If you are of the habit of running your business without stopping to analyse your marketing strategies to see where you stand in relation to your competition, you are likened to one who takes a jump over a cliff without looking.
It is no news that small businesses are averse to marketing. The reasons for this have been linked to the attitude of owners-managers to marketing. Little wonder these small businesses struggle to compete favourably in the marketplace.
In this post, I will reveal how to use marketing tools to determine:
- how customer penetration fluctuates over a time period
- understand how often a specific product is purchased and its usage across different target segments
- number of customers that have purchased a specific product at least twice within a specific period of time.
This will enable small business owners craft resounding and informed marketing decisions that would help them stay competitive and grow their businesses.
TOOLS TO SUPPORT MARKETING DECISIONS
Customer penetration
This is a term used to measure how much a product or service is used by customers compared to the total estimated market for that product or service.It also shows the number of customers that have purchased a specific company’s product instead of that of your competitor.
Market penetration can be used to determine the size of your potential market.If the total market is high,it means that new entrants to your industry might be encouraged that they can get market share or a percentage of total number of potential customers in your industry.
How to calculate customer penetration
To calculate market penetration, the current sales volume for your product or services is divided by the total sales volume of all similar products, including those sold by your competitors.
For example, let’s assume you sell phone accessories and your target customers are 1000 university students between the ages of 19-22 years.
Total number of students who bought phones = 12,000 and 1500 purchased your product once in three months.
To calculate penetration for students:
Customer penetration [CP] = students who bought x100
total number of students in area
CP = 1500/12000 x 100
CP = 12.5 % in three months.
With this analysis you would be able to see your position relative to other competitors and know how to improve your business strategies in the coming months.
Frequency of Purchase
A lot of times business owners find it difficult to know the customers that are loyal to them in the long run. They often fail to balance high volume purchase customers and those that buy not so big volumes repeatedly. Being able to calculate your customers’ frequency of purchase will help your businesses in the following ways:
Understand how often a specific product is purchased
Let’s say you sell a basket of different products and you want to know which product sells faster than others.
By calculating the frequency of purchase, you would be able to know your fast lines and design marketing strategies to boost sales by stimulating further usage of the products or new usages for the same product.
Compare your product usages across different target segments or across different product lines you supply.
By calculating frequency of purchase you would be able to determine customers who are heavy users, as opposed to light users, or you might be able to spot differences in usage that are related to the customer’s segment personal characteristics like age,gender,lifestyle etc.