Monthly Archives: November 2011

New Products and your Marketing Strategy

New products are launched in droves every year and the simple reason is that nothing sells like ‘new’. New product development (NPD) should form a key part of your annual marketing strategy, with the need for new ideas and innovation to keep your business competitive.

This post will help you through the new product development process, to ensure you create new product that complements your current portfolio, fulfils a consumer needs and meets profitability expectations.

What is a New Product?

Well to start off cryptically, a new product doesn’t always have to be new at all. Further, there are few products that are truly ‘new’; most are a new version of something else that already exists. (I’m telling you that to take the pressure off a bit).

New products can be:

  • An existing product with a new feature or twist
    • E.g. GHD Hair straightener, now cordless
  • A product line extension
    • E.g. Cherry Ripe being extended into a Cherry Ripe Sundae
  • A redesign of an existing product
    • E.g. Mazda 6 2011 model vs 2009 model
  • (and least commonly) A new product
    • E.g. The rain triggered awning for your clothes line

Identifying a Need for New Products

In an ideal world, small business would have enough time to mimic its corporate sized comrades and spend a month every year, undertaking a complete review of marketing and promotions strategy and developing a marketing plan for the following year.

We know however that in small business, time is consumed doing business and not necessarily developing business. The likelihood of you sitting down to an annual review is slim (if you can find the time, check out our service plan in Get Competitive with your Competitors) so you may find that for your business, identifying new products happens on an ad hoc basis.

Reasons why you may need a new product can include:

New Product Development (NPD) Process

In my last corporate role, I spent three years as Brand Manager working 80% on NPD. It would take up to 18 months from initial idea to development to product to the product appearing in store. The problem with big business is that there are so many people who have to sign off, that things can move very slowly. The motivation here for you and your small business is that with a good idea, you can be quicker to market; and with less overheads, be more profitable too.

5 Steps for Small Business NPD

1.Identify the market need

  • It is not enough to want to launch a new product because competitors are closing you out of the market or because your current product is slowly declining. You need to identify a market need. What can your new product bring to the market that consumers want or need?

2.Develop a prototype and cost it

  • A prototype can be as simple as drawing a picture with measurements and specifications, or sewing up a sample, or mixing up a batch, to as complex as working with a factory and paying to have a sample produced.
  • Developing a prototype is usually the step that precedes costing; once the prototype reflects what the product needs to look and perform like, you are then able to compile the cost to produce it.
  • When costing up your product, if it something you plan to make yourself, make sure you include a labour cost into your calculation. You may not pay yourself for every batch of cupcakes you make, but one day you might expand and need to pay someone, in which case you want that built into your cost.

3.Analyse your profitability

  • Once you have developed your prototype and costed it, you now need to set a retail price and assess profitability
  • You will want to set a retail price that allows you to wholesale it profitably. Again at first it may not be your plan, but you want to make sure you can profitably take this path if the occasion arises. Have a look at How to Measure Your Success  for tips on how to calculate Gross Margin and Wholesale Price.
  • A tip is to calculate your Gross Margin using the Retail Price, to give you an idea of how much you will make when you sell direct and then calculate using the Whole Price to calculate how much you will make if you wholesale. You want to be profitable at both points. Generally you should make around 50% gross margin when you wholesale, although as a small business you may be prepared to accept less.

4.Refine your new product

  • Based on the profitability you may need to remove elements from your prototype, seek out cheaper materials or brainstorm new ways to produce your product to have a profitable new product.
  • You should test your new product idea, if you can, with your target market to ensure it does meet a need and the purchase price is accepted. This can be through your Facebook page or design a survey through Survey Monkey and incentivise competition e.g. Complete the survey for your chance to win a $20 voucher.

5.Plan your launch

  • Assess if you need to run any existing products out, before launching your new product
  • Create a plan to tell everyone about your new product. It is essential you shout about your new news; use your social media accounts, send an email to your subscriber list, feature it on your homepage, send out media releases.
  • Run a promotion that benefits all your products, using the new product to boost overall sales. E.g. 50% off any other product when you buy our new personalised coffee plunger

New product development is an important part of your marketing strategy. ‘New’ brings consumers back to your brand giving them something different to look at; it keeps you competitive and growing and most importantly, it can have a halo effect on existing products.

Are you planning any new products for 2012, how did they come about?

Until next week, N is for New and also for planning your New Year ahead

Mary-Anne

www.wiseupmarketing.com.au

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How to Measure Success

In my very first blog post (5 Steps to Host Your Own Census) I made this huge confession:

“Being a passionate and dedicated Marketer, over the years I have become near obsessed with measuring; measuring results, measuring profitability and of course measuring the target market.”

So as M drew closer in the ‘A-Z of Marketing’ series I was filled with excitement and jotted on copious post-it notes the measurables I wanted to share with you.

