Top 5 Marketing Concepts. Number 1: PERCEPTION

I have referred to this concept throughout these discussions. In my view, it is the single most influential concept in marketing. Building a successful brand; targeting the right segments/ developing new segments); being the first-mover and successfully differentiating a product; effectively applying the AIDA concept… how do these strategies all come together? What are marketers ultimately trying to influence in people? The final answer is perception. Let me state it another way:

Perception is to marketing what location is to real estate.

Perception, perception, perception!

A wise marketing professor once said, People don’t buy products, they buy solutions to needs. I would add that they buy perceived solutions to perceived needs. Adding the word “perceived” is good news to marketers, as it implies that solutions (even needs) are subject to external influence. After all, a solution is only a solution if we believe it to be so. By perceived needs I mean that some effective marketing campaigns actually create a feeling of tension in people, however covert, only to offer a solution to that tension. An example is the use of fear in advertising. It has been said that rejections are essentially requests for additional information. Well, how can additional information make people decide to buy a product? The answer: by changing how they perceive the product and how it can benefit them.

Perceptions of the world (our mental models or underlying assumptions of the world) govern what we believe (also known as our internal rules), how we perceive ourselves and others, and, most importantly, how we decide to act in relation to the environment. More simply put: It is in our moments of decision that our destiny is shaped. (Tony Robbins)

Every single belief and opinions we have is so because we have chosen to see it in a certain way. Perceptions of the world tell us who we are at a given moment (such as role perceptions: a man can be an employee and a subordinate at work but a father, leader, or coach at home). 

Some of the world’s top communicators and leaders are so because they have been able to alter the way we see things (by framing and reframing our mental models). They are essentially able to manage the meaning we give to certain events. They can turn disasters into opportunities and failures into successes. 

This is what marketing is all about. When we boil it all down to the basic elements, we communicate with others to influence them. We want ourselves and others to believe something, to do something, or to think about something.

Marketers tell us to never compete solely on price: All of your competitors have pencils and they can mark things down just as fast as you do. It's a death spiral (from Branding Rules; The Leaders of the Pack, Branding Strategy). Instead, they say we should compete on the entire marketing mix. Competing on the product level is nothing more than competing on perceived quality, in relation to a customer’s perceived needs. Promotion is another way to convince the buyer of his or her perceived need and of reducing the perceived risk of purchase. Distribution both through intermediaries and directly to customers can be perceived as adding to a product’s overall utility (such as Form and Place Utility).

Perceptions of quality and value lead to patronage and loyalty, which is a clear predictor of long-term profitability. Reduction of perceived substitutes (through differentiation and customization) may decrease elasticity of demand and allow firms to charge higher prices while minimizing competition and increasing market share. In short, communication is the tool with which marketers try to influence perception.

Many pioneering companies, such as McDonald’s, Microsoft, and Starbucks have altered how we perceive things like dining out, communicating with others, and drinking coffee. For example, as a result of intentional perceptual framing, many small business owners, biding entrepreneurs, and writers now prefer to conduct business at Starbucks, especially at Barnes and Noble locations. Some of the advantages: no need for a dedicated meeting place, a neutral unintimidating location, and the possibility that they will be noticed by others. 

In sum, branding, targeting, timing, and communication are all crucial concepts that marketers have been trying to master for ages. When done right, each of these strategies will bring the modern marketing manager closer to successfully affecting the perception (and hence decisions and actions) of others, externally (consumers) and internally (stakeholders).

Top 5 Marketing Concepts. Number 2: Communication

Marketing is accomplished with communication. What is the goal of marketing? Is it not ultimately to get people to believe certain things to be true; to evoke certain feelings and desires (or fears); to have them act upon these desires (or fears)? It is arguably true that everything we do (even seemingly selfless acts of altruism) can be boiled down to only two goals: gaining pleasure or avoiding pain. Marketing communications promise to help us achieve one of these two goals.

