods (fruit and vegetables) and fashion goods use this channel.

Producer

Wholesaler

Retailer

Consumer

This is a traditional method used for consumer goods used by small manufacturers and retailers. Examples include fancy goods, e.g. giftware, hardware, tools and stationery.

Producer

Agent

Retailer

Consumer

Many producers choose to use a manufacturers’ agent as a cost effective means of selling to retailers, particularly large scale retailers. Examples include using food brokers to sell a wide range of goods to supermarkets.

Producer

Agent

Wholesaler

Retailer

Consumer

This channel is commonly used to reach small retailers. Examples are importers of low priced consumer goods using an agent or wholesaler to maximise coverage of their products in different states or territories.

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Price Points Those launching new products and services will find that many products they are involved in selling will have or require a number of different price points, to cater to various organisations, depending on their potential and actual volume of purchases.

Price Points

$ $ $ $

A product may have a recommended retail price (r.r.p.) of The product may have a trade price of Resellers are entitled to a discount of 20% off the trade price Industrial users are entitled to a discount of 25% off the retail price Government are entitled to a discount of 40% off the r.r.p. Educational bodies are entitled to a discount of 35% off the r.r.p. Volume users are entitled to a discount of 10% off the trade price Large volume users are entitled to a discount of 15% off the trade price Thus we have a product with eight different price points

When launching new products and services what resources do you possess or have access to? Resources may be: Time Money People Intellect Technology External expertise

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$100 $80 $64 $75 $60 $65 $72 $68


Establishing Credibility Know your customer or prospective customer and analyse their requirements. No two customers will be identical in any respect. What does the customer really want? Do you understand your customer’s business? Are you following the customer’s protocol? Maintain close contact. Know your product and it’s features. Call at appropriate times. Do you require an appointment? Follow up on queries and complaints. Are you familiar with the current status of this customer? (payments, orders) Are you providing appropriate after sales service? Be credible - look the part, act the part, be prepared, perform. Perform! Most sales situations will involve an element of WIN - WIN. Improve your selling skills constantly. COMPLAINTS Remember if a customer levels a complaint, be it justified or not, they expect an explanation, and a proposed solution. Ignore complaints at your peril! CLOSE THE SALE - HOW ? ASSUME THE SALE Would you like it delivered tomorrow? Which model would you like? INDUCEMENT Order today at a special price. IMPENDING EVENT This model will be discontinued. The shipment has to be finalised today QUESTION How would you like to pay for it? ACTION Lets see how it works making your product. TALK While we get the model you require from the store, let’s do the paper work. ASK FOR THE ORDER Pick up your pen and order form - you do have an order form handy ? To sell VALUE a salesperson must be able to answer typical questions such as: What costs are a function of the customers requirements? When the customer buys what costs are really incurred? How are they accounted for? How does your offer affect these costs? Will it reduce them, add to profits, offset some costs? What is the competition offering?

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Communications The communications required to sell your new product, includes reference to the constant verbal communication required to sell successfully to potential and existing customers. Do you verbally address? The expectations of the customer you expect to do business with The expectations of the company you are selling for Their time frame Their payment terms The customer’s shopping list In most business transactions there is a: HOW WHAT WHY WHEN WHERE WHO Asking questions of customers, or potential customers, and getting answers is COMMUNICATION. Asking well constructed questions aimed at directing a sale to a customer is even better communication, particularly if you can get the customer to open up and COMMUNICATE to you. A person selling plants is a very good example! A nursery salesperson would ask numerous questions to ascertain the customers specific requirements. If you have regular customers, by communicating: you will build long term business relationships, learn a lot about them, become friends, often be invited to their business functions, and best of all make it more difficult for your competitors to do business with your customers. COMMUNICATION IS ABOUT GETTING THROUGH ! It is INFORMING, CONSULTING PERSUADING and CONVINCING INFORMATION IS POWER! 80


Selling your idea - some basic personal requirements Ability Achievement Ambition Attitude Confidence - how do you stand apart from your rivals? Commitment Creativity Credibility Dedication Determination and drive Empathy - your product and your customer Flair Goal setting - career, money, responsibility, personal Honesty - ethics, integrity Knowledge - your product and company Listen - to the customer - listen better Luck - hard work creates a lot of luck! Motivation Move faster Objectivity - don’t stay with something too long Perseverance Planning - what are your sales plans for tomorrow? Preparation Presentation - yourself, the company, the product Prime time - when do you sell best? Prime time - when is the customer most receptive? Priorities Reliability and service Stimulation - how much of your brain are you using? Tenacity Time management - how much of your time is spent selling? Think faster Be a DOER Not a waiter or watcher. Waiters jump on the bandwagon when it appears safe. Watchers find a safe niche and watch the world go by. DOERS Doers make things happen. They are the shakers and movers of this world. Doers want to win, while waiters and watchers fear risk of failure. Doers accept risk, apathy, rejection and failure as part of the course to success. How many people do you know with self fulfilling prophecies who lament their lot in life? Fate did not do this to them - attitude did, and fear of failure solidified the mould!

