Want CA$H? The Keys to Building More Value into Your Business (ESB Presentation Version—No Animation) Presented by: Edward S. Balian, Ph.D. © 2003 Gemological Institute of America and Edward S. Balian, Ph.D. For your notes….(optional pull out) 2 For your notes….(optional pull out) 3 (c)2003 GIA and E.S. Balian,Ph.D. Dr. Ed Balian…. • • • • • • • • 4 Q-Stat started 1977 Owned numerous companies; corporations Started, maintained, bought & sold businesses School of Business professor since 1976 Authored: textbooks and software Consulted with over 60 companies to date; large & small Former Dean of GIA School of Business Over 500 instructional seminars presented, including Harvard Business School (c)2003 GIA and E.S. Balian,Ph.D. I Welcome Three Groups that are Before Me Today: Those wanting (or praying?) to BECOME millionaires Those who ALREADY ARE millionaires, now wanting to become MULTI-millionaires Those who already are multi-millionaires (Let’s do LUNCH!) 5 (c)2003 GIA and E.S. Balian,Ph.D. I Promise You….. BIG MONEY—TODAY! No tricks—it takes: Hard work, YES, but also: Spending your time efficiently, on the “RIGHT STUFF!” 6 (c)2003 GIA and E.S. Balian,Ph.D. Keep It Simple, Stupid 7 (c)2003 GIA and E.S. Balian,Ph.D. YES---we all know this catchy and cute saying, but when it comes to today’s complex business challenges, it is, UNFORTUNATELY, just not so “simple” anymore. Questions that “DRIVE” the Creation of Your Success: (1) 8 WHAT are you driving? WHERE are you going? HOW and WHEN are you moving forward? How FAST will you go? When will you know to SLOW DOWN? Note that the size, style or cost of “car,” (i.e., your business) does NOT matter--You still need knowledge and control of your MARKETING PLAN to move it where you want to go. (c)2003 GIA and E.S. Balian,Ph.D. Questions that “DRIVE” the Creation of Your Success: (2) 9 How will you measure your business’ EFFICIENCY? If inefficient, will you blow your cool? Will you be glancing back or moving forward? Both? Can you avoid panicstops? Note that the size, style or cost of “car,” (i.e., your business) does NOT matter--You still need knowledge and control of your MARKETING PLAN to move it where you want to go. (c)2003 GIA and E.S. Balian,Ph.D. Major Points Today: 10 Ways to Operate Your Business The Power of Marketing Working for You How Market Research Will Help You The 4-P’s of Marketing SWOT Analysis A Marketing Plan Branding and its Ultimate Power to You (c)2003 GIA and E.S. Balian,Ph.D. There Are Two Basic Ways to Operate Your Business…. SO, CHOOSE: 11 (c)2003 GIA and E.S. Balian,Ph.D. Think OUTSIDE the Box: The guy who invented the wheel…. Be creative and courageous---but not crazy! 12 (c)2003 GIA and E.S. Balian,Ph.D. Need Proof-Positive? Fair Enough! 13 When MARKETING is applied CORRECTLY: SUCCESS HAPPENS: SUCCESS HAPPENS: A senior-citizen, fictional rodent now owns ABC Broadcasting, Touchstone Movies, and countless mega-resorts, worldwide. A “Diamond is Forever” is recognized by 99% of those within the company’s industry; 78% of those not in the industry. (c)2003 GIA and E.S. Balian,Ph.D. Diamonds or Football? The “Game” is the Same: BRANDING! DeBeers DaBears BOTH “BRANDING” Identities are Quickly Recognized! 14 (c)2003 GIA and E.S. Balian,Ph.D. In over 60 Years of Marketing & Branding, He Has Done Quite Well! 15 (c)2003 GIA and E.S. Balian,Ph.D. No More “Mr. Nice Guy:” Mickey Mouse STRIKES: 16 Disney challenges town library's new mouse logo:Story Posted by Blake on Saturday June 22 2002, @ 11:39AM -- Read 1927 Times. from the Corporate-Greed dept. A Sad Story from FL says Walt Disney Co. officials have until July 30 to decide whether to challenge the Genesee District Library's mascot for an alleged similarity to Mickey Mouse. Last summer, the library submitted a trademark registry request with