Compliments of the season! I hope that you are well for I am great! We will start off the year by looking at some important elements of a marketing strategy. These elements will go a long way in increasing your profit margins this year. Michael Porter said, ‘Strategy is about making trade-offs, it’s about deliberately choosing to be different.’ However, a lot of firms are operating much in the same fashion, they are running the same race. All of this starts with how one conceives their marketing strategy. I have come across quite a number of marketing strategy documents in my time and they are similar in that they are missing quite a number of ingredients. Sun Tzu famously said, every battle is won before it is fought. Let me show you how you can win your industrial battles by simply adding the concepts that are missing in many a marketing strategy. You can blow the competition away before they even have a chance to blink by having a target customer through using target marketing.
This diagram (Marketing Strategy Factors) shows you some of the things that you should consider when you are coming up with your marketing strategy. We will start from the center, the target customers, as everything should start with the customer. Can you see anything that you have missed there?
Components Of Target Marketing
Target Customer
As you know you cannot be everything to everyone. You have to find where you fit and hit hard on any advantage that you might have lest you risk becoming a jack of all trades and master of none. Ladies know that there are different types of men and men well, you know that you are different right? There are bad boys, the adventurers, the artists and the regular guys among others. As a man you have the best chance of finding the woman of your dreams by knowing who you are and the type of women who go for guys like you. If you do this you will be practicing what we call Market Segmentation, focusing on a target customer. This is critical for the purpose of targeting the right customers for your business. According to Wikipedia Market Segmentation is , ‘a marketing strategy which involves dividing a broad target market into subsets of consumers, businesses or countries that have, or are perceived to have common needs, interests and priorities, and the designing and implementing of strategies to them (the target customer).
Below is information on how focusing on a target customer group gives you an advantage in battle:
1) Focus: Suppose that you are a new school teacher at a high school. The principal tells you that your job description is just teaching. You are not given details of the form that the students are in or the subject that you will be teaching them. The timetable for the lessons is also omitted somehow. Without a crystal clear idea of your call to action you will not be able attain much as your efforts will end up being spread all over the place instead of channelling your strengths towards one small area. Focusing will ensure that you will choose the right target customer and that you will make the most of your (limited) resources by not diverting them to other sections of the market that do not care about your offerings as much as the target customer. Focus also ensures that you do not spread yourself too thin resulting in a situation where you will not be significant to anyone, including the target customer. As Alexander Graham Bell said, ‘the sun’s rays do not burn until they are brought into a focus.’ You will gain an advantage in battle as most of your competition spreads itself too thin and ends up not being significant in any of the markets that they participate in. You can focus on a section and take over by using overwhelming force as a result of channelling all your resources towards that section. After that you move on to the next section and so on.
2) Competitiveness: Back to relationships! If you have one partner and you are solely focused on them you will probably be able to keep them happier than if you had two or more partners. This is because you will be able to give your partner more attention and love than a ‘player’. The high level of presence that you will have in their lives will fulfill them and will reduce the chances of them finding other suitors. If you have many partners you will give each of them divided attention leaving gaps for the competition to penetrate. It is the same with customers, if you focus on a target customer brand recall and brand equity will be very high among customers in that segment. It is hard to find a business that really focuses on your needs as a customer such that if one practices it they will gain loyalty and market share at higher than normal rates. If you see yourself playing different customers without giving each the required attention like a player does with his or her partners believe me when I say that there are high chances that there will be others who will be helping you to run those side relationships. You will gain on the competition as most firms always try to play the field and end up with a lot of unhappy customers that you can lure to your firm. More importantly they will actually not be aware that they are doing so.
