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Worksheet 5.6
Inventor y Control Report
for (Month/ Year)
Total Inventory This Year
Month
1 2 3 4 5 6 7 8 9 10 11 12 Total



Total Inventory Last Year
Month
1 2 3 4 5 6 7 8 9 10 11 12 Total



Inventory at Low Level
List any items with under two months inventory on hand.

Quantity Expected
Product Description Currently on Hand Restock Date
169
Achieving Quality and Quantity



BUSINESS PARTNER (SUPPLIER) SURVEY

Worksheet 5.7 assesses how your suppliers feel about their relationship
with your company. Using this data to improve your business relation-
ships may lead to lowering your costs as well.



Making It Happen

You may get back only a small percentage of surveys sent. You can in-
crease this response rate if you call ahead and tell your supplier contact
to expect it or if you send the survey with an order. Try to specify a date
by which you would like to have it returned. The larger the number re-
turned, the better the data you have from which to draw conclusions.
You might consider asking that the form be returned directly to the com-
pany president by including a self-addressed, stamped envelope. You
will get a better response and the responses will be more meaningful if
suppliers believe their survey comments will be read by the president of
the company.

Tabulate responses by taking each question individually, totaling the 1 to
10 score received, and dividing that number by the number of surveys re-
ceived with that question answered. This will give you an average score
for each question.

Distribute your scores throughout the company. Congratulate yourself
on scores of 8 to 10. Continue to improve on scores of 5 to 7. Consider
scores of 4 or under to require immediate attention focused on those
areas of your company. Put together interdepartmental task forces to de-
vise action plans to increase your levels of service.

In particular, consider the remarks in the comments sections. Call any
suppliers who requested it within a week of receiving their completed
survey. Be sure to send a thank you message to all suppliers who pro-
vided their name at the bottom of the survey.

This survey should be done annually and results trended over time.
170 Build Long-Term Growth



Worksheet 5.7
Business Partner (Supplier) Survey
Please help us improve our business relationship by rating us in the following categories (10 = best).
Question 1“10 Comments
Do you enjoy doing business with us?
Do you feel we treat you as a vendor or as a
business partner?
Do our employees treat you courteously?
Are you paid on time?
Are we a larger or a smaller customer
(10 = largest)?
Do we supply you with enough information
about our business for you to do your best work
with us?
Do we give you enough time to fill our orders?
Could we make any changes in our business practices that would help us reduce your costs
and result in lower prices for us?




How could our relationship with you be changed to benefit us both?




Other comments about areas we missed in this survey:




There is more to say and I would like you to telephone me. The best time to call is .
Name and Company Name (optional)
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Achieving Quality and Quantity



Reality Check

Consider these questions about your completed worksheet:

• Are you making it easy for suppliers to do business with your
company?

• Are your employees creating partnerships with suppliers or treat-
ing them as vendors?

• What can you do to immediately change supplier perception for
the better?

• Have suppliers told you anything that surprises you about the
ethics of their communications with your employees?

• Are your scores trended up or down over time?



W H AT ™ S N E X T

Many managers begin their efforts at overall improvement with op-
erations because they see the most money to be saved and the great-
est improvement to product quality. Marketing, stimulating future
growth, and generating new products are all crucial functions re-
lated to managing your operations, which is the subject of our next
chapter.
6
GROWING PROFITABLY
WITH MARKETING AND
PRODUCT DEVELOPMENT
I have learned, that if one advances confidently in the
direction of his dreams, and endeavors to love the life
he has imagined, he will meet with success unexpected
in common hours.
”Henry David Thoreau




G rowing a business means deepening your understanding of what
drives the business, the market for your product or service, plan-
ning on the fly to take advantage of significant opportunities, and con-
tinuous product innovation. In addition, delivering better products
faster and more efficiently to your customers requires a great deal of in-
formation. Marketing”in its broadest definition”is that information.
It™s a means of figuring out what works and doesn™t work in attracting
profitable customers for your business.

Few business factors challenge owners and managers more than market-
ing”perhaps because the term covers so many activities and disciplines.
In many companies, marketing includes sales, customer research, and
new product development. This confusion leads some managers away
from giving marketing the attention it deserves.

