THE MARKETING GAME
What is Marketing?
What Is Marketing? The Ultimate Question
Marketing
[mar-ka-tin]
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Activities a company undertakes to promote the buying or selling of a product or service.
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In essence, the fastest way to capitalise on your product. It is crucial to monetise your product and create a cash flow because, money to a business is like oxygen to a person. And as the saying goes, there is no business problem that money can't solve. Experienced entrepreneurs and business owners will say that although money is never the only goal, it certainly gives an individual the freedom to think about moving in a direction of their choosing, and for them to pursue long-held desires. These may include travelling, philanthropy, raising a family, or simply taking out time to self-develop and cultivate their health and wellbeing.
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It is estimated that between 50%-90% of businesses will fail within the first five years of trading. And to make matters worse, these numbers don't include all the businesses that are just scraping through. With business owners working tirelessly around the clock, to simply make enough money to keep their business running. Where in fact, they would be better off just getting a job and working themselves up. Making more money, working less hours, and having much more peace of mind.
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"Richard Branson was in a board meeting surrounded by his staff who worked for him. All his professional advisors went to the best schools and Universities, but we know Richard Branson never went to University. During the meeting where financials were being discussed, he stated that he didn't know what net profit meant. His team had to draw a picture of the ocean, fishes, and a net, to explain the fishes were what he gets to keep at the end of the day." - Steven Bartlett, Diary of a CEO
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The above brings us to the crux of the issue. There is a difference between an employee and the business owner. This is because it takes technical skills to do a job, but it takes business skills to be the owner. Both of which have little commonality. This is why most start-ups fail, as they are started by those who know how to do the job well, but have no real training, experience, or knowledge of how to do the business of what they want to do.
So if you wish to have a business, or avoid a plateau in which you just make enough money to survive, what can be done? An excellent question, and thankfully there's answer. Plan!
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Doctors, dentists, pilots, athletes, soldiers, and project managers all use plans. Why? Because failing to plan is planning to fail, and having a plan dramatically increases your chance of success. It also keeps you calm and encourages logical adaptability if conditions suddenly change and new tactics are to be deployed.
Pareto Principle (80/20 Rule)
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The Pareto Principle states that 20% of the cause will result in 80% of the effect.
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For example:
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- 80% of the sales generated will come from 20% of the customers
- 80% of the wealth is owned by 20% of the people
- 80% of customer complaints come from 20% of the customers
- 80% of a company's production is the result of 20% of its employees
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Therefore, it is reasonable to deduce that it is efficient to focus your effort on the most important 20%, as it is the cause of the 80% of the result. Even better, if we apply the rule again, i.e. 20% of 20, and 80% of 80, we end up with the 64/4 rule, which means only 4% of our actions will generate 64% of the result. So, if we can identify the 4% of what we need to do, we will generate 64% of the possible results. Isn't that music to our ears?
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So how do we identify these 4% or 20% actions that are the cause of most of the results? Well first of all, these actions are called leverage points.
Leverage Point
In marketing, a leverage point refers to a strategic aspect within a strategy which, when utilised effectively, can significantly impact the overall success or outcome. For instance, if a business had no marketing at all, only the 4% of the marketing activity can result in 64% of the sales.
Leverage points include:
- Target Audience Understanding: Understanding the target audience needs, behaviours, and problems.
- Unique Selling Point (USP): What makes you distinctive or unique in the marketplace, that sets you apart from the market place.
- Channel Optimisation: Understanding which channel gains the most traction. For instance, social media, email, podcasting, or blogs.
- Content Strategy: Creating content that resonates and brings forward what you wish to show clearly and effectively, to not only attract people but convert them to customers.
- Data and Analytics: Gaining useful insights into marketing effectiveness and optimising marketing strategy.
- Customer Experience (EX): When value outweighs cost with smooth client onboarding and servicing. This may breed customer loyalty and result in referrals.
- Innovation and Creativity: Innovation and authenticity may keep eyes on you, creating a recognisable brand that distinguished you from your competitors.
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So now we know why marketing is important, or some may argue, the most important part of a business, let's break down what marketing actually is, so you can use it for your business and sky rocket sales.
Advertising
Sales
Promotion
Marketing
Public Relations
Publicity
Let's break down each part to get a good understanding of what they mean.
