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
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.