Measuring your performance, not just financially, but also your connection with your consumer gives you a reality check. It uncovers the true effectiveness of your strategies and guides you in how to improve your business and stay ahead of the competition.

5 KPI’s (Key Performance Indicators) for your Business

1. ROI (Return On Investment)

In the marketing sense ROI is used to analyse the profit on a campaign you have run, to determine the percent return on investment.The formula is:

Return on Investment Formula

This result would mean we had a 62.5% return on our investment. You will need to get a benchmark of what is acceptable for your own business and work to improve over time. A negative ROI means that you have lost money and in that case you would need to question the appropriateness of your strategy.

2. Wholesale Margin

Use this formula to determine the margin you are giving a retailer. Often the wholesale expectation sits between 45-55% of retail depending on the outlet.

Set the RRP you believe the market will accept for your product and then use this formula to calculate the wholesale margin you are giving to your retailer.

wholesale price formula

GST TIPS: To remove GST divide by 1.1, to add GST multiply x 1.1, to work out the GST component divide by 11

 3. GM (Gross Margin)

Use this formula to determine how much money you will make from each item you sell. As this is Gross Margin, we are only concerned with the costs associated with making the goods or service.

This is the key way we measure if a wholesale price requirement will be profitable for our business. The formula is:

gross margin formula calculation

4. CTR (Click Through Rate)

The CTR tells us how many people are clicking through (clicks) our online advertisement as a percentage of the total times our ad was shown (impressions). We measure CTR on the banner and badge advertising we do on websites and also when we undertake pay per click campaigns E.g. Google AdWords, Facebook Ads. The formula is:

Click Through Rate Formula

The CTR benchmark is different by business and will differ based on whether you operate in a broad or niche category. The DoubleClick Benchmarks Report, published in 2010  lists 0.10% as the CTR benchmark on static online ads.

5. CPV (Cost Per View)

We recommend our clients estimate a CPV when approached with an advertising opportunity. We are all often wondering “Should I advertise in this publication?” and “Is this advertising opportunity worth it? Measuring the CPV helps you to break down the advertising costs and assess them at a leads level. If you could buy a mailing list for $1,000 and it gave you 1,000 names you would say it was a $1 per sales lead. Similarly CPV is calculated with the formula:

Cost Per View

You would then evaluate the CPV against how valuable the lead is. Further you may want to take the distribution and cut it down to what you believe is your target market, e.g. the distribution is 20,000 of which 5,000 are your target, say Elderly Couples on the Pension, you then would work out the CPV against just your target:

2,500
5,000

=$2

 Your CPV has increased greatly, but with few mediums that get in front of that target and the targets affinity with local newspapers, we would say it is a reasonable CPV.

Check your Web Stats to Monitor Web Traffic

If you have a website (is it even worth asking anymore?) you may feel uncertain at times as to whether anyone visits it, if it’s working as hard as it can for you and most importantly, is it converting browsers into customers.

Your web stats are measuring every interaction browsers are having on your website, all you need to do is logon and analyse them.

The two stats we pay the most attention to are both functions of time. When we undertake a Website Effectiveness Audit, firstly we look at the Bounce Rate. This is given as a percent and tells us how many people landed on our page and clicked off (bounced) straight away. A high bounce rate tells you that the majority of traffic to your site are arriving and deciding instantly you’re not the right fit. Work on decreasing your bounce rate by improving your home page appeal or direct traffic to the page most relevant to them e.g. product page, location page etc.

Dwell Time, is the other time based base measurement we encourage you to look at. Once we remove the people that ‘bounced’, we want to know how long the rest of our traffic stayed for. These are usually presented in bands of time e.g. 0-30 seconds, 31 – 2 minutes etc. Again we want our traffic to stay as long as possible, browse many pages and convert. If you have a very low dwell time, work on engagement with your traffic, add more images, a video, a blog, FAQs, any valuable content that will increase the time your potential consumer spends on your site, getting to know you.

We run a Website Effectiveness Audit for just $49.95 which includes a “Traffic Light Report” on how your website is performing, please get in contact if you would like to know more.

When you set out to measure success you need to remember that success looks different to everyone (and to every business). The key is to benchmark against realistic targets for your business.  Focus on how to be more profitable whilst exceeding your customer’s needs and your business will continue to grow.

Until next week M is for Measurement and also for Making it to the halfway Mark in the A-Z of Marketing!

Mary-Anne

www.wiseupmarketing.com.au


Long Live your Product (with Life Cycle Management)

Countless products are launched every year, landing in the market with a reason to be, a well thought out way to connect with the consumer and hope that the investment will pay off for the brand owner. But what comes next?

Product Life Cycle Management is the key to ensuring your brand thrives year in and year out. This post will help you understand its importance to your marketing strategy and give you the tools you need to identify the different stages of your products life cycle and strategies to maximise growth throughout.

