MANAGEMENT E-RESOURCES: September 2009

Wednesday, September 30, 2009

ISO and The ISO Survey

The ISO Survey – 2007

ISO and The ISO Survey

ISO is the world’s largest developer of voluntary International Standards for business, government and society. Its portfolio in September 2008 comprised more than 17 400 standards that provide practical solutions and achieve benefits for almost every sector of economic activity and technology.

Of these, ISO 9001:2000 and ISO 14001:2004, which give the requirements for, respectively, quality management and environmental management systems, are among ISO’s most well known and widely implemented standards ever. They are used worldwide by businesses and organizations large and small, in public and private sectors, by manufacturers and service providers, in all sectors of activity.

Many users decide to have their management systems independently audited and certified as conforming to the standards. Certification is not a requirement of the standards themselves, which can be implemented without certification for the benefits that they help user organizations to achieve for themselves and for their customers. Nevertheless, many thousands of organizations have chosen certification because of the perception that an independent confirmation of conformity adds value.

ISO itself does not perform certification to its standards, does not issue certificates and does not control certification performed independently of ISO by other organizations. However, it frequently receives requests for information on the number of certificates and this led the organization to undertake The ISO Survey, which is now in its 15th year. ISO provides the basic results free of charge as a public information service on its Web site: www.iso.org

The collection and compilation of data for the 2007 survey was outsourced for the fourth consecutive year to the market research firm ACNielsen of Vienna, Austria. The data was then analysed by ISO Central Secretariat.

Standards covered
in this edition
This edition of the survey
g i v e s t h e w o r l d w i d e
panorama of certification
to ISO management system
standards at the end of 2007.
The standards covered are:
 ISO 9001:2000 for quality
management systems
 ISO 14001:2004 1
for environmental

management systems.
For the fourth consecutive year,
the survey includes certification
data on two ISO standards that
include the requirements of
ISO 9001:2000, plus sector-
specific requirements:
 ISO/TS 16949:2002 for the
automotive sector
 ISO 13485:2003 for
medical devices.
For the second year, the
survey includes data on
ISO/IEC 27001:2005, which
provides the requirements
for information security
management systems, and
whose requirements are
aligned with ISO 9001:2000
and ISO 14001:2004.

About ACNielsen

ACNielsen is the leading global provider of marketing research information services, analytical systems and tools, and professional client services that help clients win in the market-place. The clients of ACNielsen include the world’s leading manufacturers and retailers of consumer packaged goods, as well as companies that market many other types of consumer products and services. Clients work with ACNielsen to measure their market performance, to analyse market dynamics, to diagnose and solve marketing and sales problems, and to identify and capture growth opportunities. ACNielsen’s operations span more than 100 countries. Founded in the USA in 1923 by Arthur Charles Nielsen, Sr., ACNielsen, the Austrian office was opened in 1961, initially carrying retail measurement. In 1990, consumer research was added to the range of services offered by the Austrian office.

Table of contents

* = exclusively in the combined brochure-CD version of The Survey (available from sales@iso.org).

How The ISO Survey is carried out 4

Background to The ISO Survey – 2007 4

Certification 5

*Highlights of The ISO Survey – 2007 6

ISO 9001:2000 global picture 9

ISO 14001:2004 global picture 10

ISO/TS 16949:2002 global picture 11

ISO 13485:2003 global picture 12

ISO/IEC 27001:2005 global picture 13

ISO 9001:2000 certifications worldwide 14

*Regional share expressed in percent 18

*Country highlights 19

*Top 10 countries for ISO 9001:2000 growth 19

*Newcomers 19

*Certificates by industrial sector 20

*Top five industrial sectors for ISO 9001:2000

certificates 21

*Top sectors for ISO 9001:2000 certificates –

services aggregated as single sector 21

*Withdrawn ISO 9001:2000 certificates 22

ISO 14001:2004 certifications worldwide 24

*Regional share expressed in percent 28

*Country highlights 29

*Top 10 countries for ISO 14001:2004 growth 29

*Newcomers 29

*Certificates by industrial sector 30

*Top five industrial sectors for ISO 14001:2004

certificates 31

*Top sectors for ISO 14001:2004 certificates –

services aggregated as single sector 31

*Withdrawn ISO 14001:2004 certificates 32

ISO/TS 16949:2002 certifications worldwide 33

*Regional share expressed in percent 36

*Country highlights 36

*Top 10 countries for ISO/TS 16949:2002 growth 36*

*Withdrawn ISO/TS 16949:2002 certificates 37

ISO 13485:2003 certifications worldwide 38

*Regional share expressed in percent 41

*Country highlights 41

*Top 10 countries for ISO 13485:2003 growth 41*

*Withdrawn ISO 13485:2003 certificates 42

ISO/IEC 27001:2005 certifications worldwide 43

*Regional share expressed in percent 45

*Country highlights 46

*Top 10 countries for ISO/IEC 27001:2005 growth 46

*Certificates by industrial sector 46

*Top five industrial sectors for ISO/IEC 27001:2005

certificates 47

*Top sectors for ISO/IEC 27001:2005 certificates –

services aggregated as single sector 47

*Withdrawn ISO/IEC 27001:2005 certificates 47

The ISO Survey of Certifications 2006 3

How The ISO Survey is carried out

The ISO Survey has been carried out 17 times since the first in January 1993. The survey is now published on an annual basis by ISO Central Secretariat (ISO/CS). For this 2007 edition, the principal sources of the data are certification bodies. ISO/CS would like to thank all sources for their participation and assistance.

Only certification bodies accredited by national members of the International Accreditation Forum (IAF – 4 www.iaf.nu) have been used as sources. The IAF is an international association that represents the national accreditation bodies set up in many countries to verify the competence of certification bodies. Therefore, the survey does not cover certificates issued by certification bodies accredited by organizations other than members

of the IAF, or not accredited at all.

Many of the certification bodies which contribute data are business competitors of each other. For this reason, the data supplied is treated by ISO/CS as confidential in that it is not linked in the published survey to the certification body which supplied it. This rule is applied in order to avoid the data being used by competitors as business intelligence about their rivals. ISO/CS will not therefore comply with requests to identify the market share of certification bodies, or “the top 10 certification bodies in the world”, or similar.

As pointed out above, the survey is carried out once a year and ISO/CS does not maintain a database or running total which would allow it to meet requests for updates between publications of the survey.

It should be noted too that the data supplied is of the numbers of certificates – the individual organizations which hold certificates are not identified. Therefore, ISO/CS cannot satisfy requests for lists of certified organizations in a particular country or business sector.

The survey is of the numbers of certificates, not the numbers of sites covered by any one certificate. Although ISO/CS requests the suppliers of data to distinguish between single-site and multiple-site certificates, and includes this information when available in specific tables, not all suppliers provide such information.

Background to

The ISO Survey – 2007

In line with the ISO 9001 requirement for continual improvement, a major effort has been launched with the 2007 survey to improve the reliability of the data by harmonizing the collection methodology.

In previous years, the survey data was collected from a variety of sources including ISO national member institutes, accreditation bodies, certification bodies and regional certification databases. A disadvantage of this approach was the resulting mixture of data from primary sources and secondary sources. Compiling data from secondary sources increased the possibility for error, particularly as these sources themselves may use different methodologies for compiling data.

To reduce such problems to the minimum, the data collection method for the 2007 survey has been harmonized so that, whenever possible, it has been obtained from the primary sources, the certification bodies that actually issue certificates.

Because of this harmonization of methodology, the numbers of certificates for a number of countries may show some significant variations when the 2007 figures are compared with the 2006 edition of the survey. The countries principally concerned in this edition are Australia, Canada, Mexico, New Zealand and the USA. For future editions, the harmonized methodology will facilitate the comparison and consistency of the survey data.

In addition to this change in methodology, other factors may cause figures to be revised from one edition of the survey to another, including the following:

• The responsiveness of certification bodies to requests for data varies. Not all submit data. Among those who do, the quantity and quality varies. From time to time, mistakes or additional data come to light and the figures are adjusted accordingly in subsequent surveys.

Enquiries about The ISO Survey should be addressed to : Ms. Joyce Bleeker

ISO Central Secretariat E-mail bleeker@iso.org

The ISO Survey of Certifications 2007

• The responsibility for collecting figures within the different source organizations may be transferred from one person or department to another and, with it, their methodology for compiling the data may vary. As a result, country totals given in previous surveys may be revised retrospectively and totals may, therefore, not always tally up from one survey to another.

• A number of joint assessment arrangements are in operation by certification bodies. These are taken into account when known, but a small degree of double counting no doubt occurs. Again, when double counting becomes apparent, totals are adjusted.

