MARKETING AND OPERATIONS
THE MARKETING MIX
‘Marketing’ is simply the word bluffers have coined to describe the grubby business of ‘selling’. The bluffer will never admit this. Indeed, the word ‘selling’ should never pass your lips, and even ‘marketing’ should not be used in mixed company (i.e., in front of prospective customers or clients). So if:
Marketing = Selling, and
Selling = Business, and
Business = Bluff,
logic dictates that
Marketing = Bluff.
However, you should never be caught bluffing when selling because:
a) If a sale is found to be based on selective information, it could be void by law. The buyer could claim his or her money back and the seller could be liable to civil, or even criminal, action.
b) It’s unsporting.
When marketing, you are a sportsman engaged on the greatest hunt of all. As with any hunt there are rules, and there is a proper order in which things are done. First of all, you must identify your quarry; then you come into contact with it; and only you can bring it home. Thus:
- Market research identifies the customer.
- Sales and Marketing makes contact with the customer.
- Distribution delivers the product or service.
MARKET RESEARCH
In the old days, ‘market research’ consisted of someone with a clipboard asking people in the street, who were busy trying to avoid them, what they thought of a particular product or service. People with clipboards still exist on our streets but they are now less likely to be carrying out market research and more likely to be intent on persuading you to set up a direct debit in favour of a particular charity. They are called, perhaps uncharitably, charity muggers, or ‘chuggers’.
These days, ‘consumer surveying’ is done mainly by phone or, increasingly and more cost-effectively, online. However, the bluffer will view market research as a far broader process, involving the formulation of strategy, new product development, test marketing and the gathering of a great deal of information of which canvassing consumers is only one part.
There are two reasons why you should adopt this broad approach:
- Consumer surveying is still too expensive for small or start-up businesses and may be irrelevant if the business does not deal with a mass market.
- It allows you to work out exactly who your customer is, and how he or she is best approached. A business dealing with a small number of relatively high-spending customers ought to have a completely different marketing strategy from one with a large number of relatively low spenders.
Only when you are sure where your customers can be found should you start trying to attract their attention.
SALES AND MARKETING
Sales and marketing includes anything that might attract the customer’s weary eyes towards your product. This covers a wide variety of sins from point of sale (POS) displays to alleged ‘competitions’, ‘special offers’ and ‘sales’ that go on forever.
Advertising
The small business can forget about mass-media campaigns; to penetrate the collective consciousness and establish your product as a ‘brand’ name is far too expensive (and cannot be guaranteed). Advertising is pointless unless you are prepared to do it properly, which means spending more money than most start-up businesses are ever likely to have.
Having said that, some businesses have managed to establish a brand without spending the huge amounts of money they didn’t have by being smart and doing things differently. Social media is a very tricky beast to tame but it does open up immense possibilities to the creative bluffer. Some blogs started in the proverbial spare bedroom have flourished to become bona fide businesses.
Press and public relations
This should appeal to the subtle bluffer who enjoys the idea of marketing by pretending not to market.
By going down the editorial route rather than the advertising route, you can promote your business without the cost of actually paying for advertising.
Journalists should become your friends. Contrary to legend, few of them can be bribed with drink (although few can resist a good lunch), but good social relations help to keep channels of communication open. So do regular briefings (especially if spiced with some good gossip – feel free to refer to it as ‘market intelligence’ – whether on or off the record) in addition to putting absolutely anything that might give your business publicity into a press release.
The press release should not err on the side of modesty:
(Headline) EXECUTIVE TEAM STRENGTHENED
(Sub head) New transparent wall maintenance operative joins Universal Widgets
(Text) One of Barchester’s most progressive and ambitious companies has announced the appointment of AN Other who joins an experienced and dynamic team...
(Translation: Universal Widgets has just taken on a new window cleaner.)
Other examples of useful headlines on press releases:
JOBS AT RISK
(The standard line when a public authority threatens to do something the company doesn’t like.)
LOCAL FIRM IN TALKS WITH US GIANT
(They phoned to ask about the price.)
LOCAL FIRM SIGNS CONTRACT WITH US GIANT
(We actually sold them something.)
US GIANT & LOCAL FIRM LINK UP
(They gave us a local sales agency.)
US GIANT & LOCAL FIRM IN PARTNERSHIP DEAL
(The sales agency is a joint venture: we split the profits.)
LOCAL FIRM TO TAKE OVER US GIANT?
(Well, anyone can speculate, can’t they?)
Direct mailing
The bluffer’s best hope. A letter need reveal little about the sender: the recipient does not know if it is from a big or a small business.
It is possible to buy a good mailing list suited to your business needs – a good investment if you can afford it – but it might be too expensive. If so, you can create your own using trade directories, local business directories, electoral rolls, online research and networks like LinkedIn, the leading social network for professionals.
If you do not have the name and exact title of the addressee (always preferable), use the most prestigious title you can imagine each functionary having – e.g., if you are selling office supplies, ‘the director of administration’. When in doubt, go straight to the top and write to ‘the chief executive’, the form of address most likely to get your letter to the real power, whatever his or her true title.
