What is marketing?

Marketing grows a business by providing value to customers. Without customers, there is no revenue. Marketing is about understanding a customer and their needs, segmenting customers, and creating a compelling value proposition for the correct segments. Additionally, good marketing will address the go-to-market strategy, whether it be direct to consumer, partnerships with retailers, through a salesforce, viral word-of-mouth, or other channels.

Technology influences

Today, marketing includes digital marketing. Digital marketing has changed customer behavior and driven growth for savvy companies. Digital marketing is another avenue for demand generation.

Marketing growth strategies

A company can grow by broadening its consumer base with a different value proposition or enter new markets with new products. A few risks are losing product-market fit, alienating current customers, diluting a brand, or cannibalizing existing products.

Incumbents need to focus on monetization and reinvention

As margins erode for mature companies, pricing becomes increasingly important. Companies will study price-demand curves that document different customers’ willingness-to-pay and what is a “fair” price to charge. Mature companies need to respond to shifts in technology and customer purchasing patterns.

Professor Sunil Gupta’s Framework for Marketing Strategy

Our section’s Professor of Marketing here at HBS demonstrated a framework that illustrates how customer behavior impacts the design of a good marketing strategy. It contains four parts.

Part one: Identify market opportunity

For a strong market opportunity, the customers, company, and competition all must align in one’s favor. This is what he calls the 3 Cs.

Customers

At this stage, one will analyze

  • unmet needs of customers,
  • market size and growth rate, and
  • barriers to adoption.

Company

This part focuses on whether the company

  • can develop the product and
  • scale it profitably.

Competition

Then, one will understand

  • strengths and weakness of competitors who are either
  • indirect or direct competitors.

Part two: Ensure product-market fight

Next, one finds the right target market and value proposition.

Segmentation

One might segment

  • on demographics,
  • on purchase patterns, or
  • by needs or values.

Targeting

Next, analyze how closely the product appeals to various segments. A winning segment may be chosen because of

  • size,
  • growth rate, or
  • margin potential.

Positioning

Finally, align on a few key benefits that differentiate the product from the competition.

Part three: Design marketing program

Introducing… the 4 Ps.

Product

Determine the breadth and depth of the product line and the effects on brand and value proposition. This will be influenced by growth and branding strategies, and sensitivity to cannibalization.

Promotion

Decide through what channels and with what budget promotions will take place. This includes advertising and discounts.

Place

Place describes the distribution strategy, whether it be through a salesforce, direct, partnerships, retailers. Understand the margins across all channels.

Price

Analyze what price to charge for different customers and markets.

Part four: Grow customers and sales

One can only grow revenue by acquiring new customers, retaining existing customers, or expanding the basket size of current customers. Expanding the basket size can come through up-selling or cross-selling.