Marketing – Research, Product and Place

43

Chapter 3 Marketing – Research, Product, Place

What is Marketing? You can tell the people you’ll meet in the house from the dog you meet at

the gate.

Marketing is defined as ‘the satisfaction of customer needs and wants at a profit.’ The key approach that sets it apart from other business practices (e.g. production) is the ability to see things through the customer’s eyes, thus getting to know their needs and their wants. The most successful businesses are those who really understand their customers’ needs and wants. Once they understand these, all future decisions are based on satisfying them. The first key word in the above definition is satisfaction. If you don’t provide satisfaction to your customers, they won’t buy from you again and won’t recommend you to others. You need to build up a satisfied client base who’ll give you repeat work and referrals (they recommend you to their friends, family, colleagues, etc.). If customers are dissatisfied they’ll actively discourage others from dealing with you. Bad news travels fast, and research shows that whilst satisfied customers will tell an average of four people about their good experience, dissatisfied customers will tell at least ten. The next main word in the definition is the customer. ‘The Customer is King’, because you want them to spend their money with you rather than your competition. The customer is the key to your business, for without them you have no business. Customer needs and wants are the next words in the definition. There’s a big difference between them, and people spend most money on their wants. People’s needs are basic enough – food, clothing and shelter. Wants are more about people’s discretionary spending – cars, holidays, televisions, cameras, fashion, designer brands, etc. An increasing number of businesses cater for people’s wants, which makes it all the more important that you present your business properly or they may not want to deal with you. Finally there’s profit, the hallmark of a successful business, the

Marketing – Research, Product and Place 44

lifeblood of a healthy business, and the cornerstone of good marketing.

Who is at the Market? To ignore the competition

is business suicide, because you’ll have no benchmark against which to measure

yourself.

There are three main players at the market – the customers, your business and your competition. Firstly, there are the customers. This is the most important group of players, because without them you will not succeed. You’re trying to get their hard-earned money out of their pockets and into yours, and that means pleasing them. The ‘satisfaction of customer needs and wants at a profit’ should be your marketing mantra. There is no point going to the marketplace with things people don’t want because they won’t buy them, regardless of how beautiful or valuable you think they are. Your opinion as to what customers should buy doesn’t matter, and ‘he who pays the piper calls the tune’; so observe and listen to your customers, and pitch your product offering accordingly. Your focus should be on how you can satisfy your customers’ needs and wants and how to make a profit in the process. Secondly, there’s your business. The key to getting your own needs met is by meeting the needs of your customers, and one of their main needs is to deal with a reputable person. Your reputation is essential, and a good reputation earns you a good price, repeat work, and recommendations to friends and family. Finally there’s the competition. In striving to make sales you must compete hard with others who want these sales. You must at least match them, and should aim to outperform them. If they are well established, you may need to identify a group of customers that they are ignoring a little bit (not really satisfying their needs), and this might form your niche market. This niche will give you a platform to grow and expand from. The strength of these different players changes from time to time. Sometimes the competition is weak and you can gain a large market share quickly. Sometimes it’s a sellers’ market, other times

Marketing – Research, Product and Place

45

it’s a buyers’ market. The market is a dynamic place: new competitors enter the marketplace, products go out of fashion as they come to the end of their life cycle, recessions come and go, etc. Forecasting and observing these trends accurately is a vital business skill.

The Target Market You can’t be all things to all people so focus scarce resources on a clear target market.

The market is a big place, and you’re a small operator when you’re starting off. You cannot be all things to all people because you’re not big enough; you just don’t have the resources. Knowing this, you must choose what ‘target market’ (small grouping within the larger market) you want to serve. Focusing carefully in order to service this target market means less wasted money and effort. The average market is very diverse, with lots of different needs and abilities to pay. Although diverse, the customers in the market for any product are organised in a pyramid shape, with those most able to pay at the top of the pyramid. Likewise, the products in that market are organised in a corresponding pyramid shape to match the customers’ needs and wants. The pyramid is wide at the bottom (lower priced product, selling to a large number of customers) and gets narrower at the top (higher priced product, selling to a lower number of customers). As you climb up this pyramid you go through three main price ranges:

1. At the bottom there are the lower priced products in the market. Prices are low because customers are cost conscious, trying to stretch their money as far as possible.

2. In the middle there’s the mass market, where prices are higher, and the products and service are also of a higher standard.

3. Finally there’s the premium end of the market, where cost is almost irrelevant, provided the product is the best that money can buy.

Your products must match the requirements of the target market that you have chosen to focus on. You cannot use a low-quality product to target a premium target market because they’ll consider

Marketing – Research, Product and Place 46

it poor quality and not buy it. Similarly it would be a waste of time aiming a premium product at the lower end of the market because they would consider it too expensive. You should position yourself at the level on this pyramid where you can best fulfil the corresponding market needs, given your resources and abilities. Aiming to position yourself around the middle of the product pyramid is the safest strategy, especially at the start. Competing on price alone can be difficult, so aim to develop a market niche where you can compete on a combination of unique service, flexibility and price. ‘Niche Marketing’ is where you sit in just below a bigger operator and do the smaller work that he finds uneconomic or ignores (e.g. small building jobs, short-run printing, small quantity supplies, etc.).