By Brian H Meredith
From the NZBusiness"Marketing Maestro" Archive
First published August 2012
As times continue to be tough and challenging for many businesses and marketplaces appear to becoming ever more complex, it might be appropriate to offer a timely reminder of the core principles of marketing. And business.
Someone wants/needs something.
Someone else is willing and able to provide it.
The cost of meeting the need/want is $1.
The buyer is prepared to pay $2 to acquire it.
The difference is $1.
That is gross profit.
So there you have it.
The definition of the business concept.
No MBA required. (Phew, imagine how much money you spent on that Executive MBA!)
All that is now required is to do another transaction like that one.
Whether you end up completing 10 or 10 million such transactions in a week, the core concept does not change. Should never change. Must never change.
All that separates the Dairy owner from the CEO of a multinational corporate is scale. Nothing else.
The concept is the same.
Here are three key questions that stem directly from the core concept and which I always ask of clients at the outset of our relationship. See if you know the answers for your business:
What are you selling?
Who are you selling it to?
Why the heck should they want to buy it anyway?
Got the answers? Nice, tight, simply articulated answers that can guide the very structure, operation and future of your business?
Bet you haven’t.
For example. Question # 1 “What are you selling? (or, put another way, what business are you in?)
Is Black & Decker in the drill business or the hole business? If you think people buy drills because they want/need drills you are mistaken. People buy drills because they want/need holes. So Black & Decker are in the hole business. And that difference is about as fundamental as it comes in business. A business that is in the hole business will look very different from one that is in the drill business (‘specially when you can buy a pen-like laser hole maker in Mitre 10 for $19.95!)
Charles Revson, founder of Revlon, once said “In the factory we make cosmetics. In the drugstore we sell hope” – Let this be your guiding light in finding the answer to the question for your business.
Next is your target market (“Who are you selling it to?”).
I once had a client in the pizza delivery business who argued that his target market was “well, pretty much everyone really ‘cos pretty much everyone eats pizza”.
Some people eat pizza more often than others. Some people always eat meat and others never eat meat. Some people eat lots of pizza and others rarely eat pizza. Some demographics display some pizza consumption habits and others display others. Some eat pizza because they enjoy it and others eat it because it is convenient.
So, is it OK to answer the question “Who are you selling it to” with the answer “Pretty much everyone really”? In fact, my client had seemed surprised that I had asked him the question in the first place.
The third question, (“Why the heck should they want to buy it anyway?”) is equally fundamental but equally tough to answer. In fact, some businesses don’t even try to answer it, relying, instead, on some gut feel or instinct that there is a need or desire for their product or service and simply promoting the heck out of it in the hope that the numbers game will work in their favour.
I remember well the constant challenge, when I was Head of Marketing at TVNZ, in getting the Programming Department to listen to anything that the Marketing Department had to say about audiences and programming. We (the Marketing Department) produced comprehensive research on both audience viewing (i.e. ratings) and audience attitudes towards programmes and their content.
The Programming Department preferred to rely on their “gut” – they were “in touch” with their audience (no they weren’t) and they instinctively knew what the audience did wanted (no they didn’t). They knew best – Yeah right.
Time, I think, has proved them wrong, demonstrated by the way that an explosion in viewing choice has negatively affected TVNZ’s ratings performance.
The definition of the marketing concept is:
An organisation will only achieve its goals by identifying and/or creating, needs and/or wants, amongst its chosen target markets and fulfilling them, at a profit, time after time after time.
If you think for just a moment about this definition, you will surely reach the conclusion that the definition of the business concept is the same. That conclusion should lead you to the equally compelling conclusion that the words “business” and “marketing” are, in effect, interchangeable. Marketing is what a business is. Period.
A business is, at its core, a marketing organism.
That’s what it is. It’s not optional.
The challenge is to acknowledge that and to build the business around that reality and to develop and nurture that “organism” to ensure that it achieves your objectives.
And the way in which you must do that is, before you do anything else, develop the answers to the three key questions I articulated earlier and build everything that your business is around those answers.
Anything else simply isn’t good business.
In fact, it isn’t business at all.