TACTICAL SOUP WON’T CURE MARKETING WOES

SoupMotivational speakers Jack Canfield and Mark Hansen created an entire industry with the 1993 introduction of their Chicken Soup for the Soul book series. They have since sold over 100 million copies, and inspired countless authors of every genre. A recent search of Amazon generated 35,024 hits of titles beginning with “Chicken Soup for the.” One could easily get the impression soup has magical powers to cure just about anything.

However, there is one soup not good for anything except unnecessary costs and market failure. That is a steaming bowl of tactical soup. What is tactical soup? Princeton, NJ consultant Gordon G. Andrew describes the recipe this way:

“Tactical Soup occurs when firms get bogged down in a flurry of marketing activity without placing enough emphasis on how it will help generate revenue and profitability.”

Tactical Soup is served up regularly in businesses where activity is too often substituted for results, where the urge to “early adopt” the latest craze eagerly overlooks cost-benefit analysis, and where the rush to hop on the current media bandwagon precludes any thought of whether your target market is similarly enamored.

To squander limited marketing resources in a valueless caldron of tactical soup is a recipe for disaster. It can be avoided by asking three simple questions:

  1. Where will I find my market?
  2. What is the total cost of the proposed marketing tactic?
  3. What incremental sales volume is necessary to justify the cost?

Marketing is about connecting with the right audiences in whatever communication channel they select, always a moving target. There was a time when most audiences were found through ads in the Yellow Pages and the Sunday newspaper. Finding new customer prospects today is far more complex, and depends on demographics such as age, sex, income and education levels.

Question 2 is the easiest, provided indirect and allocated costs (such as the hours someone devotes to maintenance and updates) are included with the initial design costs, monthly hosting and other recurring expenses.

The final question requires a basic understanding of your cost structure. While cost accounting is too complex to explain here, of primary concern in implementing marketing tactics are the average gross profit (sales price less cost of goods sold) and what volume of sales can be expected from new customers. A product or service with a $100 gross profit is cost justified at a much lower new sales volume than one with a $3 gross profit. Likewise, a service that typically enjoys 6.3 sales per customer supports a higher marketing budget than one where repeat sales are negligible.

Answers to these three simple questions will provide the focus, discipline and accountability to maximize return on marketing efforts and avoid the waste and disappointment of tactical soup.

© 2014 by CFO America, LLC

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CFO America reaches 50,000 views on SlideShare

CFO Amer logoCFO America has exceeded 50,000 views on SlideShare.

Launched three years ago, CFO America’s profile page currently features 28 presentations available on the web based hosting program. Over 85% of the presentations have received in excess of 1,000 views.

Topics include strategic planning, cash flow optimization, financial modeling, risk management, customer service, marketing, and many other business topics. All are available for unrestricted download.

Launched in late 2006, SlideShare is similar to YouTube, but for slideshows and “Zipcasts”. The most popular formats are PowerPoint, pdf and OpenOffice. The LinkedIn subsidiary receives approximately 58 million visitors per month.

To view CFO America’s SlideShare articles visit http://www.slideshare.net/CFOAmerica.

 

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