In the 2007 edition of the survey, the following figures for 2006 have been revised:

• Afghanistan (ISO 13485:2003)

• The Netherlands (ISO 13485:2003)

• Sweden (ISO 9001:2000, ISO 14001:2004 and ISO 13485:2003)

• Switzerland (ISO 14001:2004).

The condensed version of the survey, with tables giving the world, regional and country totals of certificates is accessible free of charge on ISO’s Web site (www.iso.org), plus graphics showing the rise in certificates over the different cycles. The paper version of the complete survey, including a CD-ROM with additional information regarding breakdowns of the number of certificates per country by industrial sector is available at a cost of 48 Swiss francs from the Central Secretariat (sales@iso.org), and from ISO’s national member institutes (their contact details are provided on ISO’s Web site).

The 2007 survey gives detailed ISO 9001:2000 certification breakdowns from December 2003. To facilitate comparison and analysis, the 2006 edition, which gives the figures for 2001 to 2006, is retained on the ISO Web site, along with the 2000 edition which gives figures for previous ISO 9000 versions right back to the first survey in January 1993 up to the end of 2000. Figures for ISO 14001 prior to 2003 can also be found in these retained editions on the ISO Web site.

Certification

Both the ISO 9000 and ISO 14000 families include a single standard – respectively, ISO 9001:2000 and ISO 14001:2004 – that gives the requirements for a management system and against which the system can be “certified”. This means that the system has been audited against the requirements of the standard by a specialized “certification” or “registration” body which, if the requirements have been met, issues a certificate of conformity, known as an ISO 9001:2000 or ISO 14001:2004
certificate.
5

Certification is not a requirement of any of the standards in the ISO 9000 or ISO 14000 families, including ISO 9001:2000 and ISO 14001:2004. Neither is certification a requirement of the other ISO management system standards highlighted in this survey – ISO/TS 16949:2002, ISO 13485:2003 and ISO/IEC 27001:2005.

An organization can implement the standards for their internal and external benefits without seeking certification. The decision whether or not to have the management system certified after an independent audit is one to be taken on business grounds – for example, if it is a customer requirement, or a regulatory requirement in the organization’s area of activity.

The other standards in the ISO 9000 and ISO 14000 families address specific issues in quality and environmental management, or provide tools, such as for auditing management systems. The greatest value can be obtained by organizations when they implement these in synergy with their management systems. In relation to ISO 9000, more information on this subect can be found on the ISO Web site in the “Management standards” section in the electronic brochure, Selection and use of the ISO 9000 family of standards.

The ISO Survey of Certifications 2007

Global
ISO 9001
picture

ISO 9001:2000 , Quality management systems – Requirements with guidance for use

Up to the end of December 2007, at least 951 486 ISO 9001:2000 certificates had been issued in 175 countries and economies.

The 2007 total represents an increase of 54 557 (+ 6 %) over 2006, when the total was 896 929 in 170 countries and economies.

ISO 9001:2000 principal results 9

World results Dec. 2003 Dec. 2004 Dec. 2005 Dec. 2006 Dec. 2007

World total 497 919 660 132 773 867 896 929 951 486

World growth 330 795 162 213 113 735 123 062 54 557

Number of countries/ 149 154 161 170 175
economies

Worldwide total of ISO 9001:2000 certificates
December 2003 to December 2007

1 000 000
900 000
800 000
700 000
600 000
500 000
400 000
300 000
200 000
100 000
0
03 04 05 06 07
. . . . .
Dec Dec Dec Dec Dec

Annual growth of Top 10 countries for
ISO 9001:2000 certificates
ISO 9001:2000 certificates

December 2003 to December 2007
China : 210 773
350 000 Italy : 115 359

300 000 Japan : 73 176

250 000 Spain : 65 112

200 000 India : 46 091
150 000 Germany : 45 195

100 000 USA : 36 192

50 000 United Kingdom : 35 517

France : 22 981
0
03 04 05 06 07 Netherlands : 18 922
. . . . .
Dec Dec Dec Dec Dec

The ISO Survey of Certifications 2007

ISO 14001
Global
picture

ISO 14001:2004, Environmental management systems – Requirements with guidance for use

Up to the end of December 2007, at least 154 572 cer-tificates had been issued in 148 countries and econo-mies.

The 2007 total represents an increase of 26 361 (+ 21 %) over 2006, when the combined total was 128 211 in 140 countries and economies.

ISO 14001:2004 principal results

10 World results Dec. 2005
Total of which Dec. 2006 Dec. 2007

ISO 14001:2004

World total 111 162 56 593 128 211 154 572

World growth 21 225 – 17 049 26 361

Number of countries/ 138 107 140 148
economies

Worldwide total of Annual growth of Top 10 countries for
ISO 14001:2004 certificates
ISO 14001:2004 certificates ISO 14001:2004 certificates

December 2005 to December 2007 December 2005 to December 2007
160 000 28 000 China : 30 489

26 000
140 000 24 000 Japan : 27 955

22 000 Spain : 13 852
120 000
20 000

100 000 18 000 Italy : 12 057
16 000

80 000 14 000 United Kingdom : 7 323

12 000 Korea, Republic of : 6 392

60 000 10 000

8 000 USA : 5 462
40 000 6 000
Germany : 4 877
4 000
20 000

2 000 Sweden : 3 800

0 0
05 06 07 05 06 07
. . . . . . France : 3 476
Dec Dec Dec Dec Dec Dec

The ISO Survey of Certifications 2007

Global ISO/TS 16949
picture

ISO/TS 16949:2002, Quality management systems – Particular requirements for the application

of ISO 9001:2000 for automotive production and relevant service part organizations

Up to the end of December 2007, at least 35 198 ISO/TS 16949:2002 certificates had been issued in 81 countries and economies. The 2007 total represents an increase of 7 199 (+ 26 %) over 2006 when the total was 27 999 certificates in 78 countries and economies.

The figures for the total up to 2007 have been provided by IATF (International Automotive Task Force).

11

ISO/TS 16949:2002 principal results

World results Dec. 2004 Dec. 2005 Dec. 2006 Dec. 2007

World total 10 019 17 047 27 999 35 198

World growth – 7 028 10 952 7 199

Number of countries/ 62 80 78 81
economies

Worldwide total of ISO/TS 16949:2002 certificates
December 2004 to December 2007

40 000
30 000
20 000
10 000
0
04 05 06 07
. . . .
Dec Dec Dec Dec

Annual growth of Top 10 countries for
ISO/TS 16949:2002 certificates ISO/TS 16949:2002 certificates
December 2004 to December 2007
China : 7 732
10 000 USA : 4 288
Korea, Republic of : 3 453
8 000
Germany : 3 068
6 000 India : 2 008
France : 1 165
4 000
Japan : 1 106
2 000 Italy : 1 024
Brazil : 972
0
04 05 06 07 Mexico : 947
. . . .
Dec Dec Dec Dec

The ISO Survey of Certifications 2007

ISO 13485
Global
picture

ISO 13485:2003, Medical devices –
Quality management systems –

Requirements for regulatory purposes

Up to the end of December 2007, at least 12 985 ISO 13485:2003 certificates had been issued in 84 coun-tries and economies. The 2007 total represents an increase

of 4 959 (+ 62 %) over 2006 when the total was 8 026 in 81 countries and economies.

ISO 13485:2003 principal results

12
World results
Dec. 2004 Dec. 2005 Dec. 2006 Dec. 2007

World total 2 403 5 065 8 026 12 985

World growth – 2 662 2 961 4 959

Number of countries/ 55 67 81 84
economies

Worldwide total of Annual growth of Top 10 countries for
ISO 13485:2003 certificates ISO 13485:2003 certificates ISO 13485:2003 certificates
December 2004 to December 2007 December 2004 to December 2007
Germany : 2 204
14 000 5 000 USA : 2 186

4 500
12 000 Italy : 1 482
4 000

10 000 3 500 China : 1 329

8 000 3 000 France : 709

2 500
6 000 2 000 Switzerland : 608

4 000 1 500 United Kingdom : 589

1 000 Japan : 456
2 000
500

0 0 Canada : 408

04 05 06 07
04 05 06 07
. . . . Israel and Korea, Republic of : 255
. . . . Dec Dec Dec Dec
Dec Dec Dec Dec

The ISO Survey of Certifications 2007

Global ISO/IEC 27001
picture

ISO/IEC 27001:2005 Information technology – Security techniques – Information security management systems – Requirements

2006 was the first year for which the survey recorded ISO/IEC 27001:2005 certificates. At the end of December 2007, at least 7 732 ISO/IEC 27001:2005 certificates had

been issued in 70 countries and economies. The 2007 total represents an increase of 1 935 (+ 33 %) over 2006 when the total was 5 797 in 64 countries and economies