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Advertising: The creation of promotional messages to a target audience in order to influence their behaviour, opinions, and purchasing decisions. Key aspects include messaging, placement and channels, creativity and design, targeting, and measurement and analytics.
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Examples:
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- TV Adverts: Brands such as the RSPCA produce emotionally captivating adverts to create awareness and connection. Cadbury also successfully did this by having a gorilla drum to the beat of Phil Collins - In The Air Tonight.
- Digital Advertising: Social media sites such as youtube or instagram, along with search engines such as google strategically use targeted ads to reach customers who are more likely to be interested in their products. This takes into consideration their history, preferences, and browsing behaviour. This is typical of a holiday company or clothing brand sending you an advert if you have been searching through particular clothing styles.
Promotion: To stimulate interest, increase demand, or encourage the purchase of a product or service. They are usually short term strategies aimed at achieving specific goals within a defined time frame. Key aspects include sales promotions, advertising promotions, contests and giveaways, trade promotions, and loyalty programs.
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Examples:
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- Contests and Giveaways: Coca-Cola successfully achieved this by their "share a coke" campaign where people personalised bottles with names, encouraging customers to buy, share, and even showcase them in their homes to others.
- Loyalty Programs: Tesco Clubcard's, Nando's cards, and McDonalds points are typical examples that award the consumer with free items once enough points have been collected. This breeds loyalty and discourages the customer from going elsewhere.
Publicity: Gaining attention and visibility for a service, product, or brand, through media coverage or public interest. This is different from advertising as it is earned media, where exposure is gained through news stories, social media accounts, interviews, podcasts, or public discussions. It may seem crafty, but brands sometimes use "shockvertising" or "controversy marketing" to gain publicity. This is when companies do certain things that are somewhat condemned, shocking, or highly irregular. Although this can come with negative impacts such as damaging a brands reputation or alienating customers, this does increase brand awareness rapidly, making the brand highly visible and talked about overnight, at zero expense to the company. Key aspects include media relations, press releases, public interest stories, event publicity, and social media engagement.
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Examples:
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- Product Launch Events: Brands such as Apple, Tesla, and Adidas have successfully created huge publicity through their launch events by unveiling new products, attracting media attention, and public interest. They're seen as futuristic companies that are innovative, high tech, and a model for the rest to follow and aspire to be.
- Stunts and Viral Campaigns: Whether it be Red Bull's stratos campaign where a skydiver jumped from a stratosphere, Range Rover getting a driver to climb a near vertical staircase of 999 steps in china, or Dynamo randomly walking on water in Central London, they're a great way of achieving publicity.
Public Relations: Communication aimed at building and maintaining a positive image, reputation, and relationship between a company and its stakeholders, employees, investors, the media, and the public. A typical example would be when brands showcase their "corporate responsibility" and "community engagement". Key aspects include media relations, crisis communication, internal communication, community engagement, event management, and content creation.
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Examples:
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- Crisis Management: Brands such as Toyota, Tesla, and Johnson & Johnson have dealt with faulty product recalls successfully by being transparent. This maintains consumer trust and does not allow the customer to feel cheated.
- Sponsorship and Partnerships: Sports brands such as Nike partner with cultural events to create a positive association and reach wider audiences. Creating academies by making sport available to less privileged people is another typical way to achieve this effectively. The UEFA has done this well, by partnering up with Unicef.
Sales: The exchange of goods or services for a monetary value between the seller and buyer. Sales is the most distinct part of marketing, however, still a marketing component. Key aspects include relationship building and nurturing, customer interaction, closing deals, and post-sales support.
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Examples:
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- Direct Sales Campaigns: Companies like Apple, Mercedes, and Rolex use direct sales through their stores, demonstrating product features, product advantages, and favourable customer service.
- Sales Events and Promotions: Retailers like Amazon have sales such as Black Friday or Cyber Monday to boost sales by the means of discounts and promotions. Another well known example is when food retailers such as McDonalds have a wrap of the day for £1.99 which changes daily.
Marketing Example: Let's bring this knowledge all together now by a complete example, involving all the elements of marketing. Let's say the London Classic Car show is coming to town and we need an effective marketing strategy. A basic template may look something like the below:
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- Advertising: Printing media such as adverts in magazines, newspapers, and car enthusiast literature to spark interest in a targeted audience.