For you to be able to move to the next level in any relationship, you will have to have gained a lot of points with that person or business. Points are gained by concentrating on one area (target customer) and giving it your all, not performing half-hearted actions in various spheres
3) Expansion: When you have been dating someone for say 3 years, and you are so in love, what are the chances of them saying yes when you propose to them (and yes, ladies are allowed to propose to men nowadays)? The chances are never 100% but they will probably be much higher than if you meet someone on the street right now and you ask them to marry you right? So we agree, or I will agree on your behalf, that it is easier to take things to the next level with someone who has been around you for a while, someone who focuses only on you, someone who cherishes you etc. The same rule applies in business. According to Business2Community.com, it costs 6 times more to expand into a new market segment by focusing on a new target customer than it is to do so based on existing customers. With existing customers you will have a lot of loyalty, trust and brand recall among the other factors that we mentioned above. That trust will enable you to introduce a new product to them without having to use a lot in terms of advertising and other tactics which generally push the cost of introducing a new product up. Loyal customers will also help you to expand within existing markets at a much lower costs as word of mouth comes into play. As you know word of mouth is the most effective type of advertising. So let us say that you are a manufacturer of cool drinks and then you decide to venture into the production of maheu, start by introducing the product to your existing, loyal, target customer. This will work against the competition in battle as most are doing the opposite and are incurring very high costs of expanding into current and new markets. You, on the other hand, will benefit from having lower costs of entry and thus can set lower prices for your products making it even more difficult for the competition.
4) Customer Retention: For those who are married you know this and for those who are yet to marry (or be married) we have probably been taught about this. Let me speak from a young man’s/eligible bachelor’s point of view. I was told that a woman’s priorities, needs and wants change over a period of time and that as a man you should adapt to these changes if you intend to keep your woman around for life. When a woman is young she wants you to look good, to take her out and to talk to her. Basically to keep her company. When it comes to making a decision for the future she wants those promises to turn into plans. She wants to see signs of commitment like you introducing her to your family and the likes. If you fail to show signs that you are in it for the long run she will kick you to the curb, fast!
In business in order to retain customers you need to walk with them in their journey of life, you need to know their life story and to adjust your offerings in line with what they want at that stage in their life. When you are targeting a specific set of customers this is easier to do with finite resources. Doing what I mentioned above requires a big investment in terms of time and resources from installing the necessary structures that enable you to learn about your customers in detail and to create profiles of who they are. You cannot do this without targeting a specific set of customers because the costs will become too big. Having done so you will end up with very loyal customers who will give you repeat business as you will know them and what they want from you, down to the last detail. You will gain an advantage over the competition as they will be targeting every Tom, Dick and Harry, with varying (but not better than yours) results.
Trying to communicate with many different types of customers will leave you in a situation like the in the picture above. Customers speak different languages and if you try to reach out to them all you will end up in the middle of nowhere. Focus on a type and become an expert at communicating with that type of customer. That way you will communicate better with customers
5) Better Communication: The best type of communication is one that is suited to a specific target market. You can tailor your words and everything that you say in such a way that the recipient of the message understands it. Picture this, you are a politician and you are making a political speech in front of 10000 people who, in this case, are the target market (for votes or something like that). The thing is that you will be making this speech from behind a curtain so you cannot see the people but you hope that they are identifying with what you are saying. After you’re impressive, earth shattering speech you emerge from behind the curtain and you realise that your audience is a bunch of 5 year old kids. What do 5 year old children know about politics? You will probably find them pulling each other’s ears and fooling around as they do not care about what you will be saying.
This is what happens when you do not communicate to a specific, targeted, audience. This way of doing business is known as the Spray and Pray approach. You will end up saying the wrong things to the wrong people. Imagine the amount of money that you will waste by advertising to the wrong people who are not interested in your offerings. If you are communicating to your customers using common sense and not a deliberate science based on customers that you have segmented, profiled and tracked, then it is time that you make a change. This is how you will beat the competition. Your messages will strike a chord with your customers unlike the competitions’ messages that will not be customised giving you better results. Your messages can even appeal more to the competitions’ customers than their own messages helping you to lure them towards yourself. You will get more for less with quality communication leading to you operating at a lower cost. What you do with the extra money could include lowering the prices of your products and services putting even more pressure on the competition.
All that I have talked about above will increase your profit margin. All those elements that I have mentioned above are like components in an engine which perform different roles so as to achieve a single, common goal. A higher profit margin (than your competitors) can strengthen you in battle in many ways. Mind mentioning a few?
