Marketing (an Overview)

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:

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.

For once, small business holds an edge. While larger companies hire professionals to do their research, small business managers are close to their customers. They can learn much more quickly the likes and dislikes of their customers and can react quickly to change in customer buying habits.

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

• 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?

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

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).

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?

After these objectives are established, determine a date for accomplishing the objective.

The marketing mix allows owner-managers to combine different marketing decision areas such as products and services, promotion and advertising, pricing, and place to construct an overall marketing program.

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

One element of advertising is promotional activities. These activities not only advertise, but they offer added incentive for customer patronage. Some examples are:

• 2 for 1 offers
• Coupons
• Special sale prices
• Rebates
• Sweepstakes
• Give-aways

Try to reach the largest number of people with the money allocated to advertising and promotion. This may be accomplished by using several different methods of advertising. Remember to be creative and implement ideas.

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.

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?

Also, evaluate the following decisions and others:

• Did advertising efforts reach the target groups?
• Were promotions timely?
• Did customers respond to sales, coupons, or rebates?

Additionally, consider the following:

• 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? By evaluating performance after decisions, there is reference for future decision-making, based on past results.

In addition, periodically assess customers' feelings and opinions toward the business and how well their needs are being satisfied. This can be done through surveys, customer comment cards, or simply by asking them, "How are we doing?"