Thursday, September 18, 2014

The PEST Analysis: Providing Insight Into The Market Infuences And Dynamics


Background

As readers of this blog you know that I have always believed that the most underutilised tool in the business world is the all encompassing SWOT analysis. It is perfect for any business in any market and provides unfailing insight into both the internal processes and systems of your business as well as the external market forces that prevail outside of your business.  Recently I had a student ask me about what is the best way to assess the current and foreseeable opportunities and threats that are likely to present themselves within the next twelve months?  Enter the  PEST analysis.

                                                                  http://bit.ly/1pkgwUJ

The PEST Analysis

The PEST analysis is a structured framework of macro-environmental (external) factors, which essentially act as a feeder that facilitates a better awareness of the likely opportunities and threats that your market will present your business in the short, medium and long terms based on the current available knowledge and understanding. It is made up of four key groupings.

Political 

Political factors examines how directly and to what extent the Government (National, State or Local) intervenes either in the market your business operates in and/or within the economy. Political factors include monetary and fiscal policy, taxation levels, employment law, environmental legislation and regulation, trade policies and tariff settings.

Economic

Economic factors include various aspects that measure the state and dynamics of the economy such as the inflation rate, foreign currency exchange rates, income tax rates, the level of Gross Domestic Product (GDP) and the level of budget deficit or surplus.  The robustness or weakness of the key economic indicators have a direct and profound effect on the level of business optimism, levels of risk tolerance and subsequent levels in business expenditure.

Social (and Cultural)


Social factors look at the prevailing attitudes, beliefs and generally sum up the current mind set of the people within different groups that make up the community or market place. These factors include: key demographics such as age distribution and population growth rate as well as attitudinal data such as environmental attitudes, home ownership, career aspirations and immigration. Changing beliefs in these social factors affect the demand for a company's products and future products. Currently for example Australia has a Baby Boomer driven aging population that will increasing require additional levels of pharmaceuticals, medical services, retirement facilities,etc.

Technological


Technological factors as the name suggests involve any refinement or advance that occurs in the processes, automation or broad technology used by that market or industry. As the levels of sophistication and cost for technology rise in any given market, so to do the barriers to entry which protect the businesses currently within that space and deter potential rivals from entering. Broadly speaking technological advances made by any business or group within a market, drive continued research by the other players to match and surpass that business and lead to greater quality, production levels of efficiencies in production supporting a more profitable outcome.

Summary

By utilising the PEST analysis and reviewing your findings on a regular basis you will be able to ensure that you are feeding the best, most relevant and timely information into the SWOT analysis as the basis for robust and reliable long term, strategic and short term, tactical decision making for your business.

Naturally to discuss any of the marketing and social media discussions raised here, please come along to any of the Free Digital Enterprise Workshops and sign up for a Free Four hour coaching session for your business at: http://www.vecci.org.au/business-solutions/digital-enterprise-program
Hope to see you there.

So until next time, good luck and good marketing.
Regards,
Daniele.

Saturday, September 13, 2014

LinkedIn Publishing Soon To Be Available To All LinkedIn Users

Background

In a recent post I mentioned that LinkedIn were trialling their new blogging feature LinkedIn Long Form Publishing on their site with a highly select group of only 20,000 key opinion leaders and influencers. The likes of Bill Gates, Richard Branson and Michael Cuban have been writing updates and posting on a regular basis to incredible numbers of readers.


So What Has Changed

Since that original introductory phase LinkedIn have revealed that this highly desirable feature will be systematically rolled out to all users in the next few months and will therefore be able to be used by anyone who is an active member of the LinkedIn platform. The potential for all members is extraordinary to direct and amplify a message or piece of work.


The Numbers Behind LinkedIn

LinkedIn  currently has over 300,000,000 members and operates in over 200 countries and territories globally in over twenty languages, making it unequivocally the number one professional business networking site in the world bar none. True some other sites are larger but those sites are for the most part social sites where many of the members have no interest in business, where as here with LinkedIn virtually the entire group is actively involved in business, networking or some form of lead generation.

How LinkedIn Publishing Works

Eventually we will all be seeing the same pen icon in the top right hand corner of our LinkedIn screens. When you see and click on this button the publishing input area as per picture below will open up with a brief set of explanatory slides to guide you with your first post.



