The fundamentals of marketing
- Chris Haycock
- Wednesday, October 9, 2019
As consumers, we are absolutely spoilt for choice. No matter what we are looking for, there seems to be 1001 different choices. That's great for consumers, but it can make it very difficult for businesses to get their voices heard over all the noise our competitors are making.
Astonishingly, it was estimated that about 80 new UK businesses were established each hour in 2016. With so many new businesses springing up, competition can be fierce.
When you're surrounded by other businesses offering the same - or similar - products, it's difficult to make your business stand out from the rest.
That's where marketing comes in.
Marketing is all about the strategic planning and execution of activities you use to reach potential customers who have a need (or want) for your product or service.
OK, that sounds a bit 'corporate', so I'll try again:
Marketing is all about attracting and retaining customers.
There are many different marketing activities. But they all have one thing in common - they're all designed to get your attention in a way that gets your brand in front of the eyes of the people that matter: those that will be interested in your product.
So how does this differ from sales?
'Sales' is a term that describes the activity of persuading a customer to take action. That action is typically the exchange of money for a product or service.
'Marketing' also has the same goal - to get a customer to buy that product. But whereas sales usually involves the final stages of the interaction between customer and business, marketing will cover the initial stages, including determining the pricing, the promotion strategy, and the product.
Sales and marketing often go hand-in-hand, and it's true - there certainly is some crossover between these two all-important business activities. Without any sales activity, you won't convert eyeballs into cash. Without marketing there won't be any eyeballs.
You could say that many digital businesses (think along the lines of Confused.com) have their sales and marketing functions more closely intertwined, simply because their website often needs to do both functions: the marketing - attracting visitors, and sales - converting visitors into customers.
But for the sake of this article, let's concentrate solely on marketing.
Where does marketing start - and finish?
You might be forgiven for thinking that marketing is just something that you do to attract people to your business, but it turns out that marketing is much more important throughout the entire business process and customer lifecycle.
Marketing is an activity that's worth spending time learning about. It's can be costly if you get it wrong, not just on your pocket, but your reputation too. Money comes and goes, but reputation will hang around like a bad smell for a long time.
So, let's take a closer look at the different roles that marketing plays in the customer journey.
To make it easier to understand, I'll use a fictitious business called "Annie's Baby Clothes". It's a business that I created as part of my Diploma in Business Studies way back in the 80s when I was in my late teens, so forgive the rather bland and uninspiring name.
Marketing Fundamentals #1
Research (the missing element)
Even before Annie's Baby Clothes was "launched", we needed to do our research. It was the job of marketing to research the market, and find out everything we could about the types of customers we'd be trying to get into our shop:
- Who they are
- How many there are
- Their current buying habits
- Their concerns and 'pain points'
- Their motivations
- Their scepticisms
- Their buying cycle
Understanding the types of customers that would be interested in the products I was selling was crucial, because it meant that I understood how - and where - to pitch my business to them.
But that's not all.
Also important are the businesses we're competing with When you get a better idea who your competitors are, you're already one step ahead of many others. Why? Because you'd be surprised at how many businesses don't research their rivals.
Here's what you need to know about your competitors:
- Who they are
- Where they operate
- How much market share they already have
- Their strengths and weaknesses
- What their customers think of them
- Why your product is better than theirs
In short, the more we understand about the environment we're going to be operating in, the more effective we will be with out marketing activities. The more effective your marketing becomes, the more customers you attract, and the more sales you make. It's that simple.
But for many new business owners, they often forget to research their target market. Big mistake. That's like playing darts with a blindfold secured tightly across your eyes, and attempting to hit the bulls-eye. You'll need hundreds of attempts before you hit the target.
There's another important reason, too. Marketing can be costly, and you don't want to have to spend a single penny more than you should do. By researching the market you'll get a much better idea where your future customers are 'hanging out'. Thanks to your diligence in the research phase, you'll know that they be hanging out on particular online forums, or Facebook groups. Or they may be subscribers of certain magazines and newspapers, or listen to certain radio stations on their way to and from their workplace.
This knowledge is power. It means you get to find out where to pitch your business, and the type of content you'll need to get their attention. And that means you won't be wasting money marketing in places that your customers aren't at. This could save you a huge amount of money - and headaches too.
Marketing Fundamentals #2
Crafting the message
As a business owner you'll already have a pretty good idea of how to 'pitch' your product. After all, you're the one that built it, so that naturally makes you better at crafting a message that will entice your customers to buy, right?
