Marketing and Advertising Tips and Tricks for Small Business Owners
I recently taught a marketing class at a local university and had an exciting time sharing the lessons I’ve learned from obtaining and helping small businesses become successful and profitable. I decided to share some of the tools I developed for the class with small business owners online. Read through the series by following the links at the bottom of the articles Here are some key takeaways I think every business owner needs to be aware of:
Key #1. Successful Businesses Spend Money on Marketing
I know this point can be difficult to swallow sometimes. The most common response I get from this statement is
“well if I had more cash flow, I would spend more on advertising.”
This line of thinking is dead wrong, and for your business, that dead wrong could be fatal. If you don’t currently have a budget for marketing, take a look at your net profit, and take 10% of that number. There you have it, a realistic advertising budget.
“What if I can’t afford to spend 10% of my net profit on advertising and marketing?” My answer to this (sorry if I sound harsh, this is the real world): You’re in the wrong business.
Why do I have to spend 10%? Simple: Everything in business is investment. If you cannot invest $10,000 (or whatever your 10%) works out to be, and get a return on that investment that exceeds it – remember, most investments will take several years to recoup the principal, most well-constructed online businesses will recoup the principle much sooner than say a securities investment – then you are investing your time, effort, and money in the wrong place. Some of the money you spend on advertising will create immediate gain, but you also want to invest in advertising and marketing that will create long term value. Like any investment portolio, you want to diversify the methods according to their long-term and short term potential.
If you have faith in the profit potential of your business, you should have the faith to make monetary investment in it with the expectation that it will show a return.
“Ok, I get it, I need to invest in marketing my business. I’ve tried that and it didn’t work.”
Once again, this is a pretty common argument. The simple reason why your advertising isn’t working is because you are not doing it right (duh, thanks buddy). Let me explain:
Most marketing/advertising efforts fail because of one simple reason: Improper market segmentation
What is market segmentation?
I really like Investopedia’s definition of market segmentation:
Definition of ‘Market Segmentation’
A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. Market segmentation enables companies to target different categories of consumers who perceive the full value of certain products and services differently from one another. Generally three criteria can be used to identify different market segments:
1) Homogeneity (common needs within segment)
2) Distinction (unique from other groups)
3) Reaction (similar response to market)
Once you have an idea of what your market segments are based on experience or research, you want to pick a target market – the market(s) or consumers who you want to target in your marketing. There are a number of ways to pick your target market. If you have been in business for a while, you probably have a good idea of who your ideal customer is. That’s great if you know that, but it is not enough. You need to know everything about them: Where they shop, where they live, what their income is, how many children they have, what motivates their buying behavior, what other sorts of products they buy, what television shows they watch, what radio stations they listen to (on average…I’m not suggesting you stalk anyone).
How do you find out more about your target market?
Let’s just say you own a local garden center, your primary and secondary markets may look like this (who gives you the most money):
1. Local landscaping companies that buy large quantities of mulch, fertilizer, and decorative plants
2. Middle aged to older women who are passionate about gardening.
The best way to start gathering information about these individuals to help your marketing efforts is to solicit feedback, this can be done at the cash register, through surveys (don’t just give them a survey, you need to provide an incentive to fill it out, or noone will fill it out), and online. Online research can take time, but companies like Nielsen spend millions of dollars finding out the information you are looking for. You can also find tons of valuable information on .gov sites about demographic spending habits. Go to these secondary research sources and gather information about your target markets.