Marketing

“The belief that marketing and selling are the same is a common and mistaken view held by both the public and many businesspeople” –Philip Kotler

Having worked with entrepreneurs, small business owners and Fortune 500 companies the misconception about marketing is widespread and tearing companies apart. Learn what marketing truly is and watch your business soar.

Most entrepreneurs and small businesses never establish a formal marketing group at all when they first start. Their notions of marketing ideas come from the owners, managers, sales staff or an outsourced agency. Marketing to a large degree is an afterthought and is only thought about during the sales process. Due to this, businesses equate marketing with selling; they cannot even comprehend marketing as a broader way to position their firms. As the company grows, these false axioms and beliefs seep into the overall culture of the firm which puts a ticking time bomb on the business.

 

  • Marketing is NOT advertising
  • Marketing is NOT hyperbolic
  • Marketing is NOT selling
  • Marketing is NOT Manipulation

 “If I could teach my children one thing, it would be the skill of marketing. For with that skill they could be successful at anything they choose” – Howard Ruff

So what is marketing? We know what it isn’t, and we know it’s extremely important.

It is no surprise that we should enlist the insights of Peter Drucker as he gives us a brilliant answer on the purpose of marketing.

The aim of Marketing is to make selling superfluous – Peter Drucker.

This is the true purpose of marketing.

Let’s take the example of Apple and its consumers. If you ask the average consumer the following question “at what point did Apple sell you on your purchase?” you would get many puzzled looks. When most Apple consumers start to think about it, they cannot categorically pinpoint the selling stage. It certainly wasn’t when the Apple store attendant talked about the device, so when was it? When the consumer really thinks about it, the decision to purchase an Apple product happened well before they even entered the store. Apple consumers knew they were going to buy the product before they even entered the store to talk to someone about it.

Can you see how powerful this simple fact is? Do you see what happens when companies start focusing on the consumer, the issue of selling disappears, it becomes irrelevant.

I will repeat Peter Drucker’s quote once again.

The aim of Marketing is to make selling superfluous – Peter Drucker.

This is the power of marketing and its purpose; now let’s try and dig deeper on what it is and its functions.

According to the (AMA) American Marketing Associate; Marketing is – “a set of processes for creating, communicating, and delivering value to customers and… managing customer relationships in ways that benefit the organization and…stakeholders”

This is getting closer of what marketing is and outlines the close link between a client and the business.

“Marketing is to know and understand the customer so well the product or service fits him and sells itself.” – Peter Drucker

Once again Peter Drucker provides incredible insight. This one understanding of marketing is violated time and time again by most businesses.

To further re-emphasize marketing I will try and re-state it in a more granular form.

Marketing – is an umbrella of processes that captures a markets desires; then articulates a value proposition that will fulfill that desire in the form of your product or service.

In this one sentence the implications should not be understated or overlooked.

Like Peter Drucker’s definition of business and marketing this sentence implies a deep understanding and connection with your market. It is an understanding that every potential client has unfilled problems, needs, challenges, opportunities and desires that need to be achieved.

The idea of “our” company and the common selling approach is completely removed. It implies that your product or service is dynamic, molded by your market. It implies your product is the answer to their current questions as well as their future questions.

The word “selling” is not even used. From now on when thinking about the selling process, think of it just as the financial confirmation of marketing. Use it is as the scorecard that your marketing is on point, and should not be mistaken for marketing as a whole.

Secondly, it implies that a company can successfully articulate and educate people on their unfilled problems, needs, challenges, opportunities, and desires. It aims to position the company as the one who can help them achieve it. This is often referred to as advertising. As you can see advertising is only one part of marketing.

Lastly it states that marketing is not just one thing, but a whole myriad of activities. These activities help in the pursuit of understanding and serving a consumer as well as understanding how your company plays a role in the clients’ life.

Here are just some of the functions that pertain to marketing.

  •      Competitive research
  •      Market analysis
  •      Internal analysis
  •      Client insights such as – polls, surveys, client psychographics, client behaviour, feedback
  •      HR – yes even HR is under marketing. When you understand the links of marketing and HR your hiring process drastically improves.
  •      Testing
  •      Advertising

These are just some of the functions and depending on the specific company there will be more functions or maybe even less.

However, all these functions can be put into three main categories of marketing.

1.    Understand the client deeply

2.    Understand how your business can relate to the client (this could be through your existing product or new innovations)

3.    Articulating to the client how your business provides them value

This is so important I am going to re-state this into a simple and even more granular actionable steps.

