Guide to Starting and Operating a Small Business | 2018 Guide to Starting and Operating a Small Business - Page 49

of your products/services? What are key benefits to customers? Features “tell”. Benefits “sell”. The key to your product or service identity is your “market niche”, not only in terms of the services provided, but in terms of needs fulfilled. For instance, a feature of residential lawn service is that it provides lawn cutting, fertilization, etc. The need this business fills and the benefit provided to the customer is convenience for homeowners who are short on time or proper equipment. Identify Potential Customers. A potential customer is one whose needs may be filled by your product/service and who may reasonably be expected to consider your business as a source of this product/service based on price, location and other factors. Everyone in the world is not a potential customer. Focus on an attainable and realistic portion (segments) of the market. Identify Your Competitors. A competitor is a business that delivers the same product or service (direct) or similar product or service (indirect) as your business. For instance, if you are providing guard services to warehouses, all other such guard service businesses within your competitive reach would be direct competition. However, alarm systems for warehouses could be an alternative to guard services, and businesses selling alarm systems would be indirect competition. Understand Why Customers Buy Your Product or Service. It is very important to understand the basis on which customers make buying decisions related to your type of product or service. Price: Set prices strategically to accomplish business goals, while understanding customer motivations: • Cost based – cover expenses • Going rate – follow the leader • Image pricing – exclusivity • Service pricing – convenience • Slow entry – build customer loyalty • Loss leaders – generate traffic Examples: • Will you offer a 25% off coupon to generate traffic? • What are your long term company and financial goals? (i.e. build a repeat base of loyal customers that buys your pizza every week? Provide a software solution with monthly subscription fees?)) • Based on your company goals, what pricing strategy will you implement? • What are your target customers willing to pay for? • Are you providing extra services that customers are willing to pay more for? • In developing pricing strategy, be careful not to give away product! If the product is “free” its perceived value may be much less than actual cost. Placement Determine most effective ways to get your product to your customer: (with packaging that reinforces value and image). How will your customers get your product/service? Can you reduce the cost of delivery and not sacrifice customers’ value perceptions? Can you increase the speed of delivery and increase your price? Promotion Which media are most likely to reach your target customers? How can you gather information about which promotional tools are most effective? Which media are most cost effective? (Calculate cost per lead.) Be sure to ask your customers how they heard about your products, so that you can evaluate effectiveness of your promotional tools. Publicity/Public Relations What are some customer success stories that you would like to share? Where can you find examples of well-written news releases? What community events and organizations attract your target customers? Name the media contacts that you reach out to regularly to reinforce your message. 47