Direct sales
In many businesses, especially those whose customers are other businesses (known as ‘business-to-business’, or B2B), a great deal is done through personal contact. Turning a non-business contact into a business one is a skill that can be learnt only by experience. It helps if an entrepreneur gets around as much as possible and becomes involved in organisations to which prospective customers belong. Join as many as your resources permit.
Do not imagine that fellow members will suddenly provide you with business just because you are one of them, but if you make them aware of your business, the day may come when you could be given the chance to put in a competitive quote simply because they happen to know you personally.
E-commerce
The Internet was designed for bluffers running their own business. It has given them the level playing field they have always craved. Online, the biggest and smallest businesses in the world are both boiled down to a small screen. Whether you spend millions on marketing or are somehow getting it for free, it makes no difference. Your ability to impress depends solely on your ability to convince those looking at that screen that you have something they might need.
It is easy to pretend online that yours is a big business – no one has to see your office or your employees – but, paradoxically, the one time it is easy to do may be the one time that it is not necessary.
It seems that the only place the small business does not need to look like a big business is online. People who buy on sites like eBay rather like the idea that they are dealing with a ‘Mom-and-Pop’ operation; there are cases of large established companies pretending not to be in order to appeal to a broader audience.
Social media
Social media marketing is a hard topic to avoid these days, and has been the subject of much hype. Some businesses have had great success with it, but others have gone in with high expectations that were, almost inevitably, disappointed. Whether it is right for you depends on the nature of your business, the norms of the sector and how it fits with the image you want to project. If you are in a trendy business like media or technology – and it seems that half of start-ups these days are themselves social media-related – it is practically compulsory, but an agricultural feed outfit, for example, would be unwise to rely on it too much.
Social media is not relevant to all businesses so you must first decide whether it is relevant to your business. If you decide to use social media, you must then commit to doing it properly or not bother at all. You need to keep your content up to date; if you get out of the habit of posting or tweeting regularly, people may assume that you are no longer in business or that your business isn’t doing very well. Your content has to be lively and interesting, too; it is not enough simply to ‘tweet’ new products as they become available. If you do not feel you can maintain a good standard, best to avoid active social media marketing altogether.
DISTRIBUTION
Think of distribution not as part of the selling process but as a continuation of the process of promotion. The packaging, the company name on the delivery van, the physical presence of the product itself – all are forms of advertising.
Delivery should always be accompanied by fanfare, even in businesses without a product in the traditional sense. A construction firm will put a large sign outside a building it is repairing; an accountant will usually deliver accounts in a binder with the firm’s name on it; and an estate agent will send you a basket of homemade cookies the day you move into your new home (in your dreams).
OPERATIONS
Having gone to all that trouble to sell a product or service, it seems rather unfair that you have to provide it as well. Unfortunately, most customers tend to insist on getting something in return for their money, unreasonable cads that they are.
So the question is: ‘What product?’ To which the true entrepreneur will reply: ‘Anything I can sell.’ Nevertheless, you ought to have a main or principal product of some sort. It provides you with a ready answer to the question: ‘What business are you in?’
An evasive reply will make everyone assume you must be into something shady. As an entrepreneur, you will have enough trouble trying to establish the reputation of your business without people thinking that you must be a gunrunner.
When selecting your principal product, consider the extent to which it can be used as the base for a broader range of products.
Having selected a product, your next question is how to produce it. The answer is: you don’t. As a rule, your new business should never actually produce a product. Production costs money: selling makes money. Production is a pain; it takes up time (better spent selling) and money (spent on plant, machinery and labour). Even if you reduce your costs through vigorous self-denial and constant vigilance, you are unlikely to be able to match the low unit costs, or quality, of mass production and economies of scale.* The answer is to sell something produced by someone else. You can do one of the following:
a) Obtain agency agreements to sell the products of another company.
b) Employ manufacturers to do your production for you on a sub-contract basis.
There are thousands of variations on the above, most notably the mutual reference arrangement which means that both you and your producer act as agents for each other. In general, you cannot have too many business contacts, however casual, whether they are prepared to pay you commission to sell their products, prepared to sell your products in return for commission, or willing to produce for you at need.
The ideal business has no capital, no stock, no premises and, above all, no employees.
It is worth remembering that the word ‘entrepreneur’, loosely translated, is French for ‘middleman’.
The ideal business has no capital, no stock, no premises and, above all, no employees. True, there is a limit to the amount of money you will make without them, but you may well decide that, beyond a certain point, the extra cash really is not worth the extra hassle. This is particularly true these days when almost everything is subject to government regulation and you can be sued for almost everything else.
The bigger business can hire someone to push the paper around. In the smaller business, it all falls on the boss – who has better things to do. The focus of the entrepreneur must always be on exchanging products or services for money, and anything that distracts from that, like actually running a business, should be avoided where possible.
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* ‘Economies of scale’ is business-school speak for ‘Big is Beautiful’.