Wrong (probably). Sorry to upset you, but quite often the person behind the product is often not the person who is best placed to write all the marketing collateral that accompanies it.
But all is not lost. You just need to have the ability to step outside of your business and walk a day in the life of your customers. Once you remove yourself from your business bubble you'll see your product (and business) in a different light.
It's this little trick that can make or break a business - and it can help you scale massively if you do it right. The best way of seeing your business from a customer's perspective is to either:
- Be your own customer and follow the journey
- Get feedback from others who are your ideal customer
Let me reiterate this. It's incredibly important to see your business - and product - from your customer's eyes. Only then will you know how to craft a message that your future customers will buy into.
Now, when it comes to creating your message (this can be website copy, adverts, blog posts or product descriptions) a good marketer will have the skills required to turn 'bland' into 'solid gold'.
It's the marketer's job to craft the message in such a way that it gets attention. Once we've got their interest, we create a lot of desire. We do this by using words and phrases that we know are going to connect with the pain points and motivations of the market. And finally - but some would say most importantly - we've got to get them to act.
This process is used extensively throughout marketing. We call it the AIDA principle:
Attention > Interest > Desire > Action
In a nutshell, when you apply the AIDA principle to any marketing activity, it works like this:
- Use emotive language that resonates with the reader to get their 'Attention'. Stir an emotion!
- Make it personal to them (using "you") to build 'Interest', remembering to keep it simple to understand.
- Create 'Desire' by building trust and selling the benefits.
- Encourage 'Action' by telling people what they need to do next.
Eureka! I guarantee you'll sell more and capture more leads by following this principle.
Personally, I tend to go slightly further with the AIDA principle, and put an 'S' on the end so that it becomes AIDAS:
Attention > Interest > Desire > Action > Satisfaction
The 'S' stands for 'Satisfaction'. After encouraging your audience to take action, you need to ensure that the consumer is satisfied. Usually I'll do this by managing their expectations by telling them what to expect after they've taken the action I want them to take. This can be either woven into the advert, on a landing page, or after the checkout process.
It's all about understanding how your future customers see and respond to your marketing messages, and using psychology to reinforce why your products are better than others vying for attention.
You'll find most good marketers have an interest in psychology, as it really helps to understand how people's minds work. I'll cover some basic marketing and consumer psychology another time.
Marketing Fundamentals #3
Positioning (the marketing 'bread and butter')
Yeah, as marketers we love this bit. 'Positioning' means getting your message in front of the people that are most likely to buy your product.
If you haven't done your customer research, running marketing campaigns will be costly - I guarantee it. You'll probably end up dipping your toes into a few commonly-used activities such as Facebook ads, or posting leaflets door-to-door, or a classified ad in your local paper without really knowing where your customers are located. This will hit your bank balance hard unless you're very, very lucky on your first attempt.
But if you have done your market research, you'll know where best to spend your hard-earned money.
There are many types of marketing activities, but the more popular ones include:
- Media advertising (TV, radio, newspapers & online)
- Trade shows
- Leaflet drops
- Email marketing
- Media adverts
- Press releases
In fact, there are more marketing activities than you can shake a stick at, and I'll be covering many of them another time.
Don't make the mistake of succumbing to temptation by grabbing any old offer to advertise your business. Remember, it's got to be a place where you know your customers are 'hanging out'.
I was recently chatting to a small business owner who runs a local landscape gardening company. They were approached by the organisers of a local entertainment listings guide to run a series of advertisements in their magazine at half the normal price.
The business owner snapped up the offer because it was almost too good to miss, but ended up getting no enquiries from it. If they had done their research, they'd have known that advertising in a magazine that focused on nightclubbing events wouldn't reach their target audience. A costly lesson.
Choose your positioning carefully, and make sure that you're 100% sure your audience will be there to see your advertising messages.
Marketing Fundamentals #4
Keeping customers sweet
So you've got sales coming through your door (or website) and your customer base is growing.
Once a customer is 'hooked', there needs to be an active continuation of the marketing process. Just because someone's bought five pairs of frilly knickers from your shop, that doesn't mean you can forget about them. That person has become a customer, and now they need nurturing with additional marketing activities to get them to come back - and indeed keep coming back time and time again.
We call it 'customer retention'.
Hands up if you've ever heard of the "Pareto Principle"?
The Pareto Principle is also known as the 80/20 rule. The phrase was coined by Italian economist Vilfredo Pareto, who observed that there is an 80-to-20 relationship between effects and their causes. He wasn't specifically referring to marketing though. In fact, Pareto realised that about 80% of Italy's land belonged to around 20% of the country's population.