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5 Case Studies Check Lists


Is your Business well run? The TELSTRA SMALL BUSINESS AWARDS competition, asks the following questions of organisations wishing to enter: 1) • • • • • 2) • • 3) • • 4) • • 5) • • • • 6) • 7) •

BUSINESS GROWTH and PERFORMANCE Describe how you plan future growth and development. What is your strategy to achieve your business objectives? Outline the key actions you are taking to achieve this plan. How do you monitor your business performance against these objectives? How do you identify market opportunities and threats? CUSTOMER SERVICE Describe what steps you have taken to deliver first class customer service to your clients. Describe what research you have done in assessing customer needs. MANAGEMENT INFORMATION SYSTEMS What information do you source to make day-to-day business decisions? How regularly do you source this information? FINANCIAL PERFORMANCE What controls are in place to manage your business’ financials? Describe the financial performance of your business in terms of revenues and / or profits for the last 2 or more years. STAFF DEVELOPMENT Describe the process by which you evaluate the performance of your staff. Describe the process by which you assess the career development of your staff. Describe the involvement of staff in developing your business plan and operational decision making. What role does staff training and development play in your business? RELATIONSHIPS WITH SUPPLIERS What initiatives have you taken to improve relations with your suppliers and what type of supplier agreements do you have in place? BUSINESS STRENGTHS What are the 3 key strengths that make your business successful?

Another example of business awards is the GIO Business Stars Award program run by The National Business Bulletin. Some of the criteria they look for from ‘fast growing and successful companies who have succeeded in the last ten years’ are: JUDGING CRITERIA • Demonstrate skills of energy and innovation • Prove value-added focus • Apply excellent business strategies or tactics • Involvement in networking, electronic commerce, Internet or new approaches (TQM etc) OTHER FACTORS GIVEN CONSIDERATION • Overcome business setbacks • Staff growth • AS3902, ISO9000 etc. accreditation • Environmentally aware • Winner of awards • Winner of market share • Proof of customer service • Sales in $millions and growing • Export success • Plans to 2010 and beyond 83


The Time Period

from conception to realisation of some major innovations

Antibiotics Automatic transmission Ball point pen Cellophane Dry soup mixes Frozen foods Heart pacemaker Instant coffee Liquid shampoo Nuclear energy Nylon Photography Radar Roll on deodorant Selfwinding wristwatch Television Video tape recorder Photo copying Zipper

Conception

Realisation

Incubation Interval

1910

1940

30 years

1930 1938 1900 1943 1908 1928 1934 1950 1919 1927 1782 1904 1948

1946 1945 1912 1962 1923 1960 1956 1958 1965 1939 1838 1939 1955

16 7 12 19 15 32 22 8 46 12 56 35 7

1923 1884 1950 1935 1883

1939 1947 1956 1950 1913

16 63 6 15 30

To achieve a 25% market penetration in the USA: Household electricity took 46 years Telephones took 35 years Television took 26 years Personal computers took 15 years Mobile phones took 13 years

While the Internet achieved a 25% market penetration in just 7 years!

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Buildings XYZ BUILDERS A Victorian based manufacturer of portal steel framed buildings wanted to increase their turnover by 100% in 3 years. The business,established 5 years, was based in an outer suburban area, in an Industrial estate with no passing trade, to attract impulse buyers. Customer base was traditionally aimed at small factory / warehouse owners and developers and local people requiring large car and or storage areas. The company is not in the traditional ‘garage’ market. Cash flow was excellent as deposits were obtained with orders and progress payments collected as work progressed and final payment obtained on completion. No retention money was involved.

How should / could the company increase its turnover/market share? By tendering for Government work. By conducting a review of its competitor’s activities. By printing an illustrated colour leaflet,with a company profile. By re-vamping its image with new logo, signage, letterheads, quotations. By moving to new premises on a busy main road and erecting display buildings. Spending 4% ( or more?) of sales on advertising. Reviewing prices,with a view of deep price cuts to grow market share. Publishing a price list and risk competitors getting a copy. Erect a permanent display building at the local showground. Letter box drop leaflets to local target areas - blocks of 5 acres. Investigate export markets. Travel overseas to investigate export potential. Spend $30,000 on developing export markets. Use display advertising in a rural paper and the Age, showing illustrations of their buildings,targeted at specific markets.

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You could have been In the early 1980’s a well known Australian organisation decided to offer early retirement packages to a number of employees. Many accepted the package and as a consequence of this there were a number of positions throughout the organisation which needed to be filled. To boost morale and encourage the remaining staff, the organisation invited applications from people already employed there . A man who had been a cleaner with the organisation for 8 years verbally applied to the manager for a promotion to the position of Caretaker of Cleaning Equipment he heard about from his work mates, who encouraged him to apply. With 8 years experience, never a sick day in all that time, and the respect of all the people he cleaned for, he was a natural for the job, and had surely earned a promotion. After the shake out with the retirements, the manager was looking for better qualified staff, and wanted a competency appraisal of any of his remaining staff, who applied for a promotion to the vacant positions. The man who applied for the promotion was horrified when he was told that he would would have to do some tests to ascertain his competency for the new job he wanted. In due course he confessed his dark secret to his work mates - apart from scrawling his signature, he could not write, and his reading ability was not much better. He was even more horrified when approached by management to confirm the reasons why he refused to sit for their tests. One thing quickly led to another and management informed him that an illiterate such as he, had no place in their organisation, even as a cleaner. The only compensation in all this, was a reasonable pay out for his 8 years service when he left the next Friday. At a loss to know what to do with the rest of his life, and worse still where and how he would find another job, he walked home a different way that day, down the main street, to ponder the future. It was a very warm day and on his way he decided that he felt like a natural ‘home made’ ice cream. It would lift his sagging spirits and make him feel better. He was surprised and then peeved that he had difficulty in finding a shop to buy the type of ice cream he wanted. When eventually he did find a shop to buy the ice cream he wanted to buy, the ice cream disappointed him and so did the grubby shop and almost non existent service. That night he talked about the experience of buying the ice cream with his wife. ‘Why don’t you start your own ice cream shop’, his wife said. ‘We could make our own product, including the cones. It would not cost all that much to commence and you have your severance money to help’. Two weeks later after lots of verbal negotiating with potential suppliers and a landlord, the former cleaner had his own natural ‘home made’ ice cream shop. A year later he had 2 shops. A year after that he had 3 shops and in three years he had 7 shops and a manufacturing plant. And so it went until after ten years he decided to retire and sell out to the the national company who had been courting him for some time. The former cleaner savoured the moment as they sat in the board room of the national company signing the contract of sale for his business [which he could not read, though he had sufficient acumen to have had it checked by his advisor]. As he was scratchingly signing his name on the contract the managing director remarked with a smile, ‘You know you have done very well with this business. Just think if you had the literacy skills that most of us have, you could have been anything you wanted.’ “Yes”, he replied laconically, thinking of the wonderful life style now open to him, “I could have been a Caretaker of Cleaning Equipment, in a factory.” 86


