MARKETING TIPS

by Ken Mitchell

Many businesses are service based where they interact with clients for ongoing business of some nature. Where most businesses go wrong is that they do not take advantage of computer technology and, for example, store basic data on a computer to enable the effective use of a MkIS (Marketing Information System - defined by Stanton (2000) Fundamentals of Marketing as an ongoing organized procedure to generate, analyse, disseminate, store and retrieve information for use in making marketing decisions).

Typically most business do not differentiate clients into different client groups requiring different levels of service categories and therefore do not use Perato's Principle - Perato was an 18^th century Italian Economist who devised the 80/20 rule which when applied to business means that essentially 80% of business comes from 20% of clients or 80% of your income comes from 20% of your products etc.

It is therefore important for profit maximisation to treat clients differently and divide the total market for a good or service into several smaller groupings (segments) such that members of each individual group are similar with respect to the factors that influence demand for the goods or service. This can then be managed better, for example, by allocating a greater proportion of the senior sales representatives time to dealing with the most profitable groups of clients without compromising the service and demand levels for the other groups. The storing of transactions onto a database enables managers to readily identify profitable and less profitable groups and devise strategies for growing business such as Key Account Management. Traditionally this was achieved from information recorded on cards and stored in shoe boxes or invoices piled in a corner and worked over by switched on sales representatives to meet quotas when times were tough.

These days, simple computer systems produce simple "touch of a button" marketing management reports to reveal important information such as the "advertising source" of client or the "suburbs/postcodes" where the business comes from - this can be vital is deciding how to allocate the advertising budget or where to distribute letterbox drop information, and importantly, where not to spend as it is not cost effective. More importantly it will identify how to sort the clients into meaningful groups to enable better and more cost effective service levels that cater to demand and produce more revenue on a highly cost effective basis. This means greater profits.

It is ironic that at a time when Canberra is being fitted out with state-of-the-art data transmission by TransAct to enable Canberra to be the most technically equipped information city in the world, most businesses do not have simple and basic marketing management information systems to guide their business. It is my view that most businesses do not fully appreciate the impact such systems can make and therefore most businesses do not realize that they are under-performing through lack of marketing planning. We can see already that the new information age is changing they way business is managed and those businesses that pro-actively adapt to the technology first will be best placed to maximise business profits in their local community and in many instances take their business to the wider (even global) community.

Why not make a new years resolution to be pro-active and upgrade the marketing planning for your business.