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We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.
The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.
These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.
When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?
Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.
Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.
Home / Small Business
Wednesday, April 30, 2008
The Essentials of Guerrilla Marketing
As marketing continues to change, the secrets of guerrilla marketing continue to change. There are 18 guerilla marketing secrets, and they guarantee you will exceed your most optimistic projections.
Memorize these words, then live by them. I'm giving you a memory crutch so that you'll never forget these major guerrilla marketing secrets. All these words end in "-ent." Run your business by the guerrilla concepts they represent and reap the rewards.
Commitment
You should know that a mediocre marketing program with commitment will always prove more profitable than a brilliant marketing
program without commitment. Commitment makes it happen.
Investment
Marketing is not an expense, but an investment--the best investment available in business if you do it right. With the 18
secrets of guerrilla marketing to guide you, you'll be doing it right.
Consistent
It takes awhile for prospects to trust you. If you change your marketing, media and identity, you're hard to trust. Restraint
and repetition are two great allies of the guerrilla.
Confident
In
a nationwide test to determine why people buy, price came in fifth, selection fourth, service third, quality second, and,
in first place, people said they patronize businesses in which they have confidence.
Patient
Unless the person running your marketing is patient, it will be difficult to practice commitment, view marketing
as an investment, be consistent, and make prospects confident. Patience is a guerrilla virtue.
Assortment
Guerrillas know that individual marketing weapons rarely work on their own, but marketing combinations do work. A wide assortment
of marketing tools is required to woo and win customers.
Convenient
People know that time is not money--it's far more valuable than money. Respect this by being easy to do business with and
running your company for the convenience of your customers, not yourself.
Subsequent
The real profits come after you've made the sale, in the form of repeat and referral business. Non-guerrillas think marketing
ends when they've made the sale. Guerrillas know that's when marketing begins.
Amazement
There are elements of your business that you take for granted, but prospects would be amazed if they knew the details. Be
sure your marketing reflects that amazement.
Measurement
You can
potentially double your profits by measuring the results of your marketing. Some weapons hit bull's-eyes. Others miss the
target. Unless you measure, you won't know which is which.
Involvement
This describes the relationship between you and your customers--and it is a relationship. You prove your involvement by
following up; they prove theirs by patronizing and recommending you.
Dependent
The guerrilla's job is not to compete but to cooperate with other businesses. Market them in return for them marketing you.
Set up tie-ins with others. Become dependent to market more and invest less.
Armament
Armament is defined as "the equipment necessary to wage and win battles." The armament of guerrillas is technology:
computers, current software, cell phones, pagers, fax machines. If you're technophobic, see a techno-shrink.
Consent
In an era of non-stop interruption marketing, the key to success is first to
gain consent for your marketing materials and market only to those who have given you that consent.
Augment
To succeed online, augment your website with offline and online promotion along with constant maintenance of your site.
Content
Dont believe that old adage, "Sell the sizzle, not the steak." Sophisticated
consumers these days know the sizzle from the steak and prefer the steak every time. Your substance, not your style, will
carry the day for you.
Implement
Its not enough for you to know these
18 secrets. The key is to take action on them, all of them.
Congruent
Be certain that all your marketing is saying the same thing and pulling in the same direction. Dont undermine what you do
with marketing that marches to the beat of a different strategist.
These concepts are the reason many startup guerrillas now run highly successful companies. They are the cornerstone of guerrilla marketing. They might look like just words, but each one is nuclear-powered and capable of propelling you into the land of your dreams.
Jay Conrad Levinson is the author of the Guerrilla Marketing series of books, the most popular marketing series in history with 15 million sold, now in 49 languages. At hisGuerrillaMarketingAssociation.comand hisgmarketing.comwebsites, youll find profit-producing ideas plus a list of 200 guerrilla marketing weapons.
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