Marketing 101 - The Essentials
of Marketing
By Ammon
Johns
...
Continued from Part
one...
Knowing your customers
The tricky part to this is
that you really need to know
who your customers are and
what they want even before
you can make them your customers.
Bigger businesses literally
do this by carrying out extensive
market research to find the
best balance of the 4 P's of
marketing before they go any
further.
I'll come back to the 4 P's
in a moment if you are not
already familiar with them.
First however, I want to discuss
ways that the small business,
even the Sole-Owner business,
can do market research. In
fact, you probably did some
of this yourselves. You ask
people you know. "What
do you think of this...?", "Would
you pay $50 for a service that...",
etc.
Do what market research you
can, and if that means carrying
your own clipboard in the streets,
or means trying to find people
in your target market to interview,
then so be it. Every scrap
you glean will stand you in
good stead later on.
It is the data you get from
knowing your customers, combined
with the data from studying
your competition in the market,
that helps you to find a good
mixture of the 4 P's
The Four P's of Marketing
The four P's of marketing
are:
Product
Price
Place
Promotion
Product is what you are selling.
Not just the physical product
or the actual service, but
all the customer benefits and
values that the product represents.
It is usually not important
to have the best possible product.
Cutting edge and feature packed
products cost more. The key
is to have the most valuable
product in its price range.
Price is the amount that the
customer must pay. This is
the acid test of whether the
features you added to the product
were really valuable, or whether
you might have been better
to cut a few low-value features
out and so be able to offer
a lower price.
Place is sometimes thought
unimportant to online business.
However, many deals still go
best with a handshake. Services
can only be cost-effectively
provided within a fixed travel-radius.
Shipping costs matter. Place
is still a vital concern. With
the internet, all online shops
are on the super-highway and
equidistant to any customer,
and yet people still look for
local and regional suppliers.
Financial and legal issues
are still mostly set by place
too. Where will you place your
distribution centers? Would
better placement of your business
let you ship faster or more
cost-efficiently?
Promotion is the P that everyone
knows Marketing is about. Of
course, we are not only talking
about advertising in promotions,
but also sponsorships, public
relations, special offers,
viral marketing, and so much
more.
Every business, and every
product or service, will need
its own special blend of those
four elements. The cheaper
the product and the better
your place, the lower the price
you can offer. The more attractive
a product is for the price,
the further people will travel
or the longer they'll wait,
and the less promotion the
product will need.
The 4 P's of marketing all
inter-relate to create an overall
mix that you can control, and
in doing so, can find the optimum
blend for your customers and
market conditions.
Let's illustrate this with
something you'll all know -
a computer.
I am going to create a great
computer to sell. Using marketing
for strategic business, I know
I need to research my customers'
values, and look at what my
competition are supplying.
I find a gap in the market
in two respects - first I see
that almost all computer 'packages'
are far too low on memory by
default. Second, most computers
are still pretty ugly, though
great improvements have been
made. I'm locating this business
in the city, so I know there
are plenty of people and businesses
that can buy my machines, and
that delivery costs will be
cheaper because of that.
Okay, so offering at least
1Gb of memory in every PC is
my first product development
decision. (You do know that
Windows XP won't run at full
speed if you have less than
1Gb of memory, right?). Now,
that means my machines are
either going to be more expensive
than my competitors, or I am
going to have to cut out some
other feature that offers less
value.
I could go for a cheaper Graphics
card for example, and so develop
the computer for the no-nonsense
user who wants reliability
and performance for serious
work, and isn't going to be
playing many if any games.
Or I could save some on the
processor, and offer a slower
but more stable machine that
my competitors. The thing is
not to just guess, but to know
what features customers assign
the most value to. In actual
fact, this is why most computers
you buy in the shops are given
inadequate memory - people
value other things more highly,
and have suffered all the increased
likelihood of windows crashing
and freezing up for all these
years because they were more
concerned with a big graphics
card and surround-sound speakers,
than in supplying Windows with
the memory it actually needs
(1Gb, remember).
Okay, I decide on a mix of
components, some brand name,
others generic, and create
a PC that will be valued pretty
well by customers. I find that
I can offer really beautiful
cases and matching keyboards
in unusual colours (because
my brother is a real artist
with an airbrush) so I add
that too. I now have a unique
product that is as valuable
as I can get it while not being
far above the price of what
else is available. I've done
the market research to confirm
that people will pay that little
bit more for the truly beautiful
colours and individual look
that our custom cases and keyboards
offer.
Now I put the price on it.
I'd been considering price
all along the design process
as you noticed, but now is
when I decide whether I can
cut my margins a little to
sell more, or whether I increase
my margins so that I'm covered
if my brother decides that
painting all those cases is
hard work and he wants more
money.
What I'm actually doing here
is betting my business on my
belief that the value of the
product to my customers is
greater than the price tag
I'm putting on it. I have now
got the mix of product, price
and place sorted and now need
to add enough promotion to
make it work.
A lot of that promotion may
include educating my customers
so that they realise how important
it is for a PC to have enough
memory. I can run an education
campaign to help them learn
that the vast majority of crashes
on Windows are due to memory
handling errors, and that by
having 1Gb of memory, they
will be a full 90% less likely
to suffer a crash than a user
with 256Mb of memory - (All
pretty accurate, btw).
The rest of the promotion
is to have some advertising
that shows of the attractive
cases and beautiful colours,
inspiring some of the desire
that I know the artistic work
by my brother will arouse.
I go for a couple of big posters
at the railway station, some
flyers on the high street where
my shop is, and place some
posters in the windows of some
cafes where I know lots of
office workers buy their lunch.
I spend quite a bit on some
stunning pictures to use in
the posters and on my website
of course, and pay for some
user testing (I know a guy
at Site-Report.com) to ensure
that the 'extra reliability'
I am branding on is going to
be supported and reflected
by my website. I definitely
don't want any unforeseen irony
of an unreliable website. There's
the basis of my Promotion in
place. I'll also use SEO and
SEM too, because they offer
unbeatable value.
In fact, I decide to sort
out shipping for orders from
outside the city and oversees.
That way I don't have to be
so careful to exclude non-local
surfers and shoppers. The shipping
costs will push up the price
massively for those orders
of course, but though I'll
have a lower conversion rate
on shipped orders, I'll have
a wider customer base to compensate.
I still have superb value on
the local business, so my thought
for Place is going to pay off.
If the product really does
appeal massively to customers,
I may find that ongoing promotion
isn't needed as the viral marketing
effect of customer telling
lead takes over. Of course,
I may decide that means I'm
under-charging, and raise my
prices, so that I need to spend
a little more on promotion,
but not as much more as the
higher margins are giving me.
Now that, dear friends, is
the essential beginnings of
marketing.
...
Ammon Johns is an internet
marketing specialist. Ammon
works with Propellernet's
UK Internet Marketing Consultancy.
He is also an Administrator
(and frequent poster) at the Cre8asite
Forums, and a regular contributor
to Search
Engine Blog's articles
|
