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The tools and techniques of selling are all about selling what the business wants to sell. Wheras marketing is about offering the customer what the customer wants to buy. Which is the more powerful? If you struggle to answer this, perhaps it’s not a marketing consultant you need.
Three steps to a successful marketing plan
Firstly: Understand your customer and your market, i.e. ‘market research’. If you have any doubts as to your market knowledge, have a look at my ‘Sherlock Holmes’ page.
Secondly: Target the right clients or customers. The point of a good marketing plan is to focus on the right potential clients with the emphasis on the ‘right’. Only certain potential customers in any market are profitable, and so it’s essential that it’s these customers you reach. Research shows that on average 80% of a typical business’ profits comes from just 20% of its customers. So it’s worth understanding the profile of those 20%, because it’s more of these that you want. This is your target market!
Thirdly: Communicate the value you offer – rather than just describing the products or services you want to sell. And communicating the value you offer, is where the marketing plan comes in. The marketing plan is made up of the 4 P’s of the ‘Marketing Mix’; to give them their full names: Product, Price, Promotion and Place. The marketing P’s have been around for so long, that almost everyone people has heard of them. And over time they’ve increased in number to 7 at the latest count – but more of that later.
In a nutshell, the P’s of the ‘Marketing Mix’ are the marketing elements you need to juggle to market your business effectively. Getting them firing together, all nicely synchronised, is the aim – like a finely tuned engine.
This three step approach of: Understanding, Targeting, and Communicatingencapsulates the marketing task. It seems easy, which is why so many businesses underestimate the sheer effort – 90% perspiration, and 10% inspiration – it takes to get it right. And getting it right, understanding the needs of your market, identifying and targeting more of your most profitable customers, and communicating your value in terms that your target market appreciates, is a job for a marketing specialist.
Unfortunately most smaller or medium sized businesses cannot afford a dedicated marketing department or Marketing Director, and are obliged instead to focus on sales. Hiring the right marketing consultant on a project basis, can be a cost effective way to increase sales and profits.
A good marketing plan focuses on profit
Successful businesses talk about their ‘brand’ – and they invest a great deal of time and money into their brand. The brand is what gives the customer reassurance, and for the right brand, the customer willingly pays a premium. So why do so many smaller to medium sized businesses miss a branding trick, and think about branding in terms of expensive advertising and marketing promotions, when in fact it’s about margin and profit?
It may be because so much of what is written about branding seems academic and talks so little about profit. Which is a shame, because effective marketing and branding strategies can be used in any size business – for the only purpose that brands exist in the first place – to increase profit.
The 4 P’s of marketing and how they drive profit
I mentioned that that the 4 P’s have grown to 7 P’s. But for now, let’s focus on the ones you’re probably most familiar with: Product, Price, Promotion, and Place.
Product, or service, is of course what you sell. But is it the whole story? For instance, you may be a printing business that goes out of your way to provide exceptional service to your clients, or a manufacturer that goes the extra mile for quality, or indeed any type of business that takes the trouble to be that bit better. And yet, the extra value you provide often doesn’t seem to be recognised – or at least paid for.
The secret lies in how you design your product or service offering in response to the market. For example, in case you haven’t guessed it, McDonald’s success is not about their food. In fact if blind tasting surveys are anything to go by, people don’t particularly like their burgers. The McDonald’s product is a ‘happy outing’, akin to Disney; with a particular focus on time-pressed parents looking to keep kids occupied. The kids even get a play area and Ronald McDonald’s ‘free’ toys as a treat. McDonalds closely researches and designs their entire product line, service, and image around the ‘happy value’ of their product; and customers, happily or otherwise, pay a handsome premium for it.
If you’ve ever doubted the power of branding consider this research finding: “Even carrots, milk and apple juice tasted better to the kids when wrapped in the familiar packaging of the Golden Arches” (Associated Press, 2007). Make no mistake. Creative product branding is the ‘killer app’ of marketing. It’s the clever design and branding of the happy value of their product that makes McDonalds’ food so mouth-watering – to investors that is.
And with some analysis, I can help do the same for your business – identify where the uncharged-for premium, i.e. the ‘happy value’ equivalent lies in your product or service. And once I have identified where the value lies, I consider how to better charge for that value through pricing strategically.
Rarely do all four marketing P’s fire completely in sync; and yet it’s a fundamental principle of marketing theory that they must. ‘Price’ is consistently the most overlooked area for profitable fine-tuning. Because of the complexity, many marketing and branding consultants shy away from the spread-sheets and numbers involved in getting to grips with ‘Price’; mistakenly believing Price to be the sole responsibility of the finance department. And accountants wearing their ‘bean-counting’ historic looking lenses – which to be fair is exactly what they are meant to do – are notoriously indifferent to the power of strategic pricing, which if nothing else, is all about the future of the business.
Thus the most powerful profit driver in a company’s possession is often overlooked as the strategic power of pricing falls between the cracks of the marketing and finance department.
Why the most powerful? Because any improvement in price drops straight to the bottom line. Ground-breaking research published in the Harvard Business Review by Marn and Roseillo back in 1992 and still as relevant today, showed that even a 1% improvement in price, can deliver a 10% or more increase in operating profits. As a result of these and similar findings over recent years, Strategic Pricing has become a business discipline in its own right. Yet in small and medium sized businesses, Pricing is still the most overlooked of the tools available in the quest for growth and increased profitability.
