Marketing concepts and strategies

Marketing

What is the best way to gain knowledge about customers and competitors? Why is this method superior to others? (Knowledge, not only information)

Although market research can be costly, it is often even more costly to make erroneous decisions based upon bad or inadequate information. In fact, an average business spends between 25 and 50% of its annual marketing budget on research activities," and thinks of that money as well spent ("Market research," 2007, Encyclopedia of Small Business). The most common primary methods of gathering information on customers are through questionnaires on websites, solicited surveys from current and prospective consumers via the mail box, on the phone, and asking questions through personal interviews. Secondary information "generally tracks trends within a market, an industry, a demographic group, or a geographic region" ("Market research," 2007, Encyclopedia of Small Business).

Secondary research may be the more valuable method of information gathering, firstly because it is available "at little or no cost," through "government reports, trade association records, newspaper and magazine surveys, university-sponsored research, local chamber of commerce records, online services, and competitors' annual reports" ("Market research," 2007, Encyclopedia of Small Business). It is also less likely to have potential individual biases -- only a random selection of customers may answer questionnaires, or provide hasty or inaccurate first impressions on a marketing survey, but secondary research is pure data, full of information about relevant demographic trends in the industry as a whole. It also can provide valuable information as to how competitors within an industry are faring, while questions about competitors may not draw forth candid replies from individual consumers, who may buy both from the questioning company as well as its competitors.

What are key decisions in crafting market strategy?

Remember the 4 Ps: product, pricing, promotion and placement are the three key elements of creating an effective marketing strategy. The product is not simply what a consumer is buying, but how it is different and similar from what competitors are selling, and how it conveys unique value to the customer. "Product refers to the goods and services you offer to your customers. Apart from the physical product itself, there are elements associated with your product that customers may be attracted to, such as the way it is packaged. Other product attributes include quality, features, options, services, warranties, and brand name (Ehmke, Fulton, & Lusk, 2007). In B2B, bundling desirable services or products may be especially important.

In terms of pricing -- is it a bargain product? Is it middle-range in price (usually not a good idea unless it is an extremely good value for the price)? Is it a luxury good? On a basic level, price "refers to how much you charge for your product or service" (Ehmke, Fulton, & Lusk, 2007). But the price "must not be so low as to make the product seem of poor quality, and it must still cover the costs of production. Whatever your price may be, ultimately it must cover your costs, contribute to your image by communicating the perceived value of your product, counter the competition's offer, and avoid deadly price wars. Remember, price is the one 'P' that generates revenue, while the other three 'P's incur costs. [This is why] Effective pricing is important to the success of your business" (Ehmke, Fulton, & Lusk, 2007). Pricing also includes how the customer pays, whether by installments or upfront, as methods of payment can affect the long-term solvency of the business.

Place" refers to the distribution channels used to get a product to customers. "What your product is will greatly influence how you distribute it...Businesses that create or assemble a product will have two options: selling directly to consumers or selling to a vendor," and even exclusively B2B enterprises must select what type of vendor, whether small or large (Ehmke, Fulton, & Lusk, 2007). Promotion refers to the advertising and selling part of marketing, to individual consumers or businesses. "To be effective, your promotional efforts should contain a clear message targeted to a specific audience reached via an appropriate channel. Your target audience will be the people who use or influence the purchase of your product" and ideally advertise its quality to other buyers (Ehmke, Fulton, & Lusk, 2007). Promotional strategies also must determine whether an intensive promotion campaign, targeted at wide range of buyers is appropriate, or selective or exclusive campaigns targeted at specific clientele are more likely to draw the right buyers, willing to pay extra money for a unique or luxury product that suits their specific needs.