It is that time of the year when businesses sit down and plan for the 2018 financial year. Whether you sell BMWs or home-baked cupcakes, you need to increase sales next year if you want your business to grow. To sell more you need more customers. To get more customers you need to tell more people about your product or service. That process of ‘telling’ is called marketing.
What is marketing?
It is generally accepted that there are eight elements that make up marketing:
- Personal selling;
- Sales promotions;
- Public relations;
- Direct marketing; and
- Digital communication.
Ideally, a marketing plan should have a healthy mix of these elements.
How do you create a marketing plan?
First, you need to be clear on your objectives. What is it you want to achieve? For this article, we will focus on the goal to increase sales. Why do you want to achieve it? An increase in sales leads to an increase in revenue, and that is what makes a business grow.
Who do you need to talk with to increase sales? If you sell cupcakes it is possible that your target market is women, but who are these women and what do they do? It is likely that you will sell a fair number of cupcakes to women who have children in primary school, and who has a full-time job. Where do you find these people to talk to and what is it you are going to tell them? If you want to tell the working mom about your cupcakes the chances are that they will be on Facebook at night after putting the kids to bed, and then you want them to know that they don’t have to stay up baking all night for a birthday party, or find time to drive to the grocery store if they need cupcakes. You want them to know that they can order from the comfort of their home, online and you will deliver free of charge.
You must spend money to make money
This common English saying means that it is hard to make money in a business without investing some money in suppliers, products, marketing, or other business expenses.
But how much should I spend on marketing? The general rule of thumb is that your marketing budget should be 7-8% of your annual revenue. If you make R120,000 by selling cupcakes in a year you should spend R8,400 on marketing; that is R700 per month. If you make $86-million by selling BMWs in a year you should spend $6-mil on marketing; that is $500,000 per month.
As you can see from the example above it is clear that it will be easier for BMW to launch a marketing campaign than for the home-based business owner who sells cupcakes. But that doesn’t mean the cupcakes business has no options, or that it is doomed to rely on word-of-mouth only. Once you know how much you can spend on marketing you can start planning on how you are going to reach your target audience. Because of the limited budget available, I would recommend the cupcakes business spend R300 per month on Facebook advertising and R400 per month to print flyers that can be handed out to mothers waiting in the car for children after school. This then utilises two elements of the marketing mix: advertising and digital communication. For BMW I would recommend a healthy mix of all eight elements, with at least 35% of the budget allocated to digital communication.
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