1.    Understand the clients ever changing needs/wants (even if they don’t know themselves)

2.    Understand what your company can offer them in relation to their wants/needs

3.    Educate the client on the unfulfilled wants/needs

4.    Offer a solution and create an intense desire for that solution

5.    Prove that your company can carry out that solution in the most optimal way

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Marketing has changed

Marketing in the past used to be separated from business and product development. The old dogma constituted of creating a product and then advertising that product. This incomplete way of marketing worked during the early days of the industrial age where you could run a business in a less than optimal way and still be profitable. As we have seen with TiVo as well as many other failed companies, complacency on the functions of a business will result in failure in today’s hyper-competitive environment.

Marketing for too long was mistakenly known as pure advertising so it is easy to fall into that trap. Even today when I discuss this topic among high-end corporate leaders or several Harvard MBA’s it yields the same confusion that marketing and selling is the same thing.

Already having discussed the rise of competition, the bottom line is this; there is no room for good companies, there is no room for average companies and there certainly isn’t room for poor companies. You must build an exceptional company with the functions of marketing and innovation prioritized; a company that is focused on realities of the market and not what you think the priorities should be.

For those who live and breathe business growth you will be accustomed to buzz words that have been popping up in the past decade like “agile”, “lean”, “growth hack”, or “MVP” which stands for ‘Minimal Viable Product’ which was made famous by the book Lean Start-up.

If you don’t know those terms, then a quick google search will result in millions of pages. It doesn’t take too much digging to reveal that the premise of these ideas seem very familiar to what we have already talked about.

Agile, lean, minimal viable product; what do all these buzzwords advocate? Exactly what Peter Drucker advocated all his life, the purpose of a business is to produce a client. The whole premise of these phrases are to stay close to the needs of the client and pivot accordingly to their changes.

Instead of starting your business upon a product or idea, go straight to your target market and ask them what they want and then fulfil their wants through a product or service. In a competitive ecosystem where one wrong move causes business bankruptcy, building a business starting from the client is the ultimate, purest, safest and most profitable form of business.

We are in a time where we must market products that are easy to market and it starts with what the consumer wants. Thus marketing starts with the user and ends with the user; it must be integrated into the core business as well as product development.

If you have a separate marketing, advertising and product development division that do not have complete transparency then your company is going to struggle in the near future.

Business now demands you become so client focused, so connected with the end user that MARKETING has become the single most Important factor. Marketing is not a single division in your company; it is your company.

As the competition is so fierce marketing MUST encompass every section of the business; marketing is your business.

Timing is an essential part of business.

If you do the wrong thing at the right time, you go bankrupt.

If you do the wrong thing at the wrong time, you go bankrupt.

If you do the right thing at the wrong time, you go bankrupt.

To win you must do the right thing at the right time.

Let’s go back to the caveman example again. Try selling an iPod to a caveman and see how well that works. Effective marketing would stipulate that a company should understand the wants and desires of the caveman.

Through effective marketing, the creation of something more practical such as a wheel would be advised.

The first and most important step in building a profitable business is to master marketing. It is the difference between mediocrity and success. It is the mechanism of growth and it is the highest leverage point in a business for the 21st century. No longer can you just outsource labor to India or the Philippines to realize a competitive advantage as everyone is doing that now.

New Technology and first movers advantage is no longer a competitive advantage. Your marketing ability is where you have infinite leverage on every competitor.

Studies show most businesses only spend 11℅ on marketing. Most of this 11% is just the selling process; as we discussed marketing is far more than just selling. With most factors of marketing ignored no wonder companies are scratching their heads as to why they are on a steep decline.

“….selling, again, is not marketing. As already pointed out, selling concerns itself with the tricks and techniques of getting people to exchange their cash for your product. It is not concerned with the values that the exchange is all about. And it does not, as marketing invariably does, view the entire business process as consisting of a tightly integrated effort to discover, create, arouse, and satisfy customer needs.” – Theodore Levitt

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Your product is not your business.

Shows like “Shark tank” and” Dragons Den” have been growing ever popular in today’s culture which inspires many more daring individuals to start their own venture. While I love the rise of entrepreneurship I fear though that these shows often perpetrate the wrong idea of what being a successful entrepreneur and business owner actually is. It perpetrates the notion of having “the single silver bullet idea” and values single products as the cornerstone for success. Anyone experienced in the business world will know this is not the case. Overestimating the value of your product breeds severe lack of adaptability and egocentricity which we know will kill a company in the long term.