A New Engineering Product Because of general apathy from potential users of your product(s) and a lack of support from existing trade suppliers you decide to sell your new industrial product(s) by going alone and starting your own small Industrial Supplies company. The company will sell your products(s) and a small, complimentary range of products to end users and general industry. Your brief is to: Set up a warehouse from scratch. Set up a small sales team. Establish as many (profitable) clients as possible. Win at least 35 major accounts in the first year. Have a 9% market share in 3 years. Be making a profit within 12 months. Establish your product in a market leader image. TO ACHIEVE THESE AIMS, WOULD YOU? Endeavour to snare experienced, key staff from competitors? Target those you would like as customers? Call on prospective clients? Start a price war? Throw an opening party? Hire experienced, retired people? Commission a market survey? Advertise in the newspaper? Advertise on TV? Promote special deals? Stress features and benefits? Stress price? Stress service? Investigate competitor activity? Buy out competitors? Establish long term working relationships with potential customers? What else could you do to ensure survival and on going success?

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Beerenberg Jams Beerenberg are Hahndorf, S.A.E., based makers of a wide range of jams,pickles, sauces and the like who established in 1970. In the 1980’s Beerenberg achieved significant growth and publicity with sales of small jars (40 gram) of jams to Airlines, Restaurants and Hotels. English rivals muscled in on the small jar market with 30 gram jars that under cut the price of Beerenberg 40 gram jars by 25%. Demand plummeted. Should Beerenberg: Write off that market segment and concentrate on other areas. Offer 60 gram jars at 1.9 times the price of 30 gram jars. Ask for a special tariff to protect the local jam market. Accuse the competition of ‘dumping’. Investigate if 30 gram jars are 50% cheaper to buy than 40 g. jars. Buy new machinery and double production of jam. What happened? Beerenberg discovered that their competitors ‘were paying 50% less for their jars and lids’. Beerenberg switched to 30g. jars to cut costs and directly take on their competition. They doubled production from 20,000 jars a day to 40,000 by getting new machinery and reorganising their staff. By streamlining the operation Beerenberg was able to match the competition in price and win back markets. Backpackers thrill ride An entrepreneurial man owned a rural property and wanted to build an adventure ride at cost of almost $1 million. His target market was to be backpackers who would be bussed in by the local travel agent on a daily basis, from the nearest town which was some 20 kilometres away. They were expected to pay $35 for a ride which lasted less than one minute. When attempting to raise funding for the project he was asked by a finance broker to provide a Business Plan for evaluation by potential backers. The project never proceeded any further than this as the entrepreneur had insufficient funds to pay for the Business Plan - even though the cost of the Business Plan was actually less than one percent of the total project. Even worse it turned out that the entrepreneur was about to be evicted from his property. Many people who contemplate launching a new product or service appear to lack the essential elements of being able to plan properly. And would the local travel agent in a remote village have been able to attract sufficient backpackers to make this scheme viable?

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Launching New Products - Some Pitfalls In our opinion and experience some of the requirements, and very common and widespread mistakes, people launching new businesses, products and services should be aware of include: The need to be prepared to give 100% commitment (and even more) of their own efforts to make their new business or product successful. The need to LISTEN. Before you start a business venture, ask potential customers if they would use your services. Ask how the business or product might be improved. Find out what potential customers want to buy. In most cases what they want to buy is different from what you want to sell. Do not assume that your business or product is a ‘good product’. Many people tell themselves their potential business or product is a good product, produce an untried and untested product in quantity, refuse to carry out any market research, are paranoid about usually non existent ‘competitors waiting to steal their ideas’, and then blame the world at large when no one will buy the product at consumer level, on their terms and conditions. Do you understand the culture and protocol of the industry you want to sell to? The need to be aware of commercial reality. Many people find it hard to accept that a retailer, in most cases will make more profit on a product than the manufacturer. It may take months to be paid for your product and there will invariably be bad debts. Do you understand how sales and marketing in the world of commerce functions? Many people from a non sales background think they can out sell people with years of sales and marketing experience and contacts. They seldom outsell any one. The apathy of business and the public in general, to change and new products. Research and development involved in most successful new products is in the order of one to three years. Last nights ‘good idea’ will require lots of development. The need for market research and on going research and development. The need for an advertising budget and integrated sales and marketing campaign. The need for products to meet government and industry regulations. The need to listen closely to potential customers and understand what they want. Customers seldom want to buy exactly what you want to sell them! You will need an easy to read Price List / Order Form and trading terms and conditions. Venture capitalists in Australia willing to bankroll new ventures are virtually non existent. 89


