Marketing has never been more important. But what exactly is marketing?

To some people this may be a silly question; but, there are many businesses, in many different sectors, that talk about marketing but mean advertising and promotion. Undoubtedly, advertising and promotion are part of marketing but, on their own, they are not marketing.

So what is marketing?

Probably the best place to start is the Chartered Institute of Marketing (CIM), which is the world’s largest organisation for professional marketers and is based here in the UK. The CIM’s definition of marketing is: –

“The management process responsible for identifying, anticipating and satisfying customer requirements profitably”.

I would argue that advertising and PR, whilst extremely important to most businesses, represent a relatively small part of the marketing mix. However, they may well account for a disproportionately large share of the budget, particularly in businesses that sell B2C. This implies that there is a significant risk factor because, if a business gets the identification and anticipation elements wrong, the advertising and PR expenditure, which is part of satisfying customer requirements, may be wasted, in part or even entirely.

I’m afraid to say that I have seen this happen all too often, particularly in small and medium sized businesses, within which there tends to be less sophistication and fewer really experienced marketers. Typically, SMEs tend to develop strong operational and selling skills but marketing gets tagged on to the sales director’s responsibilities. He/she then becomes the sales and marketing director with a relatively junior manager heading up marketing, which is predominantly advertising and PR.

I’ll come back to how SMEs might consider addressing this problem, without spending large sums of money that they don’t have. But first I’d like to look at what a more rounded marketing process might look like.

We should probably begin with asking, “Who is our customer?” Because, if we get that wrong, everything that follows will also be wrong.

Whichever market your business is in, it is likely to consist of an array of sectors and segments; and even within these, there will probably be many different profiles of customers at both B2B and B2C levels. It is generally a mistake for SMEs to try and cover too wide a spectrum; and the risk of trying to do so is that the business never really succeeds in becoming a significant player in any part of the market. So there is a need to evaluate the market you’re in and build up a profile of the type of customer, with which your business is or can be most successful. In a B2B environment, this may require some market research. In a B2C environment, there are some extremely sophisticated and accurate profiling tools available. In both cases, these don’t have to cost huge sums of money; but, even so, relatively few SMEs use them.

Once you know the profile of your target customer everything else should be focused on optimising your sales to that target. This doesn’t mean that you turn away sales from customers outside your target profile; but it does mean that you don’t go looking for them and you don’t compromise your position, with your target customer, by taking them.

Having identified your target customer profile, you then need to assess what products and services those customers require. This needs to be objective and realistic; so, once again, some market research may be needed. Then comes, what I think is perhaps, the biggest challenge of all. Of the products and services your target customers require, which ones can you supply efficiently, effectively and profitably? Once again, this needs to be dispassionate, objective and numbers driven. If you can’t make money from it; don’t do it. If you can’t do it efficiently don’t do it. And if you can’t do it effectively; don’t do it. Inevitably, the argument will be put forward that, “We make money on product A; but, in order to sell it, we also need to supply product B, on which we lose money”. At the extremes, the solutions are easy. If you make a substantial profit on product A and the losses on product B are not significant, you sell product B. If the profit on product A is small and the losses on product B are large you don’t do it, even if that means you don’t sell product A. The dilemma comes when the balance between the profitability of the two products is less obvious; and it is in this area that many SMEs get themselves into trouble. Often, they don’t have a clear understanding of the numbers and they do favours for their customers, without fully appreciating the cost to themselves. But with a robust marketing strategy, this would be less likely to happen.

In addition to products and services that are current today, marketing also needs to look at trends and developments of both the products/services and the market itself. Going back to the CIM definition, this is about anticipation. What will your target customers require in the future? Which product groups have growth potential; and which are likely to decline? Where are the gaps for new product initiatives; and what new products are likely to emerge through market and technological developments?

Whilst there is inevitably a degree of crystal ball gazing in this, the risk can be substantially reduced through having really good market intelligence and, of course, market research.

Having established the target customer and the product(s)/service(s) to be supplied, the next stage is to ensure that the resources and processes are in place to enable the efficient, effective and profitable delivery of those product(s)/service(s). Most of the work here isn’t a marketing responsibility; it’s down to production/fulfilment, IT, logistics etc. However, marketing does need to have a watching brief and an involvement in the co-ordination of the various activities involved, so that it can co-ordinate advertising & PR, sales training etc.

Only at this stage does marketing move into the advertising and PR phase. However, if everything prior to this has been done properly, an effective campaign is much more likely.

I’ll finish off by returning to the challenge for SMEs that don’t have a substantial marketing resource. The key is to recognise the need for good strategic marketing input. Once that hurdle has been crossed, there are ways in which simple market research can be done at low cost and much of it “in-house”. And, as I’ve already said, there are some very good consumer profiling tools available at a modest cost. In many SMEs, the missing ingredient is senior marketing expertise. But, in reality, most of these businesses cannot justify the costs of employing a marketing director as well as a sales director. Nor do they need a full time marketing director because the demand for his/her skills is likely to fluctuate considerably. The obvious solution is to engage an independent marketing professional, with strategic marketing skills, on a “when needed basis”. This could be on a project by project basis; it could be on a regular basis of an agreed number of days per week/month; or it could be on just an advisory basis such as attending monthly review meetings. Different businesses will have different needs; but this strategic input should not be confused with the role of the advertising agency, which is to work to a specific advertising brief that is developed from and preceded by the marketing strategy.

There are some good strategic marketers around. But they tend to be industry/market specific; so be sure to engage someone that knows the market your business is in; and look for someone who has a marketing qualification and/or is a member of the Chartered Institute of Marketing. By taking this approach SMEs can benefit from the strategic marketing expertise they need, when they need it and at a cost that is affordable.

I’ll be following this article with a series of articles that explore some of the issues I’ve raised here, but in more depth.

If you’d like more information about me and my consultancy business, AP Management Consultants or would like to discuss any of the issues in this article,

Log on to www.apbusinessconsultants.co.uk

Email me at anthony.pratt@apbusinessconsultants.co.uk

Call me on 01962 715899 (+44 1962 715899 from outside the UK)

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