Some companies boast that they are “market responsive” or “market
driven,” but in truth, in a world that depends on information, all com-
panies must be market responsive. Your customers don™t buy your
products or those of your competitors for mysterious reasons; and
whether you make hardware for cars, disk drives for computers, or
movies for Hollywood, you must know who your customers are and


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174 Build Long-Term Growth



what they want. You have to respond when their wants and needs
change.

Marketing well may take more planning than any other area of your
business, and most businesses have a specifically developed marketing
plan. Marketing plans include not only an assessment of the world at
large, but also activities you will undertake to impact that world and
reach your customers. Your customers™ perception is critical; your mes-
sage to them about your product must be clear, have impact, and allow
them to immediately see the benefit in buying your product.

Your marketing plan covers questions such as: How will you get that
message out to them? What media will you use? How will you distribute
your product? Furthermore, good marketing research often leads to new
product development, answering questions about what else your cus-
tomers expect for you to provide them and what risks there will be in
launching a specific product.

This chapter takes you through the critical information for creating a
marketing plan and covers the following topics:

• Determining your industry˜s potential and your competitors.

• Determining who your customers are and are not.

• Reviewing marketing activities to date.

• Looking at the development of new products.

• Looking at your industry.

To start planning your marketing efforts, first, you must consider how
large or small your market is and who the other players are in that mar-
ket. You learn much from the people in the marketplace who love your
products and even more from those who don™t. This means taking a hard
look at your successes and your failures. It also means researching how
well others are doing and analyzing that data to see what will be useful
in your marketing efforts.

The details of your marketing plan will vary greatly depending on the
industry. In publishing, for example, marketing entails huge expenses
for advertising, publicity, and distribution because selling books or data
relies on thousands of small and sometimes impulsive transactions.
Marketing in the defense industry, on the other hand, entails meeting
new customers face to face and networking on Capitol Hill and in the
175
Growing Profitably with Marketing and Product Development



Pentagon, because defense contracting relies on a few huge and lengthily
considered transactions.

Industry information may also give you an idea of your market share. It
may also tell you when developing new products may be most beneficial.
Sources of industry information include trade associations, the U.S. Com-
merce Department, Standard & Poor™s Industry Report, Dun & Bradstreet
(many of these can be found in local libraries), annual reports of publicly
held companies, online data services such as Lexis/Nexis and Dow Jones
news services, and by talking to industry experts.

What you need to consider about the data on your competitors is whether
this is an industry that offers opportunities for your company now and in
the future. You also need to decide whether growth prospects are limited
and, thus, if you should consider moving out of that market.



1 0 T H I NG S YOU SHOU L D
K NOW A BOU T YOU R I N DUST RY

1. What is the total buying power by number of potential cus-
tomers and estimated dollar-buying volume?
2. Is this a mature or start-up industry?
3. What are the barriers to entering the industry?
4. Who are the industry leaders and why?
5. What is your position in your industry?
6. How many companies operate in this industry? Is the number
increasing or decreasing?
7. Is there room for your company to expand its market in this
industry?
8. Are there seasonal buying patterns in the industry?
9. Can you find projections of growth trends for the industry from
trade groups, security analysts, or the federal government?
How is the industry expected to change in the next year and in
the next five years?
10. Are there factors that will affect the demand for products in the
entire industry”technological innovation, government factors,
or social or economic factors?
176 Build Long-Term Growth



RESEARCH YOUR MARKET

It™s easy to pose the questions you want to answer about your market and
your competitors”and difficult to answer them. Managers must usually
do more with less when looking outside the organization for factors influ-
encing sales. Begin your market research by asking everyone in your com-
pany to write down everything they know about your competition and its
products. From this, expect to pull a variety of impressions; your sales
staff will probably have a perspective different from your technical peo-
ple. In addition, order your competitors™ products, call their salespeople,
visit them at trade shows, and look at their web sites. Make a point of col-
lecting and discussing this data at least annually. The object is to build a
universe within which you can place and define your product and how
your customers perceive you. You want to understand your competition so
as to differentiate your product. The questions to answer include:

• What are the strengths and weaknesses of your competitors™
products? Of their management teams?

• How do they mix quality, value, and service?

• Can you bring new products to market more quickly than your
competitors?