Philosophical discussions aside, one of the most important and obvious, yet commonly overlooked, techniques we use to influence people is, yes, communication. Branding is crucial, yet branding is an (ongoing) end that we achieve my means of communication. Targeting is great, yet its goal is to help us determine who to communicate with and how to do so. Timing is essential, yet its use is to answer the question, When do we communicate?

Without effective communication marketing cannot succeed. It is at the core of our discipline, which is what makes its application so hard to describe in a short report. From planning, coordination and integration to implementation, communication is everywhere that marketing is. For instance, the concept of Integrated Marketing Communications is crucial to the marketing efforts of any respectable firm. The AIDA concept (Attention, Interest, Desire, Action) is based on communicating an interesting message that sparks a desire to act accordingly.

Communication is essential to marketing research and a company’s marketing information system. In fact, it is difficult to find a concept of marketing to which communication does not apply. Another example of the use of communication is the reduction of cognitive dissonance, as well as buyer’s remorse, especially for high-involvement products for which there are substitutes. Communicating with a customer during the post-purchase stage can be helpful in reducing such feelings of anxiety. This in turn may increase perceived brand equity and loyalty.

How can anything be more important to marketing than communication?

I'll give you a hint: Communication's Goal is...

Top 5 Marketing Concepts. Number 3: Timing

Why do many companies advertise most heavily and use push and pull strategies at times such as the holidays? How do marketers know to target early majority consumers when a product enters the growth stage? How do they know that a generation has entered a certain lifecycle stage and will thus alter its buying habits? What do we mean when we claim that buying patterns (and hence revenue streams) are cyclical? These questions all have one principle in common: Timing. 

There is no single all-encompassing definition to this concept in terms of marketing. Still, as a marketing manager, I have come to realize how crucial timing really is to marketing.

However, timing, as a strategy, can be an elusive skill. Many seemingly unimportant forces and social patterns combine in various ways to influence the popularity of any idea, products, or service. Thus, it is sometimes difficult to understand how or why some products become popular when they do. Returning to the North Face example, I can recall when the jacket (pink for girls, black for guys) became amazingly popular. Before the brand had multiple offerings, its appeal was that it was a unique jacket with high brand equity. After a few years, the product reached the late maturity stage with young college-aged adults. This segment eventually became saturated, which reduced its exclusivity or uniqueness appeal (except for laggards). During one trip, I recall waiting in airports, noticing that every five or so young men and women were wearing a North Face shirt. In my opinion, this was the time for the North Face to begin targeting younger segments (aspiring to seem older) and perhaps older segments (aspiring to seem younger). 

When I wrote the first version of this report in 2004, I gave another example of a product whose “time had come”, at least with the college segment. It was the then-new Föm pillow, which was available exclusively at Brookstone. Back then, its growth seemed to have been moderate, though more and more students (mainly women) were using this comfortable new pillow in their rooms and while traveling.

I wrote, “Assuming the product is not a fad that will fade like some others, I would estimate that it is between its late introduction and its early growth stages. This is a time when competition begins to emerge.”

Soon after, Brookstone began to warn its customers of new substitutes: 

Don’t fall for imitations—available only at Brookstone, genuine Föm is thousands of high-quality, cushiony microbeads in a luxuriously soft, stretchy shell that will snuff out your daily stresses and bring happiness to your world. Föm, it’s what fun feels like! 

This was Brookstone’s attempt to increase and protect its brand equity. Perceived quality was definitely a goal when competition increased. Another tactic of increasing perceived value was the price. Brookstone charged up to one hundred dollars for the largest Föm pillow. The company also began targeting new segments with new extensions of the brand: the Föm Curlee Junior targeted a younger segment, while the Föm Body Pillow might have targeted the singles segment. Shortly thereafter, there was an entire Föm Collection.

Since then, however, many “microbead” substitutes have come to market. Prices have been driven down to around ten dollars for a travel microbead pillow. Brookstone realized the time was right to alter its strategy, and it now offering an entire series of comfortable therapeutic (personal care) products, from pillows to socks. These are still in the early growth stage and hence justify high prices and higher margins.

