Marketing-the whys and hows
So you've got this fab idea for a new product but you have no idea where to start. But before you throw your hard earned savings/cash at making the product and trying to sell it, you need to understand why someone might buy your product, what drives them to do so and how much they will pay. You also need to work out how you are going to sell your product. AND you really need to know if no-one will buy it at all, to save you money and time.
What you need is marketing plan!
It has been a little while since I wrote a business post but one of the themes that runs through my spotlights is the need to get your marketing right, and with the increase in social media and online as marketing tools changing the way we market today, I'm going to focus on how to market your business and what you need to know before you get started and once you have launched.
(credit for top picture: https://everydayinterviewtips.com/wp-content/uploads/2015/05/82257074-cacaroot-marketing-boards.jpg)
So why Marketing?
- Business creates value for key stakeholders – customers, shareholders, employees & suppliers and YOU
- It cannot create value for shareholders, employees or suppliers or YOU unless it can create value for the customer
- The marketing process must create value for customers
- And extract value from customers – INCOME
- YOU create value for customers by solving a problem for them
Before you start, I always advocate knowing where your are going and where you want to be, in say 1 year, 3 years, 5 years' time. How successful do you want to be? how are you going to build your brand (I will talk about building a brand in a separate post)? and most importantly how are you going to measure success? Money? Sales? A certain number of enquiries by a certain date?
Know your market and who you are selling to. Do your research. Market Research Professionals would look to the following strands to understand their market. I wrote a blog post about Jessica at PigletinBed who had started thinking about selling a totally different product to the bed linen she sells today, but realised the market was too small and therefore saved herself a costly mistake.
- The Market – growth, lifecycle. is your market new? are you selling into an established market where you need to compete on quality or price?
- The Competition-who are your completion and what are they doing?
- Historical trends & future projections-what has happened in the market in the past and is it predicted to grow or decline?
- Political & Legislative climes-is there anything coming up that will make people buy your product? or that you need to know in order to sell?
- Economic-Brexit for example, consumers may have less disposable cash. are their any other big trends
- Social trends-how are people buying products, the move to online shops? the use of social media as a tool
- Technological-what changes might affect you and how you sell? physical shops versus the Web
- The Client/customer-what drives them to buy? when?
An important tool that most marketing professionals use is the 7"P"s model which captures the different components of a marketing strategy.
Product; What is special about your product? is it value, technology, usefulness, brand, design, quality?
Price; is your product a quality product and therefore sold at a premium price? or are you selling cheaply to capture more of the market where you compete on volume of sales rather than price ?
Promotion; how are you going to let customers know about your product? leaflets, web, social media, trade shows?
Physical Environment; probable only relevant if you have a physical place (shop), but how does your space feel? and what does it say about you?
Process; how are your services consumed?
Place; how are you selling you product? website? retail? direct sales?
People; who is going to deliver you product and what is your customer service like? This may only be YOU but think about how you want your customer to feel.
All of the above ought to be considered as part of a successful marketing strategy; knowing what is special about you helps you to communicate this to your customers which in turn leads to sales. I will cover some of these sections in more detail below.
Getting your pricing right is critical. Overprice a low quality product and you will not be able to sell it, underprice premium goods and you are selling yourself short. I've broken down some of the pricing strategies below, depending on whether you are entering a new market, already in a market, or can choose to price flexibly and what you might need to think about along the way to your decision.
In a New Market
Are you Skimming the market? This involves setting a high price in early stages of your product life as you enter the market. You serve non price conscious customers; hence you maximise the upper end of demand curve and the non competitive environment. High margins (the amount you make over your costs) support recovery of significant proportion of research development & promotional costs. There will be heavy promotional costs to introduce, educate & induce. This strategy requires a lack of direct competition & substitutes.
