Fasttrack: Why can an investor evaluate a company’s value based on its marketing reach and depth?
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Transcript of this marketing & investor Edition
Welcome to today’s episode of Fast Track. They’re fast and short episodes of the growth on. My name is Christian Bartsch. And today we are going to talk about how can investor evaluate a company’s value based on its marketing reach and depth. So in the last episode, we were talking about brand and products and what makes it different between a company and a corporation that has brand, has coach our mission, vision, noise, different things that actually are giving the reason to a buyer or is the consumer a client or any kind of thing.
Product value of the brand
Actually willing to buy and buy at a higher price? The value. And as well, the banning of the product value of the brand and as well the gap between the price and the physical products value, the benefits that actually happen.
So. Let’s imagine you are an investor and you want to evaluate a company, you’re thinking of buying a company. Doesn’t matter whether it’s a startup or its a company that’s already been for 10, 15 or 20 years in the market. And you’re thinking, OK, I know this company produces products or it’s a retainer or anything. Or is a service company that provides services or an online Web site. So is there anything.
Customer retention and customer lifetime value are factors of success
You have to think? OK. What’s the typical thing that we’re looking at? We’re looking at cash flow. We’re looking at customer retention, customer lifetime value and all these different things. And profitability is worth of all the things that the company is doing. How much actually is left of it? What is profitable and what is not doing well? Companies often have several areas in the businesses that sometimes are not profitable. Maybe they’re growing and it takes some time to grow and to be the next important thing. And others are maybe just costing money and not have any realistic chance to be profitable.
Engagement in the next few years or decades. That’s why then the company has to restructure and decide what to get rid of. And what maybe to a sell off or what, maybe two to redesign or realign with something else and it maybe becomes suddenly usable and profitable. And what’s profitable and no longer working, and it’s going to decline and eventually fade out.
What’s the value of the business activities?
So the thing is. Clients are actually, or customers are those who give money to the companies. And these people need to be aware first that the company exists. That product & services exist. What’s the value? Why should I buy from them? Why should I buy their services, some products or not? And, why should I trust these companies that they’re going to provide me value that is reliable for me in the short and long run.
Reach other markets or regions
And that’s the thing. It comes only to closing the client, to getting the client to pay and sign a contract and so on and so on. But it comes actually the key important thing. What is the marketing reach and depth of that organization? Is that organization actually able in today’s time to get enough clients to stick with them and enough new clients to join them? That’s the key thing.
Are they able to grow to reach other markets or regions or other demographics? Are they able to go deep enough to offer them a variety of different products and services to have a more meaningful interaction with it? And if there’s no depth and it doesn’t matter whether this company is providing service just to women or men or men and women or just couples or let’s say kids or Young professionals, Seniors, pensioners. It doesn’t matter.
Where is the marketing reach?
The key thing is where is the marketing? What is it doing? Where’s the reach? What’s the depth? How many clients are coming in? What kind of clients are coming known? Are they more valuable? Or are they showing even less profitability? Are they maybe just buying small packages? And it’s not really worth it. You’re putting so much effort in and it’s not really getting in.
You can’t grow it properly because maybe these clients have got a limited budget. That’s the thing. It depends. It’s like when you compare products like, for instance, cigarets. Yeah. After Second World War people were able to afford maybe one to one or two cigarets, maybe a day they would smoke. And yeah, and they were just cut them. Nowadays, eventually the cigarete box used to have seven cigarets and then the taxes started to increase and they had less cigarets inside. But the thing is, it’s different whether you are selling one package of cigarets or you are the manufacturer of the cigarets.
Products that last for generations
The same thing is if you go and say You are a candy manufacturer. You’re selling candy just in your county. You are maybe selling be on to your country. You are maybe reaching different age groups. Maybe the age groups as they grow older, still stick with you. For instance, look at things like M&M’s Smarties on all these things. Those things were really in my childhood. They were there. These products were already even, um, 10, 20 years before that, already there. And today’s children go to school or college and so on. They’re enjoying this product as well. So it goes. And last generations.
The same thing is with Lego. It’s the same thing. Forty years ago, kids were playing. Now, Kid are aswell playing and sometimes even parents and grandparents are playing as well with the same product or they are taking them on excursions and experiences online. And if the brands are actually able to redesign not only the product experience on what that offer us and expand as well, the kind of offers they have, they are expanding at the same time as well, the marketing reach and depth.
How buyers reconnect with the brand of their childhood?
So I can actually go and get people actually to reconnect with the brand of their childhood. Take their own kids and get them to be fascinated of these parts and get them as well. Even to ventus holidays, and all these things. So that where it shows and an investor this company is actually able to survive not only with the current demographics, but even the future demographics and the aging demographics, plus able as well maybe to expand, even beyond a region. And that’s value. That’s true value because it means the company has a future.
If the company only is able to survive with those people who were 40 years ago children and now adults. But their own children are no longer using these products, then you have a massive problem and that’s a problem, for instance, that companies had made model trains and all these things like brands like Merklin and all these people. That’s the thing. These brands, brands that we we know from our childhood, whether it was Revell or Matchbox and all these other brands are fading out because the kids from today, they are playing with iPhones & tablets. They’re playing with other stuff, claim to be Lego and all different other kinds of activities, but not so much really into model building. And it depends very much how it’s fostered and supported spent in their home with the parents.
Able to reach these clients?
The key thing is marketing reach and depth. That’s really an important thing that every investor should always look if they’re wanting to buy a company or invest in a company and see what is the potential. Are we able to reach these clients? And it doesn’t matter whether this is a company and it’s a B2C or B2B or B to government or B2M (B to military). Depends very much, but doesn’t matter in the end, even if it’s a government customer, we have to be able to reach government clients, have to show them the products are still usable at the right price and value.
See, for instance, people like Elon Musk. He’s gone. He’s got businesses that are focusing on consumers, focusing on companies and even focusing on government organizations. NASA, for instance, the best example is Space X is going up. Tesla is selling cars to companies and to consumers. What do you want more on his solar technology and other kinds of things that he’s doing. They all combined and all make sense.
And that’s where really a investor who notices this company not only has a marketing reach and depth, it has even a brand that people take serious and they want to be aligned with it and they want to be aligned as it was 10 years ago and now as well. And that has a true feature and a true future. So in our next episode, we will be looking at topics on how brands can redesign their value proposition.