Invest in Marketing

Marketing is the set of actions you take as a small business owner to communicate the value of your products and/or services to the right people at the right time. Investing in marketing is essential for the success of your business because it builds awareness of your brand and connects your business’s offerings to the people most likely to make a purchase. In this article, I will discuss the aspects of marketing, the various marketing vehicles, and how to allocate funds for your marketing campaign!

Aspects of Marketing

The essential aspects of marketing are product, price, place, and promotion, known as the “four Ps.” The concept of the four Ps was developed by E. Jerome McCarthy and popularized by Neil Borden, both marketing Professors, in the 1950s and 60s, to help businesses develop a marketing mix. A marketing mix is the unique combination of the four Ps that allow businesses to reach the right customer (“promotion”), at the right “price”, at the right “place”, with the right “product.” A well-designed marketing mix ensures that customers perceive the value your product offers and are well-positioned to make a purchase. So, let us take a look at each P to ensure you have the right tools to create an effective marketing mix.

Product

Your product is the good or service that you sell to consumers, whether it is candles, tire repairs, freelance services, chairs, or music. A successful product is one that fulfills a consumer need, even if that need has not been clearly communicated yet (no one thought they needed computers two hundred years ago, but now it is a billion-dollar industry). Your product is the backbone of your marketing mix because the type of product you sell influences the price you charge, where you sell it, and how you promote it. Therefore, it is important to determine why your product is unique. This is called differentiation. How does your product “differentiate” you from your competition? Is it the unique customer service experience you offer? Is it the personalization of your product? Is it the quality of your product? Answering these questions will help you determine how to market your product best. If your product is the first of its kind, you will need to educate consumers about how it works and why they need it. If your product is similar to others, you will need to focus on why your product is more valuable to purchase than the next.

Price

The price you set for your product is the amount of money consumers must pay to obtain your product or service. The price you charge should consider several factors: competitors’ pricing, cost of labor/materials, bundles, discounts, and seasonal fluctuations in supply and demand (mangoes are generally more expensive in winter because few are being grown locally). Unless you operate in the luxury industry, it is useful to understand the relationship between price and revenue. Generally, when you set your prices high, you make more money on every purchase, but fewer people are willing to buy your product. When you set your prices low, you make less money on every purchase, but more people are willing to buy your product. This is fairly intuitive, I hope. Your goal, then, as a small business owner, is to identify the sweet spot price, called the equilibrium price in economics.

Have you ever seen a shirt sell for $19.99 and wondered why the company doesn’t just set the price at $20.00? This is the psychological part of setting prices. The fact that the shirt isn’t quite $20 makes people more willing to buy it than if it were simply $20. There are many different psychological pricing strategies businesses use to entice consumers- some are ethical and many are not. Avoid getting tangled up in psychological games with your customers and never compromise on honesty to increase profits. Set a price that you believe is fair; that is, you make a nice profit and your customers walk away happy. Then, adjust over time if you believe your product is over/underpriced. Ideally, you can lower prices over time while increasing profits due to “economies of scale,” which are operational efficiencies your company creates as it grows. This way, you increase value for both you AND your customer.

In summary, the price you charge should be a balance of:

1. Costs (to generate profit)
2. Market conditions (to remain competitive)
3. Customer perception (to match perceived value)

Product

The place you sell your product could either be in physical stores, online, or both. For some products, this is an easy consideration. If you are a dentist, there is really only one place you can offer your services – in your dental office. However, the consideration is more important with other products. What if you sell affordable maternity clothing? Discount stores like Target and Walmart would be excellent options since they offer the best chance to get your product in front of the consumers most likely to purchase it. However, it may be wise to avoid offering them in luxury stores where consumers are looking for expensive items. Keep in mind that there may be certain barriers to entry for physical locations like Target and Walmart. They may require certain licenses, quality inspections, a proven ability to fulfill large-volume orders, and a record of sales. Generally, a great way to get your foot in the door is to begin selling online and transition to physical stores as your business grows.

