The Marketing Process

The Marketing Process

The marketing process consists of four steps. These four steps are all completed with the goal of creating value for your target customers. Some elements of the steps are performed continuously, such as monitoring the marketing environment. Some are done annually, such as the annual development of a marketing communications plan. Lastly, some of the steps, if done correctly, should last for decades, such as segmentation, targeting, and positioning.

Scanning the Marketing Environment

This is where you do your homework prior to developing marketing plans. Marketing textbooks speak of the “uncontrollable elements” facing the marketer, and these are the items that you need to study. The number of groups of these uncontrollable elements varies from one marketing textbook to another, but here’s a convenient list of the areas with which you need to be familiar:

· Economic factors

· Demographic elements

· Technological trends

· Political/legal events

· Social/cultural environment

· Competition

Many marketers rely upon their marketing intelligence people to monitor and report upon much of this information. Some of the elements, such as competition, are monitored on a daily basis; others, such as social/cultural elements, may be assessed only annually. Good marketing practice call for translating the environmental trends which may impact your business into opportunities and threats for a SWOT (Strengths / Weakness / Opportunities / Threats) analysis. A template for constructing a SWOT analysis is available. Just drop me a note at jhargrave.marketing@gmail.com

Marketing Strategy: Segmentation

Customers are different; they have different wants/needs. “One size fits all” is not a good approach to marketing because when you try to be everything to everyone, you end up being nothing.

There was a time when Coca-Cola only produced one product offering, the classic 6.5 ounce bottle. Perhaps customers’ wants/needs were less diverse. Today, Coca-Cola offers multiple sizes of its classic cola, brand extensions in the form of Diet Coke in multiple sizes, caffeine-free extensions, and a host of other flavors as alternative brands.

Henry Ford is perhaps the classic example of the mass marketer. “People can have a Model T in any color they want, as long as it’s black.” While Ford’s approach sold 15,456,868 Model T’s, it also nearly bankrupted the company as Henry waited until the company was on its knees to introduce the successor Model A.

Today marketers can’t afford to ignore the market segments in their product category. Your competitors are going to figure out what the market segments are. If you enter the market with a product or service that’s for everybody, your competitors are going to develop a market offering for each market segment. Because their offering is tailored to the customers in a given market segment, those customers will prefer your competitor’s offering and purchase it. Your competitors will take your customers away from you, segment by segment.

Because consumers are motivated by internal wants/needs, which are difficult to understand, segmentation in consumer goods categories can only be accomplished through marketing research. In business to business categories, the motivation of end-users is straight forward economics. Thus, their wants/needs vary by more easily understood factors, such as the size of the firm, application of the product or service, type of business, etc.

Marketing Strategy: Targeting

Targeting is nothing more than selecting those customers that you are going to serve; and, by extension, defining those you are not going to serve. Targeting is a concept that is difficult for some sales-oriented businesses to grasp. For the salesperson, making their quota and getting their bonus is the goal. Thus, any sale is good regardless if it’s to the wrong customers. But selling the wrong product to the wrong customers can get your brand in trouble as the product may not perform up to their expectations.

Professor Kotler tells us that selection of a target market segment should be based upon the attractiveness of the segment and your firm’s strengths and weaknesses. Attractiveness is conceptually easy to grasp. A segment being served by a few competitors is better than one served by many competitors; a growing segment is more attractive than a shrinking segment; a segment that holds the potential of your making a profit is more attractive than one that promises a loss, etc.

Recall that you were encouraged to construct a SWOT analysis in the Scanning the Marketing Environment section. In that SWOT analysis, you’ll list your firm’s strengths and weakness. Your strengths and weaknesses should help you determine which market segments you should target. For example, if a firm has a strength in product quality and a weakness in being the high cost producer in the category, that firm probably isn’t suited to serve segment customers who are overly price sensitive and will purchase based upon price.

Marketing Strategy: Positioning

The concept of brand positioning was popularized by two practitioners, Al Ries and Jack Trout, rather than academicians. They outlined the rules of brand positioning in a series of 1970’s articles published in the marketing trade magazine, Advertising Age, and a now classic book, Positioning: The Battle for Your Mind.

Brand positioning is the process of claiming for your brand the unique brand benefit that motivates your target customers to purchase in your product/service category. In consumer goods categories, the benefit should be either directly or indirectly related to the satisfaction of the target customers’ internal wants/needs. In business to business categories, the benefit should be economic.