It soon became clear that this 80/20 rule applied to many other things too, including the role of marketing in business.
When you apply this rule to business, we can say that around 80% of your sales come from 20% of your customers. So, for every five customers there's just one that brings in 80% of the sales revenue.
Whilst this figure varies massively depending on many different factors, there is one lesson to be made:
Always consider ways to keep your customers coming back. You don't know which ones will be your best long-term customers.
Let's go back to your initial research, which included understanding your customer's buying lifecycle. Just because a customer has graced your store, it doesn't mean that she will return again. She might go somewhere else next time because she found a cheaper version somewhere else. Or she felt let down by the quality of your product. Or worse, she felt your customer service stunk!
Whatever their reasons for wanting to go elsewhere next time, you stand the best chance of getting them back if you maintain an active conversation and dialogue between you.
That's why most of the big companies want to sign you up for their store cards, reward cards, memberships etc. They all want to keep you engaged with their brand in the hope that you come back again. And again. And again.
As you get better with marketing you might want to start looking at the Customer Lifetime Value (CLTV).
CLTV is a metric that we marketers use to determine how much a customer is worth over the course of time that they're with us. For example, if your average customer is with you for an average of a year, the amount she spends will determine the CLTV.
So, in order to get customers to keep coming back (and increasing your CLTV), it's the role of marketing to devise a method to keep communication open between the business and the customer AFTER the purchase.
Growing your customer retention levels is a sure-fire way of scaling your business, and has the added benefit of reducing the need to spend a fortune on marketing campaigns.
Marketing Fundamentals #5
Measuring and identifying opportunities
A marketer's job never ends. Yes, there's more.
Picture this: you've got an order book stuffed with customers and you think your business is doing well. That's a great position to be in, but at the same time your cost per customer acquisition may be high, repeat business may be low, and the cost of running campaigns is hurting your pocket.
Now, if only you could do something about that.
Enter the marketeer - again.
When they're not busy running fantastic new campaigns, you'll find marketers poring through logs, statistics and raw data looking for ways that they can improve.
In the vast majority of businesses, there are so many different ways of bringing costs down and increasing profits. A marketer's role is to use the findings of previous campaigns to determine how best this can be achieved.
For example, let's take a business that is running two 30-day campaigns: a radio advert and a Facebook advert.
After the campaigns have ended, the marketing team will pull apart the statistics to identify opportunities to improve the next campaign. So, if the radio campaign ended up with 50 new customers after spending £1,000, and the Facebook ad got 50 new customers for a campaign that cost £500, it would be in the best interests of the business to scale up the Facebook campaign, and perhaps ditch the radio adverts.
Of course, it's not quite as simplistic as this in the real world, but it gives you a good idea how important it is to look at the results of the campaign, measure the success rates, and take action based on the findings. Continuing to throw money at a losing campaign is a sure-fire way of ending up broke - with no customers.
Remember the Paretto Principle above?
Just because you're getting customers through your door, it doesn't mean they'll all come back to you next time they want something new. In business, we need to look at the 'customer churn rate'.
Churn is the percentage of customers that stop using your business over a certain time frame. Although it's important to keep the churn rate low, it means that you need to replenish your customer base with new customers all the time.
Identifying opportunities to reach brand new customers is an important aspect of marketing, and one that never ends unless you're enjoying zero churn rate.
And most importantly
Marketing is all about PEOPLE. And more specifically, it's about the relationship that your business has with them.
Without people, our businesses cannot exist. That's why it's so important that we always remember that our customers are not numbers, statistics or money in the bank. They're human beings.
Although it's the role of marketing to attract customers to our businesses, customer relationships are critical to longevity. In order to compete with competitors our whole business model needs to be first class.
You'll notice that the days of treating customers like numbers is disappearing fast. Today, the most successful businesses listen carefully to what their customers are telling them, taking the feedback onboard and actually taking action to improve their business based on what they're saying.
Consumers want good, clear communication. Don't be afraid to talk to your customers (and prospective customers too) about what they want from you. You might think you know everything about your customers, but until you hear it from them you're stabbing in the dark.
Consumers also tend to buy only from businesses they like, admire and trust. If you fail to build an element of trust between you and your customers, then you risk ruining your relationship with them, and you'll lose sales.
If you're out to hoodwink customers into buying from you, or if you use unethical tactics in any part of your marketing, realise that it will only work in the short-term - if at all.