Place also refers to the place you advertise your product. There are many platforms to advertise your product on: television, signs, billboards, radio, etc. I will discuss these “marketing vehicles” shortly, but for now it is important to know that the place you sell your product and the place you advertise your product do not necessarily have to be the same. However, the product you sell should influence where you advertise it. If you wanted to advertise children’s toys, you might create a commercial for a cartoon on TV, but you would likely avoid sponsoring a monster truck event. The intention is to match the target audience of your product with the target audience of a particular marketing vehicle.

Consider these questions before advertising through a particular marketing vehicle:

Am I reaching my target audience?

How will this be perceived? Will consumers react positively to my choice of marketing vehicle?

Does this fit my advertising budget? Do the benefits outweigh the costs?

Does this platform align with my brand’s message and effectively showcase my product?

Promotion

Promotion is the strategy you use to show consumers why they need your product and to convince them that your product is priced fairly. Promotion is accomplished through the messages you send through marketing vehicles. I am sure you have heard of famous slogans and jingles that companies have used to create this messaging. But promotion is more than catchy taglines; it encompasses the entire process of communicating the central need(s) your product fulfills and the value your product creates. Effectively showcasing your product’s value is part of how you justify the price of your product. Remember, the market conditions and supply strains that increase your cost of production are irrelevant to the consumer. The consumer sees the product, evaluates its value, and compares that value to the price. If you want to charge more for your product, you must make your product more valuable to consumers (or communicate its existing value better) because this is ultimately how the consumer makes a decision.

Marketing Vehicles

Marketing vehicles are the different mediums you can use to drive your promotional campaign. I will briefly introduce some of the most common vehicles and describe their respective audiences. Remember, your target market should closely mirror the audience of the marketing vehicle you use.

Television

Television is perhaps the most powerful marketing vehicle, with an expected market size of almost $200 billion by 2028. Television combines audio and visual elements to create an engaging platform for any product. Because television is so popular across demographics, it appeals to most advertisers and is suitable for many types of products. However, due to its popularity, commercials are generally very expensive depending on the time, platform, location, etc. While a local news station may charge $400 for a 30-second ad, companies may pay millions for a 30-second ad during large sporting events.

Social Media

Social media platforms like YouTube, Instagram, Facebook, and X allow users to share audio, video, and text for entertainment, informational, social, and various other purposes. These social media platforms boast billions of users and continue to grow day by day, making them a powerful way to reach a wide audience. Each platform has different demographics. For instance, Facebook is generally known to have an older demographic of active users than Instagram. Most social media platforms are free, while advertisement campaigns vary in cost.

Radio

Although social media platforms and television have replaced radio as the most popular entertainment medium, radio continues to reach a wide audience and is used by countless advertisers. There are thousands of different radio stations, ranging from talk shows to rock music to local news stations. The product you intend to promote will influence which radio stations you choose to advertise your product on. For instance, if you were selling quality walking sticks, you might pick an old rock station that tends to attract a more senior audience.

Newspapers

Newspapers contain articles that have been professionally written and edited before publication. For this reason, newspaper advertisements can bolster your brand’s credibility and offer a more in-depth explanation of your message. You might also include a coupon or promotional code to increase the chances of someone trying your product. As with radio, the demographics for newspapers vary based on the type of newspaper, but generally, newspapers and other types of print media are read more widely among older generations.

Billboards

Billboards are large posters set on tall pillars, usually next to high-traffic areas like interstates. Billboards are especially ideal for businesses that operate locally, as they are noticed frequently by daily commuters in the area. Billboards range in price from several hundred dollars to tens of thousands of dollars per week. However, they are an impactful way to spread your message, especially if your message is urgent. This is why lawyers, hospitals, charities, and nonprofits often choose to advertise using billboards.

