20 per cent VAT 2012 budget 50% return accountancy accountancy fees accountancy services accountant accountant B accountants accounting for dividends accounting records accounting software accounts accounts software administration annuity annuity rates Autumn statement avoid inheritance tax avoidance of tax avoiding inheritance tax bank lending basic personal allowance BCC big picture book keeping Bribery Act British Chamber of Commerce BS7858 budget budget 2011 Budget 2012 budgeting business business accounts online business advice business cash management business confidence business continuity business continuity management business continuity plans business cost management business efficiency business exit business exit planning business finance business friendly business funding business goals business growth business investment business loan business management business owners business performance business plan business planning business record keeping business records business sale business success business succession planning business survival business tax planning business tips bwe based account cash flow Cash flow forecast cash is king cash management Cash-based accounting cashflow chancellor chartered accountant chartered accountant Birmingham chartered accountants chartered financial planner chartered financial planner Birmin child savings children’s savings choosing an accountant client entertaining Cloud accounting Company Tax returns compliance industry contractors IR35 corporartion tax Corporation tax credit control credit control procedure cyber attack cyber crime cyber insurance cyber security cyber threats data security data security. IT security debt collection debt recovery despite some of the bad press over recent years director’s loan account directors loan directors pensions Directors’ loan account dividends doubl Dragon’s Den dragons den Economic expansion EIS email security employee data security Enterprise Investment Scheme enterprise zones entrepreneur Entrepreneur’s relief entrepreneurs entrepreneurs relief ethical hacker Everyone needs to finance their retirement and exit planning finance finance management financial advisor financial difficulty financial forecasts financial freedom financial goals Financial management financial plan financial planner financial planning financial planning checklist financial planning tips financial wellbeing FSTE 100 FTSE100 fund manager gifts global markets growth growth finance HMRC HMRC enquiries HMRC enquiry HMRC IR35 guidance HMRC tax enquiries HMRC tax enquiry home loans how to manage time ICAEW IHT income tax income tax r income tax relief income tax return independent financial advisor information security information security management inheritance tax inheritance tax planning insolvency Institute of Chartered Accountants investing Investment investment advice investment diversity investment in marketing investment management investment options investment philosophy investment planning investment portfolio investment risk investment strategies investment volatility investments investors IR35 ISO 27001 ISO 27001 benchmark ISO 27001 consultants ISO22301 ISO27001 IT security Jimmy Carr jobs keeping the books key perfirmance indicators key performance indicators KPIs kpi's late payment penalties late payment penalty fines late payments legal tax strategy management information management meetings management standards managing data security marketing investment miscalculated tax motivating staff national lottery new years resolution online accountancy online accountancy software online accounting on-line accounting online accounting software online accounts online tax return online VAT return outsourced accountancy outsourcing outsourcing accounts overtrading owner managers Parker Management Consultants partnership agreements passwords Pay off mortgage PAYE paying a dividend Payroll penetration testing pension pension contribution pension contributions pension fund Pension funds pension investment pension investment strategy pension scheme pensions pensions forecast per personal allowance trap Personal financial plan personal financial planning personal guarantees personal pension personal pensions personal tax return plumbers tax safe plan pre pack administration private pension profitable business sale R & D tax credits R&D tax credits recession red tape reduce tax remote working report on economy research and development tax credits retirement retirement planning risk risk return safest passwords Saga sareholder protection cover security of websites Seed Enterprise Investment Scheme SEIS selecting an accountant Self assessment self assessment tax return self invested personal pension selling my business selling your company shareholder agreements shareholder protection SIPP SIPPS small business small business owners small business tax small businesses small firms SME SME business management SME marketing SME tax planning SMEs social media policy SSAS start up start-up stock market succession planning tax accountant tax affairs tax avoidance tax breaks tax charges tax code tax disclosure tax enquiries tax enquiry tax evasion tax investigation tax investigations tax liability tax man tax mitigation strategies Tax planning tax planning advice tax planning schemes tax reduction tax reform tax relief Tax return tax saving tax saving strategies tax savings tax strategies Tax tribunals taxation tax-break time management time management skills top rate of tax tough times UK Bribery Act UK economy VAT increase vat return VAT rise VAT submission web based acc website security when to pay a dividend work-life balance Xero Xero accountancy software Xero accountants xero accounting xero accounts Xero accounts service