ISO/IEC 27001:2005 principal results

13

World results Dec. 2006 Dec. 2007

World total 5 797 7 732

World growth – 1 935

Number of countries/ 64 70
economies

Top 10 countries for

ISO/IEC 27001:2005

Japan : 4 896

United Kingdom : 519

India : 508

Taipei, Chinese : 256

Italy : 148

China : 146

Germany : 135

USA : 94

Spain : 93

Hungary : 81

The ISO Survey of Certifications 2007

ISO 9001
ISO 9001:2000 certifications worldwide
Growth from end of 2003 to end of 2007

Africa /
Africa/WestAsia Dec. 2004 Dec. 2005 Dec. 2006 Dec. 2007 Africa/West Asia Dec. 2003 Dec. 2004 Dec. 2005 Dec. 2006 Dec. 2007
Dec. 2003

Afghanistan – 3 – 2 4 Morocco 64 296 403 457 504
Algeria 43 126 185 103 171 Mozambique 3 9 8 10 8
Angola 1 2 3 1 10 Namibia 15 23 22 18 23
Bahrain 30 99 107 116 126 Niger 2 – – – 1 1
Bangladesh 49 182 570 570 284 Nigeria 49 99 101 132 149
14 Benin – 1 – 1 2 Oman 86 250 267 311 349
Botswana 11 8 22 35 32 Pakistan 464 695 2 013 2 291 2 580

Burkina Faso – – 2 2 2 Palestine 18 29 27 34 25
Cameroon 2 9 13 10 7 Qatar 17 94 97 101 177
Central African – 212 394 1 – Rwanda – 1 1 1 1
Republic 247 394 642 710 645
Saudi Arabia
Congo, Republic of – – – – 1
Senegal 10 29 40 42 56
Côte d’Ivoire 1 9 35 46 46
Seychelles 4 9 8 9 13
Egypt 754 810 1 326 1 928 1 535
Sierra Leone – – – 4 –
Equatorial Guinea – – – – 1
South Africa 2 356 2 486 3 119 3 259 3 283
Eritrea – – – 1 1
Sri Lanka 90 148 244 318 496
Ethiopia – 2 3 3 20
Sudan 26 37 32 55 82
Gabon 2 3 3 3 6
Swaziland 17 13 18 29 40
Ghana 9 17 11 12 12
Syrian Arab Republic 215 240 248 272 297
Guinea – – 1 – 1
Tanzania 2 5 20 14 12
Guinea-Bissau – – – – 3
Togo – – 2 2 3
India 8 367 12 558 24 660 40 967 46 091
Tunisia 119 123 380 585 690
Iran 470 3 000 3 090 5 250 5 503
Turkmenistan – – 1 6 7
Iraq – – – 3 5
Uganda 120 47 45 45 42
Israel 5 019 7 280 7 657 10 760 10 846
United Arab Emirates 892 819 963 1 040 2 422
Jordan 112 278 293 248 283
Uzbekistan 2 – 57 26 85
Kazakhstan 174 229 320 603 726
Yemen 6 9 12 16 14
Kenya 29 158 169 183 204
Zambia 11 17 21 17 16
Kuwait 25 101 111 141 184
Zimbabwe 14 109 129 128 136
Kyrgyzstan 5 6 9 9 4

Lebanon 62 154 167 193 296
Total
Liberia – – 1 – –

Libyan Arab 4 6 35 46 55 Africa/West Asia 20 124 31 443 48 327 71 438 78 910
Jamihiriya

Madagascar – 3 6 23 23 Share in percent 4,04 4,76 6,24 7,96 8,29
Malawi 6 2 8 2 6

No. of countries/
Maldives 1 1 1 1 2 47 51 58 61 64
economies
Mali – – 2 2 2

Mauritania, Islamic – – 1 – 1
Republic of
1
Cote d’Ivoire – due to non-receipt of 2007 data, figure for 2006 used.
Mauritius 93 212 202 240 259
2 Niger – due to non-receipt of 2007 data, figure for 2006 used.

The ISO Survey of Certifications 2007

ISO 9001

Central
and South
C Dec. 2003 Dec. 2004 Dec. 2005 Dec. 2006 Dec. 2007
America
Argentina 1 790 4 149 5 556 7 934 8 808
Bahamas – 5 – – 3
Barbados 8 11 11 11 11
Belize 2 3 2 2
Bermuda 1 1 – 1 1
Bolivia 40 88 104 198 161
Brazil 3 4 012 6 120 8 533 9 014 15 384
Cayman Islands (UK) 1 1 – 1 1
Chile 340 924 1 124 2 565 4 013
Colombia 2 222 4 120 4 926 6 271 7 033
Costa Rica 63 105 136 186 260
Cuba 3 218 305 363 424
Dominica – – – 2 3
Dominican Republic 1 22 22 29 44
Ecuador 29 57 140 486 559
El Salvador 7 34 49 96 120
Grenada 1 1 1 2 2
Guatemala 18 25 30 61 93
Guyana 3 11 8 10 9
Honduras 9 9 22 36 44
Jamaica 3 12 10 14 18
Netherlands Antilles 35 38 41 41 41
(NL)

Nicaragua 9 28 20 28 29
Panama 44 69 80 99 85
Paraguay 37 44 146 103 116
Peru 141 205 193 576 621
Puerto Rico 26 33 55 29 45
Saint Lucia 4 2 4 1 6
Suriname 1 – – – 16
Trinidad and Tobago 52 60 64 40 59
Uruguay 200 325 478 648 765
Venezuela 201 299 437 535 578

Total

Central and South 9 303 17 016 22 498 29 382 39 354
America

Share in percent 1,87 2,58 2,91 3,27 4,14

No. of countries/ 30 29 27 30 32
economies

3 Brazil – methodology changed from previous years.

North
America
Dec. 2003 Dec. 2004 Dec. 2005 Dec. 2006 Dec. 2007

Canada 4 8 454 9 286 12 503 11 917 7 462
Mexico 4 1 437 3 391 2 890 4 636 3 946
USA 4 30 294 37 285 44 270 44 883 36 192

Total
North America 40 185 49 962 59 663 61 436 47 600

Share in percent 8,07 7,57 7,71 6,85 5,00
15
No. of countries/ 3 3 3 3 3

economies

4 Canada, Mexico and USA – methodology changed from previous years.

Europe
Europe Dec. 2003 Dec. 2004 Dec. 2005 Dec. 2006 Dec. 2007

Albania 2 6 11 28 23
Andorra 1 1 6 12 26
Armenia 16 26 55 34 79
Austria 2 809 3 259 3 368 3 806 4 203
Azerbaijan 2 203 213 171 55
Belarus 102 447 658 882 1 308
Belgium 3 167 4 471 4 810 3 865 4 822
Bosnia and 47 209 350 242 652
Herzegovina

Bulgaria 842 1 685 2 220 3 097 4 663
Croatia 580 966 1 273 1 676 2 073
Cyprus 314 573 530 683 440
Czech Republic 2 565 10 781 12 743 12 811 10 458
Denmark 935 1 050 1 219 1 840 1 794
Estonia 261 438 489 577 625
Finland 1 861 1 784 1 914 1 986 1 804
France 15 073 21 769 21 700 21 349 22 981
Georgia 7 20 24 52 88
Germany 23 598 26 654 39 816 46 458 45 195
Gibraltar (UK) 28 47 55 49 29
Greece 1 615 2 572 3 255 4 753 5 132
Hungary 5 7 750 10 207 15 464 15 008 10 473
(continued overleaf )

5 Hungary – figure based on less completed questionnaires returned than previous years.

The ISO Survey of Certifications 2007

SAMSUNG

SAMSUNG
How Lee made Samsung a world leader Chairman

Kun-Hee Lee's mantra: better product quality and market perception

IN the summer of 1993, Samsung chairman Kun-Hee Lee took 300 company executives through intensive strategy discussions in three cities: Frankfurt, London and Fukoka (Japan). Earlier that year, Lee and the executives had pounded the streets of Los Angeles, visiting shop after shop. "He would run his fingers on the Samsung products and show us the thick layer of dust on each of them," says K.S. Kim, currently president and CEO, Samsung South-west Asia regional headquarters. "Our stuff wasn't moving."

The problem lay in Samsung's business model. In the 1970s, Samsung outgrew the small domestic Korean market and began focussing abroad. But it became clear that the low margin-high volume game wouldn't work for Samsung in markets like Europe, the US and Japan, where it would need to take on big, established brands. At the same time, customers in those markets were more discerning. So, Lee's message in 1993 was simple: it had to upgrade product quality and perception. This would change the company forever.

