Lesson: Marketing Basics
Small Business Marketing
The art and science of customer satisfaction
The purpose of marketing is to help you attract and keep customers. As such, you should consider marketing
as an investment, not an expense. Marketing techniques will enable you to communicate with potential
customers, creating awareness of the value of your products and stimulating demand among selected buyers.
Marketing is the process of developing mutually satisfying, ongoing, profitable relationships with
current and potential customers.
In contrast to a simple sales approach, which is product-oriented, the marketing concept is people-oriented.
Based on the relationship between the business and the buyer, this approach emphasizes the importance of
the tangible and intangible aspects of economic transactions. It recognizes that long-term relationships are
much more financially rewarding and personally satisfying to both parties than the quick sale. Small businesses
that interact with their customers regularly are in an excellent position to take advantage of these basic
marketing principles, thereby ensuring repeat business and positive word-of-mouth referrals.
A marketing approach emphasizes satisfying customer needs-necessities such as food, clothing, and
shelter - and wants, such as status, entertainment, and style.
To meet the challenges of a highly competitive market, small businesses must attend to customer needs which
should direct strategic business decisions. Successful companies make a practice of listening to past, current,
and prospective customers. The insights gained through this input enable businesses to design desired products
and services, anticipate changing customer needs, and modify products and services accordingly. Companies
that are attuned to customers stay ahead of the competition.
If you are to succeed in today's marketplace, you must master both the art and science of satisfaction. As
we explore the basics of marketing, you will find that you already practice many of these skills every day. In
essence, marketing is about communication with your customers. If you are a good listener, you are well on
The customer as the driver
Marketing encompasses all those activities that facilitate the flow of goods and services from the producer to
the consumer. It is clear that the needs and wants of customers should be central to the overall mission and
direction of every company, guiding each area of business operation and every phase of the marketing process
from creation to consumption of products and services.
Research and development. Customers' wants and needs point to appropriate avenues for
growth and diversification.
Product planning. Customers' wants and needs define the nature and types of products, their
features and benefits.
Distribution. Customers' convenience dictates availability, outlets, and delivery of products and
Merchandising. Customers' tastes will guide development and placement of logo, brand marks,
trademarks, and packaging.
Advertising. Customers' interests, opinions, tastes, and values will direct your advertising
message, methods, and media placement.
Sales promotion. Customers' interests will suggest opportunities for point of purchase, crossmarketing, and other promotions.
Publicity. Customers' preferences and habits will determine opportunities for targeted publicity,
special events, and community involvement.
Sales. Sales staff will focus on long-term relationships, ongoing service.
Keeping the customer's point-of-view in mind throughout the business cycle enables companies to identify
emerging business opportunities, introduce innovative products and services, and create whole new markets.
The contemporary marketplace
The contemporary marketplace is every bit as colorful and crowded as the bazaars,
souks, and stalls of other times and places. They’ve been replaced by corner markets, small businesses,
shipping magnates, and international corporations. The modern marketplace also encompasses the on-line
world, a global computer network that enables even the smallest business to reach national and international
You are already familiar with the workings of the marketplace. As a consumer, you know from experience the
satisfactions of purchasing a high-quality product and the frustration of being stuck with a "lemon." You know
about competition and may have taken advantage of price wars between companies in industries as diverse as
airlines and automobiles. This personal knowledge will be invaluable as you make decisions about your own
Despite the similarities of our marketplace to the markets of simpler times, you should be
aware of significant differences, principally in technology, communications, regulation, and, as a result,
changing consumer expectations.
Consider the telecommunications industry as an example:
Today's sophisticated media consumer, who has access to innumerable products and services, is
no longer satisfied with a few simple choices. Since the introduction of television, audiences
have come to expect such features as color, stereo and big-screen viewing, and programming,
not only from the major networks but from cable companies and satellites as well. Now
traditional telecommunications companies are scrambling to respond to the challenge posed by
the interactive programs available on the information superhighway.
Along the way, audiences have been inundated by advertising and programs in questionable
taste. Consequently, consumers are less susceptible to the claims of advertisements and more
critical of program offerings. And the industry is faced with governmental regulation or a
voluntary rating system.
Telecommunications and related businesses must be sensitive to the impact of all these factors on their
current operations and their future plans and prospects. Similar issues and developments face companies
large and small in every field of endeavor.
Take a moment to reflect on the changes in your area of business over the last 50 years. What are the primary
differences in technology, advertising, and promotion, in governmental or industry regulation, and in
customer expectations? Understanding and responding to both continuity and change will be essential to your
success in the modern marketplace.
Defining and understanding your target markets
Common and intelligent uses for research, both primary and secondary, are:
To understand what motivates a customer to purchase a particular product or service
To understand a customer's behavior with regard to product purchases and usage
In order to conduct research with current or potential customers, you first must be able to identify and define
the customer you wish to understand.
Because each individual customer is as unique as a fingerprint, no single product will satisfy everyone. Some
people like Coke"; others prefer Pepsi"; and many cola drinkers may give up caffeine, sugar, or even sodas
themselves as the aging process or social changes stimulate increasing health consciousness. Despite this
variety among customers of almost all products, specific market segments can be identified: groups of
individuals with shared histories, interests, values, incomes, and other qualities who are likely to have
common needs, wants, and behaviors.
Markets can be segmented according to shared consumer characteristics (e.g., age or sex) or similar behaviors
(hiking, sewing, television viewing). By using these categories, either alone or in combination, to analyze your
target market, you can gain valuable insight into what makes your customers tick and what makes them buy.
DEMOGRAPHIC SEGMENTATION. This approach focuses on objective consumer characteristics such as
age, sex, ethnic background, religion, educational level, occupation, income, and household size.
GEOGRAPHIC SEGMENTATION. This approach focuses on the physical location of consumers and can
include international, national, regional, area, or local breakdowns and also such factors as climate and
PSYCHOGRAPHIC SEGMENTATION. This method focuses on subjective factors such as lifestyle,
attitudes, and values influenced by social class, generational experiences, and group affiliations.
Defining and understanding your competition
Another valuable benefit of marketing research is a better understanding of your competition, the other
major player in the marketplace.
Getting specific data about your competitors can be somewhat difficult as they are unlikely to share their
secrets voluntarily. However, a significant amount of information is available through a variety of public and
private sources. You should make a practice of reading the local newspaper and business publications. When
conducting research on a particular competitor, back issues of the local business journals can be an invaluable
resource. Public documents such as tax records and annual reports are sometimes informative. You may also
want to review findings of the Better Business Bureau or, if you have larger corporate competitors, a financialratings company such as Dun and Bradstreet. In addition, watch for your competitors' advertising and
promotions in all types of media.
One of the most effective means for a small-business owner to get detailed information is to mystery-shop,
posing as a potential customer. You can do this by phone or have a friend or colleague do it in person. These
visits will give you the best view of facilities, professionalism, and customer orientation. Ask for quotes on
specific products or services, estimates of days required to provide a specific service or product, extra
services such as gift wrapping or overnight delivery, guarantees and other relevant information. You will
learn a great deal about your competition and may get some innovative ideas as well.
Once you have completed your research, the information you have compiled should be analyzed and
filed for future reference. Add to this profile on a regular basis in order to maintain ongoing, up-to-date
information about your competitors.
Are you ready to apply this information to your business? Go to the Marketing Basics worksheet next.