Launching New Products-Some More Pitfalls In our opinion some very common pitfalls ‘entrepreneurs’ should be aware of include: The notion that someone will come along with a handful of money to buy an untried and unproven product. It is usually the case that a product will retail for 3 to 6 times the manufactured cost, (and often more). GST rules and requirements. You are required to pay GST on all your purchases. You need to sell your products inclusive of GST, collect the money for the Australian Taxation Office (ATO), and remit this GST to the ATO. An unwillingness to seek out professional Sales and Marketing advice, which should pay for itself in the money you will save long term. Going into production of an unproven product without proper checking of manufacturing costs. This is a common occurrence and people launching new products get ‘friends and mates’ to make a batch of their product which is inevitably, way overpriced. A factor of 75% overpriced is not uncommon. Products do not sell themselves in retail shops. Products require point of sale displays, marketing and advertising. You have far more interest in selling your product than the retailer. The notion that the USA is a huge market, just waiting for my idea... Launch it successfully in Australia first. ‘If I sell to 10% of the population ......’ Totally unrealistic - 0.5% to 1.0% is a far more practical (and still a difficult) target. Articulate your vision at every opportunity - many people are paranoid about others finding out about their product, even after it is being sold in the market place. Many opportunities are lost at launch stage because of this paranoia including editorial type stories about new products in the media. You need absolutely total commitment and persistence, with your product. HOW BIG IS A MARKET? Using South Australia as an example, in the 1990’s there was a population of around 1,400,000. If you subtract the following people with very limited, or no discretionary spending power, how big is your potential market? Babies School children People in nursing homes Retired people Unemployed people People in employment (those with a disposable income and able to spend in the market place) was officially around 650,000 less than half of the population.

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Widget Dealers If your new business were about to launch a new WIDGET to the market place, one that you were going to manufacture yourself, what are some of the attributes and requirements that you might need to be successful. What do you need to be a successful WIDGET MANUFACTURER? A sales / distribution strategy Effective dealership arrangements A good product range Product must be perceived as offering value for money Able to anticipate trends - or better still, initiate trends Compete with backyard and major operators The ability to forecast sales and trends Finance schemes for purchasers.

What do you need to be a successful WIDGET RETAILER? Exclusivity to one major brand for a specified area. Or be part of a major retail operation, shared with other dealers. A line of credit to pay for the product. Expertise and experience in the WIDGET trade. Awareness of quality and features. The ability to read market trends - will the market grow? What type of WIDGETS will people want to buy in the future?

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What makes a company successful? A poll of management came up with this rating: 1. A bias towards action - do it, fix it, try it 2. Simple form and lean staff 3. Continued contact with customers 4. Productivity improvement via people 5. Operational autonomy to encourage entrepreneurship 6. Stress on key business value 7. Emphasis on doing what they know best 8. Simultaneous loose-tight controls They might also have added Stick to the core business and basic theme of the business BE THE MOST COMPLETE Make your business the most thorough, best stocked, highest profile. Become the benchmark by which other competing businesses are measured. Don’t live up to a criterion - set it! Design your product better. Present it better. Supply better instructions. Supply better after sales support. DO YOU POSSESS THESE ATTRIBUTES? SELF DIRECTION Self disciplined and thoroughly comfortable at being self employed. SELF NURTURING Boundless enthusiasm for your idea when no one else has. ACTION ORIENTATED A burning desire to realise, actualise, and turn your ideas into reality. HIGH ENERGY LEVEL Emotionally, mentally and physically able to work long hours. TOLERANCE OF UNCERTAINTY Psychologically able to handle risk. What personal requirements do you require to successfully sell your new product ? All that is needed are three things, according to a recent poll: 1. Persistence 2. Talent 3. Performance

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Are you an Entrepreneur? You have just opened a new business in a strange city, which you are sure will prosper and make good profits for you. You have budgeted very carefully and by the time you are ready to open for business, have almost run out of cash. You decide to run a six month advertising promotion as a way of launching your new business, at a cost of $1,000 per month for a full page, in an attractive glossy local magazine which targets your potential customers brilliantly. You arrange the copy and then sign a 6 month contract and sit back and wait for the results. You expect the first account for the advertising at the end of each month, and are prepared to pay on a 30 day account basis. Less than a week before the advertisement is due to appear the magazine insists upon prepayment in full - $6,000. They insist you were told this and that there is no discount for cash payment. The advertising is vital to you but you do not have the $6,000 to pay them. What can you do to resolve this impasse? • Forget the whole deal? • Try and find another magazine to advertise in? • Could you offer a monthly Bank Draft to be drawn at the time the magazine appears every month, over the 6 month term? • This would offer the magazine security and assist your cash flow. You get the order or you don’t. The defeats are many and painful. The victory makes it all worthwhile.

Do you covet security of the crowd? Do you operate by consensus and committee? Are you willing to make sacrifices? Are you comfortable working 6 or 7 day, 60 80 h+our weeks? Are you easily distracted working on special projects? Are you prepared to do more than your competitors? Can you make important decisions? Can you keep your head when those about you are losing theirs? Can you handle constant rejection and apathy?

