MARKET PLANNING

Difference between marketing and advertising

The first thing you must understand concerning marketing is that it is an umbrella term encompassing ALL activities used to promote business. This means it spans the spectrum from the name of the business, slogans letterheads, logos, and business cards to public relations to paid media and a presence on the World Wide Web.

Think for a moment about some of the elements mentioned above. The name of the business, for example. Toys-it-Us tells you just about everything you need to know about the business itself. You know exactly what to expect when you walk in their door. On the opposite extreme would be something like Harrison Enterprises. This name tells you very little about the company. Slogans such as "Domino's Delivers" is most effective. But marketing goes even further. It covers such things training of your sales force or retail clerks to be friendly and helpful; the style of packaging you use for your product that attracts attention; color, size and shape, as in Gummy Worms. It even encompasses public relations such as speeches at civic clubs, and sponsorship of sports teams. It's all a part of marketing.

It has been our experience that fewer than 10% of all small businesses use everything at their disposal to promote business or product, simply because they do not understand the elements that comprise marketing nor do the understand the absolute necessity for constantly marketing.

Many confuse advertising with marketing. Advertising is a media form of marketing. Generally advertising a non-personal communication of a sales message which attempts to persuade which is PAID FOR by an identified sponsor. However, advertising is only one of many elements to a successful Marketing Plan and not even the most important element. You can an do marketing successfully without any paid advertising but a small ad budget can enhance good marketing.

No business can grow or sustain without marketing. In order to be effective you must understand three key elements of marketing. These, simply stated are:

• You must be committed to your plan. Remember, any marketing takes time to be effective. There are no "Quick Fixes."
• You must think of marketing as an INVESTMENT, not expense.
• You must be consistent. Consistency gains familiarity and confidence which result in sales.

Consistency in marketing is perhaps the key element, not what you spend on marketing. You must constantly market your firm and your product or service. There are a 10 good reasons for this.

First, the marketplace is constantly changing. Think of the Mobile market. Every week new people move into Mobile. Every week, Mobilians move somewhere else. People die....people are born. Peoples needs constantly change. The used to be single and now are married. They start families. Their lifestyles change. In business new competitors open up, old competitors go out of business. The contact you have cultivated as a client is promoted and transferred, or retires, or is fired and suddenly you are dealing with a new person. Nothing stays the same and if you stop marketing you miss out on this evolving process.

Second, people forget quickly. The average person is exposed to over 2700 marketing messages per day. The trade journal ADVERTISING AGE conducted a 1 3-week study to test the effectiveness of advertising. They ran a half-page ad in major daily newspaper once a week for 13 weeks. At the end of 1 3-week run, they surveyed the readership and discovered that only 63% remembered the product. One month after run, only 32% remembered product. Six weeks after run, only 21% remembered. This means that 79% of the readers who saw the ad forgot they even saw it in only 6 weeks.

Third, your competition is NOT quitting. They are out there trying to win your customers away from you.

Fourth, marketing strengthens your identity. It adds to your reputation when people constantly come across your marketing efforts. Also, it adds to the confidence your existing customers have in you. They know you are serious about being in business and this helps them have confidence in their decision to do business with you.

Fifth, marketing is essential for growth. Remember the purpose of marketing is to create customers. Without customers buying your product, you will not be in business long.

Sixth, it enables you to hold old customers by countering the marketing they are receiving from your competitors.

Seventh, it maintains the morale of your employees when they see the commitment you have to the overall marketing effort.

Eighth, it definitely gives you the advantage over your competitors who stop their marketing efforts.

Ninth, it allows you to continue operations. (See the fifth item, above)

Tenth, in light of the Advertising Age study, you stand to lose the investment in time and money in what you have already done if you don't keep reminding your customers and potential customers.

Marketing Variables

Before you can create an effective marketing plan you must have a clear idea of the variables you have to work with. By variables we mean the various elements you have to juggle to effectively get your message across.

The Product

The is so basic that most people overlook it. The product you sell is variable. And how you market your product or service depends on how clearly you can define your product to others.