the U.S. Patent and Trademark office for "Book Mouse," a blue, large-eared rodent wearing red-rimmed glasses and a backpack. Book Mouse appears on bumper stickers and in coloring books, and even marches in local parades. Library attorney Pxxx Pxxxx said "I don't think we cut into their movie profits this last year." Disney owns FL. They will win this one. Similar case in FL with a daycare center-they were trounced by the Mouse Machine. (c)2003 GIA and E.S. Balian,Ph.D. Need Proof-Negative? Fair Enough! When MARKETING is applied incorrectly or not applied at all, DISASTER HAPPENS: 1972 Chevrolet Vega vs. Honda Civic 1959 Edsel (Ford) vs. Anything Beta-format video tape (Sony) vs. VHS “New” formula Coca-Cola vs. Classic Coke (Notice that ALL the above were large, multinational corporations---so what? They can error, (c)2003 GIA and E.S. too!) Balian,Ph.D. 17 So, At This Point, We Just Need to…. …and CONSIDER: 18 (c)2003 GIA and E.S. Balian,Ph.D. Critical Steps….. 1. 2. 3. 4. 5. 19 Use Sound Business Practices Learn & Understand Your Target Market, then: Refine Your 4-P’s, thus Leading to: Creation a Marketing Plan Branding of Your Business Name (c)2003 GIA and E.S. Balian,Ph.D. TARKET MARKETING: You MUST KNOW YOUR CUSTOMER BEFORE You Can Effectively Promote Your Business 20 COSTLY ERRORS if you “just guess,” no matter how confident you are in being correct. Your current “success” is a poor measure---how much better still COULD it be? In today’s new, highly competitive global environment, no one can afford to GUESS WRONG. The “expense” of doing research is a myth. The cost of not doing it could result in Chapter 7. (c)2003 GIA and E.S. Balian,Ph.D. Market Research POWER 21 Always learn more about HOW YOUR PRODUCT/BUSINESS is perceived by potential customers. Don’t just guess! WHO are your customers? WHERE are they? HOW do they behave? (Travel? Read? Do? Internet?) HOW will they know about and/or care about your products or services? THE ANSWERS TO THESE QUESTIONS WILL DEFINE YOUR TARGET MARKET (c)2003 GIA and E.S. Balian,Ph.D. Product (by DeBeers): 3-Stone Anniversary Ring A PRODUCT target marketed to Baby Boomers, but obviously NOT Boomer-newlyweds. DeBeers “BRANDING” adds the “trust” dimension. (Courtesy: DeBeers) 22 (c)2003 GIA and E.S. Balian,Ph.D. Can You Suggest the TARGET MARKET(S) for This PRODUCT? 3 Emeralds in Platinum Mount (Courtesy: DeBeers) • • 23 Suggest the TARGET MARKET(s) for this Product. (Narrower or wider target than 3-DIAMOND target market?) (c)2003 GIA and E.S. Balian,Ph.D. First-Hand Data? First-hand (Primary) Data: Surveys, POP/receipts data PRO: Customized for you and your business CON: Can be slower and sometimes, expensive. 24 (c)2003 GIA and E.S. Balian,Ph.D. Second-Hand Data 25 Second-Hand (Secondary) Data: gov’t data, published industry trend data PRO: Fast, less costly CON: Not specific to your products or services, questionable quality, not under your control (c)2003 GIA and E.S. Balian,Ph.D. The 4-P’s of Marketing…. Product Price Placement Promotion This is NOT “mumbo-jumbo,” they lead directly to higher profits through greater efficiency of your business. 26 (c)2003 GIA and E.S. Balian,Ph.D. The Building Blocks: The 4-P’s of Marketing 27 PRICE: Wal-Mart, Dollar General Stores, Cartier, Tiffany PRODUCT & PROMOTION: Ford T-Bird went from 2-seater to 4-seater, DeBeers PRODUCT, PROMOTION & PLACEMENT: Tiffany, Pet Rocks, Cabbage-Patch Dolls PROMOTION: AVIS Car Rental, Zales (c)2003 GIA and E.S. Balian,Ph.D. P1: PRODUCT 28 ESSENTIAL: Is your Product or Service in demand by a particular (targeted) market? MARKET RESEARCH may help. NOT ESSENTIAL: Unique? Necessity or Discretionary? Alluring? Fun? Packaged “Correctly?” Has Potential to Expand into Larger Product Line (Variety & Assortment)? You DON’T NEED allGIA(or of these, necessarily! (c)2003 and ANY) E.S. Balian,Ph.D. DeBeers and Product Expansion DeBeers print ad (October, 2003) promoting “RIGHT HAND RINGS” to women for women. 