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Do you have what it takes? Rating your new product

(A) Product success requirements

(B)

Relative Company competence level weight 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Rating (A x B)

Company personality 0.20 and goodwill Marketing

0.20

Research and development

0.20

Personnel

0.15

Finance

0.10

Production

0.05

Location and facilities

0.05

Purchasing and supplies

0.05

TOTAL

1.00

Rating scale : 0.00 - 0.40 poor, 0.41 - 0.75 fair, 0.76 - 1.00 good. Present minimum acceptance rate: 0.70

Many organisations require their staff to evaluate new product ideas using some type of ‘standard format’ for later review by a committee. This rating form can be used to address these issues. The first column lists factors required for a successful launch of the product to the marketplace. The next column shows ‘weighting factors’ which management may apply to various issues. Thus management believes marketing competence will be very important (0.20), and purchasing and supplies competence will be of minor importance. The next task is to rate the organisation’s degree of competence on each factor on a scale from 0.0 to 1.0. The final step is to multiply the relative importance of the success requirements by the corresponding levels of organisational competence to obtain a single overall rating of the organisation’s ability to carry this product successfully to the market place. 94


Selling your Business - An Exercise After a short period of time in selling your product or service, a stranger approaches you and asks if they can buy into your company. The stranger asks you to prepare a profile of your business and the positive things it has to offer. What will you tell them, about yourself, the business proprietor, and your business? Remember, the more you have to offer the higher the price you can ask. What personal things would you list? Experience Expertise Qualifications Recognition What business attributes? Goods Services Market share Improvements Profitability What opportunities do you offer? Are they unique? Concepts Products What are your goals? SUCCESS is the progressive realisation of worthwhile pre determined personal goals. No one else can succeed for you. What are your goals? GOALS should be S pecific M easurable A ttainable R ealistic T angible What special skills do you need to start a new business? In the formative years of a new business, you require the leadership skills of : Creativity Innovation Promotion Finance These are required in generous measure. 95


Time Management - Try this checklist • How much of your time is spent on work appropriate to your position, to the level of your skills and knowledge? • Where does the rest of your time go? • Who / what interrupts you the most? • What can you do about it? A BIG OFTEN A NOT A PROBLEM PROBLEM PROBLEM Unclear objectives Changing priorities Inadequate planning No self imposed deadlines Fire fighting crises Confused responsibility Confused authority Personal disorganisation Cluttered desk Unfinished tasks Duplication of effort Lack of decision Meetings Mixed messages Communication breakdown Incomplete information Dependence upon grapevine Procrastination Ineffective delegation Change badly handled Inability to say NO Ineffective control info. Telephone interruptions Unplanned visitors Excessive reports / returns Untrained subordinates Work flow bottlenecks

Take a close look at your problem items. • What can you change/ • What items will you need help with? • What must you accept as it is? Why? 96


An Entrepreneur’s Checklist Do you have what it takes? Try this simple quiz and see how you fare. It is generally accepted that a score of less than 100 will require some major personal development on your part, to cope with the demands of your business.

High Low 5 4 3 2 1 0 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30.

Do you enjoy making your own decisions? Are you self reliant? Do you relish competition? Are you a self starter? Do you have will power? Can you build teams? Do you plan? Can you take advice? Can you adapt to change? Do you establish schedules of activities? Do you keep to them? Can you keep others to schedule? Do you deal with complex issues well? Can you deal with ambiguity? Are you capable of adapting to change? Can you work long hours? Are you single minded? Do you have the physical stamina to deal with the project? Do you have the emotional strength and resilience to handle the strain? Will you make sacrifices to achieve your goals? Are you capable of identifying the skills needed for success? Do you have them? Can you fill in any gaps in your skills from elsewhere? Can you deal with risk of failure? Are you skilled at networking? Can you keep your objectives in view despite distractions? Do you know your goals? Can you communicate them to others? Can you handle several tasks at once? Do you separate need to’s from nice to’s?

5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4 4

3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3

2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2

1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

5 5 5 5 5 5 5 5 5 5 5 5

4 4 4 4 4 4 4 4 4 4 4 4

3 3 3 3 3 3 3 3 3 3 3 3

2 2 2 2 2 2 2 2 2 2 2 2

1 1 1 1 1 1 1 1 1 1 1 1

0 0 0 0 0 0 0 0 0 0 0 0

TOTAL The underlying theme of this questionnaire is a series of propositions about individual enterprise. At the core lies a notion that the person is self reliant, and can make personal decisions, enjoys being self reliant and is not intimidated by competition. Alongside these ought to be the capacity to be a self starter. The enterprising individual does not wait for others to give a lead. This reflects a well formed and strong will. The attitudes and skills needed by entrepreneurs are seldom as glamorous or exciting as those seen in the movies or those portrayed in popular writing. There needs to be a willingness to roll the sleeves up, take on board the basics and understand the fundamentals. 97


Launching a New Product OPPORTUNITIES

THREATS

Expand your customer base more clients Natural growth An improved economy Increased prosperity Population shifts - positive

Reduce your customer base less clients • Natural attrition • A worsening economy • Reduced prosperity • Population shifts - negative

Improved customer access Increased range of products Easier to purchase New, improved marketing Improved service and contact

