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Fundamentals of Marketing

Fundamentals of Marketing

The most fundamental aspect of marketing is the understanding of your customer, or target prospect, regardless of ethnicity or any other attribute. This "Understanding" encompasses the demographic, lifestyle, attitudinal, behavioral and other attributes that uniquely describe your customers, versus the rest of the market. In direct marketing this "Understanding" means the unique mix of attributes that quantify the difference between a settlement base (or target group), versus responders, applicants, or buyers. Without this, marketers are guessing at "What" to offer, "Which" channel to deploy and "When" to deploy. The "Understanding" of your target prospect means you know "Who" to make your offer to.

As a general rule, specifically in direct marketing, correctly understanding "Who" to target (your List) accounts for 50 – 60 percent of a campaign's performance. Knowing "What" to offer, in terms of product and service features / price / terms etc., accounts for 30 percent of performance. Knowing "Which" channel / package / message / creative determinates 10 percent of a campaign's performance. Understanding the needs of your target prospect / buyer is not as ominous as it used to be. There are numerous public data sources that can be used to get a handle on these attributes. The critical marketing practice most overlooked by new marketers is understanding the attributes that distinguishing a response from everyone else and a buyer from your responders.

The more comprehensive this understanding becomes, the more opportunity marketers have to customize their campaigns to specific target groups with specific messages, with tailor messages, at the right time, with differentiated offers, via their audiences preferred channels.

Optimizing the "When" or timing of when your target is in market can be the most difficult task. This is the primary reason inexperienced marketers jump from channel to channel, never giving campaigns enough time to mature. These marketer's sometimes test in too small quantities, on a one time basis. Even when hitting the right audience, it is sometimes the wrong time. At high campaign volumes the likelihood of the right "Who" being "in market" is much higher. At very small campaign volumes, Ie 5,000 solicitations, the likelihood of that right "Who" being in market is much lower. Over time, the highs and lows of response will even out. Therefore, experience supports that it is critical to execute campaigns for at least four to six months.

The most strategic marketing decisions after understanding the target audience are:

Determining a Unique Value Proposition:

This is a crisp description of why your target prospect should become your customer. It is the benefit to them. It has to be quantifiable and understandable, typically in one sentence. The typical mistake made is that novice marketers articulate Value Propositions as if they are talking to each other. The consumer rarely understands these propositions. It appears easy until you have to create it. The difficulty in creating one is the single reason very few marketers have one. But. The good marketers each have one. These are both at the corporate and product levels. As examples:

Corporate: Ie FEDEX – "The World On Time", eBay – "What ever it is, you can get it on eBay.", Intel – "It's what's inside."

Product: Haines – "Comfort Waistband", TrueGreen – "For Your Home Complete Lawn Care Needs".

Articulating the Value Proposition across copy, creative or scripts / messages:

Prospects need to understand what is being offered, how they will benefit, at what cost, and how to get it.
The second mistake is attempting bundling multiple offers, or making many options available to the prospect. Inexperienced marketers many times assume that a menu of choices will increase response because the prospect will have a variety to choose from. In most cases the opposite happens. They are either confused or lack the patience to understand the options. You have a very short window of time to capture your prospects attention. Be clear, concise and tell your prospect what to do to redeem your offer.

Selecting the targets' preferred channels:

It is critical to understand which channels your target prospect responds to today. Your first and simplest decision is across three overall choices: Broad market (TV, Radio, newspaper, Etc.), Direct (Direct mail, Telemarketing) and Interactive (the internet). You may see hybrid channel tactics, such as TV or radio driving response to an 800 # and / or the web. But what you rarely see and should avoid at the early stages is deploying two of the three or all of the overall three choices. This is RARELY cost effective. When you see it, it is typically by a very large company like a national bank or insurance company who has a full product line, attractive to all consumer segments. For example: Bank of America, Wall-mart. As a small company, you want to pick one of the three, which you can communicate, a clear value proposition to the right audience.

