What is marketing?
At its basic level, marketing is about determining the value of your product or service and communicating that information to customers.
Table of Contents
Who is your customer?
Before you begin selling something, you need to know who you are selling to. When developing a general profile of your customers, you might want to define them by their demographic characteristics, such as:
- Age, usually given in a range (20-35 years)
- Marital status
- Location of household
- Family size and description
- Income, especially disposable income (money available to spend)
- Education level, usually to last level completed
- Interests, purchasing profile
- Cultural and ethnic background
For example, a clothing manufacturer may consider a number of possible target markets — toddlers, athletes, grandparents, teenagers and tourists. A general profile of each of these potential markets will reveal which ones are most realistic, pose less risk and are more likely to show a profit. A test market survey of the most likely target groups, or those who buy for them, such as parents for babies and toddlers, can help you separate real target markets from unlikely possibilities.
Once you have defined your target customers, you must learn about their needs and preferences.
- What challenges do they have that could be solved with your product or service?
- What are their needs and expectations regarding this product or service?
- What types of things do they desire?
- What do they spend their money on?
- Where do they shop?
- How do they make spending decisions?
Those are just a few of the many things you may want to learn about your prospective customers.
To develop a profile of your customers and understand their needs, you will have to do some market research.
The Four Ps
Will anyone buy what you're selling?
Marketing experts say that there are four factors that influence purchasing decisions. These four factors are known as the marketing mix or the four Ps:
- Product: What are you going to sell?
- Price: How much can you charge for your product?
- Place: Where will people buy your product?
- Promotion: How will people find out about your product?
How successful you are at these four elements will strongly influence your business' revenues.
Note: In this section, we use the word "product" to mean both "goods" and "services".
What are you going to sell?
In order to determine what you should be selling, you must understand your target customer's needs and then tailor your product to meet those needs. The more you are able to fulfill your customers' expectations, the better the chances that they will buy from you, recommend you to others and come back again in the future.
Some key considerations when designing your product include:
- Mass production or customization: Is your product going to be mass-produced and be the same for each person who buys it or will you offer a custom product for each person who buys from you?
- Convenience, shopping, specialty or unsought good: Is your product something that people pick up regularly when doing their errands (convenience good); is it something they would shop for and compare different brands (shopping good); is it something special they would only buy infrequently, like an expensive gift or luxury item (specialty good); or is it something they don't really want, but may need to buy (unsought good)? Understanding which category your product fits into will be important in determining how to price it, where to sell it and how to promote it.
- New or existing product: If your product is a new product, you will have to create a market demand for it (convince people that they need it). If you are creating a new version of something that already exists, you will need to show people that it is better or less expensive than what your competitors are offering.
- Test your product: So, you understand who your prospective customers are and you've done some research on their needs. You've designed a product to meet their needs. But have you tested it? Sometimes, there could be something (big or small) about your product that put people off and that would limit its success in the marketplace. Be sure to get feedback from people who fit your target customer profile.
You also have to consider what stage in its lifecycle your product is at. This can have a significant influence on your sales and profitability.
How much can you charge for your product?
The price that you charge will influence the number of sales and the amount sold. If your price it too low, it may appear that the product is of lower quality or you may simply make too little profit. If your price it too high, customers may buy fewer items or in smaller quantities.
To determine the right price, you should consider:
- The cost of developing the product (including direct cost of inputs and overhead costs)
- The price established by the competition
- The amount customers are willing to pay or can afford to pay for your product
Where will people buy your product?
Place refers to both where you are going to sell your product and how you are going to distribute it.
- Are you going to sell your product directly to the end consumer yourself or will you sell to wholesalers or retailers who will sell it for you?
- If you do sell it yourself, will you be selling over the Internet, by mail or from a physical location?
- Is the location you've chosen a good fit with where your target customer shops?
Whether you are just getting started in business, considering new distribution methods or trying to sell your products abroad, you may find these additional resources helpful.
How will people find out about your product?
For people to buy your product, they need to be aware of it, have a positive impression of it, and be convinced that they need or want it. There are a wide variety of tactics you can use to promote your product to prospective clients, including:
- Traditional advertising on television, radio, billboards, in newspapers or magazines
- Internet advertising, social media and other online promotion techniques
- Participation in trade shows and other events
- Development and distribution of marketing materials
- Direct marketing by telephone (telemarketing), mail and e-mail
- Signs outside your business
- Listing in company directories
Determining which approach is right for your business depends on your budget and on your target customer. You want to be sure that you are promoting your product where people will see it and where you will get the greatest exposure possible for the money spent (also known as "return on investment").
Your product packaging is also an important part of your promotion tactics, especially if your product is going to be sitting on a shelf next to competitive products. You need to think about:
- How are your competitors packaging their products?
- What type of design will appeal to your target market?
- Will people be able to determine what the key features or benefits of your product are by looking at the package?
- What are the labelling requirements?
The message that you use and the brand image that you develop are critical to getting people to know and like your product. Your message needs to convince consumers that they need or want your product, and that it will bring them value. Your brand has to be engaging enough that they remember it and think of your business and product when making purchasing decisions or recommending products to their friends.
How does marketing interact with the rest of your business?
Marketing is not a stand-alone activity. It is integrated with all other functions of your business.
- Your research and development needs to be focused on developing products that meet the needs of clients.
- Your production team has to be able to keep up with the demand that you create for your product and live up to promises you make about the quality of your product.
- Your human resources strategy has to be focused on hiring and training people to sell your product and create a strong image for the business.
- Your financial experts need to provide input into discussions around pricing your product.
- Your legal team needs to assess the privacy implications of various marketing techniques that you are considering.
- Your environmental team will want to look at the packaging of your product and ensure that, while still being attractive, it has a low impact on the environment.
As you can see, marketing is far from an isolated business activity. It needs to be a key consideration in all types of business decisions.