Most of the business owners I meet know that marketing is good. They also know that they should be involved in marketing. However, they rarely can answer the question, “What is marketing?” That fundamental question launches my ongoing series on the topic.
What is Marketing?
Let’s first look at some definitions of marketing. First, consider what Wikipedia has to say. According to that site, the term “marketing” refers to
Activities to gain and keep customers, providing value to them through offerings and communication about offeringsWikipedia
We can also look at the American Marketing Association. Surely, they know what marketing is, right? As of 2013, here’s how they define marketing:
Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.American Marketing Association
I like to consider marketing from the perspective of what it does.
What does Marketing do?
Practically speaking, marketing satisfies the needs of a business’ stakeholders.
What is a stakeholder?
As far as I’m concerned, a stakeholder is anyone who has an interest in the performance of a business. So, who are your stakeholders? They include:
To a lesser degree, you can even say that the community is a stakeholder. After all, what your business does affects them.
So, you can think about all the things these people need. That’s a good exercise. However, I want you to think about one desire they all have in common.
Your stakeholders want your business to thrive. By that, I mean, they all need you to operate a profitable business.
When your company makes money, everyone wins.
How do stakeholders benefit when your business earns profits?
The community benefits because your business spends money there.
Also, your business pays taxes which, theoretically, help to pay for the community services and fund the surrounding infrastructure.
Your suppliers benefit because you spend more money with them.
Investors love profitability because it creates returns on their investment.
As a business owner, you benefit because profits mean that you get to pay your bills and support your family.
Are you getting the picture?
So, what does marketing do? Marketing creates the conditions that enable your business to generate a profit.
My Definition of Marketing
For practical purposes, I want you to regard marketing as the activities that are necessary to attract profitable customers.
Now, that includes a lot, so you’ll have to think outside the box.
For example, customers love to know that they will receive service after the sale. So, for this reason, customer service is a marketing activity.
Your management style is also a marketing tool. Customers love dealing with well-run, professional, and efficient businesses. So, if chaos characterizes your store, you’re probably losing business.
How is payroll a marketing tool? Well, pricing is a part of marketing. So, if your labor and other overhead expenses are too high, you won’t be able to sell at prices that your target market expects.
What makes your business profitable?
Certainly, good management can make your business efficient. You can control expenses. You can even make good investments. However, if you spend your time focusing on efficiency, that won’t make your business profitable.
Think about that.
Before your business can accomplish anything, it needs money. For practical purposes, this means profits.
I say that because you can get money from almost anywhere. For instance, you can start a Go Fund Me or Kickstarter project. you might even get a loan from a bank. Some companies have major investors who provide enough money to operate for months if not years.
However, sooner or later, profits are necessary. After all, there’s only so long you can go before you have to pay back your loans or return your investors money.
So to answer the question about what. makes your business profitable, the answer has to be as follows. You must receive more money from customers than it costs to deliver value to them.
Now we are getting back to my definition of marketing:
Marketing is the collection of activities that are necessary to make your business profitable.Bruce Tyson
You have to admit, that my definition is better than both Wikipedia and the American marketing Association.
So getting back to the question I asked at the beginning of this section: What makes your business profitable? The answer is marketing.
So, if marketing makes your business profitable, what does marketing involve? The overarching concept of marketing is to identify the needs of a particular set of consumers and then meet those needs.
As already noted, while meeting the needs of consumers, you must deliver exceptional value in a way that customers pay more to receive that value than it costs your business to deliver it.
Generally speaking, your customers are your most important stakeholders. I say this because
So, you need to meet their needs, offer benefits, and satisfy their desires.
By needs, I’m referring to the physical and/or psychological needs of your stakeholders.
Moreover, your customers want to have their needs met in a particular way.
Ultimately, demand exists when your customers have a desire for a product or service together with the necessary resources to acquire them.
You can choose one or more ways to satisfy the demands of the marketplace. For instance, you could open a store in a shopping center or on eBay. You could also open your own e-commerce store.
Of course, your customers might not prefer every form of business. So, before you open a physical store, you should find out whether your target market will shop there.
In addition to offering the right form, your business must provide the right products and services at the right time and place.
Going Further with Marketing
Now that you have a solid marketing foundation, why not learn more?
Visit the Small Business Administration’s Marketing 101 course.
Also, stay tuned, for Part Two in my series on marketing basics.
What is marketing? It’s a collection of activities that create profits by connecting your goods and services with the people who need them.