What is marketing? A free guide from Selectabase
Many people think of marketing as advertising and promotional material, whilst advertising and promotions fall into the category, there is much more to marketing than these aspects.
Marketing is the process of identifying products and services that consumers require; pricing, promoting and distributing these services or products, with a view to maintaining long term relationships with those consumers OK that was a bit of a text book description of marketing but what does it mean?
To make the process easier to understand we have broken it down to core components;
Products or Services
The products or services you choose to sell need to appeal to your target market and be in demand. I know that sounds blindingly obvious but you would be amazed at how many products are bought to market without thought for this fundamental principle.
To find out if your products are in demand and have appeal is simple; just ask people!
You don’t need to invest in expensive market research a few conversations with friends, family and potential customers will tell you plenty. Of course if you are embarking on an expensive product launch or manufacturing then money spent on market research is not something to be skimped on, use your judgement but NEVER skip this process.
Ahhh pricing, pricing, pricing; what do you charge for your products or services?
How do you arrive at a selling price?
How much is too much?
Pricing is a delicate balancing act, you want to get the best price for whatever you are selling, but also have to bear in mind the volume you require to sell to cover your overheads and make a profit.
The text book way to set a price is to work out the cost of an item, work out your overhead, divide that by anticipated volume, add a little profit et voila there is your selling price.
Not surprisingly there is more to it than that. For instance if the business model is based on high volume then a lower price than the competition may be used to boost sales.
Conversely if the business model is one of low volume, high profit is used your selling price may be higher than your competitors. Confused?
The key to a selling price is value or more correctly perceived value. This means the value that a consumer places on a product or service, let me try and give you an example;
Producing chocolates costs say £1 per kilo.
If we sell these chocolates loose in a pick and mix style the customer may pay £1.20 per kilo. If we sell the same chocolates, hand packaged in cellophane with a ribbon attached in a beautifully decorated shop and spend time with the customer helping them choose the chocolates they may be prepared to pay £5 per kilo.
Same chocolates, just the perception of value changes.
To arrive at a price you need to identify what the competition is charging and identify the key values of your products or services that will increase or decrease the perceived value amongst your target market.
Price too high, without justifying the purchase price and you will have disappointing sales, price too low and you may have spectacular sales but disappointing profits.
Positioning a product in the market is a development of the pricing section above. To use the chocolate example above, the pick and mix example is clearly positioned as a low price, high volume product.
The beautifully packaged example is positioned as a premium product.
In order to position a product in the market effectively you need to have good knowledge of your target market and their requirements.
For example, sticking with the chocolate theme, if you have a sweet shop near schools, where the majority of your customers are children with low spending potential then you may choose to position your chocolate as a pick and mix product, low price, high volume If you have a High Street location in a premium shopping location then the high priced, highly packaged product would perhaps be a better choice as customers are seeking these kind of products in these locations.
Now the fun starts, you have the right product, you have carefully positioned the product in the right position in the market at the right price, it will fly off the shelf now right? I wish!
You have to tell people about it. We apologise if this sounds obvious but you would be amazed at the amount of businesses we see with great products at great prices which we know the market wants but the owner of the business almost keeps it a secret!
But just promotion is not enough. It has to be the right kind of promotion; carefully targeted at the right prospects who want your product or service. Take direct mail as a promotional medium, something that we know a lot about.
If we go through the phone book starting at A-C and send out a letter to each person telling them about my fantastic chocolates will we get a good response? Of course not.
If we find out that the majority of our customers were female, aged 35-55, living in a specific area, in a particular income group and we could get a list of them. If we sent the same mailer to them would the response rate be higher? Of course.
These are simplistic examples but a well thought through carefully targeted promotional campaign will always outperform a poorly thought through, poorly targeted campaign.
So what is marketing?
As you can see there is a lot more to marketing than advertising and promotion, all the steps need to be followed, missing anything out is a recipe for at best disappointment.
On the other hand it need not be complicated or expensive, taking your time and considering each step can improve your marketing performance.
Contact Selectabase for help with your direct marketing campaigns to businesses or consumers on 01304 383838 or visit www.selectabase.co.uk/buy-a-list