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Marketing by Individuals and Firms

Marketing by Individuals and Firms

Marketing by firms compared to marketing by individuals differs greatly in terms of customization level and personal attention.

LEARNING OBJECTIVES

Distinguish between the process used when deciding on marketing plan for a firm or organization and the process used for an individual

KEY TAKEAWAYS

Key Points

  • The overall marketing strategy of an organization should focus on developing relationships with customers to understand their needs, while also developing goods, services and ideas to meet those needs.
  • Marketing strategies include niche, growth and defensive strategies. These can be implemented with an eye toward market penetration, development or diversification.
  • Personal selling determines a customer’s needs and attains a sales order. The personal selling process is a seven step approach: Prospecting, Pre-Approach, Approach, Presentation, Meeting Objections, Closing the Sale and Follow-Up.

Key Terms

  • niche: an area in a market in which there are unmet needs that, when met, can lead to unique business opportunities
  • target market: a group of people whose needs and preferences match the product range of a company and to whom those products are marketed
  • strategy: a plan of action intended to accomplish a specific goal
  • personal selling: the act of using people to sell products to consumers face-to-face

Marketing by Firms

A marketing strategy is the combination of all of an organization’s marketing goals into one comprehensive plan. The overall marketing strategy of an organization should focus on developing relationships with customers to understand their needs while also developing goods, services and ideas to meet those needs. Creating a marketing strategy generally involves six steps:

  1. Information Gathering: Research potential customers, their needs and spending habits in order to understand what sort of product, service or idea they wish to buy. A specific method of information gathering is targeting, which is the process of finding customers whose needs and preferences match the product range offered by a company.
  2. Evaluation of Organization Capabilities: Decide what your organization can produce and what your organization is not capable of producing based on the organization’s specific strengths and weaknesses.
  3. Identify Market Opportunities: Research the current market for a product idea with no competition or strong demand.
  4. Set Objectives of Marketing Strategy: Decide what results need to be achieved in order to reach the organization’s goals. An objective is a specific result that an organization aims to achieve within a certain timeframe and with available resources.
  5. Formulate an Action Plan: List the specific steps the organization needs to take to implement the marketing plan, and assign the responsibilities to specific staff members. One such step is product positioning, which is the process by which marketers try to create an image or identity in the minds of their target market. Action plans should be based around the 4 Ps of marketing, or SIVA analysis.
  6. Monitor & Evaluate: Study the marketing plan at least once per quarter to track performance against the set objectives.

General Marketing Strategies

  1. Niche Strategy: A niche is an area in a market in which there are unmet needs that, when met, can lead to unique business opportunities. Niche strategy involves finding customers under-served by current offerings. An example of niche marketing is the online, self-help market in which businesses cater to highly specific aspects of peoples’ lives for which they desire tips and advice.
  2. Growth Strategy: This strategy aims to increase revenue from existing market niches and deliver better offerings to new target markets.
  3. Defensive Strategy: This strategy aims to maintain, or defend, a leadership position in a market by developing brand loyalty and mass distribution.
  4. Offensive Strategy: This strategy aims to adopt a policy of “destroyer pricing” to preempt the entry of new firms or drive away existing competitors. Also known as predatory pricing, this strategy is useful when competitors or potential competitors cannot sustain equal or lower prices without losing money.

Ansoff Matrix

To portray alternative growth strategies, Igor Ansoff presented a matrix that focused on the firm’s present and potential products and markets (customers). When considering ways to grow via existing products and new products, and in existing markets and new markets, there are four possible product-market combinations.

A matrix that focuses on present and future corporate growth strategies for companies and products - market penetration, market development, product development, and diversification.

Ansoff Matrix: Igor Ansoff created a matrix that shows alternative corporate growth strategies.

The growth strategies include:

  1. Market Penetration: This strategy aims to increase sales of an organization’s current products through an aggressive marketing campaign. Market penetration occurs when a company penetrates a market in which current or similar products already exist. The market penetration strategy is the least risky since it leverages many of the firm’s existing resources and capabilities. A prominent example of market penetration was the emergence of Facebook in the social networking market. It was able to take market share away from competitors such as MySpace.
  2. Market Development: This strategy aims to increase sales by selling current products in new markets to satisfy new consumer needs or to identify new market segments. The development of new markets for the product may be a good strategy if the firm’s core competencies are related more to the specific product than to its experience with a specific market segment.
  3. Product Development: This strategy offers new and improved products to the current market. A product development strategy may be appropriate if the firm’s strengths are related to its specific customers rather than to the specific product itself.
  4. Diversification: In this strategy, companies move into multiple lines of revenue generation. Diversification is the most risky of the four growth strategies since it requires both product and market development and may be outside the core competencies of the firm. In fact, this quadrant of the matrix has been referred to by some as the “suicide cell. “

Marketing by Individuals

Marketing by individuals, as opposed to organizations, can be most clearly differentiated by the strategy of personal selling. Personal selling is the act of using people to sell products to consumers face-toface. The personal selling process is a seven step approach:

  1. Prospecting – the step where salespeople determine leads or prospects.
  2. Pre-approach – consists of customer research and goal planning for the presentation.
  3. Approach – when the salesperson initially meets with the customer and determines the need.
  4. Presentation – the process of grabbing the customer’s Attention, igniting Interest, creating Desire, and inspiring Action, or AIDA.
  5. Meeting objections – salespeople should do their best to anticipate objections and respectfully respond to them.
  6. Closing the sale – the salesperson uses various techniques to gain a commitment to buy.
  7. Follow-up – following up will ensure customer satisfaction and help establish a relationship with the customer.

These are very general steps, but they form a foundation for differentiating between marketing by individuals and by firms. Personal selling represents the focus and customization that can be achieved through marketing on the individual level as opposed to the organizational level. More specific subjects in the realm of personal selling include qualifying leads; additional information gathering beyond the customer meeting; negotiating; ensuring delivery, training, and satisfactory use of products; and ensuring adequate billing and collection techniques. These factors will be explored in more detail in later chapters.