Marketing Information Factsheet www.isington.gov.uk
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Introduction These marketing information fact sheets are aimed at chidminders and chidcare providers. They form an introduction to some of the marketing aspects associated with running a chidcare business and are aimed at assisting you in your marketing pans for the organisation. They are not intended to be the soe soution to any marketing probems that you may encounter. Additiona marketing hep can be sought from various sources incuding your business Support Officer at Chidren s Services; ICCT; Business Link for London; Vountary Sector Councis etc. Tabe of Contents Page 4 Page 5 Page 7 Page 9 Page 14 Page 16 Page 21 Marketing Methods (How the Experts Market) 25 Creative Ways to Market your Setting Marketing What Can You Do? Marketing Your Chidcare Business Marketing Tips Pricing Strategies The Marketing Mix 3
Marketing Methods How the experts market A few genera tips when panning your marketing strategy: Focus on existing customers first. It is far, far easier and infinitey cheaper to keep and se more to the customers you aready have than it is to find new ones. Learn to see buiding customer oyaty and marketing extra services to your existing customers as the most important part of your marketing efforts. Periodicay remind customers of what you can offer and et them know about new services or specia offers you have introduced. Appea to your target market. This may sound obvious, but don t forget you re not trying to reach everyone! Choose your methods and phrase your ads to be reevant to your target customers. If you have a few distinct groups, you may need to use different campaigns. Compie a contact database. Contact detais of peope who you aready know to be potentia customers are ike god-dust when it comes to maishots, invites to open days and so on. - Coect detais of the peope who contact you, both those who buy and those who don t. Don t forget to ask for emai address too. Pre-seing. Experts pace a ot of emphasis on the pre-seing process. The idea is give peope something for free that buids their trust and reiance on you, such as free trias, usefu written information or socia events. The end sae then becomes reativey easy. This sort of thing may cost you a bit up front, but compare the costs to the potentia ifetime vaue of a new customer. Marketing to the emotions. When a customer enters your premises or picks up some of your iterature they form immediate impressions based on every type of information avaiabe to them; the coours you choose, the quaity of materias, the way your staff dress and so on. Much of this is totay unconscious, but in most cases the buying decision is made in seconds, based on these types of factors rather than your carefuy panned presentations and words. So take the time to consider what gut reaction peope are ikey to have when encountering your setting and its marketing activities. For exampe, ook around your reception area: Does it fee friendy, fun, and educationa? Or is it rather impersona, cod or scruffy? image and branding. You can create and use a strong brand to show the Unique Seing Point s (USP s) of your business and appea to your target market, for exampe through signage, ogos, business paper, staff uniforms, tee-shirts for the chidren, a gossy brochure. It s worth paying for a professiona designer to put this together for you. Shop around, get a few quotes and ook at exampes of their work. But don t get carried away. This sort of thing can get expensive, and remember you re ony aiming to make an impression on your specific target group, not become known throughout the country! go for cheaper and onger asting forms of advertising. Peope often have to see an advert severa times before acting on it, so a big 6-monthy spash is probaby ess effective than reguar or ong-asting but cheaper ads. Try a stand-out format in the Yeow Pages, a weeky Cassified ad, or a very sma but we paced spot in your oca paper (most have a few spaces around their tite on the front page). Source Carde Media 4
25 Creative ways to market your setting There are many, many ways you might choose to promote your setting. The Effective Marketing Modue ooks at advertising, directories and brochures. Here are some other ideas you might want to try be creative! 1. Partnerships with oca empoyers, schoos, shopping centres, eisure centres and so on to provide chidcare on their premises or on their behaf. 2. Link up with oca cubs and businesses to provide discounts for their members, customers or empoyees. 3. Form aiances with other chidcare providers to refer peope on when you don t have vacancies. 4. Ask customers if they wi provide testimonias and references you can use for marketing purposes. Make use of positive quotes picked up in customer surveys and thank-you etters. (Make them anonymous uness you have permission). 