The Samsung group began as a rice trading company in 1938, and then kept adding businesses to its portfolio. In 1969 it entered the electronics business and in 1975 it exported the first batch of CTVs. Like the Japanese Sony and Matsushita, Samsung initially focussed on low-end manufacturing and exports. It opened its first offshore production facility in Portugal in 1982, making low-end CTVs.

Samsung did many things to reinvent itself after 1993. It deliberately kept existing capacity idle to control the flow of low-end goods into the market, got rid of poor inventories (it closed down the Portugal plant), improved cash flow management, etc. Most importantly, it carried out the most fascinating changes in its organisational culture.

"We used to say, you can change everything except your wife," says Kim who worked closely with Lee. Many of the changes made were symbolic, and were meant to create a deliberate break from the past. So, for starters, the company changed its working hours. While earlier, the official working hours were between 8.30 a.m. and 5.30 p.m., after 1993 they changed to 7 a.m. to 4 p.m. Samsung executives were encouraged to pick up a new hobby, or chuck a bad one. So Kim learnt tennis, while many of his colleagues gave up smoking and drinking.

Then, Samsung turned its energies on creating a global cadre of managers. So it started the Regional Specialist Programme. Every year, between 300-400 Samsung managers, typically between the ages of 28 and 34 were sent for year-long familiarisation programmes to a foreign country. The idea was to acquaint them with the culture, the language and so on. It wasn't about working in the local subsidiary.

This was no fun junket. Samsung didn't even allow its managers to be accompanied by their wives, girlfriends or significant others, for fear of them being distracted. Today, there are literally a few thousand country experts within the Samsung system. These experts could be located anywhere, but when important assignments crop up in their country of specialisation, they usually get the first right of refusal. There are 50 India experts already within Samsung. For China, the number is slightly higher, around 200.

Much could have gone wrong in Samsung's journey. The 1997-1998 Asian crisis could have tripped it, but Samsung used that opportunity to launch the 3P initiative on product, process and people. Samsung vice-president, Digital Media Network Business, David Steel says that the bets they took on technologies could have gone wrong. "But the scale of these bets was so big that the industry followed them as a trend."

With global sales of around $40 billion and a market capitalisation of $70 billion - Sony Electronics' market cap stands at $38 billion, Matsushita at $34 billion and LG at $8 billion - it is a colossus. McKinsey's Jayant Sinha, Dominic Barton and Tsun-yan Hsieh argue (See 'Becoming A Global Champion', page 46) that Samsung is one of the best examples of a global champion from outside Japan, Europe and the US. All because of a CEO's new way of looking at opportunities, and his team's determination to follow through. Maybe that's what globalisation is all about.

Tuesday, September 29, 2009

Marketing Basics for the Small Business

Marketing Basics for the Small Business
By Laura Lake,

The essence of marketing is to understand your customers' needs and develop a plan that surrounds those needs. Let's face it anyone that has a business has a desire to grow their business. The most effective way to grow and expand your business is by focusing on organic growth.
You can increase organic growth in four different ways. They include:
• Acquiring more customers
• Persuading each customer to buy more products
• Persuading each customer to buy more expensive products or up selling each customer
• Persuading each customer to buy more profitable products
All four of these increase your revenue and profit. Let me encourage you to focus on the first which is to acquire more customers. Why? Because by acquiring more customers you increase your customer base and your revenues then come from a larger base.
How can you use marketing to acquire more customers?
• Spend time researching and create a strategic marketing plan.
• Guide your product development to reach out to customers you aren't currently attracting.
• Price your products and services competitively.
• Develop your message and materials based on solution marketing.
The Importance of a Target Market in Small Business
When it comes to your customers keep in mind the importance of target marketing. The reason this is important is that only a proportion of the population is likely to purchase any products or service. By taking time pitch your sales and marketing efforts to the correct niche market you will be more productive and not waste your efforts or time.
It's important to consider your virtual segmentation by selecting particular verticals to present your offerings to. Those verticals will have the particular likelihood of purchasing your products and services. Again, this saves you from wasting valuable time and money.
Small Business Marketing and Large Business Marketing are Different
If you are like the majority of small business owners your marketing budget is limited. The most effective way to market a small business is to create a well rounded program that combines sales activities with your marketing tactics. Your sales activities will not only decrease your out-of-pocket marketing expense but it also adds the value of interacting with your prospective customers and clients. This interaction will provide you with research that is priceless.
Small businesses typically have a limited marketing budget if any at all. Does that mean you can't run with the big dogs? Absolutely not. It just means you have to think a little more creatively. How about launching your marketing campaign by doing one of the following:
• Call your vendors or associates and ask them to participate with you in co-op advertising.
•
• Take some time to send your existing customers' referrals and buying incentives.
•
• Have you thought about introducing yourself to the media? Free publicity has the potential to boost your business. By doing this you position yourself as an expert in your field.
•
• Invite people into your place of business by piggybacking onto an event. Is there a concert coming to town, are you willing to sell those tickets? It could mean free radio publicity. If that is not your cup of tea, how about a walkathon that is taking place in your area, why not be a public outreach and distribute their material?
When you do spend money on marketing, do not forget to create a way to track those marketing efforts. You can do this by coding your ads, using multiple toll-free telephone numbers, and asking prospects where they heard about you. This enables you to notice when a marketing tactic stops working. You can then quickly replace it with a better choice or method.
Getting Started with Small Business Marketing
By being diligent in your marketing and creating an easy strategy such as holding yourself accountable to contact ten customers or potential customers daily five days a week you will see your business grow at an exceptional rate. The great thing is it will not take a large marketing budget to make it happen.

Marketing, Advertising, Sales - Who Does What?
Sunday September 27, 2009
It's so easy for the confusion to begin when you start talking about advertising, marketing and sales. Truth is most individuals don't understand the difference. The good news is there is a difference and each of these components have a part to play in the success of a company. Today, I want to clear up the confusion.
I started to see the misunderstanding of these roles when I was spending time browsing and sorting through job listings. It is not uncommon for sales jobs to be listed in the marketing jobs classifications and the same was true when it came to jobs that pertained to advertising.
I'm going to say it one more time, before getting into the details - they are not the same.
Let's take a look at the defining differences:
Marketing: The systematic planning, implementation and control of a mix of business activities intended to bring together buyers and sellers for the mutually advantageous exchange or transfer of products.
Advertising: The paid, public, non-personal announcement of a persuasive message by an identified sponsor; the non-personal presentation or promotion by a firm of its products to its existing and potential customers.
Sales: The sales process is everything that you do to close the sale and get a signed agreement or contract. The sales process consists of interpersonal interaction. It is often done by a one-on-one meeting, cold calls, and networking. It's anything that engages you with the prospect or customer on a personal level rather than at a distance. Advertising and marketing lay the ground work to warm up the lead and prepare them for the close of the sale.
When you are looking to place job listings, be sure to list them in the right category and you will more than likely detour the chances of getting applicants that don't fit the requirements for the positions you are listing.
When it comes to the world of corporations and business structure look at the different roles and use them to help define how departments can work together with the other departments and the role that each department plays when supporting the others.
All three of these components are necessary when it comes to the success of a business, but having a deeper understanding of their purpose can help in organization and planning for that success.
For a greater understanding of the differences use the following resources:

What is the difference between marketing and sales?
Let's think about this question for a moment. Without marketing you would not have prospects or leads to follow up with, but yet without a good sales technique and strategy your closing rate may depress you.
Marketing is everything that you do to reach and persuade prospects. The sales process is everything that you do to close the sale and get a signed agreement or contract. Both are necessities to the success of a business. You cannot do without either process. By strategically combining both efforts you will experience a successful amount of business growth. However, by the same token if the efforts are unbalanced it candetour your growth.
Your marketing will consists of the measures you use to reach and persuade your prospects that you are the company for them. It's the message that prepares the prospect for the sales. It consists of advertising, public relations, brand marketing, viral marketing, and direct mail.
The sales process consists of interpersonal interaction. It is often done by a one-on-one meeting, cold calls, and networking. It's anything that engages you with the prospect or customer on a personal level rather than at a distance.
Your marketing efforts begin the process of the eight contacts that studies show it takes to move a prospect or potential client to the close of the sale. If marketing is done effectively you can begin to move that prospect from a cold to a warm lead. When the prospect hitsthe"warm" level it's much easier for the sales professional to close the sale.
Do you see the cycle?
As you see in my explanation above it takes multiple contacts using both sales and marketing to move the prospect from one level to the next. That is why it is import that you develop a process that combines both sales and marketing. This will enable you to reach prospects at all three levels; cold, warm, and hot. It's all about balance.
Are you unsure of how to integrate your marketing and sales?
Try this. Take a few moments and divide your prospect lists and database into categories of cold, warm, and hot leads. Then sit down and identify a strategy on how to proceed with each individual group.
For example you could try the following methods of contact:
• Cold Lead Strategy - Send out a direct mailing or offer them a special promotion
• Warm Lead Strategy - Try a follow-up call, send out a sales letter, or schedule a special seminar or training session to get all of your warm leads together.
Once you've moved your prospect to the "warm" level it's time to proceed in closing the sale. This will be easier to do if you somehow engage the prospect. You can do this by conducting a one-on-one call, make a presentation, or present a proposal, estimate, or contract.

