Don't buy into these fallacies

Marketing is the key driver of business growth. But marketing is not an exact science, leading to many fallacies and myths. And following some of these fallacies and myths can lead your business in the wrong direction. The good news is that if you recognize these fallacies, you can turn them to your advantage.

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Fallacy No. 1

Business owners and entrepreneurs have passion, energy and total belief in their product or service, which is why they are willing to take so much risk in marketing their product or service.

It is a fallacy that "everyone needs my product/service." No matter how good your product or service is, the better mousetrap does not necessarily sell the most product. Most people in the marketplace don't think they need your product or service and certainly most are not ready to spend money on it.

The danger of this fallacy is that it causes many businesses to believe they can succeed without doing much marketing or proactive selling. They think their product or service is so special that it should automatically generate large numbers of paying customers. But very rarely does it happen this way.

Building a successful business is hard work, and most of it is devoted to finding customers. Even if most people can use your product or service, it will still require a marketing strategy to reach them and then a persuasive benefits-oriented sales message to close the deal.

Advice: Look for narrowly defined niche markets where your product or service provides a unique solution for the customer's needs. Focus on marketing to this smaller defined group of customers rather than trying to reach broad general groups of potential customers. Not only will this generate more sales but it will also provide a better return on marketing investment dollars.

Fallacy No. 2

Business owners tend to be concerned about competitive pricing because they believe customers want to buy where they get the cheapest price.

Even though there will always be a market for the cheapest price, the reality is that the most-satisfied customers are those who believe they got the best value.

There are many examples of building successful businesses by providing value rather than cheapest price. Look at German car manufacturers. There are many expensive German cars with significant customer bases; if the fallacy of cheapest price were true, we would all be driving the cheapest cars available and only businesses that charge low prices would exist.

Some people do believe that the cheapest price is the best buy, but consumer research has shown that most customers are more interested in getting value for their money rather than just a bargain. Consequently, businesses that do not invest in improving their marketing and sales skills will be forced to sell on price.

Advice: Find ways to enhance the perceived value of your product or service, particularly to a niche market, and provide the appropriate communications for the selling process. Then test raising the prices. There is a high probability that this tactic will increase both sales and profits, and the profit increase will be by an even greater percentage than the sales increase.

Fallacy No. 3

Business owners tend to want to offer many products or services � "the more the better" � in the belief that it will help boost sales.

The sales adage, "Too many choices confuses the customers," remains true. When potential customers are presented with lots of options, it usually reduces actual sales. When confronted with multiple options, most customers have a hard time making a decision. They often react by procrastinating, and they never make a decision. When this happens, you will lose a sale you already had.

Advice: Limit the customer's decision-making task to either "Yes, I'll buy" or "No, I won't buy." Don't risk losing the customer by including "which one" decisions.

Fallacy No. 4

Because business owners see their ads many times, they think that if they don't change the advertising to keep it "fresh," sales will decline.

The only time to change an ad is when the cost of running the ad is greater than the product or service gross margin plus advertising cost (a direct cost break-even analysis). Never abandon advertising that is working financially.

There will always be non-customers who don't respond to the advertising. The reason is, most have not seen the advertising, and those who have seen it usually need to see it several times before they will respond.

Advice: Don't abandon advertising that is working, that is generating greater revenue than the direct cost break-even analysis, but do work to improve the advertising. Test and measure the modifications to see if they provide an improved response rate to the existing advertising. A guide to execute this test-and-measure program is to allocate 85 percent to 90 percent of the advertising budget to the existing advertising and allocate 10 percent to 15 percent to testing modifications to the advertising. And when something new works better than the existing advertising, move 85 percent to 90 percent of the budget to the new advertising and spend 10 percent to 15 percent of the budget on testing more new ideas.