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Section 2. - Marketing Strategies

Constructing a Marketing Plan -
A marketing plan is a "road map" for you to use as you go about selling your business to potential clients. A marketing plan allows you to be organized, efficient, and effective in the process of attracting guests. It also allows you to evaluate your efforts in a quantitative way.  The first issue to address in creating a marketing plan is deciding who your customer is. The more specific you can be the better chance your strategy will have to be successful. The next issue is the budget. Some money needs to be spent in order to attract customers. Although no hard and fast rules apply, a good guideline, at least in the first few years of business, is to spend from 20 to 30 percent of your expected or actual gross revenues. Constructing a marketing plan is very simple, once the research phase has been completed. Whereas major companies may have a marketing document of hundreds of pages, a two-four page plan is appropriate for most small businesses.

It is important to remember that a marketing plan is only a guideline, and as such should be changed as needed to meet your goals. In your first years, the marketing plan may need to be revised frequently to suit your needs, your cash flow, and even your customers. You also should be ready and able to take advantage of any favorable situations that may arise. For example, you may learn midway during the year that a targeted magazine is offering terrific rates for new advertisers. You should have the ability to adjust your plan for such a situation. On the other hand, enough time and thought should be spent on constructing a marketing plan that does not require that changes be made on a weekly basis. The concept of flexibility should not be used as an excuse for not accomplishing a particular task.

The major elements that should be stated in any marketing plan are: 1) Defining your customer; 2) Budget; 3) Marketing goals; 4) Target markets; 5) Plan of action.
Some Thoughts to Consider When Pricing Your Farm and Ranch Stay -
Arriving at a price which: accounts for all your costs; accurately portrays your added value; is attractive to your customer and is favorably compared with your competition and ensures a realistic profit.   

Accounting for Costs: - Develop a cost checklist, including "overhead" and marketing expenses. If your marketing budget is $15,000 and you plan to have 50 guests all staying for a week, you will need to factor in $300 per person; so if your weekly rate is $1,050, $300 is for marketing.   Have a marketing costing checklist. And account for travel agent commissions. Example:  Assume 15% commission to booking agent; Assume 25 out of 50 guests come from this source; Prorated over 50 guests, this is actually a 7.5% commission.  If weekly rate is $1,050, travel agent commissions equal $78.75 or 26% of your marketing budget.

Accurately Portraying Your Added Value - This is best done by a consumer and/or objective outside party. **Points to consider (sample list only):  Location (i.e. next to National Park, major airport, interstate, unique historical site, etc), number of guests (capacity), types of activities available- uniqueness (example: fossils on property, trout stream, work with rare livestock breeds, hunting opportunities, view Anasazi Ruins/irrigation patterns, etc.).

For the host(s): The extent of their involvement as a community leader, story teller, multi-generation rancher, family with kids involved and rodeo participant. Provide accommodations: Bunkhouse /bin with private bath. Food: All raised on ranch; gourmet cook and understanding and delivering on the issue of quality.  

Attractiveness to Customer - Who is your customer? This is all important. Once clearly understood, then price must be attractive to them (market tolerance) so you book them, and have them return again and again-- nurturing customers for lifetime value and lifetime income. Make sure the concepts of quality and added value are defined by the customer.

Favorably Compares With Your Competition

  • Must know your competition; must know their pricing.
  • Then contrast what you have to offer that they don't.
  • What is unique; what is extra value that you offer.
  • Mistakes to avoid:
    ↓ You aren't a dude ranch
    ↓ You aren't a guest ranch resort
    ↓ You aren't next to a great trout fishing river
    ↓ You are three hours south of Salt Lake City, not, 45 minutes
    ↓ Your hunter prices are not the same as your summer "dude" prices 
    ↓ You don't do realistic/objective assessment of what you offer that customers want
    ↓ You set a price based mostly on what you want to make per person, open your doors, and they will come
    ↓ You define added value and quality, not your customers

Ensures a Realistic Profit

  • Must work through what a realistic profit is for you.
    ↓ Need to know some of your competition only want to break-even (this can undercut you)
  • Must clear $10,000 example:
    ↓ If 50 guests at $1,050 per week (total $52,500), then your markup has to at least be $200. If $300 is allocated for marketing, does $550 cover your overhead and all costs?

Other Issues

  • Deposits - 25 - 50%
  • Cancellation Fees - Depends when they cancel and whether you can fill the space.
  • Gratuities - Extra? Included as a service fee? Can you expect one if you are the owner? Do you state them or hope the customer knows?
  • All inclusive pricing versus `a la carte pricing.
  • Family pricing -Discount for kids?
  • Off season pricing.
  • Local customer pricing.
  • Minimum stay.
  • Can you have day use customers and overnight customers? How do you arrive at prices for day visitors?

EVALUATING THE MARKETING PLAN -It is impossible for hospitality providers to become and stay successful without completing this step in marketing. By analyzing what was attempted and achieved, providers gain the knowledge and insight needed to correct, improve, and maintain the particular parts and pieces of the marketing plan. (The same applies for other aspects of the business as well.)

