The textbook definition of marketing is that marketing is the science that creates, captures and sustains value. This intriguing definition implies a few concepts.
First you create value through an innovative, differentiate product. Then you capture it through pricing, and finally you sustain or harvest it through a loyalty program. Marketing is therefore one of the most important functions in a business, and when executed correctly it can sustain long term sales growth and top line growth.
There is usually a distinction to be made between strategic marketing and marketing communication. Strategic marketing involves analyzing customers, competitors, collaborators, the context and the company skills. It implies the search for a sustained competitive advantage.
It implies planning for a new product launch, pricing competitively to capture market share, choosing a channel to distribution such as direct, wholesalers or through partners and finally promoting your product through campaigns or sales promotions.
Marketing communication is on the other hand focusing on the message, the brand positioning, and in general what the consumer perceives as value. The value proposition of marketing is a key concept and answers the question, what kind of value are you delivering to your customers and who are you targeting? Every business should have a clear and compelling value proposition to provide a clear message and position the brand in the minds of the consumer.
Branding is the art of creating a connection with the consumer, a bond, a promise to be delivered. That is why the value of the brand and brand equity are important goals for marketers. For large companies in consumer goods such as Coca Cola or Procter and Gamble branding is fundamental. It’s magic. It works.
When you are a small player, branding is perceived as less important although how you position your brand in the eyes of the consumer will imply a series of marketing communications decisions that will define how you compete in the marketplace.
There’s a converge between marketing and technology and the term digital marketing was coined. So digital means having a web presence on both desktop and mobile, doing social media, email marketing campaigns, SEO, retargeting, and content, etc. Everything is going digital and so is marketing. The vast amount of data that the internet offers is something we just started to explore and the potentials are unlimited.
And then there is market research, how can you make strategic decisions if you don’t know the size of the market, who is your competition, what are they pricing at? And how do you plan to understand the consumer without insights, about pain points, measured through a survey or a focus group? How would you launch a new product or enter in a new business without creating and testing a prototype in a sample market? The power of market research is there, and it’s up to the wise business man to be able to use it.
Let’s talk about loyalty and how it increases your sales and marketing efforts. Loyalty is the ability to retain the customers, reducing the churn rate and therefore increasing its lifetime value. Loyalty program are very effective in certain industries, including financial services, airlines, grocery stores. The ability to manage the relationship and offer targeted promotions is very valuable for any marketer. Of course a loyalty program without a CRM system in place would be hard to manage. That’s where the technology comes to help the marketer. With a strong CRM tool, I can track customer service, sales, social media and other things, with the goal of generating loyalty.
Finally licensing, when you don’t own an intellectual property you can licensed it. The classic example is brand licensing, where you use the branding of someone else and license a character to use on your product. This marketing tool is very effective in extending the brand or character or trademark to the licensee products. The price to pay is in the form of a royalty agreement from the licensee to the licensor. Or you can license a product, in exchange for a royalty you can focus on sales and marketing and license for instance a new innovation. This is particular useful for new technology.
Cobranding instead is a strategy where two companies joins efforts to market a product or a service. Typically, co-branding happens when the two companies find value in cooperating and addressing the market together both on the communication level or at the product level.
In conclusion, marketing is an interesting field, evolving and focusing on creating value through top line revenue growth. Being a primary activity in the value chain is fundamental that it interacts with sales, customer service, operations and R&D for product development. While traditional marketing is tied to business strategy, digital marketing is evolving as a practice and it converges technology with business. The continuous innovation in technology and big data it is just a bet for marketers that can only grow in importance to sustain and grow a business.