The definition of your product or service must be based on evaluation of potential target market you are trying to reach. Who will use your product? Why will they use it? What options or accessories can be offered? What benefits does your product have that makes your product better than the competitions?

Remember when defining your benefits that benefit can be REAL or PERCEIVED. Skippy Peanut Butter in a plastic, shatter-proof jar is a real benefit to mothers with small children who try to fix their own sandwiches. On the other hand, wide-stick deodorant is a perceived benefit. Do you really save any meaningful time applying a wide-stick deodorant? Whether it is real or perceived is irrelevant. What is important is what the CUSTOMER thinks.

The decisions you reach when you examine your product or service must be reevaluated constantly. Sales records must be kept to determine most profitable product in your product line. Slow-moving or unprofitable items must be removed and replaced. Changes in target market demographics and habits as well as governmental regulations can all affect product, so you must be flexible.

The Price.

Do not confuse price with value. There is no relation. Price is determined by the marketplace: What will the customer pay for the product? VALUE is in the consumer's eye. What is the real difference between a $20 pair of Levis and an $80 pair of Guess jeans? There are three basic considerations you must take into account when establishing the establishing the price of your product.

The first is an internal factor. What are your costs for both the product and for your overhead? If you don't know this, you cannot possible establish a price for your product.

The second is what does your competition charge? You CAN sell above competition if your product has feature or benefit that justifies extra cost.

By product feature we mean a specific product characteristic. This might be such things as the product's size, color speed, wether it has remote control and so on. Basically it is any description of what the product looks like, how it operates or what it will do.

A product benefit is a product features translated into motivating buyers for wanting your product. Terms like "Convenient to use", "Maintenance Free", "Saves Time", "Safe for Children and pets". Basically its anything that appeals to the customer and motivates them into buying your product. In other words, "What will it do for ME?"

Marketing and advertising helps your customer see the benefit of your product and helps him make a decision to buy.

Just as you can sell above the competition, it is possible to sell below competition IF increase in units sold generates enough additional profit. Being low cost is not always desirable, however, and does make it more difficult to maintain your margins. Even if you can sell far below the competition and maintain your margins, why would you want to do so? Why "leave money on the table" as the expression goes?

More important is how does your customer react to your price? Does customer recognize your benefits and features justify paying more for your product than the competition's? If so, then by all mean price the product accordingly. Does price lower than competition leave customer with unfavorable image of your product? If all things are equal, how much of a discount will be necessary to win customer over from competition?

Before establishing a price for your product there are several elements you have understand. Every product has a variable cost and a fixed cost connected to it. The difference between these two and the selling price is the contribution the sale of the product makes to your bottom line and to your breakeven point.

Variable cost are the cost incurred with each unit of product sold. These include the cost of product itself, shipping cost, any preparation charges, sales commissions, etc. Fixed cost are the cost of doing business. These are such things as salaries, office expenses, depreciation, rent, insurance, etc. All the usual monthly expenses of doing business.

What you must do is establish what contribution to your bottom line will be made with each unit sold. This is the difference between your selling price and your variable cost. The formula is quite simple:

UNIT SELLING PRICE $1.00

-UNIT VARIABLE COST 0.60

CONTRIBUTION 0.40

This contribution, in this case $0.40 per item sold is what pays your overhead and any extra after you pay all overhead is PROFIT!

Next you must figure your Breakeven point. If you determine what your fixed expenses and variable cost will be, you can determine the number of units you need to sell to break even i.e. cover your fixed expenses.

FIXED EXPENSES= BREAKEVEN

CONTRIBUTION

$1 000.00 = 2,500 UNITS MUST BE SOLD
            $.40           TO BREAK EVEN

For every unit less than 2,500 sold each month, you will show a LOSS of $0.40. For every unit over 2,500 sold each month, you will show a PROFIT of $0.40. Not all that difficult, is it?

Now comes the real eye opener. It is extremely tempting to offer discounts to entice customers to buy. However, you must understand the effects of discounting on your bottom line fully before you give into to the discounting trap.

