Establishing The Market Strategy
Here, we talk about marketing strategy, and marketing mix. So I'm gonna do a little bit of theory setup for you. So, marketing strategy is, in very simple terms, how you market your brand. And, that just has many choices with it, that you need to decide, in terms of what is the best way to build your brand in the marketplace. And the core step in the marketing strategy is defining and selecting the different components of the marketing mix. And the reason why it's called mix, is like you're baking a cake, is because it's about selecting the ingredients whose optimal combination generate the highest number of sales. So that's why we also talk about math. So you have the marketing strategy, which is really, this is how you articulate how you will go about marketing your brand. And then the marketing mix is your choices, your strategy choices, on the different components and ingredients. Your perfect concoction of elements to generate sales. So we're gonna look at the different components...
. The marketing mix is typically defined by the famous four or five P's. And the P's are really inputs into your marketing strategy. So we're gonna go through, one by one. The first P, in a marketing mix, is product. Is really, the product is the physical goods or service that you offer. And, let me start telling you, people just think that putting a product out there, will sell on its own. It doesn't happen. In an entrepreneurial economy, there's not that many bad products out there, right? So, everyone is trying to compete with the best product, global markets, and you really, to stay competitive, you really have to have an excellent product, an excellent service, and that doesn't mean that you have to be an expensive product. There's all tiers to compete in. But the product what you offer is the bread and butter of your business. So a few things to consider here, on characteristics. When you're defining how well your product delivers on the need the consumer has. One, how well does it function, and actually does what it said it would do? Basic. So, how well it functions, speaks to how is really the product delivering on the expectation? Does it meet expectations or not? Then packaging. Of course, let's say, if we talk about packaging, whether it's a product, or, in how you present your service, as part of that initial interaction with the customer. Design plays a huge role in making items more attractive. Why? Because we're typically selecting with our senses. With the memories that we have, or certain colors, certain shapes, certain preferences. So the packaging plays a key role. And whether it's a service, also how you present yourself. That first interaction. Service and support. So, either your product, once you use the product, is that the end of the relationship? Are you creating a feedback loop, that benefits you to stay connected to that consumer? Or in service as well, do you have the right touch points on getting customer feedback, as they go through the service, as they repeat. Hopefully it's not like those call centers, when you call and you actually pass out, waiting for them to respond. Even if your product is good, right, if you have that service experience, that might be the last time. Maybe once they pick up, that might be the last time that they'll hear from you. So, those are elements that you have to decide when you're thinking about product design, and this is the bread and butter of your proposition. So you have product. The next P is promotion. And, promotion is a broad category, which is really about all the communication and tactics used to encourage someone to buy your product. And then it's many different kinds. So, advertising and media. So, step three that we talked, belongs in promotion because you're incentivizing the customer to come and meet you and try you. So, it requires a core message to persuade them. So we have advertising and media as a core bucket there. Then price promotion incentives, right? So, sometimes reducing the price of the product, or creating incentives for the customer, gets you that trial that you want. So, think of some coupons on this Sunday's newspaper, or big promotions. That's the, Black Friday is nothing more than a promotion tactic, to get people to come out there and try. Or sampling. Sampling, let's think about in beauty, right, there's so many products out there, and the barrier to trial sometimes can be as, I want to experience and see how it looks on me, before I commit to the purchase, then sampling might be a great way to get people in the door. Now, a rule of thumb is, the higher the price, the more likely the consumer needs to experience the product first, or connect with the product to be able to purchase. The other element, if you have a phenomenal usage experience, like one time use, you actually see a difference in whatever the category, investing in sampling might make a difference. If you're sampling a product that the consumer would not be able to experience when you offer, then just it doesn't work. For example, test drives in the car industry, are, you're not gonna buy a car without driving it for the most part, right? So, the sampling in many ways, both services and products, can play a key role in reducing the perceived risk in that purchase. It's also a promotional tactic. So we talked product. We talked promotion. And now we talk placement. Some people actually call it distribution. And placement is really the space, call it physical or virtual, where the product or service can be purchased. So it's a distribution channel. And, what is important here, is that you need to have what, it's very common is, for your product to sell it needs to be the right place, at the right time, and in the right quantities. How many times you go to the store looking for something and the product is not there? It's quite disappointing. Not only for you, but also for the brand that lost that sale, because the product was not there. And, here what is important to think through, when you're defining which is the right places for you to show up, is, where would the consumer expect to find you? As we joke, and we say, a luxury item might not be available, call it at a discounter store, right? Similarly, if you're highly specialized, are you more likely to be found online, etc. So for example, with online sales today, you virtually can have access to multiple products, but you have to do it in a way that the consumer can find you. Because the consumer is the one who, on its own, basically