The fundamental role of marketing in business
One of the things that I think most people in the marketing world take for granted is that everyone understands the critical role of marketing in business. However, through my daily interactions with other business owners over the past few years, I have been struck by the relative lack of understanding about the importance of marketing. Most of the time, marketing takes a backseat, tertiary thinking that comes after your product / service and day-to-day operations, even if it’s such a high priority.
One of the phrases that my business partner, James Orr, has coined in the real estate investing arena is that “it all starts with motivated sellers.” Without motivated sellers, there are no properties to buy, rentals to place tenants, repairmen to sell, or deals to wholesale. This is such an important aspect of real estate investing that it is almost a mantra for the way James and many other successful real estate investors conduct their businesses. The key to contacting motivated salespeople is marketing.
I suppose a good starting point in this discussion is to define what marketing is. Google defines tells us that marketing is “the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to satisfy customers.” Marketing really consists of more than most people realize. Marketing is about more than the activities that drive sales. Rather, marketing encompasses all activities that seek to identify what consumers want and how to promote and deliver those goods and services.
Before an individual or business makes the decision to produce a particular product or service, they must first spend time determining whether there is a market for that offering. If there is demand, they need to figure out how to get that supply to consumers who want it, how to tell consumers that it is available, and how to price it so that there is money left for a profit. This is all part of the marketing process and should really happen before the actual product is produced.
In the most common use of the term, “marketing” is often considered just the promotional aspect of a product or service that is already available. This part of marketing consists of making the consumer aware of what you offer and convincing them to buy it. There is a tendency in corporate environments to separate marketing and sales functions into disparate departments, which is often a mistake. The purpose of the promotional element of marketing is to drive sales, and therefore the two functions are closely connected. A good example of the disconnect between these two departments is when companies that sell capital goods have far more staff in their marketing departments than in their field sales force. Another example is when marketing and product development people ignore information from field sales people. This information is often derived from actual customer contact, which most employees in large organizations do not experience.
The main purpose of one of my blogs is to test marketing promotions using a wide range of messages, media, and markets, often referred to as the three M’s of marketing. Before conducting a test, we first do a background investigation to determine if there is a market for what we are considering selling, and we analyze if we can at least break even in the marketing test using certain realistic assumptions about sales. ratios. Pricing strategy is also something we discussed a lot before launching a new test. The actual development of sales copy, ad writing and placement, setup of measurement systems, etc., comes later in the process. The next thing is to generate sales and tracking metrics, and then adjust the marketing.
Unfortunately, many business owners do not understand the importance of marketing. Because of this, they are unable to plan for difficult times in the business cycle, such as low seasons, economic recessions, and other events. As the cliché goes, “to fail to plan is to plan to fail.” Every business must have a marketing plan of some kind, and it must be in writing. Businesses that don’t “do” marketing will invariably fail.
In short, without marketing there are no sales. And without sales, there is no income. And without revenue, any business will quickly succumb to statistics that show that nearly 2/3 of all businesses fail in their first 4 years.