CUSTOMER MARKETING DATA

In addition to researching your competition, you should also research
your customers™ buying patterns. Pinpoint what data you need and don™t
get bogged down in just having a lot of information. You need data from
customers you have as well as customers you don™t yet have, relevant to
your particular product or service. That will be plenty to focus on.

Getting data is becoming much less difficult with the services available on
the World Wide Web. It is possible to collect so much data on customers
and their buying patterns that consumer groups have become alarmed
and have tried to stop it. For most small businesses, the best sources of
data are paying attention to your customers™ comments and complaints.
Really listen to how customers use the product and what would make it
easier for them to buy and use in their setting. This data is available from
your sales and customer service reps and can also be accessed directly
through questionnaires and focus groups. This information is important
to get for a new product in the design stage, the testing stage, and after the
177
Growing Profitably with Marketing and Product Development



product is launched. Be creative by using your web site, contests, and dis-
counts to get customers to provide information on your service, pricing,
product quality, and their overall satisfaction with your company, person-
nel, and product.

Bear in mind that if customers offer solicited suggestions, they will be-
come impatient to see solutions. Therefore, don™t ask for information you
don™t plan to use. If you aren™t intending to allocate resources to make cus-
tomer service changes, don™t ask customers™ opinions on your service”
you will just draw attention to the problem.

It™s important to be discriminating when determining who your cus-
tomers are and are not when preparing your marketing plan. According to
one California-based marketing consultant, most companies use market-
ing information weakly and ineffectively. “Many businesses don™t focus
on who their real customers are because they are afraid to turn away busi-
ness,” she says. “It™s important to identify who you don™t want to sell to, so
you don™t squander your resources.”

To do this, you need good trend information about your sales and cus-
tomers. It is important to chart the information about sales and customers
through time by week, month, or year; by product type; by location; by
customer type; by marketing method; by dollar volume; and any other
way that fits with your business.


T H E M A R K E T I NG GA M E P L A N

Jeffrey Schmidt and Clark Greenlee, who together started a success-
ful espresso bar in the Country Club shopping district of Kansas
City, had a clear eye on their market when they started out. Working
as architects in Washington, D.C., they saw running an espresso bar
as a good way to put their design skills to practical use. Coffee bars
had proliferated in Washington, and Schmidt figured that Kansas
City, his hometown, might prove a good market for a business rely-
ing heavily on atmosphere and inexpensive extravagance.

He and Greenlee did some basic market research. They went to
espresso bars whenever they had the chance. They enrolled in
Small Business Administration classes on starting a business and
writing business plans. They contacted officials in Kansas City.

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178 Build Long-Term Growth




Because Schmidt and Greenlee came to know their customer pro-
file, they were able to use this information to open doors for their
business even before they enacted any marketing efforts. For in-
stance, other potential espresso bar owners had tried to get their
plans approved by the large real estate holding company where the
partners eventually opened their business. Schmidt and Greenlee
stood out because their plan reflected their clear understanding of
the market and their customer, forecasting sales and cash flow,
and analyzing the Kansas City marketplace and the performance
of analogous cafes and restaurants. This grasp of their customer
also enabled Schmidt and Greenlee to secure a generous bank
loan. As their bank officer said, “They had a great business plan,
they came in and presented it very well and they seemed sharp
and on the ball, qualities we look for in a borrower.”

Latteland Espresso opened in spring 1993. By the end of the year, it
had become one of the most thriving locations in the shopping
plaza. Sales ran 50 percent ahead of projections, and the place
turned a healthy profit. By the end of the decade, they had two lo-
cations in the city. In fact, their locations continue to do so well
that Starbucks recently opened a store within a block of one of
them. Sometimes your success inadvertently suggests a new mar-
ket opportunity for your competition.




MARKETING ACTIVITIES

Sales are the best tool for measuring the effectiveness of your marketing
activities, but they don™t tell you everything you need to know. If sales
increase, it probably means you™re doing something right, but it some-
times takes some digging to find out what. You want to make the best
and most effective use of your sales resources, and you need to analyze
your numbers so that you know what “best” and “most effective” mean.

This includes looking for the highest margin. Find out what the average
gross profit margin is for your industry and market, and see whether you
expect to outdo or fall below the standard”and whether you can stay in
business at that margin.

However, immediate profit isn™t everything, especially when you under-
take a long-term marketing program. Such a program might call for you
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