This is a tremendous opportunity todemonstrate your knowledge, skills and experience and in so doing position yourself as an expert in your field and be able to build your reputation within your field. I think many people were disappointed when LinkedIn removed the Answers Feature some time ago which essentially allowed people to do much the same thing. So at least this new feature replaces Answers with the added advantage of being able to further amplify the message to a much greater extent than before.

After you post an update with LinkedIn Publishing, it will be added to your profile each time and from there you can share it with your own network, where your network members and followers are then able to share it both on and off LinkedIn. At any stage you will be able to check the internal analytics page to see how widely distributed the post is being shared. As well this content will be searchable both on and off LinkedIn for greater access so as always make sure you try to always optimise your content with the right key words and phrases.

Naturally for more information on anything LinkedIn, Social or digital media marketing you should
go to the:  VECCI website on:
http://www.vecci.org.au/business-solutions/digital-enterprise-program/workshops
Here you will be able to sign up for any of the seven free two hour workshops and automatically qualify for a free four hour coaching session for your business.

So until next time, good luck and good marketing.
Regards,
Daniele.


Monday, September 1, 2014

Cost Plus Pricing May Be The Preferred Method For Small Business But It's Filled With Risk

Pricing Is One Of the Four P's

Unashamedly this blog focuses most of its efforts on Promotion, Product and Place. Namely the 3 P's that costs the business money. Rarely if ever have we spoken about the equally important fourth P: namely Pricing which is coincidentally the only one of the four P's that earns the Business revenue so let's change that and have a discussion now.

                                                Image from:  http://www.trinityp3.com/2013/01/value-based-pricing

In truth I have been getting this same question for a while as to what is cost -plus costing, what are the pros and cons and how effective is it as a means of being able to set effective price levels for your business.

What Is Cost Plus Pricing


As the name suggests Cost - Plus Pricing is when you buy an item and you add some additional amount either in dollar terms or as a percentage of the cost price to calculate the sales price to plan to sell the item for.

How Is It Calculated

So for example if you buy a pen for cents a unit you might say we want to add fifty cents to the cost price and sell it for one dollar a pen, where this additional fifty cents will cover our additional costs and profit margin.

Perhaps a slightly more qualified example may be a s business that sells pizzas.
They know that it costs them $5 to make the pizza
They believe that they can sell 10,000 a year (or 27 a day).
They also project that their  operating costs for the year will be $100,000

There for the total cost of the pizza will be:

$100,000/ 10,000 =  $10 indirect cost per pizza plus $5 cost of cost of goods per pizza = $15/pizza.

Now they may wish to earn 25% profit on every pizza sold so the sales price would be:
$15 + $5 = $20 sales price per pizza.

Based on this the business would earn: $200,000 (i.e: 10,000 pizza sold at $10).

Pros and Cons Of The Cost Plus Pricing Strategy

Put simply the greatest argument that anyone can make for Cost - Plus pricing is it's simplicity.
You merely add or multiply the cost of the good by some nominated amount or percentage and you have your sales price. Simplicity itself.

However the negatives are I believe more compelling.  When you use this method you are assuming that your target market are willing and able to purchase your goods at the price you have come up with. But what if they are not able or willing to do it? In that case the product simply does not sell.

 The Best Use 

In the end based on the inherent drawback, the best use for Cost - Plus pricing is not to set prices purse, but rather to determine if  that market based on the current pricing levels and market dynamics is one you should be in or trying to get into. Many times this analysis will be proof you should just walk away and pick another market to go into business.

It is worth remembering also that at the end of the day any product or service is only ever worth what someone else is willing to offer you for it. Not what it's worth or what you paid for it, but only what they are willing to pay.

 And of course for more information on Pricing or anything else in marketing or digital media sign up for any of the seven free Digital Enterprise Program workshops and receive your free four hour coaching session for your business at:
http://www.vecci.org.au/business-solutions/digital-enterprise-program/workshops


So until next time, good luck and good marketing.
Regards,
Daniele.


