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May 12, 1997 02:00 AM

MISSION IMPOSSIBLE?: BUSINESSES CAN'T SUCCEED IF OWNERS CAN'T DEFINE SUCCESS, CREATE MARKETING PLANS

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    LOUISVILLE, Ky.—There once was a fixed base operator. In other words, the guy managed an airfield. One day he told an inquisitive visitor: ``I started off this business with a borrowed $10,000. Now I owe $4 million—I must be successful!''

    True story. But what does it all mean?

    At least a couple things, according to Richard P. Morgan, a certified management consultant. There's a better than even chance that the aforementioned entrepreneur got into business without really anticipating where he was headed—without a mission, so to speak, much less a statement. You just can't fly a plane that way.

    And, ``if you don't define success, how will you ever know when you're getting close?'' the former senior vice president for Longmile Rubber Co. asked the audience at his workshop entitled, ``Successful tire and retread marketing.'' It was held during the International Tire and Rubber Association's recent World Tire Conference and Exhibition in Louisville.

    Often times, he said, owners find themselves in an ``unbalanced'' business situation:

    The company's marketing people may promise more than they can deliver;

    The business is running an underutilized facility;

    Inadequate credit management has led to bills piling up;

    A new facility over-extends finances; or

    Poor administration squeezes cash and cuts marketing efforts.

    ``Achieving balance means good planning and allocating resources in advance'' of a crisis situation.

    ``Good managers do things right,'' Mr. Morgan pointed out, while ``good leaders do the right thing.''

    He warned of overemphasizing one aspect of an operation over another, such as a retreader who grew up in the business and likes the technical aspects of it, but neglects the marketing side.

    Or perhaps a ``good numbers person'' whose books are up to snuff, but the plant is out of date and the company's marketing efforts lag behind the competition's.

    Then there's the born marketer whose manufacturing plant can't seem to keep up with what is being promised to customers.

    The ``bull's eye'' on a company's program should be its targeted customers, he said, outlining the first of 10 marketing keys to running a successful business.

    ``If you have a mission statement, and are following it, that tells your customers who you are, what you do, what your goals are,'' said the president of Dallas-based Morgan Marketing Solutions Inc., noting a business consists of many people—not just the ones who own it.

    ``But it's the owner's mission that drives the company, and the mission statement says how you will accomplish that.''

    While some believe that having a mission statement is a gimmick, he disagreed, instead calling it a serious exercise focusing on ``how to get and keep customers.''

    The second marketing key is a careful selection process—of suppliers, employees, and even customers, Mr. Morgan said.

    A business owner must strive for market position, he noted, by asking himself or herself, ``What do I do better than others?''

    Nonetheless, it is a constant battle to achieve ``top of mind'' and ``preferred'' status among customers.

    One way to do that is by everyone in a company telling the same sales story at all times. That gets pretty boring to sales people, he admitted, but it's consistent.

    In line with that strategy, he urged owners to practice ``relationship marketing:'' know your business; know your customer; know your customer's business; collaborate via long-term ``partnering''; help your customer succeed; and use effective, frequent communication.

    ``Vendor'' is a terrible word, Mr. Morgan continued. Instead, ``work at developing relationships so that you're a business partner with customers.''

    The fifth marketing key is to establish a company's marketing expectations. ``Most people will rise or fall to the level of your expectations as the owner of the business,'' he said. ``Do your employees know today what's expected in detail, and do they know where they stand with you in accomplishing those goals?''

    Written job descriptions, written individual performance appraisals, pre-determined goals and expectations will help attain those goals, Mr. Morgan said.

    ``And keep raising the bar! That way, their productivity rises, and they're doing things they never thought they could achieve.''

    Nothing, however, comes without a price.

    Running a successful business requires education—marketing key number six. But ``if you think education is expensive,'' he said, ``then price ignorance.''

    ``You educate people. You train seals.

    ``Is technical knowledge enough for sales persons in today's marketplace? No.''

    Mr. Morgan suggested owners seek out a nine-year-old book for sales people called Spin Selling, which designates as a ``SPIN'' model:

    Situation questions lead to

    Problem questions that point to the implied needs of a prospect; then

    Implication questions focus on problem solving; and

    Need-payoff questions help a prospect state his or her explicit needs, so the seller can relate the benefits being offered.

    Design compensation plans carefully, Mr. Morgan warned owners, and ``pay for results,'' rather than pay increasingly more for employees to stay at the same production level.

    That can be accomplished by gauging sales results vs. specific goals; gross profit vs. specific goals; attainment of business-building objectives; and attainment of individualized goals.

    In order to succeed, a company must provide superior selling tools. As outlined in the eighth marketing key, that includes written proposals to key prospects; company and product literature and fact sheets; multi-media communications with clients and prospects; and contact on various levels, such as personal, phone, direct mail, fax, the Internet and community efforts.

    The ninth marketing key calls for owners to know their real investments—that is, variable and fixed—and ``margins,'' which are defined as margin on materials, gross margin, and marginal income. Mr. Morgan also recommended they understand their ``break-even'' point—where variables and fixed investment costs are equal.

    There are only three ways the break-even point can be influenced, he noted: by an increase in profitable sales, a change in margins or a reduction in fixed expenses.

    Restating the obvious, Mr. Morgan said successful marketing means profitability, and there are at least two very different ways in which a business looks at profit perspectives.

    The accounting view, he said, sees an inverted triangle, with sales at the top. Aided by the ``law of gravity,'' cost of goods follows, then fixed costs—all factored together to let profits "leak" out of the bottom.

    The inverse is the strategic view from a marketer's standpoint, where profit is squeezed out at the narrow top of the triangle.

    ``For me, the bottom line is sales,'' Mr. Morgan said, ``and the top line is profit.''

    The 10th marketing key is development of a marketing plan and budget.

    That will counteract the notions that ``when you don't know where you're going, any road will do,'' or ``I'll wait for something to happen, then I'll react to it.''

    Mr. Morgan told owners to tie marketing to a mission and balance it with company resources, and consider an outside facilitator and implementation help for the process.

    Marketing tires and retreading are not separate functions within a company, he stressed. They require an integrated approach. ``Too much or too little either way could get you in trouble.''

    Touching briefly on the subject of family-run businesses, he said 90 percent of them never make it to the third generation because of a lack of planning. Consequently, an owner must state his vision as well as decide how he wants his business to end.

    Letter
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    Do you have an opinion about this story? Do you have some thoughts you'd like to share with our readers? Tire Business would love to hear from you. Email your letter to Editor Don Detore at [email protected].

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