6) Increases your profit margin: All of the advantages of targeting specific customers contribute to your company having a higher level of profitability. When you focus on a specific set of customers you are able to make the most of limited resources providing higher quality products that you would not have been able to provide had you spread yourself too thinly. Better products and services command better profit margins. When you become more competitive you will get a higher share of the customers’ wallets as they will not switch between competing brands but will spend more on your brand increasing your profit margin. The relationship that you will create with your targeted customers will lead to them adopting some of your other products and services because of the level of trust that you will have. This will allow you to expand your operations at a lower cost thus increasing your market share. Retaining customers will increase your profit margin as you will be selling products to them at the same price whilst spending less on advertising etc. Customers that you retain will also bring in new customers through word of mouth as a result of their high level of loyalty. When you communicate well with your clients they will understand the messages that you will be sending them. As a result the targeted customers will be more likely to respond in the way that you want them to as they can identify with what you will be saying. This will dramatically improve the ratio of marketing costs to sales generated improving your profit margins.
As you can see targeting a specific set of customers is something that you should definitely do. Not doing so will lead to a situation which is best described by the politician who made a political speech from behind a curtain to a bunch of kids. You will waste a lot of resources by paying attention to people who do not care about what you have to offer and lose the customers that care about what you do by not using the finite resources that will be at your disposal to pay attention to them instead. So when you create or review your marketing strategy for 2016 make sure that whatever is in there is based on a clearly targeted customer segment. We will go into the specifics of targeting customers at a later date.
As on the first diagram in this article i.e. Marketing Strategy Factors the ‘Target Customers’ are surrounded by the components ‘Product, Price, Place and Promotion.’ I talked about these in the article So, What Is Your Business Philosophy (Part B). You can take a look at those factors by clicking on that link. We will talk about Marketing Information Systems and the other stuff in the next article. I wish you success in 2016!
Thanks
Ruvimbo
Thanks Ruvimbo. Compliments of the year to you too. Among my successes of this year, I hope we be able to finally meet.
Your post like all previous ones, talks about organisation-wide success, and the role that marketing plays in this grand scheme of things.
I believe our present time is that of disruption. Small/emergent companies competing with large and long established behemoths. The internet and the power of the key (phone or laptop) gives us the chance to be giants too. And in a matter of seconds the whole world can see what we are offering.
When you ask, at the end of item 5, what other ways we can employ, the above comes quickly to mind.
Another is building a connection first before trying to sell. For eg one can become a member of a group on facebook. As one gets known by the other members, through involving oneself in daily discussions/posts, the other members will come to know him/her. One can then adroitly mention one’s form of business now and then in the comments. This should also be accompanied by one’s growing photo album, which anybody anywhere in the world can view.
You are welcome Taurai. Yes I hope we can meet as well, it would be interesting to put a face to the name and discuss about how we are going to be successful in business.
I totally agree with you on building connection first before you try to sell. It gives you the very same effect that I mentioned under the heading ‘Expansion’. When someone feels like they know you on a personal level and they feel like you understand them they will be more open to doing business with you. The internet has indeed been a blessing because startups and small enterprises can now gain exposure at a very reasonable cost.
Looking at the example that you gave you might also want to look at (If you have not already done so) Stephen Covey’s metaphor of the Emotional Bank Account. It means that ‘that anyone with whom we have a relationship with, whether it be our coworkers, family or friends, we maintain a personal “emotional” bank account with them. This account begins on a neutral balance. And just as with any bank account, we can make deposits and withdrawals. However, instead of dealing with units of monetary value, we deal with emotional units.’ You can read more about the metaphor here: http://lifetrainingonline.com/blog/the-emotional-bank-account.htm I hope it will make for an interesting read.
Thanks for the Steve Covey read. I had read his Seven habits of highly effective people, but not this Emotional Bank Account gem.
The whole story revolves around Emotional Intelligence. Without knowing ourselves (strengths & weaknesses) there is no way we can understand other people & by extension our relationships with them. If we lack this maturity, we are likely to do the very opposite of what we should to keep our relationships alive. We thus end up keeping our account in the red, because we over-withdraw.
You are welcome. Steve Covey is very good at what he does.
Yes indeed that is true. The 4 competencies of Emotional Intelligence come together to give you Social Competence and Personal Competence which will complete you both as a colleague and as a business person. I am of the belief that a dollar value can be placed on ones skills in the arena of Emotional Intelligence in that business deals can be made or can be broken as a result of how much a person is intelligent on an emotional level.