I was asked this by a friend of mine recently, and because of what I do, my first reaction was to take slight umbrance at the suggestion that marketing could be anything but worthwhile.
However on reflection I thought that it was in fact a very good question to ask, and one which I am sure most marketers don’t stop to think about, so I considered it properly and want to share the following thoughts.
To understand why you should bother with it, you first need to know what it is. To my knowledge there is no one single and accepted definition of marketing, but I like to think of it as the following;
“Marketing covers all activity that combines to deliver a positive customer experience across all aspects of their interaction with a product or service.”
From large advertising campaigns to answering the phones promptly and professionally, when your business interacts with a customer you are marketing to them, as a result of which they will take away an impression of your company. You can make sure that it is a positive one.
So, why bother with marketing? Well there is only really one reason really; To enable you to sell your products or services at the highest price possible.
And to sell at the highest price you need to seek out and deliver Customer Value.
Customer Value
Customer value is not prescriptive or standard but is the value that is derived from a product or service, as perceived by the customer. This may well be different for different customer groups and it can be defined with the following ‘equation’;
Customer Value = The Benefit – The Effort – The Risk – (The Price)
Benefit – The benefit that provides the perfect solution to a problem or need
Effort – Using insight to understand and adapt to what makes customers lives more convenient
Risk – Any perceived downside to purchasing i.e. quality, peer group opinions, time, availability
Price – This is in brackets because it should be accompanied with a word of caution. Countless surveys have been conducted, all of which consistently throw up the following information regarding price;
In Developed Markets, 90% of people prefer to buy on non-price based motivations
In Un-Developed Markets 60% of people prefer to buy on non-price based motivations
It is very easy to lower prices but extremely difficult to raise them, so price should only be used very tactically.
So to maximise Customer Value, we need to increase the Benefit and reduce the Effort, Risk (and Price), all of which is achieved through three core marketing strategies.
Differentiation
Be easy to choose.
If you are able to offer something different, your product or service will stand out from the crowd and be easier to buy.
The key drivers here are to be different and relevant – features that are important to the customer and highly differentiated from the competition.
But it is no good being different just for the sake of it. You can put pink spots all over your product to be different, but if it is not relevant you will do more harm than good.
Segmentation
Treat customers as individuals.
One size does not fit all when it comes to customers and their motivations. Old school targeting was about judging customers by profiling characteristics such as where they live, what they do, how old they are etc. However today that is not enough.Segmentation is about understanding needs and motivations. Different people enjoy the same things and share motivations not because of who they are but because of what brings them together.
Branding
Give people a reason to buy from you.
Brands are important. Even for small companies and organisations. They make a statement about what a customer can expect from a company, and this establishes a reputation that builds. I don’t mean what the logo looks like, but more what the company stands for – its values and how it treats its customers.
Brands are a short cut for customers in a busy, time poor world. If you know you can trust a brand any risk is reduced and you are more likely to buy the product or service.
In Summary
So, why should you bother with marketing?
It’s simple really;
To create Customer Value so that you can charge the highest possible price for your product or service.
Jono Oswin