5. Give out free informative eafets or artices on topics reated to chidcare, famiies, education, etc. Incude a bit of information on the setting and your contact detais. 6. Socia events open to a, or just for your customers and their friends. It s vita you foow-up these events with a ca or maier, so make sure you get contact detais. 7. Free/discounted tria sessions (maybe just a sma charge for the chid s refreshments). 8. Pay a bonus to staff for bringing in new customers. 9. Give existing customers incentives for bringing in new customers, such as a free session for exampe. Remind them reguary that you do this. 10. Loca maishots and eafeting. 11. E-maishots, especiay for existing customers. The cost is negigibe! 12. Press reeases. Journaists aways ike an interesting story e.g. specia events, unusua achievements of the setting or chidren (parenta permission required of course). 13. Write to your oca newspaper s Letters Page on reevant topics. Incude the name of the setting and what your roe there is. 14. Invite your oca media to specia events. 15. Get known by oca journaists as someone to come to for a quote on chidcare reated topics. 16. Run a charity reated event they often you free coverage or mentions in oca newspaper or radio. 17. Act as an agent to se the products or services of others whist taking a cut e.g. acting as a book-cub agent. 5
18. Cross-se. Share customers and maiing ists with non-competitive businesses. Think about whom in your oca area is aready marketing to your target groups. For instance, seers of toys, chidren s furniture, maternity products, schoo uniforms, dance outfits, etc, etc. 19. Networking. Get invoved in the oca community, business groups or education reated groups. Join committees, vounteer for schoo governorships. 20. Offer to give short taks to oca groups on topics of genera interest. 21. Pace very oca ads where your target groups shop, work, access services and spend their eisure time. 22. Open Days maybe combined with socia events such as summer fairs or the setting s own birthday, again don t forget to get contacts and foow them up. 23. Website and internet. Many peope use the Internet in preference to Yeow Pages these days. Set up at east a basic website and get isted on a reevant portas (e.g. oca business and chidcare directories). For advice on this, contact your Business Link. 24. Give out freebies that peope wi keep around, such as pens or note pads. 25. Run charitabe stas at car boot saes and fetes. Make sure you show off your ogo and have eafets ready to give out! Ask your Business Support Officer for more information about potentia marketing opportunities in your area. Source Crown Copyright Next Steps in Marketing A4e 6
Marketing What can you do? Check what your customers are buying Decide your offer & what sessions Review your forecasts Resource the saes offer Hep parents access support for fees BE PROACTIVE! Create a good impression SELL, SELL, SELL pan to get the saes (Andy Mason Warwickshire County Counci) Register & Ratio Anaysis 1 week per month Record each chid s attendance by nursery usage / sae type Patterns of occupancy Ratio Anaysis (compare staff ratios with occupancy) Are there periods of overstaffing? Buiding a Sustainabe Business Perception is reaity first impressions count. If someone wants to visit your faciities woud they be happy with what they see? Woud they want to send their chid to your nursery? Market for contacts more contacts = more saes Match resources with forecasted saes How to Market for Contacts Ensure that you have a detaied marketing pan Know where your contacts come from Referras check where your referras come from incuding any website contacts (if you have a website) Convert contacts into saes 7
An exampe of a simpe Marketing/Contact Pan Activity Where Purpose Date by Tota Cost Person Responsibe 2000 Fyers Shops; GP s 30 contacts generated 500 ME Introduce a Friend Sign up for 6 months & get 1 month free Nursery Nursery 10 contacts generated 5 contacts generated Website Nursery 30 contacts generated * Link to management accounts * Link to management accounts 1,500 Per annum ME ME ME Market for Customers It is important to ink the cost of your Marketing Pan to your cash fow they are reated NOT separate Do you have a system for cacuating recurrent income and expenditure? You cannot pan marketing in a void. Usefu Reading Tite Author Pubisher Practica Marketing and PR for Sma Business Moi Ai Kogan Page Successfu Marketing for the Sma Business Dave Patten Kogan Page 101 Ways to Market Your Business Andrew Griffiths Aen & Unwin Marketing on a Tight Budget: a ten-point action guide P. Forsyth Piatkus Market Research in Practice: A Guide to the Basics P Hague, N Hague, C Kogan Page Morgan Gueria Marketing (3rd Edition 1998) Jay Levison Houghton Miffin Source Crown Copyright Next Steps in Marketing A4e 8