Websites

A business website is a versatile, in-depth way for you to advertise your products. Your business website can feature multiple pages that highlight your product’s strengths, provide customer satisfaction stories, and encourage customers to get in touch with you or buy your product. You might also publish blogs and informational articles to attract organic traffic, which is called content marketing. There are many quality website designers out there, but for a simple small business website, I would recommend taking the time to create one yourself. Tyler Moore has excellent tutorials on YouTube that walk you through creating a WordPress website from scratch. In fact, I used this very tutorial to create the website you are viewing now! Not only do you save money, but you obtain the skills necessary to maintain your website in the foreseeable future.

Street Marketing

Street marketing is nontraditional marketing that focuses on word of mouth, direct interaction with consumers, and building a positive public relations brand. There are many different ways to engage in street marketing, from pop-up shops and community events to the distribution of flyers and products in the street. Street marketing is generally suitable for businesses without an established customer base that have physical products or demonstrations for consumers. In street marketing, it is key to have something tangible to offer potential customers, whether it is a flyer, business card, or physical product. It is even better if customers can purchase your product at the location where you are marketing it. An important detail to consider when conducting street marketing is location. Street marketing tends to produce excellent results in high-traffic locations. The logic is, the more people see your product, the more people will buy your product.

Budgeting For Your Marketing Campaign

Creating a budget for your marketing campaign is an excellent way to align your marketing efforts with your business goals, ensuring that you receive the maximum benefit from your marketing investment. Since marketing needs and costs vary drastically from business to business, it is unreasonable to provide a specific budgeting benchmark, like 5% of revenue. However, I want to provide you with some guidance on strategies to create a budget so that you can set a benchmark that suits your business’s needs.

First, set specific goals for your marketing campaign. Remember, these goals should be SMART (specific, measurable, achievable, relevant, and time-bound). An example of a SMART goal for your marketing campaign is, “increase clicks on my website by 25% within one month.” Why is this SMART?

Specific: I have identified a specific percentage increase I want to achieve.

Measurable: I can easily measure this percentage increase using my website stats.

Achievable: For a new website, a 25% increase in website traffic is reasonable.

Relevant: Increasing website clicks leads to increased sales, which improves my net profit. Improving revenue or decreasing costs is always relevant to the health of your business.

Time-bound: I have identified a deadline of one month.

Second, once you have established your SMART goal, identify the marketing vehicles that best align with your goal. If I know that websites provide a great return on investment (ROI) in my specific industry, and my marketing campaign goal is to increase clicks, then digital marketing vehicles are going to be the most efficient way to meet this goal. This is not to say that street marketing is useless or ineffective, but in my particular situation, it may not be the best use of my limited resources. Invest in the marketing vehicles that create the most growth for you, and perhaps down the line, you may consider dedicating a small percentage of your marketing budget to experimenting with other vehicles.

Last, track your spending and goals to determine how your marketing campaign is performing. Maybe content marketing is exceeding your expectations, but email marketing seems to be generating few leads. You may want to adjust your budget to allocate more funds to content marketing and less to email marketing. Remember, data is your friend; do not be afraid to learn acronyms like CPL (cost per lead) and return on ad spend (ROAS) because they provide valuable insights into the performance of your marketing campaign.

One final thought: I am sure you have recognized this, but I want to emphasize that the success of your marketing campaign depends heavily on the quality of your SMART goal(s). Without clear goals, your marketing campaign lacks direction, making it challenging to measure success or make informed adjustments. Clear SMART goals act as a roadmap, ensuring that every marketing dollar is spent with purpose and aligns with your broader business objectives. By setting specific, measurable objectives, identifying the right marketing vehicles, and continuously analyzing your campaign’s performance, you create a feedback loop that drives improvement and maximizes ROI. Ultimately, a well-thought-out marketing budget and strategy not only help you achieve immediate goals but also build a strong foundation for sustained growth and success for your small business.