Financial reports can feel intimidating, especially for founders without a finance background. But understanding the basics can dramatically improve decision-making and confidence. In this practical guide, Rebecca Nankya Ssemugabi breaks down how to read a balance sheet in simple, everyday language, supported by a hands-on balance sheet generator you can try yourself. M ost founders don’t struggle with running a business. They struggle with understanding the numbers behind it. And few reports feel more intimidating than the balance sheet. But here’s the truth: a balance sheet is simply a snapshot of what your business owns, what it owes, and what’s actually yours at a specific point in time. The Balance Sheet in One Line Every balance sheet is built on one simple equation: Assets = Liabilities + Equity Assets are what the business owns Liabilities are what the business owes Equity is what belongs to the owner(s) If this equation balances, the balance sheet makes sense. A Simple Exa...
Forget AIDA and throw it in the dustbin. It is tough for marketers who have been nurturing this model for over a century. It is being replaced by the 5As model, presented by the father of Modern Marketing, Philip Kotler. I know some people don’t have any idea what AIDA or 5As are. So here is a brief explanation of the AIDA model.
Image Courtesy: https://www.activecampaign.com/ (Philip Kotler's 5As Model)
AIDA stands for Attention, Interest, Desire, and Action. It shows how a customer unaware of your product passes through different stages and changes into a buyer. First, a product grabs the consumer’s attention, then advertisers pique their interest with its cool features and benefits, which results in the desire to buy that product, which ultimately compels one to take action, i.e., purchase.
But there is a catch. It has aged. It is as old as the hills. It doesn't consider what advertisers do once the action has been taken. Should you toss them in the proverbial garbage and start looking for new prospects?
This also doesn’t consider the technological development that has happened in the last 50 years or so. There are a lot of things competing for the attention of the users. Thousands of marketing messages bog down users' attention.
Also, people slip off the funnel at different stages and don’t complete the process. Similarly, it thinks that the user is sitting in a vacuum and not affected by other influencers. We know this is not the case. Our buying decisions are affected by social media, web reviews, friends’ opinions, and a whole lot of other factors.
Seeing these conundrums with this classic model, Philip Kotler proposed a new model called the 5As of Customer Path. Philip Kotler is Professor Emeritus of Marketing at the Kellogg School of Management.
Philip Kotler's 5As model is a framework that maps out the customer journey in today's digital age, focusing on the stages customers go through from being aware of a product or service to advocating for it. The 5As stand for:
Awareness
Appeal
Ask
Act
Advocacy
Let's elaborate on each stage with an example.
1. Awareness
Definition: The stage where potential customers become aware of a brand or product.
Example: Say a company, “PakWheels” that deals in automobiles. It is the largest marketplace for cars and bikes in Pakistan. They run online ads, social media campaigns, and content marketing efforts to introduce their brand to a broader audience. A potential customer, Ahmed, sees an advertisement for Pakwheels on Instagram. He has been thinking of buying a motorbike for some time.
2. Appeal
Definition: The stage where the customer is intrigued by the brand and develops an interest in it.
Example: Ahmed clicks on the Instagram ad and is directed to PakWheel's website. He finds the website appealing, with a clean design and compelling content about automobiles in Pakistan. They have a large listing of vehicles from second-hand bikes to costly SUVs. Ahmed starts thinking positively about PakWheels and is interested in learning more.
3. Ask
Definition: The stage where the customer actively seeks more information about the product or brand.
Example: Ahmed wants to know more about PakWheels and vehicle options. He searches for reviews online, visits their vlog content on YouTube, and even reads comments on their social media pages. He also asks her friends and family if they’ve heard of or used PakWheel. He searches for a bike using different filters.
4. Act
Definition: The stage where the customer makes a purchase or takes another significant action.
Example: After gathering enough information and feeling confident about the bike he chose he decides to give it a shot. He goes to their website, selects the product, and contacts the seller. He visits the seller and inspects the bike. He has a friend with him who is more knowledgeable in bikes and cars. They find it satisfactory and seal the deal.
5. Advocacy
Definition: The stage where the customer becomes a brand advocate, sharing their positive experience with others.
Example: Ahmed is impressed with the performance of his bike. He posts a positive review on the PakWheel’s website. He shares his experience on social media and tells his friends and family about the product. His advocacy helps spread the word about PakWheels, potentially influencing other customers to consider the brand.
This sums up Kotler’s 5As model. It integrates the new digital experience into the mix. It also takes into account the role of friends and family in forming the opinion and making the final decision. The AIDA model is very exclusive, it sees the entire buying process in a proverbial vacuum which we know is not the case.
The AIDA model helped a lot of marketers in their jobs but now we have to let it go. Although there might be some situations where it still applies. But for experiences especially online we need to shift to the 5As model.
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