So is this science or art? Timing is one of many strategies marketers like myself use in their ongoing attempt to turn marketing into a science. Wouldn’t it be nice to input some information into a program that then tells us exactly what we should do to maximize ROI every time. Well, no, I don’t think that would be optimal. Frankly, the implications of that are scary. Thankfully, no matter how hard we try to quantify human behavior, much of our discipline has remained, and will always remain, a form of art. 

Now what could be more important than timing to marketing?

Top 5 Marketing Concepts. Number 4: Segmentation & Targeting

Once we recognize that a company has a successful brand we need to ask: 

Who is this brand being offered to?

…Everyone is an unrealistic answer, as companies are subject to capital restraints. No company, not even Coca Cola, can serve the needs and wants of an entire market, especially in the United States. People’s preferences are far too varied. The vast majority of marketers must target their offering at very specific, narrowly-defined groups of people.

A second concept, one that is not covered adequately in marketing texts, and one that I find to be extremely important to our discipline is target marketing (that is, market segmentation and the development of target markets).

The goal here is to identify a group or groups that are adequately distinct, in that they are measurable, responsive, stable, and sufficiently large. We may do this by differentiating groups based on variables such as demographics, lifecycle stage, location, behavior, needs, wants, and usage. A company may then target that segment based on the factors its offering can best fulfill. Rather than trying to influence all consumers, most companies focus one brand on one (or few) segment(s).

Clearly, as different segments are targeted, different marketing strategies are needed. So, influencing multiple groups would require multiple strategies, each of which requires its own set of resources.

Interesting Side Note: It is worth noting that marketers sometimes target one well-defined segment by appearing to target a different segment. This “false” segment (the group marketers are “pretending” to target) may be a group that the “true” segment (the group marketers are actually trying to influence) aspires to become like. The goal here is to induce this reasoning process: I want to be like this group. Therefore, I should behave like them. If they use this product or service, I should too.

An example of this is a recent campaign for a body wash. The campaign asks, Who should use this body wash? It then shows various “goofy” (slightly unusual, yet funny) high school boys claiming the type of body wash does not mater, or that it will not help them “get the girls”. The commercial ends by showing a young professional man in an urban setting. The image of the young man implies that he is well educated and confident, yet care-free; his appearance implies that he has a well-paying job; even his brief case has an implication – he is carrying a black leather satchel that implies he is professional, but still young and trendy. In short, this is a young man that has attained what many teenage boys aspire to. The young many clearly uses this brand of body wash. He sums it up with just four words, “It works for me.” The commercial concludes that this type of person uses the body wash.

Here, the young professional is the false target. The campaign is clearly targeting the high school boys who aspire to be like him, or at least to be unlike the boys previously shown.

Another advantage of segmentation is an added degree of control for companies. In today’s highly-regulated, consumer-controlled market, companies have little control of environmental factors. These include regulatory factors, industry norms, and consumer expectations, among others. By utilizing a segmentation process, firms can choose to target only the most profitable groups. They can also go as far as creating new segments.

Focusing on one or few segment also enables firms to more easily conduct marketing research regarding the buying patterns and preferences of their target market.

When I was a student, one firm that did this well was Student Advantage. The company offered a card to fulltime students, with which they could save up to fifty percent buying products and services from over 15,000 partner firms (online and brick & mortar). As a student, I used the card for discounts on Amtrak and Greyhound, which saved me significantly more than the cost of the card. Had I not used the card, I may have chosen different methods of travel. This, along with the name, makes it easy to identify this company’s target market: price-conscious college students. The company has also gathered valuable information, including the buying habits of college students. In this way it attracts partners who may wish to target this segment.

Segmenting, in short, is a way to maximize marketing’s impact (by tailoring the message to the audience) while ensuring that resources are spent in an efficient manner (by not trying to be everything for everyone).

This brings me to the three broader concepts that, in my experience, are the most important to marketing. Understanding these concepts is of even greater importance than the two previously discussed. These concepts are usually not covered specifically, though they are implied on a daily basis.