Using the example above, we have a product that sells for $1.00, contributes

$0.40 to the bottom line and in the example above I must sell 2,500 units to break even. What are the effects of a 10% discount on the above examples? Well, lets run through the numbers and see. We will discount it 10%, from $1.00 to $0.90.

UNIT SELLING PRICE $0.90

- UNIT VARIABLE COST 0.60

CONTRIBUTION 0.30

FIXED EXPENSES = Breakeven

CONTRIBUTION 

$1 000.00 = 3,333 UNITS MUST BE SOLD TOBREAK EVEN

$0.30 

Well, now you have to sell 3,333 units instead of 2.500 units to break even. What would the effects of a 20% discount be?

UNIT SELLING PRICE $0.80

- UNIT VARIABLE COST 0.60

CONTRIBUTION $0.20

$1 000.00 = 5,000 UNITS MUST BE SOLD TO BREAK EVEN

$0.20 

You now have to sell twice as many items just to break even. When you discount to promote sales volume you must be confident that you can generate enough extra sales volume to exceed higher breakeven. Or, if you are going to play the discount game, take it into account in the pricing in the first place. Try the above formulas using the same numbers except use $1.10 as the selling price. You can give your big 10% discount and guess what? your initial 2,500 units to breakeven doesn't change significantly. But your customer still gets their 10% discount. (Is that a real or a perceived benefit? Do you care, as long as you can maintain your margins and keep the customer happy?)

Placement.

Where does the consumer encounter your product? If its in your retail outlet Is your location consistent with your target market? Where in your store is your product place? Is it merchandised properly and attractively?

If its in other retail outlets, do you provide promotional displays that will attract attention to your product? Which other retail outlets are best for your product? Your market research about your customers should help you here. This can best be explained by the example of, believe it or not, panty hose.

When panty hose first appeared on the market they placement was the same as all hose, namely department stores. One of the 3 major hose manufactures decided to do some research and found out some interesting things about women and their shopping habits. At that time, they discovered, women were in a department store on the average of 3 times a month. The same survey reveled that the same women were in grocery stores an average of 2.7 times a week! Following the theory of placing the product where your customer can encounter it, they developed and egg shaped package launched the L'eegs product line and put the product in the grocery stores where the women were. The results was a dramatic increase in sales.

If your product is distributed by mail order do you reach customer by direct mail, newspaper ads, magazine ads, late night T.V. ads (Ronco, various record deals)? If you use print media, are the newspapers and magazine subscribers consistent with your target market? Obviously you probably wouldn't advertise $200 per ounce perfume in Mechanics Illustrated or power tools in Vogue.

Remember, convenience plays big role in placement. Domino's delivers. 7-11 and Circle -K markets are on convenient corners. And 1-800 phone numbers allow your customer to contact you at no cost to themselves.

Now there is a whole new field for placement that didn't exist until just a few years ago that many have access to and that is E-commerce and the Internet. The Internet and the World Wide Web offers new opportunities that were not available for business as recently as 3 years ago. You are no longer confined by location or the clock. With a telephone, a modem and easily learned computer skills you can be marketing your products WORLD WIDE 24 hours a day at very little cost. This phenomena is so important that it will be covered in a separate section of this presentation.

Promotion.

This is your marketing and advertising at work. How you deliver your message. It can be a advertising campaign, direct mail, presence at trade shows or speeches to civic groups.

Product life cycle.

Sales of new product grow steadily for a time, then plateau off for a time, then drop off as product becomes obsolete. It is important you have an understanding of where your product "fits in" on this curve. Different strategies are used depending on where you are. In the "Growth Phase" you are primarily concerned with establishing your name and expansion of your market share. Education of the customer is of prime concern. ("New Dawn Dishwashing Liquid cuts through the grease faster!")