29 (c)2003 GIA and E.S. Balian,Ph.D. Who Started with Only THIS, then EXPANDED their PRODUCT Line? 30 (c)2003 GIA and E.S. Balian,Ph.D. Follow-up “Product,” Customer Service, Nearing Extinction? USA TODAY, September 30, 2003, Headline: Drop in Traditional “CUSTOMER SERVICE” 31 (c)2003 GIA and E.S. Balian,Ph.D. P2: PRICE (aka, “The Goldilocks Syndrome”) Is the PRICE reasonable vs. competitors? Tangible vs. Intangible “value” to customer vs. selling “price.” – Is “low price” (or customer PERCEPTION of low price) a selling point? (Wal-Mart) Is high price a selling point? (Tiffany) MARKET RESEARCH to price it “just right” 32 (TIFFANY SILVER HARMONICA vs. WAL-MART Earrings) (c)2003 GIA and E.S. Balian,Ph.D. PRICING from Tiffany & Co. Diamond Engagement Rings: $1,000 to $1,000,000 (As per website information) (Courtesy: Tiffany & Co.) 33 (c)2003 GIA and E.S. Balian,Ph.D. P3: PLACEMENT (aka, “Distribution”) 34 (c)2003 GIA and E.S. Balian,Ph.D. How hard do customers need to look to find you— including .com sites. (Travel the world? Tiring!) How badly do customers think they NEED to find you? What are your costs regarding placement: store location(s), internet, etc.? MARKET RESEARCH will help answer these questions. P4: PROMOTION 35 “Promotion” potentially may include many elements: Press Releases Print Ads Radio, TV Ads Community Sponsorship Word of Mouth “On Sale” Clearance Campaigns Training for In-Store Sales Associates And more…. (c)2003 GIA and E.S. Balian,Ph.D. Let’s Look at Each of the 4-P’s, One at a Time, Using a Few Real-World Examples…. 36 (c)2003 GIA and E.S. Balian,Ph.D. The 4-P’s at ZALES Let’s Discuss: PRODUCT PRICE ($299) PLACEMENT PROMOTION (Courtesy: Zales) 37 (c)2003 GIA and E.S. Balian,Ph.D. The 4-P’s at Wal-Mart: Let’s Discuss: PRODUCT PRICE ($299) PLACEMENT PROMOTION (Courtesy: Wal-Mart) 38 (c)2003 GIA and E.S. Balian,Ph.D. The 4-P’s at J.C. Penny Let’s Discuss: PRODUCTS PRICE ($499) PLACEMENT PROMOTION (Courtesy: J.C.Penny) 39 (c)2003 GIA and E.S. Balian,Ph.D. The 4-P’s at Starbucks: Let’s Discuss: PRODUCT PRICE PLACEMENT PROMOTION (Courtesy: Starbucks) 40 (c)2003 GIA and E.S. Balian,Ph.D. Let’s Go Back and Study Types of P4: PROMOTION in More Detail 41 (c)2003 GIA and E.S. Balian,Ph.D. Press Releases PROS: Relatively low cost mailings Can reach wide audiences with your informational message Can word articles the way you want Can help build future PR contacts for later re-use 42 (c)2003 GIA and E.S. Balian,Ph.D. CONS: Publications only run your press release if they want to No fine “targeting” of your audience in most cases You have no control over editing You have no control over dates of publication Must be “newsworthy” Print Ads PROS You personally create your message and image No edits or alterations Can be highly targeted 43 (c)2003 GIA and E.S. Balian,Ph.D. CONS Lead-time is considerable Gen X & Y are already “turned off” by typical print ad messages Production cost can be very high Ad placement costs can be very high Community Sponsorships PROS: Demonstrates your involvement in community, by name and spirit Local audience targeted 44 (c)2003 GIA and E.S. Balian,Ph.D. CONS: Very limited “eyeballs” on your name and product/service Potentially high cost relative to small audience Could be perceived as “small time” business Radio & TV/Cable Ads 45 PROS: More “human” approach with voices and/or images Allows excitement and energy not found in other approaches Potentially huge audiences (c)2003 GIA and E.S. Balian,Ph.D. CONS: Gen X & Y just not interested in typical ad messages “Bathroom Break” queue Potentially very high cost Audience may be too wide; results in an inefficient