Marketing is such a vast topic that it is easy to get overwhelmed. This article gives you a brief overview of marketing principles and is intended only to acquaint the reader with topics and terminology.
What is MARKETING?
There are many definitions of Marketing, here’s one I like:
- identifying your customers
- informing them of your product or service, and
- persuading them to buy.
That’s actually a lot. We will take these items one at a time.
1. Identifying Your Customers
Many start-up businesses start with an idea and then try to find customers to buy their product or service. Believe it or not, that’s backward.
Instead, look for a group of people with money to spend who have a problem you can solve. Then decide what product or service will solve this problem. The more urgent the problem for them, the better for you.
What you want is a subset of the population that you can easily identify. This is your target market. When people tell me that everyone is their customer, I groan (inwardly). To reach everyone, you need advertising on the scale of a Super Bowl half-time commercial. Expensive.
On the other hand, to reach bow-hunting enthusiasts, you would need a small display ad in one of two publications devoted to bow-hunting. Much less expensive.
The more specific you can be about your target market—who they are and what they need—the better you can decide how to design your product or service (your offer) and the more effectively you can reach them with your marketing message.
Choosing a focused market (known as a niche or niche market), makes it easier to locate and reach your customers.
2. Informing and 3. Persuading
The traditional framework for analyzing this aspect is “the Four Ps” of the Marketing Mix:
The Marketing Mix
- PRODUCT (or service)—what’s being offered for sale
- PRICE—the price being asked, OR the price being offered by customers
- PROMOTION—how potential customers are being informed of the offering’s existence
- PLACE (distribution)—the route the product takes from the producer to the final consumer.
A product (or service) is a basket of features – big, small, blue, pointed, long, covered, etc., that have benefits for the user. A feature is a characteristic of the product, whereas a benefit offers a solution to a specific need.
As an example, features of a bottle opener are a shape that fits over a bottle top and a handle that can be gripped and/or pulled. Features can be tangible or intangible. The color is a tangible feature, whereas ease of use is intangible, but still a feature.
The benefits of these are that the user may easily remove a bottle cap. More features can be added – an ergonomic handle, a can opener at the opposite end, a corkscrew attachment – that have additional benefits – a more comfortable grip and versatility.
A service also has features and benefits. A maid service offers the feature of house cleaning, the benefit being convenience and more free time.
Features vs. Benefits
When you are promoting your product to your customers, emphasize benefits, not features. Why does someone buy a Mercedes-Benz instead of a Hyundai? The status of a luxury car like Mercedes is a benefit. The Hyundai dealer, however, will emphasize the benefits of excellent gas mileage and affordability.
Other benefits include a desire for convenience, success, power, sex, comfort, happiness and money. Emotion trumps logic when it comes to buying.
When you are designing your offer, think about the benefits desired by your customer and what features will fulfill those desires.
Packaging is another aspect of a product and can communicate both features and benefits to the customer. It can also provide a benefit in itself. If your product may be used as a gift (e.g., candles, gourmet food products, etc.) attractive packaging adds to the appeal of the gift and is, therefore, an added benefit.
Customer Service is included with the features of a product. It can be one of the most powerful tools in your marketing toolkit.
Pricing is often based on more than the costs involved in producing the product (known as cost-based pricing). Market pricing is a price comparable to what competitors are charging.
A skimming pricing strategy is charging a high price for a new product that will attract competitors.
Setting a low price that will attract buyers (to gain market share and crowd competitors out of the market) is a penetration pricing strategy. Another term for penetration pricing is a loss leader.
Choosing a premium pricing strategy means setting a high price to communicate quality, for those buyers who believe that “you get what you pay for.”
The price must produce a profit, whatever strategy is chosen.
Promotion is what most people think of when they hear the term “marketing.” Promotion includes all the activities involved in informing, persuading and influencing prospects to buy.
- Advertising is a paid notice, whether by print media (e.g., magazines) digital media (online, TV, etc.), or direct (snail) mail.
- Personal Selling is a dialogue (or series of them) between a sales person (e.g. Pat) and a decision-maker (e.g., Chris). Pat attempts to convince Chris that Pat’s product will meet Chris’s needs. Think of people selling shoes, clothes, cars, insurance, and houses. This is personal selling.
- Direct Sales is a subset of personal selling where the customer is contacted directly with an offer by snail mail, email and is usually done via a sales letter.
- Sales Promotions can be seen both online, in print and physical displays in brick-and-mortar stores: coupons, contests, discounts taken at the cash register, discounts codes used at checkout, Black Friday sales, point-of-purchase displays, logo merchandise, etc. All of these items are used to encourage buyers to act or to keep a company’s name in front of buyers.
- Public Relations or publicity is information about a company or product that appears in the media that is not advertising. Publicity is viewed as information produced by an impartial party (e.g. a software review in a computer magazine).
Advertising, personal selling, etc. are promotion strategies. The medium used to deliver the strategy—e.g., print or digital—is the channel or platform. Definitions of Social media vary, but one I like is: “the network of technology, websites, and applications that allow users to share information online.” Facebook, Youtube, SnapChat, Instagram, Tumblr, Pinteretst, Google, Twitter and LinkedIn are only a few of the better-known social media sites that can be used to implement all of the strategies discussed previously. It’s the new 500-lb gorilla of marketing, yet mainstream businesses often struggle to understand how to convert the community-building power of social media into sales.
The perceived need for a social media strategy has become so pervasive that often the term “marketing strategy” translates in people’s minds to “social media presence.” Don’t confuse the two—they are not the same.
The 4th “P” stands for Place. This is another name for distribution, or the ways a product moves from the manufacturer to the final customer.
The fastest, simplest and cheapest form of distribution would seem to be the customer buying directly from the manufacturer, but that is generally not what happens. Other factors result in distribution networks or channels that move products through layers of distributors and retailers, known as intermediaries.
The number of layers can be specific to an industry, and each intermediary increases the price of the product to the end user. Ultimately, a good distribution strategy focuses on what is the most efficient way to put the product in the hands of the consumer.
The internet has proven to be a great tool for selling directly to the end user. It has resulted in manufacturers being able to eliminate layers of intermediaries. This process is called disintermediation and is causing disruption in nearly every industry. Think of the fate of small, independent bookstores with the advent of Amazon.
Whew! That was the nickel tour of marketing. There are two more topics I want to cover in separate articles: Branding and The Customer Experience. I think there is a lot of confusion about what branding is, and I think the Customer Experience is the most accessible yet powerful tool in your marketing toolkit.