There are several types of "evidence" to analyze during this phase. The first is actual versus projected inquiry and client numbers. You also want to pay close attention to the number of clients received from each different type of promotion (publicity, word-of-mouth, etc.). Furthermore, each publication, book, or show in which you receive mention or bought space should be looked at. Client evaluations should be sent out and carefully examined. Finally, you will want to utilize the information you have gathered on your clients to create a profile of your typical client. From this effort, a clear picture should emerge about the success of your operation and marketing efforts, along with reasons for that success or failure.  Consider using the following approach in evaluating your efforts:  Inquiry Numbers and Client Count - Determine the number of inquiries received in total and the number of total clients or "conversions." A percentage figure can then be extrapolated. One conversion out of 100 inquiries is one percent, which is quite low, whereas ten conversions or ten percent is much more acceptable when one takes into account the dollars used to pull those inquiries. Compare those figures to what your best guess was at the beginning of the season. Was it higher or lower? Were you hoping for too much, too soon?  How did that actual number "feel"?  Could you have realistically handled any more clients?

Critique Promotional Methods - Overall, you will want to determine the effectiveness of each type of promotion you have invested in over the year. To do this, you need to determine the percentage of clients converted from the inquiries received in each category (advertising, publicity, direct mail, etc.) You will then know both the gross percentage and conversion rate for each category. For example:

Advertising: 100 Inquiries; 4 Conversions = 4.0% Conversion; 8.0% of total clients
Publicity: 40 Inquiries; 11 Conversions = 27.5% Conversion; 22.0% total clients
Direct mail to your list: 200 Inquiries; 11 Conversions = 12.5% Conversion, 50.0% total clients
Other: 150 Inquiries; 6 Conversions= 6.6% Conversion, 12.0% total clients
TOTALS:  50 Clients, 100.0%

In this example, it is clear that although publicity yielded only 30% of the clientele, a high percentage of those who inquired converted into clients (37.5%), a good sign that publicity is working for you. Tracking categories of promotion in this way can be very useful in judging the impact of your efforts and assessing the effectiveness of each type of promotion on which you spend time and money.

Advertising: You should also track the effectiveness of each ad. You could do this by evaluating conversions as they relate to the overall client count and/or by assessing conversions as they relate to dollars spent. In other works, was the money you spent on an ad recouped or offset by the number of clients you received as a result? Such an analysis might look like this:   
Ad (x)  Cost $300- Number of Conversions x Income ( 4x$200) = Income of $800.00

Although on the surface this ad appears to have paid for itself, providers must remember to figure in all expenses when determining a profit. In this case, if expenses, including the ad buy, cost more than the income realized, the ad purchase should be reviewed.

Publicity: Since you did not actually invest hard dollars in purchasing publicity, a better way to determine its effectiveness is to come up with an overall percentage figure of how many clients converted from publicity sources, and then to compare that number to other campaigns.

If 37.5% of your clients came from publicity, it is a good sign that it is working well for you and that you should maintain your current efforts in that area. If only five percent are publicity related, you should look at (1) the AMOUNT of publicity you received (was it only one story in one magazine?); (2) the TYPE of publications in which you have received mention (were they travel-related and how large was their circulation?); (3) the TIME of year published (too late for effective planning, or run when you were already full for the season); and (4) the EFFORT you made to procure stories.

Direct Mail to Your List (follow-up calls): Your list is very important. It is made up of referrals, past clients, friends, inquiries, word of mouth names, etc. It can be ten times more productive than a purchased list. However, after a mailing, call within two-three weeks; follow up is essential.

Website: This is a very important tool. Tally "hits" and conversions; analyze; add links; keep website current. Ask basic question: Are you getting your money's worth? Talk to those that have a successful conversion ratio.

Other: Analyze what your trade association or any other marketing association to whom you have paid money has done for you over a year. Look for consistency of referrals and conversions over a period of a few years. Look carefully at all other marketing campaigns including membership dues to organizations to which you have spent time pursuing, and whether or not hard dollars were invested. What have they done to improve your business?

Things to keep in mind when preparing brochures and other promotional materials for your agri-tourism business --1) your promotional materials reflect the kind of outfit you are:   a. Distinct, attractive image versus no memorable personality - "Think outside the box"- What makes you unique - Benefit headline and Dominant graphic element; b. Quality operation with good detail versus sloppiness and carelessness. c. Clear customer benefit versus no special reason to buy. 
2) All your communications should consistently describe who you are (remember the communication focal point) and should have a similar appearance. Family versus adult oriented.  3) Keep it simple - a. If you try to communicate everything, you may communicate nothing; b. Use a simple design that is easy to follow; make it easy for the customer.  4) When it comes to images: a. Use the best photos/digital images you can afford; b. don’t use images which won't reproduce or say anything the customer isn't interested in; c. Nothing less than 5 mega pixel; prefer 7.   5) Be sure to include the things your potential visitors want to know about: accommodations, the food, the setting;  rates and seasons of operation; distance to transportation options;  directions; what their experience might consist of (and options); other things to do in the area (self-guided tours, etc.); information about you, your family, and your hired help; acceptability of credit cards; don't forget the basics: website, telephone (800 line), fax, address, and electronic mail address.   6) Understand how your promotion materials will be distributed before producing them.  If it's displayed on a rack--a piece folded to fit a letter size envelope with a vertical layout will get the best results.  The same size should work well as an enclosure with confirmation letters. Consider a self-mailer that can contain a letter and rate card. Consult a printer or graphics specialist for economical sizes --slight differences can increase the cost, but may also separate your brochure from others. Consult your post office regarding sizes and weight.    7) Printing considerations: quantities; colors, embossing, foil; size; paper stock --recycle paper; photos; illustrations and budget!   

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