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Benefit from Strategic Thinking

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A typical marketing plan has two major parts. The first
is a statement of what you are going to do, and the second describes how you
will do it. Your task is to create the optimum combination of strategy and
action that will achieve your objectives. And that depends on your ability to
apply strategic thinking.

The interaction of marketing planning and strategic
thinking is demonstrated in the following example, beginning with the
understanding that marketing objectives evolve from your financial objectives.
For instance, if you want to earn $100,000 in profit and your target profit
margin is 10% on sales, then you must set a goal of $1,000,000 in sales revenue.
With an average list price of $14.95 on a book sold through a distributor
discounting sales at 65%, you would receive $5.23 per sale. Therefore, you would
have to sell 191,205 books to generate $1,000,000 of revenue.

If last year you sold 145,000 books, then your unit
sales would have to increase by 32%. With this in mind, your goals would read:

  • Achieve total sales revenue of $1,000,000 by
    12/31/2002.

  • Increase unit sales volume by 32% to 191,205 over the
    planning period.

Now the challenge becomes a quest to find out what you
can do to reach these targets. This can be done through strategic thinking, the
process of creating new approaches to implementing your marketing plan and
matching them to your skills, resources, and changing market opportunities. Such
a practice is most easily accomplished by dividing your thinking into the four
arenas of marketing.

1.  Product-line planning. If you can change the
content of your product line, you may spread the unit sales projections out over
more titles. For instance, you might publish a new title with a list price of
$16.95 or add a video program for $39.95. Or you could lower your price on some
items by introducing a series of booklets for $2.95 each.

2.  Pricing. Some book-marketing pundits would
have you price your books by multiplying your printing costs by 7 or 8. With
this formula, a print run of 1,000 copies could be priced much higher than for
5,000 copies of the identical book sold by the same distributors to the same
markets. Costs should have some bearing on your ultimate price, but not as much
as value, distribution discounts, competitive issues, and market need.

3.  Distribution. Your selection of distribution
channels has more impact on your bottom line than almost any other decision you
will make. There are four basic distribution strategies from which to choose:
(1) indirect marketing, (2) special sales, (3) direct marketing, and (4) some
combination of the other three.

Indirect marketing employs a reseller that
purchases books from you and resells them to the ultimate buyer. Of course,
there is the traditional system that utilizes all or some portion of the
distributor — wholesaler — bookstore arrangement. But indirect marketing also
makes use of intermediaries in non-traditional channels such as warehouse clubs,
discount stores, and supermarkets. Most publishers employ indirect marketing,
but many don’t use it for non-traditional outlets.

Special sales, which can be considered a subset
of indirect marketing, also entail selling to someone other than the end user.
This has come to be the descriptive phrase for sales to corporations,
associations, and organizations. Special sales include niche marketing to
specialty stores related to your titles’ topics too (i.e., such places as
museums, car dealerships, hair salons, health-food stores, etc.). Sales to
catalogs and book clubs also fit into this category.

Direct marketing occurs when you bypass a
distribution network and deal directly with buyers. This technique involves
selling through direct mail, telemarketing, e-mail, personal presentations, or
via your Web site.

4.  Promotion. The promotion mix that you employ
is influenced by your distribution choices and your decision to use a push or
pull strategy. Push marketing is directed to the members of your distribution
channel. Pull marketing drives readers to seek your titles in retail outlets.


Promotion Activity

Push Strategy => Publisher => Distributor => End
User


Demand =>



Promotion Activity

Pull Strategy <= Publisher <= Distributor <= End
User


<= Demand 

A balanced promotional mix should contain a combination
of push and pull. For instance, you might provide your distributor’s sales
people with promotional devices or literature. You could also exhibit at Book
Expo America (BEA) or at regional booksellers’ shows, informing retailers of
your special offers (two-for-one deals, free shipping, etc.). At the same time,
you could arrange print publicity and appear on television and radio shows to
drive the general public to the outlets selling your books.


Find a New Path
 

Now that you have evaluated alternative ways to reach
your objectives, it’s time to organize all your strategic thinking into a
proactive marketing plan. For example, if you have a line of titles related to
careers, then your path to success might resemble this:

Product/Price decisions.  Publish one new title
at $16.95, a video about job interviewing for $39.95, and a new line of
job-search booklets with a unit price of $2.95.

Distribution decisions.  Segment your markets
into niches with different needs for career information. The resulting combined
distribution network would reach the general public through bookstores and
libraries, and college students, corporations, and state governments through
direct marketing.

Promotion decisions.  Balance your promotional
mix with both push and pull marketing activities. First, schedule appearances on
television and radio shows to drive people to bookstores and your Web site. Then
contact Career Placement Officers, parents of college students, corporate HR
executives, and state unemployment offices through direct marketing and personal
presentations.

Although the total revenue goal remains firm, your path
to it has changed. With your new average selling price of $15.95 (one title at
$14.95 and one at $16.95 nets $5.58 per sale), you could actually sell fewer
books than last year to reach the same revenue. And if you plan to sell 5,000
books to colleges and corporations, 4,000 videos to parents of college students,
and 50,000 booklets to colleges, state governments and corporations, your new
objective would read:

  • Achieve total sales revenue of $1,000,000 by
    12/31/2002 by reaching these unit sales volume targets:

110,000 books  @ $5.58 = $613,800
5,000 books  @ $15.95 = 79,750
4,000 videos  @ $39.95 = 159,800
50,000 booklets  @ $2.95= 147,500
169,000 units $1,000,850

 

This strategy offers many benefits, including a broader
base for generating revenue in terms of product selection and customer segments.
In addition, it will reduce your reliance on bookstore sales. Profit as a
percentage of sales increases since direct and special-sales customers pay in 30
days, do not return books, and pay shipping expenses. Your product-development
techniques will become well entrenched and your new strategic-thinking abilities
will help you in all areas of your business. Declare your dependence on
strategic thinking and free your mind to create new ways to reach your goals.

Brian Jud is a book-marketing consultant, President
of Book Marketing Works, and the host of the book-marketing seminars jointly
hosted with “Publishers Weekly” and “Writer’s Digest” and featuring
presentations by John Kremer, Dan Poynter, and Jan Nathan. Seminar dates are
September 15-16 in Philadelphia and November 17-18 in Dallas. Contact Jud at
P.O. Box 715, Avon, Connecticut  06001; phone 860/276-2452; fax 860/276-2453; or
e-mail imarketbooks@aol.com. Visit his Web site at http://www.strongbooks.com.

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