In this blog entry we will take a reflective look on how the digital revolution has impacted on what we know in marketing our products. The purpose of this entry is for you to get a better idea and education of how each of the 4 P’s have changed since digital became an integral part of business. Having been at recent conferences I’ve noticed that there is a few people out there that are unaware of how digital has affected marketing. Some seem to think Facebook’s/Twitter’s etc when the word ‘digital’ is thrown around and hopefully this post will make Start-ups think about the other areas digital can affect their business.

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Price:

The influence of the internet on global marketing strategies is principally seen in respect to price with the free movement of information from country to country. A large contributor to this is the advances in search technology and SEO/ SEM making prices easier to find online as well as the online irrelevance of previous competition issues such as location. This is also supported by the emergence of third party search engines which scan the international landscape for the best price: For example Skyscanner.com which searches for the most affordable flights between destinations. Previously national boundaries played an important role in the global marketing strategies whereby companies could exploit national differences in consumers’ price sensitivities by charging different prices across different national borders for the same product. Differential pricing strategies become more apparent and companies risk being exposed as exploiting customers in different countries.

These factors have all lead to greater transparency which results in a customer’s changing perception of value. The results of this, as is common in the legacy of Web 2.0’s is that the customer has increased control. Some companies have responded to this power shift by relinquishing further price control and allowing customers to haggle as seen on Enterpriseonline.com or EBay. Furthermore, pricing has become more dynamic and fluid as a result of the digital revolution. As successfully exploited by Ryanair pricing now has a significant response to Supply and demand which forces prices up and down with increasing speed. The only way companies will be able to stay ahead of the competition and keep up with the customer is to develop a flexible pricing structure that allows them to move with the dynamic digital pricing terrain.

Product:

However, the digital impact is not restricted to price. Products themselves have been altered as a result of digital’s imposing presence on the global marketing scene. Product strategies have been impacted by deconstruction whereby internet operations have become companies in their own right whereby the messenger has become more important than the message. It is difficult to imagine Ryanair without its internet offering. Similarly American Airlines internet wing “Sabre” is now worth twice that of the original business. American Airlines originally created its SABRE electronic ticketing system as a means of selling seats. Under legal and regulatory pressure, American Airlines was forced to partially spin off SABRE and operate it as an independent business. But this “navigator” business is now valued by the stock market at nearly twice the value of the airline it was originally created to support.

Mass customisation is also reshaping a company’s product strategy. Again, following Web 2.0’s placement of the customer at the centre of everything this now includes a customised product. Levi’s and Nike, two of the biggest mass producers ever, now have services for customers to have products customised specifically for them. Long gone are the days of Henry Ford’s “any colour as long as it’s black” to a specifically built personalised product. Customers are further invited into the production process as crowd sourcing becomes increasingly popular. A veritable global think tank is created by customers being invited to submit their ideas for t-shirts and (Threadless.com) to creating chocolate bars with new recipes to Cadbury’s.

Location Awareness technology has also reshaped product strategies. Facilitating layering of additional information based on location offering a heightened real time real place customer offering. Many products themselves have been altered through digitization with music mp3’s now being the common platform and books following suit. A company’s product strategy must be reviewed to see can production and cost saving opportunities be realised through digitization.

Place:

With the movement from physical offices to offices in the cloud, a company must review their distribution strategies almost annually at this stage. The digital revolution provides companies with the opportunity to augment traditional channels of distribution reshaping customers shopping habits. The Financial Times revealed a while back that Donatello’s Pizza orders are now 36% via mobile, online and social networking. The rapid development of app’s is facilitating this with Paddy Power similarly reporting 10% of their revenue comes via mobile, 50% of this number being attributed to the Paddy Power iPhone App.

Of course with the shifting boundaries of distribution channels becoming more streamlined this implies that some supply channel partners will fall victims to disintermediation. Ryanair and Dell are advocates of this removing travel agents and computer wholesalers alike via disintermediation and selling directly to the consumer.

