Unlike small businesses, which predate the Industrial Revolution, marketing is a relatively new business activity. The concept was first developed late in the 1800s and came into full bloom during the last century.
The growth of mass production led to the belief that customers would buy low-priced and widely available goods. This belief is still prevalent, and managers of production-oriented organizations concentrate on achieving high production efficiency and wide distribution coverage. Another approach is based on the belief that if left alone, consumers will not buy enough of the organization’s products. This approach, favored by sales and advertising people, involves aggressive promotional activities. A more contemporary approach, also more suitable for small business, is based on meeting customers’ needs and wants better than the competition.
Marketing is important to your business: Not only does it help maintain your existing customer base, it helps attract new customers. And marketing is no longer just for businesses. Many public and nonprofit organizations undertake marketing programs to promote their work and increase their profiles.
Big business organizations devote extensive resources to marketing activities. Lacking resources to dedicate to marketing, owners of small businesses must take a different, simpler approach. For small businesses, anything that they do to get more business can be considered marketing.
Approaches to Marketing
Typically, businesses follow three main approaches to the sale of their goods and services: production, sales, and marketing. The Production Approach
This is the oldest approach. It is based on the belief that consumers will favour products that are widely available and low in cost. Until fairly recently, production-oriented organizations concentrated only on achieving high efficiency and wide distribution coverage. Ford Motor Company, for example, put its resources into perfecting the mass production of standardized automobiles. This reduced the production cost so that ordinary consumers could afford to purchase them. The down side of standardization is the corresponding limit of choice. In terms of the early Ford automobiles, it was said that you could have any colour you wanted as long as it was black.
As marketers began to understand more about why consumers chose one product over another, many people started to believe that consumers would favour those products that offer the most quality, performance, and features. Product-oriented organizations now focus on making good products and improving them over time. To relate this philosophy, Ford began to tel lus that “at Ford, quality is job one.” This concept also gives rise to the adage: “Build a better mousetrap and the world will beat a path to your door.” Standardization is no longer the most important feature for today’s consumers. We expect custom products and services that meet our own unique needs, something that is not always possible for mass-produced items. Today, not every-one wants a black car.
Entr epreneur Beware
Just because you have a better mousetrap it does not necessarily mean that consumers will buy it. What makes it better than the oth-ers? How will the world know about the mousetrap or even that it is better? How will the world know where to find the mousetrap? Does the world really need another mousetrap? These and similar ques-tions challenge the universal validity of the product concept.
The Sales Approach
This approach is based on the belief that consumers, if left alone, will ordinarily not buy enough of an individual business’s products. Thus, the business must undertake aggressive selling and promotion efforts. Selling is often supported by extensive advertising and promotional campaigns. Closing the sale becomes more important than the product, service, or customer. As a result, many consumers believe that marketing is advertising and hard selling. We now see the Ford Motor Company joining thousands of other organizations in spending billions of dollars on advertising competing for our attention and our disposable income.
The Marketing Approach
The basis for this approach is the belief that the best way to achieve business goals lies in achieving two things. First, identify customers’ needs and wants, and second, satisfy these needs and wants more effectively and efficiently than the competition.
In discussing marketing, management guru and best-selling author Peter Drucker says that There will always, one can assume, be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy. All that should be needed then is to make the product or service available.
Building Block
The key to achieving your business goals is to figure out what your clients need and then meet these needs more effectively and efficiently than your competitors. Nontechnical ways of expressing this idea include “Find needs and fill them” and “Make what will sell; don’t try to sell what you can make.”
What Marketing Does for You
Marketing does two very important things for you. First, it helps to protect and maintain your current customer base. As noted in Chapter 7, there is a great deal of competition in today’s marketplace. This means that your customers are also target customers for other organizations, both business and nonbusiness. For your business to thrive in the long term, you must protect your client base from the competition. This can best be done by ensuring that you meet your clients’ needs on an ongoing basis. Defensive marketing activities—maintaining regular contact with your clients, understanding your clients’ shifting needs, and showing your responsiveness—will help protect your client base from erosion.
If you do not maintain regular contact with your customers, and understand and respond appropriately to their shifting needs, you risk losing them to a competitor.
The second thing that marketing does for you is to generate new business. The lawyers I knew were quite good at this aspect of marketing. Although they could not advertise, most law firms had at least one member who was very skilled at generating new business. Whether schmoozing on the golf course, or networking at service clubs or with individuals who make referrals, lawyers continue to generate most of their new business by effectively maintaining personal contact with helpful people.
Everybody Seems to Be Doing It
In our modern world, all organizations, whether in the public, not-for profit, or private sectors, engage in some form of marketing activities. Governments undertake research to clarify what their clients—that is, taxpayers—need and want from them and how satisfied the public is with its performance. All levels of government spend millions of taxpayers’ dollars to promote a variety of programs and services. Similarly, not-for-profit organizations and charities, struggling to deal with changing demands for their services and declining revenue streams, are undertaking new and innovative marketing activities. Frequently, fundraising activities such as selling products or services are more like business activities than traditional charitable donation activities.
Marketing activities by public and not-for-profit organizations represent a bad news/good news scenario. The bad news is that these marketing initiatives—whether research, promotion, or fundraising—are all competing for a share of the attention, time, and money of our existing and potential customers. The good news is that these marketing activities represent opportunities for us to learn new approaches to marketing our own goods and services. If we like a marketing activity that a government or charity is using, it might also work in our businesses. Conversely, if we see something that does not work, we will know not to try to incorporate a similar approach into our businesses.
