Marketing plays an important role in the success of your small business. Here is an overview of the marketing process, it will help you see the whole picture and assures that you won't miss any phase of it
THE MARKETING CONCEPT
The marketing concept rests on the importance of customers to a firm.
All company policies and activities should be aimed at satisfying customer
needs while obtaining a profitable rather than maximum sales volume.
To use the marketing concept, a small business should:
- Determine the needs of their customers (marketing research).
- Develop their competitive advantages (market strategy).
- Select specific markets to serve (target marketing).
- Determine how to satisfy those needs (marketing mix).
- Analyze how well they've served their customers, and then return to step 1 (marketing performance).
The aim of market research is to find out who the customers are, what the customers want, where and when they want it. This research can also expose problems in the current product or service, and find areas for expansion of current services to fill customer demand. Market research should also encompass identifying trends that may affect sales and profit levels.
Market research should give you more information, however, than just who your customers are. Use this information to determine matters such as your market share, the effectiveness of your advertising and promotions, and the response to new product developments that you have introduced into the market.
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What to look for, Market research should investigate four areas: customers, customer needs, competition, and trends. The research conducted should answer questions like:
Customers. Identify their:
- Age
- Income
- Occupation
- Family size
- Marital status
- Residence
- Interests and hobbies
- Is the product needed for a limited time (diapers, for example)?
- Are customers looking for quicker service?
- Do customers want guarantees with the products?
- Will customer come frequently (for example a grocery store) or seldom (a car dealership)?
- Are customers looking for a wider distribution or more convenient locations?
- What is the competitions' market share?
- How much sales volume do they do?
- How many similar firms exist?
- What attracts customers to them?
- What strengths do they advertise?
- Population shifts? (Baby boom, for example) Legal or regulatory developments?
- Changes in the local economic situation?
- Lifestyle changes? (single parents, working women, smaller family size)
There are two general sources of information that can be gathered: data already available and data that can be collected by the business.
The following sources may provide already accessible data:
- Local area Chamber of Commerce
- Trade associations in the line of business
- Professional market research services
- Local library
- Telephone surveys
- Local and national newspapers
- Surveys sent by mail
- Questionnaires
- Local TV and radio stations
- Interviewing
- Customer service cards
- Employees.
- This is one of the best sources of information about customer likes and dislikes. Usually employees work more directly with customers and hear complaints that may not make it to the owner. They are also aware of the items customers request that the business doesn't offer. They can probably also give a pretty good customer profile from their day-to-day contacts.
- Customers.
- Talk to the customers to get a feel for you clientele, and ask them where improvements can be made. Encouraging and collecting customer comments and suggestions is an effective form of research. By asking the customers to explain how the product could improve to fill their needs, constructive market research is done, as well as instilling customer confidence in the product.
- Competition.
- Monitoring the competition can be a valuable source of information. Their activities may provide important information about customer demand that were overlooked, and they may be capturing part of the market by offering something unique. Likewise, small business owners can capitalize on unique points of their products that the competition does not offer.
- Company records and files.
- Looking at company records and files can be very informative. Look at sales records, complaints, receipts, or any other records that can show you where your customers live or work or how and what they buy. One small business owner found that addresses on cash receipts allowed the pinpointing of customers in his market area. With this kind of information he could cross reference his customers' address and the products they purchased. From this information he was able to check the effectiveness of his advertising placement. However, realize that this information represents the past. Present or future trends may mean that past information is too obsolete to be effective.
In addition, check returned items to see if there is a pattern. Check company files to determine which items sell best, and which sell poorly.
The key to effective marketing research is neither technique nor data it's useful information. Customers likes and dislikes are shifting constantly so this information must be timely. It's much better to get there on time with a little than too late with a lot.
A MARKET STRATEGY
With the research information gathered, the next step is to develop
a market strategy. Use this information to determine areas where the competition
doesn't adequately fill consumer demand or areas where a new product or
different product promotion would capture part of the market.
A new business may capture a significant market share by aiming their
market strategy on areas not focused on by the competition.