Marketing Your Chidcare Business With any business that operates regardess of its ega structure, marketing and saes is one of the key tasks of any business. As a chidcare provider you are invoved with seing chidcare paces and chidcare sessions. You re abiity to be abe to fi these paces successfuy and to increase your occupancy rate is the backbone of the business. This business fact sheet introduces some appropriate marketing techniques and methods that you coud undertake as a chidcare business. The foowing are the areas that wi be covered in this guide: The Market Fiing Paces Customers Panning for Success The market It is important to have reevant market research information on the chidcare sector. This wi give you vauabe insight into the market, its trends and aso its customers. You wi consider in your research what the requirements are of the parents who use your faciity these coud incude met or unmet needs. Remember that your market research does not remain static. Trends and needs are aways constanty changing therefore you have to take these into account and update your data in order to hep you effectivey pan and set objectives for your organisation. If you know and understand what the opportunities are within the oca community where you have your chidcare faciity it wi hep you with: Identifying gaps in the service that you offer It wi show you potentia opportunities in the oca community It wi hep you to secure on going business for your organisation It wi hep you to identify your strengths and weaknesses It wi hep you to be more competitive within the oca community Some of the information that you wi require in order to undertake your research wi be who are your competitors e.g. the number and type and providers in your oca area. Aso you wi need to know what chidcare paces are required and the number of paces that are avaiabe or need to be fied. There are some key areas that you have to take into account: How many parents that require chidcare within the community that you operate The activities other chidcare providers are offering The types of provision that the oca area wants or needs e.g. fu day care, sessiona care, extended schoo care, hoiday pay schemes, after schoo cubs or pre-schoo paces, etc What your customers or potentia customers desire in terms of price, quaity and the fexibiity of chidcare provision 9
The Loca Area You wi be abe to find out information and statistics about the oca community by accessing severa sources: Your oca Chidren s Information Service (CIS) www.neighbourhood.statistics.gov.uk Loca Authority Libraries The Business Support Team etc Some of the statistica data that you wi ook at wi be the birth rate, the number of chidcare paces in your area and emerging chidcare deveopment. These can be obtained from Isington Chidren s Services. You wi need to find out if the other oca chidcare providers currenty have waiting ists. This wi then give you an idea of the demand for chidcare within your area. The Competition In order to find out what other chidcare providers are doing and offering within your oca community you wi need to: Speak to your competitors Read their adverts, brochures, eafets etc Know how much they charge for the services that they offer What discounts (if any) that they offer Find out what activities that they undertake what makes them stand out from other providers Find out what is the age range that they cater to Look at where they advertise and the type of adverts that they use Look at whether there is a potentia that you coud work in partnership with another provider in order to offer new services. By doing the above it wi hep you to identify potentia threats before they turn into a fu scae probem. It wi aso give you a potentia opportunity to expand if there are oca cosures. Customers It is important to find out what your existing and potentia customers require and then you wi need to try to match your services to their needs. This wi hep to keep you ahead of your competitors and give you a unique seing opportunity. By understanding what parents want, you wi potentiay increase the ikeihood of fiing your chidcare paces and increasing your occupancy rates. You shoud reguary tak to parents to ensure that you sti understand and are fufiing their needs and to aso receive feedback on the quaity of service that you are offering. 10