 





Tuesday, August 26, 2014

Google Adwords. The Rationale, The Stragegy And The Architecture Of An Effective Ad

Background

 In recent times whilst delivering the half day free coaching sessions for the Federally funded Digital Enterprise Program (DEP), I have received many requests to discuss and in most cases set up Search Engine Sponsored links or paid ads which of course for the Google search engine are called: Adwords.


 AS you can see from the screen shot above the Adwords are typically displayed down the right hand side of the page of the search engine listing and usually also occupy the first few spots at the top of the left hand column, just above the organic results that occupy the remainder of the left hand side column. 

The Rationale

The most compelling argument for why Adwords (and sponsored links in general) are necessary for so many marketing campaigns stems from the fact that around 70% of search engine users don't go beyond the first page of results. Similarly 90% of users don't go beyond the second page of displayed results for any given set of search results. What this means in real terms is essentially that if your product or service is ranked organically on page three or beyond, then you are only being seen by less than ten percent of those searching for that term. 

Thankfully regardless of where you rate in terms of organic search, you can usually achieve first page placement with a well written and targeted Google Adword.The Strategy
 Simply put the key strategy is to combine SEO tactics and the use of cost effective adword  spending that will ensure that your product, brand or service is routinely able to be seen on page one of Google for the most important search key words and terms as revealed by Google's own Keyword Tool.

The Strategy

Simply put the strategy adopted here is to ensure that at all times there is at least one listing visible to your target market either through Organic Ranking and /or through the Search Engine Marketing Ads such as Adwords.  This combined strategy involves concurrently ensuring that quality content is consistently written and professionally formatted and optimised to fully meet with Google's expectation of content, whist still investing appropriately in paid ads that appear only to precisely targeted customers and prospects based on the key words submitted to Google as part of the campaign design.

In every case the key words selected are paid for at a known and agreed price that when clicked on will add to the daily budget also nominated by the ad organiser. When this daily maximum budget is reached, the ad simply disappears until the next day where it then reappears to those that search for the specific words and terms listed. In this way the traffic is perfectly targeted and each key word has a much greater chance of achieving a  suitable click through rate (CTR) required by Google to key each key word active.

The Architecture 

Google Adwords are very simple in design and can be effectively written for any product or service once the basic required format is fully understood. For each ad there are four separate lines as follows: 




The first line is the heading which can be up to twenty five characters in length including the spaces between the words and of course should contain the likely key words being used in the first place to bring up the ad. Google has constantly reported that the most successful Adword ads consistently have the most important key words as part of the heading. Hint, Hint.

The second line and third lines are thankfully longer at up to thirty five characters each and are used to provide a key benefit that the product offers and importantly a call to action to drive the customer to perform some required behaviour.

Finally the fourth line is the destination URL where your landing page resides on the server.
Although it can be the home page of your website I encourage you to set up a specialised landing page that will more precisely be able to direct the arriving inquiries.

So there you have it.  Simple, practical, cost effective and ultimately another formidable marketing tool in your weapons array. Naturally if you would like to learn more about Adwords or any other aspect of digital media I would encourage you to also come along to any of the seven free 2 hour workshops for the Digital Enterprise Program and obtain a free half day coaching session just for showing up.  Simply sign up here to sign up:

http://www.vecci.org.au/business-solutions/digital-enterprise-program


So until next time, good luck and good marketing.
Regards
Daniele





Sunday, August 17, 2014

Australian Online Sales Continue To Grow And Grow

The Early Years of E-Commerce in Australia

I remember six short years ago whilst delivering a marketing presentation for the NSW Chamber of Commerce during the Think Big Seminar, I was asked about the percentage of sales in Australia that at the time were online as a percentage of overall total sales. The answer for which was less than one percentage point.



Rationale

The reasons for this slow adoption of the online purchasing rate in the early days of e-commerce remain speculative but it's a reasonable bet that the slow embrace was largely a consequence of some well publicised, horror stories of customers being defrauded while trying to make online purchases.
This publicity certainly instilled a sense of fear and caution in most Australians for many continues to the current day.