Promotion:

Communication is central to the theme of Digital Media. The adoption rate of Social Media has seen a growth like no media before it. Facebook now has a global audience of 750m with 50% of users logging on every day and people spending over 700billion minutes per month on the site. This has dramatically changed the promotional strategies with 92% of businesses (2011 Social Media report) now employing a Facebook strategy, 84% on Twitter and 71% using ‘Linked In’ for digitally influenced promotional strategies. The rise of Geo-location promotional strategies is set to continue with companies now employing Facebook places and Foursquare to give Social Media promotion a real time, real place solution. Seth Godin, business guru, argues companies can no longer rely on “interruption media” to get a customer’s attention. Social Media has reframed the promotional landscape which implies permission needs to be sought to advertise to the customer. The customer can choose whether they receive a message which is the basis of Irish success Empathy Marketing company “Pigsback.com”.

However, companies’ promotional strategies must involve a contingency plan for to deal with the new voice that the consumer has and their new found power to amplify and broadcast their views. Social media has granted consumers power to dictate companies actions: P&G were recently embarrassed into recalling their Pampers Dry Max diapers due to mounting complaints over Twitter and Facebook. Social Media enables customers to communicate their anger, organise themselves more efficiently and recruit others to their cause however; similarly the digital media revolution has seen the implementation of derogatory websites. Sites such as Dell hell, Murderking and Mcspotlight have cast Dell, Burger King and McDonalds in a hugely unfavourable light demanding change to their operations.

Digital impact on Research:

As most start ups are aware the internet provides an efficient means of conducting market research. Now you can see what your competition is doing in just a click. But it doesn’t end there. Previously focus groups interviews and questionnaires need to be conducted to obtain such valuable research information but the internet has created communication links through emails and corporate websites facilitating collaboration with a range of customers from different national, regional or cross cultural backgrounds. The advantages of digital to the research sphere include increased cost effectiveness through online surveys, interviews and observational research. Digital media also allows greater access to secondary data online, CD ROMs and is more easily distributed if purchased or ordered. Consumers are giving out all kinds of information via Twitter, Facebook and Blogs if companies choose to listen to it.

The internet’s impact on the global marketing landscape has changed everything from companies’ relationships with their customers and even companies relationships with their competitors.

To conclude on a topical note former Global Media Giant Rupert Murdoch said

“The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow.”

Digital has helped make so many Irish start-ups successful, understand it and embrace it!

When it comes to exporting it is always crucial to have done some homework before committing. Although exporting may not be specific to every start up it is good to have some knowledge on the area. The case happens to be that most start-ups with high potential will have sought financial assistance from CEB’s and Enterprise-Ireland already but for those of you awaiting approval or ineligible for support we hope that these tips can help you.

One of the best exercises your start up can partake in is ‘IMS-International Market Selection’.

The main focus of IMS is concerned with isolating the markets with the biggest opportunities. You should never just assume you know that your product is suited to a market without doing the background research. As mentioned it’s a very important decision to take time over as when you choose a market it is also counts as a choice of:

• Customer
• Competitive Environment you are entering to compete in e.g. technical, political, social, competitive etc

For these reasons you’ve got to get it right as the decision is not easily reversed after you’ve committed to one market. Many successful entrepreneurs say that a firm’s ability to choose the right countries for entry and investment should lead to significant competitive advantages once entry has begun. It is a tedious process but valuable in the long run. The saying “fail to prepare, prepare to fail” springs to mind!

How To:

The exercise itself must be taken as a systematic approach. If you decide to skip steps or be lazy it will affect the end decision and the overall business decision. It is also important to note that the availability and comparability of international market data should be taken into account when carrying out the exercise. Why? Here’s an example of how the comparability of data can deceive one’s anticipation of a market.

Example:  Firearms Statistics

In Ireland a proxy for the legal number of firearms held may be gauged by the number of licenses issued.  I.e. – A license is issued for each firearm. Whereas in the UK using a similar method would yield an inaccurate picture.  In the UK the individual is licensed to hold firearms.  Thus a person could hold several firearms on the one license. Confusion for gun producers looking to export quantities.

This blog entry will cover the first two stages of the process and next week we will continue with the final three stages. Ideally if approaching the like of Enterprise-Ireland being able to show you have least carried out the first two stages will ensure your application is more credible and well grounded. Generally the latter three stages would be covered with the agency as more resources will be widely available.

The Systematic Approach Guidelines:

See the diagram below.

Stage 1: As you can see you begin by pooling all the prospective countries together. For this example let us say there are 100 potential countries.

Stage 2: In the second stage you carry out what is known as ‘coarse grained screening’ or preliminary screening. You should imagine the system as a filtration process and each step is removing undesirable countries. This will allow you to narrow your potential country pool to about 50 countries or less.