How do you arrive at your pricing? Cost, plus a reasonable margin; or what the market can stand? If this is what you do, you’re almost certainly leaving money on the table. There’s more to ‘Price’; and investigation can pay handsome dividends.
Promotion which includes advertising, extends to all the ways you communicate the existence of your business to the outside world. Promotion is an area where flair and lateral thinking can go a long way. I’ve mentioned the importance of identifying the true value of your business. Once we’ve done this, ‘Promotion’ is all the ways we communicate this.
If you have the right relationships, promotion starts with your existing customers introducing their friends. A good example is Vida e Café. The baristas shouting whilst making the coffee is not to everyone’s taste. In fact I can’t stand it. But they rightly don’t care about that – I’m not their market, and they don’t even want me if it means catering to my tastes. Rather, Vida e Café have very cleverly differentiated themselves in a heavily contested marketplace by creating a highly distinctive atmosphere focused on their targeted clientele – affluent younger people on the move. Vida e Café’s website and social media, Facebook, Twitter etc. accurately reflect the atmosphere and energy of their shops, and they leverage the benefit to their brand by playing to the tastes and interests of their target group with loyalty cards and all manner of promotional hooks. Vida e Café’s success speaks, or rather shouts, for itself.
Likewise your business. Getting your products or services talked about in the right way, promoting the right image, is where the marketing effort comes together. A study of your business, your market place, and what matters to your customers is where I start. Then from a close understanding of your business and your market, I develop and promote an image of your business that people relate to; and talk about – and which they recognise.
The whole point about promotion is to develop and keep to a consistent message about your product or service. The key is to identify what you are most known for; in marketing, it’s called the Unique Selling Point or USP for short; and then to consistently promote this USP of your product or service in all your advertising and promotions. But having identified and successfully promoted one particular USP, one has to be careful not to be tempted into promoting other possibly conflicting USP messages. For example if your product or service has developed a well-deserved reputation for ‘value for money’, it makes no sense at all to promote other conflicting messages, for instance implying uniqueness or high-fashionabilty.
But sometimes, because a brand has done well in one category i.e. value for money, marketers are still tempted to stretch the brand into another category. For example the watch brand ‘Tempo’ was for many years the market leader by volume in South Africa. It was solidly positioned in the minds of consumers as the Nation’s favourite value for money timepiece. But over recent years the promotion and pricing of the Tempo brand is more and more akin to fashion names such as Guess and DKNY etc; in other words going head to head with these brands, and abandoning its traditional usability/reliabilty/value for money positioning. Marketers call this ‘brand stetch’, teenagers would say ‘duh’. It comes to the same thing. Lanco has taken over Tempo’s traditional positioning and is now the biggest selling watch in South Africa.
Motto: Discover your Unique Selling Point, promote it like crazy, and stick to it!
Last, but not least of the traditional marketing P’s, is ‘Place’; meaning the ‘where and how’ you distribute your product or service.
And even this ‘P’, which may seem the most difficult to change in a business, can yield surprising results with some investigation. Reviewing the way in which a product or service is distributed to the customer can be very rewarding. Amazon and all the other successful internet retailers are always the examples that marketers point to when discussing new distribution channels. This gives the false impression that new distribution channels must invariably be to do with the internet.
So it’s important to realise that an alternative method of distribution doesn’t, by any stretch of the imagination, have to be an internet concept. Opportunities abound for re-evaluating the product or service delivery for almost any business. For example, farmers in Australia offer ‘work experience’ opportunities, and charge tourists for seasonal labour that they would normally pay for. ‘Vets2Home’ in the UK have taken a leaf out of the traditional family Doctor’s book and offer home visits; a service so successful that it’s been featured on television. And how many restaurants survive the green-season thanks to food and wine paring evenings with guest speakers? It all comes down to alterative distribution, and in many cases making innovative use of spare (and paid for) capacity.
Ways to leverage your distribution may similarly be sitting unexploited, and you may be pleasantly surprised at the opportunities that can be unearthed for leveraging your distribution. This may involve selling un-used capacity; or even selling some services at a premium; all of which represents marginal income or additional profits which drop straight to the bottom line.
Examining each component of the marketing mix, and juggling the P’s is a specialist task. Unusually for a marketing consultant, I have experience in ‘Pricing’; the most frequently overlooked and yet most rewarding marketing P of all.
As I mentioned, there are now 7 P’s – inflation is not limited to the economy. The additional P’s are: ‘People’; your people, in that everything your employees say or do is part of your marketing; ‘Process’; the hundreds of systems you use, from producing a quote to managing debtors; and ‘Physical evidence of the business’; your offices, vehicles, uniforms, and every visible sign of your business.
And if one or more of the P’s is out of line with the others; for example, if your product or service delivery is at odds with the claims made in your marketing, or your pricing at odds with the brand’s image, the effect on your business is like an engine misfiring on one or more cylinders. My approach is to systematically work through your business and juggle the P’s until they’re all in synch.
The output, being the P you’re most concerned about.