gets to find you. So that is placement. Now price. Price is a quite complex one, because it's not only what it signals to the consumer, what determines whether they will buy you or not, it actually has a pretty big impact on your financials, and whether you actually will make a profit or not. So, first consideration is, the product price needs to be right, for the product that you're selling, so that the consumer actually buys it, and is right for the brand, enough to make a profit. And pricing is never set on a vacuum. It's always in relationship to your competitor. Because, most categories, let's say if, we're not talking about higher order benefit, consumers are now trained to price shop. And you could do it online very easily. So, price comparison, and knowing, at least. Doesn't mean that you have to match the price of competitors. You need to know how much of your relative price will impact the perception of your brand. Also, as I said, the impact pricing can have in your financials is quite dramatic. And I think this is one of the mistakes that I see done more often on, call it a brand building journey, when you're setting up the price, is that either you set it up without taking into account the margin that you need to generate to stay as a sustainable business. Remember, the difference between what the product costs you, or the service costs you, and the price, is what will pay your bills. And what will pay the product. What will determine whether you will have money for advertising or not. So it's a pretty big decision to make. And, it's complex because that pricing not only needs to enable your business, but it has to be attractive versus competition, and it has to be the right price so they buy you. Because you cannot price yourself out of the market. So, pricing requires quite a bit of thinking through of the different variables to set the right price. So this is one that I always encourage to take more time, to get right up front. It's very hard to raise prices, once you're in the market. Sometimes it's easier to adjust it down. But, don't setup your business for failure, by not picking the right price up front. So that's a big, big piece. So, we reviewed the four P's. So we talked about product, we talked about promotion, we talked about placement, and we talk about price. Now let's assume those are the ingredients that we're going to play with to talk about marketing mix. So you would say, "Well, why do we have these elements? I could just make a decision, and just plug and play, and just run with it." Well the reality is that, every choice across those P's, will likely give you a different result, and what we care most about. Which is trial, and the repeat of your brand. Every brand is looking to get as many customers as possible, that not only buy for one time, but they come back and repeat. So, brand sales are really a result of consumers buying your product for the first time, and how many of them repeat that purchase. If you don't have those two outputs from a consumer standpoint, there's no business. No customers, no business, no money, no brand. So, as simple as that. So, when we think about the marketing mix, it's about what is the right combination of those elements, that will allow me to get as many customers as possible interested in buying the product. And once they do, how do I keep them coming back for more? So, the marketing mix, which is basically your own perfect combination, needs to do a few things for it to work. So here are the characteristics. A strong marketing mix, first makes the right people aware and persuaded to buy. So, you need a combination of elements that actually brings people in the door. You have to have an appealing product or service. If no one wants to buy you, then you're not gonna have any sales. So, when we think about that, the value that people perceive, and the quality of that product will make a difference whether you're appealing or not. And then finally, availability, right? So, you need to be able to find the product in the right place, in the right time, and also at the right quantities to have the right experience. And when your marketing mix is able to do these things, then you know you will have a recipe for success, to bring people into your brand. Are you guys ready for some math? And we'll make it the easy math. Because we're gonna talk about the formula, and just math becomes quite handy in just understanding the functionality of all these variables. Because you can easily put numbers behind all of these different elements. And I encourage you to do so, for your own business. And, this is called the brand sales formula brand math formula, and it's very simple. And you know it's multipliers. First, and this is pretend for a second, for a sale to take place, or call it, or for someone to try your product for the first time, first they need to know they exist. If you're not in their head, in front of them, or available, zero. There's not going to be a transaction. And, that awareness then has to first happen. You have to be aware, for the transaction to happen. And that awareness is typically measured by the number of people that know who you are, and what you stand for. Because, knowing a brand name, and not knowing what that brand name is, doesn't do you any good. So, sometimes you hear this reference as quality awareness. So people know who you are and what you stand for. Then, you have to be appealing. So, people know who you are, but then if you're not attractive, there's not an interest to buy, then there's not gonna be a transaction. And the interest to buy is really determined by the benefit that you offer, divided by price, which is really the value that people see in you. If you're so expensive, but you don't communicate that you're worth it, then people will not see you as a good value. And value is not that you're cheap. Value is, what I believe is the fair transaction cost of you solving that need for me. Distribution, as we talked, this is the P of placement, which is, if you're aware, you're appealing, but you're nowhere to be found, no one can buy you. So, distribution, which is where your product is available, tends to be one of the variables that make one of the largest differences in terms of driving more sales. So, for example, having distribution at a broad retailer chain, just by the venture of having your product out there, available on shelves, will bring the product to more consumers, and will likely impact your sales. So that's important, distribution. And then usage is