Reduced, more difficult customer access • Decreased range of products • Harder to purchase • Old, worsening marketing • Decreased, worsening service and contact

Increased appeal of your products Advantages over competitors Market leadership Other methods of convincing

Decreased appeal of your products • Disadvantages over competitors • Loss of market credibility • Competitors better methods of convincing

Exploit competitors’ shortcomings Opportunities for increased market share Competitors are moribund Competitors do not respond to new strategies

New strategies from competitors • Price wars • Slow or no reaction to new strategies • New technology

98


The Top 20 Questions Originated to help develop company backgrounders, advertising brochures and promotional pieces, the Top 20 Questions are what most people will ask you about your new product, service or business. 1. What type of product or service do/will you have? 2. What is the purpose of this product or service? 3. What is the key message or phrase to describe your product or service in one sentence? 4. What is your reason for launching this product or service? 5. What is your product or service? 6. Can you list three unique benefits of your product or service? 7. Do you have datasheets, brochures, diagrams, sketches, photographs, related press releases or other documentation about your product or service? 8. What is the product or service application? 9. What led you to develop your product or service? 10. Is this product or service used in connection with other products? 11. List the top three objections to buying your product or service immediately? 12. When will your product or service be available? 13. Who is your target audience? 14. Who is your competition? 15. How is your product or service differentiated from that of your competition? 16. What is the pricing of your product or service versus your competition? 17. Are you making any special offers? 18. What plans do you have for advertising and promotions? 19. How will you finance company growth? 20. Do you have the management team needed to achieve your goals?

99


A Checklist - New Product Development Use this worksheet to assist in defining the positioning and objectives for your product or service.

Positioning Goals

Goal

Achieved

Comments

Feedback from press Feedback from sales force Customer data from direct sales Vertical market(s) activity User registration card information

_________ _________ _________ _________ _________

________ ________ ________ ________ ________

_____________ _____________ _____________ _____________ _____________

Pricing goals 1. Determine the price where you can sell the most product and achieve maximum profits. Measured by: Different price points Market research Competitive analysis

_________ _________ _________

________ ________ ________

_____________ _____________ _____________

2. Maximise market share Measured by: Competitive analysis Channel reports Formal market research

_________ _________ _________

________ ________ ________

_____________ _____________ _____________

Naming Goals Choose an effective name for your service or product, measured by: Feedback from market research (target audience, influencers, consultants, etc.)? _________ ________ _____________ Mocking references or inappropriate puns in press? _________ ________ _____________ Trademark or copyright problems? _________ ________ ______________ Translation problems? _________ ________ _____________ Positioning Activities 1. Determine product's position with respect to the following: A. Category What is it?

____________________________________________

What does it do? ____________________________________________ 100


A Checklist - New Product Development Positioning Activities (cont) B. Class High-end ____________________________________________________________ Low-end ____________________________________________________________ C. Features and benefits What's new, different, better, etc.? ____________________________________________________________ Who will buy this product? ____________________________________________________________ D. Price What's the right price for this product? ____________________________________________________________ Research target audience Strongly recommended, especially for new products. It is always a good idea to perform primary or secondary research in order to assist you in the proper positioning of your product or service. This research will help you to know who your customers are and what they want from your product or services. 3. Create product positioning statements This worksheet will allow you to identify the prime benefits of your product as well as who would benefit by using it. You can then summarise and refine this information to develop your product positioning statements. I. Customers will know they need my product because ... Briefly describe specific selling features of your product.

101


A Checklist - New Product Development II. My product meets the needs of ... List the types of customers who could benefit from your product. A. B. C. III. These customers will benefit from my product because ... List the key benefits of your product; be sure to list benefits and not just features. A. B. C. IV. Positioning statement drafts Summarise the above information into your first drafts of your short and full product positioning statements. Full Product positioning statement draft: It is important to develop strong, positive statements now so you'll sound confident when you talk to potential customers, backers and the media. When you've completed this worksheet, test your statements by reading them out loud. Can you say the short statement in less than ten seconds? Do the words roll off your tongue or are they tongue twisters? Try reading your completed statements to people in your office, preferably people who are not familiar with the product. Then, ask if they can explain in their own words what the product does and who should use it. If they can, you're ready to talk with the press. If not, you may need to refine your statements. Tip: When you're trying to get feedback from your associates, don't ask a question that can be answered "yes" or "no." People will frequently say "yes" to avoid embarrassment. Instead, ask an "open-ended" question that requires a complete sentence for an answer. Example: "Based on what you just heard, please tell me what the product is, and who should use it." V. Product positioning statements If necessary, refine your statements based on the feedback you received .

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A Checklist - New Product Development 4. Present product position internally Is position understood and believed?__________________________________________________ Does the sales force agree with it?_________________________________ 5. Incorporate position into marketing plan __________________________________________________________ PRICING ACTIVITIES 1. Determine product List price / Recommended retail price __________________________________________________________ 2. Develop a pricing model to establish price points for every price category. Compare your price for each category with your competitions' prices. (Avoid pricing too high or leaving money at the table.) A. List price Unit __________________________________________________________ Multiple quantity _____________________________________________ Volume purchase_____________________________________________ O.E.M. (Original equipment manufacturer)___________________________ Retail S.K.U. (stock keeping unit)__________________________________ Special packaging ____________________________________________ B. Channel price Distributor __________________________________________________________ Reseller ___________________________________________________________ C. Promotional price _______________________________________ Competitive upgrade _________________________________________________ Employee purchase __________________________________________________ Internal use _________________________________________________________ 103


