Marketing

by Jeff Bartlett

Translating needs into action

So, you have undertaken your market research, identified your consumer and customer needs and decided in principle which products you will be targeting at which market segments. Before we look at translating market research into action, let’s consider the following question.

Is there a difference between a product and a service?

For marketing purposes, no! Traditionally, a product was viewed as something physical, such as a car, and a service was intangible – insurance, for example. But nowadays most physical products have a service element, such as service and repair, telephone or web-based order or customer service, so the historical distinction between the two becomes increasingly irrelevant.

This irrelevance is perhaps best demonstrated by defining a product as something that has a specification. In order to make a Mars Bar, the physical product needs a recipe (a content specification), packaging (protection and on-shelf visual specification), and so on.

Similarly a service needs a specification: exactly what does an insurance policy cover, what is the level and scope of protection, and so on. Also, both Mars Bars and insurance need specifications to cover how they are distributed and sold, and how customer service will be designed and managed. In this sense, a service is a product, since both need a detailed specification.

The word product is therefore used here to cover both a physical product and a service.

The 7 Ps

The marketing mix, often referred to as ‘the 7 Ps’, is the combination of marketing inputs that affect customer perception, motivation and behaviour. These 7 Ps are Product, Price, Promotion, Place, People, Process and Physical evidence.

1. Product

Your market research has identified which products and benefits your consumers want. If your existing product range does not match these requirements, you will need to embark on product development – starting with product design – to translate those requirements into a product specification.

A market is never saturated with a good product, but it is very quickly saturated with a bad one.

Henry Ford

This specification will need features that deliver the consumer benefits at a selling price that is acceptable to consumers and customers, and that also enables you to make a profit.

Armed with this specification, you can then brief a designer (either in-house or an external consultancy) to produce product concepts.

These concepts are then researched with consumers to ensure they meet their needs. They are modified and re-tested as necessary, and then the financial numbers are double-checked to ensure the final concepts can be given the ‘proceed to launch’ decision.

2. Price

Price decisions are crucial in determining sales levels and profitability. Do you wish to position yourself at the top end of the market, or do you need a lower price in order to win market share?

If you traditionally sell low-priced products, how will your customers react if you suddenly introduce high-priced ones? Will the change sit comfortably with your brand or corporate image? For example, would it make sense for Rolls Royce to launch a car to compete on price with the Ford Fiesta? What effect would it have on the core Rolls Royce business?

Special consideration is needed when products are sold through different distribution channels, to ensure one channel is not unnecessarily advantaged at the expense of another, and to make certain that the price correctly matches the place of sale.

For example, the price you could charge for the same bottle of water would differ greatly according to whether you were selling it in a five-star restaurant or a supermarket; and consider how much you could charge if you were selling it to someone who had just emerged from a three-hour trek across a desert!

3. Promotion

This is the part of the marketing mix normally identified with marketing. It includes all those activities in your promotional campaign and covers advertising, direct marketing, packaging, personal selling, public relations and sales promotion (including point-of-sale activity). These are designed and planned to promote your organisation and/or its products to its chosen target audiences or market segments.

All of these activities, with the general exception of personal selling, often involve the use of external consultants and agencies.

As with market research, there are professional and trade bodies to represent these different specialisms. These can be a useful source of information regarding the selection and employment of the various outside suppliers.

Advertising

This involves paying for media space or time in order to promote a product or message to a target audience.

We read advertisements... to discover and enlarge our desires. We are always ready – even eager – to discover, from the announcement of a new product, what we have all along wanted without really knowing it.

Daniel J Boorstin

Advertising may be described as the science of arresting the human intelligence long enough to get money from it.

Stephen Butler Leacock

Historically, the mass media of television, newspapers, magazines and radio have dominated the advertising field. However, the media market has been fragmenting rapidly over the past decade or so, with the introduction of many new television channels and the explosion in internet usage. This has made the task of media selection much more difficult.

Direct marketing (DM)

This encompasses those activities which enable products or messages to be delivered to customers and consumers by post, e-mail, telephone and other direct one-to-one means.

Direct marketing has grown in importance in recent years, one reason for this being that it is much easier to measure the cost-effectiveness of direct marketing compared to traditional advertising, as the results are more easily seen.

Packaging

In addition to protecting products, packaging presents the opportunity to display brand, logo and other attractive and engaging information for the consumer’s benefit.

Personal selling

One-to-one activities between a seller and a prospective purchaser are classified as personal selling.

‘Sales’ is often set up as a separate department to ‘Marketing’ within an organisation, although in its strictest sense selling is a component of the marketing process. As such, sales should take its specification from the marketing area.

Public relations (PR)

Also referred to as publicity, this attempts to establish, protect and enhance the reputation of an organisation and its brands, and to create a specific understanding of an organisation or brand within targeted audiences.

PR differs from advertising in that it does not involve direct payment for media time or space; rather, it uses influence and lobbying to gain media coverage.

Sales promotion

Covering action-oriented activities designed to boost immediate product sales, this includes temporary discounting, free product, coupons, free gifts, competitions, sponsorship, exhibitions, and so on.

4. Place

Where your product is sold – in other words its distribution channels – can be vitally important. The choices an organisation makes about where to sell and how to distribute its products fundamentally affect both profitability and success.

First, you need to identify how and where consumers in your target market segments prefer to buy. You then confirm that you can price your product to ensure that any intermediaries in the distribution chain earn their required profit margin yet still achieve an acceptable price for the consumer.

With advances in technology, the number of distribution channels open to organisations has grown significantly.

Nowadays, many products are sold direct to customers, via the telephone and internet, which has lead to the relative decline of traditional wholesale and retail distribution channels.

Things can get complicated when an organisation is selling the same product through different distribution channels. Many insurers had to set up separate (and competing) direct telephone brands and sales operations when their traditional customers, insurance brokers, complained they were being undercut.

5. People

Whenever and wherever you are providing a service (including customer service), the attitude and behaviour of your people are vital.

The quality and content of personal interactions and relationships between company and client become critical. In some cases, your staff become the product to a great extent, so it is crucial to have properly selected and trained people in place.

New joiners will need thorough training and on-going monitoring to ensure they have understood what is expected of them and are behaving accordingly.

People may take clients with them when they leave. Staffing costs are likely to be a higher percentage of your cost base and recruiting specialist staff is time-consuming and expensive.

6. Process

Your firm’s processes can give you a competitive edge. Processes should do more than just make life easier for you – they should help your customers get what they want as well.

What new processes, systems or services will make it easier for customers to do business with you? How helpful is it that a credit card company automatically sends out a new card to you when the old one expires rather than you having to request a new one?

Think about how new systems – or new technology – can help you positively stand out from the competition by delivering greater benefit to your customers...

7. Physical evidence

Banks, building societies, retailers – they all take care over the physical appearance of their premises, as these have a major impact on their customers’ perception of them.

Similarly, product literature, packaging (again), media articles, blogs, other customers’ testimonials and stories – their content and presentation also influence perception.

Ordinary people can spread good and bad information about brands faster than marketers.

Ray Johnson

Professional marketers take great care to identify all these touch points, and then seek to control their consistency of appearance and content so these reflect the desired market position and perception.

This is why there is often a lot of emphasis on ensuring that corporate or brand logos are always accurately reproduced; this says something important about the organisation.