the quantities in which a consumer can buy your product, makes a big difference to your volume. So, deciding how big, how small, how big or small the quantity is. Bundle packs, no bundle packs, trial packs. That will impact your sales, because it's typically connected to what is the right amount for people to experience your product. How long do you want to use that product for? How many purchase cycles do you want to offer them? And that will impact your volume quite quickly. And that's a choice you need to make. What is the size offering they're gonna do? Or also if we're talking services, what is the length of services? Or how would you want consumers to pay for those services? So that's also an important variable. And, as you can imagine, the higher the awareness, the higher the appeal, the higher distribution, and the higher the usage, the more brand sales. So, I encourage you to break down for your brand, what are the choices that you're making, in order to increase the size of each of them. And awareness is how many people am I investing in, to reach with my media and my advertising? That, you'll get to a number. How many people are aware of my brand, based on the efforts that I'm doing? Appeal is how likely are my customers to buy my product? A typical question if a survey is done, is purchase intent. Would you definitely buy, probably would buy, might or might not buy, never buy? That's typically a measure that is used to determine how appealing your product is. Distribution is how many points of distribution do you have? Are you selling online? How many people are actually searching for you, or how many store or outlets do I have out there? Do I just sell in the San Francisco area? Do I expand distribution? That all will give you more customers. And then usage is what is the right price, and what is the right size, or call it in service, the length of the service that you're offering, in order to get consumers to not only have the experience, but also how you, over time, maybe you trade them up to a longer service. If, for example, you're a massage therapist, and you own a service like that, 30 minute segments, or 90 minute massages, or packages, that's quite common you see, is all intended to actually generate more volume, and generate more sales. So, make sense? There's a lot of math behind it, and you can really maximize each of those variables, in order to unlock more sales. And you can, and each of them behaves a little bit different, but the mix together is what you need to get right for your brand. Okay? So that wraps up step four, which is how we are using all the right elements to maximize our brand sales.
Will this pertain to a non-profit?
Profit, non-profit. The reality is for our non-profit to be successful, you still need users, volume, the only difference is that you don't have someone, call it from the Board of Directors or stakeholders pressuring you to actually stay in business, making a profit. But, you will always have customers, objectives, missions. So, the framework works the same. I think the only difference is, I guess that pressure for the profit part. Now, and I would even tell you, of course you need to generate enough volume of activity, call it if it's donations, or if it's participants, to stay afloat, to pay for administrative expenses, so I would say it's virtually the same. Similarly, how you communicate. Communication plays even a stronger role in not for profit, because it's hard to get people to contribute, right? Because there's a lot of non profit, and people are very careful where they put their money. But the right communication, the right storytelling, the right way, finding the target. Not everyone might be, call it a potential donor, for your cause, if, and we're connecting non-profit. So, I would say framework is the same. The only difference just is the pressure for the profit, and that even is not an excuse, as you need to run the business the same way. So I'm glad you asked that, because it's quite applicable.
Great, and from the internet, Smurfy would like to know, can you give us a few, just a couple of strategies on determining the numbers, on how I would realistically come up with how many people know about my product?
Yes. So it's a very good question. So, it depends what product you're selling. So, let me say, you could break it down to, if you're a local business, how many people, call it cupcake shop, very simple. So, I'm in this region, and in this specific neighborhood. And, you can even count how many people, and how many customers pass through these streets, that in the morning would commute. And you could say, well roughly, I want to reach, call it 10 percent of the people that pick the bus in front of my shop every day, then what do I have? Do I have a sign? Do I have flyers? How many of them do I want to convert? You can become even more sophisticated, where you would say, well, you could look online, and say, if I'm a pizza business, how many pizza parlors are there in this mile radius? You can do that on Google, right? And you can roughly assess what is the size of the market that you have there. Also, when we go back to the swat, right, part of doing the swat is knowing your industry very well. So, even a great Google search of average number of sales of a particular product, that's information that should be readily available. Now, it's not gonna be perfect for your product, unless you can do a specific market research survey, but you can create proxies. The key there in this question, is to understand how many people are likely to be in that market. Bring it down to your region or your area, to see what's realistic, and then start to do a few experiments to say, okay, if I need to sell a thousand cupcakes a week, that will already tell you that you need at least a thousand customers, assuming they just buy one. So, a thousand customers, you start to do the assumptions of how many people, either in traffic, or in reach, I need to do. And that's where you can make some choices of do I buy search, do I do flyers, do I need corporate clients, where I could increase my volume? So, it's not perfect science. It just depends on your business, and honestly, I would get very creative with the data that is out there on the internet, and make some assumptions, and then you choose how much you have to invest to get the right amount of customers, which is always really connected to your sales. You should really know, for this sales target, that you pick in step number one, how many people you'll need.