Current Levels of Adoption

However in more recent times with a raising awareness of the protection afforded by SSL (Secure Sockets Layer) certificates and especially SSL's with full extended validation as used by larger businesses such as financial institutions, more people have gradually made the transition to online purchasing. Currently in Australia around 7% of total sales are made online  highlighting the more than 700% growth over the last 6 years demonstrating the increased levels of confidence in the protective measures around the protective systems employed.

Additional Challenges to Increasing Adoption Levels

As fully illustrated by the recent data showcased in the Marketing Sherpa, E-Commerce Benchmark Study 2014, there are several perceived issues that businesses are still grappling with regardless of the size of the business in question.

Issues such as technology, fulfillment, access to capital and availability of appropriately trained, quality human resources, being amongst the expansive list generated by the study data.


Despite these ongoing challenges the data also reflects that specialist online retailers continue to grow at an even faster rate than hybrid businesses that offer both retail and online purchasing options.  Perhaps having a singular focus with a niche positioning allows these businesses to more fully appreciate the needs of their customers and ultimately present a more fully rounded solution thereby attracting a faster growth rate.

Suffice to say the percentage of online sales will surely continue to increase in coming years with a simple imperative for all businesses to follow and that being to make the e-commerce option available and user friendly with intuitive customer interfaces that continue to deliver a convenient and rewarding customer experience as a valid option to offline options.

To learn more about e-commerce and all things digital please also join me for any of the free Digital Enterprise Program (DEP) workshops with the added bonus of a free four hour coaching session for your business simply by attending any on eof the seven workshops. Simply go the link below and register your interest now.

 http://www.vecci.org.au/business-solutions/digital-enterprise-program/workshops

So until next time, good luck and good marketing.
Regards,
Daniele.












While online sales have been growing at around 20-30% annually, the overall market share was still only around 5-7% of the overall market in early 2013. Many users cite the reasons of availability, convenience and pricing as well as delivery options as some of the reasons for purchasing online. - See more at: http://www.budde.com.au/Research/Australia-Digital-Economy-Online-Retailing-Trends-and-Statistics.html#sthash.yzp1DiQu.dpuf
While online sales have been growing at around 20-30% annually, the overall market share was still only around 5-7% of the overall market in early 2013. Many users cite the reasons of availability, convenience and pricing as well as delivery options as some of the reasons for purchasing online. - See more at: http://www.budde.com.au/Research/Australia-Digital-Economy-Online-Retailing-Trends-and-Statistics.html#sthash.yzp1DiQu.dpuf

Saturday, August 9, 2014

Forever Loyal: Turning Loyalty By Default Into Loyalty By Design

Last week we spoke about customer loyalty and how in many cases even clients that are supposedly loyal to a business are only loyal essentially through habit and not through any more meaningful rationale and are therefore more than vulnerable to rival attacks should their the offer be more attractive or better targeted to their specific set of needs.

Level of Dependence

Simply put the goal of every marketer is to translate weak, uncommitted levels of customer loyalty into stronger, longer term and more intentioned levels of support. To do this you must form less of a transactional relationship with clients and instead start to design ways to migrate across to the strategically based relationship quadrant which by definition is associated with far closer working relationships, higher levels of loyalty by design and ultimately advocacy where the client proactively sings your praises to others. In these situations both client and corporate have a mutual high level of dependence and act intuitively to help, support and protect the other.





 Transactional Relationships

 Imagine the scenario of someone entering a newsagent on a busy weekday, picking up a copy of the daily newspaper and seeing the store owner is busy taking with someone at the counter with other people already waiting in line, makes a hand gesture catching the owners attention and throws the  exact change on the pile of papers adding to the other money that has been deposited in exactly the same way. This example albeit an extreme example, is an example of a purely transactional customer relationship where there is quite literally no relationship, connection or level of engagement between the two parties. Put another way neither the buyer nor the seller really need each other. The buyer can obtain a copy of the paper across the road  at the convenience store and the newsagent will survive if the customer chooses to take their business elsewhere. So the key question remains how do you transition from transactional to strategic?



Strategic Relationships

Now imagine another scenario. That of a product brand manager that is launching a new product and requires a consultant to help them build a promotional product that will help position the product, drive its awareness in a market that knows nothing about it and deal with the vagaries of the market within which it will operate.

