Marketing is one of the most important aspects of running a successful business and it is important to understand the theory behind it. This blog post will outline the basics and explain how small businesses can effectively apply the right marketing process to positively impact their bottom line.
Many of the insights of these article come from the lessons of Prof. Mark Ritson at the MIT Sloan School of Management. He was voted Teacher of the Year many times and his classes were always overbooked, with people sitting in the aisles to absorb his knowledge in marketing management. In addition to this, we also include lessons from Steve Blank’s book “Four Steps to the Epiphany”. The focus of his book is centered on customer development and how customer validation is the right approach to develop product market fit.
The Marketing Process
- Marketing Orientation
- Market Research
- Market Segmentation
- Buying Process
- Product, Price, Promotion, Placement (4Ps)
We will focus on the first part of this marketing process. Contrary to common sense, marketing is not only about products, advertising or sales. It is the fusion of all of these through a methodology that allows us to learn from the customers to understand how the market is conformed. In order to follow the right marketing process one must first develop the right Marketing Orientation. This means putting consumers at the center of the development process and at the core of the business.
The next step is Market Research, this can be done in many flavors from primary research such as Focus Groups, Conjoint Analysis and Ethnographic to secondary research from previous research studies and existing data. This will provide you with information from consumers in terms of who they are, what they like, how they value the product or service that you offer and how much they will be willing to pay for it, among other things.
Here is where many companies fail to follow through with the methodology. Segmentation is a critical part of the marketing process and it is here where we analyze, slice and dice the data. A company must understand that every market will be conformed of different segments and not everyone is equal. Through the analysis of the data one can determine different segments, for example behavioral and geographic. Here you can come up with different personas to represent the different segments that you have uncovered (and remember this must cover the whole market).
Now comes Targeting, this is where fewer consumers equal more profit. By defining the right positioning statement to address the needs of a smaller market segment and focusing on delivering value to them you will achieve better results. Your customers will be better served and you will be able to differentiate yourself from your competitors. You can select one or two segments to target, just ensure that the business is interesting in terms of dollars for the part that you have selected. After you begin to focus your efforts and resources on serving the target segment, your customers will see more value in your product. Your targets are all looking for the same thing and you are focused on providing it. They will be less sensitive to price, which will result in better margins. In addition to this, you will also begin to see how one segments influences the other resulting in more business over time.
Check out Small Business Marketing 101 – Part 2 which covers Positioning, the Buying Process and the 4P’s of marketing.