Introduction to Marketing – Part One

Part One: Marketing, an overview of the basics

Marketing: What is it?

So, marketing- what is it? Basically put, it is the process of meeting a customer’s need for gain or trade, usually profit in the context of most business organisations. Of course, this is a basic definition, as it involved many steps and can vary from organisation to organisation, consumer to consumer, market to market, and so on.

The Marketing Cycle

The process of marketing revolves around a few different aspects that act as a continuous cycle: Firstly, there is a need, want or demand by consumers which, in turn, create a market. This market is evaluated for its potential, and an organisation creates a solution to it, in the form of a product. This product is designed with specific features that satisfy the market’s requirements to a certain extent, creating a value. An exchange takes place, and then the process repeats.

Consumer Choice and Value

Marketing directly affects the way a consumer judges the value of a product and the level of customer satisfaction they receive.

Value

Just because an organisation creates a product to meet a market’s need, doesn’t mean it’s the only one, nor is it the best or worst. All consumers judge the value of a product, both before and after the purchase. As stated above, marketing is based on an exchange or trade: this means that a consumer parts with something for the product in question. This ‘parting’ gives the consumer the ability to judge the value and the level of satisfaction they experience.

It’s important to remember that the trade doesn’t always solely involve money. Of course, the majority of products are paid for with money, however there are other costs, such as time, that also go into the transaction.

Customer value can be calculated, conceptually, by dividing total benefits by total costs.

Total benefits include all of the tangible, physical gains of a product (known as the functional benefits), as well as the emotional benefits that go with the purchase. For example, a new pair of jeans provide the functional benefit of clothing and comfort, and the emotional benefit of being fashionable and making the wearer feel good.

Total costs include the obvious monetary cost, but also costs of the consumer’s time, energy and even emotion. If a consumer is stressed about a purchase, this would be considered an emotional or mental cost.

Therefore, the benefits divided by the costs gives a consumer’s value of the entire product purchasing experience. Of course, not all of these turn out positive. The consumer may want the product, but if they believe the monetary or time cost was too high, outweighing the benefits gained, they will value the product very low. Consumers often experience what is known as the ‘turmoil of the purchase’ which is the cost they experience in acquiring the product, whether that be frustration with queues in a store, or not having the correct size, and so on. ‘Buyer’s remorse’ is the emotional conflict that a customer experiences after the purchase where they start to analyse whether there was enough value to justify their purchase- a good marketing strategy is to always reassure the consumer and create enough value for them to never associate this feeling with your product.

A good example is the Harley Davidson motorcycle. There are many different alternatives of motorbikes on the market more powerful and cheaper, however the brand Harley Davidson still presents a lot of value to a certain group of avid motorcyclists, simply because the brand carries more weight than the simply functional benefit. The customer gains more value from the prestige and image that the brand represents.

Customer Satisfaction

How expectations are met dictate the level of customer satisfaction in relation to a product. If a product over-delivers in comparison to what a consumer expected, satisfaction will be very high. The opposite is true from a low level of satisfaction. Marketing aims to ensure that customer satisfaction is high to ensure that their product has a positive reputation in the market place, as the resulting repeat purchase of a happy customer as well as the positive word-of-mouth is very profitable.

The market place is forever increasing their expectations with the rapid evolution of technology, competitors and social media. Modern marketing is not just the creation and delivery of the right product: it’s also about managing expectations. A product will never please everyone, and it’s important to ensure the greatest satisfaction within reasonable confines.

Relationship Marketing

Managing value and customer satisfaction has created what is known as customer relationship marketing, sometimes shortened to CRM. This basically means that organisations view the consumer as the ultimate judge of their product, and therefore, creating a good relationship whilst satisfying their needs leads to customer loyalty: a goal, all good marketers strive for.

Retaining customers in a market is a key driver in organisational success. Losing customers results in less demand for a product, and significant financial loss. Often, an organisation will encourage feedback, especially complaints, as this means that they can evaluate the weaknesses in their offering and attempt to employ a recovery strategy to retain the customer. It has been shown that making a mistake and then correcting it, be that via an apology, a refund or sending free stock, etc., can greatly increase customer loyalty.

With the rise of social media, bad feedback can reach further than ever before. Employing a customer recovery strategy can result is avoiding significant losses associated.

