f there's one aspect of doing business that new entrepreneurs often don't think about enough, it's the marketplace their business will operate in.

Your marketplace includes the industry that you're a part of, the customers you hope to sell to, and the competitors (direct and indirect) that could capture the same dollars you're aiming for.

For example, if you're planning to open a Chinese restaurant, your direct competitors include all Chinese restaurants in your service area. So if there are no Chinese restaurants, does that mean you have no competition? No. Because your indirect competitors are all other restaurants, from fast food to French cuisine, that could attract your prospective customers.

It's also easy to overlook the relationship of your business to the industry you're a part of. As business becomes more global, your industry expands to include all of the companies in the world that supply a product or service similar to yours, plus all of the supply and distribution companies supporting those businesses. So trends that affect shoe sales internationally will also affect the shoe store on Main Street in Anytown, U.S.A.

That also means that global supply and distribution changes can affect all businesses in a given industry. For example, an Ohio toy manufacturer may not think that companies manufacturing chemicals have anything to do with the toy business. The fact is, chemicals are required to produce the plastics used in many toys—and if the supply of chemicals is interrupted, the toy company could run out of plastic very quickly.

These examples illustrate why it's important to understand the overall marketplace in which your business operates.

Start with a look at your industry

Analyzing your marketplace begins with an in-depth look at your industry, including your competitors and the specific market segment you'll target.

Your industry is every company that offers products or services similar to yours. In the case of the Chinese restaurant, it's all other restaurants. For a shirt laundry, it's all other dry cleaners and laundries, including coin laundries.

The best way to get a handle on your industry is research. You can start at the local library, a bookstore, or your Chamber of Commerce. It's a good idea to contact professional organizations associated with your industry. There are also professional and industry publications for virtually any type of business you can name. And don't hesitate to contact others who are working for or operating businesses similar to yours. If they're willing to talk, they can offer you advice and insights you won't find anywhere else.

KEY QUESTIONS

THIS SECTION WILL HELP YOU ANSWER

• What is my marketplace?
• What are the trends in my industry?
• Who will my customers be?
• How will I position my product or service?
• How will I reach customers with my marketing messages?
• How will I plan and budget for marketing?
• How will I make the best use of my sales team?

Worksheet 4: Industry Analysis provides key questions you should address in your industry analysis.

Look out for the competition

Competition can come from many directions—the smallest local firm or the largest multinational business. But regardless of size, anyone who sells a product or service similar to yours can be considered a competitor. And knowing your competition is the first step to beating them.

Worksheet 5 will help you identify and understand your competition. Be sure to include all potential competitors. If you haven't identified at least three competing firms, you're probably not thinking broadly enough. On the other hand, if you've listed more than ten, you may not have targeted your niche tightly enough.

Defining your target market

We've talked in general terms about who you'll be selling to. Now let's get specific. Think about designing your product or service. Now think about who will buy it. If you're selling public relations, will your customers be small business owners or large corporations? If your product is American folk art, will you sell primarily to middle or upper income consumers?

To answer these questions, take a close look at your product. Who wants it? Unfortunately, there are no formulas for determining who will buy from you. This is an area where knowledge of your prpduct or service, combined with good instincts and creative thinking, can win out over quantitative research.

Worksheet 6: Customer Profile will help you develop a clearer picture of your target customer.

How will you position and promote your company and products?

Many people think of marketing and sales as the same thing. They're not. Marketing includes everything you do to make the prospective customer aware of and inclined to try your product or service. Sates activities are direct actions taken to get orders from customers.

For most new companies, a marketing effort is needed to generate the first sales. The marketplace analysis you completed on Worksheets 4, 5, and 6 should give you a pretty clear idea of your competitive environment. Your job now is to position your company in the minds of your customers and prospects as uniquely able to meet their expectations.

Use Worksheet 7: Positioning Your Product or Service to consider which attributes will be most important to your positioning strategy. Remember, customers are interested in the benefits of your products to them, not product features. To stay focused on benefits, think of your customer asking, "What's in it for me?"

Stake out a position that is clear, meaningful, and available

The key to effective positioning is to focus on one or two key attributes. Remember this formula: Emphasis² = Zero. That means when you emphasize everything, you end up emphasizing nothing. The company that claims to be all things to all people ends up saying nothing to anyone.

It's also critical to take a'position not already occupied by the competition. If your key competitor is already known for a product that is the fastest or the sweetest or the softest, focus on another highly desirable and meaningful attribute in your own positioning efforts.

Your key messages

Now that you've determined what truly makes your product or service unique, devise the key messages you want to convey to your customers.

For example, Quinby's Incredible Fantasy Furniture (QIFF) wants to consistently convey the following key attributes to customers:

• QIFF furniture is constructed of the best quality materials, for safety and durability.
• QIFF furniture is priced reasonably.
• QIFF furniture is fun to own.
• QIFF furniture is easy to assemble and maintain.