Determining expected response and conversion rates:

Typically only the large scale marketers have quantified their response and conversion rates from broad market media. Many marketers are able to quantify click-through's (CT's) from their interactive campaigns, but are unable to tie clicks to purchases. Typically, direct marketers have the ability to set expected response and conversion rates in advance, based on experience. Regrettably, few accurately track conversion rates and even fewer track response rates. There are no overall standard set of response and conversion rates. But, you can use the following benchmarks for planning:

O Former customers will respond and convert at 6-10 times the rate of prospects,

O Direct marketing campaigns using statistical models, driven by transaction data, such as property or credit data, perform 3-4 times better than non-modeled campaigns,

O Adding a second channel to a campaign (Ie telemarketing following direct mail) can lift conversion by 25 – 50 percent. Adding a third channel has little impact on response and conversion, but will dramatically lower ROI, due to the cost burden.

O Marketing to response lists, purchased from list brokers can be effective. However, these lists are typically small, and can be hit or miss.

O Email as a channel for B to B prospecting typically has at least double the performance levels of B to C prospecting

O Email campaigns to customers or recent contacts can be as much as 100 times the response and conversion rates of email prospect campaigns,

O Unless you are deploying an email launch platform that is "White Listed" reach rates can be as low as 20 percent and as high as 60 percent, while "White Listed" platforms are typically at / or above 90 percent,

O There are ranges that can be used for each industry. For example, across banking, lending and insurance prospecting response rates to direct mail can range from 0.25 to 0.65 percent, with conversion rates from 3 to 10 percent. Adding telemarketing can lift these performance levels by 25 to 50 percent. Adding email has minimal lift.

"White listed platforms" are those recognized by the Internet Service Providers (ISP's) as companies / platforms with fully compliant (opt in) email lists, following acceptable marketing practices.

Setting budgets, ROI objectives and campaign volumes:

The marketer's quandary is that these objectives must be set together, based on actual history. Many times it is helpful to approach setting these as follows:

O If the campaign is for acquisition, retention or cross-sell of other products, start with ROI (as [Revenue-Cost] / Cost) and historical response and conversion rates. Then, if there is a budget cap, determine the expected quantities of responders and converters. If the objective is to test for ROI, then limit the test to a sufficient observable response and converter base. If the objective is to maximize volume, calculate the budget to achieve desired volume goals.

O If the objective is longer term to profitably scale, then the most important early driver of performance will be a statistical model, predicting response and conversion. To build these models you need an unbiased set of responders and converters. Calculate the campaign volumes, budget and ROI to secure these responders and converters.

O Plan that you will need at least 500 – 1,000 responders and 300 – 400 converters. You likely will not capture these volumes in one campaign. Therefore, you'll need results from multiple campaigns.

Determining the optimum buying experience:

This is a new frontier, for now, consider that typically marketers approach the consumer under the "Marketers Terms". The new frontier is segmenting your most attractive customers and historically observing how they elected to approach and do business with the company. Once defined, replicate this "Experience" for prospects that look like your best customers.

Capturing Response:

This is the area where most marketers seem to be unable to control. Yet, it is the area of ​​knowledge that when applied has the most significant impact. Allowed one to understand how the target prospect elected to respond. Captured, it is the one behavior that you can model and replicate. Response to direct campaigns can be captured via:

O Deploying campaign specific 800 # ', Using a third party service like "Who's Calling" to track inbound calls,
O Driving response to the web, requiring and capturing self-identification information (name and address).
O BRC (Business Reply Card) – being used less and less since BRC's dampen response, compared to web, email and inbound options.
O Visits to retail locations
O Attending seminaries, etc.

The simplest and most effective way to manage responses (depending on planned response volume and product / service offering) is to partner with an inbound telemarketing agency that can manage your inbound responses, specific to your campaign. They can (Reference Telemarketing section ahead) track your inbound calls and also drive responses to the web as an additional source for more detailed information. Website response management is another response tracking resource, which allows the prospect to "opt in" and provide key identification information (name, address, product preferences, etc.), which can later be managed and used to not only measure success but also Define key learning's for future campaigns.

Although "Brand" is not included under the "Fundamentals of marketing" content structure, a focus on building a brand is many marketers largest downfall. Your brand is determined by the sum total of your customers experience with you. It is not determined by a logo, slogan, campaign or other marketing tactics. It is determined by the total experience of those you touch. Therefore, it takes time to build. That's why sometimes you hear it referred to as "Brand Equity". It's analogous to the equity in you home. You build it over time and it's the sum of your property, house, school system, etc.

Source by Moises Piedra

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