The Evolution of Marketing

Basically, the modern practices and concepts of marketing and promotion began roughly in the 1960s to 1970s. From that time to now, the view on marketing has shifted and evolved.

The first philosophy was called the production concept which focused on mass production of products and selling them to a market as is. However, organisations started to discover that just one product didn’t always fit the demands of a versatile group of consumers. This is how the product concept developed, and it saw focus on differentiating a product’s features. Following this came the selling concept, which revolved around utilising promotion and a sales force to drive sales through communication with the market.

The next step diversified marketing further, which, funnily enough, was called the marketing concept. This involved conducting business through connecting far better with consumers, segmenting the marketing, investigating their individual needs and maximising consumer value and customer satisfaction by tailoring the product to match, setting an appropriate price, communicating effectively and ensuring delivery was convenient. Basically, it put the consumer first, and answered them with production, selling and product concepts, rather than the other way around. This was a very internally focused concept and was extremely effective, employed by most organisations even today.

There is one last stage. Whilst not all organisations do this, the benefits of an organisation that focuses on what’s known as the societal concept are quite high. This is basically taking the above marketing concept and adding a socially responsible aspect to it. The societal concept looks externally and not just internally within an organisation. For example, products can be environmentally friendly, contribute to charities, sponsor events and so on that benefit the larger community. It revolves around making profit by simultaneously satisfying consumers and acting in a way that benefits society. The positive repercussions of this can be very beneficial for an organisation as consumers seek more from them than just a good product.

The Marketing Mix

Here it comes- the obligatory 4 Ps of marketing. Considered by some to be slightly out dated, the four Ps are the real pillars of all marketing practices: Price, Product, Promotion and Place. Often, a fifth P, Positioning, is added to this marketing mix.

Price refers simply to the cost of the product. As already mentioned, this is monetary cost, as well as other costs such as time.

Product revolves around all attributes of the offering that are created by an organisation to satisfy their needs.

Promotion is about the communication techniques that educate and persuade customers to be interested in the product.

Place, also known as distribution, are the logistical practices employed in bringing the product to the consumer.

Positioning refers to the marketing technique of where your product sits in the market and how it is viewed by consumers. It’s basically a product’s reputation: is the product a low cost alternative, or an expensive luxury item with lots of prestige and so on.

When the product is an intangible service, there are three additional Marketing Ps that are added to the marketing mix: People, Process and Physical Evidence.

People refers to the human element of the service being carried out, such as relationships, personability, experience and expertise.

Process is exactly what it sounds like: the steps involved in carrying out the service to produce a gain for the customer.

Physical Evidence are the associated tangibles that the consumer will experience during the service that have an impact on how a consumer rates the service. For example, the way a lawyer dresses or the quality of the tools a builder uses.

The Wholistic Marketing Approach

Also spelled ‘holistic’, this approach suggests that a perfect marketing organisation unites the four key elements in one united operation: The marketing mix (the Marketing Ps, above), Customer Relationship Marketing (CRM), Internal employee satisfaction and the external Societal marketing concept, all discussed above.

By conducting organisational operations with these four elements, a business ensures that its main priorities ensure the greatest potential for success and profit.

How Does Marketing Do This?

The marketing function of an organisation lends itself heavily to how successful an organisation is. This is because the marketing function investigates the current position, and develops strategies, formulates tactics and executes actions that all produce the benefits an organisation strives for.

A marketing plan is a living document that outlines marketing’s analysis and proposed efforts over a particular time frame in achieving organisational success. It involves the following elements.

Overview and Executive Summary
As the title suggests, the first section is a quick snap-shot of the entire marketing plan that will follow this section.

Current Position
This section outlines everything to do with the organisations position as it stands currently, both internally and externally. It analyses the current market and its trends, current competitors, all external related environments as well the organisation’s strengths, weaknesses, opportunities and threats.

Objectives
The range of goals are outlined here, which can include financial goals as well as marketing goals, such as greater share-of-voice, market share, reputation, etc.

Strategy
The proposed approach that will be taken in order to answer each objective.

Tactics/ Action Plan
Detailed explanations of executable steps of the strategy that will deliver results to achieve the objectives.

