THE BUSINESS PLAN
- Part 2
1. Competition
Competition is a way of life. We compete for
jobs, promotions, scholarships to institutes of higher learning,
in sports-and in almost every aspect of your lives. Nations compete
for the consumer in the global marketplace as do individual business
owners. Advances in technology can send the profit margins of
a successful business into a tailspin causing them to plummet
overnight or within a few hours. When considering these and other
factors, we can conclude that business is a highly competitive,
volatile arena. Because of this volatility and competitiveness,
it is important to know your competitors.
Questions like these can help you:
Start a file on each of your competitors. Keep
manila envelopes of their advertising and promotional materials
and their pricing strategy techniques. Review these files periodically,
determining when and how often they advertise, sponsor promotions
and offer sales. Study the copy used in the advertising and promotional
materials, and their sales strategy. For example, is their copy
short? descriptive? catchy? or how much do they reduce prices
for sales? Using this technique can help you to understand your
competitors better and how they operate their businesses.
2. Pricing and Sales
Your pricing strategy is another marketing
technique you can use to improve your overall competitiveness.
Get a feel for the pricing strategy your competitors are using.
That way you can determine if your prices are in line with competitors
in your market area and if they are in line with industry averages.
Some of the pricing strategies are:
The key to success is to have a well-planned
strategy, to establish your policies and to constantly monitor
prices and operating costs to ensure profits. Even in a franchise
where the franchiser provides operational procedures and materials,
it is a good policy to keep abreast of the changes in the marketplace
because these changes can affect your competitiveness and profit
margins.
Appendix 1 contains a sample Price/Quality
Matrix, review it for ideas on pricing strategies for your competitors.
Determine which of the strategies they use, if it is effective
and why it is effective.
3. Advertising
and Public Relations
How you advertise and promote your goods and
services may make or break your business. Having a good product
or service and not advertising and promoting it is like not having
a business at all. Many business owners operate under the mistaken
concept that the business will promote itself, and channel money
that should be used for advertising and promotions to other areas
of the business. Advertising and promotions, however, are the
life line of a business and should be treated as such.
Devise a plan that uses advertising and networking
as a means to promote your business. Develop short, descriptive
copy (text material) that clearly identifies your goods or services,
its location and price. Use catchy phrases to arouse the interest
of your readers, listeners or viewers. In the case of a franchise,
the franchiser will provide advertising and promotional materials
as part of the franchise package, you may need approval to use
any materials that you and your staff develop. Whether or not
this is the case, as a courtesy, allow the franchiser the opportunity
to review, comment on and, if required, approve these materials
before using them. Make sure the advertisements you create are
consistent with the image the franchiser is trying to project.
Remember the more care and attention you devote to your marketing
program, the more successful your business will be.
Next Topic: The
Management Plan
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