To capture these key attributes, QIFF prepared the following positioning statement to guide their communication and marketing efforts:

Quinby's Incredible Fantasy Furniture is the children's ready^tO' assemble furniture line that children and parents like best, because it's fun, affordable, durable, safe and easy to assemble and maintain.

A positioning statement is not a slogan and may never appear in print - but it's an essential step in assuring that you present a strong, unified image to your customers and prospects.

Your turn

Now, it's your turn. Use the attributes you developed on Worksheet 7 to draft a positioning statement that will serve as a platform for your communications and marketing in the months and years ahead.

Focus on the key attributes that your customers value most - and those which make you stand out most from your competitors. Don't be satisfied with your first attempt. Work hard to develop a clear, concise statement that will guide you as you position your business in the marketplace.

Remember - if your customers understand clearly what makes you and your product or service better, they'll always know why they buy from you.

Delivering your messages to customers

By now, you've determined who will buy your product or service. You have developed a positioning statement and know what makes your business better than the competition. Now you need to answer the next question—how will you get your customers in the door, or on the phone?

Selecting the most efficient marketing tools to deliver your message to customers begins with a few simple questions:

• How big is your pool of customers and prospects?
• How well can you identify individual prospects?
  • Do they all live or do business within a specific town or zip code?
  • Are they all members of the same profession or associations?
  • Do you know most of them by name, company, and title?
  • Do they have specialized needs and interests?
  • Where do your customers get their buying information? (Television, newspapers, trade publications, friends, coworkers, salespersons, trade shows? Many sources? Just one?)

Research will help you answer many of these questions. You'll also want to talk to prospective customers. Their feedback can be invaluable in guiding your marketing plan and budget.

Getting the most bang for your buck

How much of your budget should you spend on marketing? Not an easy question. Marketing costs vary from market to market and from medium to medium.

But the more tightly you can target your marketing messages, the less you'll pay for each contact and the less waste you'll have in your marketing budget.

For example, if you're marketing a specialized learning product to schools within your own state and can identify the decision makers by name and title, direct mail or personal contact may be the most efficient way to deliver your key messages to them.

But if you are marketing a service or product that has broad consumer appeal, such as a new restaurant, you may want to use mass media outlets, such as radio, television, newspaper, or billboards to expose the greatest number of potential customers to your business.

A general rule of thumb is this—you should spend a minimum of 3 percent of your total annual revenues on marketing. You can determine the appropriateness of your efforts in several ways:

• Talk it over with your, banker. Bankers often refer to a book called the Robert Morris Associates (RMA) Annual Statement Studies to compare your business to an "average" company in the same type of business.
• Seek out an advisor, someone who has business experience and can offer suggestions.
• Work with a reputable marketing agency or consultant.

Worksheet 8: Your Marketing Plan lists a variety of marketing tools to consider. For each medium (or vehicle) you want to use, identify who will receive the message (your target audience), the number of people in that audience, the message you will convey, the number of times your prospect will see the message (frequency of "impressions"), and how much it will cost per impression.

Do your best to answer each question completely. You can get approximate costs for each medium by contacting newspapers, radio and TV stations, billboard companies, printers, and other suppliers in your area. If a medium does not apply to your business, skip to the next one.

One final note: Once you've started implementing your marketing plan, be sure to review your efforts periodically. Keep track of your sales. If sales increase while you're running an advertising campaign, you're probably on the right track. If nothing happens over a six-month period, it's probably time to regroup and try something else.

Defining your sales strategy

Now that your marketing efforts have created awareness and a willingness to try your product, the sales process begins. How will you get customer orders?

The complexity and duration of the sales process can vary a great deal from one type of business to another.

For a new or small business, the owners may be the entire sales team. More established businesses may have several salespeople.

And while face-to-face selling may be the primary sales activity required for a local retail store, the sales process can be much more complex for a company selling processing machinery to manufacturing customers nationwide.

What's more, while all employees have a responsibility in attracting and satisfying customers, your sales team will be most involved in converting lookers into buyers. Your sales team may include:

• Outside salespeople, who call on customers at their homes or places of business.
• Inside salespeople, who make sales on the company's premises, including retail sales clerks, phone order clerks, and telesales personnel, who sell by phone.

Your sales team can make "cold calls"; that is, they can call on prospects who have not expressed a previous interest in your products; For higher sales productivity, they can also call on prospects who have been pre-qualified through other marketing efforts. For example, if you do a direct mailing or run an ad, and several people respond, your, salespeople can follow up on the responses to try to convert these "leads" into sales.

Use Worksheet 9: Your Sales Team and Tactics to develop a sales strategy for your company.

By carefully examining the marketplace in which you do business, you've taken another big step toward being a successful entrepreneur. Now that you've got Marketing under your belt, it's time to go inside your company and work on the details of Management and Operations. Take a deep breath. You can do it. Only two more steps to go.