- Promotion: Merchandise contest or giveaways, alongside time specific promotions such as discounts, VIP packages, and prizes. Driving around loud American muscle cars with the signage is also a way of promoting the event as people will stop and look at the spectacle.
- Publicity: Press releases that announce the event, guest appearances, special features, and theatrics. Media partnerships and event listings will also create listings. Above all, a public stunt will be great to get people talking about the event.
- Public Relations: Creating media relations for positive coverage of the benefits the brand has brought to society. Getting the community and public figures involved is a great way of showing familiarity with customers.
- Sales: Ticket sales campaigns that offer early-bird discounts and perks, alongside special spaces for classic car dealers and collectors. An example of this would be an auction space.
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The one who combines the above is the marketeer of the event. Marketing is referred to as the strategy, with each of the five components being tactics. In marketing, we can think of strategy as the blueprint of what we wish to accomplish, and tactic as the individual actions that are carried out in order to reach the objective. But why do we need to know the difference between strategy and tactics you may wonder? Excellent question, and here's why.
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Analysis Paralysis Vs Winging It
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Strategy: The big picture or planning prior to the tactics.
Tactics: How the tasks will be carried out.
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If you have a well thought out strategy, but do not implement any tactics in order to meet marketing goals, this is called "analysis paralysis". There's a saying, knowing and not doing is the same as not knowing. In order to reach any kind of success, regardless of how well thought out that plan is, one must take actions in order to advance progress and make changes accordingly to optimise results. Therefore, tactics must be implemented after a strategy has been devised.
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However, the opposite also holds true. Implementing tactics without a strategy is called "winging it". Although applying tactics without a strategy will result in experience which will make you better with time, it is not efficient, resulting in unnecessary loss of time and money. Furthermore, this may make one prone to "shiny object syndrome", which is when tactics are randomly executed as soon as one seems favourable. This however leads to distractions from the current objective, potentially leading you to walk around in circles, resulting in wasted time and energy. Therefore, tactics being a must only after a strategy is concretised.
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Think about strategy and tactics as a project to build a house. The blueprint of the house, the expected time to be taken, and the amount of material required is the strategy. Getting brick layers, electricians, and plumbers in order to carry out the work are the tactics. If you make a great blueprint but do not carry out any work, this is deemed analysis paralysis. But if you start the work without a plan, you are effectively winging it. Although some progress will be made, there is a high probability of something going wrong. Can you image if the walls are built in the wrong place, the material wasn't nearly enough, and you need to start over and over again? This can be very time consuming, unnecessarily wasting money and leading to frustration. Therefore, it is clear that both the blueprint for the house and the building team are both required. But in this order respectively.
Customer Retention Vs Customer Acquisition
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If you are thinking "do I really need to get involved with this whole marketing thing as my product is 10/10, and will therefore sell itself?", I am afraid this is a rookie mistake that has caused the death of many businesses. We must understand that a great product is what you call a customer retention tool. This is when a customer becomes a regular as they are happy with the product, and have no reason to go with another service or product provider. However, how is the customer expected to experience the product without actually trying or using the product? This is where marketing comes in, as marketing is a customer acquisition tool.
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Example: Giuseppe has opened up a Pizzaria and is convinced that his pizza is the best in town. Making his world class pizza and wowing the customer is a customer retention tool as the customer will come again and again, speaking positively to others which results in more customers coming in. However, how is Giuseppe suppose to wow his customers if no one walks through the doors to his restaurant? This step, which is the most important step is called customer acquisition, and is achieved by marketing. As a marketeer, your job is to get customers through the door of Giuseppes restaurant in order for them to taste his pizza. Without this step, no one will walk through the doors of his Pizzaria, which means no sales will be made, which will result in the business having to shut its doors and declare bankruptcy.
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Identifying your Marketing Needs​
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Misunderstanding your marketing needs and following the wrong approach is the fastest way to crumble your business as it will lead to a high cost with no return. For instance, if you are the owner of a small business, your marketing strategy will be different to a large business. This is because different companies have different marketing budgets and agendas. In the table below, we see how the agendas of small and large companies differ, which will change the marketing strategy of each type of business.
