Tag Archives | marketing

Marketing Fraud

See also:
Intangible Assets: Protecting Your Brand and Reputation
The Red Flags of Fraud
Dealing with Employee Fraud
Marketing Plan
7 Warning Signs of Fraud
Marketing Mix
Protect Yourself: A Guide to Non-Compete Agreements
Does Your Business Need A Financial Audit?
Becoming a Smart CEO

Marketing Fraud Definition

The marketing fraud definition is the false promotion of a product or service and/or the making of false claims. Some of the most common forms of marketing fraud is selling authentic versions of a product for it to only be an imitation or knock-off brand. This issue of false advertising led to the famous expression, “if it’s too good to be true, it probably is.”

Mass Marketing Fraud Explanation

There’s a significant difference between marketing fraud and mass marketing fraud. The US Department of Justice defines mass marketing fraud as “any fraud scheme that uses one or more mass-communication methods – such as the Internet, telephones, the mail, or in-person meetings – to fraudulently solicit or transact with numerous prospective victims or to transfer fraud proceeds to financial institutions or others connected with the scheme.” Marketing fraud can occur anywhere as it doesn’t need to reach a massive amount of people for people to fall for it. But mass marketing fraud is typically hosted on a web-based platform (email, telemarketing, internet, etc.).

Examples of Marketing Fraud

Some examples of marketing fraud include exaggerating claims, false advertising, and misrepresenting the product. Although it is sometimes difficult to see your own company’s marketing fraud,  it is easy to identify other company’s participating in this fraud. Ever seen a commercial for the next supplement that will magically loose weight? If you pay attention to what they are saying, then you may find that they do not mention medication, prescription, FDA, etc. All you hear is about the results, the method, and how taking it will give you six pack abs.

How to Prevent Fraud in Your Marketing

When a company deals with marketing fraud, there are a myriad of issues that stem from it. Some of those consequences include bad reviews, customer backlash, lawsuits, and even prison time depending on the severity of marketing fraud. Needless to say, your company needs to have processes in place to prevent fraud in your marketing because it can have financial repercussions. As the financial leader in your company, you need to know know what marketing fraud looks like and how to flag it if it’s happening in your company.

Know What Marketing Fraud Looks Like

Before you can prevent fraud in your company, you need to know what marketing fraud looks like. It can come in the form of overnight engagement sensation on social media, significant boosts in traffic or followers, and emails made to look like they are coming from someone else. For example, a company that uses social media heavily got 20,000 more followers in a day. That company also saw a 400% increase in comments (and those comments all raved about the product being sold). Although some companies may naturally experience this, you may want to look at the quality of followers you have and if they are even real. Unfortunately, some marketers manipulate the analytics to please the financial leader. But that is fraud.

Flag That Company

If your company is dealing with marketing fraud, then it is destroying the value of your company. But you do not have to continue in old habits anymore and can remove those “destroyers” of value in your organization. Download your free Top 10 Destroyers of Value guide to avoid letting the destroyers take value away from you.

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The Hooter Meter: Main Street’s Economic Indicator

On Thursday, natural gas prices hit a 17-year low. Ouch…

We often talk about how to manage your company and the best way to judge what the economy is doing. One of the simplest (and most often overlooked) things to do is to look beyond what’s right in front of you to the hints the economy has left behind.

Main Street’s Economic Indicator

Confession Time…Hooters_logo_1983-2013.svg

About once a month, I go to Hooters because I genuinely enjoy their wings. I love Hooters! (but don’t tell my wife)

The last time I went, I noticed that the Hooters girls were out in the parking lot with hula hoops rather than inside the restaurant serving.  Were things so bad that they had to pay employees to hula hoop in the parking lot as a marketing plea for people to come and eat at Hooters?

“How’s business?”

As an entrepreneur, I’m always curious about how other people view the economy.  My favorite question to ask people is, “How’s business?”  When I put this question to my waitress, she told me how sales had slumped and the restaurant’s business was slow, hence the hula-hooping waitresses.  Not surprising given the number of layoffs in the energy sector over the past 18 months.

What I learned through observation (strictly in the name of economic research, of course) and talking to the people on the ground was that the economic crisis had made its way into other industries.  Something I had expected, but my new economic indicator, the “Hooter Meter”, confirmed it.