In the "Plateau Phase" you are concerned about maintaining your market share. Keeping the customers is of prime concern as well as reacting to new entrants to the market. ("New and Improved Dawn Dishwashing Liquid, Now in Lemon Scented and Pine Scented")

In the "Decline Phase" you introduce new products to your mix while continuing to capitalize on the sales of the old product. (" Introducing Dawn Laundry Detergent! )

Positioning.

Which market niche will you fill? If you don't know, how can you possibly develop a marketing strategy that will be effective? This should be learned through market research. You must understand your customer as completely as you can so you can develop marketing plan that targets them. By defining your market, you will learn how to approach the market. You need to know as much about your target market's needs, attitudes, lifestyles, buying power, etc., as you can find out.

Marketing Plan

Now that you know all that you can about your product, competition, and target market, you can begin to bring it all together into a marketing plan. A well conceived marketing plan has three distinct elements: A marketing strategy, a budget and a creative plan.

Marketing Strategy.

Which benefit of product will you key in on? What price will you charge? What terms, if any, will you offer? What channel of distribution will you use?

Marketing Budget.

When starting a new business you have no name recognition and potential customers know little or nothing about your product or service. They MUST be told about it. Therefor when starting, it is necessary to spend more at the beginning than will be necessary later. There is no magic formula for determining how much of a budget is necessary to do the job. Industry standards are available in Standard and Poor's and from Robert Morris Associates. But remember the standards are only guidelines. McDonald's budget is only 2.2% of sales but 2.2% of multi-billions in sales buys much more than 2.2% of $200,000 in sales.

There are some common "formulas" you might try.

Percentage of Sales. This is the simplest method. You simply pick a percentage of estimated sales and dedicate that amount to your annual marketing budget. Its not a very scientific method, but in the initial stages of your new business it may be all you have to work with.

Unit of Sales. This method depends on knowledge of how much advertising it takes to sell one item of each product in your product mix. If you plan to sell $100,000 of goods and you know your product mix will consist of 800 of unit "A" sold and 200 of unit "B" sold AND you happen to know that it takes $3.00 of advertising to sell each unit of "A" and $5.00 to sell each unit of "B", then you can formulate your budget:

$3 X 800 unit "A" = $2,400

$5 X 200 unit "B" = $1,000

Budget = $3,400

Objective and Task. Usually used for a specific sales goal or special sale. You must make estimate of what it will take to move a certain number of units. This is what you spend on marketing. Note that both Unit of Sales and Objective and Task methods require knowledge of actual sales history. Thus they are more suited to business which is already established and has record of sales history. This is why keeping records of sales/marketing efforts is so important. It will help in making future advertising decisions.

Creative Plan

In the creative plan you determine how are you going to tell your customer about your product. You want that it's simple, memorable and conveys exactly the benefit you wish to stress.

There are certain elements of a creative plan that must be considered if it is to be successful.

The plan must have what is called Inherent Drama. That means you must focus on the reason people will want your product. Next you must translate the drama into meaningful benefit for the customer. Remember, people buy benefits, not features. Women buy good-looking hair, not shampoo. You must make it believable, stated it in such a way that it will be accepted without a doubt. Of course you must get people's attention. Most people do not pay attention to advertising but will pay attention to something that interests them. There is a danger here. Don't try to be too cute or else they will remember the ad but not the product. To be a successful plan you must motivate the customer to do something. Invite them in for a test drive, have them call for more information or visit your Web Site. You could have them clip a coupon or give them a free sample to try. Whatever you do, you must communicate clearly. People often give advertising half their attention. Before you actually spend much money on your creative plan, test your it on at least 10 people to see if their reaction is what you expect. If it isn't, the go back to the drawing board and rethink it.

MEDIA PLAN

Now that you have decided on your creative plan and have established a marketing budget, you must decide on what tools will you use to implement your creative plan. These could include things such as radio, t.v., Web page, newspaper and/or magazines, billboards, direct mail, handbills or doorknob hangers, brochures, yellow page ad, telemarketing, going to trade shows with an exhibit and specialty advertising.

There is no one "right" tool for all cases. You must decide, based on a through understanding of you target market and the constraints of your budget, which will be most effective in your own case.

