The Value of Marketing to Your Business

Hippos to Horses Marketing

The Value of Marketing to your Business

The Value of Marketing to your business is a relatively straightforward concept. At least, in theory, it should make your #tribe lives better, whilst at the same time, you the #hustler should get paid in the process. Concurrent goals occur in this process, the creation of Value for consumers and the capture of Value for the business owner. Kotler 1969[1] said that Marketing was a philosophy based on the exchange of Value and a path to profitability.

There is an enigma in how Business Owners understand marketing. On the one hand, marketing has become accepted as the fundamental driver of Brand/ Business value. Every Business owner knows that building long-term relationships with customers is beneficial. Yet while the role of marketing in achieving competitive advantage and creating Value is undisputed, the true meaning of marketing is often lost. Experience at Hippos to Horses Marketing has found that most people often confuse Marketing with Sales. This confusion leads to businesses reducing the budget spent on building brand equity and funnelling this money towards sales promotions. Usually, a company whose primary focus and resources are funnelled toward sales, end up with short- term profitability. Such a business also relinquishes the benefits that can be accrued such a price premium and customer loyalty. It is essential to realise that the investment benefits of marketing have a lagging effect, and this is probably why its Value is often undermined.  

Yet while the role of marketing in achieving competitive advantage and creating Value is undisputed, the true meaning of marketing is often lost.

Most small business owners use the wrong metrics to evaluate the Value of marketing to a business, i.e. an increase in sales and market share. Better criteria for assessing the benefits of marketing to a company are brand awareness, consumer attitudes towards brands, repeat buying and customer satisfaction. All of these have weak relationships with increasing sales and almost non to profitability. You must be asking yourself what is the role of marketing if it cannot be linked directly to revenue.

The importance of marketing management to a business can be accessed by defining its objective. What is the goal of marketing? As alluded to earlier, it is in maximising returns to us the small business owners. Marketing is not sales, but it is a process that seeks to maximise returns to you the business owner by developing relationships with customers and creating a competitive advantage.

Marketing is not sales, but it is a process that seeks to maximise returns to you the business owner by developing relationships with customers and creating a competitive advantage.

Suppose you are always pushing product at your customers without telling them of its Value. In that case, you are compromising your ability to generate profits in the long run.  The challenge is for you, the business owner to formulate strategies for selecting the right customers, building relationships of trust with them and thus creating a competitive advantage.

Marketing Assets

By investing in marketing, your expenditure creates assets that generate future profits. These marketing assets are what link marketing activities to value creation. Marketing assets are usually intangible, therefore, do not conform to the definition of financial resources.  Accounting principles recognise financial resources as being those resources owned by an entity whose cost at the time of acquisition can be objectively measured. (Antony and Pearlman, 1999)[2].This definition does not favour the appearance of marketing assets in the balance sheet.

The following marketing assets seldom appear on the balance sheet.

  1. Marketing Knowledge:- Exceptional marketing knowledge provides a core competency that conveys a competitive advantage in the Business. This knowledge helps your Business to identify marketing opportunities and develop marketing strategies. That is Value!
  1. Brands:-Successful brands convey compelling images to customers that make them more desirable than the competition. Remember, owners of strong Brands possess assets that attract customers. Strong brands command a price premium and the resulting profits can be enjoyed for a reasonable length of time. That is Value!

Owners of strong Brands possess assets that attract customers.

  1. Customer loyalty:-It flows naturally that such a Business will end up with a satisfied, loyal customer base. What does this mean for your Business? A loyal customer base buying your premium brand over and over can only mean one thing profits! and faster growth of your Business. Many studies have shown that loyal customers consume more of a company’s product. If you have read our previous blogs, You will know that we are partial to all things  Tommy Hilfiger on  “sale”. So Hippos to Horses Marketing cost Tommy Hilfiger less money to serve. It’s a win-win situation – its marketing in action; it’s the exchange of Value. Loyal customer cost an organisation less money to convince to buy and are also less price-sensitive  (Reichheld 1999)[3]. That is Value!
  1. Strategic relationships:- The networks you form along this process can provide incremental sales, access to new markets endless possibilities. Remember to treat everyone you meet as you rise up the ladder well, these relationships can be life-changing. That is Value!

 Despite all the advantages mentioned above, marketing assets do not make it to the balance sheet hall of fame. Owing to te because their Value cannot be measured with sufficient accuracy.

Research has shown that Small Business owners often encounter Marketing as a problem (Simpson& Taylor 2002)[4].The key to overcoming this perceived difficulties has been identified, surprise surprise by another study carried out by Hill and Hultman 1999[5].  A close evaluation of new Small Businesses that was achieving 20% growth over 5 years showed that these small Businesses were more market-oriented. The application of the following marketing management strategies:-

  • Differentiation,
  • Relationship building
  • Constant engagement.

Successful Businesses were diligent in understanding their customer needs,  purposeful in their intention to add unique Value and customer knowledge.  These efforts resulted in high customer satisfaction. It was also a  high priority for these businesses to ask the customer for feedback on services provided regularly. Small Businesses that was growing fast were also active in developing a product for an existing customer, i.e. Product development.

 

Successful Businesses were diligent in understanding their customer needs

As a small business owner, you too can reap the benefits of incorporating elements of Marketing into your Business. The internet has made it possible to conduct research from the comfort of our keyboards, build relationships and engage with our tribe on major social media platforms. The more you know your target market, the better placed you are to give them Value. What better Value is there than providing solutions to problems

[1] Kotler, P (1969), ‘ Broadening the Concept of Marketing,’Journal of Marketing, Vol 33 No.( pp10-15)

[2] Anthony, R.N. and Pearlman, L.K. (1999) Essentials of Accounting. NJ: Prentice-Hall.

[3] Reichheld, F. (1996) The Loyalty Effect: The Hidden Force Behind Growth, Profits and Lasting Value. Boston:Harvard Business School.

[4] Simpson, M., & Taylor, N. (2002). The role and relevance of marketing in SMEs: towards a new model. Journal of Small Business and Enterprise Development, 9(4), 370-382.

[5] Hills, G. E., & Hultman, C. M. (1999). Marketing behaviour in growing firms: a challenge to traditional marketing knowledge. In G. E. Hills, W. S. Siu & D. Malewicki.Journal of Research in Marketing and Entrepreneurship 85 (Eds.), Research at the Marketing/Entrepreneurship Interface (Vol. 12, pp. 14-29). Chicago: Institute for Entrepreneurial Studies.

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