Some examples of the various areas of emphasis include offering a:
- Better or wider distribution
- Specialized instead of a broad product line (or vise versa)
- Lower price
- Modified product (improved)
- Better value for the consumers money (quality)
- More dependable product or service
- Customer support service
TARGET MARKETING
When the marketing strategy is developed, determine with which customer
group this would be most effective. For example, a "better value for the
money" may be more appealing to the "family" consumer group while a "wider
distribution" would be more attractive to consumers who travel. Remember
that different market strategies may appeal to different target markets.
Therefore, apply the collected data to choose the combinations that will
work best. The market is defined by different segments.
Some examples are:
- Geographic: Specialize products to customers who live in certain neighborhoods or regions, or under particular climates.
- Demographic: Direct advertising to families, retired people, or to the occupation of consumers.
- Psychographic: Target promotion to the opinions or attitudes of the customers (political or religious, for example).
- Product benefits: Aim marketing to emphasize the benefits of the product or service that would appeal to consumers who buy for this reason in particular (low cost or easy access, for example).
- Previous customers: Identify and promote to those groups who have purchased the product before.
Before the marketing mix decision is made, determine what purpose these marketing efforts are going to serve. Are they to:
- Deepen the customer base?
- Increase the market share? If so, by how much?
- Increase sales? If so, by how much?
- Reach new geographic markets?
- Increase customer traffic?
- Sell remaining inventory to prepare for a new product line?
Products and Services
Use the product or service itself as a marketing resource. Having something
unique provides motivation behind advertising. While the ideas mentioned
under market strategy apply here, another option is to change or modify
the product or service. Additional attention may be given to a product
if it has changed color, size, or style, while a service may draw similar
attention by modifying the services provided. Remember sales and promotional
opportunities are generated by product differentiation.
Promotion and Advertising
With a marketing strategy and clear objectives outlined, use advertising
to get the message out to customers.
Advertising can be done through:
- The yellow pages
- A press release
- Sponsoring a civic event or activity
- The newspaper
- Billboards or posters
- Flyers or handbills
- Direct mail advertising
- The radio
Some examples are:
- 2 for 1 offers
- Coupons
- Special sale prices
- Rebates
- Sweepstakes
- Give-aways
Pricing
Determining price levels and pricing policies is the major factor affecting
revenue. Factors such as the demand for the good, the market price, and
customer responsiveness to price changes influence the price levels. Other
factors such as a convenient location or more personalized service may
allow a small business to charge a higher price. Make sure your price is
competitive, however, by checking to see what competitors' prices are.
Place
The manufacturer and wholesaler must decide how to distribute their
products. Working through established distributors or manufacturers' agent
generally is most feasible for small manufacturers. Small retailers should
consider cost and traffic flow as two major factors in location site selection,
especially since advertising and rent can be reciprocal. In other words,
low-cost, low-customer traffic location means you must spend more on advertising
to build traffic.
The nature of the product or service also is important in locational
decisions. If purchases are made largely on impulse (e.g., flavored popcorn),
then high customer traffic and visibility are critical. On the other hand,
location is less a concern for products or services that customers are
willing to go out of their way to find (e.g., restaurant suppliers). The
recent availability of highly segmented mailing lists (purchased from list
brokers, magazines, or other companies) has enabled small businesses to
operate anywhere - and serve national or international markets.
MARKETING PERFORMANCE
After the marketing mix decision is implemented, the next step is to
evaluate performance. With a detailed list of company objectives, monitor
how well the decisions are developing.
Evaluate objectives such as:
- Market share. Has the increased share been captured?
- Sales Volume. Was the increase reached?
- Strategy. Did the combinations of target markets and strategy work effectively? Which ones didn't?
- Did advertising efforts reach the target groups?
- Were promotions timely?
- Did customers respond to sales, coupons, or rebates?
- Is the company doing all it can to satisfy the customer?
- Do the employees make sure the customer's needs are truly satisfied, leading to the vial repeat purchase and customer loyalty?
- Is it easy for customers to find what they want at a competitive price?
- If these objectives were not reached, what were the reasons?
- If they worked well, what elements were most effective?
Assessing performance and asking for customer input brings us back around market research again. Your marketing plan is a continuous effort to identify and adapt to changes in markets, customer taste, and the economy for the success of your small business.