Now is the time to increase your marketing spend

Add to: Digg Add to: Del.icio.us Add to: Facebook Add to: Furl Add to: Google Add to: Live Spaces Add to: MySpace Add to: StumbleUpon Add to: Twitter
Thursday September 22, 2011 at 9:30am

With reduced economic growth meaning potentially less buying activity from existing customers now is certainly not the time to cut marketing investment, indeed it is probably time to increase marketing spend in order to replace potentially falling sales.

However, for many, effective marketing can be elusive unless you go back to first principles. Proper marketing will enable you to identify your target customer, enable you to provide services that the customers want and enable you to retain those customers.

Understanding the Market in Which You Operate

When making decisions about increased expenditure it is helpful to step back and try to understand where you are and where you want to go. Fortunately there is a huge body of academic work that can provide useful starting points. Porter’s 5 forces model will help you to understand the intensity of competition within your marketplace. Three of the forces are concerned with external factors being the ability of new competitors to enter your market, the threat of substitute products and the overall competitive rivalry between firms in your industry. The other two look at the bargaining power of your customers and suppliers.

For many SME companies their competitive advantage lies in the resources available to the firm and how they apply those resources when delivering service to customers. It is generally better to target parts of the market where the resources available to your firm are superior to those of competitors as you immediately have a head start on the competition. Superior resources are often found in skills, knowledge and ability of employees and access to intellectual property that others do not have.

Such analysis is important when deciding where to spend marketing money. For most this process takes place intuitively based on experience and gut feel. However it certainly won’t do any harm to stop and take a more structured approach to marketing spend. Another important part of this thinking is to identify the right kind of customer.

Identify the target customer

For most companies, having customer acceptance criteria that takes on anyone with a pulse is simply not a viable business model. Because retail works in this way does not make it right for most SME businesses, especially those in the service sector. For many the limiting resource is time and whilst you are spending time dealing with the wrong type of customer you are foregoing the opportunity to deal with someone more appropriate to your product offering. Remember the 80:20 rule? The strategy is to identify which customers you can provide the best service to at your price point and then target just those customers. In this way you will establish particular skills for dealing with that sector or type of customer thus building barriers for others to enter your marketplace.

The problem with not having a structured approach to marketing

Assuming you agree with me, that now is the time to be spending money on marketing, this begs the question, how much and in what areas. Without a plan the money will either not be spent or it will be spent on the wrong things and so wasted.

If you don’t think about your marketing it is very easy to take on any customer that beats a path to your door without taking any control over who you sell to. Without a clear understanding of your competitive advantage and successfully articulating this to customers you will simply compete on price.

No SME company can compete on price over the long term; you will ultimately go out of business. You have to compete on superior service at a price the customer is willing to pay. If this message is acted upon you will need to know what your competitive advantage is as far as your customers are concerned. What are the resources available to your firm (like employees and specialist knowledge) that your competitors do not have? How strong is your brand as far as your customers are concerned? How is your industry structured in terms of competition, barriers to entry etc.?

So now is the best time to start thinking about what you need to do to target the right kind of new customers and provide services to existing customers to ensure they keep buying from you rather than someone else.

Andy Parker
Chartered Accountant and Business Advisor

Comments on this post:

There aren't any comments for this post yet. Why not be the first to comment?

Share your experiences:

Your Name  
(to appear with your comment)
Email Address  
(will not be published)
Human Validation Check  
In the box below, please type the characters that you see in the picture. This helps us to ensure a real person (and not a crafty computer!) is submitting this form.

Enter the code shown to the left:

Parker Chartered Accountants and Financial Advisors is the trading name for PLW Advisors Ltd (Registered No. 10396831), and Parker Financial Planning LLP (Registered No. OC347027). Parker Financial Planning LLP is authorised and regulated by the Financial Conduct Authority. All companies are registered in England and Wales – registered office contact details here