Projected Performance
Forecasted results of each deliverable

Control and Evaluation
This section details how the entire plan will be monitored

Email Marketing Know How’s

I can only imagine that near enough every online business today is using email marketing as part of their online marketing strategy, if you’re reading this and it is not then make it one of your New Year’s resolutions sharply. The power of the email is grower stronger and stronger due to a number of reasons, including its power, flexibility and cost-effectiveness. Despite the continuing growth in the use of social media platforms in marketing, the good old trusted email has remained a favoured form of communication and marketing between customers and businesses alike. Looking at recent trends from 2013 and predictions for the upcoming year, it would seem that email marketing is only set to become even more valuable to us as businesses and marketers.

The Problems…

The problem with email marketing is that although we know it has many an advantage to offer, sometimes reaping those benefits and increasing our ROI is difficult. As the world and face of global communication is changing, we are repeatedly finding ourselves hitting walls. There are so many factors to take into consideration when embarking on our email marketing campaigns such as the type of list we will use, we should all know by now that an opt-in list is much more preferable than a list we have bought. There is no point communicating with users who do not know us, or maybe don’t even want to know us. Then we have to find our email service provider, which can also be a tricky process if we do not know how. We want to be sure throughout that our emails will be opened not spammed. This is one of the biggest issues we will have as an email marketer; not getting spammed and of course being opened. Now, getting our emails into the inbox then means we have to pass the next hurdle of getting our mail opened. Our open rates often depend on our subject line, so of course we have to test, cross-check and do all sorts of preparation before we send our emails out to our audience. So, we’ve been opened, now we want our customers to click-through and hopefully buy from us. But if we are not careful here, if we don’t use the right coding, images or text, we may go full circle and actually get spammed.

… Are Outweighed By the Benefits

The whole process of email marketing can be a little bit of a headache, with every step we take having to be carefully planned out and tested, it can even sometimes feel like it’s not worth the effort. The thing is, when you feel like that there is probably something you’ve missed on the way. As I mentioned earlier, with so many steps and processes to follow, there is probably something you just didn’t realise would pose a problem. Nowadays with a huge rise in users accessing the internet (and increasingly their emails!) via their mobile phone it is becoming more and more difficult for us email marketers to find the right designs, templates and coding to fit all our user’s needs. But, when you get it right (and you will!) email marketing is much easier than other forms of online marketing. Now that might sound like a contradiction so let’s think of an example, maybe a complicated recipe, in the beginning not even the dog will eat your first attempt but after a few tries you will get it right and the more you do it, the easier it gets. Social media can be just as complicated and actually requires a lot more input, a lot more regularly. Let’s take a look at why, on the whole, email marketing is in essence the most effective form of online marketing:

· No time restrictions – You can send email anytime, any day from anywhere. It doesn’t matter when you send it; you are not restricted by the time margins like social media of when commuters are on the train on the way to work or on their lunch break.

· Most effective way to increase ROI – Email marketing greatly reduces advertising costs and at the same time can work to truly increase ROI. As emails are very cheap to send and are often the most preferred form of communication method with businesses by most users, chances are you could really increase sales at very little cost.

· Monitoring – Monitoring the results of an email campaign is much easier and in depth than monitoring the effectiveness of a social media campaign. You can even see who, where and when your mail was opened, unlike social media where you will just get a total sum. Monitoring your emails allows you to find out your strengths and weaknesses and where you need to improve or focus on more. Where this may take time, it will lead to better results in the future allowing you to even use these results in other parts of your online marketing strategy leading to all round growth.

· All it takes is one click – Unlike other forms of online marketing where you may put out an advert and have to wait for it to catch on and hopefully go viral, through email you can literally pin point specific users. Email affords you the ability to communicate directly with those who (on most occasions) actually want to hear from you, just send and wait.

So there you have it, email marketing allows you to be more specific, on target and personal. We all know that the future of our online business is meeting our customers’ demands and needs, without offering them something and connecting with them, we will simply get lost in the crowd. Although email marketing can be a long process, the end result will be the ability to monitor what your customers truly respond to; therefore you will start to be able to segment them through understanding their different wants and needs and even use this data to target your other online marketing strategies. Email marketing can boost your business and ROI in ways you have never dreamt of, it just takes determination and patience.