Basics of Marketing

 I have written this note for my former students who are looking for a quick and dirty reminder of what we learned in class. Most of this note is to allow you to go into a meeting properly prepared so that you won't be humiliated by having nothing to offer. Answer the questions in this note before the meeting and you will be ahead of the game. Keep in mind some of my rules for beating your competition (whether internal to the company or external):

  • P5 Rule: Proper Preparation Prevents Poor Performance! Show up with your information in a readable format: a one page executive summary, or a slide, or a short report (with executive summary). Most people in the meeting will not know all that you know about your subject so you must give them a prop that helps them understand what it is that you are talking about.
  • 24/7 Rule: Arrive seven minutes early for a meeting or event you are merely participating in and 24 minutes early for one that you are hosting. You will be more relaxed if you aren't rushed.
  • Data beats opinions! Everyone has an opinion but if you arrive with some original (primary) research to back yours up then you will be taken much more seriously. Even if the research is as simple as handing out 100 surveys at the mall, then you just tell the boss that "my preliminary research shows..." or "a snap survey my people conducted found that..." Anyone who disputes you then had better have data backing up their opinion or they can be made to look foolish.
  • In the Race Between Quality and Timeliness, Deliver the Product on Time! Don't deliver junk, but most people won't notice a product that is 15% less than your best, while everyone will notice (and remember) a product that is delivered late!
  • Doing the basics puts you ahead of all those who don't (and most don't): If you take care of the basics in business then almost everything else will fall into place. Against internal or external competitors, you don't have to be the best at everything to be known as the best... but you must always be in the top third!

 

OK, Let's get to it:

 

Four P's of Marketing: also called the "Marketing Mix"

Product (or service)

  • What is it that you are selling?
  • How is it different/better than what your competitors are selling?

 

Placement / distribution

  • How are you going to "touch" the customer? (internet, mail order, telephone, stripmall, mall)? In other words, where will you and your customers interact?
  • What will your hours be?-- Do they match up to your customers? (i.e. dry cleaners should not close at 5 PM)
  • How will you get what you need from your suppliers and how will you deliver your product to your customers? Poor performance here can doom your business!

 

Promotion

How will you reach out to your customers to tell them you exist and have a product for them to look at?

  • Advertising (internet, TV, radio, magazines, billboards, bumperstickers, etc.)
  • Salespersons (inhouse or outsource, trained or untrained, permanent or temps)
  • Public relations (events/ press releases)
  • Sales Promotions (coupons, cash back, salesperson bonus, two-for-one deals)

Promote in stages (AIDA Concept) because buyers buy in stages: for instance, advertising is good for Awareness and Interest but sales promotions close the deal by getting the customer to take Action on his Decision

  • Step 1: Awareness- if they don't know about you they can't buy from you
  • Step 2: Interest - once they know about you then you have to get them interested or they won't buy from you
  • Step 3: Decision- once the customers are interested enough to explore their options they make the buy or no-buy decision
  • Step 4: Action - just because the customers decided to buy doesn't mean they will-they need that extra encouragement to make them act (i.e. a coupon with a deadline)

 

Pricing

  • Are you going to price low to gain business and then go high? NO! How happy are you to see that the price of gas went up? Or anything else? Raising prices KILLS repeat business!
  • Are you going to Price high and then go low? Much better- you can always offer coupons or other sales promotions to increase business and everyone knows they are short-term only.
  • Make sure that you know your Fixed Costs and your Variable (per unit) Costs! Do not sell a product below your unit cost. "I'm going to sell below my unit costs but I will make it up on volume..." is both a common and wrong statement.

 

Market Segmentation and Targeting:

Segmentation and Targeting are the Keys to Selling ANYTHING! You build your business around who you want to sell to and who isn't worth the effort. You cannot sell to everyone so you have to limit your efforts to customers you can profitably serve. How would a Birmingham auto dealer sell cars to the Iraqis for instance?

 

Segmentation:

You have to examine the market and decide how to intelligently divide the customer base up:

  • Geography - not just a physical area but also a climate (snowmobiles will not sell well in Biloxi, MS)
  • Demographics (age, gender, race, income, etc.) - actual measurable facts about people
  • Psychographics (personality of customers) - Sometimes this is hard to understand because it involves unmeasureable, individual traits (i.e. risk-taker vs. risk averse, planner vs. impulsive). A business example from Biloxi would be that you will probably never see a smoke-free casino because people who don't smoke will very rarely gamble away their money due to their risk averse nature.
  • Usage ( frequent/occasional, business/pleasure, etc.)

 

Targeting:

 

Which of those market segments that you identified are you going to try to serve/sell to? Pick segments that are large enough to profitably market to and distinct enough that you can design an entire marketing mix for them.

 

Marketing Strategy:

Design a marketing mix to serve the customers in your Target Market segments. Perform a SWOT analysis on yourself and your competitors. Look at your competitors for those target customers and ask yourself what you can offer that target market that will get those customers to choose your product-this is called your Unique Value Proposition. Remember that "If you say it… You have to deliver it!"

  • Try to avoid competing on Price! Any idiot competitor out there can offer a lower price! If they have more money than you then they will bankrupt you if you try to match them.
  • Always look at Speed! Can you offer it quick? It is a McDonald's world and there is always a market for quick service no matter the quality or price. But your operations have to be set up correctly to do this.
  • Always look at the Quality/Price relationship. Can you offer much better quality for not much more money? Then tell the potential customers you can!
  • After Sales Support-customers will go with the supplier who will be there to help them if they need assistance. This could be as simple as a website with Frequently Asked Questions answered. For instance: a new car dealership without a service department will go bankrupt.
  • Repeat Business- existing customers are a lot less expensive than finding new customers so make sure you treat your current customers like gold... because they are! Never forget this- if you lose customers due to neglect you will never get them back!

 

Last Updated 02 AUG 2008

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