The marketing world is a world apart that is constantly changing. What is innovative today may be completely outdated tomorrow. What is marketing? What steps does the marketing process consist of? In this article we move from understanding the market and customer needs to extracting value from the customer.
Marketing is more than advertising
Before we start mapping out the marketing process, let’s first ask ourselves what marketing actually means. Marketing is a social and managerial process in which individuals obtain what they need and want by creating products and values and exchanging them with others. So the goal of marketing is to attract new customers and promise them value that is better than the competition and retain old customers by more than satisfying them.
The marketing process
Step 1: Understanding the market and customer needs
A customer experiences a need when he or she gets the feeling that something is missing from him. Needs are part of human nature and strive to fulfill them in the most satisfying way possible. Needs in turn evolve further into wishes. A wish is the concrete form that a need takes in a particular culture, in a particular person. There are infinite wants and only a limited number of needs. For example, you may be hungry (1 need), but we think of different types of food to fulfill these needs (different wants). If the customer has purchasing power and a desire, one can speak of demand. The marketing offer is the combination of goods, services, information or experiences that companies offer to satisfy a need or desire. One must therefore look for a solution for a specific need. The value of a product to a customer is the extent to which a product meets the customer’s needs. The customer will weigh the benefits against the price. Customer satisfaction is the degree to which the perceived performance of a product meets customer expectations. If these do not meet expectations, the customer will be dissatisfied. The aim is therefore to meet the customer’s expectations. A good tool for this are TQM programs or Total Quality Management programs where the aim is to increase the quality of products, services and marketing processes. Customer value and customer satisfaction are two important building blocks for building and managing customer relationships. The market is the group of current and potential buyers of a product. The size of a market is determined by the number of people who have the need or the resources to exchange and are willing to offer those resources in exchange for what they need. Marketing forms the connection between the company and the market.
Step 2: Formulating a customer-oriented marketing strategy
To build a customer-centric marketing strategy, it is important that we choose a target group with which we can build profitable relationships. So we have to ask ourselves how we can best serve these customers. First you have to decide which customers you want to reach. A good way of working is to start by dividing the market into market segments and then choose which segments you want to serve. This is called target group choice. Only customers who can be served well and profitably are chosen. Then one must choose a value proposition. This is the package of benefits or values that you promise to customers to meet their needs. To build profitable customer relationships, one must realize that for any business, demand comes from two groups: new customers and existing customers. It costs about five times as much to attract new customers as it does to keep an existing customer happy. So, emphasis should be placed on retaining existing customers and building lasting relationships with them.
Step 3: Create the marketing plan and program
Drawing up a marketing plan and program consists of two important elements.
- Determine the marketing strategy. A company outlines which customers it wants to serve and how it wants to create value for these customers.
- The purpose of creating the marketing program is to deliver the planned value to the target customers. This consists of the marketing mix or the 4 P’s
Step 4: Build customer relationships
Building and maintaining profitable relationships with customers by generating customer satisfaction is called customer relationship management. the building blocks of a good relationship, as mentioned above, are customer value and customer satisfaction. Greater customer satisfaction means greater customer loyalty. Smart companies therefore deliver more than they promise. The main purpose of the previous four steps was to create value for customers and build relationships with the customer. In the last step we will discuss getting value from the customer in more detail.
Step 5: Getting value from the customer
There are three ways to extract value from the customer.
- Generate customer loyalty and retention. Customer value is the value of the total stream of purchases a customer would make over the life of the relationship. Any loss of a customer will result in a one-time loss of sales and loss of the total flow of purchases that a customer would make during the relationship.
- Increase customer share. The customer share is the share that a company has in the total number of products purchased by a customer in a specific product category. This can be increased by offering a greater variety to current customers and by training employees to sell more through coss-selling and up-selling.
- Building customer equity. This is the sum of the customer value of all the company’s customers. The more loyal the profitable customers are, the higher the customer equity. So one must try to build appropriate relationships with the right customers. There are four types of customers that must be distinguished from each other.
- Foreigners are not very profitable and not very loyal. The offer does not fit their needs well and there is therefore no need to invest in them.
- Butterflies are profitable, but not loyal. So you can attract them through temporary promotions and then stop investing in them for a while until the next promotion.
- True friends are profitable and loyal. The offer therefore fits well with their needs. It is therefore beneficial to build lasting relationships with them. So dare to invest in them too.
- Stickers are very loyal, but not profitable. The offer only partially meets their needs. So try to increase profitability by selling more to them, raising prices or reducing service. If this does not work, it is better to let them go.
So try to create as much value as possible for your customers so that you can build lasting relationships that will benefit the profitability of your company.