One of the most influential thinkers and writers on the subject of management theory and practice, American Peter Drucker, once said that “great business is made up of only marketing and innovation”. However, many SME’s, see marketing as no more than an add-on function that can be dropped when things aren’t going so well.
The extent to which marketing is misunderstood and undervalued by the manufacturing and industrial sectors is demonstrated by the fact that many, if not most, small businesses, combine the roles of marketing and sales in the shape of a Sales & Marketing Manager/Director; A position which is in fact at odds with itself.
The marketing function, if done correctly, is to focus the business on meeting the needs of its target customers, on the other hand, sales are trying to get the customer to match the product they are selling. Put another way, sales does one function within the business, whereas marketing should have an influence on every area.
· Developing the products that solves customers problems
· Ensuring the correct pricing strategy is adopted
· Making sure the products are readily where and when customers want them
· Establishing a customer support service before, during and after sales
· Promoting the product in a way that convinces the customer that it is not only the preferred choice, but is in fact, the only choice.
The first four bullets above come under what is known as ‘Upstream Marketing’, a process which asks fundamental questions of a business. Which markets does the business want to work in, how much of those markets are available to us, which products does the market need, what features, price, experience etc. and what will give us a competitive edge? The questions that make the difference between success and failure or at least mediocrity.
As we emerge from recession there is a case for saying that competitive advantage should be the main topic of conversation in any boardroom and giving marketing its key role is the way to make this happen.
But what about resources? How much should you invest in marketing?
Please note that I say marketing not advertising
As a percentage of revenue, recent surveys suggest that packaged goods spend between 4% - 10%, retail 2% - 5%, car manufacturers 2% - 3.5% and professional services at the top with at least 15%. In comparison, many SME’s spend barely 1%. This lack of investment kills any chance of creating that all important competitive edge.
The question SME owners will ask is “what will be my return on investment”? That of course depends on the strength of your commitment. However, a better question would be; In five years’ time, where will you be in relation to the competition if you continue to treat marketing as an add-on that can be dropped whenever costs need cutting?
David Hassell DLH Marketing
Let me first say I am not a photographer (apart from some amateur stuff) and I am not associated with a photographer. However, as a marketer, I am concerned with image and perception. It's for those reasons that I always advise clients to use a professional photographer rather Jim the enthusiastic amateur in accounts. Using a professional doesn't have to cost thousands, but it will probably save thousands in lost revenue.
To illustrate the point, let’s take something we are all familiar with – the take away and fast food menu. We’ve all seen it, whether pushed through your letterbox or above the counter at your local take away. Poorly lit, out of focus pictures of plates of food meant to entice you, when in fact they are more likely to make you question the reason you walked through the door. Then you have the photos taped to the window showing you the deal of the day which is printed on a piece of white paper, fresh off the inkjet printer in the back office, and seems to be one cartridge short of full colour. These are obvious attempts by the owner or manager to save money but the product, i.e. the food, ends up looking totally unappetising with the result probably being lost custom.
The same is true whatever product you sell. Look cheap and expect customers who haggle, portray quality and expect customers who value quality. It’s no coincidence that Rolls Royce and Bentley never leave photography of their cars to chance.
Going back to fast food, take a look at how one of the market leaders, McDonald’s, makes sure you expect the best in fast food.
Independent retailers need to start embracing mobile technology as a way of bringing customers back in store.
Smartphones are already having a significant impact on the way we shop and this is only set to increase as the tablet market joins the fray. IMRG m-Retail sales index showed a 359% growth in mobile device sales in the 12 months to May 2012, and is predicting a 13% online sales growth for 2012 in its e-Retail report. Although the true impact of tablets is yet to be established, with 65% of owners using them to browse online stores and 72% of them purchasing according to the IAB, it’s likely to be pretty significant.
This demonstrates an increasing acceptance amongst shoppers to bring technology into the overall shopping experience, and mobile is able to impact through every channel of the retailing experience. However, rather than being another nail in the coffin of the high street, including this multi-channel flexibility within their marketing plans presents independent retailers with a real opportunity.
Marketing is about putting the customer centre stage and mobile technology does just that. Morgan Stanley predicted that by the end of 2013 the number of searches done on phones will overtake those using a desk top with, according to Google, 40% having a local intent. O2 Media figures suggest that 7 out of 10 smartphone users are happy to receive location based messaging and additional research revealed that 69% of UK users would be happy to share their location in order to receive relevant information.
Add to this to the development of mobile coupons, the recent launch of PayPal inStore in Aurora Fashions’ stores Oasis, Warehouse and Coast, QR codes and near field communication, and you can begin to see the potential that high street retailers have in merging the online and offline shopping experience
Using location based messaging you can speak directly to potential customers when and where it’s most effective, using mobile coupons you can target your offers, using QR codes in store you can add offers, value and track response. Rather than dismal these really could be exciting times for the high street..
In a competitive environment it is vital that potential users are clear about why they should choose you above anyone else. This applies whether you are selling a product, service or indeed attracting funding. Differentiation is key in a crowded arena but often you are so busy working in the business that these questions don’t get asked, so when I first start talking to an organisation one of the first things I do is to get them to ask questions that very often they assume they already know the answers to.
Often the questions will relate to the organisation as a whole and sometimes they are product/service related. Here then are the 17 questions you should ask yourself when thinking about differentiation. I have made them product based but they can easily be adapted to an organisational basis.
1. What is the present position of product or service?
2. Where do we want it to be in the future? (Give yourself a time period)
3. What opportunities are there in the next 2 years and why?
4. Do we need to make changes to the product or service beyond its current strengths/positioning to take advantage of these opportunities?
5. What are the greatest threats?
6. Can we control these threats? If so, how?
7. Does the product or service offer something better than the competitors?
8. How does the customer benefit?
9. When someone buys the product or service what are the top three reasons they give?
10. What are the top three objections given by for not using the product or service?
11. What percentage of next year’s revenue is expected from new vs. existing customers?
12. What are the characteristics of our ideal customer? (Market segment, size of organisation, job position, motivators, internal and external influencers, buying habits, factors in buying decisions, social media, associations, publications, trade shows.)
13. Who are our key competitors?
14. Who is our competition targeting?
15. How do we want to be seen relative to the competition?
16. What is the typical sales process for our product/service?
17. What are the values and personality we want to project for the product or service?
David Hassell - DLH Marketing
David has worked in advertising and marketing services for 30 years both client and agency side. Having worked with local, national and muliti-national clients, he set up DLH Marketing to help small organisations, owner managed businesses and those organisations without in-house marketing.