Top 5 Marketing Concepts. Number 5: Branding

As a former marketing major and a practicing marketing manager, I think that every fundamental marketing textbook should have a chapter devoted to branding. In today’s competitive markets, companies have two broad options. They can either mass-produce low-end, low-cost, generic products or they can specialize and create a unique brand. This is true with both goods and services. Because the cost of distributing and “mass-producing” certain services are so low, differentiation and branding becomes even more important to non-tangible goods. Since competition is such a primary element in business today, and since consumer-centricity is peaking, it is very important that marketers give potential customers a reason to buy; but they must also give current customers a reason to keep buying (repeat business and customer loyalty are the primary source of revenue for many companies; and the cost of acquiring – or losing – a loyal customer can very high).

Also, branding creates perceived differentiation and allows companies to avoid competing solely on price. If this were the case, large firms would undercut smaller ones, and industries would consolidate. Logically speaking, the end result would be an economy of monopolies. Firms combat this by attempting to differentiate their products from others, creating and developing awareness and perceived quality of their brands, and developing brand equity.

Obviously, none of this would be possible without marketing research (a form of market research), testing and evaluation. Still, in this discussion, let’s keep it broad.

The world’s most well-known companies all have a primary or core brand and high brand equity. Coca Cola is an example used below.

Keep in mind that firms can sometimes overemphasize their brand (such as by over-advertising or by over-extending their brands), which can lead to brand dilution. Coca Cola, over many decades, has developed and added value to its brand. Today, Coke’s is the most widely-recognized brand on Earth. In fact, Coke’s brand worth is estimated at around $70 billion. Now, with the saturation of the soft-drink market and with health awareness becoming a driving force for more consumers, Coke has launched and acquired other health-oriented brands such as Dasani, Nutriwater, Evian, Fresca (…the healthy way to stand out.), KMX (Coke’s answer to Redbull), Minute Maid, Odwalla (…different from any other juices you see in the store…), Simply Orange, Sparkletts, and Swerve chocolate milk.

This is sound marketing practice on Coke’s part, as many people do not recognize that these brands belong to Coca Cola. However, at times Coke has also extended its own brand. In other words, it has marketed new products under the same name, or new forms of Coke. The soft drink conglomerate has added caffeine-free diet coke, caffeine-free coke, vanilla coke, diet vanilla coke, Coke C1, diet coke with lemon, diet coke with lime, and more. Many of these new offerings were rebuffed by consumers and have since been discontinued. By doing this Coke has somewhat diluted the brand it worked so hard to build.

The Five Most Important Concepts of Marketing (Introduction)

The Five Most Important Concepts of Marketing:

An Unconventional View of what Successful Marketing is All About

INTRODUCTION

This marketing mini-series covers what I perceive as the top five elements of successful marketing, based on my experiences and research. It is mainly intended for aspiring marketers who want to get a firm grasp of the basics of marketing from a broad perspective, though it can also serve as a great reminder to more experienced marketing professionals. Rather than being a how-to guide, this series should be viewed as an overview or a reminder of what really matters in marketing. These concepts apply to all forms of true marketing.

Being such a broad topic, identifying just five marketing concepts was a challenge in itself. I wanted to select a few concepts that stand out above the rest and that apply across the entire discipline.

The five concepts I will discuss are commonly implied throughout marketing texts. Unfortunately for aspiring marketers, they are usually not discussed directly, at least not at the basic level. Yet, as mentioned, these are some of the most important marketing concepts to understand.

I begin this mini-series by discussing two specific, well-defined marketing concepts, neither of which is covered sufficiently in basic Marketing texts. The final three concepts are more broadly-defined and are of paramount importance to marketing. In my opinion, each of these five topics deserves its own chapter in any Principles of Marketing text. Throughout these postings, I have inserted links, in case you would like to learn more about some of the marketing terms used.

Each week, I will post my thoughts on a new topic, in descending order, like a countdown. Feel free to send me any comments. But remember, I have attempted to keep this discussion as broad as possible. Also, if you have another opinion, please let me know what you think are the top marketing concepts that aspiring marketers should keep in mind.

OK, let’s jump right in…