How to buy media.

All T.V., radio, newspapers and magazines will provide you with media kit or at the least a rate card. Media kits contain a variety of information concerning the station or publication including a breakdown of the market reached, its location, and its demographics. Print media gathers its information from reader surveys while T.V. and radio usually subscribe to market research services such as Neilson, Arbitron or Birch. Be warned: every media will claim to be #1 in some target market but it may not be YOUR target market. With careful analysis of the demographic information provided in the kit, you should be able to make intelligent decision on when and where to place your media dollars.

The rate card gives the various rates charged for the different offerings including various "package deals." Be very careful concerning these deals. Some may be just right for you but usually they work in favor of the media. For example: In radio and T.V. you will usually find the best "deal"(i.e. lowest price) is for what they call a Run of the Station (ROS) schedule. This means they will play your ad at their convenience. You will receive a few good spots, but you will also get many more which play between 2 and 5 A.M.

Frequency and quantity of ads will also affect rate structure. Newspaper standard rates are always for what is called ROP (Run of Paper). Your ads will go where they fit them in. Special newspaper rates usually are for special editions or special sections that appear weekly or on holidays. Newspaper display ad rates are always based on the number of column inches used and the frequency of insertions.

Outdoor (billboards) rates are determined by the traffic counts at the board site, the number of boards used and the length of time the board is rented.

Media cost is best determined by comparing the Cost Per Thousand Persons Reached (CPM) for the various mediae under consideration. If a newspaper ad costs $250 and the circulation of the paper is 50,000, then the CPM = $5.00 per thousand. If a radio ad costs $250 and the listening audience during that time is 25,000, then CPM = $10.00 per thousand. In this example, on a CPM basis, the newspaper is definitely a better buy UNLESS your target market is more closely identified with the radio. If trying to reach teenagers, a pop radio station will usually get more attention than newspaper ad.

One of the problems with marketing with media is that while the CPM may be very low, you may be paying for people who are far outside your target market. If, for example, your target market lives within a 10 mile radius of a particular zip code in west Mobile, Alabama why pay for a t.v. ad that is on a station covering a 12 county radius of Mobile? The same could be said even for an ad in the Mobile newspaper which covers a 4 county area. You are paying for thousands who are not in your target market.

The CPM for direct mail may be much higher when you include the cost of the mailer, the envelopes, the mailing list and the postage and handling BUT you may be able to target your market even more selectively. Mailing lists are available commercially for an almost infinite variety of highly selective groups. For example you can get a list for doctors in general, for internists, for internist in a particular geographic area, for internist in a particular area with incomes above $100,000, etc. You can get mailing list that not only target down to a single zip code, but you can even break the zip codes down into carrier routes and target specific neighborhoods.

You must weigh the CPM against the target that the particular media will reach.

Media Scheduling

Timing of an ad is very important. You must take into account a number of factors in order to get maximum results. Is there a seasonal event you can key in on such as Christmas, Easter, 4th of July, Mother's Day, Father's Day, etc. What is the competition currently doing? What particular market segment do you want THIS ad to reach? If kids, aim for Saturday A.M. T.V.; If real estate, Sunday in late spring and late summer is prime time for that market. For men's goods, advertise on sports page except for Christmas and Father's day when the women's pages are more effective.

It is most useful to actually plan out events on a calendar to avoid overlapping campaigns and to remind you and staff of deadlines and when ads will actually appear.

Measuring Results

How do you know if your media campaign has been successful? Well, you must design ad with measuring of results in mind. You could use a coupon. You could offer discount for those who mention ad. In a retail environment you can compare store traffic during ad campaign to traffic prior to the campaign. You could track items sold during ad campaign vs. previous period without advertising. You could have a contest and count entries. Conduct in-store survey of customers and ask the obvious: "Have you seen our ads?", "Where did you see them?", "What did you like or dislike about them?". If you use direct mail, use a reply card with offer to send more information, such as a catalogue.