You wi need to buid up a picture of their needs e.g. the times that they require chidcare services (fu week, sessions, after schoo etc), the price that they woud ike to pay (wi they pay more for a higher quaity service, what discounts are avaiabe, Working Tax Credit) and what eements of the service that you offer are important to them (educationa activities, ocation etc) Remember you are trying to encourage parents to pace their chid within your provision. So the more that you understand about what their needs and wants are and what they want for their chidren, the better you wi be in responding to these demands. Fiing paces The success to your sustainabiity is ensuring that paces are fied at your chidcare provision. Taking reguary with parents wi aow you to be abe to anticipate what coud be the changes in chid numbers for your provision. It wi aso aow you to act more quicky to fi a vacancy that you know wi occur, in order to sustain and generate income for the organisation. Of course in ife we cannot aso predict what wi happen and there wi be times when you wi not receive any notice etc. Therefore you have to watch for potentia tetae signs e.g. a parent changing jobs or moving ocation. There is no wrong or right way to attract new parents to your chidcare faciity. Parents wi be attracted by different things depending on what their needs and wants are for their chid or chidren. Parents wi ook at the foowing factors in order to decide whether they take a pace at your faciity or another competitor: Quaity and attitude of your staff team Location of your faciity The quaity of your faciities Price Hours avaiabe The reputation and what other parents say about your faciity By knowing what makes you different from other chidcare providers wi hep you to se your services within your oca community. Advertising You wi need to devise an advertising pan. You shoud aso ensure that you have an information pack that parents can take away. And finay you shoud ensure that you have open days or easy visiting processes for parents to ook around your faciity. Remember when producing any form of advertising to incude the unique seing points that makes the service you offer different from your competitors. There are severa ways that you coud advertise and promote your business: Chidren s Information Service (CIS) Loca newspapers or oca newsetters Libraries 11
Jobcentre Pus Leafets Website Open days Directories e.g. Yeow Pages, Thomson Loca Directory etc Doctors surgeries, shop windows etc Some of the methods are inexpensive and some may not be appropriate for your chidcare business. You wi need to decide what are the best and most cost effective methods for etting customers know about your services. Customers It is important that you keep parents happy and provide a quaity service. This wi ensure that your occupancy rates are kept up rather than have chidren eave because the parents are unhappy with the service that you offer. You wi have to constanty monitor the quaity of your service provision. You wi need to keep track of why parents and chidren depart from your service and then you wi have to put in pace, new and creative ways of maintaining customer oyaty. As part of your retention pan you shoud speak to parents formay and informay. This can take pace when they come to pick up their chidren. Aso have the opportunity for them to feed back to you on a reguar basis by having a suggestion box. You coud aso ask them to undertake a sma survey. This shoud not take more than ten minutes to compete, as their time is precious to them. The survey coud give you invauabe information about what they think and how you coud improve your service offering. Parents wi aways appreciate the fact that you have asked for their input and their opinion and that you are ooking to improve your service offering. Concerns and Compaints From time to time you wi encounter concerns and compaints from a parent. When this occurs ook at the concern or compaint in a positive ight to hep improve your service offering. Remember that they vaue the fact that your team aowed them the opportunity to express and to hep to sove their probem. You shoud have in pace a compaints poicy and process for handing compaints. There are severa key points to bear in mind: Find out the exact nature of the compaint. Ask the customer to compete a concerns/improvement form. Aways remain poite and cam. Listen to what the customer has to say and ask questions if further carification is needed to ensure that you have a the right information. Remember the compaint is about the service that you are offering and not a persona attack on you. Try not to give an immediate response. Let the customer know that you wi address their probem and give them a time when you wi respond by. Make sure that you record the compaint and the soution that has come out from the situation. Make sure that there is an assigned individua within your organisation that has responsibiity for handing compaints. 12
