What is marketing? What are its principles?
How does marketing tie into a business model?
How is marketing as a philosophy important to growing shareholder value?
Why do we create about Marketing at all?
We’ll explore these questions and more as we get into a marketing introduction and some commentary around how this relates to you.
Marketing is important in a world where we want to maximize shareholder value which is essentially how companies attract, retain, and grow relationships with clients. Delivering client value is directly responsible for a companies long term well being and increases this shareholder value.
Marketing as a philosophy embraces the idea to build client value by looking externally to focus on the client experience to attract, retain, and grow relationships rather than the inverse of an internally focused organization that focuses on process, products, and services.
To be successful in marketing there are some actions that you must take:
- Decide the market to help
- Decide which segment of that market to focus on
- Determine your strategy and the words you tell people that describes what you do
- Design the offering; a marketing mix
- Get help from other people within your group
- Analyze the results you get from your marketing effort
There are four principles as well:
- Client Value
- Differential Advantage
Marketing is more than just advertising, giving stuff away, and supporting sales. It is centered around analyzing what people want and develop a strategy around being able to explain in various forms what you do relative to what other people want. With all of this you will also need to be able to explain how what you do is better than your competition at getting what people want. If what you do isn’t better than your competition you’d better change that if you want to stay competitive.
Ultimately, the client will determine what the company does relative to what they want. The more the client gets what they want (achieving their goals, feeling happy, and secure) the more they will value what you do.
Maximizing shareholder value is making decisions that benefit the organization owners (people that own stock and others that have direct ownership of the organization). There are a number of stakeholders in an organization as well such as management, labor, and the public at large. Most global markets favor a shareholder value perspective.
Shareholder value is only increased if the cost of capital is equal to or less than incoming cashflow. Sometimes balance sheet assets act as strategic liabilities that inhibit the organization from pursuing new opportunities.
As discussed before marketing usually has an external orientation. External orientation means that the firm focuses on clients, competitors, and other variables that could help or hurt the organization. An externally focused firm doesn’t fear change because it can take the variables above and adapt to change itself to coexist with them.
The alternative approach is an internal orientation where there are silos and individual functions feel that their needs are more important than the client’s needs. These internal needs are usually short term such as increasing sales volumes, decreasing unit costs, increasing short term profits. But alternatively focusing too much on the long term in research and development rather than the value that is being provided to keep the lights on day to day is also problematic.
Let’s go into the actions that you must take a little more.
- Decide which market to help
Simply put this is a decision for what type of business is being done and where resources (time, money, and people) are invested. This is usually a management decision but marketing can play a key advisement role to identify opportunities and provide client feedback to other internal functions to support strategic action.
2. Decide which market segments to focus on
Once you’ve decided which which market to help put groups of people into categorical buckets of similar needs and figure out how what you are doing adds value to what they want. When this analysis is done correctly the needs, benefits, and values for one group are distinctly different than another. Once this analysis has been done there needs to be a step for deciding what to do to approach each segment to explain how you solve their problem and add value.
3. Determine your strategy and the words you tell people that describes what you do
It is important to set goals for the return you will get for helping people in different segments. Then form a strategy for how repeating a process over a long period of time achieves these objectives. After developing a strategy decide what you will say about what you do to the people you are trying to help. If the people you are trying to help don’t understand what you do relative to what they want how are they supposed to work with you? Over time the clients that you help will know you by what you do and you will form a brand.
4. Design the offering; a marketing mix
The marketing mix consist of Product, Promotion, Distribution, Price, and Service.
The product is what you give a client to satisfy their needs.
The promotion is the communication to your clients about the product.
The distribution is where the client goes to get the product.
The price is what the client pays for the product.
The service can be a product or how internal team members interact with the client during purchasing and supporting the product.
5. Get help from other people in your group
The focus here is how the different internal groups work together to make sure the marketing offering design is correct. This could come in the form of design where the support is around technical, operational, or financial feasibility and/or internal buy in for the implementation of the marketing strategy.
6. Analyze the results you get from your marketing effort
This step is important to determine if your marketing strategy is actually working. Depending on environment factors that you cannot control you may need to change course on your marketing strategy. Further, you may find out that your marketing plan just doesn’t work at all and you need to do something else. In an ideal world implementation will get the results as planned but actual practice doesn’t always work this way so marketers must adapt to an ever changing and expanding marketplace.
Focus is important because if you try to focus on adding value to everyone everywhere for everything you will find that you don’t do anything competitively as well as those that focus on one thing. Further you should be selective on the areas that you do best so that shareholder value is maximized (and all other stakeholder value as well).
2. Client Value
Although client value can be a moving target an organization should always focus on this obsessively. Understanding clients find value and benefits (or lack thereof) from the products that the organization provides and passing that feedback to other functions in an organization will ensure that the firm stays ahead of competition.
3. Differential Advantage
A differential advantage is what you do better than anyone else that you can be compared to. Put simply this is what other people would consider you the best at and buy from you for that reason.
Integration is where your communication is not irritating to current and prospective clients but rather feels natural in their day to day life. We see this done poorly by telephone solicitors and advertisers on the street that distract us from what we are trying to do. Instead of this ‘in your face’ approach try to figure out strategies that feel natural in interactions.
We will continue exploring Marketing Strategy further. Thank you for reading and check out our other content on the site!