Small Companies | Large Companies |
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Make a profit | Please management and career growth of individuals |
Maintain superior status within the marketplace | |
Influence stakeholders and acquiring further funds from investors | |
Keep inline with company traditions and preconceptions | |
Ensure targets are hit in a way that reports and financials keep stakeholders happy |
In addition, we must understand how the marketing budget impacts the marketing strategy. For instance, large companies have the money and time to saturate large amounts of media outlets, such as events on the TV, the internet, and live events such as concerts. This is not only expensive, but takes a lot of time to get the message across to consumers. This strategy is almost certain to fail for a small business as they do not have the time and money to saturate media outlets in this way, consequently running out of money quickly and making no returns. The table below gives you an idea of the marketing budget differences between small and large companies.
Small Company Budget | Large Company Budget |
|---|---|
Arts and Crafts store: $2-$6 Thousand annually | Apple: $1.8-$2 Billion annually |
Local Gym: $3-$10 Thousand annually | Amazon: $10-$15 Billion annually |
Consultancy: $6-$24 Thousand annually | Coca-Cola: $4 Billion annually |
Small E-Commerce Business: $12-$36 Thousand annually | Samsung: $10-$15 Billion annually |
Local Bakery/Cafe: $6-$12 Thousand annually | Procter & Gamble: $7-$9 Billion annually |
As we can see, as there is stark difference between the marketing budgets of small and large companies, their strategies must be different. Otherwise, small businesses will quickly run out of money, meaning they are certain to fail. So what strategy do small to medium business use? Good question, let's answer that below.
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Direct Response Marketing​
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Direct response marketing is a marketing strategy that aims to spark an immediate response from the target audience. This response may be in the form of subscribing, contacting the company, making a purchase, singing up to a service, or engaging in a specific call-to-action. A highly effective way is to focus on solving a problem of the target market with training and solutions. What makes this effective is that you can reach the consciousness of a prospect immediately, resulting in interest and engagement. Key features of direct response marketing include:
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- Data Collection: We know when someone has responded, which channel and ad in specific, in addition to their location. This is in direct contrast to large company tactics or mass brand media. For example, if you are running ads on the TV and billboards, you don't have any way of evaluating the effectiveness of your marketing as it's non-trackable.
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- Informative Selling: An advert from your company will be more of an informational piece, which makes it more likely to be read as people faced with the particular problem you are offering a solution to wish to learn and resolve it. The headline must be specific and attention grabbing, arousing strong interest from your target market. The effectiveness of the headline should be deepened by the thought provoking editorial.
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- Targeting a Niche or Specific Audience: The narrower the target market, the greater the interest you will generate. When individuals are faced with a problem, the less common or more specific a problem is, the less likely it is that there is a solution readily available to them. Therefore, instead of trying to appeal to wider audiences and hyper-focusing on a niche will elicit immediate interest. An example of this could be to identify an area where has a niche characteristic about them, and provide them a service fit for their specific need. This is in contrast to large companies who follow a one-size-fits-all approach.
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- Immediate Call-to-Action and Follow-Ups: The aim is not to immediately make a sale, but get individuals to sign-up. They must have options to easily get into contact with the company. Once we have as much information of our prospect as possible, we stay in touch by consistently exchanging valuable knowledge, information, and solutions to the prospects problems. This could be a free course, free consultation, or a weekly newsletter. This is then subsequently followed by an offer to serve and do official business.
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- Maintenance Follow-Ops for Slow to Mature Leads: People who have signed-up but have not taken any further steps may have many obstacles that are currently holding them back. Slow-to-mature prospects should be hearing from your regularly as they will sooner or later start doing business with you.
Summary
So now you know what marketing is, why it's required, and how it can be used to monetise your idea, or go from an average business to a great business.
We have discussed:
- Pareto's Principle
- Leverage Points
- The five key areas of marketing (Advertising, Promotions, Publicity, Public Relations, and Sales)
- Strategy Vs Tactics
- Analysis Paralysis Vs Winging It
- The difference in the marketing needs, agenda, and budget between small and large companies
- Direct Response Marketing, the ideal marketing strategy for small businesses.
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Let's take a look at The Marketing Game process of how a marketing strategy is planned and executed.
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