Panning for success Aways remember the five P s of Panning Proper Panning Prevents Poor Performance. Like any type of business you wi need to constanty review and ook at your goas and objectives. This can be done by having a simpe tabe that outines these. See the tabe beow as an exampe. Goa To ensure that there is aways a demand for the chidcare services of your business Objective 1 To have an effective marketing strategy by October 2008 Action 1: Action 2: Action 3: Objective 2 Action 1: Action 2: Action 3: Undertake market research on the number of eigibe chidren for your service and the number of paces in your oca community overa Investigate who are your main competitors Find out what type of chidren service is required by parents being in mind any new egisation that may affect or have an impact e.g. undertake customer surveys To increase the number of new customers using your chidcare service by 10% by October Production of an advertising pan by investigating the most effective methods of advertising Design and produce the necessary marketing information e.g. information pack to give to prospective customers Organise an open day where potentia parents can come to visit your faciities and where any of their questions can be answered successfuy Further business support for your chidcare provision can be sought from the Isington Chidren s Services Business Support Team. Ronan Fox Business Support Manager (0207 527 8612) Zoë Best Business Support Officer (0207 527 4029) Source Crown Pubishing 13
MARKETING TIPS 1. Remember AIDA There s a cassic formua used by advertisers and its we worth remembering. The formua is AIDA. This stands for Attention Interest Desire Action If you foow this formua in every ad that you write or produce, you wi greaty increase your chances of success. Attention the first thing your ad needs to do is grab the reader s attention. You achieve this with your headine. Interest once you ve got their attention, you need to create an interest in your product or service. Desire There is a big difference between being interested in a product or service and desiring it. You need to convert the reader s interest into a strong desire for what you are offering. Action - Even if someone desires what you have, it is not enough unti they take action. At the end of the ad you need a ca to action. Te peope exacty what they need to do to foow through and make it easy for them to do so. This is where many peope go wrong. Even if you have a good ad, you sti need to te peope precisey what to do - how to take action. 2. Benefits, Benefits, Benefits One of the principes that shoud drive a of your marketing is communicating the BENEFITS of your product or service. Your ad needs to be a persona communication to the individua reading, hearing or seeing it. And it needs to be about them. It needs to address their needs, desires and fears and it needs to constanty communicate the benefits of what you are offering. Nobody wi buy anything from you unti they have expicity understood how they wi benefit from what you have to offer. So here s a usefu tip. When you ve written your ad, imagine stepping into the shoes of your prospective customer. From this perspective does the ad fuy convey what those benefits are? If not go back and fine tune the ad unti it fees right. 1. Don t Advertise on a Left Hand Page If you re doing newspaper or magazine advertising, this one piece of knowedge can turn an unsuccessfu ad campaign into a successfu one. This has been tested again and again. When you read a pubication, your eyes are drawn to the right hand page as you fick through, so statisticay, more peope wi see your ad if it s on the right hand page. 14 If you ook at the big nationa magazines and newspapers, you wi see that most of the arge advertisers are on the right hand pages. The few that appear on a eft hand page wi be paying ess because their advertising agencies know that ess peope wi see the ad. When you book your ad space, te them you want it on a right hand page. Very few peope in your position ask for this, so the pubication wi normay obige. If they te you they can t guarantee it te them you advertise in a future edition when they can guarantee it. You soon discover how obiging they can be!
2. Never pay the fu rate for advertising The person seing you the advertising needs to know very eary on that you have absoutey no intention of paying the fu rate. Most advertising rate cards are far too high and you can aways negotiate. If you re a sma business remember that arge companies who use ad agencies are buying based on the readership or audience eves rather than the rate card - so hagge and negotiate. If you can pay 20 or 30% ess for your ads it can turn an unprofitabe ad into a successfu one. Here s another handy itte trick to pay ess for your advertising. The coser to the deadine you can book your ad, the better. Saes teams work towards targets and as the deadine approaches they get more desperate to fi the ad space. They become far more open to negotiation. This appies to a forms of advertising. If your oca radio or TV station does not se a its ad space that they have avaiabe for tomorrow - it s gone forever. If you come aong and offer them a dea at what seems a ridicuousy ow price, you might be surprised at how ow they re wiing to go. 3. Don t Foow the Competition One of the biggest mistakes peope make is advertising in pubications