How the Big Guys Market
Not surprisingly, it is in private sector organizations—that is, businesses—that we see the most marketing activity. Big business organizations, individually and collectively, have a wealth of marketing experience. It is this wealth of experience that has produced conventional marketing wisdom and knowledge.
I first became aware of conventional marketing wisdom and knowledge after I stopped practising law and, like many others before and after me, decided to start my own consulting business. Although I had gained some practical experience in hands-on marketing, I had never taken any marketing courses. To learn more about marketing and to better prepare myself for marketing my consulting business, I enrolled in a basic marketing course at a local university.
During the first night of the course, I learned that, based on the experience of businesses such as General Electric, General Motors, Proctor & Gamble, and Coca-Cola, marketing was defined as “the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that will satisfy individual and organizational objectives.”
Impressive as these definitions were in the course handouts and the 800-plus page textbook, they appeared to be simply too academic and theoretical for what I planned to do in my small business.
Early in the first class, the instructor also introduced the famous “4 P’s of marketing”: product, place, price, and promotion Many people think of these elements as the very basis of all marketing. If you have never heard of them, here are the details:
Product
The components of product include the following: - Quality
- Brand name Packaging Ingredients
Place
For retailers, this means location; and for manufacturers, it means distribution channel. Price
The components of price include the following: - Premium or low pricing
- Market considerations such as competitors’ pricing Customers’ willingness to pay
- Production and marketing costs
Promotion
- Some of the elements of promotion might include the following:
- Advertising
- Sales promotion Public relations Personal selling
The instructor used breakfast cereal and motor vehicles as examples to illustrate how the 4 P’s worked in practice. Each example effectively showed the importance of product, place, price, and promotion in the complete marketing process. However, as I thought about what I had experienced and saw other people experience while running their own small businesses, the same 4 P’s simply did not apply.
As a lawyer, I had provided a service. The owner of the building where my office was located was an accountant who also provided a service. What relevance do product-related criteria such as quality, brand name, packaging, and ingredients have to services such as law, accounting, or any consulting-type service?
I had no trouble with the place factor; clients did after all come to my office. But like all service providers, I also met with clients and did work for them away from my place of business. My accountant/landlord had several clients who lived out of the country and had never set foot in his office in Canada. How relevant was the location of my office or my neighbour’s office for marketing purposes?
As for price, my fees, like the accountant’s, were usually based on the time spent on a matter. These fees were comparable to what the competition was charging for similar work.
As a lawyer, promotion was a nonissue: We could not advertise. And at the time, accountants seldom advertised.
After I concluded that the 4 P’s probably do not apply when marketing professional services, I tried to apply the principles to former small business clients whom I had known to be successful. The results were similar. Although some principles applied slightly to some clients, none applied to all clients.
Building Block
Generating more business involves more than schmoozing. Chapters 12 through 18 offer various approaches to developing more business.
Why Marketing Is Different for Small Businesses
Very early in my formal study of marketing theory, I decided that the marketing practices of big businesses are not always applicable to small businesses. There are several reasons for this. Among the most significant is the fact that small businesses simply lack the resources to have dedicated marketing departments. Small business owners are excellent at multitasking: In most cases, they personally do some or all of what must be done, including marketing. As a result, because of time pressures, their marketing efforts are more simplified than big business marketing. In most cases, the marketing activities are reflections of the individual owner’s personality and strengths.
Marketing as defined by big business experience comprises a very broad range of marketing tasks. These tasks include analyzing marketing opportunities, including
The marketing environment that affects the business
- Consumer markets and buyer behaviour
- Organizational markets and buyer behaviour Competitors
- Researching and selecting target markets
- Designing marketing strategies and planning marketing programs
- Organizing, implementing, and controlling marketing effort
Big business organizations have resources to undertake and complete these tasks with reasonable effectiveness. Small businesses do not.
Having dismissed big businesses–style marketing as a useful model, I no longer had to struggle to force-fit conventional marketing theory to small businesses. The challenge then became trying to understand what marketing meant to small businesses.
Effective as these approaches are, none would fit neatly into the traditional 4 P’s approach of marketing. Further, it would be difficult even to classify these activities as specific marketing tasks or subtasks under the big business marketing model.
There are, however, two consistent elements running through these examples. First, they are unique to each business and its owner. Second, and in the simplest of terms, these activities are all things that in some way or other relate to retaining existing clients and attracting new ones.
Whatever you do to retain or attract new customers is marketing. In other words, marketing is doing whatever it takes to generate more business for your small business.
Simple as this definition may appear, it is quite compatible and consistent with the purposes of a small business, with the two elements stated above, and even with the tasks of marketing outlined in the big-business context. Being general, the proposed definition can include all aspects of running a business. This makes it possible for everyone who is involved in running a small business to always be constantly aware of marketing considerations. It also makes it more difficult to isolate marketing concerns into specialized marketing departments and divisions staffed by marketing personnel, as happens with big business organizations.
Finally, the more general definition allows owners of small businesses to personalize their marketing activities, a technique that has worked effectively since our ancestors traded their excess production.
The most effective marketing activities are those that are planned and implemented according to a well-prepared plan. The next chapter outlines how to develop and implement a marketing plan.
The Least You Need to Know
Marketing helps you maintain your current customer base and attract new cus-tomers. Marketing as practised by big business organizations is not always appropriate for small businesses.
Marketing is whatever you do to develop more business for your business
