Developing a Marketing Strategy
This section covers all the areas you will need to consider when developing a marketing strategy, including product definition, pricing, promotion and product life cycle.
Once you have set a strategy for marketing your social and commercial products and services, you will be able to specify set of objectives. You will need to be able to monitor and report progress towards those objectives and, finally, review the strategy.
Marketing objectives should be stated in SMART terms. SMART means that the objectives are
- Specific (not conflated with other objectives)
- Measurable (how you will know it has been done)
- Achievable (say who is responsible for making sure the objective is achieved and what resources will be required)
- Realistic (where the required resources will come from; critical dependencies)
- Timebound (when it will be done by)
Monitoring and Review
The better that different marketing initiatives can be correlated with results the easier it will be to monitor and understand what is working (though the PEST has to be taken into account at the same time). Trying one change or one new effort at a time makes this easier. Review and analysis will then reveal what works and what doesn't and thereby enable the Social Business to become more cost effective in its marketing efforts.
See also Business Wales Marketing Zone
The Marketing Mix
In order to achieve its marketing objectives a Social Business requires a strategy that includes different elements – the various parts of the marketing mix. Calling it a mix reminds us to try and get the balance right between the different elements. It is easy to assume that one part of the mix is wrong, when in fact it is another. For example, if take-up of a newly priced service is poor, it could be that the answer is to change the service, or to deliver it in a way that is more convenient to the user, or to improve the quality of the promotion (rather than to cut the price).
The 8 P's of the marketing mix are:
Defining the characteristics of the product or service to meet the customers' needs. This includes social product and their purchasers in statutory organisations or funding organisations. There is more discussion of social outputs, incomes and impacts in social accounting in a social business.
Deciding on a pricing strategy by considering:
Cost-based pricing, which is based on the total of all costs associated with delivering a product or service to a customer. An example of cost-based pricing would be when an organisation identifies all of the costs associated with producing a product or service, adds them up, adds a margin for profit and arrives at the 'price' the customer is to be charged. This type of pricing is the 'floor' for pricing decisions in that it is as low as the price can be and still covers all of the costs associated with delivering the product or service. It is very important to calculate in every component of the cost structure not forgetting the costs of depreciation and replacement, human resource development and a minimum acceptable profit. Otherwise there is a danger of selling at a loss and making the Social Business an unsustainable enterprise.
Value-based pricing, which is based on perception of the value the potential customer might place on the product or service. An example of value-based pricing would be when an organisation believes that people would pay £20 for a service and decides to price it at £20 even though the price might be set at £10 based on a cost-based model. This type of pricing is the 'ceiling' for pricing decisions in that it is as high as the price can be and still find a willing customer. It has no relationship to the cost of production, rather it is influenced by perception of alternatives customers face.
Competition pricing, which uses the competition's prices as starting points – if your product is an improvement, you can sometimes price it above the competition, as long as you communicate to your customers the reasons for the higher price (say: improved service, choice). Pricing below the competition could lead to a 'price war', which could be hazardous if the competition has more financial resources for the 'price war' than you do.
3. Place – distribution – location
Any Social Business needs to consider how its services are made available to the target market, whether this is about footfall for a retailer, access to road and rail for a wholesaler or ease of click-through for an on-line service provider. The best option usually proves to be more economic than the cheap option. Clustering can be helpful – a group of enterprises in related fields creating a critical mass towards which customers gravitate.
If there are existing methods of distribution and sales in your trade it may be more economic to use them than to create a rival channel while you stick to the knitting of creating those goods or services. It may also be appropriate to join with other Social Businesses to share the cost of creating marketing channels and promoting them to customers.
This includes advertising, personal selling (attending exhibitions), sales promotions (special offers) and PR. Importantly for a Social Business it also includes the whole area of Brand Values. Values is an area of particular strength for Social Businesses and the mechanisms by which these values are associated with the product and used to create the right reputation with customers are important, as is the way they are impressed on the media and the public and protected by good PR.
Successful promotion depends on good definition and understanding of the target market, (the people who actually make the purchasing decisions), who influences them, what media they read, watch, listen to, what concerns them and what messages they respond to. The promotional strategy can then be worked up - what messages, delivered through what media and how can this be achieved with the minimum of the scarce resources of time and money.
The same message arriving from different directions in different ways to the target market is especially powerful – it is how the human mind recognises that there is something in their environment significant enough for them to take notice of and seek information about. If the information is held on a web site then it is important that the information you want the potential customer to find is easily accessed and the action they need to take to become an active customer is obvious, quick and easy. Once you are sure this is the case it is worth sending out the promotional messages and ensuring the link to the information is with it. The most powerful means of delivering the promotional message is still word of mouth and human contact.
These are the core ‘4 P’s. However, further analysis helps develop a more well rooted marketing strategy – we add a further ‘4 P’s’
Selecting, recruiting, hiring, and retaining the people who will do the job that needs to be done is among the most important parts of business
6. Packaging and labelling
Whether product or service, the provision of well explained product information including provenance gets more important every day as markets become better informed and more discerning. Again it is important to keep those Social Business Brand Values highlighted.
7. Product life cycle
Products, not unlike people, have-life cycles. They move from birth, through a period of growth, to maturity, then level off somewhat before declining towards their demise. The decision on whether or not to produce or provide a particular product or service should depend, in part, on what stage in the life cycle the product is in. Some products have a short life cycle while others enjoy more prolonged lives. The life cycle concept informs the form of advertising and promotion to be used. Products can be redesigned if necessary, and products can be dropped if necessary.
There are 5 stages in the product life cycle:
i) Introduction - in this stage, the product is launched, and the first barrier to overcome is people's lack of awareness of the product and its features. Sales will rise very slowly and promotional costs will be high. Promotion emphasis is on introducing the product to the public and attempting to have people try the product for the first time.
ii) Growth - in this stage, sales rise slowly and a flood of similar competitors may enter the market. Prices probably fall as a result, which can translate to even more sales.
iii) Maturity - in this stage, the growth in demand begins to slow down. Competitors modify their products, stressing design and style, and making annual model changes. Smaller firms fall by the wayside in this stage, overcome by the larger, higher-volume dealers who can afford to offer lower prices and better service.
iii) Saturation - sales demand stops growing and levels off. Selling costs increase because most people, or all people, who want it, now have the product.
iv) Decline - sales demand drops off, never to regain its former level. Prices are cut and advertising is reduced considerably. Many companies simply drop the product at this point. A Social Business may have to adjust its marketing mix in each life cycle stage, to compete effectively and to maximise profits.
8. Publicity/Public Relations
Publicity is free exposure in the media, in the form of news reports. Getting column inches or radio and TV time is still all about human interest stories and photographs. Getting mentioned in tweets and blogs is all about being up-to-the-minute with what is trending on social media and humour. This is a specialist area requiring talent, training or both.