"Modern civilization, nearly all civilization, is based on the principle of making things pleasant for those who please the market and unpleasant for those who fail to do so, and whatever defects this principle may have, it is better than none."
-- English economist Edwin Cannan in An Economist's Protest, 1927
Most of us have accepted the wisdom of goal-setting. Actually, it was a fairly easy concept to incorporate. Just a few intellectual steps above our infantile cries for milk, goals are somewhat more sophisticated expressions of our needs, wants and desires.
I am by no means denigrating the importance of setting goals. But I want to focus our attention today on another essential, less comfortable, marketing planning process: Evaluation ... particularly the evaluation of market feedback.
No, you do not need to hire a market research firm to conduct focus groups or detailed client interviews. You have most of the market feedback you need ... right there on your Profit & Loss Statement.
Start by reviewing your revenue goals for 2005.
Now, turn to your P&L statement. How do your goals match up to your actual revenue?
The premise of your Marketing Audit is that each of us must accept the fact that our success or failure is dependent upon whether or not we have succeeded in producing and offering for sale something that others value sufficiently for us to earn a return in excess of our costs. If we have misjudged what consumers want and the price they are willing to pay, we suffer a loss. That may be a "hard loss," meaning we literally did not cover expenses. It may be a "relative loss," suggesting that while we covered expenses, we did not achieve the desired level of profitability. Alternatively, it could be an "opportunity loss." Opportunity losses occur when we misjudge the market such that we UNDER-price our services, failing to capitalize on the VALUE others perceive in them (and are thus willing to pay for them).
Honest evaluation is the hard part. Our losses are in fact MARKET FEEDBACK, telling us that we have devoted our efforts in the wrong direction. By analyzing these results, we learn that consumers either prefer some other product or service more than the one we are offering, or that others have devised ways of marketing their products and services that are more appealing.
Whatever the reason, the market is telling us to adjust our behavior. We could shift into offering something consumers prefer more; creatively think of ways to match (or outdo) our competition by utilizing a more appealing marketing message, or offering a better or cheaper version of the product; or we could slash expenses while adding perceived value in order to boost profitability. If we are suffering Opportunity Losses, it maybe time to raise fees and adjust our marketing messages to support the increase.
Any or all of these strategies may be appropriate. Making the correct adjustments requires both more information and more analysis. But the first step is to simply sit back and ask, "What is the market telling me?"
Then, open your mind to the possibility that the market MAY be telling you to adjust your behavior!
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