or on various forms of media (taxis, biboards, buses etc) just because their competitors are doing so. Don t for a minute think that a your competitors are there because their ads are producing great resuts. They re more ikey to be there because everyone ese is and most of them wont have a cue whether their advertising is working. In fact, this is a we known saes trick used by the peope seing ad space. If they can get one or two of your competitors to advertise, they can ca you up and te you how you ose out if you don t advertise too. What they fai to mention is that your competitors probaby never test their advertising, often haven t got a cue how to market and are ony advertising there because they think you wi. This is a highy effective way to sustain the advertising industry. It s 1. So start to think out of the box. Ideay, you shoud be using a combination of up to at east ten other marketing strategies to grow you business. They incude (but are not imited to). Teephone Marketing Direct Mai Internet Emai marketing Direct Saes PR (Why spend money on advertising when PR gives you coverage for free) Strategic Aiances Lead Response Marketing A muti eve Referra system Have a ook at this ist. How many of these are you impementing in your business? More importanty, what woud happen to your business if you coud start to combine some of these extra marketing approaches? How woud that effect your profits? What woud that do to your financia freedom? Here s another thought. At east four of the items on this ist wi cost you either nothing or very itte to impement. Why throw money at advertising when some of the best marketing is Free? Source Carde Media 15
PRICING STRATEGIES Definition A pricing strategy describes the way in which you set charges to refect the services you offer, so that however parents choose to use the chidcare you offer, you sti cover a costs. Pricing strategies recognise that: Parents want choice if they re not presented with choices they may seek aternatives and ook for other chidcare provision To maximise profits (surpuses), it s necessary to maximise income Offering a range of services (day care, after schoo sessions, paygroup sessions, coections etc) can resut in a range of charges to match. There are many ways to price your chidcare service for exampe houry fee, session fee, bock pricing, membership, discounting schemes etc. It is important for you to use ideas that suit your organisation. You aso have to take into account what your competitors are charging and the services they are providing. Buiding a Pricing Strategy In order to buid a pricing strategy for your organisation you need to use information that you aready have: Registers your registers contain information about when chidren have attended session. This information aows you to work out the revenue you receive from parents for sessions or fu days and et you see which chidren attends every session and which ones may attend ony occasionay. Advance booking ists just ike registers, by ooking at the advance booking ists, you can identify the ways in which parents intend to use your services in the future weeks and months. This aows you to continuay review your pricing strategy. Forecasts forecast information is usefu when you re trying to estimate your future occupancy trends. For exampe If the past year shows that in your out of schoo cub: 80% of parents chose fu after schoo sessions 20% of parents chose breakfast and after schoo sessions and 5% of parents received a sibing discount You are abe to accuratey forecast what the next year s income is ikey to be, under your current pricing strategy. Make sure that your cacuations are rea and that you have identified the ways that parents may choose to use your service. Take time to cacuate the effects that this coud have on your income. 16
Ask yoursef questions: What if, in the next six months you have five new chidren starting on a sibing discounted rate? Wi you sti cover your costs? What if you offer more houry sessions and ten extra chidren attend? Do you need more staff and can you cover the extra costs? Using your current pricing strategy, what woud be better, to have more chidren using fu day care or more chidren using shorter sessions? What proportion of chidren can you care for on a day care basis and how many on a sessiona basis to maintain your chid / staff ratio and maximise your capacity and revenue? Etc. Working out costs The starting point when setting your price is having a fu understanding of your costs. It is not just controing them. Understanding them wi aso hep you set your fees propery to ensure that you charge enough to make a profit or surpus for re-investment in the business. Working out your costs may initiay require a bit of work but this is not difficut. Once you have competed the cost checker, you be abe to accuratey identify your weeky costs. Once you have confirmed these