Restaurants, like other businesses, often find that the best way to succeed in the market is to

Marketing includes all the ways you can research who your customers are and how they behave when planning to buy what you sell. You should identify:

• how customers make decisions in general and when choosing what to buy
• the steps they follow before, during and after buying your product or service.

Splitting your customers into groups helps you target the right people and promote your business in a way that chimes with them. For example, you might group customers by age, sex, demographics, income, or anything else that makes sense for your product or service. Getting your targeting right helps save money by focusing on promotion that hits the mark.

Sales data and other business information can help you understand how valuable customers are to the business. You’ll want to know the cost of gaining each new customer, the profit each time they buy something, and the total profit over their lifetime as a customer.

What your customers want and how they think

A brand is something that distinguishes your business from your competitor’s. Every business has a brand, even the smallest sole trader or newest start-up. Marketing helps you understand what makes up your brand and its effect on winning and keeping customers. Then you can build the brand you want, one that shows customers why they want to buy from you. 

A strong brand can also be the key to getting finance and improving customer loyalty.

Build a brand your customers will love

A pricing strategy is a plan to set up the price of your products so that it appeals to your customers. The right pricing strategy is one that holds value for your business, your customers, and your collaborators. Your business should have the right pricing strategy to be profitable. It’s a key part of running a business and finding your position in the market. You need to know whether your product is more or less appealing than competing products, and how price-sensitive your customers are.

Insights like these help you understand which pricing strategy fits your business best. Too high a price can put customers off. But too low a price can hurt your bottom line even if it boosts sales.  Marketing helps you find the pricing sweet spot that works for you, your customers, and anyone else your business works with.

How to set the right price

Promotion is what most people think marketing is all about. But promotion is just the part of marketing that covers ways you share ideas about your product or service with customers. Examples include:

• talking with customers in store or online
• social media posts
• advertising on billboards or flyers
• discount coupons offered online or on letterbox leaflets.

The internet is changing how businesses promote themselves. It opens up new ways to find the right customers, and to communicate with them.

Find the best way to promote your business

Strengthening relationships with customers

Even if your finances are stretched, spending on well-planned marketing activities is a good idea. You can recover the cost through an improved profile and more sales.

Setting a marketing budget is a good way to ensure you set money aside for it. And with its own budget, marketing is less likely to be an afterthought.

Financial models: Step-by-step guide

Here are four popular ways to set your budget, and some pros and cons to be aware of.

Spend to achieve objectives

A great marketing plan needs to have objectives. Examples include:

• identify 200 potential customers
• show 300 people a video on social media
• give an introductory discount on the first 10 sales of a new product.

Once you know what you want to achieve, set a marketing budget to pay for it.

How to do it

Set up marketing objectives. Figure out tasks that will achieve these objectives, and then estimate the cost of those tasks. Your marketing budget needs to cover the total cost. For example, making a video might cost $500, and promoting it online to reach 300 target customers might cost an extra $60.

This is the most logical method of budgeting. You’ll have the money you need. And if the budget looks too steep, you can revise your targets.

Sales-based budget

Some businesses dedicate a percentage of current or forecast sales income to marketing. You can adjust the percentage depending on factors like how your business is performing, how’s the business environment etc. This method of budgeting is often highly recommended by business experts.

How to do it

One way is to allocate part of the revenue from each sale to pay for the promotion or other marketing that supports that sale.

This method shows a clear relationship between marketing budget, and selling price. It’s also helpful when you’re applying for funding or doing your accounts.

It doesn’t reveal how much you need to spend on marketing, even though everything depends on setting aside the right percentage. You might spend too little and fail to make the most of your marketing ideas, especially if your budget is based on business as usual sales.

Spend to match competitors

Some small businesses prefer to keep their marketing budget close to their competitors'.

How to do it

If you can work out roughly what your competitor spends on marketing, you could match this amount. Another option is to match the average for your industry, if stats are available.

Stats on marketing spend can be hard to find. Some businesses try to find out what multiple competitors spend, then work out an average. 

There’s no way to find out if your competitor is doing the right thing until it’s too late. What’s right for your competitor — or the average business in your industry — may not be right for you. You might have different ambitions for growing the business, or a different financial situation.

Stick to what feels affordable

Small businesses often set a marketing budget based on what the business can afford.

How to do it

Use part of your net profit (revenue minus operating expenses) for marketing. How much to set aside is up to you. 

This method often leads to underspending. For example, you set aside $200 of your net profit for social media marketing to gain new customers. But it costs $200 to create the ads, leaving no money in the budget to target the right people on social media.

Starting with a budget limit, rather than setting an objective, will affect the benefits you see. It may even waste the money you spend. For example, a discount offer may not boost sales if the price reduction is too small. An advertising campaign may not boost your profile if you can’t pay for enough people to see it. Poor results can make you reluctant to spend more, even if spending more is exactly what you need.

What would a firm most likely use to differentiate its product to the customer?

Which of the following would a firm most likely use to differentiate its product quizlet?

Which of the following refers to a group of products offered by a firm that are physically similar or intended for a similar market?

What term refers to a group of products offered by a firm quizlet?