A Checklist - New Product Development NAMING ACTIVITIES 1. Determine whether or not you need a new or different name A. New product or product line_____________________________________ B. New module/edition__________________________________________ C. Existing name is not working ____________________________________ Name does not support product's position ____________________________ Product has changed significantly ___________________________________ Name connotes antiquated or negative images ________________________ Product breadth changes-becomes a family or series ____________________ 2. Evaluate whether or not you are in a position to change name A. Do you have enough money to: • Conduct adequate research __________________________________ • Change target audience awareness (advertising, direct mail, etc.) _______ C. Does name have too much "in market" equity? • Decide to keep third-party product name ________________________ 3. Naming process A. Decide you need a new name B. Determine type of name you want There are three major conventions in naming products and or services. Names may be either descriptive, (Burgers-to-Go), suggestive, (SuperBurgers) or Arbitrary (Bill’s Burgers) C. Conduct target audience research • Formal-through consultant • Informal-in-house D. Run naming session 1. Brainstorm 2. Vote on names 3. Select up to 15 names E. Select final name F. Conduct legal research G. Reserve name with Australian. Patent and Trademark Office H. Reserve name with international agencies

104


Foxtel casts a line to hoteliers When Foxtel conducted research into why it was not selling Foxtel into 2–3.5 star hotels, it found a number of misconceptions relating to the price and perceived low demand from guests. Foxtel and its advertising agency Young & Rubicam, created a campaign targeting hoteliers. It wanted to dispel the myths within the hotel market and educate hoteliers on the relatively low cost of Foxtel and its effectiveness as a tool in attracting guests. The campaign, which also targeted sales staff with an incentive program, was based around a fishing lure theme, symbolising how Foxtel can lure guests. Delivering the key message, “Foxtel is an affordable way to attract new hotel guests” a lead-generation pack was sent to 1000 hotels following a telemarketing operation. Foxtel sales staff visited 45 of those and 32 signed contracts—a success rate of 71% of qualified leads. The revenue generated amounted to more than 10 times the cost of the campaign. Y&R account director Michelle Stott said the campaign succeeded because of multiple sales points. “The campaign has made an impact in the hotel industry, receiving a response rate of 11%. OBJECTIVE: Increase sales of Foxtel in to 2-3.5 star hotels. STRATEGY:

Educate the hotel market on the low cost of Foxtel and its effectiveness as a tool in attracting guests.

RESULTS:

Contract conversion rate was 71% and additional revenue generated more than 10 times the cost of the campaign.

105


Summary Many people become very disillusioned when trying to launch new products and services. These ideas people often assume that it is a simple matter of approaching someone in a position of power or authority with their idea or prototype in that particular industry and that they will walk away with a large cheque and lifetime royalties. The truth of course is far different. We live in a crowded and dynamic market place. In the previous pages we have outlined some of the pitfalls that people wishing to launch new products and services can expect to encounter. Experience is a wonderful aid when launching new products and services but is obviously not available to many budding entrepreneurs. Absolute professionalism is another major bonus when planning to launch new products and services, but this takes many years, even a lifetime to acquire and use to your advantage. Research and understand your market place before you commence. A working and proven prototype is a must, together with a business plan and a marketing plan. Tell potential supporters how you intend succeeding with your product or service and how you intend to market it. Even better if you expect support, make sure you have some sales on the board before you approach these people. Many people use their friends to produce their first production run and invariably are horrified to learn that could have purchased substantially better, in both price and quality, from other sources. Advice of any kind from well meaning, though inexperienced friends should be treated carefully and with a degree of suspicion. Of course motives such as jealously and envy may colour their judgement. At any meeting make sure you present well. You never get a second chance to make a first impression! Dress to suit the occasion and have quality letterheads and other business stationery. Most importantly, if you really want your product to succeed, work at it continuously. Listen to suggestions and criticism and act on them. Make changes if required. You will have more motivation to drive the success of your new product or service than anybody else. Everybody will make some mistakes, and some can be costly, but while you are out in the market place making waves, people will surely notice you. The launch of any new product or service will involve a degree of risk. There are countless stories about people who failed the first time around and later bounced back to conquer the world - Henry Ford was not successful the first time. Live and breathe your new product or service. Your enthusiasm should be contagious!

106

INDEX Activity ratio 22 Adages, people 14 Advertising 65, 66, 73 AIDA 74 Aids, visual 74 Analysis, SWOT 57 Approach, methods of 74 Attributes, do you possess these? 92 Audit - Marketing questionnaire 64 Backpackers thrill ride 88 Basic record keeping 20 Basics, Sales & marketing 67 Behaviour, customer 76 Brand building 5 names 54 Budget, a 20 Business communication 80 Business law 24, 25 Business plan format 12 Business Planning 11 Buyer behaviour 76 Buying signals 76 Buying process, the 32 Case studies Backpackers thrill ride 88 Buildings - pre fabricated 85 Engineering products 87 Entrepreneur, are you an 93 Foxtel casts a line to hoteliers 105 Furniture shop 19 Jams, 88 Selling your business 95 Telstra awards 83 Time period, new products 84 Venture capital 21 Widget dealers 91 You could have been... 86 Checklist, launching a new product 8 new product development 100-105 value selling 36 Closing the sale 72 Columbus, Christopher 13 Communication 80 Competitive advantage 59 Competitor activity 37 Complaints 79 Consensus of advice 8