Brand positioning was institutionalized by American package goods marketers. There is a somewhat standardized template that many package goods companies use to capture the relevant elements of brand positioning. There are two versions of this document: one for consumer product/service categories and a second for business to business product/service categories. Both the Consumer Brand Positioning Template and the Business to Business Brand Positioning Template are available to you; again, just drop me send me a note to jhargrave.marketing@gmail.com.

It is the brand positioning document that summarizes all of the segmentation, targeting, and positioning work for a given brand. This document should guide marketers in their tactical marketing mix decisions. It is an internal document that should be understood and embraced by everyone, both internal and external, who works with the brand – research and development, product design, manufacturing, logistics, sales, consumer relations, customer service, marketing communications suppliers, dealers, OEMs, etc.

The completion of the brand positioning work completes the strategic elements of marketing. With these strategic elements summarized in the brand positioning template, marketers have a strategic foundation for their tactical marketing mix actions. Too often, however, marketers complete the brand positioning template, file it away, and execute tactical marketing mix elements without any reference to this strategic foundation.

Marketing Tactics: The Marketing Mix

The concept of the marketing mix was developed by Professor Neil Borden in the 1950’s. It has long been agreed that there are four sets of elements that comprise the marketing mix. Each of these sets of elements should be executed so as to create value for your target customers. Careful adherence to your brand’s positioning document will help insure that each of your marketing mix decisions create value for your target customers.

By the 1960’s everyone agreed that there were four elements in the marketing mix, the product and service offering, channels of distribution, marketing communications, and pricing. During this time frame, a relatively young marketing professor at Michigan State University, E. Jerome McCarthy, authored an introductory marketing text entitled Basic Marketing: A Managerial Approach in which he referred to the marketing mix as the “4P’s”, product, place, promotion, and price. 4P’s or marketing mix, it’s the same concept.

The important concept to remember when working on the various elements of the marketing mix is that you have identified a target market segment in the marketing strategy steps of segmentation and targeting. In the marketing strategy step of positioning, you identified the unique brand benefit which will motivate your target customers to consider purchasing your brand. In each of the four elements of the marketing mix – product and service offering, channels of distribution, marketing communications, and pricing – you need to integrate and deliver your unique brand benefit to your target customers.

Monitoring and Control

Monitoring and control begins with establishing goals for your business. Many businesses establish financial and sales goals, but they make the mistake of establishing only financial and sales goals. The thought process operating in these businesses is if they sell their products and keep their costs under control, they’ll make a profit. This line of thinking assumes that the starting point of profitability is the sale. This is a short sighted assumption. A marketer makes a sale because a customer has made a purchase. The starting point is not the sale but the customer. (Always start with the customer and work backwards.) What made customers purchase the brand? Did they recently become aware of the brand? Do they believe that the brand delivers a unique brand benefit that will satisfy their wants/needs? The brand must have been available where they shopped, and it must have been priced at a point which they were willing to pay.

It’s marketing’s job to make target customers aware of their brand and move those target customers toward purchase. Thus, the starting point of a business obtaining its financial goals is not sales, it is what marketing accomplishes with its target customers. Sales goals are intermediate goals toward obtaining financial goals. If marketing is successful in moving its target customers toward purchase, it will make the job of sales easier. In the words of Theodore Levitt, “Marketing makes sales redundant.”

In addition to financial, sales, and marketing goals, a business usually has some internal goals which are totally within their control. These are things that the business has to do in order to run efficiently. Examples of such internal goals are inventory levels, fill rates, SKU counts, etc.

One can think of the goals of a business as being a hierarchy with the foundation being marketing activities, sales being an intermediate activity, and financial results as being the pinnacle. Examples of these objectives may be found below.

So What Has All of this Accomplished?

It's taken a while to get to this point. The marketing process and the marketing mix are going to be the organizational structure into which we're going to organize our marketing guides. It's my intent to post one marketing guide per week starting with the "scanning the marketing environment" category. As I move forward, you'll see for some categories I have multiple guides. For other categories, I may have only one or none. Some of the guides have been noted by contributors to the marketing body of knowledge. Others, I have observed in the course of my 40 year adventure in marketing. You are welcome and encouraged to suggest marketing guides that you have learned in your professional experience.

Coming Up in Next Week's Post

We have our organizational framework so next week we'll start with the first of our marketing guides.

Some References

Al Ries and Jack Trout, Positioning: The Battle for Your Mind (New York, NY: McGraw-Hill Companies, Inc.), 2001.

E. Jerome McCarthy, Basic Marketing: A Managerial Approach (Homewood, IL: Richard D. Irwin), 1960.