costs, you have a good idea as to what your minimum fee shoud be, to ensure that you at east cover your costs and break even. YEARLY COSTS Tota Expanations 1 Registration/membership fees 300 The amount you pay to register as a chidcare provider or to professiona organisations 2 Pubic iabiity insurance 500 The amount you pay for pubic iabiity 3 Empoyee iabiity insurance 500 The amount you pay for empoyee iabiity insurance 4 Premises 4,000 The amount you pay for rent of if you own the premises as a mortgage repayment 5 Counci tax 600 Your annua rate 6 Utiities 1,000 Eectricity, gas, water 7 Office equipment 1,000 Desks, computers, stationery etc 8 Marketing 1,000 Advertising, eafets, brochures etc 9 Wages 38,000 Your tota annua wage costs incuding NIC, tax and benefits 10 Additiona staff costs 2,000 Recruitment, training etc 11 Toys and equipment 1,500 Toys, books and safety equipment 12 Other 1,000 Your additiona yeary costs (if any) 13 Tota yeary costs 51,400 Now add figures 1 to 12 together to get a tota yeary cost (13) 14 Number of weeks 42 The number of weeks your business operates in the year 15 Sub-tota 1,223.81 Divide tota number 13 by tota number 14 to get a sub-tota (15). Copy this figure into the box beow. WEEKLY COSTS Tota 16 Food and drink 60 Meas and snacks for chidren you ook after (don t incude mik if you get an aowance) 17 Disposabes 100 Craft materias, pens, paper etc 18 Other 40 Your additiona weeky costs (if any) Weeky sub-tota 200 Now add figures 16 to 18 together to get a weeky sub-tota. Copy this figure into the box beow. 17
Sub-tota Weeky sub-tota Tota weeky costs 1,223.81 + 200 = 1,423.81 Houry Fees Having competed the cost checker and arrived at your figure for your weeky costs, working out how much you need to charge per hours to breakeven is straightforward. Simpy divide your weeky costs by how many hours you can charge for in a week. This is your maximum capacity. For exampe To work out your number of hours per week Hours per day Paces Days Open Tota hours 10 x 10 x 5 = 500 Mutipy your hours per day by your paces avaiabe by the number of days you re open in the week. To work out what you need to charge per hour at maximum capacity Tota weeky costs Tota weeky hours Breakeven houry fees 1,423.81 500 = 2.85 For exampe, if you weeky costs are 1,423.81 and you have 500 hours avaiabe per week, the houry fee you need to charge to breakeven wi, at 100% occupancy, be 2.85 Pointers Pricing strategies need to be continuay reviewed. Remember there may be more than one way to sove a probem Make sure you do rea cacuations before impementing a new pricing poicy Memberships are another exampe of a pricing strategy. Membership can offer benefits to reguar users. Make sure that you have a written pricing poicy, so that you can present parents with a document outining your charges. If you need to take any cost contro measures you wi need to ensure the continued provision of a good quaity service for your users. To buid rea business strength, concentrate on marketing, pricing and deivering a high quaity chidcare service. Remember the above aso needs to be inked to the break even point cacuations that you undertake for your business. 18
OCCUPANCY CALCULATOR 100% 90% 80% 60% 1 TOTAL Costs of running 258,000 provision - from cacuations 2 Paces registered 40 36 32 24 3 Number of weeks Open 50 50 50 50 4 Weeky Cost based on 100% capacity (Cost/ Paces/Wks Open) 129.00 5 Weeky cost based on 90% capacity 143.33 6 Weeky cost based on 80% capacity 161.25 7 Weeky cost based on 60% 215.00 capacity 8 T Costs 258,000.00 258,000.00 258,000.00 258,000.00 [Insert Figure Beow] A Max Fu time weeks avaiabe 50 2*3 2000 based upon number of weeks B Fu Time weeks necessary to 175.00 1474 se based on average price per week C Occupancy eve required B/A * 100 % 74 D Equas Average occupancy IN 29 NUMBERS STEPS How to use: - 1 Get TOTAL costs of provision (both fixed & variabe) that is absoutey a costs of running your provision 2 Put in number of paces registered - it wi automaticay cacuate for 90%; 80% & 60% 3 Put in Number of weeks your Nursery / After Schoo cub etc 4 This wi cacuate what you need to charge weeky for the different occupancy eves 5 This wi cacuate what you need to charge weeky for the different occupancy eves 6 This wi cacuate what you need to charge weeky for the different occupancy eves 7 This wi cacuate what you need to charge weeky for the different occupancy eves 8 This proves your cacuations, as this shoud equa the Tota Cost of running your provision in Number 1 above. A B C D Mutipy 2 by 3 above (Paces x Weeks Open - this gives us our tota avaiabe paces for sae Here we input our average price (or owest price if you are been conservative in your cacuations) - this cacuates how many weeks we need to se to cover costs NOTE: this shoud give you an indication if your charging poicy is covering your costs and generating surpus This cacuates as a percentage the required occupancy eve required This cacuates as a percentage the required occupancy eve in NUMBERS 19