Of course the most accurate measurement of the success of any marketing campaign is simply did sales go up during and after the campaign as measured against tales prior to the campaign. If yes, then it was successful. If not, then you have to try something else.

Help Available

Library

There are a number of reference books available in the library concerning advertising theory. But more useful for finding the cost of ads is a book called STANDARD RATES AND DATA. STRD has two editions. One covers print media(newspapers and magazines) and the other covers electronic media(t.v. and radio). STRD contains rate cards and deadlines for all national media and most major local media. Librarian can also help you find information concerning industry standards for advertising in your particular type of business.

Media Sales Persons

All media sales people will offer help in producing ads if you buy the ad through them.

Manufacturers' sales reps can often help by providing prepackaged advertising material, and some manufactures will even co-op the media expense with you.

Advertising Agencies

Advertising agencies charge in one of, or a combination of, the following ways. Often they receive a commission from the media where they place the advertisement. Usually, they receive a 15% commission from the T.V. station, radio station or magazine. In other words you can buy the ad yourself for $100, they can buy it for $85 and will still charge you $100 for it. The exception to this is newspapers, which do not give agency discounts. On to of this commission, they may or may not also charge you an hourly rate for the time they have involved in servicing your account. If you have the advertising agency do any creative work for you, expect to pay even more.

Be sure you have a clear understanding of the charges involved before you have an agency work for you. They will often charge you for any work they do, wether or not you actually use their creative ideas.

It is important to remember that when dealing with an advertising agency, big is not necessarily better. Large agencies with many employees on staff have a considerable overhead they must meet and may not really be suitable for small accounts. Lets face it, a client paying them hundreds of thousands in commission are most likely to get the time and attention of their best talent. There are many talented smaller agencies available.

There are two types of advertising agencies. Most common is the full service agencies which will work with you from concept to creation and placing the ad. The other is called a Graphics Design Studio which will work with you on the concept and creation of an ad, but leave the placing of the ad to you. Unfortunately, the media will not pay you the 15% commission that they pay the full service agency for placing an ad.

By the way, don't overlook the large number of "free lance" graphic artist out there, many of whom work full time for agencies and design studios and will freelance on their own time. There are also many talented Desk Top publishers who will do layout and even some design work. Of course, if you have the time and talent, you can buy your own graphics programs and do your own on your own computer.

Elements of an Advertisement

Identity

This is your company or product name, logo, and slogan. It should appear in every ad.

Concept

This is the basic message and/or theme you wish to convey. In other words, what is it you want to say?

Production

How are you going to convey your message? A full-page 4-color ad? Who going to lay it out? How much are you going to spend?

Headline

This is the attention getter. It should be brief and to the point, such as: "For a limited time...", " Sale", " New 1999 edition now available"

Copy

Sometimes called the BODY of the ad, this is your story, in pictures or words or both

Illustration

This is the graphic elements of the ad. The photo or drawing of the product, etc.

Signature

Your name, location and, if you have one, your Web Site address. You must tell the customer who you are and where to find you. This seems obvious, but you cannot pick up a daily newspaper and not find an example of an ad that the signature was omitted.

E-Commerce

E-Commerce is a term used to describe marketing and sales over the Internet, or to be more precise, the World Wide Web. It is more than just having a web page describing your products. You must also have the means of transacting sales over the Web.

Very Brief History of the Web

The Internet originally designed by the Department of Defense in the mid 1 960's to enable communications in event of nuclear attack. To demonstrate the model, the DoD used it to link research universities and defense contractors so they could exchange information. The model was quickly adopted by government and universities. Originally, the net was text based, primarily used to transfer data files. In early 1 990's scientist at the Cern Physics Laboratory in Switzerland developed method of transferring pictures as well as text using a programming language called HTML which made the internet much more user friendly (point and click) and capable of being used on any computer. HTML gave rise to the World Wide Web, a part of the internet that used HTML protocol which allowed anyone to access and use the Internet.

It wasn't until the mid 1990's that the public began to experiment with business models using the web. Originally the model was business to business, linking manufacturers with suppliers. The big boost in development came in 1995 when the Federal Government began requiring all business transactions with the Federal Government be done over the Internet.