What if you are uncomfortable with the sales or marketing process?
An alternative that often proves successful is to partner with someone that possess the talents that you feel you lack in. You can do this by creating a partnership, subcontracting, or hiring in that talent.
Remember the key to success in marketing and in sales is balance!

Is There a Difference Between Marketing and Advertising?
There are many technical and complicated definitions of both advertising and marketing and the differences between them. But it can be stated rather simply:
• Advertising tells a story about something to attract attention. Advertising is a step in the marketing process.
• In business, “marketing” is the planning of, and steps taken, to bring merchants and consumers together.

MARKETING MIX

MARKETING MIX

YOUR POSITION

Look at the map

MAP

253 days before opening.

1. Challenge 2. Product 3. Place 4. Price 5. Promotion 6. Sales strategy 7. Do it yourself 8. Coaching

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INTRODUCTION

Marketing mix allows you to combine all the marketing tools in order to sell your product.

Duration

Lesson: 1 hour

External readings and quiz: 13 hours

Do it yourself: 20 hours

Total: 34 hours

Objectives:

The objectives of this lesson about marketing mix is to give you:

-The tools you need for establishing your detailed marketing plan and forecasting your sales.

1. Challenge 2. Product 3. Place 4. Price 5. Promotion 6. Sales strategy 7. Do it yourself 8. Coaching

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1-CHALLENGE

You have gotten a rough idea about the market situation and the possible positioning of your product. Of course, it's far to be sufficient. Now, you must write your detailed planning. It means that brainstorming is ended and that you have to go to the specifics in examining and checking all the hypothesis you had made in the preceding chapters. You will use the marketing mix.

-Definition: Marketing mix is the combination of elements that you will use to market your product. There are four elements: Product, Place, Price and Promotion. They are called the four Ps of the marketing mix.

Some people think that the four Ps are old fashionable and propose a new paradigm: The four Cs! Product becomes customer needs; Place becomes convenience, price is replaced by cost to the user, promotion becomes communication. It looks like a joke but the Cs is more customer-oriented.

1. Challenge 2. Product 3. Place 4. Price 5. Promotion 6. Sales strategy 7. Do it yourself 8. Coaching

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2-PRODUCT

A good product makes its marketing by itself because it gives benefits to the customer. We can expect that you have right now a clear idea about the benefits your product can offer.

Suppose now that the competitors products offer the same benefits, same quality, same price. You have then to differentiate your product with design, features, packaging, services, warranties, return and so on. In general, differentiation is mainly related to:

-The design: it can be a decisive advantage but it changes with fads. For example, a fun board must offer a good and fashionable design adapted to young people.

-The packaging: It must provides a better appearance and a convenient use. In food business, products often differ only by packaging.

-The safety: It does not concern fun board but it matters very much for products used by kids.

-The "green": A friendly product to environment gets an advantage among some segments.

In business to business and for expensive items, the best mean of differentiation are warranties, return policy, maintenance service, time payments and financial and insurance services linked to the product.

External readings

Go to http://peerspectives.org and click on "Defining and serving a market" . Then click on "Launching a new product " and on "Product development" You will find a lot of articles about the subject.

1. Challenge 2. Product 3. Place 4. Price 5. Promotion 6. Sales strategy 7. Do it yourself 8. Coaching

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3-PLACE-DISTRIBUTION

A crucial decision in any marketing mix is to correctly identify the distribution channels. The question " how to reach the customer" must always be in your mind.

-Definition: The place is where you can expect to find your customer and consequently, where the sale is realized. Knowing this place, you have to look for a distribution channel in order to reach your customer.

In fact, instead of "place" it would be better to use the word "distribution" but the MBA lingo uses "place" to memorize the 4 Ps of the marketing mix!

Important Warning:

The place is not where is located your business but where your customers are. For a retailer it is the same but for a boat producer located in Philippines the real place is the entire world.

Do not confuse positioning and place. Here place means the real physical position of the customer in a geographic area or along a distribution channel.

31-Channels

It exists today, with the internet, more channels than in the past but basically, you have to consider three main distribution channels:

-Selling to the customers: Whether you sell by yourself ( as retailer) whether you employ a sales force, you are in these cases in front of the final customer. There are not intermediaries between you and him. Unfortunately, except for the retailer business, this situation is far to be the general case.

-Selling to the retailers: For example, you manufacture the fun boards and you sell them to the Arizona retailers. This practice could be a bit complicated.

-Selling to the wholesalers: There are maybe four or five sport articles wholesalers in Arizona. You sell your fun boards to these big men. On turn the wholesalers sell the fun boards to the retailers which finally sell to their customers.

In the case of Pacific Boat which manufactures its boats in Philippines for customers located in the USA or in Europe, there is not alternative ways. It must sell through some big import export corporate's. Pacific boat has not any contact with its final customers but of course it must know exactly their profile. If the product does not fit to the profile of the final customer, the wholesaler will not buy it.

As you can see, the choice of your distribution channel heavily depends on your product and place in the productive process. If you are in coal mining, do not expect to sell some coal buckets to the final consumer!

The next drawing summarizes the different possible channels: You are represented by the black square, the wholesaler by the maroon one, the retailer by the yellow and the customer by the green!

Real life example:

A commodity is a product such as crude oil, coal, rice, wheat, sugar, copper and so on: Mainly primary products and raw materials. In a commodity market, the products have very few distinguished characteristics.

They are traded in few places like Chicago and London. In the rice market, there are maybe six or seven big traders for the entire world in front of some hundred millions of little producers grouped in cooperatives or primary marketing boards.

The big traders know each other very well and most of the bargain relies on trust.

Nevertheless, inside a type of channel, you keep the possibility to choose between the different wholesalers and retailers. You have to choose the best. It means that your choice must focus on two major facts: the margin and the image.

32-The margin

You have already gotten an idea about the price which should fit to the customer profile. Let's suppose this price is $100. It is the retail price: the price paid by the final customer.

The retailer takes his margin (or the mark-up). This margin is calculated on the retail price. Suppose, he takes $30. It means that he buy $70 to the wholesaler.

As the wholesaler trades big quantities, his margin is usually lower than those of the retailer: Maybe 15% of the selling price to the retailer. So, he will take $10,5. It means that he has bought $59,5 to you.

Consider now that you support the cost of the shipping from your manufacture to the wholesaler store: For example $9,5. Finally, your factory price is $50 for a product sold $100 to the final customer. In many case, when taxes and new packaging occur at the different levels, the factory price can easily be only one fifth of the final price!

Do not imagine that you have too much choice. Each intermediary fills up a real function and it's not easy to ignore him. For example, you can't sell your fun board straight to the consumer: you should need a massive sales force.

You could also ignore the wholesaler in selling directly to the big retail supermarket. You will save in this case $10,5 but you can expect that the supermarket which usually practices low prices will tell you the following speech " $100 as consumer price is too much. I want to sell that $80. Of course I keep 30% as margin. So I buy it $56 to you "

It could look fair but the number of the supermarkets is higher than those of the wholesalers. It means more shipping and consequently a rise in costs. Instead of paying $9,5 for shipping, you will pay $12. Now what is the result?

Consumer price-------------80

Supermarket selling price----56

Shipping to supermarket-----12

Factory price---------------44

It does not look a good business: $44 instead of 50! You can object that the sales will rise because of the lower price to the consumer but it does not fit with your hypothesis about the customer profile. Anyway, could you afford $44 as your factory price? Is it good to sell your fun board through the supermarket? Is your customer buying in a supermarket or in a fashionable specialized sport shop?

Real life example:

Periodically, people complain against margins and plead for short distribution channels. These claims often come from the farmers because most of them are blindly ignorant about economic reality.

They regularly try to market their product directly to the consumers but it does not last very long because they quickly register heavy losses.

Some stubborn guys go on with that practice and as a result they can't pay back their loans to the State owned agricultural banks. Finally the bank losses are covered by the taxpayers!

33-The image

The place of sale influences the perception of your product. Consequently, you must pay attention to the choice of your outlets: wholesalers and retailers. If you sell products for every one, a mass distribution through the supermarket will be probably the best issue. On the contrary, if you sell fine products, you have to choice fine shops and beautiful people to sell them. In the fun board case, you should have better to emphasize on the image and to look for fashionable shops and people.