This example comes to my mind because at the time I was that product manager launching Australia's first combination anti hypertensive medication Monoplus and tendered out the project to four respected firms but through the process of determining the right candidate, the decision became increasingly obvious each day as the other three positioned themselves as transactional players with a stance of simple in and out, no unique skill, no shared risk, no meaningful differentiation and an eye for price and price alone.

The eventual winner of the tender on the other hand ticked all the strategic buttons. Namely: Sharing in the risk of the project, clearly defined and unique skill sets, differentiated approach and an unmistakable strategic role in the deign and roll out of the package which meant higher levels of barriers to exit for both parties.

I'm pleased to say I was able to convince senior management of my preferred choice and history shows that the launch of the product was an amazing success with the product achieving a staggering 250% of its budget in its launch year.

So moving forward always see suppliers, distributors or clients as being in one or the other of these two discrete groups and make your mind up as to which one s have the potential to be moved effectively in the strategic space because these are the type of relationships that build businesses not simply sell papers.

So until next time, good luck and good marketing.  And of course remember to sign up for any Free workshops you haven't already seen in the Digital Enterprise Program through:
http://www.vecci.org.au/business-solutions/digital-enterprise-program/workshops
where you will automatically qualify for the free, one on one, 4 hour coaching session for your business with a leading marketing consultant.

Regards,
Daniele.















Thursday, July 31, 2014

Understanding Customer Loyalty

The Goal of Every Business

Understandably most businesses everywhere are constantly looking to increase and consolidate the level of customer loyalty they have with both individual  customers and the group as a whole and when you consider that numerous research reports have consistently reported that it is many times more difficult to win a new customer over rather than keep and existing customer, you can fully appreciate why. But two important questions that arise from this underlying premise are:
1. Does every customer have the same potential for being loyal  and
2. Of those customers that are loyal, are there different groupings of loyalty?

Does Every Customer Have The Potential For Loyalty

Simply stated, the answer to this first question is no and rather than take this as an admission that the business is unable to provide quality service or the customer is unable to respond in kind with loyalty, the issue is often one of pure practicality where it is unreasonable to be loyal.

For example let's assume you are taking some time away from work and taking an extended road trip where you have chosen to drive around the country and experience first hand the many wonders your nation has to offer.  When you are on the opposite side of the country you pull into a petrol station to fill up on fuel before starting the long trek back. At this station you receive an excellent level of customer service, an excellent meal, the opportunity to withdraw cash from an ATM, and so on. Kudos to the management and staff but are you now loyal to this business. Clearly not, because no matter how well your needs were met her you probably wont be back any time soon and realistically the best the business could hope for is a favorable review on a review site such as Urban Spoon or Trip Adviser.  So no not all customers have the potential for loyalty, but for those that are what types of loyalty exist?

Loyalty by Default and Loyalty by Design

There are two key types of loyalty, namely Loyalty by Default and Loyalty by Design.
So what is the difference?  As the name suggests customers through repetition may be loyal to you by default where it is for the most part out of habit that they continue the association but  in truth see no great advantage in dealing with you and feel no great degree of connection with the brand or business.

Customers who are loyal by design on the other hand have made a conscious choice to do business with you and are overtly aware of and appreciative of the value that you provide for them and will therefore be much less likely to look elsewhere for a replacement provider or service regardless of what other alternatives may present themselves, whereas the customer that is loyal be default will much more easily be swayed to try and potentially adopt another alternative provider with only marginal improvements to what you are offering.

In a recent training session to CEO's I asked the group to write down on a piece of paper what percentage of customers they felt where loyal by design versus those that were loyal by default.
Suffice to say you could have heard a pin drop as the people in the room started to ponder their situation and realise that for most people, the answer lay squarely in the default category where the potential to lose significant amounts of business was only as  far away as a rival business uncovering some part of the need that was still undelivered and provide it to a higher level than them.

If you're reading this and thinking this dynamic also applies to you, you have plenty of company. The good news however is that the business can proactively do something about this situation and gradually position itself squarely in the other camp. On our next blog post we will fully explore the strategic change needed to drive this change in approach to further enhance and maintain your customer loyalty.

And until then, good luck and good marketing.
Regards,
Daniele