Very few companies ever became successful from their first product; instead it can be seen throughout history that the first product is a stepping stone. Your first product is simply a way into the market and is just a catalyst for you to learn more about the client base on a deep level.

Remember, be stubborn on your goals but flexible on how you get there; your products are something that must be flexible and interchangeable on your journey.

If you are not constantly trying to make your current product service, business model obsolete rest assured your competitors will – Peter Drucker

All products eventually become superseded; even Facebook when it first started is not even close to what is now. Instagram used to be location tracking app; when the founders introduced it to the market they quickly found out they had to make drastic changes.

Do not become attached to your product because it could spell grave disaster.

Avoiding Business Myopia

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Business Myopia is a company’s failure to recognize the scope of its business.

Let’s talk about an example where business myopia tore down some of the wealthiest and bullet proof tycoons in history. One of the greatest instances of business myopia was when the “untouchable” rail road tycoons fell from grace. Before the 1930’s the railroad tycoons were incredibly wealthy and powerful individuals who thought they were indestructible. They believed they were in a market that was virtually impregnable and no new incumbents could penetrate it. To a certain degree they were right; it was virtually impossible for someone outside to share in the profits.

If anyone wanted to enter the rail road business it would have been like tearing down a brick wall with a plastic baseball bat. What lead to their eventual bankruptcy wasn’t that new entrants came into their space; it was the fact that their whole business became relatively obsolete to their clients.

The rail road tycoons had a very myopic view on what their business was; they assumed that they were in the rail road business. The issue is this; the client didn’t use railroads on the virtue of the company using the actual rail road. Only a very small percentage of the market used the service for their love of rail roads; they used it so they could reach their destination. Consumers used the service as a means of transportation. The tycoons looked at themselves in a railroad industry instead of a transportation industry.

In the 1930’s Henry Ford started making trucks and came out with a fleet of 700 hundred trucks costing approximately $200 each. Instead of partnering or buying Ford out which they could have easily done, the rail road tycoons ignored the obvious transportation advantages trucks and cars had. They continued their myopic view of what their business was and stated “we are in the rail road business; we do not care about trucks”.

Something startling happened to the tycoons; the transportation industry was increasing but rail road tycoons were losing money at an alarming rate. Their actual service was being replaced trucks, cars, planes and other modes of transport. When Henry Ford first built his fleet of 700 trucks 80℅ of all freight was hauled by trains. Fast forward to the present and well over 80% of freight is now hauled by trucks and those rail road tycoons are now bankrupt.

When companies fail to understand what the actual needs of the market are, then they are privy to even slight market changes that could leave them bankrupt like that rail road tycoons.

Let me refresh you on ’s statement again.

“We won’t experience 100 years of progress in the 21st century, it will be more like 20,000 years of progress (at today’s rate).”- Ray Kurzweil

Every industry as we know it is going to go through dramatic changes within the next two decades which will leave most companies out at sea if they are not willing to accept change. The real estate, transportation, retail, medical, energy, manufacturing and financial industries are just some spaces that will be near recognizable by 2025. Your company and industry will face the same challenges that the rail road barons did before they went bankrupt; do not make the same mistake they did.

You don’t know what you don’t know. To define your business as a product will put an expiration date on your whole business. In a world where technology is increasing at such a rapid rate your product life cycle plummets. Sony used to have an 8-year product life cycle and over the years it has reduced to a few months. Thus to define your business as a product will mean your life span of the business will be mere months.

You must define your company as it truly relates to a client.

  • Sony is not in the video game business; they are in the entertainment business.
  • Amazon is not in the bookstore business; they are in the convenience business.
  • Disney is not in the cartoon business; they are in the happiness business.

Imagine the limited growth in those companies if they believed they were in a myopic business.

If Disney were only in the cartoon business then I guess there would be no Disney land. If Sony was in the video game business, then there would be no Sony TV’s. If amazon was in the bookstore business, then you wouldn’t have same day shipping for your groceries.

I want you to take a second and imagine for a moment.

Visualize the best restaurant you have ever been to.

This restaurant has the food that you love.

This restaurant has the perfect ambiance.

This restaurant has incredible aromatic flavors wafting to your nose from the kitchen.

