Is Your Marketing Out of Control?
By Wayne Forster
This article was written for Kapital Magazine, (Riga, Latvia), May 2002
It’s sad but true that many businesses have absolutely no idea what they’re doing when it comes to marketing. Their marketing effort is totally out of control. It’s a collection of unrelated, disjointed activities initiated in knee-jerk reaction to the latest fad, the latest media promotion, or the latest marketing campaign of a competitor. There’s no clear strategy and no consistent message. They’re spending money – lots of it, at times – but they have little idea why they’re spending it where they’re spending it and less idea if it’s paying off. Without any clear idea why you’re doing what you’re doing, you can waste a lot of money. In marketing, “winging it” just won’t do. You must take control!
The key to taking control of your marketing is the preparation of a formal, comprehensive, detailed Marketing Plan. As a starting point, your Marketing Plan should answer the following three questions:
WHAT should I market?
WHO should I market it to?
WHAT should my MESSAGE be?
What Should I Market?
As simple as this question may sound, it is often the most difficult one to answer. And also the most pivotal. You cannot answer any of the other questions in your Marketing Plan until you answer this one. At first glance, the answer may appear to be self-evident. If you’ve got a computer consulting business, you provide computer consulting. If you’re a cabinetmaker, you make cabinets. If you’re a dress designer, you design dresses. But it’s not that simple, of course.
What specific types of computer consulting do you provide? What types of cabinets do you make? What types of dresses do you design? The options are numerous.
In order to be able to determine what specific products and services you should market, you need to consider the following factors:
Your Business Purpose
Your Business Purpose identifies, in general terms, what market need your business is designed to meet. The specific products or services you offer, therefore, must enable you to achieve your Business Purpose. If, for example, I say that my Business Purpose is to “improve the physical health of senior citizens”, I must then select products and services that will enable me to achieve that Purpose.
Market Demand
Once you’ve identified the products and services that will achieve your Business Purpose, you’ll need to do some market research to measure the current demand for these products and services. Review industry and government reports and statistics. Do an Internet search. Conduct your own surveys. Check business directories at your local library. Conduct in depth interviews with key people in your industry, including customers and suppliers. Find out how much is being purchased, how often, when, at what price and from whom. Why is this product being purchased? What specific needs does it meet? Is demand on the rise or in decline? What is the expected future demand? What is the life expectancy of the product? Will it become obsolete within a short period of time?
The Competition
Virtually every business has competition. No matter what products or services you offer chances are someone else also offers the same or similar products or services. Even if your product is unique, you’re still competing indirectly with other businesses for the customer’s money. Analyzing your competition can help you determine what products you should market. Find out how many businesses market the same products. If the number is high, it suggests strong demand. It also means, however, that it will be more difficult to capture market share. Do you, then, want a small piece of a large market or a large piece of a small market? Determine the typical product mix of your competitors. Do they offer a wide range or a narrow range? Also assess the comparative strengths and weaknesses of your competition. What advantages do they have over you and what advantages might you have over them?
Core Competencies
It’s often said that everyone is good at something. The corollary, of course, is that no one is good at everything. The same can be said for businesses. No business can be good at everything. But every business is (or has the capability of being) good at something. Every business has its core competencies. These core competencies might derive from the particular skills or experience of the owner or the staff, from a superior product design feature, or from an advanced technology.
Specialization vs. Generalization
Even within a business’s core competencies, it may have to make a decision about whether it wants to specialize or generalize. In today’s cluttered world of marketing messages, the generalist has a more difficult time getting noticed. If you try to be all things to all people, you end up being nothing to anybody. For small businesses in particular, specialization can be the best way to survive and prosper.
Return on Investment
The final factor you must consider is your return on investment. What is the profit potential of the product or service, considering likely sales volume, selling price and profit margin? What is the opportunity cost of offering a particular product as opposed to offering an alternative one? Would your profit be higher if you specialized in a higher margin product with a lower volume or a smaller margin product with a higher volume?
Who Should I Market To?
Once you’ve determined what products you’re going to offer, the next question is, “Who are you going to offer them to?” These are your target markets. Target markets are groups of customers who are most likely to buy your product. They are primarily identified by a set of common characteristics that give rise to common needs that your product is designed to meet. The needs and characteristics of your target markets dictate what your marketing message should be and how best to communicate that message. Defining your target markets is essential to the success of your marketing efforts. If you had an unlimited amount of time and money, it wouldn’t make any difference. You could market to everybody. But since your resources are not unlimited, you want to concentrate your marketing efforts on those groups of customers most likely to buy your products. In other words, you want to focus where you’ll get the biggest bang for your buck!
Target markets can fall within any of five broad market categories:
Residential (individual consumers)
Commercial (retail, wholesale and service businesses)
Industrial (manufacturers and resource-based industries)
Institutional (hospitals, universities, prisons, etc.)
Government (National, State or local departments and agencies)
We can further break down market categories into market segments. For example, market segments within the commercial retail category would include, among others, automotive, building materials, clothing, food and furniture. Market segments within the industrial category would include, among others, farming, mining, oil refining, steel making and software development.