approach to target Poor ad can result in disaster—risk is high “Positive” Word of Mouth 46 No direct cost! Personal testimonials between friends are powerful and credible Pyramiding (c)2003 GIA and E.S. Balian,Ph.D. “Negative” Word of Mouth 47 Pyramiding Danger: Just one bad experience by ONE “crying” customer can be disproportionately harmful to your business Whether the complaint is actually valid or not is immaterial (c)2003 GIA and E.S. Balian,Ph.D. Training for Sales Associates 48 MOST COMMON comments from my students entering a retail operation on assignment: “I wasn’t treated well…” “I was ignored” “May I help you/No, I’m just looking, thanks.” (c)2003 GIA and E.S. Balian,Ph.D. SWOT Analysis 49 Existing In the Present: S= STRENGTH (how will you maximize it?) W=WEAKNESS (how will you attack it?) Potential In the Future: O=OPPORTUNITIES (how and when to capitalize on it?) T= THREATS (how will you defend against it?) (c)2003 GIA and E.S. Balian,Ph.D. Houston--- 50 (c)2003 GIA and E.S. Balian,Ph.D. WE HAVE A PROBLEM: With all these marketing issues and without millions of dollars behind us, how do we find our DIRECTION? Until You Have A Marketing Plan…. 51 (c)2003 GIA and E.S. Balian,Ph.D. We MUST HAVE a “MAP” or MARKETING PLAN to Move Forward Intelligently WOULD YOU TAKE A MAJOR ROAD TRIP WITHOUT A MAP? THE “MAP” IS CALLED A “MARKETING PLAN.” 52 (c)2003 GIA and E.S. Balian,Ph.D. The MARKETING PLAN Takes into Account: 53 WHO we are trying to reach (Target Market) HOW we want to reach them WHERE the product will be available WHAT the MESSAGE needs to be (ad copy, images) HOW MUCH $$$ is in our MARKETING BUDGET (per Pro Forma P&L, Cash Flow, Balance Sheet) SWOT Analysis AND WHEN will the action happen, per a TIMELINE (c)2003 GIA and E.S. Balian,Ph.D. Marketing Plan Quick-Tips: 54 Concentrate on a “do-able” population and scale. Be realistic in expectations. Do an accurate SWOT, not “Pie in the Sky” Stay the course; use your “map,” do not unnecessarily “change direction” or make adjustments to name or logo without quality research behind it. The Marketing Plan we follow MUST be thought out and researched FIRST, not last. (c)2003 GIA and E.S. Balian,Ph.D. Back to Where We Started in Today’s Presentation: Branding! MARKETING = POWER The sum of your marketing 4-P’s and Marketing Plan will ultimately build your “BRAND” (either one way or the other!) Solid and positive BRANDING will ultimately provide huge added value to your name, your business and your products or services= ADDED NET WORTH. 55 (c)2003 GIA and E.S. Balian,Ph.D. In Review…..we discussed: 56 Your Choices in How to Operate a Business The Power of Marketing Target Marketing through Market Research The 4-P’s of Marketing SWOT Analysis Your Marketing Plan, Ultimately Leading to: Branding and its Long-Term Value (c)2003 GIA and E.S. Balian,Ph.D. Adding Net Worth to Your Business The Balance Sheet: Assets Liabilities “Balance:” Assets=Liabilities 57 (c)2003 GIA and E.S. Balian,Ph.D. Ingredients of the Balance Sheet (Simplified): ASSETS Cash on Hand $100,000 Accounts Receivables $200,000 Hard assets $400,000 Other assets $100,000 Branding, Logo, Trademarks, “Goodwill” $200,000 Adds up to: $1,000,000 58 LIABILITIES Accounts Payables $200,000 Other liabilities $100,000 Net Worth $700,000 Adds up to: $1,000,000 (c)2003 GIA and E.S. Balian,Ph.D. Branding and “Goodwill” to Build Your Net Worth 59 Branding Trademark Logo Name Recognition (c)2003 GIA and E.S. Balian,Ph.D. How Might I Further Assist YOU? It was my pleasure to meet you today! Best of luck in all your future endeavors! Stay in touch! edbalian@silversky.com 60 (c)2003 GIA and E.S. Balian,Ph.D. Contact Me…. For a set of my presentation notes (in PowerPoint only): Email: edbalian@silversky.com 61 (c)2003 GIA and E.S. Balian,Ph.D. NOTES………….. 62