This coarse grained screening can be carried out in two ways:

1. Country Clustering

Clustering seeks to group countries with similar commercial, economic, political and cultural dimensions. For example Portugal and Spain have similar commercial and cultural dimensions so markets may be alike. After spending time clustering you can even go as far to map them out to illustrate your plan of action for identifying the most valuable clusters.

2. Country Ranking

Country ranking as the name suggest involves ranking your targeted countries. An excellent resource for start-ups looking for low cost research on all this is Global Edge online. At this site you can rank and compare countries by their statistics. However there are some serious drawbacks with ranking such as the lack of product specificity in the indicators e.g. how much can you tell from Population figures if you’re selling cars etc and there is also a lack of current data in all countries, especially African and underdeveloped economies. Nonetheless it is still a very valuable resource to be aware of.

When ranking you should carry out four steps:

1. Identify relevant evaluative criteria for your product/service

2. Assign importance weights to the various criteria identified

3. Collect specific information about the foreign market reality or performance related to the relevant criteria

4. Apply a decision rule to the information collected to identify the best target market

Country ranking (Detailed)

1: Criteria Selection and Data Collection

• First need to pick a set of socioeconomic and political indicators you believe are critical.
• The indicators that a firm selects are to a large degree driven by the strategic objectives spelled out in its global mission

Examples

• Colgate – Palmolive views per capita purchasing power as a major driver behind market opportunities
• Nestle views population and buying power growth as key to market opportunity
• McDonald’s starts with countries that are similar to the US in lifestyle, with a large proportion of women working, and shorter hours for lunch

2: Determine importance weighting of country indicators

• Importance weighting need to be allocated to each indicator identified in Step 1.
• One common method is the “constant sum” allocation technique – where 100 points are allocated across the set of indicators according to their importance in achieving company goals (the more critical the indicator the higher the points allocated). Follow Worked example below.

3: Rate the countries in the pool on each indicator

• Each country is given a score on each indicator, you could use a 100 point scale (0 meaning very unfavourable, 100 meaning very favourable)
• The better the country does on a particular indicator the higher the score awarded

4: Commute overall score for each country

• This simply involves multiplying the country score on each indicator by the weighting for that weighting and summing up
• Countries with the highest overall score are the ones that are most attractive

Example of Workings:

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This is brings us to the end of the second stage and your potential countries should have decreased significantly. Some great sources of finding the market data and research information for screening can be found online as mentioned on Global Edge or GMID Databases.

GMID is a seriously undervalued resource by many companies these days. Many are unaware of its existence! The database has more than 3 million country statistics ranging over 205 different countries as well as dating back as far as 1977. Some of the reports include country profiles, region profiles, future demographics, lifestyle insight reports, customer behaviour studies and many more.

Hopefully there is enough in the above tips to help you with identifying suitable countries for your product or service. Tune in next week to read about the more detailed screening that takes place after preliminary screening.

All Businesses start with an idea!, How do you find the right one??

All businesses start with an idea. Ideas are two a penny, millions of people have millions of them every day…somebody should do such and such…I saw this here or there….what’s needed around here is X……I could do Y much cheaper than X etc. etc.

The vast majority of these ideas die a death in the recesses of gray matter around the world. For some people these ideas fester and grow and sometimes they just won’t go away. For others the idea finally moseys off after growing tired of hanging around or worse somebody else grabs a hold and runs off with it.

But what about you? What brings you here?  Have you got an idea that you are struggling to find validation for? Or are you 110% confident that you have a winner and are itching to get going?

Obviously we cannot tell you whether your idea is good or bad, in fact this is in many ways is irrelevant. An amazing entrepreneur with a mediocre idea will still probably outperform an individual with an incredible idea but who lacks conviction, drive and the ability to make things happen.

What we can tell you is this; you need to think about the end game from the start. What hypothetically would you be doing this for? What is your motivation? Is this a lifestyle business? do you want to make the world a better place? Or do you simply want to get filthy rich? It is important to be aware of your motivation as this will help to dictate your course of action.

If your motivation is to quit your lousy job, spend more time at home with the kids, or make the world a better place then our advice is above all to do something that you are interested in or preferably passionate about. Starting a business is tough often really tough but at least if you are interested in the product or general area it won’t seem quite so bad on those quiet days when you are wondering what the hell you have gotten yourself into. The very very lucky get to make money from what they love doing this is the ultimate goal.