Just sitting down at the table gives you a sense of calm and longing for what is to come.

Imagine you are at the restaurant with your loved ones; it may be a special day like a birthday or anniversary.

Now think of the name of that restaurant; imagine standing outside and looking at the sign of that restaurant.

Now let me ask you this:

Was that restaurant McDonalds?

Whenever I do this exercises with most people they don’t think about McDonald’s. Compared to what you may have just imagined, the food at McDonald’s cannot even compare. So why is McDonald’s the most successful restaurant in the world?

They are so successful because they understand that they are not in the burger business or the restaurant business. They have not created a system to deliver on the worlds tastiest food. Let’s just Imagine for a second that they were in the burger and restaurant business. Imagine that all of their actions revolved around their burgers and being a great restaurant.

To put it quite frankly, if McDonalds thought they were in the burger business they would be bankrupt in a heartbeat.

I don’t think many people would ever say that McDonalds food is the tastiest food they have ever had; probably not even in the top ten for most. Like Amazon they are tailored to the convenience business. Instead of spending all of their resources on making their burgers taste better they spend it on convenience. They spend their money on play grounds to make it convenient for parents and their children; they spend money on drive-throughs to make it easier for people to order; they spend money on improving their operational efficiency to make the food faster to make. McDonalds rarely ever spend an impactful amount of money on improving the actual taste.

In their quest to become convenient and to provide franchises easy access to the client, McDonalds have one of the world’s largest commercial real estate portfolios. You can see in this simple example; McDonalds truly understands why their clients choose them without egocentric realities. The company can double down on what works instead of wasting money on areas that are not appropriate for them.

Once you identify your business on a broader level you must identify the emotional triggers that bring clients to you.  When you know these it will give you even deeper knowledge on how to serve them; it will open up incredible opportunities you can use to drastically grow your business.

Here are a few examples of digging down to the real reasons clients may buy.

  • Don’t sell me clothes. Sell me a sharp appearance, style, and attractiveness.
  • Don’t sell me insurance, sell me peace of mind and a great future for my family and me.
  • Don’t sell me a house. Sell me comfort, contentment, a good investment, and pride of ownership.
  • Don’t sell me books. Sell me pleasant hours and the profits of knowledge
  • Don’t sell me things. Sell me ideals, feelings, self-respect, home, life and happiness

It is imperative that a company actually know the value it provides on client value level and not the obvious product answer. The biggest issue companies have is they actually don’t know why clients buy; they assume it is features and new technology but this is rarely the case.

No one cares about your product, service or company.

They only care about what you can do to make their lives better.

Over a billion toothpastes are sold every year in the United States. I don’t know about you but I for one have never had a strong desire or craving to brush my teeth and use toothpaste for the fun of it.

George wakes up every morning and thinks to himself; “I would love to go out and shop for toothpaste today; I can call my friends to join me and pick out the perfect toothpaste, we can make a day out of it; it can be a dental day”.

I believe George to be one of a kind and most other people do not think like this; certainly not enough to warrant a billion toothpaste bottles sold every year.

What they do have is a realization that having bad breath is extremely detrimental to their health and social status. They have fear that their teeth will go brown; they fear that they will scare off potential partners; they fear that they will be ridiculed for bad breath; they are scared they won’t fit in.

This is why people buy this you must understand why people really buy your product or service.; just like tooth paste

Let’s talk about TiVo again. The company could never articulate what value it actually presented the market.

When people asked why they should buy TiVo the company responded with pure technological features:

You can record any program.

The market then responded with “well a VCR can do that”

You can watch your favorite shows whenever you want.

The market then responded with “a VCR can do that too”

It changes your entire television viewing experience.

The market said “I don’t want my television viewing experience changed, I am happy the way it is”.

No one wakes up desiring to change their TV viewing experience. The market didn’t even know it needed their viewing experience changed. Remember humans do not like change; thus without a compelling reason you will be going against natural human biology.

Now let’s look at a far better way TiVo could have approached the market; a benefit driven approach.

  • Never channel surf again.
  • Turn on the TV and have the confidence that you will always have something you love to watch
  • Don’t wait on TV; let your TV wait on you
  • You are a person who has true control in their life, let TiVo help you
  • These dot points speak to a direct problem for much of the market. It articulates how their life will actually be benefited.

Let’s look at some more examples.

