How Marketing Creates Value In The Customers Mind
by Tom Egelhoff
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I never know where or when the inspiration for these articles is going to strike. In the case of this one it happened on a cold street corner in Missoula, Montana about 6:45 am on October 26, 2000.
I was scheduled to give a breakfast talk to the Missoula Area Technology Round Table. These folks are a dedicated group of business and educational leaders that take the time to help small business throughout our state by networking on a regular basis.
I was standing there in the frosty Montana darkness going over my talk in my mind when all of a sudden, "Hey Tom, Marketing CREATES Value" jumps into my mind.
Not sure where or how I thought of it but there it was.
I must have read hundreds of marketing definitions over the years but this little three word phrase completely encompasses the entire industry in which million of dollars are spent each year.
It's exactly what all forms of marketing are designed to do. Marketing makes your product or service valuable to others.
The hard part is for you to determine what's valuable about your product or service and convey that message to your customer.
Let's talk about how to do that.
What Makes Something Valuable To Others
Why do some baseball cards sell for hundreds of thousands of dollars? Why is John Lennon's piano more expensive than a regular piano?
Why do people spend thousands of dollars for ringside seats at prizefights? The Super Bowl? In the case of these items the answer is that they are all rare or limited supply items.
How about the Lexus? Or BMW? Not exactly in short supply. You can certainly order one if your local dealer is out of the particular model you want. It's not a rare item. Wines? Cheeses?
Both come in a variety of price ranges. Yet most of us wouldn't know one wine or cheese from another without some education about what makes each valuable.
Jewelry? It's all over the board. Real Estate? Clothing? All these products have a variety of price ranges but what really makes them valuable? The answer? Information.
If you had never seen a CD player before, how much would you guess it was worth? You would have no idea without information about the product.
What it does and how it works and most importantly the benefits to you of owning the product. Armed with this information you can decide whether the product or service is worth the asking price.
So, what makes something valuable to others?— The benefits of the product or service. It might be a feeling of prestige, or safety, or health, or any other reason important to the person making the purchase. For more on this See: "Understanding Why Customers Buy."
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How Exactly Does Marketing Create Value?
This is where most people confuse marketing with advertising. Let me see if I can clear that up for you really quickly. My business card is advertising. Deciding whom to give my business card to is marketing.
Advertising is always a part of marketing but marketing does not always include advertising.
Marketing will determine your target market. These are the people who are most likely to want your product or service based on several criteria.
Age, occupation, education, income, and marital status to name just a few. Market Research will help you decide if there is truly a need for your product.
Marketing will help you position your product in the minds of your target market. Using all the information from the above sources you can now create value and attach that value to your product or service.
Once you determine there is a need for your product you can begin to demonstrate that need to a target market that has that need but is not being filled by current products or services.
Marketing will show that you have the right product, directed at the right customers, where they are, and how to reach them with a message that will encourage them to buy.
Until marketing has determined all these things, no advertising should take place.
Marketing matches the product to the right customers that have a need for it. This is the real value of marketing because, as I've said so many times, advertising must always be an investment, never an expense.
It must produce more revenue than it costs.
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Where Does Advertising Come In?
Good question and a simple one to answer. Advertising simply presents the value (benefits...created by marketing) of your product or service to your target market.
Your advertising may be as simple as passing out your business card or as complex as a full blown advertising plan of TV, radio and print media.
Whatever your advertising mix consists of just remember one point. Never advertise anywhere unless there is at least a 75% positive expectation of success.
Otherwise the best advertising in the world is useless and expensive.
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The Last Word On Marketing Creating Value
You can cut corners in almost any facet of your business except marketing. If you aren't reaching the right people, with the right message, you won't have a business for long.
The excess expense of useless advertising in the wrong places will drive your business right into the ground.
Don't confuse value with price. If the marketing is done correctly you can request any price you want and get it.
It isn't a matter of what the market will bear that determines price, — it's what someone will pay based on your marketing message. And that's an amazing value.
Return to the "How to Market" Directory
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© Eagle Marketing PO Box 271, Bozeman, MT 59771-0271
http://www.smalltownmarketing.com - Phone: (406) 585-0219
Based in Bozeman, MT, Tom Egelhoff is the author of How To Market, Advertise & Promote Your Business Or Service In A Small Town, and The Small Town Advertising Handbook: How To Say More And Spend Less. He is also a seminar and workshop presenter and trainer. He may be reached at 406-585-0219 or PO Box 271, Bozeman, MT 59771-0271
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