Retail sales over the internet didn't make significant gains until 1996-1997. In fact, it is still often described as the "Wild West" because ways of selling efficiently over the World Wide Web are still being developed.

E-Commerce Is still in its infancy but growing at an incredible rate. In 1996 sales over the Web were estimated to be about $450 million. By the year 2000 it will exceed $10 billion. Studies of e-commerce reveal that in 1998 there were approximately 16.8 million web users world wide who purchased at least once on-line. About twice that number used the web for information gathering...electronic window shopping if you will.. Then purchased the item locally. By the end of 1999 the number of purchasers is estimated to grow to 36 million And it is estimated that by 2002, 63 million will purchase regularly over the Internet.

A study of on-line retail sites showed that monthly sales during the 4th quarter of 1997 averaged only $13,000. During the 4th quarter of 1998, it had grown to $40,000. That is over 300% increase in only 12 months.

Currently, most businesses on the web are using their web presence as an additional tool to their overall marketing plan. In May of 1999, IBM reported that 25% of their sales were e-commerce. GM reports that they expect 25% sales via e-commerce by 2002. On the other hand, there are a few (1 in 9) that depend on e-commerce for 100% of their sales. Dell Computer sells $14 million a DAY on the Internet.

The majority of sales during 1998 were for items between $10 and $500.

As with any channel of distribution or advertising media, you must understand who is using the Internet before you can decide if you should attempt ecommerce. A study of several thousand internet users was conducted in the fall of 1998 and found the following statistics. 51 % of the net users were over the age of 35. 49% were High School graduates or less. This is up considerably from earlier studies. 58% had household incomes of LESS than $50,000 per year. This number was down by $10,000 from the previous year. Users were 55% male, down from 63% the previous year. Male users account for 64% of all internet buys during 1998. Conclusions: Internet demographics are changing rapidly and beginning to look a bit more like middle America. The fastest growing group during 1998 were females and those with less than a college education.

Just as important is who did not on the internet at this time. These include the rural poor; rural and inner city minorities; Young households under age of 25 and female headed households.

In the very short term, the internet is still a middle management, relatively affluent, male dominated market. This should change by the end of 1999.

Just as important as who is on the internet, you must understand how they get to the internet. This has a major impact on how you will design your website.

It is projected that by 2005 there will be 206 million dial up connections to the internet. This means the vast majority of people are and will continue using modems and phone lines. It is estimated that by 2005 there will only be 17.5 million permanent connections to the internet. These are any connections not using a modem. The issue here is access speed. Although a 56K modem is standard now with new computers, 64% of all modems in use are 33.3 k or slower. This has a major impact on the amount and type of graphics, sounds files and video clips you can incorporate into your site. The more non-text "bells and whistles" you add to your page, the slower the page loads. The slower the modem used, the slower the page loads. Speed is the all encompassing issue for internet users of all demographics.

To understand this, we must look at studies of how people VIEW the Internet. The "average" user in the study spent about 17 hours a month on-line. These 17 hours were allocated over an average of 29 sessions per month. Each session was about 35 minutes. During each session, the users visited and average of 37 web pages. The duration of each page view was only 57 seconds.

Remember the speed we just discussed? This is where it impacts you design. If you page is loaded with large graphics, fancy java script files, sound files and so forth and the potential customer is connecting to the internet with a 33.3 k modem, it may take your page 35 or 40 seconds just to load! That means you have only 17 seconds to "hook" the viewer with your message. In actual practice, most viewers will not wait 40 seconds for a page to load...they will simply click and go somewhere else.

Are advertising banners that pop up as your page is loading effective? 375 were viewed monthly by the study group. But only 1 out of a hundred banners viewed were clicked on.

Another note about allowing advertising banners on your page. The whole purpose of having a web site is to have people view what you have to say. The whole purpose of a banner is to have people click on them and go to another site! Why go to all the trouble of designing a site only to give the potential customer an easy way to leave your site??? Sure, you get paid a penny or two every time someone does click on the banner, but you also loose the potential customer (and probably the sale).

