One of the things I think most people in the marketing world take for granted is that everyone understands the fundamental role marketing plays in business. However, through my daily interactions with other business owners over the past few years, I am amazed at the lack of understanding of the importance of marketing. More often than not, marketing is the backseat, tertiary thinking that comes after their products/services and day-to-day operations, even if they are a high priority.
One of the phrases coined by my business partner, James Orr, in real estate investing is that “everything starts with a motivated seller.” Without motivated sellers, there are no properties to buy, rentals to place tenants in, fixer tops to flip over, or wholesale deals. It is such an important aspect of real estate investing that it has almost become a mantra for the way James and a number of other successful real estate investors run their businesses. The key to connecting with motivated sellers is marketing.
I think a good place to start this discussion is by defining what marketing is. Google’s definition tells us that marketing is “the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to satisfy customers.” Marketing really consists of more than what most people think. Marketing is more than just an activity that drives sales. On the other hand, marketing includes all activities that seek to identify what consumers want and how to promote and deliver those goods and services.
Even before an individual or company makes the decision to manufacture a particular product or service, they must first take the time to determine if there is a market for that offering. If there is demand, they then need to figure out how to get that offer to consumers who want it, how to let consumers know it’s available, and how to set the price so there’s money left over to make a profit. This is all part of the marketing process, and must actually happen before the product itself is produced.
In a more general use of the term, “marketing” is often seen simply as an aspect of promoting a product or service that is already available. This part of marketing consists of making consumers aware of what you have to offer, and convincing them to buy it. There is a tendency in corporate circles to separate the marketing and sales functions into separate departments, which is often a mistake. The purpose of the marketing promotion element is to drive sales, and therefore the two functions are intricately interrelated. A good example of the disconnect between these two departments is when companies that sell capital equipment have more people in their marketing department than they do in their field sales force. Another example is when marketing and product development people ignore input from field salespeople. This input often comes from actual customer contact, which is not experienced by most employees of large organizations.
The main purpose of one of my blogs is to test a marketing campaign using a variety of messages, media, and markets, often referred to as the three M’s of marketing. Before we run the test, we first do some background research to determine if there is a market for what we are considering selling, and we analyze whether we can at least break even on the marketing test using certain realistic assumptions about sales. ratio. Pricing strategy is also something we often discuss before launching a new test. The actual development of the sales copy, writing and placing of ads, setting up the measurement system, etc., happens later in the process. Creating sales and tracking metrics, then changing marketing, is the next step.
Unfortunately, many business owners don’t understand the importance of marketing. Because of this, they fail to plan for rough points in the business cycle, such as low seasons, economic downturns and other events. As the cliché says, “failing to plan is planning to fail.” Every business should have some sort of marketing plan, and it should be in writing. Companies that don’t “do” marketing will always fail.
In short, without marketing there is no selling. And without sales, there is no revenue. And without revenue, any business will quickly succumb to statistics showing that almost 2/3 of all businesses fail in their first 4 years.