New businesses, as well as established ones developing marketing strategies in 2018 and beyond, should formulate plans around the seven functions of marketing. Many business owners take for granted that their companies have a good grasp on these functions; however, it is always wise to revisit this list annually, refresh your approach to these functions, and consider the ways the marketing landscape has changed with new trends and technology always on the horizon.
Function One: Pricing
The Pricing function considers the cost to produce the product itself, the prices of competing or similar products, and an analysis of what customers are likely to pay for the product. Pricing competition could be one of your toughest barriers in business: consider every possible way you can price the product lower than your competitors and remain profitable OR what additional value you can offer that the competitors don’t.
Both overpricing and underpricing can kill your bottom line, so business owners must be committed to doing a tremendous amount of research in this area. So many factors are at play here, from the perceived value of the product to the demographics of the customer base. Expanding businesses always have to take the pricing function into account: your successful retail chain in urban cities may not translate to smaller, rural markets without some pricing adjustments. Establishing effective pricing is impossible without knowing your audience, and Marketing Information Management is another important piece of this puzzle.
Function Two: Marketing Information Management
The Marketing Information Management function can best be described as research. Any would-be business owner needs to gather and analyze information regarding its potential customers, competing products, and relevant industry trends. The importance of this function cannot be overstated as rushing a product to market without understanding the customer base—or the competition—can destroy a business before it even gets off the ground.
In the digital age, social media platforms are an incredibly useful tool for business owners to gather data. Surveys and polls seeking consumer feedback can inform decisions that affect the rest of the marketing functions and every business should be engaged in social media in some way.
Function Three: Selling
The Selling function is about communicating directly with customers to provide the information they need to make a purchasing decision. Cars do not sit on lots alone, with a single cashier waiting to take your money. The salesperson is there to answer every question you have about that dream automobile, allow you to test drive it, tell you about financing options, and ultimately convince you to make the purchase. Just as the retail salesperson brings you new dresses to try on when the first one doesn’t fit or the waiter convinces you that tonight’s surf and turf special is your best bet. They are all selling.
Function Four: Distribution
Distribution is the function of getting your goods to customers; as a business, you may do this directly via your own storefront, via direct shipments from your website, etc. But most businesses these days utilize a wide variety of third-party distribution options, whether you hire a company specifically to distribute your product, sell via Amazon, use contracted sales representatives, etc. As is the case with all of the marketing functions: research, research, and research some more! You need to understand where your most likely customers are to develop the plan to reach them and it will likely involve more than one distribution channel.
Function Five: Promotion
The Promotion function is key to what most people consider the very definition of marketing: telling people your product exists. Selling cannot happen without promotion and marketing; it is of no use to have a product for sale if people do not know it exists. Promotion is everywhere in the digital age, and products and services are being promoted to you every time you log on to a social media platform. Competition for consumer attention is at an all-time high, so businesses will promote their products and services with discounts, giveaways, customer loyalty programs, and more.
Function Six: Product
The Product function goes beyond simply creating the product and bringing it to market; this is about continually improving and refining the product based on customer needs and wants. Business owners must stay engaged with customers—especially via social media—to find out what they love about the product (and capitalize on that in your marketing efforts) as well as what they don’t love (and find ways to improve the product based on this feedback). We all know of examples where products have been updated and refreshed and met with great consumer enthusiasm, as well as when “revamps” have failed. (Crystal Pepsi, anyone?) Business owners must view product enhancement as a constant priority. When it falls from the priority list, a competitor will surpass yours with a far superior product and gain the market share.
Function Seven: Financing
Financing is the function of acquiring the funds necessary to set up and market your business. The definition is simple although the process is not. Many great product ideas never come to fruition due to the inability to secure financing. And it goes beyond the money to create the product and set up shop: business owners must plan for the long-term costs of running the business and marketing the product successfully. A successful marketing plan “pays for itself” by generating revenue for the business. And a second element of this marketing finance function comes into play where financing is available to help the consumers obtain your goods (think leasing options or credit terms). Depending on the types of goods and services you provide, you may need to build this into your budget.
Your entire organization, even beyond your marketing staff, needs to understand the crucial role these functions play in the success of your business. Everyone can have a hand in creating a successful marketing strategy, and the best marketing professionals know that good ideas can come from any source. Educate your employees on these functions and how your business plans and implements strategies for each of them. Internal buy-in will help you drive successful external results!