Marketing Basics - A Review
Consider marketing basics before you dive into the thick of marketing analysis. In business, as in most things, it pays to occasionally take a step back and evaluate the bigger picture. Drafting a very basic marketing plan can help you focus on the right activities, target the right customers and set the best prices.
The STP Process
STP is an acronym for Segmentation, Targeting and Positioning. It represents the highest level of your marketing plan. Ideally, you should start this process before your product or service is ever brought to market. It can still be a worthwhile exercise for an existing product.
Segmentation is an essential stage in marketing basics, it means that you need to identify your customers. Think of every possible customer. Now, start slicing that population into smaller, more defined segments (thus the name segmentation). You could start by separating individuals from businesses, then divide each segment further.
You could split individuals by sex, age, socio-economic status, geographic location, interests, hobbies and so on. At this point, try not to pigeon-hole by prematurely selecting segments. You are trying to find meaningful groups of potential buyers that will have similar buying behaviour.
Your goal is to identify opportunities. When you feel you have subdivided the market enough, evaluate each segment. Try to quantify how large, reachable and unique each segment is compared to the others. Look for significant overlaps between the segments.
The next step in marketing basics, is to decide which segments of the market you will target. Decide if you will target the "mass" market or focus on a niche. The general trend over the last decade has been to go after a niche sector. This will reduce your competition but the market will be smaller.
Identify the competition for your chosen segment, and the potential value of the market. Find out how large your niche is and how expensive it would be to reach your market with advertising.
Define how you are going to "position" your product or service to your selected target market. This is where you will invoke another handy acronym called the 4P's - Product, Price, Promotion, and Place.
You need to target your product towards your selected niche. What do the people/firms in your niche want and need? If you are working with an existing product, you need to make sure it fits your intended market. If it does not, find out if it can be altered so that it does? It's critical to match the right product with the right market.
Pricing your product is an art. If your product is too inexpensive, it could give the impression that the product is junk. Consider the competition. It makes little sense to target the same market with a similar product at the same price as your competitors.
Entire books have been written on the subject of pricing. Avoid locking yourself into a "cost plus profit margin" way of thinking. Instead, consider the price independently of your competition at first, and focus on the value your product offers the customer.
Promotion is simply how you intend to get the message to your customers about your product. Will you use online marketing, or offline marketing: commercials, magazine advertisements, radio, the internet, mass mailings?
Lastly, you need to think about how you will bring your product to market. This is sometimes referred to as marketing channels. Will you sell directly to the customer, or sell to distributors or retailers who will then sell on to customers? You also need to decide where, geographically, you will sell your product. Will you sell entirely online or in a traditional bricks-and-mortar location?
Bringing it all together
This tried-and-true process of marketing basics can help you formalize your marketing strategy and help you identify holes in your business. Use a product research checklist and a list of information sources to help with your research.