One of the keys for an SME to grow is the
professionalization of the role of marketing. There is a widely shared belief
that the marketing is only for the large companies. However, most of the SMES
develops marketing actions on a daily basis, but they don’t say they are doing
marketing: they say they are simply "doing business". Let me share
with you just two typical examples: a restaurant’s owner who invites a good
customer with an extra drink with the hope of a soon return or a 2 x 1
promotion with an end-of-life product. So, obviously, SMEs do marketing every
day. But they don’t do it in a structured way and responding to a formal
business strategy.
But let's start at the beginning: what is marketing and
what’s it for in an SME? Marketing is the discipline that develops
methodologies and techniques to achieve the business objectives of an
organization and looks for the best way to meet the needs of consumers and
customers. In the words of Raul Peralba, marketing is "everything that
needs to be done to enable the sales; that is, it is the art of
attracting and maintaining customers".
In this process we must be able to find out how customers
think, how they work and what they want, and how we can find a place for us in
a market that is full of competitors. Marketing must, therefore, manage a
difficult balance between the capabilities of the organization, what the market
demands and what the competition leaves us to do.
Philip Kotler, one of the world's leading authorities on
the subject, defined the process of marketing in five phases clearly
identified:
1. Market research and economic environment.
2. Definition of the target market.
3. Definition of the marketing strategy.
4. Management of the Marketing Mix.
5. Control.
This process is similar for any type of organization
regardless of its size or activity profile. However, with the aim of
simplifying and with the permission of Mr Kotler we can say that a Marketing Plan for a SME should contemplate the following 4 chapters:
Diagnosis
A good marketing plan should include an analysis of the
current situation of the business. Therefore, there is a need to identify
clearly the market is serving, the competition, the regulatory and
technological context, the economical situation, etc. It also should consider a
diagnosis of the brand image of our organization. At the end of the day, our
sales are also determined by our reputation.
There are several tools for this phase. The most
well-known and perhaps the easiest to implement is the SWOT. On one hand, it allows
us to identify weaknesses and threats and, on the other, strengths and
opportunities. This exercise can be complemented by another model of strategic
analysis: the analysis of the Porter five forces. With this methodology we can
address, among other things, the bargaining power of buyers and suppliers, the
potential appearance of substitute products or the threat of new entrants in
the market.
Finally, in this stage of diagnosis, we must develop a
benchmarking exercise; that is, compare our marketing activity, communication
and product with the competition to identify best practices from which to learn
or copy if our strategic model is compatible. At this point we must try to
overcome the temptation to believe that our model is based solely on the best
price. Let us consider, for example, the latest sale that we have done and the
motivation of the client to buy: Was it only a question of price? Was the
customer influenced by the good relationship established with him during the
last few months? Did it have anything to do the customer care service?
If the budget or the
level of ambition of your small business permits it, there is an additional
possibility that usually requires the participation of an organization
specialized in marketing services: market research. Through this tool, you can
get very valuable information such as market share (yours and your competitors)
or brand recognition. You can also check a new value proposition in its
pre-launch phase (see next point). There are also many platforms on the market
that can be used free of charge.
The use of all the
tools mentioned above will make you have a thorough knowledge of your
competitive reality and your real potential to have a differential proposal.
But what it is more important: this information will also enable you to
identify new customer needs that can have an adequate response from your
company.
Determine goals and value proposition
It is the time to
determine the objectives. These can be of two types: purely economic (for
example, selling a certain quantity of product or attain a certain market
share) or more intangible (for example, being the most recognized or preferred
brand). Obviously both types of goals are perfectly complementary and can live together
in our marketing plan.
In this phase it is
very important to determinate a differential value proposition. On the basis of
what we already know (diagnosis) and what we want to do (objectives), we must
build a solid proposal in terms of product, service or experience that really
meets the latent needs of our target customers. I stress once again the
importance of not be swayed by the first impression that the price is the sole
determinant of the reason for the customer's purchase.
To do this it’s
very helpful to develop a market segmentation exercise. This will identify
homogeneous groups of customers who will respond in a similar manner to the
actions of the marketing mix.
Action Plan (marketing mix)
The marketing mix is
the combination of four tools that an organization uses to implement the
strategy and achieve the goals. This is often called "the four P" of
marketing:
Product. It is based on the products and services company portfolio
management.
Price. It is a fundamental element and it is perhaps what let
you adapt faster to the competitive circumstances. Obviously, your objective is
to generate income and it is determined by the costs of production, the margins
you wish to obtain, the competitive context, etc.
Promotion. It’s about communicating the brand, the
benefits of the product or service, etc. The advertising, public relations,
direct marketing or sales promotion are some of the basic tools of
communication. At this point, it is especially necessary to recall the important
role of social networks.
Placement. This is the element of the mix that
manages the process by which a product arrives in a satisfactory manner to the
customer. Under the distribution policy you have to manage the distribution channels (all the agents involved
in the process to move the product from the supplier to the consumer), the
physical distribution (transport, stock management, etc.) and merchandising
(actions that are performed at the point of sale).
Monitor and measure
Although Peter Drucker
used to say that "the marketing produces results, the rest only
costs", the marketing plan quite often needs a specific budget. Therefore,
it is imperative that you check your implementation and measure the return on
investment (ROI). A good measurement will allow you to add value to the
marketing action and facilitate the provision of resources for future plans.
To finish this
post, I'd like to share a quote from David Packard (co-founder of Hewlett
Packard): "Marketing is too important to be left to the
marketing department". It is a nice way to remember that marketing is
a responsibility of senior management. Therefore, if we talk about SMEs and you
are the owner or manager of one of them, you should take this discipline very
seriously.