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Harley-Davidson became a giant in the bike industry after world war two. After the war, they took advantage of all the returning men that came back. There was a common perception at the time that “real hard American men” drive on bikes and Harley Davidson filled that need exceptionally well. The market did not buy Harley Davidsons purely for transportation, they bought it as a status symbol of their manhood.

In the 1980’s the Japanese started manufacturing bikes at a rapid rate and provided Harley Davidson with stiff competition. The Japanese bikes were built faster, stronger, more efficient and significantly cheaper to the end client. Harley-Davidson found itself on the verge of bankruptcy; however, this compelled them to truly understand the value they give its consumers.

What turned the company around was their realization of what business they were really in and it certainly was not bikes. What Harley-Davidson clients were really buying was an icon; they were buying identity; they were buying a statement, they were buying a legend, a legacy. Harley Davidson was in the business of nostalgia. Finally understanding this, Harley Davidson geared its marketing, its product development and everything in the company towards this and escaped commoditization and bankruptcy.

By identifying the deep needs, it did not have to compete with the Japanese bike on price or anything else. It never had to compete on price with the Japanese as they were not in the Bike business they were in the nostalgia business.

Let’s look at another example.

With the rise of Amazon many companies felt the heat and one company in particular was Ace Hardware, the billion-dollar home hardware company. Ace hardware were going bankrupt because Amazons supplied low margin products that the company could not compete on. However, Ace Hardware realized that they weren’t in the commodity hardware business. They realized that they were in the client service business. After millions of dollars’ worth of client analysis, they realized that the primary reasons their clients were actually doing business with them was their expertise and deep knowledge; not the prices.

The company started rolling out more client centric services like handymen that would drive to a clients’ house and install and build things. All of a sudden they were no longer competing with Amazon and the threat of bankruptcy was alleviated.

When businesses struggle to understand what business they are in as it pertains to the client they will always struggle. Inevitably what happens when other companies try to compete with Amazon is that they fall for the lethal game of price dropping.

Did you know….only 15% of consumers in markets actually choose on price. The reason most people go with the cheaper price is that companies cannot articulate what value they actually offer. The consumer see’s similar companies and has no other factor to differentiate between them besides the price thus they choose the cheapest option.

Ask yourself this question; if you were in a store isle and you had to choose between four companies and the only difference you could see was the price, then of course you would pick the lowest price too. This does not mean you or the market always choose the lowest price, it just means you were given no reason to pick the higher priced option.

Do not fall prey to the 15% that buy on price because you have another 85% of the market that you can capture. Remember in any given market there is only one company that can have the lowest price; once you start a pricing war it becomes lethal.

Price dropping is the most inefficient and destructive strategy to try and compete for market share. Instead of price dropping companies must compete on value. Thus it is imperative to understand the true value of what you are actually providing and not be blinded by the obvious myopic answer.

Examples of myopia can be seen everywhere you look and not just in typical corporate business. Love them or hate them, most people would agree Britney Spears, Rhianna, Justin Bieber are all world famous entertainers. When you look at singing shows such as “American Idol” or “the voice” that try to unearth the best singers in the country, they have one fundamental flaw.

Like shows like Shark Tank they assume and perpetrate the wrong idea. These singing shows perpetrate the idea that to become a world famous artist you have to have the best voice.

It is a fallacy to say that the music industry is a singing industry; instead it is an entertainment industry. Britney Spears, Justin Timberlake and Justin Bieber do not have the best voices in the world, not even close and nor do people care. If you looked at most of the contestants on the common reality singing shows they would all be able to outperform the celebrity singing stars each time. This is why it is very rare that winners of these shows actually find the worldwide fame they thought they would get.

They have failed to recognize what industry they are in; they fail to realize why people go to concerts. Often times the world’s best technical singers are often found in the classrooms teaching others how to sing. If you had a myopic view about the music industry you would find it hard and frustrating to see the success most famous pop stars receive. You would think it as injustice to see better singers who do not have the same level of success. However, when you truly understand the reality of the situation everything becomes far clearer. You are different; you understand markets on a far deeper level than your competition.

Every time competition increases; commoditization of goods and services is apparent. Even doctors, chiropractors and accountants become commodities as people now find their answers online. Understanding and serving your markets’ needs on a real deep value-based level is the most effective way to de-commoditize yourself in markets that are continually commoditizing.

When you can expel business myopia you will see your business in a more exciting and expanded light. Remember your product is not your business, your client is, and when you know what truly drives them the possibilities for your company are endless.

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