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Marketing can deliver value – even during economic uncertainty

By Advice, Advice for Businesses, Advice for Not-for-profit Organisations and Charities, Government, News No Comments

Australia has faced several years of economic uncertainty and the latest trends appear to be indicating that a recession is on the horizon. Marketing is often one of the first areas to experience downsizing during economic uncertainty. This is largely due to a lack of measurability, resulting in marketing being seen as a cost centre rather than revenue generator.

This cycle is perpetuated through an execution led approach to marketing. Operating marketing as a silo, results in a lack of consistency between business goals and marketing outcomes. Agencies will typically take carriage of specific functions, such as design, content or social media, but there is a failure to fully appreciate the marketing mix, and the need to align execution with the identified strategic direction.

It is time to change this paradigm. Marketing needs to return to its core definition of delivering value, as per the definition adopted by the Australian Marketing Institute:

Marketing creates value – for customers, shareholders and society as a whole. It does this by creating an alignment between what consumers value and what organisations offer. It offers techniques that help firms better understand the needs, preferences and perceptions of their customers (a prerequisite to adding value to them), and ways of using that understanding to focus the value-creating and communicating activities of the firm into areas where they will be most effective.

The creation of value through marketing is what enables a business to expand its capacity. While economic conditions will have an impact, the role of marketing is to rise above these challenges and deliver ongoing value creation.

Proctor and Gamble is one such example. During the Great Depression of the 1930s, consumer goods were hit hard. Rather than cutting its marketing function, Proctor and Gamble, shifted its focus to essential household items. The solution came in the form of Oxydol, one of its soap brands, which made it easier to wash clothes, in an era where washing required extensive physical labour. After defining the product and its value proposition, Proctor and Gamble focused on how it could reach its target customers.

In an era where other companies were slashing marketing activities, Proctor and Gamble rehoned its approach to take into account the difficult economic conditions. Initiatives included a re-orientation towards commercial radio broadcasts, reaching consumers through a medium that was affordable to consumers, while offering positivity in an otherwise negative environment.

Pioneering both personas and content, Proctor and Gamble personified the product through the creation of Oxydol’s Own Ma Perkins and created the genre of soap operas along the way.

The Great Depression could have easily been a time of despair for Proctor and Gamble, but instead it re-examined the market context and gained a deeper understanding of its consumers. The marketing execution was the output of a strategic approach that ultimately saw the company achieve growth during times that many others failed.

If marketing rose to the challenge and re-connected with the need to demonstrate value, then marketing would be seen as the function that enables businesses to build capacity. It is time for the marketing profession to not repeat past mistakes, but instead to re-align itself with value and the delivery of metrics that matter.

A Marketing Plan Informs Your Strategy

By Advice, Advice for Businesses, Advice for Not-for-profit Organisations and Charities 2 Comments

A Marketing Audit is the first stage in being able to plan for the year ahead. As we discussed, the audit enables you to review your activities to identify what worked and what needs to be refined.

The second stage is Planning, so you can gain insights into the your market and the actions that are required to achieve your goals. This stage incorporates the development of a Marketing Plan that provides both a short-term and longer-term vision to position your business in the marketplace.

A Marketing Plan is a high level strategic document that should support the direction identified in your Business or Strategic Plan. The Marketing Plan explores how you can achieve the outcomes you have identified in the Business Plan, as well as the resources that are required.

You need to start with strategic marketing planning, as the right strategy will ensure that your tactics or actions will deliver results. Begin by understanding your current market position, competitive pressures and the value that is provided by your products and services.

You should also gain insights into your target customers and key demographics. Understand who your ideal customer is and the value that they receive from your products or services. Also consider other potential customer segments that may receive similar benefits. Identifying new markets can provide further opportunities for growth and enables you to discover segments that may have less competitive pressures.

A Marketing Plan identifies how you can achieve your goals

A Marketing Plan identifies how you can achieve your goals

Research is an essential element of any successful marketing plan. Undertaking the right research will enable you to make informed decisions so you can understand how best to allocate marketing resources.

This research will enable you to consider strategies that will enable you to achieve your business objectives. For example, if you want to develop new growth opportunities, then potential strategies could explore the development of new markets or encourage repeat purchasing. Research into customer trends and demographics will enable you to identify what markets may be suitable or how best to encourage additional purchases.

The strategic marketing planning approach validates your direction, ensuring that resources allocated toward strategies will deliver positive results. This in turn will influence the actions and tactics that will be undertaken as you implement your marketing plan.

Inside Small Busines

Inside Small Business: Make sure you review your marketing

By Advice, Advice for Businesses, News No Comments

No marketing plan remains static.  It is imperative that you can conduct at least an annual assessment of your marketing direction. This annual review will ensure you are achieving your expected results.

Our discussion on marketing audits was recently featured in the Spring 2014 edition of Inside Small Business, discussing the need and outcomes from an annual marketing review.

What is a Marketing Audit?

A marketing audit is designed to provide a review of your marketing activities, with the aim of identifying cost savings and new opportunities. A Marketing Audit supports the direction of your marketing and business plans, by measuring performance against your goals and suggesting refinements where needed.

Market conditions change and a marketing plan needs to be regularly reviewed to remain relevant. Business directions can also change and the marketing audit ensures an alignment between operations and marketing.

The end result ensures efficiency savings by aligning your marketing direction with your business goals.

Undertaking a marketing audit

The first phase of a marketing audit is a self assessment. Consider your current operations and whether this is consistent with your expectations. Compare your sales figures against forecasts, as well as other factors, such as profitability and staff involvement.

Next, consider the marketing tasks that you undertake. What marketing activities do you undertake and why? What return are you gaining from these activities and what resources are required to deliver these?