You have also to take notice of the share of power inside the distribution channel. As you will be a beginner, do not expect to get too much power! For example, you can ask the retailers to store your product on the first line or in the best situation in the shop. They will probably answer " OK! but I'm going to charge 35% margin instead of 30%". May be it's a fair bargain but is the rise of the consumer price compatible with your previous positioning?

It's quite difficult to list all the occurrences in this matter. Give a chance to your intuition but keep in mind that all these daily decisions must always remain in line with your customer profile.

1. Challenge 2. Product 3. Place 4. Price 5. Promotion 6. Sales strategy 7. Do it yourself 8. Coaching

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4-PRICE

Price means the pricing strategy you will use. You have already fixed, as an hypothesis a customer price fitted to your customer profile but you will have now to bargain it with the wholesalers and retailers. Do not be foolish: They know better the market than you and you have to listen their advices.

41-Pricing strategies

In fact, you have to choose between three strategies:

-Competitive pricing: If your product is sold at the lowest price regarding all your competitors, you are practicing competitive pricing. Sometimes, competitive pricing is essential. For instance, when the products are basically the same, this strategy will usually succeed.

Remember that the success of competitive pricing strategy depends on achieving high volume and low costs. If your prices are lower than your costs, you are going straight to bankruptcy! To avoid such a mistake, you have to take notice of the break even ratio that you will find below.
-Cost-plus-profit: It means that you add the profit you need to your cost. It is also called cost-orientated strategy and is mainly used by the big contractor of public works. The authority may have access to the costing data and should like to check if the profit added to the cost is not too high.

In fact, this strategy is only good for a business whom the customers are public collectivities or government agencies.

-Value pricing: It means that you base your prices on the value you deliver to customers. For example, when a new technology has a very large success, you can charge high prices to the customer. This practice is also called skimming. It is easy when you are in the introductory phase of the product life cycle.

Value pricing is also common in luxury items. Sometimes, the higher the price, the more you sell: Fashionable clothing or restaurants for snob people. Of course value pricing is limited by the price elasticity as you have already learnt in Economics.

External readings:

About these pricing strategies, click on www.businessplans.org. Click on "business planning resource" and then on "pricing".

See also www.sdrnet.com . Click on "analytical services", then on "exploratory price modeling" and finally on "premium price policy".

In addition, go to: www.ideasformarketing.com and click on the article: "How to develop a product or service pricing". You can also download a free-book on pricing!

The diagram below illustrates how you have to determine your price. You could see that a conflict could arise between your financial objectives ( the expected profit) and your actual costs.

So, you have to calculate your break even ratio.

42-Break even ratio

Suppose you price your fun board $ 1000 to make a competitive pricing strategy. You have some fixed costs which remain constant whatever the number of fun boards you sell: For example your office rent, your secretary and your own salary: Saying $200,000.

To manufacture one fun board, you need $900 in labor and raw material. $900 is the variable cost per unit.

To recover your fixed costs without making any profit you have to sold:

Fixed costs (200,000)/Selling price(1000)-Variable costs(900)=2000.

You have to sell 2000 fun boards just to recover your fixed costs. Now suppose that the total market in Arizona amounts 2000 fun boards per year. Do you believe that you should conquer the entire market despite your five existing competitors? It would seem quite unrealistic!

If you sell 500 fun boards ( 25% of the market) what should be the results:

Receipts: -----500*$1000= $500,000

Variable costs: -500*$900= $450,000

Fixed costs:----------------$200,000

Loss: ---------------------($150,000)

It means that you must charge a higher price: May be $1300. In such a hypothesis, your fixed costs could be recovered:

200,000/1300-900=500

Now suppose, that your competitors offer the same quality, with a price ranking between $1050 and $1250. In this case, it means that your project is not economically sound and that you must review it: Whether the fixed costs, whether the variable cost per unit are to high. In fact, the choice of a pricing strategy depends heavily on the break even analysis.

External readings

Go to http://peerspectives.org and click on "Defining and serving a market" Click on "Pricing" and at the end of the page click on "Small business administration-pricing your product"

1. Challenge 2. Product 3. Place 4. Price 5. Promotion 6. Sales strategy 7. Do it yourself 8. Coaching

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5-PROMOTION

Advertising, public relations and so on are included in promotion and consequently in the 4Ps. Sometimes, packaging becomes a fifth P. As promotion is closely linked to the sales, I will mention here the most common features about the sale strategy.

-Definition: The function of promotion is to affect the customer behavior in order to close a sale.

Of course, it must be consistent with the buying process described in the consumer analysis.

Promotion includes mainly three topics: advertisement, public relations, and sales promotions.

-Advertisement:

It takes many forms: TV, radio, internet, newspapers, yellow pages, and so on. You have to take notice about three important notions:

Reach is the percentage of the target market which is affected by your advertisement. For example, if you advertise on radio you must know how many people belonging to your segment can be affected.

Frequency is the number of time a person is exposed to your message. It is said that a person must be exposed seven times to the message before to be aware of it. Reach*frequency gives the gross rating point. You have to evaluate it before any advertisement campaign.

Message: Sometimes, it is called a creative. Anyway, the message must: get attraction, capture interest, create desire and finally require action that is to say close the sale.

Down-earth-advice:

There are some magical words that you can use in any message:

-Your-You--I-Me-My--Now-Today

-Fast-Easy-Cool-New-Fun-Updated-Free-Exciting-Astonishing

-Success-Love-Money-Comfort-Protection-Freedom-Luck.

-Public relations:

Public relations are more subtle and rely mainly on your own personality. For example, you can deliver public speeches on subjects such as economics, geo-economics, futurology to several organizations (civic groups, political groups, fraternal organizations, professional associations)

These speeches will enable you to develop new relationships and their cost is nil !

-Sales promotion:

It includes fair trades, coupons, discounts and are linked to the sales strategy.

External readings:

Go to: http://peerspectives.org . Click on "Defining and serving a market". Then click on "Public relations"

About e-Business and Marketing Resources, go to: www.7thdimension.com. You will find here tips, tools, articles and more to help you succeed online!

About Link Popularity, go to: www.your-link-popularity.com . It's an informational site about Link Popularity and the major search engines.

1. Challenge 2. Product 3. Place 4. Price 5. Promotion 6. Sales strategy 7. Do it yourself 8. Coaching

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6-SALES STRATEGY

Sales bring in the money. Salesmen are directly exposed to the pressure of finding prospects, making deals, beating competition and bringing money.
You have first to learn some definitions used by the MBA lingo:

61-Definitions:

A lead is a person who has been identified as a prospect.

A prospect is a potential customer.

An account is a customer that often buys from the company.

A national account is a very big customer

An order taking: the customer asks for a product and the vendor sells it. It's usual way to sell candy, soda or to sell tickets for theater.

On the contrary, active selling involves locating customers and persuading them to buy.

Inside sales refers to selling done mainly by phone or by internet. Outside sales involves getting appointment to meet customers at their home. Home cold calling means to phone people you do not know. Hard sell means to use of high pressures upon the prospect.

We have then to distinguish the sale process and the sale organization.

62-The sales process:

It depends heavily on the buying process. It includes prospecting and persuading.

Prospecting involves finding the leads and presenting the product. After making contact, the salesman must show that the product solves a customer's problem. He must also answer two questions :

- Has the prospect a need or an interest in the product ?
- Does the prospect have the money to buy the product ?

If the prospect does not meet these criteria, you have better to move on to the next prospect !

Persuading and authority are often necessary to close a sale. The salesman's approach is often to rise questions in order to lead the prospect to a logical conclusion : I must buy now.

63-The sale organization:

The two major issues are to recruit salesmen or to organize a franchising or or multi-level market

If you recruit the salesmen:

-You should determine the size of the sales force: It must cover the customer segment. A poor coverage is an invitation to competitors. Remember the production possibility frontier to determine your maximum sales force.

-You should also determine the alignment of the sales force:

Alignment by territory divides the market into geographical areas such as counties or cities and specializes each salesman in an area.

Alignment by product specializes each salesman in a product

Alignment by customer specializes each salesman in a customer (it means that the customer must be a national account).

You can also combine the three alignments.
-You should finally determinate how to motivate the sale force: Sales people can be compensated by commissions, salary or salary plus commission. For a starting business it's more convenient to pay only commissions

If you organize a multi level marketing: Salesmen becomes independent distributors. They operate as contractors. They are encouraged by your company to recruit other distributors. In return, they receive a percentage commission on the sales of their recruits.

There are two benefits from multi-level marketing :You get a large sale force without the expense of full time employees and the distributors work very hard to improve their income.

DRAWING 11

Anyway let to the salesmen a sufficient commission to enable them to manage prospecting and advertising on their territories at their own expenses.

