The basics of marketing

Marketing, a scientific approach to getting sales or the dark arts of snaring customers? This post is aimed at those people for whom the normal day job does not involve marketing services or products, those new to business or in Finance, HR or Operations that are curious about what marketing is or want to get an understanding of terms they hear. This is my introduction to the very basics of marketing.

Basic Definitions

Let’s start with the difference between a customer and consumer. Words that are thrown around quite merrily but which are subtly different.

A consumer is the person who uses (consumes) the product or service and a customer is the person who buys it. The consumer may not have an input into the purchasing decision.

A doctor or pharmacist may buy a drug for a hospital (customer) but the patient it is used on will be the consumer.

For the purposes of this post I will use the term customer to refer to both for simplicity.

What is marketing?

In 2012 the Chartered Institute of Marketing defined marketing as:

The management process responsible for identifying, anticipating and satisfying customer requirements profitably. 

Alternatively the American Marketing Association suggests the following:

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

Combining these definitions, marketing is recognising what your customer wants and satisfying their wants or needs, importantly this should be done profitably and the second definition of marketing introduces the concept of value.

Defining Value

Value is the benefit and satisfaction received by the customer compared to the effort exerted in buying the product. This is not just monetary amounts, within value there are intangible benefits that are harder to put a price on, what is the price you put on a soundproofed hotel room and the great nights sleep you get in it? How do you put a monetary value on owning the latest prestige car or an iPhone say?

Likewise cost is not just monetary, it is the effort spent researching an item before purchase, it is the time taken to queue up to pay, the hassle of possibly returning an item to a company with poor customer service relations.

When a decision is made to buy the customer will weigh it all up and go for the option where the perceived value outweighs perceived cost.

Therefore you need to be offering the maximum benefit for the least possible effort to maximise the perceived customer value.

It has been suggested that customers don’t buy products but instead benefits, the classic example given is a customer purchases the ability to accurately make holes, not a drill. They buy the nights sleep and the comfort in a hotel room.

Reasons for buying

Consider purchasing a car, what are your reasons for buying it?

  • being able to be mobile and get from A to B
  • reliability and not breaking down
  • being the most cost effective and fuel efficient
  • creating the least harm to the planet
  • comfort or the social status and kudos that the car gives to the owner.

This is why a range of cars are available from a Citroen C1 to  a Rolls Royce and all cars in between. Every customer will value different aspects of the car and the benefits obtained from purchase are offset against the price and the effort that has to be extended to making the purchase.

Segmentation

This leads nicely onto segmentation.

If you are a car manufacturer lets say Rolls Royce and you are marketing your new model who do you advertise your car to? You could choose a mass market approach and try to advertise to the masses but the majority of people that you reach will not be able to afford your car, no matter how much they aspire to own it. This means that 99% of your advertising would be effectively wasted.

Picture of Rolls Royce to demonstrate basics of marketing

If you break down the people who want to buy cars though into different categories in this case possibly social class, high disposable income and advertise specifically to these then you will get a higher success rate for that advertising. Breaking down the customers in a market into groups is segmentation, choosing which segments to market to is targeting that segment.

By segmenting and targeting your market theoretically this provides the  best value and most efficient marketing.

What does all this mean for your business?

This means you need to understand what your customer wants and needs in great detail, how do you expect to satisfy your customer if you don’t understand their reasons for purchase. The Rolls Royce customer wants exclusivity and luxury, a Citroen C1 buyer will probably want cheap motoring instead.

These examples are on opposite ends of the automotive spectrum, realistically you would be marketing the C1 against a Peugeot 108 and seeking to differentiate a it against a vehicle in the same class.

If you know what your customer wants then you can design your product to match these needs, then choose the marketing to highlight your benefits over competitors to maximise your sales.

The Marketing Mix

So you know what your customer wants and you have the product to sell, what next?

You need to communicate your amazing product to them and get those customers to buy it, this is where the marketing mix comes in.

You’ve probably heard of the 4P’s or the 5P’s (recently I heard it as the 7P’s). These are what are alternatively known as the marketing mix:

  • Product 

As mentioned previously you need a product that delivers what your customers want.

  • Price

The product needs to be sold at the right price for the customer.

  • Place

It needs to be available for sale in the right place and through appropriate distribution channels.

  • Promotion

The methods by which you get marketing messages to your target market.

  • People

This is people both in the target market and in your own organisation, research into the people and their wants and needs in the market and the excellent people you need in your organisation to make it successful.

This post has covered the very basics of marketing and is a very simple introduction which highlights the need for marketing to be related to profitability, to provide value to a customer and what value is. It then introduces segmentation, targeting and the 5P’s or marketing mix.

Future posts will develop this and put some flesh on the bones and discuss what marketing channels to choose, aligning marketing with strategy and the differences between transactional marketing and relationship marketing.

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By |2019-03-07T19:51:58+00:00March 7th, 2019|Marketing|Comments Off on The basics of marketing

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