Halliburton just announced 5,000 more layoffs this past week. Many other oil & gas companies are struggling to maintain their economic status in the industry. If I had just chosen to eat my wings and watch the game, then I would have had little indication that restaurants are now struggling.

In management 101, we learned to walk around and talk to employees before making big decisions. You can apply the same technique to the economy.  When visiting clients, I always ask my standard question: “How’s business?” Often, a client will start talking about how the economy is making business rough and how they are beginning to struggle… or I get a shrug and “it’s good” to avoid further discussion.

(Have you read our recent blog post: Mistakes in Troubled Times? Click here to read more about how you might avoid making mistakes within your company.)

Economic Indicator: Monitoring the Economymonitoring the economy

Although economic indicators are important tools that can and should be used, the extent of their effectiveness is limited. As the financial leader of your company, you must be able to walk around outside your business to observe your external environment. How is the economy affecting your community? Your suppliers (upstream and downstream)? Your customers?

(You can see all of the economic indicators provided by the US Census Bureau here.)

The Strategic CFO often coaches and consults with oil & gas companies. Many of Hooters’ customers work in the oil & gas industry.  By observing the affect of the economy on Hooters, I’m better able to prepare my company to be adapting to the changing economy.

Be an Effective Wingman

A CEO needs a financial wingman who can observe the economy and how it affects the company. The goal of this is to be able to react and prepare the company for anything. One of the ways you can achieve this is by doing what entrepreneurs do: keep your eyes and ears open for non-traditional economic indicators.

(NOTE: Want more tips on how you can be a trusted advisor? Check out our whitepaper How to be a Wingman!)

Wikipedia says this:

The wingman’s role is to add an element of mutual support to aerial combat. The presence of a wingman makes the flight both offensively and defensively more capable by increasing firepower and situational awareness, permitting the attack of enemies, and increasing the ability to employ more dynamic tactics.

With fewer professional jobs being available due to the recession, it’s important to provide the best advice to your CEO to prove your value. Financial people are often seen as overhead, but if they are able to provide insight (even if it’s found over Hooters hot wings),  they will be better able to create value.

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If It’s Always On Sale, Is It Ever On Sale?

When you walk into a shopping mall, what do you see? I see sale signs everywhere! How could a company ever make money if its products or services are always on sale? 50% off, buy 1 get 1 free, 70%… It never ends.always on sale

Have you wondered if it’s always on sale, is it ever on sale?

Marketing in Action

Organizations such as Checkbook.org compare the regular price, lowest sales prices, etc. to the public. This non-profit organization has studied companies (especially in retail) to shed light to how those businesses are always advertising sales.

Truth is, we’re all suckers for a good sale. The way marketing works is that they tap into expressing a higher value for a product for a cheaper price. AND it works! If you see a shirt that’s on sale for $15, having been marked down from $45, you’d probably think that’s a great deal. You’re a winner. But what if I told you that that shirt, priced at $45, was produced at $5? At that cost, you’re looking at a 200% profit margin for one T-shirt on sale. And you’re going to buy it because you didn’t have to spend $45. They made you feel that you’re getting a valuable deal. And the next day, this particular store takes 10% more off, giving you an 80% sale.

If It’s Always On Sale, Is It Ever On Sale?

Now, this example might be a bit extreme. But if something is always on sale, is it ever on sale? This type of selling has been known to be very profitable and effective. Consumers believe that they are getting a good deal on a product or service if the percentage off is high (20-80%).

Bucking the Trend

One company decided not to be “always on sale“… with disastrous results. After the 2008 recession, JC Penney’s new CEO, Ron Johnson, made some radical changes in how the company was going to move forward. The company was struggling to find its identity in the competitive world of middle market retail.  Johnson decided that rather than their usual practice of offering an item for $100 only to mark it down to $50 a few weeks later, the store would offer no discounts but would price all its items at what it called “Fair and Square Everyday Pricing”.  The everyday low prices strategy offered the product for less than the initial $100 offer, but slightly more than the $50 sale price.

The problem?  JC Penney’s customers had grown accustomed to discounts and sales prices and went elsewhere when none were offered.  The store’s efforts to attract new customers with it’s simpler pricing policy were a failure as well resulting in decreased sales to the tune of $1 billion.

Want to learn how to price for profit while still catering to your customer’s needs? Click here to download our free Pricing for Profit Inspection Guide!