MARKETING MIX

Marketing mix

Marketing mix
1. overview 2. planning 3. swot 4. marketing plan 5. marketing mix 6. product
7. price 8. promotion 9. place 10. literature 11. public relations 12. promos
13. advertising 14. sponsorship 15. sales

Marketing mix. You have decided what your overall company mission is. You have then gone through the process of defining your marketing objectives, and defining the marketing strategies you will employ in order to meet those objectives. You are now moving into the decision-making process for defining the actual tactics you will utilise.

-- elements of the marketing mix.

McCarthy identified the four P's of the marketing mix (40 years ago!)

Product: Defines the characteristics of your product or service that meets the needs of your customers.

Price: Decide on a pricing strategy - do not let it just happen! Even if you decide not to charge for a service (a loss leader), you must realise that this is a conscious decision and forms part of the pricing strategy.

Promotion: This includes all the weapons in the marketing armoury - advertising, selling, sales promotions, Public Relations, etc.

Place (or route of distribution): Some of the revolutions in marketing have come about by changing this P. Think of telephone insurance and the internet! A bit of lateral thinking here might reap rewards for your business.

The leap forward in thinking at the time was that it put the customer at the forefront of the company thinking. Although marketing has got much more sophisticated over the years, I still find this model a very useful way of communicating to non-marketers exactly what marketing is all about.

There are a vast array of circumstances that will dictate which elements of the marketing mix are to be employed and in which proportion. If you have put sufficient time into accurately defining your marketplace, your market segment, your product positioning, and your unique selling propositions then it becomes much easier to carry out this task.

I cannot stress this point strongly enough. Taking time to think through your marketing strategy forces you to take some very difficult decisions. The most difficult ones are those where you decide NOT to do certain things; such as deciding certain market sectors are not key to your company's success due to the difficulty in competing effectively. The benefits of taking such decisions are that it really helps you to focus on a more limited (and achievable) set of objectives. It then becomes much clearer which elements of the marketing mix need to be used, and hence you achieve profitable results from your marketing budget.

A few years ago I took on a senior marketing role within a large organisation and one of the biggest problems I experienced over the initial weeks was a constant supply of "promotional opportunities" being offered up by a whole range of agencies and promotional companies. Because I had not inherited a clearly defined marketing strategy I could not decide which of these opportunities were good and which were inappropriate. Although this is a frustrating situation to be in, I knew that it was only a matter of time before I could put together an agreed marketing strategy and then cherry pick the most appropriate of those promotional ideas.

The point is that less experienced managers can easily become totally snowed under by such an array of conflicting and costly opportunities. This then leads to a promotional campaign based on "which agency sent in the glossiest brochure" rather than on a promotional campaign that supports the marketing objectives/strategies.

Marketing Plan

Marketing Plan
The information for this article was derived from many sources, including Michael Porter's book Competitive Advantage and the works of Philip Kotler. Concepts addressed include 'generic' strategies and strategies for pricing, distribution, promotion, advertising and market segmentation. Factors such as market penetration, market share, profit margins, budgets, financial analysis, capital investment, government actions, demographic changes, emerging technology and cultural trends are also addressed.

There are two major components to your marketing strategy:
how your enterprise will address the competitive marketplace
how you will implement and support your day to day operations.
In today's very competitive marketplace a strategy that insures a consistent approach to offering your product or service in a way that will outsell the competition is critical. However, in concert with defining the marketing strategy you must also have a well defined methodology for the day to day process of implementing it. It is of little value to have a strategy if you lack either the resources or the expertise to implement it.

In the process of creating a marketing strategy you must consider many factors. Of those many factors, some are more important than others. Because each strategy must address some unique considerations, it is not reasonable to identify 'every' important factor at a generic level. However, many are common to all marketing strategies. Some of the more critical are described below.

You begin the creation of your strategy by deciding what the overall objective of your enterprise should be. In general this falls into one of four categories:
If the market is very attractive and your enterprise is one of the strongest in the industry you will want to invest your best resources in support of your offering.
If the market is very attractive but your enterprise is one of the weaker ones in the industry you must concentrate on strengthening the enterprise, using your offering as a stepping stone toward this objective.
If the market is not especially attractive, but your enterprise is one of the strongest in the industry then an effective marketing and sales effort for your offering will be good for generating near term profits.
If the market is not especially attractive and your enterprise is one of the weaker ones in the industry you should promote this offering only if it supports a more profitable part of your business (for instance, if this segment completes a product line range) or if it absorbs some of the overhead costs of a more profitable segment. Otherwise, you should determine the most cost effective way to divest your enterprise of this offering.
Having selected the direction most beneficial for the overall interests of the enterprise, the next step is to choose a strategy for the offering that will be most effective in the market. This means choosing one of the following 'generic' strategies (first described by Michael Porter in his work, Competitive Advantage).
A COST LEADERSHIP STRATEGY is based on the concept that you can produce and market a good quality product or service at a lower cost than your competitors. These low costs should translate to profit margins that are higher than the industry average. Some of the conditions that should exist to support a cost leadership strategy include an on-going availability of operating capital, good process engineering skills, close management of labor, products designed for ease of manufacturing and low cost distribution.
A DIFFERENTIATION STRATEGY is one of creating a product or service that is perceived as being unique "throughout the industry". The emphasis can be on brand image, proprietary technology, special features, superior service, a strong distributor network or other aspects that might be specific to your industry. This uniqueness should also translate to profit margins that are higher than the industry average. In addition, some of the conditions that should exist to support a differentiation strategy include strong marketing abilities, effective product engineering, creative personnel, the ability to perform basic research and a good reputation.
A FOCUS STRATEGY may be the most sophisticated of the generic strategies, in that it is a more 'intense' form of either the cost leadership or differentiation strategy. It is designed to address a "focused" segment of the marketplace, product form or cost management process and is usually employed when it isn't appropriate to attempt an 'across the board' application of cost leadership or differentiation. It is based on the concept of serving a particular target in such an exceptional manner, that others cannot compete. Usually this means addressing a substantially smaller market segment than others in the industry, but because of minimal competition, profit margins can be very high.
Pricing
Having defined the overall offering objective and selecting the generic strategy you must then decide on a variety of closely related operational strategies. One of these is how you will price the offering. A pricing strategy is mostly influenced by your requirement for net income and your objectives for long term market control. There are three basic strategies you can consider.
A SKIMMING STRATEGY
If your offering has enough differentiation to justify a high price and you desire quick cash and have minimal desires for significant market penetration and control, then you set your prices very high.
A MARKET PENETRATION STRATEGY
If near term income is not so critical and rapid market penetration for eventual market control is desired, then you set your prices very low.
A COMPARABLE PRICING STRATEGY
If you are not the market leader in your industry then the leaders will most likely have created a 'price expectation' in the minds of the marketplace. In this case you can price your offering comparably to those of your competitors.
Promotion
To sell an offering you must effectively promote and advertise it. There are two basic promotion strategies, PUSH and PULL.
The PUSH STRATEGY maximizes the use of all available channels of distribution to "push" the offering into the marketplace. This usually requires generous discounts to achieve the objective of giving the channels incentive to promote the offering, thus minimizing your need for advertising.
The PULL STRATEGY requires direct interface with the end user of the offering. Use of channels of distribution is minimized during the first stages of promotion and a major commitment to advertising is required. The objective is to "pull" the prospects into the various channel outlets creating a demand the channels cannot ignore.
There are many strategies for advertising an offering. Some of these include:
Product Comparison advertising
In a market where your offering is one of several providing similar capabilities, if your offering stacks up well when comparing features then a product comparison ad can be beneficial.
Product Benefits advertising
When you want to promote your offering without comparison to competitors, the product benefits ad is the correct approach. This is especially beneficial when you have introduced a new approach to solving a user need and comparison to the old approaches is inappropriate.
Product Family advertising
If your offering is part of a group or family of offerings that can be of benefit to the customer as a set, then the product family ad can be of benefit.
Corporate advertising
When you have a variety of offerings and your audience is fairly broad, it is often beneficial to promote your enterprise identity rather than a specific offering.
Distribution
You must also select the distribution method(s) you will use to get the offering into the hands of the customer. These include:
On-premise Sales involves the sale of your offering using a field sales organization that visits the prospect's facilities to make the sale.
Direct Sales involves the sale of your offering using a direct, in-house sales organization that does all selling through the Internet, telephone or mail order contact.
Wholesale Sales involves the sale of your offering using intermediaries or "middle-men" to distribute your product or service to the retailers.
Self-service Retail Sales involves the sale of your offering using self service retail methods of distribution.
Full-service Retail Sales involves the sale of your offering through a full service retail distribution channel.
Of course, making a decision about pricing, promotion and distribution is heavily influenced by some key factors in the industry and marketplace. These factors should be analyzed initially to create the strategy and then regularly monitored for changes. If any of them change substantially the strategy should be reevaluated.