Or aiming for a large penetration? Here you are setting a low price at the early stages of market entry which is used to grab early volume & dissuade competitors from following. In other words you are selling cheaply so that lots of people will buy, get used to you product and this makes it very hard for competitors to launch as they will need to do so cheaper. You get a cost advantage from economies of scale (manufacturing costs go down the more you make) but the product must appeal to large part of market and demand must be elastic (able to grow massively) to support cost advantage.
For Established Products
Are you maintaining the status quo, or do you need to react to you environment and move on pricing?
Reduce you pricing? This is often done as a defensive act as a result of competition or is offensive to beat the competition (knowing someone is about to launch a product). It can be in response to customer need driven by environment (lack of disposable cash, for example). You must also be financially strong to compete in a price war.
Increase your position?
This will allow you to maintain/Increase profitability and to take advantage of perceived differences & be able to price against these. In other words, you've sold into the market but realise that your product has a certain appeal to a certain segment in the current market and they are willing to pay more. You will need to reinforce with a go to market strategy, including PR.
Do you charge one price only, or set your price depending on the circumstance?
Why choose only one price? well, it simplifies things and maintains goodwill. Everyone is treated the same regardless of the quantities they order. It does require you to have a very good understanding of market pricing.
It requires information on competitive prices & price customers are prepared to pay.
Charging different prices to different customers for the same product & quantities?
This potentially maximises short term profit & maximises opportunity to take advantage of market conditions but you need to be able to identify the value and rationalise the higher or lower price. Are you giving a lower price for someone buying multiple items? It will be driven by the market, the product, by timing or by technology
You will also need to understand how competitors will react
What is your value proposition?
This is another key part of any marketing strategy. What is it about you and what you sell that is valuable? What is your source of competitive advantage. is it cost, price, quality, premium, friendly, fun, quirky.....
A great value proposition framework is as follow:
"For (target market segment X) the (product/service name) is a (product/service category) that unlike (primary competitors), (statement of how the product is different from the major competitors).”
Public Relations or Content!
Traditional PR is over.... and Content is King!
You need to build up a profile around your brand with relevant, engaging & authoritative content. You need a distribution strategy for that content – offline & especially online.
You need to drive engagement with your brand but remember you do not manage your reputation...others do; think TripAdvisor, TrustPilot, FeeFo and there are many examples where "off the cuff" comments have destroyed a business.
Focus on satisfying your customers. But...have a process for handling potentially damaging situations
Everything is going DIGITAL
The one thing that is clear in recent years is that marketing and PR is going digital, be it your website, email marketing or social media, people use their mobile devices to find everything at their fingertips, 24 hours a day. Communities are important – we trust them and this is why marketing is moving towards influencers where brands can target niche markets and consumers through who they look up to and who influences them. Smaller brands now have the ability to advertise through media in a way they never had in the past without huge marketing and advertising budgets. It has levelled the playing field.
Website Marketing and Design
It goes without saying that you website must reflect your brand and the message you want to convey to you consumer but don't stop there. Capture data whenever possible. This allows you to target your customers appropriately, with advertising that works for them, rather than mass communication.
Social Media Marketing
This has grown hugely in recent years, where people look to their community to influence their buying habits, a community built on trust and women especially will often go onto social media before buying a product to see who has bought it before and whether it fits with their perception of themselves. So always think about sharing in real time through multi-channels. Listen to you audience, engage with good content and interact, build you social media followings and engagement.
Go hang out with your stakeholders
But don't rely solely on online marketing, events can be really useful.
Choose which ones to attend carefully? Check them out first and if possible exhibit or talk.
And finally I'm covering distribution strategy; How will your customer buy your product from you & what path will they take? Where do they expect to find you?
You need to consider all customer channels and usher people down the path to deliver a great user experience Do they start shopping via their mobile device? Maybe they perform searches on their computer? Are they introduced to your solutions by a third party How can affiliates support distribution of your product?
so there you go a whistle stop tour of the basic concepts of marketing. I will be following up with creating a brand in due course
The Girl with The Green Sofa