The key idea in an ad

Plan the ad around one idea

Each ad should have a single message – the key idea in an ad. If the message needs reinforcing with other ideas, keep them in the background. If you have several important things to say, use a different ad for each one and run the ads on succeeding days or weeks.

The pointers which follow are designed to help you plan ads so they will make your store stand out consistently when people read or hear about it:

Identify your business fully and clearly

Make sure your radio and television ads identify your sponsorship as fully and frequently as possible without interfering with the message. Logotypes and signatures in visual ads should be clean-lined, uncluttered, and prominently displayed. Give your address and telephone number. It's possible to use a musical or sound effect signature identified with your store to create a "logo" on radio, too.

Pick illustrations that are similar in character

Graphics - that is, drawings, photos, borders, and layouts - that are similar in character help people to recognize your advertising immediately.

Pick the audio format or typeface and stick to it

Using the same typeface or the audio format for radio or television helps people to recognize your ads quickly. Using the same format or kind of type and illustrations also allows you to concentrate on the message when checking ad response changes.

Make copy easy to understand

Printed messages should be broken up with white space to allow the reader to see the lines quickly.

Broadcast messages should be written conversationally. Remember, these messages are human beings talking to human beings.

Tell your listeners how what you're advertising will help them. Consumers buy benefits, not products.

Get the main message in the first sentence, if you can. Sentences should be short. Be direct. Go straight to the point. Get the audiences' attention in the first five seconds of the radio or TV commercial.

Try out your script on somebody else or read it into a tape recorder. When you play the tape back, you'll easily spot phrases that are hard to understand (or believe!). Your ears are better than your eyes for judging broadcasts ads.

Planning for Advertising Results

Planning for  Advertising Results

Whether you are trying to measure immediate response or attitude advertising, your success will depend on how well the ads have been planned. The trick is to work out points against which you can check after customers have seen or heard the advertisement.

Certain things are basic to planning advertisements whose results can be measured. First of all, advertise products or services that have merit in themselves.

Unless a product or service is good, few customers will make repeat purchases no matter how much advertising you do.

Many people will not make an initial purchase of a shoddy item because of doubt or unfavorable word-of-mouth publicity. The ad that successfully sells inferior merchandise usually loses customers in the long run.

Marketers, as a rule, should treat their messages seriously. Humor is risky as well as difficult to write. Be on the safe side and tell people the facts about your merchandise and services.

Another basic element in planning advertisements is to know exactly what you wish a particular ad to accomplish. In an immediate response ad, you want customers to come in and buy a certain item, or items in the next several days. In attitude advertising, you decide what attitude you are trying to create and plan each individual ad to that end.

Evaluating Advertising Results

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Marketing Misconceptions

To begin moving in the right direction, we must first dispose of some  marketing misconceptions. Four of the most common are:

Misconception 1: Companies control market demand. This is a notion that is at once seductive and destructive.

The idea that companies control markets has been disproved most vividly in the industry where the misconception first took hold–the automobile industry. General Motors saw its market share plummet during the 1980s, despite pouring millions of dollars into television, magazine, and other mass-market advertising. The decline of huge department stores (Macy’s), airlines (Pan Am), and computer companies (Wang) is further evidence that companies don’t control markets, no matter how large their advertising budgets.

Misconception 2: Once you develop a marketing approach that works for your company, you've mastered marketing.  This may be the most dangerous misconception, because it can mislead entrepreneurs who are enjoying business success. Just think about all the business executives who have ridden the crest of marketing success, only to crash.

Remember whenWestern Unionwas synonymous with time-sensitive business communications, and IBM synonymous with computers

These examples aren’t meant as slights to the companies noted. The purpose in citing them is to make the point that everything looks easy when it works. But it should be clear to anyone who follows the ups and downs of business that few executives can feel truly secure that they have mastered marketing.

Misconception 3: There's a magical "marketing bullet" that works for everyone.    The converse of this is that a single overall explanation exists as to why successful marketers stumble. Successful marketers invariably attribute their accomplishments to some special practice–a focus on product quality or top-notch service or speedy delivery or the best prices. The stumbles come about, they typically say in retrospect, either because of some force beyond their control (Japanese imports or a recession, for example) or because they “took their eye off the ball.”

If one analytically picks apart the successes and failures, though, they are invariably much more complicated. Lee Iacocca can certainly blame Japanese imports and a recessionary environment for Chrysler’s problems in the early 1980s and again in the early 1990s. But there are no doubt a variety of pricing, feature, positioning, segmenting, promotional, and other issues that adversely affected the company. And perhaps Iacocca became more infatuated with his own success than he should have been if he were to stay objective about his company’s marketing prospects.

