3 Step Direct Forecasting

This fancy term means that forecasts should be analyzed and compared to three kinds of data: national economic, industry, and company.

1) A company can compare its sales projections to economic projections. For example, a 5% increase may be sub-par in boom economy but great in a recession.

2) A company can compare its sales projections to other companies in its own industry.

3) A company can compare its sales projections to its own past sales.

Looking at sales performance from these three perspectives gives management additional information to refine their decisions.

Teen Driving Down

Percent of teens with drivers licenses.

	Age 17	Age 19
1978	75%	90%
2008	50%	77%

Source: Advertising Age via The Motley Fool.

Less teens are driving now than before. What are reasons for this and what are the implications?

Why: internet means folks can communicate and shop without having to travel. In large cities, teens can text and play games on their cell phones while using public transportation.

Implications: Auto and retail stores in trouble – long term.

Footnote: The bad economy will explain declining auto sales among teens. It does not explain declining driver licenses.

What Price To Charge?

Marketing people say that pricing of products and services is part of the sales process. “Set prices to maximize sales,” they say. Accountants look at pricing this way: “Set prices to cover costs + profit.”

 

Prices can be set too low. The higher the price, the higher the perceived value of the product or service becomes. If the price is too high, though, then it becomes “too expensive”.

 

3 Considerations:

 

• Integrate prices with rest of the elements of the marketing strategy
• Relate prices to needs and perceptions of target market’s members
• Modify prices to match changing competitive environments.

 

So, pricing is an art. The accountant still says, “do not price below your cost.”

Bad Times Can Give You an Edge

- By selling harder. Selling in hard times gives the person who works harder and smarter an edge because the toughness of things weed out competition. "If you are in business, you need to learn how to sell."

I spoke today to the manager of a cab company. He told me that he's never seen times as tough as they are right now. I told him that I've experienced cab drivers who are not nice to the customers. He said some were like that. I did not have the heart to tell him that I think almost all the drivers I've experienced treat people badly.

I believe that the key to success in this business in tough times is to be treat customers nicely - and ask them to repeat the experience.

Bots on Social Marketing

Facebook and Twitter are all the rage and yes, I joined in, too. The time to keep up with all the tweets and wall messages overwhelms. So, I see that people have resorted to automated services. They automatically generate replies and follow people who follow you. I notice the same canned messages coming in over and over.

So, how many of the communication is from real people and how much of it is just bots talking to other bots?

Last month, with my mother dying, I traveled to Seattle to see her. I tweeted this. No one responded. Just the same messages came in as before. Now personally, I don't care but the implication for actual communication that is occuring is large.

One has to measure the amount of authentic communication that is occuring in this media.

People in Your Customer Company

When selling to Corporate America, realize that while your formal customer may be the company, you must deal with individuals within the company. So, how to plan a sales strategy for:

1) Gatekeepers, who answer telephones and control the information flow
2) Influentials, whose opinions are valued by
3) The Decider, who decides whether or not to buy your product or service
4) The Buyer, who negotiates the terms of the sale
5) The User, who will actually use and benefit from what you sell

When you've developed a strategy for selling accounting and tax services to these groups, call me. It's harder than the textbooks say.

Franklin on Social Networking

Benjamin Franklin started one of the first professional networking clubs in America in the fall of 1727. Think of today's Kiwanis Clubs or the Rotary Clubs and you get the idea of his "Leather Apron Club". His club was informally known as "The Junto". To help discussions, he wrote this guide:

1. Have you read anything lately that is remarkable or suited to be communicated to the Junto?*
2. What new story have you lately heard agreeable for telling in conversation?
3. Hath any citizen in your knowledge failed in his business lately, and what have you heard of the cause?
4. Have you lately heard of any citizen’s thriving well, and by what means?
5. Have you lately heard how any present rich man, here or elsewhere, got his estate?
6. Do you know of any fellow citizen who has lately done a worthy action deserving praise and imitation? Or who has committed an error proper for us to be warned against and avoid?
7. What unhappy effects of intemperance have you lately observed or heard? Of imprudence? Of passion? Or of any other vice or folly?
12. Hath any deserving stranger arrived in town since last meeting that you heard of? And what have you heard of his character or merits? And whether you think it lies to the power of the Junto to oblige him or encourage him as he deserves?
14. Have you lately observed any defect in the laws of your country of which it would be proper to move the legislation for amendment?
15. Have you lately observed any encroachments on the just liberties of the people?
16. Has anybody attacked your reputation lately, and what can the Junto do toward securing it?
17. Is there any man whose friendship you want and which the Junto or any of them can procure for you?
20. In what manner can the Junto or any of them assist you in any of your honorable designs?

* reworded by myself – JL

In this internet age, some of these topics could be used for Twitter and Facebook, too, though these topics seem to me to be mostly for local and in-person meetings.

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Pictured: Benjamin Franklin at his regular day job, working in the printing office.

More information: Wikipedia, Franklin's Autobiography

Restaurant Marketing

Why do you suppose an Italian restaurant in New York’s “Little Italy” quickly goes out of business?

In terms of the 5 criteria for defining a market segment:

1. Substantial: there were not enough people in the neighborhood to patronize another Italian restaurant. They either ate Italian food in their own homes or they ate Italian so much, their idea of going out was to eat something else. – Chinese, anyone?
2. Homogeneous: inability to identify what group of people would patronize this restaurant.
3. Heterogeneous: the place failed to form a separate identity with respect to other restaurants in the area. Suggestion: “we’re the place for Tuscan food.”
4. Accessible: Location, location, location. Could people find it?
5. Operational: Difficult to find out the attitudes of the target market, since people in the neighborhood might be reluctant to admit they were tired of Italian food.

This kind of thing illustrates the importance of planning a marketing strategy. Who are you going to sell to and then, how are you going to approach them?