What is Product Life Cycle Management?

I love a good analogy as much as the next marketer and this one was just too hard to resist.

Think of your product like roses in your garden, it is not enough to simply plant (your new product in the market), water it (with promotions occasionally) and expect it to flower year after year. At some point, its vitality is going to dwindle and you need to either deadhead them or dig them up and start again.

The product life cycle (PLC) refers to the stages a product travels through from launch to eventual obsolescence. Managing the PLC is an important part of your marketing strategy and guides you in adapting your approach by product, to ensure you are promoting, developing and phasing out products at the right time.

Four Stages of the Product Life Cycle

Product Life Cycle Management

1.      Introduction

This is identified as the launch stage of your new product.  Sales are increasing slowly, as there is currently limited awareness. Costs are high with large amounts of advertising and promotion required as well as the product development and production costs having been incurred.

The introduction stage will see your business operating at a loss and so this is the most critical stage in your product lifecycle, ideally  you want to move through this stage quickly. Understandably this is where the  highest percentage of failure occurs.

Strategies for success during the introduction phase:

  • Clearly define your market so that at launch you  are effectively targeting the consumer most likely to become your customer
  • Build a dominant market position, stand out from  your competition, don’t just be a “me too” product, have a unique reason for consumers to connect with over the competition
  • Pioneer something; be the first to launch, a true new product is rare but valuable (See Ideas and Innovation).
2.      Growth

Once awareness has increased and with an appropriate distribution strategy, you will identify that your product is in growth, which will be when you first break even (this will be discussed in next week’s post on Measuring Success) and begin to make a profit.

When your product is in growth, the market has accepted your product and consumers are trialling it. This is the time to increase your distribution to make sure you are matching supply of your product with demand.

During growth, naturally, competitors will enter the market. Noticing a new popular product will motivate them to launch similar products in order to capture some of the market (see Get Competitive with your Competitors).

Strategies for success during the growth stage:

  • Monitor pricing to ensure you stay competitive against new competitive offers
  • Confirm your actual customer matches your forecasted target customer and adjust your message. For example we have a launched a building and construction product for children, but on researching sales we find out it is popular amongst teens. We therefore want to ensure our marketing and promotions do not exclude teens by being too “childish”
  • Look for new distribution channels – use your sales history to sell the product in and growth your market share
3.      Maturity

Your product can be identified as being in its maturity phase when sales volume slows down and beings to plateau, that is becomes “stuck” at a certain level, stops growing and may be just slightly declining. This is the sign that action is needed or your product will begin to rapidly decline.

Products reach maturity for various reasons including competition reaching saturation, price wars giving unpredictable volume (this week’s special gets the sale) and the initial excitement for the product settling. This leads of course to a decrease in profit, both from a decrease in sales but also from an increase in promotional expenditure.

Strategies for success during the maturity stage:

  • Apple is the first company that comes to mind that demonstrates innovative product lifecycle management. Realising most mobile phone users are on 18 – 24 month contracts, Apple releases a new modified iPhone around every 18-24 months, by addressing that the current model is reaching maturity and releasing an update they effectively refresh the product lifecycle back to introduction and growth every two years. The result is a loyal following that feels they are up to date with the latest technology and will not move to a competitive offer
  • The Apple example illustrates the strategy of modify or relaunch. Create new news and interest around your product. Survey your customers (See Market Research ) to find out what is missing from your product; monitor your competition (see Get Competitive with your Competitors) and find out your competitive gaps; re launch your product to recapture market share and return your product to growth
  • Look for new users or new uses for your existing product and develop strategies to communicate and increase awareness for your product with these groups
  • Create new promotions, competitions and offers to maximise sales of your product while it is in its maturity phase
4.      Decline

This phase is identified by both a decline in sales volume and tapering off of profits. Allowing the product to reach decline should be strategic, meaning you identified the product in maturity and planned that it would not be refreshed, but instead would be deleted at some point in the future.

The choice to let a product decline can be as there is a new product planned for launch which will replace the current product but is not going to be positioned as an update or refresh.

Strategies to minimise loss during decline:

  • Minimise spending promotionally rather than trying to stimulate sales with competitions and discounts, allow sales to taper off naturally
  • Decrease the number of SKUs over time, so delete the worst performing sizes or colours first so you have a tighter offering in the market, then gradually run out of the product

The most important advice for using PLC management in your marketing strategy is to regularly review your sales volume and profitability; this is where the flags will be going up that will help you identify what stage your product is in, allowing you to plan your products life more effectively.

What stage in product life cycle is your product in? What are you planning to do, to maximise that stage?

Until next week L is for the life cycle of your products and also for the lifecycle of the rose, which evidently go from maturity back to growth every year, if only we could bottle that ability!