A marketing audit explores all aspects of the marketing mix, for example:

  • How are you pricing your products or services?
  • What are your competitors doing?
  • Who are your target markets and why?
  • Do you use the right intermediaries to support your products or services?
  • How are you reaching your target markets?

Each of these aspects contribute to the overall marketing approach undertaken by your business. For example, a high value service that caters to a market niche, is going to have a completely different marketing approach to a generic mass marketed product.

The Marketing Context

Understanding these components is essential to conducting an effective audit. One of the most important queries to answer is whether your marketing activities reach the right target markets. If you are not connecting with the right markets then you will need to reconsider your marketing activities.

Similarly, you need to ensure consistency across all forms of marketing. An inconsistent approach will create confusion and make it difficult for your target customers to understand your value proposition.

External advice can often identify inconsistent messages that may not be immediately obvious, or to assist in determining the right target markets.

Make Refinements

Your marketing self assessment and the corresponding marketing audit enable you to make refinements to your marketing activities. Actions that may have been relevant one year ago, may no longer be needed, or you may need to respond to actions being undertaken by competitors.

A Marketing Audit lets you make informed decisions that will strengthen your marketing approach and uncover new opportunities for growth.

The co-dependence between Marketing and IT

By Advice, Advice for Businesses, Advice for Not-for-profit Organisations and Charities 2 Comments

Marketing and Information Technology are often seen as disparate functions with little overlap. In reality, however, both are required for any organisation or business to operate successfully. As a result there is an increasing co-dependence between both of these areas.

Marketing requires valid information so you can make the right assumptions and create strategies that deliver positive results. IT, through websites, customer relationship management (CRM) systems and point of sale data collection, provides the ability to capture data and to analyse this information to deliver insights.

As an example, websites have traditionally been seen as an IT exercise, with little consideration of usability and end user interaction. Undertaking this approach, means that your website will not take into consideration the needs of your target customers and will diminish the ability to achieve sales or inquiries.

A marketing approach, utilities available technology to deliver outcomes that support the goals and direction of your business. Through a marketing approach, a website would be developed from understanding the needs it would fulfill, including an an assessment of your target customers and how they interact with your business. The website appearance and functionality would support this interaction, so that it can guide visitors to achieve the goals you have for your site. Furthermore, a marketing approach would ensure that your website adapts the existing style and identity you have for your business, to ensure a consistent appearance and level of interaction.

Similarly, CRM systems help maintain contact with customers and store relevant information about them, your products and transaction history. While the storage of information is an IT exercise, marketing involves the use of this information to deliver insights that will achieve your business objectives. A marketing perspective would utilize this data to identify customers that require more frequent contact, or may be suitable for additional purchases.

If you do not have a CRM, then you would have the challenge of collating information and storing data in a centralized location. This results in inefficiency and makes it harder to analyse data to gain insights, such as frequency, variations between customers and even basic contact details.

For many businesses, marketing and information technology is not a core focus. Investing in marketing and information technology enables you to scale your business and to build capacity to facilitate growth.

The collaboration between marketing and information technology is only going to increase into the future. It is important to have the right systems in place to support your marketing initiatives.

Which P Drives Your Business?

By Advice, Advice for Businesses 2 Comments

Keat Chiew is a marketing consultant for Syneka Marketing. Keat has worked for some of the world’s largest global brands and brings extensive expertise in brand management and marketing strategy. This is Keat’s first blog post for Syneka Marketing:

As a business owner or marketer, the understanding of the concept of marketing mix is one of practical importance. It drives the go-to-market process to a large extent. The 4 fundamental Ps (Price, Place, Product and Promotion) provide the basis in which the business operates; what does one sell, leveraging what promotional activity, at what price and through which channel.

Whilst it is not difficult to grasp the concept of each Ps, the deeper question is which P is the biggest lever that drives the success of your business. In a challenging business environment it is not at all surprising if many small business owners today rank Price as the biggest influence in their decision making process.

Competing on price is not necessarily a bad thing. It does provide an entry point for a business to get into the market. It can also drive inventory turnover if the price point is suitable. Sell-through does have a positive impact on cash flow, which is critical for small business to sustain itself. And Price is perceived as the prime lever to help drive sales.

In my opinion, using price as the primary lever is flawed. Let me explain.

Firstly, the spark or trigger of a great idea is often a product, service or solution, not price. A target market segment or addressable market is then developed. It is through this thought process that you wrap the other important marketing tools such as the pricing and distribution strategies to elicit the greatest response of your target customers, i.e. to buy your product. Hence, Product drives the strategy behind pricing, promotion and distribution. It is not logical to use Pricing to drive your product strategy.

Another important consideration is your financial stamina. The old adage ‘Revenue is Vanity, Profit is Sanity, Cash is King’ holds true. Competing on price might drive up your top line revenue; it will however eventually erode your profitability. Unless you have deep pockets to sustain the business, it will eventually bite you. This is especially true if your competitor is a larger entity. They typically will have stronger financial muscle to outlast you.
I have been exposed to organizations that use price as the major driver of their marketing mix strategy. In most cases, this approach has proven to be unsustainable. Whilst they achieved short term financial goals, more often than not, they find themselves spiralling to a situation where, in order to sustain the business, they have to continually lower their prices and sacrifice profit margins to maintain their market presence. Eventually, they either exit the market or absorb the loss, neither of which is desirable from a business point of view.

It is also critical to lock in your target segment based on the product/service you sell; following this you should develop a clear positioning statement and know your value proposition to your customers. By doing these, you are effectively building a brand that is centred on delivering value to your customer. And price is only a small component of value.

If you have been using price as the axis of your marketing mix strategy, I would strongly suggest that you re-orientate your views and let your Product be the driver of the strategy that you employ to take your business forward.