Every business has only two functions: marketing and innovation (cit. P. Drucker)
Peter Drucker, the world-renowned management consultant and author, once said that “every business has only two functions: marketing and innovation.” The concept underly a fundamental truth: the purpose of a business is to create customers, and marketing and innovation are the only two ways to do this.
This idea is particularly relevant today given how easy it is for customers to access businesses through multiple channels and for the same reason, how difficult it is for businesses to acquire and retain a loyal customer base. As a result, marketing has taken on an even more central role within organizations and the way a business decides to serve customers and compete in the market, its marketing strategy, is at the center of the game they decide to play.
This article is not about nitty gritty (and often sponsored) marketing techniques..but how to build a top marketing strategy
Marketing techniques are a set of strategies or methods that businesses use to promote their products and services. A marketing technique can be as simple as putting up posters around the city, but it can also involve a lot of different forms of advertising.
Business marketing strategies, on the other side, consider the business in its context, with its capabilities and therefore possibilities to grow via new marketing programs. Its focus is the business.
Social Media Advertising, email marketing strategy, social media strategy, or other marketing initiatives are what’s so-called channel strategies and plans and serve the higher purpose set in the overarching marketing strategy of the company. Small business Marketing, given its limited resources but oftentimes a higher degree of flexibility, can gain substantially if its marketing strategy fundamentals are properly set up: activities are orchestrated, learnings from good and bad experiments get into context and the organization can evolve in serving its customers.
What the term “customer value” means in modern marketing terms?
Customer value refers to the benefits and services that a customer can derive from the use of a product or service. Customer value refers to the “usage” of a product, meaning that both tangible and intangible factors contribute to the development of Customer Value.
In order to be successful in the modern marketplace, it is essential for businesses to create value for their customers. Value perceived must always exceed the price customer is paying. What does augment value perception without increasing ongoing production costs? Branding.
As marketing products to consumers has become increasingly complex thanks to an oversupply of products, lower entry barriers to markets thanks to digitalization and globalization, and accelerated obsolescence of products thanks to hyperbolic technical advancements, customers have more choices than ever before.
Launching new products and hoping for customers to purchase them is over, definitely over for businesses of any size. Picking the right target group, setting up the company to react to customer feedback, and quickly turning them into actions aimed at serving customers even better is the simplest and necessary mantra management should follow up with.
“But we sell cheaper than our competitors, that’s how we will attract customers” still say some companies’ executives. Wrong. While pricing is still an important consideration for consumers, especially when making smaller purchases, the more a company competes just on pricing, the more it is exposed to new entrants and shorter life cycles. How can you think of competing on pricing in today’s world where people purchase on Amazon and the query returns similar products in less than 3 seconds?
What are the steps involved in building a marketing strategy from the ground up?
Building a marketing strategy is not an easy task, even for large businesses. However, a business can do it with careful planning and execution. The first step is to perform an in-depth analysis. This will help you understand your current position in the market, as well as identify your target audience and what appeals to them.
There’s no need to fall into the analyst’s trap here, analyzing each and every data available on the net. Focus on what really matters: customers and context.
Once you have a good understanding of your target market, you need to create a proposition that provides value. This could be anything from lower prices (and again don’t just stop at pricing) to better customer service. Whatever it is, make sure it’s something your target market wants and needs through research.
The final step is putting all the pieces together. This includes engineering methods and procedures to acquire new customers and retain those already acquired. If you are an established business, you might have procedures, competencies, and distribution contracts already in place, hence make sure you plan according to those constraints and opportunities.
Where to look for potential Customer Value? The process of Marketing Analysis and Research
When it comes to business, whether you’re a startup or an established company, it’s always important to look for potential areas of growth. Standing still can’t be an option in a context that continuously evolves at an accelerated pace. And this is where marketing analysis comes in.
There are 5 domains of marketing analysis to carry on (so-called 5C’s): Customers, Company, Competition, and Collaborators.
Through the process of marketing analysis, you can develop a better understanding of your customers and their buying habits. This information can help you determine which markets/categories/segments are most promising and identify potential areas for growth. One of the most interesting aspects of performing customer research is that you have the possibility to discover how customers “see” the market offer of your competitors, the degree of value they attribute to specific features, and their blind spots. If performed well, customer research is an insight generation machine.
Perform market research to help you understand your competitors better and assess their strengths and weaknesses. Armed with this information, you can then create a more effective marketing strategy that gives you a competitive edge.
Be focused when designing a research plan and ask for help if you don’t have a professional researcher internally. It would be tempting to go all-in and flood customers with questions of all kinds to maximize data collection but unfortunately with this approach, you’ll end up with a poor mix and no guidance.
Be clear of what the objective is (what’s the expected outcome) before designing a study and do not use research to just confirm your decisions.
Unfortunately, it is becoming a common belief that market research means developing a script of questions to submit to your potential target customers. That’s a valid practice for startups who are bootstrapping and have a very fluid business structure, but it proves to be very inefficient for Small and Medium Businesses. Professional Market Research is designed and conducted by professionals, who know HOW to ask questions and most importantly how to INTERPRET answers given. Be progressive if you want to test the water and invest your budget as your learning curve progress: launch an online questionnaire through the various tools available online, get on an interview with some of them, but invest in a professional research agency if you need to commit company’s resources based on the outcome.
And don’t forget: by performing research and analysis you’ll be in a much better position to make informed decisions about your marketing strategy, but the ultimate decision lies with you as a manager.