So you want to get rich! Not unreasonable, in fact why not? What else are you going to be doing?. The only advice that we can give here (without an in-depth study of your business plan) is this – Play in a field where there is money to be made – sounds obvious doesn’t it?. Yet you would be amazed at the amount of people who expect to get rich selling herbal T bags or similar. Business is so much easier when you are swimming with the current, think being an estate agent over the past 10 years or opening a mobile phone shop around 1994…easy..nice!. So which businesses are moving with the current now? Green energy? Liquidation agencies? Cloud computing? Find one and dive in.

Ed.

Digital Marketing School is a free online video resource for anyone who has an interest in the world of digital marketing, from a beginners level, right up to seasoned professionals.

The aim is to help people with some of the basics, put some meaning behind the buzzwords, and give a broad understanding to newcomers of what is possible in the world of digital marketing

The school also looks at more advanced areas, new evolutions in technology, and where the digital marketing industry is going in the coming years.

Each month, they have a guest speaker from the industry, discussing a digital marketing campaign that really captured their imagination.

There are loads of ways to subscribe, so click on one of the links to receive updates as each new show arrives.

http://www.digitalmarketingschool.com/
www.vstream.ie

As the list of marketing options grows to include social networking, email marketing and whisper campaigns, small- and medium-size businesses must have a solid marketing strategy.

But the truth is that more than half of new businesses don’t bother. A recent survey found that 58.9 per cent of small-business owners don’t prepare an annual marketing strategy or attempt to identify the benefit and cost of marketing. This could be why the failure rate of small businesses is so high in the first year.

The director of Marketing News, Mary Brennan is not surprised by the research.

“A lot of businesses don’t put much thought into a marketing plan and as a result, it’s often done ad hoc,” she says.

“Businesses need to realise that marketing isn’t an expense but a legitimate business-building activity.”

But a lot of small businesses don’t know how to develop a marketing strategy.

“Often they will try a marketing technique based on their own ideas or what may seem like a bargain only to realise it only reached a small percentage of their target market, by which time their budget is blown,” she says.

The classic first step for Irish businesses is something like a leaflet drop or taking an ad out in the local paper. Often this course of action is taken in the absence of any other ideas!

A marketing plan should look at how a business will promote itself to its target audience, usually over a 12-month period.
Brennan says a marketing plan should include a detailed budget and examine the best ways to promote the business.

“You want [it] to take in analysis of your competitors and to have specific goals,” she says.

“It also needs to break down how much you’ve set aside for marketing, how you’re going to spend it, look at who your target audience is and how you tackle internal and external communications.”

A marketing plan for a small business might be only a few pages long but larger businesses often require a more-detailed plan.

The plan needs to be revisited monthly – or, at the very least, quarterly, Brennan says.

Business owners can write their own plan or if they have no experience in Marketing should contact an expert, even having a chat with one or two marketing companies will give you new ideas and an insight into how professionals appraoch marketing. You may not end up hiring anyone but I guarantee you will pick up some valuable tips along the way.

“We found that companies are either too busy to stop and write a marketing strategy or simply don’t place enough value on having a plan in place,” according to Brennan.

Like other key aspects of developping a successful business your marketing activity must be relevant and effective. If marketing is an area of weakness for you find a solution / person to manage it. You may have the best product or service in the world but unless the right people (your target market) know about it you are dead in the water. Do not ignore marketing your business and if your efforts to date have not been succesful it means one of two things …your idea sucks or you are no good at marketing…so which is it?

Welcome to the Startups blog

This Blog covers all and any aspects of business and entrepreneurship. The idea behind this blog and startups in general is to try and bridge the gap between the vast quantities of general information out there i.e. government pamphlets, county enterprise websites etc. and the reality of starting a business. This blog is written by entrepreneurs for entrepreneurs and as we are busy running our own businesses we would appreciate participation and content from anyone with an interest in this area.

Entrepreneurship and business success are fascinating areas, the challenge is like cracking a combination lock to a safe with riches within. Some make cracking the code look painfully easy others struggle for years without success. Managing the vagaries of timing, opportunity, ability, passion and luck seem to come naturally to some and prove impossible to manage for others.

Maybe some are born lucky maybe the harder they worked the luckier they got? Throughout this blog we will fluctuate between the philosophy of entrepreneurship and more nuts and bolts practical advice.

Thanks for visiting ….Now lets get started…………..

Ed.