The Environment
Environmental factors positively or negatively impact the industry and the market growth potential of your product/service. Factors to consider include:
Government actions - Government actions (current or under consideration) can support or detract from your strategy. Consider subsidies, safety, efficacy and operational regulations, licensing requirements, materials access restrictions and price controls.
Demographic changes - Anticipated demographic changes may support or negatively impact the growth potential of your industry and market. This includes factors such as education, age, income and geographic location.
Emerging technology - Technological changes that are occurring may or may not favor the actions of your enterprise.
Cultural trends - Cultural changes such as fashion trends and life style trends may or may not support your offering's penetration of the market
The Prospect
It is essential to understand the market segment(s) as defined by the prospect characteristics you have selected as the target for your offering. Factors to consider include:
The potential for market penetration involves whether you are selling to past customers or a new prospect, how aware the prospects are of what you are offering, competition, growth rate of the industry and demographics.
The prospect's willingness to pay higher price because your offering provides a better solution to their problem.
The amount of time it will take the prospect to make a purchase decision is affected by the prospects confidence in your offering, the number and quality of competitive offerings, the number of people involved in the decision, the urgency of the need for your offering and the risk involved in making the purchase decision.
The prospect's willingness to pay for product value is determined by their knowledge of competitive pricing, their ability to pay and their need for characteristics such as quality, durability, reliability, ease of use, uniformity and dependability.
Likelihood of adoption by the prospect is based on the criticality of the prospect's need, their attitude about change, the significance of the benefits, barriers that exist to incorporating the offering into daily usage and the credibility of the offering.
The Product/Service
You should be thoroughly familiar with the factors that establish products/services as strong contenders in the marketplace. Factors to consider include:
Whether some or all of the technology for the offering is proprietary to the enterprise.
The benefits the prospect will derive from use of the offering.
The extent to which the offering is differentiated from the competition.
The extent to which common introduction problems can be avoided such as lack of adherence to industry standards, unavailability of materials, poor quality control, regulatory problems and the inability to explain the benefits of the offering to the prospect.
The potential for product obsolescence as affected by the enterprise's commitment to product development, the product's proximity to physical limits, the ongoing potential for product improvements, the ability of the enterprise to react to technological change and the likelihood of substitute solutions to the prospect's needs.
Impact on customer's business as measured by costs of trying out your offering, how quickly the customer can realize a return from their investment in your offering, how disruptive the introduction of your offering is to the customer's operations and the costs to switch to your offering.
The complexity of your offering as measured by the existence of standard interfaces, difficulty of installation, number of options, requirement for support devices, training and technical support and the requirement for complementary product interface.
The Competition
It is essential to know who the competition is and to understand their strengths and weaknesses. Factors to consider include:
Each of your competitor's experience, staying power, market position, strength, predictability and freedom to abandon the market must be evaluated.
Your Enterprise
An honest appraisal of the strength of your enterprise is a critical factor in the development of your strategy. Factors to consider include:
Enterprise capacity to be leader in low-cost production considering cost control infrastructure, cost of materials, economies of scale, management skills, availability of personnel and compatibility of manufacturing resources with offering requirements.
The enterprise's ability to construct entry barriers to competition such as the creation of high switching costs, gaining substantial benefit from economies of scale, exclusive access to or clogging of distribution channels and the ability to clearly differentiate your offering from the competition.
The enterprise's ability to sustain its market position is determined by the potential for competitive imitation, resistance to inflation, ability to maintain high prices, the potential for product obsolescence and the 'learning curve' faced by the prospect.
The prominence of the enterprise.
The competence of the management team.
The adequacy of the enterprise's infrastructure in terms of organization, recruiting capabilities, employee benefit programs, customer support facilities and logistical capabilities.
The freedom of the enterprise to make critical business decisions without undue influence from distributors, suppliers, unions, creditors, investors and other outside influences.
Freedom from having to deal with legal problems.
Development
A review of the strength and viability of the product/service development program will heavily influence the direction of your strategy. Factors to consider include:
The strength of the development manager including experience with personnel management, current and new technologies, complex projects and the equipment and tools used by the development personnel.
Personnel who understand the relevant technologies and are able to perform the tasks necessary to meet the development objectives.
Adequacy and appropriateness of the development tools and equipment.
The necessary funding to achieve the development objectives.
Design specifications that are manageable.
Production
You should review your enterprise's production organization with respect to their ability to cost effectively produce products/services. The following factors are considered:
The strength of production manager including experience with personnel management, current and new technologies, complex projects and the equipment and tools used by the manufacturing personnel.
Economies of scale allowing the sharing of operations, sharing of production and the potential for vertical integration.
Technology and production experience
The necessary production personnel skill level and/or the enterprise's ability to hire or train qualified personnel.
The ability of the enterprise to limit suppliers bargaining power.
The ability of the enterprise to control the quality of raw materials and production.
Adequate access to raw materials and sub-assembly production.
Marketing/Sales
The marketing and sales organization is analyzed for its strengths and current activities. Factors to consider include:
Experience of Marketing/Sales manager including contacts in the industry (prospects, distribution channels, media), familiarity with advertising and promotion, personal selling capabilities, general management skills and a history of profit and loss responsibilities.
The ability to generate good publicity as measured by past successes, contacts in the press, quality of promotional literature and market education capabilities.
Sales promotion techniques such as trade allowances, special pricing and contests.
The effectiveness of your distribution channels as measured by history of relations, the extent of channel utilization, financial stability, reputation, access to prospects and familiarity with your offering.
Advertising capabilities including media relationships, advertising budget, past experience, how easily the offering can be advertised and commitment to advertising.
Sales capabilities including availability of personnel, quality of personnel, location of sales outlets, ability to generate sales leads, relationship with distributors, ability to demonstrate the benefits of the offering and necessary sales support capabilities.
The appropriateness of the pricing of your offering as it relates to competition, price sensitivity of the prospect, prospect's familiarity with the offering and the current market life cycle stage.
Customer Services
The strength of the customer service function has a strong influence on long term market success. Factors to consider include:
Experience of the Customer Service manager in the areas of similar offerings and customers, quality control, technical support, product documentation, sales and marketing.
The availability of technical support to service your offering after it is purchased.
One or more factors that causes your customer support to stand out as unique in the eyes of the customer.
Accessibility of service outlets for the customer.
The reputation of the enterprise for customer service.
Conclusion
After defining your strategy you must use the information you have gathered to determine whether this strategy will achieve the objective of making your enterprise competitive in the marketplace. Two of the most important assessments are described below.
Cost To Enter Market
This is an analysis of the factors that will influence your costs to achieve significant market penetration. Factors to consider include:
Your marketing strength.
Access to low cost materials and effective production.
The experience of your enterprise.
The complexity of introduction problems such as lack of adherence to industry standards, unavailability of materials, poor quality control, regulatory problems and the inability to explain the benefits of the offering to the prospect.
The effectiveness of the enterprise infrastructure in terms of organization, recruiting capabilities, employee benefit programs, customer support facilities and logistical capabilities.
Distribution effectiveness as measured by history of relations, the extent of channel utilization, financial stability, reputation, access to prospects and familiarity with your offering.
Technological efforts likely to be successful as measured by the strength of the development organization.
The availability of adequate operating capital.
Profit Potential
This is an analysis of the factors that could influence the potential for generating and maintaining profits over an extended period. Factors to consider include:
Potential for competitive retaliation is based on the competitors resources, commitment to the industry, cash position and predictability as well as the status of the market.
The enterprise's ability to construct entry barriers to competition such as the creation of high switching costs, gaining substantial benefit from economies of scale, exclusive access to or clogging of distribution channels and the ability to clearly differentiate your offering from the competition.
The intensity of competitive rivalry as measured by the size and number of competitors, limitations on exiting the market, differentiation between offerings and the rapidity of market growth.
The ability of the enterprise to limit suppliers bargaining power.
The enterprise's ability to sustain its market position is determined by the potential for competitive imitation, resistance to inflation, ability to maintain high prices, the potential for product obsolescence and the 'learning curve' faced by the prospect.
The availability of substitute solutions to the prospect's need.
The prospect's bargaining power as measured by the ease of switching to an alternative, the cost to look at alternatives, the cost of the offering, the differentiation between your offering and the competition and the degree of the prospect's need.
Market potential for new products considering market growth, prospect's need for your offering, the benefits of the offering, the number of barriers to immediate use, the credibility of the offering and the impact on the customer's daily operations.
The freedom of the enterprise to make critical business decisions without undue influence from distributors, suppliers, unions, investors and other outside influences

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