A chidcare providers need to know the effect of their actions on profitabiity. Break Even anaysis heps by iustrating the effect of changes in costs, prices and voume i.e. in the above exampe: - 1. Costs are 258,000 2. Prices are 175 per week 3. Voume is represented by number of paces by the number of weeks open (A in the above spreadsheet.) Companies and charities need to estimate the approximate turnover (amounts of saes revenue earned) that wi be needed in order to reach required profit. Remember Break Even measures profitabiity not iquidity this is important as your decisions on how to improve profits may affect your iquidity i.e. the ease at which your business can generate cash. So after getting our Break Even Point this is the point at which at which your chidcare provision is getting in enough revenue to cover its costs (both fixed and variabe) What is the vaue of this information? If your provision knows that through its existing occupancy that you are covering your existing costs and you sti have vacancies to fi then based on the financia information that you have cacuated through your Break Even Point you can use this to generate new business. 1. Your existing occupancy covers your costs so any new customers you can entice with a specia one off (MAKE THIS CLEAR) discount i.e. one month at 130 per week (as opposed to norma 175 per week) but the parents has to sign minimum of three month contract with norma deposit etc. Again this is just an exampe of what you can consider, but it demonstrates a practica exampe of expanding your use of existing information that is avaiabe to you from your interna records. 20
The Marketing Mix (The four P s of Marketing) The major marketing management decisions can be cassified in one of the four foowing categories: Product Price Pace (distribution) Promotion These variabes are known as the marketing mix or the four P s of marketing. They are the variabes that marketing managers or business owners can contro in order to best satisfy customers in the target market. The marketing mix is portrayed in the foowing diagram: The Marketing Mix Product Pace Target Market Price Promotion The organisation attempts to generate a positive response in the target market by bending these four marketing mix variabes in an optima manner. Product The product is the physica product or service offered to the consumer. In this care it is chidcare services. In the case of physica products, it aso refers to any services or conveniences that are part of the offering. Product decisions incude aspects such as function, appearance, packaging, service, warranty, etc. 21
Price Pricing decisions shoud take into account profit margins and the probabe pricing response of competitors. Pricing incudes not ony the ist price, but aso discounts, financing and other options such as easing. Pace Pace (or pacement) decisions are those associated with channes of distribution that serve as the means for getting the product to the target customers. The distribution system performs transactiona, ogistica, and faciitating functions. Distribution decisions incude market coverage, channe member seection, ogistics and eves of service. Promotion Promotion decisions are those reated to communicating and seing to potentia consumers. Since these costs can be arge in proportion to the product price, a break-even anaysis shoud be performed when making promotion decisions. It is usefu to know the vaue of a customer in order to determine whether additiona customers are worth the cost of acquiring them. Promotion decisions invove advertising, pubic reations, media types, etc. A Summary Tabe of the Marketing Mix The foowing tabe summarises the marketing mix decisions, incuding a ist of some of the aspects of the 4Ps. Summary of Marketing Mix Decisions Product Price Pace Promotion Functionaity List Price Channe members Advertising Appearance Discounts Channe motivation Persona seing Quaity Aowances Market coverage Pubic reations Packaging Financing Locations Message Brand Leasing options Logistics Media Warranty Service eves Budget Service/Support Recommended Reading Schewe, Chares D and Aexander Hiam The Portabe MBA in Marketing This book is a crash course covering most of the marketing topics taught in a MBA programme, incuding the marketing concept, the four P s of marketing, marketing research, marketing strategy and segmentation, targeting and positioning. 22
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If you woud ike more information about what this factsheet contains in arge print or for copies of this factsheet pease contact - detais beow. Isington Chidcare Strategy Team Chidren s Services T Ronan Fox: 0207 527 8612 T Zoe Best: 0207 527 4029 W www.isington.gov.uk Pubished Apri 2008