Pricing could be seen as a form of psychology. People are willing to spend up to a certain point on a product. Johnson failed to see the psychology behind pricing and completely disregarded his customers.

Know Your Customer

This is Marketing 101. Know who your target customer is. What’s the easiest route to obtain and hold on to that customer? Look at marketing’s 5 C’s: customers, company, competitors, collaborators, and context.

  • Are you addressing your customers’ needs?
  • What are the limits of what your company can do to fulfill a customer’s needs?
  • What are your competitors doing?
  • Is there a business that through collaboration could reduce your cost of goods and overhead?
  • What’s going on in the world that’s impacting your business?

JC Penney wasn’t addressing its customers’ needs; therefore, the company lost much of its customer base. The company was also implementing new products and services within the store. Because they didn’t have the capital to execute, JC Penney had to seek additional capital to implement the plan. Competitors  were selling at a lower cost with higher quality material. JC Penney’s customers began flooding to those competitors.

Shipping through Amazon, hiring temporary staff, and so many other strategies could have been implemented through collaboration with another company. JC Penney was implementing a completely new business strategy after the 2008 recession when consumers couldn’t really afford to spend a lot on new clothes.

Target Your Customer

This is your playing field. Focus only on this customer base. Your marketing department is most likely enthusiastic to reach every type of customer through one product. It’s better if you sell to 90% of 100 people than 30% of 300. Why? If you’re only focused on that niche market, then those customers are going to be more loyal to a company that is solely focused on their needs.

Whole Foods and Walmart do an excellent job of targeting their customer. Whole Foods caters to the middle to upper class that desire healthy, organic foods. Their target customer is willing to pay a premium price in order to get a quality product. Whole Foods doesn’t try to target Walmart’s target customer. Walmart caters to low to middle income people who aren’t particularly concerned with the quality of a product, but are looking for the best price. If Walmart were to start selling premium products for a Whole Foods price, Walmart’s customer might be hesitant to continue shopping there for fear that all prices might increase.

If you’re like JC Penney targeting middle-class families, your prices should match what your target customer would be willing to pay for a product or service. JC Penney failed to target their customer because they were only looking at their bottom line.

Price for Profit

If your company is constantly having a sale, are you actually making a profit? It is imperative that you examine your results to monitor if these sales are working and how they are impacting your bottom line.

You should be able to price at a point where you would be profitable. Oftentimes, we analyze the revenue, the big flashy sale signs, and how well the sale is doing. But what if you hosted a sale that didn’t allow for you to make a profit?

Looking for how to price for profit?  Click here to download our free Pricing for Profit Inspection Guide!

Regardless of whether your company is hosting a 20% off, a BOGO, or an 80% off sale, you can still price your products to give you the return you need. JC Penney did a number of things wrong in addition to missing their target customer, but in the end it led to the firing of the CEO and a lengthy recovery period that some still say they aren’t quite through. They didn’t price for their target customer or price at a point that would return a profit.

To make sure that you’re setting your prices at a profitable level, check out our Pricing for Profit Inspection Guide here.

always on sale

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Preparing a Loan Package

See Also:
Can Factoring Be Better Than A Bank Loan?
Loan Term
Prepare an Investor Package
Good Budgeting Processes
What the Banker Wants You to Know
Does Your Management Team Understand the Financials?

Preparing a Loan Package

Knowing the process of preparing a loan package can be one of the most resourceful tools for business owners. Many feel loan package preparation is overwhelming and even frustrating if you are unsure of what to include in the loan package. Knowing the right time to apply for a loan to help grow or sustain your business is very important when planning your financial future; however it is only a part of the whole. The other piece of this puzzle is familiarizing oneself with the loan package requirements in order to secure the loan.

In the Lender’s Shoes

Before we consider the details of organizing a loan package, let’s put ourselves in the lender’s shoes. What would be some of the risk factors needing to be addressed before lending money to this particular borrower? This person will ultimately have to sell you on the idea that their business is worth investing in and the return on their investment is worth those risks.

After they have sold you on this idea, now it’s time to discuss the terms and conditions of the loan they are requesting. This is where the question of “how much” is answered and the repayment plan is offered.

Lastly, being that we are all so busy, time would probably be of the essence. Therefore, it would be very important for them to cut to the chase when convincing you that this investment you are making into their business is a win-win relationship for both parties. In short, in order to prepare a loan request, it is important to have a thorough presentation, but in the same manner getting to the point of the matter is essential.