Misconception 4: Marketing and selling are the same. This misconception comes about because many of the most successful entrepreneurs are also very good salespeople. Talented salespeople can often go a long way selling a particular product or service without having a clear understanding of the true dynamics of the marketplace. Thus their success in selling can delude them into believing they have mastered marketing.

In reality, though, selling is only one aspect of marketing implementation. That is, once you have identified your customer prospects and determined how best to reach them, you move into the sales process–convincing customers to buy your product or service. If you haven’t done your marketing homework, you can easily fail when it comes to selling. And if you are fortunate enough to convince a random group of individuals or companies to buy your product or service, without some notion as to why you picked them, your success may be a testimonial to your sales rather than your marketing skills.

This confusion between marketing and sales often becomes apparent when companies seek to move past a particular sales plateau–typically in the $500,000 to $3-million range.

Marketing Truths: see link

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Income Statement Ratio Analysis

Income Statement Ratio Analysis

The Balance Sheet and the Statement of Income are essential, but they are only the starting points for successful financial management. Apply Income Statement Ratio Analysis to Financial Statements to analyze the success, failure, and progress of your business.

Ratio Analysis enables the business owner/manager to spot trends in a business and to compare its performance and condition with the average performance of similar businesses in the same industry. To do this compare your ratios with the average of businesses similar to yours and compare your own ratios for several successive years, watching especially for any unfavorable trends that may be starting. Ratio analysis may provide the all-important early warning indications that allow you to solve your business problems before they destroy your business.

The following important State of Income Ratios measure profitability:

Gross Margin Ratio

This ratio is the percentage of sales dollars left after subtracting the cost of goods sold from net sales. It measures the percentage of sales dollars remaining (after obtaining or manufacturing the goods sold) available to pay the overhead expenses of the company.

Comparison of your business ratios to those of similar businesses will reveal the relative strengths or weaknesses in your business. The Gross Margin Ratio is calculated as follows:

Gross Profit

Gross Margin Ratio = _______________

Net Sales

(Gross Profit = Net Sales - Cost of Goods Sold)

Net Profit Margin Ratio

This ratio is the percentage of sales dollars left after subtracting the Cost of Goods sold and all expenses, except income taxes. It provides a good opportunity to compare your company's "return on sales" with the performance of other companies in your industry. It is calculated before income tax because tax rates and tax liabilities vary from company to company for a wide variety of reasons, making comparisons after taxes much more difficult. The Net Profit Margin Ratio is calculated as follows:

Net Profit Before Tax

Net Profit Margin Ratio = _____________________

Net Sales

Management Ratios

Other important ratios, often referred to as Management Ratios, are also derived from Balance Sheet and Statement of Income information.

Inventory Turnover Ratio

This ratio reveals how well inventory is being managed. It is important because the more times inventory can be turned in a given operating cycle, the greater the profit. The Inventory Turnover Ratio is calculated as follows:

Net Sales

Inventory Turnover Ratio = ___________________________

Average Inventory at Cost

Accounts Receivable Turnover Ratio

This ratio indicates how well accounts receivable are being collected. If receivables are not collected reasonably in accordance with their terms, management should rethink its collection policy. If receivables are excessively slow in being converted to cash, liquidity could be severely impaired. The Accounts Receivable Turnover Ratio is calculated as follows:

Net Credit Sales/Year

__________________ = Daily Credit Sales

365 Days/Year

Accounts Receivable

Accounts Receivable Turnover (in days) = _________________________

Daily Credit Sales

Return on Assets Ratio

This measures how efficiently profits are being generated from the assets employed in the business when compared with the ratios of firms in a similar business. A low ratio in comparison with industry averages indicates an inefficient use of business assets. The Return on Assets Ratio is calculated as follows:

Net Profit Before Tax

Return on Assets = ________________________

Total Assets

Return on Investment (ROI) Ratio.

The ROI is perhaps the most important ratio of all. It is the percentage of return on funds invested in the business by its owners. In short, this ratio tells the owner whether or not all the effort put into the business has been worthwhile. If the ROI is less than the rate of return on an alternative, risk-free investment such as a bank savings account, the owner may be wiser to sell the company, put the money in such a savings instrument, and avoid the daily struggles of small business management. The ROI is calculated as follows:

Net Profit before Tax

Return on Investment = ____________________

Net Worth

These Liquidity, Leverage, Profitability, and Management Ratios allow the business owner to identify trends in a business and to compare its progress with the performance of others through data published by various sources. The owner may thus determine the business's relative strengths and weaknesses.

Balance Sheet Ratios:  http://wp.me/p2qN89-5S