customer_action = customer_need * demand(product(5cs), place(5cs), price(5cs), promotion(5cs));
If you don't understand marketing quite this well or this precise, read on.
I am passionate about learning. I am even more passionate about teaching: I love it. I love learning through teaching. Recently, I decided to start sharing some of my business knowledge with friends and family. My son is helping me (as you can see here!). The topic of this day was "Marketing Basics" and to highlight, this is the view from an engineer-type mind (my own). So you will see, it is simple, straightforward, organized, and logical. Engineers, pay attention, all the marketing basics are IN THIS BLOG POST! After this, you will probably be a better marketer than your VP Marketing (who forgot all this because it wasn't organized or learned as rigorous as science is by engineers). My 5 YO son grasped most of this... you can too.
Marketing Basics:
THE GOAL:
The goal of marketing is simple.
To build demand, awareness, and action.
Marketing (as a class) has 4 member functions: (The 4 Ps of marketing)
Product
Price
Place
Promotion
1.) Product - to help define a product/service that satisfies a need, solves a problem, or is otherwise desirable. It's features and benefits SHOULD be defined by marketing.
2.) Price - to set a price which maximizes profits based on demand. (see economic theory). NOTE: this price should be based on PERCEIVED VALUE, not on cost.
3.) Place - to find the best places to put the product/service where it is convenient and readily available to the target customer.
4.) Promotion - to advertise and educate customers about the product/service, price, and PLACE. NOTE: must create 'action' here, and SHOULD be measurable.
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Marketing's tools/variables.
Marketing has 5 member variables that must be considered... the 5 Cs of Marketing.
Customer
Company
Competition
Collaboration
Context
1. Customer - who are they, and what do they want? This is vital information (inputs) to the functions of marketing (the 4 Ps above).
2. Company - who are you, and what do you want? Often this is your competitive advantage and the goal of your business.
3. Competition - who are they, and how are you different/better?
4. Collaboration - who can help you and why?
5. Context - what's going on in society and how can that help/hurt you?
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That is it. Really.
Can Marketing be made more complex? Sure... is that good? You decide.
For me, I'll keep my marketing simple. I'll deliver the 4 Ps using the 5 Cs, and get it out there and get it going... to acheive the goal: build demand and create action.
For me, action is sales. A topic for another day!
Posts
I like to share a few comments from Facebook (wish I had a way to connect it automatically)
ReplyDeleteFrom Jason:
Indeed - pretty simple when you distill it down.
A good point about Promotion. One of our friend Chris's favorite quotes is:
"If you only create brand awareness and don't promote consumer action, you've done nothing."
from Shane:
ReplyDeleteHarlan, how did you control for endogeneity between price and demand in your formula
to Shane:
demand is a function of price in my equation
price as a function of demand is not really marketing; that's economics
e.g. in marketing we set a price. then the business/sales guys foolishly slash it :)
thinking it will increase demand.. but it usually just causes a short-term bump in sales.
from Shane:
price -- it's always the classic case with supply and demand. what drive what and are "we" really thinking thru the impact and controlling for endogeneity or are tehy exogenous to the model
to Shane:
yes, I agree. But Marketing is about 'setting an initial price'.. in order to try to create demand. Then sales later reduces that price when/if the demand we hoped would be there doesn't materialize.