Thus far, we have covered a general overview of preparing for a business loan. Now let’s get into some of the details of the documentation contained in the loan package.

Loan Package Template

1. Loan Request
2. Description of Company
3. Product and Services
4. Marketing Plan
5. Operational Plan
6. Management and Organization
7. Financial Plan
8. Appendixes

This template is the skeleton for the body of content needed when it comes to knowing how to organize a business loan package. It is an excellent guide regardless of the reason for the request. It does not matter where you are in the development of your company, be it start up, looking to expand, or wanting to improve on the sales and services. Seeking outside funding is a key part of that process. Answering the questions of “where do I go to get the money needed” or “when is the right time to apply for a loan” serves as a non-issue with most owners or CEO’s. However, the answer to the question of “how do I prepare a loan package” is not as obvious.

Loan Request Outline

The loan request outline included in this article will definitely get you started and moving forward on the right track. However, keep in mind the three main points:

1. Sell your Company
2. Discuss the Payback Plan
3. Time is of the Essence

For more tips on how to improve cash flow, click here to access our 25 Ways to Improve Cash Flow whitepaper.

Preparing a Loan Package
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1

Marketing Your Company using WikiCFO

Getting Published in Today’s Environment

Getting published in newspapers, magazines and books is an effective way to market your company. Unfortunately, with newspaper circulation declining and the use of syndicated columnists, it is difficult to publish your company in your local newspaper. If you can get two articles a year published, you are way ahead of the crowd! To increase your odds of getting published you may hire a public relations consultant. They are well worth the money! Speaking of money, it will probably cost somewhere between $5,000 to $10,000 for their services.

Marketing Your Company using WikiCFO

In addition to your efforts to get published in the local newspaper, start marketing your company using WikiCFO to increase the frequency of your marketing efforts using published articles. Below are three ways to use your best practice idea to market to your client.

Obtain a Free Link To Your Web Site

You can increase your ranking in the search engine results by increasing the number of other web sites pointing to your site. Search engines (Google) have proprietary algorithms to rand web sites in importance. There are two primary ways you can optimize your search engine results. The first way is through improving the text and key words in the context of your site. The other way is to increase the number of web site links pointing to your site. By writing best practice ideas you get a free link for a period of time to your site.

Email the Article to Your Client Base

Another way to market with WikiCFO is to email a link to your article to your list of email contacts. The easiest way to do this is through Microsoft Outlook. In your email, highlight the fact you were recently published in WikiCFO.

Steps involved:– set up a broadcast email in Outlook – open WikiCFO and log on to your article – copy and past the link from your web browser onto the body of the email in Outlook

Mail the Article to Your Customer Database

For a subset of your marketing list you should follow up with a printed copy of your article. In addition, you should include a note asking for their business or referral.

Marketing Your Company using WikiCFO

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Marketing Plan

See Also:
Marketing Mix (4 P’s of Marketing)
Marketing Your Company using WikiCFO
Compensation Plan
Strategic Planning Process
Action Plan

Marketing Plan Definition

The marketing plan definition is the plan to cultivate and harvest demand for the products of a business, and it is part of the business plan. A marketing plan outlines answers to the question who, what, where, how, and why will the company market and eventually sell products.

Oftentimes, the CEO comes from a marketing and sales background. It’s your role as a financial leader to be the trusted advisor to your CEO and help them take the marketing plan to an action plan. Click here to read our How to be a Wingman guide.

Marketing Plan Explanation

A marketing plan, explained as the plan which leads to sales in a business, holds a depth of knowledge. Marketing plan assumptions involve 6 parts: establishing a target market, marketing tools used to communicate with this group, the price of the product in respect to the expectations of the customer, where it will be sold, and any incentives applied to the product. Though this is a simplification, actual plans at least answer these questions. Additionally, they establish a marketing plan budget and schedule for execution.

Marketing Plan Format

The marketing plan format is not the same across businesses. Each business will have to create a marketing plan which suits their time, skill, and budgetary constraints. For example, an e-commerce store will use marketing tools specific to the internet. Pay-per-click advertising, search engine optimization, sponsored product reviews, perhaps free webinars, social media websites, and a slew of more traditional tools will fit this business well.