What target market should you focus on when building your marketing strategy? Key points on Segmentation
Segmentation is not a new concept in marketing, yet it’s one of the most difficult to fully grasp sometimes as counter-intuitively pushes companies to limit or – better said – to focus their business potential. This process involves dividing a broad consumer or business market into sub-groups of consumers based on some type of shared characteristics. By doing this, businesses can better understand their target markets and focus their efforts on reaching these specific groups. It is a subtraction-led process, with the intent of increasing the chances of being successful.
There are two main types of market segmentation:
1) Market segmentation– It takes the perspective of the whole market and subdivides it into segments or categories. Take the example of home detergents for a second, you might have detergents for the dishwasher, those for floor-cleaning, and so on…each of these is a category market. With market segmentation you can narrow down your target market, allowing you to uncover its sizing, its competitors, and the dynamics that regulate it specifically.
2) Customer segmentation– This subdivides customers into segments based on several criteria: who they are (demographics), what they do (behavioral) and what they want (needs-based).
It is important for businesses to define and regularly keep track of changes occurring on both levels in order to have a complete and updated understanding of where they are in the marketplace.
How can you reach your target market with your marketing efforts? The role of the Marketing Mix in a Marketing Strategy.
There are certain key things to remember in marketing and surely one of the is knowing what the concept of the Marketing Mix is. The marketing mix is a model for planning and executing a business’ marketing strategy. Marketing Mix consists of four Ps: product, price, place, and promotion. Each of these categories encompasses a number of strategic decisions that must be made in order to reach your target market effectively.
How can you create a Unique Selling Proposition for your business and start creating Customer Advantage?
Creating a Unique Selling Proposition (USP) for your business can be a challenge, but it’s important to have one if you want to differentiate yourself from the competition. A USP should be specific, measurable, and valuable to potential customers. It’s your Brand’s elevator pitch.
A USP is not a list of product features., but how those help the customers solve the problem or opportunity you have decided to tap into and how your company/product serves it differently from the competition. It’s about the transformation you help achieve in customers’ life.
An example? “Inspiring everyone to become an athlete” is what Nike stands for. It might sound like marketing fluff, but actually, your USP should represent what customers think when thinking of you.
Offline and Digital Channels. What mix should you use to reach your target market most effectively?
When it comes to marketing, there are a variety of channels that you can use to reach your target market. It is how you distribute value to the customer.
However, the mix of offline and digital channels will vary depending on the business, industry, and product. If you performed competitive research properly, you can already determine which channels your competitors are using and how they’re selling their products. That’s a good starting point.
Start differentiating between discovery channels and consumption channels, list them down and prioritize based on your company-specific situation and success criteria. Discovery Channels are those where ROI should normally be expressed as a function of “top of funnel metrics” such as awareness, consumption channels are generally those where a company invests to create an intention to buy and potentially close the sale.
Again, looking at where competition is playing is a good start, but spending time coming up with options that are complementary and potentially disruptive is also an exercise that might pay off in the longer run.
Making your pricing stand your value proposition. What is the “right” price for your product or service?
When it comes to pricing, it is important to remember that you are not just selling a product or service, but rather you are delivering value. Therefore, not only your pricing must be in line with your company’s value proposition but also convenient enough for prospects to sign up and become customers. I on purpose say it must be “convenient” enough to convert as we normally tend to think of pricing from our company perspective and more rarely from the customers’ side.
For sure, It is important to consider the costs associated with producing and delivering your product or service otherwise we end up with very happy customers but poor financial performance on the company side. By factoring in these costs, you can ensure that your price is above your marginal cost and still profitable. Positioning products at the right price is a balancing act, especially in the world we live in where Internet has made pricing fully transparent and comparable with a click.
Ultimately, how is your competition priced in comparison to your target? Once again, a well-done competitive analysis (see above) should allow you to clearly see where you potentially stand.
Finally, always remember that pricing is an iterative process and should be constantly evaluated and adjusted as needed. We’ll talk more in-depth about how to identify a price point that resonates with your customer as well as the latest trends in this discipline such as predictive pricing and dynamic pricing.
Building a Customer Experience machine to grow and retain your customers: develop a customer-centric go-to-market strategy.
The role of Marketing has fundamentally changed and CMOs are now accountable for revenue in most companies. As this new reality unfolds, CMOs have the accountability of designing a marketing function capable of not only developing a sound business strategy, but also an efficient customer experience machine engineered end to end to acquire and retain customers. That’s a challenge, especially in an SMB!
Building a customer experience machine is a company-wide effort that, in a nutshell, drives your company in being customer-centric. In today’s terms, this means to be ready to programmatically and intentionally acquire, convert and manage customers along their journey.
It’s, first of all, an effort in changing the product-led mentality most Small Medium Businesses still hold and that drives to assess, train and position the right people in place to make sure things run smoothly. But it’s for sure also a matter of adopting a data-driven mentality and having a technological infrastructure that not necessarily must be sophisticated and costly to run, but surely assist managers in taking decisions based on customers’ behaviors.
Most Small and Medium Businesses definitely know how to acquire customers, but very few know how to manage customers to the level needed today.
What are some common mistakes made when developing a marketing strategy?
The key mistake is not having data that inform business decisions. Gathering data, when professionally done, can be a costly exercise both financially and in terms of human resources needed, but is the only way to move forward in the balancing act of management. It’s not about knowing how many emails have been opened or advertisements seen on social media. Business data about your market, your competitors, and customer preferences…setting in place the capabilities to gather, interpret and make use of this class of data allows small-medium business to achieve a level of understanding that simplify business decisions and gear them to develop, improve or even dismiss value propositions. Multinationals are famous for using data, startups grow by constantly adapting themselves based on data. What about small-medium businesses?