How do potential customers find you on the web? Primarily its through search engines such as Alta Vista, Lycos or Yahoo! Search engines find you because you register your page with them. Look at the bottom of the search engine web page at it will say "Add URL" or "Add a page". Click on this sometime and it will tell you everything you need to know about how to do it. There are also services on the web that for $35 to$75 will register your page for you with a number of different search engines.

People also find your site because you give them the address. If you set up a web page, make sure the address is on your letterhead, your business card and in every ad you place with any media. Shout about it...don't keep it a secret.

Why are some people reluctant to use the web for purchasing? Many fear that somehow if they give a credit card number over the internet, someone will get a hold of the number and go on a buying spree. This is a perceived fear and, in reality, a myth. While technically possible it has almost never occurred. Have you ever been to a restaurant and given your credit card to the waiter? How do you know he doesn't run off several copied of your charge?? You don't. But even if it did happen, you are responsible for only $50 of charges by law and in many cases even that will be waved by the credit card company if you tell them it is a false charge.

While it is technically possible to design a program that will monitor the billions of packets of information flowing over the internet at any given moment and intercept number series that may or may not be a credit card number, it would probably be easier just to hack into MasterCard's computer and download several million active credit card numbers. (This actually happened in 1997)

Myth or not, perceived problem or actual problem, some people will simply not buy over the internet using a credit card. This doesn't stop Dell Computers from selling $14 million a day over the internet using credit cards, don't let it stop you. If nothing else...have a 1-800 number that they can call and read the card number to you.

Many people prefer to touch, feel and try things on before they buy. Not much you can do about that except not worry about them. The catalogue industry is a multi-billion dollar industry and they have the same problem. Some people don't like buying on the internet because they wand to talk to a real person and ask questions. Well...there another reason to have a 1-800 number. Some feel they didn't get enough information to make a decision. That is your fault! You must design your web-site with multiple layers of pages, each giving more detailed information about the product. Many feel the buying process is too complicated. It shouldn't be anymore as there are a number of pre packaged "shopping cart" programs on the market that should take the hassle out of buying. Some object by saying the web site is complicated, confusing and hard to navigate. Well, you may again have a design problem. This is fixable.

However, probably the biggest reason people don't buy on line is that they don't have the opportunity! Most retail web sites are actually simply internet billboards and never ask the customer for a purchase or present them with the opportunity to buy on line.

Worst of all situations is finding that product information is out dated. If the product is out of stock, remove it from the page or at least note the situation on the page and give expected date that it will be available.

Successful e-commerce sites are those that have developed a total e-commerce solution. They show the product, give information needed, make ordering the product easy and can process the credit card purchase immediately. If your page doesn't do all this, you are missing sales.

So, what is currently selling on-line? By dollar volume:

• Financial Assets Management (stocks, mostly)
• Computers and associated equipment and software
• Travel
• Sex (sex always sells)
• Insurance
• Books
• Music
• Cars
• General retailing
• Online games

Despite what was earlier said about people who NOT buy on the internet because they don't want to give out their credit cards, 80% of those who DO buy do indeed use their credit cards.

Business to Business usage of the internet may be even larger than retail ecommerce. Business are using corporate web sites for a variety of other reasons than sales. Most has to do with business to vendor communications or customer service. Printers and advertising agencies are using the internet to exchange proofs of their work with clients for approval

Summary

The key to any successful marketing plan is understanding your target market. To do this, you must understand the demographics of users the media you are using. When designing a web page, keep it fast, easy, fresh and relevant. Not a bad idea to remember in ALL forms of marketing.

In all forms of marketing, constantly monitor the competition.

In any form of marketing you cannot expect overnight results. Remember, you must have a plan and be committed to it. Give it time to work. The marketplace is constantly changing, so get used to it. The Internet is changing even faster, so stay abreast of what going on. Whatever the marketing you decide to use, remember you have to work it!

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