In contrast, a CPA firm will use quite different methods. Informational seminars, direct sales, networking, event sponsorships, print media in specific publications, broadcast media, and a variety of other tools will expand the customer base of this business.

While neither example will probably use billboard advertising, smaller differences are also present. For example, an e-commerce store could be quite successful in offering coupons and other price promotions. On the other hand, how would you feel if your CPA offered discounted services? In comparison, how would you feel if you received a discount on your fees for referring another business owner to your accountant? Even in a single marketing tool, minor differences make a major effect.

Hire Trained Marketers

When thinking about marketing, it is best to hire a trained professional. While many can not afford this, trained professionals know how the industry works far better than an outsider looking in. One will make sure to find a marketing consultant or firm who has an expertise in their industry. With a little research, great success can come from the investment of time and money.


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Marketing Plan Example

For example, Eduardo is the owner of a nail salon. Having experienced some growth, Eduardo wants to take his business to the next level. He sees the first step of this to be writing a business plan. He is now on to writing the marketing plan.

Eduardo knows that customers like his products. Now, he needs to answer other questions. Eduardo arranges for a survey to be done in order to find out what customers are willing to pay for his services. Once he has done this, he considers marketing tools. Eduardo comes up with many ideas, the most valuable being to offer his location for networking events. During this, professional women will talk while getting their nails done. Eduardo answers other questions. Am I in the best location? What other tools will I use? Am I currently targeting the correct market? What service expectations does the customer have?

Situational Analysis

Eduardo is able to finish his marketing plan with situational analysis. Months later, Eduardo is experiencing great success. It seems a little planning has gone a long way. Eduardo can not believe that he did not create a marketing plan sooner. Still, he understands that it takes time to achieve greatness. As long as he continues to put in the time, the sky is the limit for his business.


If you want to learn how you can be the best wingman to your CEO, then download our free How to be a Wingman guide!

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1

Marketing Mix (4 P’s of Marketing)

See Also:
5 C’s of Credit (5 C’s of Banking)
Economic Production Run (EPR)
Economic Order Quantity (EOQ)
Market Segmentation
Porter’s Five Forces of Competition
Strategic Planning Process

Marketing Mix 4 P’s Definition

The marketing mix 4 P’s is a method for marketing a product. This is based upon the type of product, the price, where the product should be placed, and the promotion of that product.

Marketing Mix (4 P’s of Marketing) Explained

The marketing mix can best be explained through 4 P’s modeling. Each of the marketing mix components will be discussed in full below:

Product

The first of the 4 p’s is the product itself. The product itself has several decisions that need to be made about it. For example, the brand image and styling of the product have a lot to do with how the other three of the 4 Ps decision making is made. Other factors that go into the decision making of the product are whether or not a repair or warranty agreement should be offered. The ipod has a one year limited warranty that comes standard with the product’s purchase. This was a decision that was made by Apple when it brought the ipod into the market.

Price

The price of a product is sometimes made up before without much consideration for some products usually in a low cost high volume industry. Often times a simple margin over the cost to produce the product is all that is sufficient. However, some products require much more attention. Niche products such as in the fashion market require a lot of attention in pricing. A product that is priced higher will be considered to be of higher quality or possibly rarer.

Placement

The placement of a product is another important aspect in marketing mix strategy. If the product is in a niche market then it should not be as readily available as most low cost products like you would see in Wal-Mart. The logistics are another important factor and can affect the pricing as well. Dell has a just in time inventory system where the parts are not ordered or assembled until an order is made. This means that the pricing is lower, but the benefit of having computers on display in a store is not available.

Promotion

The promotion of a product also says a lot about the product in hand. If it is a niche product you would not want it to be seen on televised marketing commercial. You would much rather let the brand image or have it promoted in an expensive magazine. You also want your product to target the demographic in which the company believes the product will sell the best.

Marketing Mix Example

Charm Spice is a product that specializes in men’s products from body wash to deodorant. The company sets itself apart from the competition by pricing its products slightly higher, and putting better quality materials into its product. The company also places its products in grocery and drug stores where the majority of these products are sold. In addition, the company has decided to launch a campaign to promote its different products in the market as a premium brand in men’s health care products. All of these factors were used to enable the company’s products to be as successful as it could be.

Learn how you can be the best wingman with our free How to be a Wingman guide!

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