Consumer behaviour 76 protection 25 Consumers, what do they want? 14 Contrasts, selling and marketing 52 Contributions to total cost 68 Cost, contributions to 68 Creating demand 32, 71 Creating sales 32, 71 Credibility, establishing 79 Crisis Management 16 Critical issues 14 CROWS, 29 Customers Evolution 45 Finding 44 New 73 The 44 Requirements 46 Targeting 71 Worth 47 Demand, creating 32, 71 Direct mail 29 Distribution chain, the 77 Do you have what it takes? 94 Do you possess these attributes? 92 Economic factors 51 Entrepreneur, are you? 93 Entrepreneurs 8 Entrepreneurial checklist 97 progress 63 Expressions of interest 7 Format, Business Plan 12 Four P’s 53 Foxtel 105 Generating interest 74 Get the shopping list 45 Getting paid 27 GIO Business Stars Awards 83 Goal planning 9 Goal, selling 72 Goals, smart 95 Growth opportunities 37 revenue, an eight step approach 4

Handshake deals, 42 How much money will you need? 19 Human Resources 14 Identification, 15 Identifying and influencing customer requirements 46 Image 58, 60 Impressions, first 58 Innovations 62 Innov8 Advisory 29 Integrated marketing 65 Intellectual property 10 Intelligence, sales 37 Interest, generating 74 Internet 83 Intimidation 43 Is it? 13 Is the playing field level? 45 Is your business well run? 83 Issues critical 14 pertinent 29 It is 1973 38 Inventory, management 26 Launching New Products 8, 13, 33 Law, business 24, 25 Luck, 17 McCreery, General Sir Richard 2 McKinsey Quarterly 5 Management Crisis 16 Inventory 26 Strategic 6 Time 96 Market Defined 49, 50 How big? 90 Niche 60 Research 50 Segmentation 53 Size 32 Markets, do they grow? 39 What is, a? 49 Marketing A new product 32 Audit 64 Basics 67 Concept, total 51 Contrasts 52 Defined 51 Ideas and promotions 65 Integrated 65

Launching New Products and Services Levels 35 Mix 53 One page 66 Plan format 55 Plan, implementing 56 Planning 3 Questions 51 May 1981 newsletter 38 Mission statement 14 Money, how much will you need 19 Naming activities 104 Negotiate with style 13 New customers 73 product, a, marketing 32 product development 34, 100 - 105 product launch 30, 31, 33 Objections, handling 46, 72 One page marketing 66 Opportunities 98 ouellette-online.com 13 P’s, four 53 Pareto Principle 39 Payment, getting paid 27 Penetration time for everyday products 83 People 14 Personal requirements 92 Pertinent issues 29 Pitfalls, some 89, 90 Plan, marketing 55, 56 Planning Business 11 for the inevitable 16 goal 9 Marketing 3 Pre-approach 73 Promotion 4 Relationship between plans and objectives 2 Reasons for 2 Strategic 6 Types of 11 Positioning 100, 101 Power failure, a 17 Premises 15 Presentation of documents 42 Presentations, sales 42 Price 46 Price lists 25 Price points 78 Prices, increasing 61

Pricing activities 103 Pro-active, be 71 Problem areas, potential 16 Product, a new 32 Profitability ratio 23 Progress, entrepreneurial 63 Promotion planning 4 Prospecting 72, 73 Qualifying, customers 72, 73 Quality 40 Quality Service, 40 Questionnaire 8, 9, 13 Questions asking, 80 top 20, 99 Quick ratio analysis 22, 23 Rapport, building 72 Rating your new product, 94 Ratio analysis 22, 23 Reasons for planning 2 Record keeping, 20 Registrations of interest 7 Relationship between plans and objectives 2 Research, market, 50 Resources 78 Retailers 65 Revenue growth, an eight step approach 4 Roosevelt F.D.R. 16 Rules 62 Russell, Chris 29 Sales Budgets 20 Close the 72, 79 Creating 32, 71 Intelligence 37 Organisations 44 Presentations 74 Requirements 81 Team, the 41 Sales & Marketing, basics 67 Sales & Marketing, strategy 70 Screening 31 Segmentation 53 Selling Contrasts, 52 Goal, 72 Personal requirements 92 to and reaching the market place 6, 7 Your business, 95 Your idea 81 Your new product, how? 31 108

Shopping list, get the 45 Signage 15 Signals, buying 76 Smart goals 95 Steps in marketing planning 3 Stock management 26 Stott, Michelle 105 Strategic plan 17 Strategic management 17 Strategy 13, 70 Success 41, 42, 92 Summary 106 Supply chain management 32 Support and services 60 Sustainable competitive advantage 59 Suzuki, Daisetz 2 SWOT analysis 57 Targeting customers 71 Telstra awards 83 Test a 8 The key to success in battle 2 Threats 98 Three levels of product 35 Time management 96 Time period from conception 84 Top 20 questions 99 Total cost 68 Trade Practices Act 24, 25 Types of planning 11 U.S.P. 13, 60 Value adding 33 Value selling 36, 79 Venture capital 21 Visual aids 74 What business are you in? 52, 71 do consumers want? 7 if we increase our price? 61 really matters in building a brand 5 Why won’t my product sell? 75 Winning with new products 6 Would you have invested in this business? 38 Young & Rubicam 105

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