To further delineate target markets, we can examine common market demographics. These suggest common needs. In the residential market category, they can include such things as age, gender, income level, education, marital status, occupation and ethnic origin. In the non-residential categories, they can include the size of the organization, ownership type, management structure, and stage of business growth.
Examining market demographics, however, may not sufficiently define our target markets. For example, some women may be interested in our product but other women would not. We need to dig a little deeper, therefore, and look at market behaviors. Market behaviors are factors that influence market groups in their purchasing decisions. They can include such things as lifestyles, interests, values, attitudes, corporate culture and decision-making authority.
The final factor we need to take into consideration is market location. Are we going to focus on groups at the local, regional, national or international level? Given our type of business, our products and our business goals, what geographic location or locations do we want to target?
What Should My Message Be?
I said earlier that determining what you’re going to market can be the most difficult part of the Marketing Plan. Deciding what your message should be isn’t much easier. It must be something that describes your product in a way that captures its essential benefits. It must be something that speaks directly to your target market and shows them how you can meet their needs. It must be something that will stand out from the crowd and not get lost in the clutter. It must be simple and direct, but imaginative and unique. Tough order!
The Marketing Message, however, is not simply a collection of words. It’s actually a combination of a number of elements. Taken together, these elements communicate an overall message to your target markets. They include core benefit, image, position, brand, and price.
Core Benefit
What is the core benefit that your product provides to the customer? What’s the bottom line? Your message must communicate this. Core benefits go deeper than product advantages. They go to the very heart of why the customer would buy your product. Core benefits include such things as saving time, saving money, increasing profits, solving problems, improving efficiency, enhancing productivity, implementing change, boosting self-esteem, gaining pleasure, avoiding pain or achieving peace of mind. Take Maytag Appliances, for example. Their message is clear. It says, in effect, that you can rest assured your washing machine will never break down. The Core Benefit is peace of mind.
Image
Webster’s dictionary defines image as a “mental perception held in common by members of a group.” Put more simply, it’s how others perceive, or see, something. We often hear the expression “Perception is reality.” In business, nothing could be truer. How your target markets perceive your products, your business and you personally constitutes their reality – and will determine how they react to you. If they perceive that your products are inferior (even if they are not), then the market “reality” is that your products are inferior – and your target markets will behave according to that reality.
How others perceive your business is largely determined by the information they receive from you. This includes everything from your business cards, to your letterhead, to your marketing materials, to your signage, to your facilities, to your product packaging, to color schemes, to the way customers are treated by your staff, to the way you answer the phone, to the owner’s personal image. In summary, any means by which you communicate with the marketplace affects your image.
How, then, do you want to be perceived by your target markets? What image do you want to project? Do you want to be seen as economical? Friendly? Convenient? Reliable? High quality? Sophisticated? Think about the image projected by many well known companies. What image does Sony try to project? What about Mercedes Benz? Or McDonald’s Restaurants? Each one presents a distinctly different image, designed to speak to their target markets.
Position
The perceptions of your target markets about your business and its products “positions” you within the marketplace in relationship to your competitors. For example, if your target markets perceive that your products are expensive, they will compare them to those of competitors that they also feel are expensive. If it turns out that your products are of lower quality than those expensive competitors, you will be at a distinct disadvantage. You will then have to either improve the quality of your products or re-position your product by changing its image. If you change either quality or image, your product will then be compared to products in a different position in the marketplace. Your image, therefore, should position you where you want to be in the marketplace. Who are you prepared to compete against? How do you want your customers to see you in comparison to your competitors?
Brand
Branding refers to the use of a name, word, term, slogan, logo, symbol, design, trademark, catch phrase – or any combination of these – to attempt to identify a product, combination of products, or an entire business as something unique and therefore more valuable. Branding has been around for a long time, with well-known brands like Coca-Cola, Nike and Swatch dominating their product categories. But in recent years, branding has become the hottest strategy in marketing. Once thought only the domain of large corporations, many small businesses are now jumping on the branding bandwagon. Why all the focus on branding? Branding provides a number of advantages for both the customer and the business. For the customer, it helps them distinguish one product from another. But more importantly, it makes buying more predictable and less risky. Since brands come to represent a collection of product features and benefits, customers know what they’re getting each time. When you buy a Henckels knife, for example, you have an expectation and a reassurance of a certain level of quality. For the business, a brand helps maintain customer loyalty by encouraging repeat buying. This, in turn, helps lower marketing costs because it’s always less expensive to keep an existing customer than it is to attract a new customer.
Price
Price ties all the elements of the Marketing Message together. The price you attach to a product must reflect the core benefits that the product provides. If it’s priced too low, the business is not getting an adequate return for the benefits it is offering. If it’s priced too high, the customer is not getting sufficient benefits for the investment they’re making. The price must also be consistent with the image of the product. If the image is one of high quality, exclusivity and sophistication, the price should be high enough to reflect that image. If the image is one of economy, utility and convenience, the product must be priced accordingly. Price must also support the position of the product in the marketplace by being competitive with other businesses in the same market.
In summary, once you decide what you’re going to market, who you’re going to market to, and what your marketing message will be, you’re well on your way to an effective marketing effort. From there you can make intelligent decisions about the type of marketing activities you will undertake in your marketing campaign.
© Wayne Forster 2001
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