The target market has been determined, now how to reel them in?
A. Overall Strategy
Marketing is critical at start-up. A business relies on cash flow, which translates into foot traffic for retail and most service related businesses. Once customers begin to come in, word of mouth will help but until then there has to be a plan. It does not have to include expensive advertising if the business is on a tight budget. Flyers can be developed and produced at very low cost. Another advantage of a flyer is that it effectively targets your desired customer. A newspaper ad will reach thousands but there is no guarantee consumers will notice your ad tucked in with hundreds of others. The yellow pages are a must. They are used frequently to determine what business to call. A well thought ad can pay huge dividends. Radio can be helpful if the budget will allow for it.
B. Pricing Policy
Pricing policy will depend on the type of product. Most businesses purchase an item at wholesale and then mark it up a percentage. If competing on price, the product is marked up with a lower percentage hoping that increased sales will offset the lower profit margin. Pricing can be flexible and often has to be. If certain products are not selling, price adjustments may have to be made. A common gimmick in grocery stores is to double the price of an item and then offer it as a two for one special. If offering an item for sale, make sure all costs are factored into the selling price. If part of the cost is left out, the final product may be selling at a loss and it may not be discovered until it is too late. When selling a service, there are overhead costs to consider and it is becoming more common to charge a creative fee. Take a look at what the competition is doing.
C. Sales Terms If at all possible seek cash at the time of sale or service. This does not always work, so have a plan in place for accounts receivable. Accounts receivable can lead to cash flow problems. If payment is not received in 30 days, follow-ups will have to be made. It is not uncommon to give discounts to customers who pay on time.
D. Method of selling, distributing and servicing products.
For most businesses distribution can be assumed. (e.g. convenient stores, restaurants). Some businesses will need some explanation however. Internet based companies have to have a delivery method for sales and returns. Computer retailers will have to have a method to repair problems in the field or a system for customers to return defective items. Do not overlook the costs associated with delivering a product and standing behind its quality.
