In the last issue of Virtual Business Advisor we talked about ‘The Meaning of Marketing’. Specifically, we made the point that marketing is NOT just about selling and advertising.
Instead, it’s about ‘…the process of planning and executing the PRODUCTION, PRICING, PROMOTION and DISTRIBUTION of goods and services…”
In order to win and retain the most profitable customers we must adjust ALL of those factors so that they suit the market. When we do that, we get rich.
On the other hand, if we fail to adjust those factors … then our customers will punish us by not being loyal, not paying the price we want to charge, not referring their friends and so forth.
Let’s prove it….
Let’s say we’ve created a sensational new fragrance. In preparation for launch, we’re putting our ‘marketing mix’ (Product, Price, Promotion and Place) together in a way that suits our target.
Clearly, we can’t be ‘all things to all people’, so we start by deciding precisely who we’re going to serve. For the sake of this example, let’s say we’ve decided to target ‘wealthy women’.
For this market segment, our ‘Product’ will obviously be the fragrance itself – and it will also be the “3 P’s”.
The 3 P’s are ‘People’, ‘Packaging’ and ‘Processes’. These are part of the ‘Product’ because they are all part of what the customer is paying for. Making these factors more or less attractive to the market WILL impact on sales and so we need to adjust these issues along with everything else.
So … our ‘People’ will be attractive females with good personal grooming, good communication skills and a high service orientation. Our ‘Packaging’ will be small crystal bottles. Our ‘Processes’ will be highly service oriented.
As far as ‘Price’ is concerned, we’ll ENHANCE the perception of quality and exclusivity by actually jacking the price UP to $180 an ounce.
Our ‘Promotions’ will be full page adverts in up-market ladies’ magazines, featuring elegant women in stunning locations. And our ‘Distribution’ or ‘Place’ will be boutique shops at the boutique end of town.
Now that’s obviously rough and ready – but it’d go pretty close. Generally speaking, wealthy women would find that to be an attractive ‘marketing mix’ and so we can expect to see some good sales figures come through.
But let’s just test something…
Let’s say our ‘people’ are now teenage boys with bad attitudes. Let’s say our ‘packaging’ is now a plastic bottle with a label that reads ‘Nice smelling stuff’. Let’s say our ‘processes’ will be based on the ‘Get It Yourself’ service philosophy.
Let’s also say that our ‘price’ will be marked: “WAS $7 a litre. NOW $5 a litre!!”. And let’s say that our ‘promotion’ will be a small advert in the local paper … and we’ll ‘distribute’ our product through supermarkets.
I think we can safely say that we’ve killed that product – at least as far as the ‘wealthy women’ market segment is concerned. But here’s the thing…
It’s EXACTLY the same core product.
On the one hand you had customers lining up to buy the product at $180 per ounce. On the other hand, those same customers IGNORED your product when it was being offered for just $5 a litre.
What’s more, we wouldn’t mind betting that if one of those wealthy women DID buy the fragrance at $5 a litre, SHE would not use it. At $5 a litre it might have a chance of being used to disinfect the dog kennel, but it has NO chance of being dabbed behind her ears.
The key point is this: marketing is NOT about reality. Instead, it’s all about PERCEPTION.
At the end of the day, IT DOESN’T MATTER WHAT THE FACTS ARE. Instead, if the customer PERCEIVES something to be true … then, to all intents and purposes, it IS. And if they DON’T perceive something to be true… then to all intents and purposes, it isn’t.
Following on from that, if we can get the customer to perceive our product is ‘special’ … then in effect it is. The opposite is also true.
So have a look at YOUR business and product through the eyes of your customers. Have you adjusted your people, your packaging and your processes to suit them? Have you priced your product and promoted it and distributed it in a way that they’ll find appealing? Have you done such a good job that the customer perceives your product to be ‘special’?
And are you SURE about that … or are you just guessing? Remember: YOUR opinion is irrelevant – because only the customer votes with their money. What YOU think about your business is an opinion. What your customer thinks is a JUDGEMENT.
That being the case, become fanatical about finding out what your customers would find appealing – and adapt your business so that you can provide it, to the extent that customers perceive that your product is ‘special’.
Do that, and you’ll need bigger bags to carry the money home.
Virtual Business Advisor
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