Mary-Anne

www.wiseupmarketing.com.au


Mastering Keyword and Keyword Phrases for SEO

Keyword strategies to increase SEO (See J is for Jargon to decipher) is a topic I talk to almost every client about. This post will get you up to speed on what keywords are and how they should form the very basis of every online communication you make.

I have been looking forward to writing this post for a few weeks, as K was a letter in the “A-Z of Marketing” that I could easily define, meaning I didn’t suffer the usual deliberating. I hope my enthusiasm for this topic gets you motivated too.

What is a Keyword?

We can all define a keyword in its traditional sense:

“A word or concept of great importance”

Thankfully the use of the word in the world of internet marketing is extremely similar:

“A word used by a search engine in its search for relevant Web pages” (Source)

So you see Keywords in this sense, are words with great importance to you, your target consumer and your overall online success.

When your target consumer performs a search, they enter a word or series of words into their chosen search engine, then that engine searches for matches. If your web page is deemed rich in those words, you will be returned as an answer to the search question.  These words are what are labelled keywords and keyword phrases.

Now it’s important to note here, it is unlikely you will be the only website rich on those keywords, so there are more complex processes at work to decide who ranks where – more on that in an upcoming post.

Defining your Keywords

Choosing the right Keywords for your business is more difficult than it may seem.

Firstly, you need to put on your target consumer hat. Start thinking about all the ways your target consumer would label your product or service. Think about the solutions you provide, then as your target consumer,
imagine you are searching for that solution. You may be aware of it by name, or you may just search on your need.  Brainstorming for different keyword and keyword phrase ideas is a good exercise to undertake (See I for Ideas)

SEO Google AdWords KeywordFor example, if you sell Sharpie Markers, your keywords to focus on may be Pen, Marker, Purple or Sharpie. Your keyword phrases may be “permanent marker”, “freezer proof marker”, “pen to write on plastic”, “pen for labelling DVD” and so on.

Testing Your Keywords

When I work on Keywords for clients the first thing I do is open up the Google AdWords Keyword Tool

Firstly plug in your website and the tool will show you keyword suggestions based on your website content. If the keywords are aligned with what you do, fantastic – this means your website is already sending out the right message and may just need a tune up. If you the keyword suggestions seem largely irrelevant, you have a big hint as to why your traffic probably isn’t what it needs to be and you’ve got some work to do.

Then I pop in a few thoughts in the very top box for keywords and keyword phrases. The search results show your words grouped together and then show you lots of suggestions based on your words.

Look for keywords that return a strong volume of searches and medium to low competition, this is a mass marketing approach. Also look for keyword phrases that have low volumes of search and low competition. If 5,000 people search that keyword phrase a month and there is very low competition, you have  an opportunity to maximise your ranking against that keyword.

How to use Keywords for SEO

After you have defined and tested your keyword and keyword phrases, establish a top 3-5 list of keyword or keyword phrases you will focus  on. This list will form an important part of your SEO strategy.

On your Website

Ensure your website Title Tag, Meta Data and Meta Keywords (ask us about these if you’re new to this), are written within “the rules” of  length and use as many of your keyword and keyword phrases as possible.

On your homepage ensure you have at least one text box of information (text boxes are easily read by search engines, words in a picture are not). When you write this text use as many of your keyword and keyword
phrases as possible while still reflecting your brand’s tone and image (B is for Branding).

Using Google AdWords

If you decide to use a Google AdWords campaign make sure the keywords you target are linked back to the ads you write and are the same keyword and keyword phrases you have selected on your top 3-5 list.

On your Blog

Research keyword and keyword phrases relevant to every blog post you write and make sure you use them appropriately. This article http://www.propagandahouse.com.au/blog/seo-2/how-to-blog-for-seo-beginners-guide/ by Propaganda House helped me immensely and I am using Dan’s Blog Plan template as I type this.

So I can’t stress to you all how important keyword and keyword phrases are for SEO and for the success of your online presence. We are currently running a Wise Up to Search package to help small business with their keyword strategy and to trial Google AdWords (who are currently offering a $75 credit for new accounts). Please get in touch if you want to know more information about the package or about this post. I would also love to hear your Top 3 Keyword or Keyword Phrases.

Until next week K is for Keywords and also Key Lime Tart http://www.joyofbaking.com/KeyLimePie.html (why not?)

Mary-Anne

www.wiseupmarketing.com.au

P.s. A quick word on keyword stuffing before you go. Like all loop holes and quick fixes, some SEO companies a few years back recommended that people repeat their keyword and keyword phrases in large blocks at the bottom of every page on their website to “maximise SEO”. Unfortunately most search engines wised up to this and as result they wrote an algorithm that detects keyword stuffing (as it’s known) and will negatively rank sites that go down this path.


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