Basics of Marketing

Welcome to a worldbestaffiliate.com’s article. This article presents the basics in marketing. This is the first article to read if you’re just into reading world best affiliate’s articles. These basics in marketing also serve as a lead into the basics in affiliate marketing.

This is an introduction to marketing. Although quite extensive, this article is expected to provide readers with marketing definition, get the readers a feel about marketing, and sketch a mental preparation to enter the market. I also expect that as a start point, this article can encourage the readers to read more about the interesting world of marketing. Hopefully this article help the reader in starting an affiliate marketing.

This article describes the important points in marketing subject. These are the stuff an affiliate marketer needs to know to understand the market. They are:

- definition of marketing
- customer value
- value preposition
- needs, wants, demand
- market segmentation, targeting, and differentiation

- market positioning
- marketing mix
- customer satisfaction
- how these relate to affiliate marketing (what to do next)

Marketing comes from the word ‘market’. It’s where products and services fulfill the needs of the consumers.  However, the definition of marketing refers deeper than the product or service offer and purchase. In short, the definition of marketing is building profitable customer relationships. This means while making a business profitable, it is also sustainable with close relationship with the customers.

Let’s get back to the market. When a customer makes a purchase, an exchange occurs between the buyer and the seller. While an exchange of payment and goods or services occurs, in marketing it is seen as an exchange of value between the customer and a business. Customers have their expectation on products or services to fulfill their need (the customer value), and companies create products containing values (value preposition) to capture the customer value.

Customer value is a perceived value by the customers about benefits of the offers from businesses. This customer perceived value is an evaluation of market offerings relative to each other. In other words, it’s how worthy an offer is in the eyes of the customers. Customers will then choose a product that best fits the customer value.

For businesses, it is not easy to assess a customer value because it is neither exact nor objective. A good value should make the customers feel that “this is the right one for me”, which can also differs at different time for the same need.

Knowing customer value is very important for a business. Not only knowing it, delivering customer value (making sure that the value can be delivered) is also a critical point.

There are many factors that have effect in shaping “what is right” as perceived by the customers. While price could be significant, marketers should keep in mind that it is not only factor. This is important to remember in order to prevent businesses (especially small businesses) from getting trapped in a “price war” which can severely affect the business’ sustainability.

To capture the customer value, businesses must understand the marketplace and customer needs, design value-creating marketing strategies, develop integrated marketing programs, and build strong customer relationships. A producer or seller must exert the best efforts to deliver the best customer value for its customers. And the efforts shall be attempted continuously over time, and may also change according to the change of market situation or customer demand.

A marketer must always realize that it is the customer’s perception that matters most. A market offer must always consider how the customers will perceive it, which could be significantly different from a marketer’s point of view. Thus creating customer value and successfully delivering it is an important focus.

More about customer value will be discussed in another article.

What is preposition? While aiming to fulfill customer’s need, a product must also distinguish itself from competitors. It must create a unique value for their targeted market and what positions it wants to occupy in those segments.

Making a value preposition is positioning the product’s unique market offer in the mind of the targeted consumers

Thus a product’s or brand’s value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs. It is the answer to question of “why choosing this product instead of others”.

Customers buy things because of need. Need is the feeling of deprivation of something not fulfilled. Naturally, people will try to get rid of this feeling of deprivation. The actual form of satisfaction of need comes in form of wants.

Wants are the form human needs take as they are shaped by culture and individual. Wants are shaped by culture and individual personality (Principles of Marketing 15th Edition, Kotler).

Wants take shape in form of specific goods or services a person or customer intends to buy to satisfy their needs. Two persons may have similar needs, but have different wants. It is easily understandable that from a single simple need, the resulting want may be in numerous variations.

The variations in wants translate to product variety. The variations may be affected among else by physical, usage, age, gender, psychological, time, geographical, and many other factors.

If we see food as an example to satisfy different needs, the wants may vary widely. The food may be in solid form (physical property), intended for specific diet (usage), baby food (age), soothing (psychological), afternoon tea (time), region-specific staple food (geographical), soldier’s ration (conditional).

When the wants are backed up by buying power, they become demands. The demand that grows to a certain size can create a market. Size of a market could be quite large (such as a mass market). It can also be quite small, covering only a fraction of specific population. However, the small unique markets, called ‘niche market’ can also be very profitable.
Businesses usually target only specific markets. Affiliate marketers target even more specific (niche) markets. They are focusing on segments that will make optimize use their resources and waste less efforts and time. This is done through market segmentation.

The market is very vast and diverse. A typical business would not be able to serve all types of demands in the market. For optimal operation, a business will usually serve only fractions of the market.

To find which sections of market to serve, the market must be divided into segments of similar characteristics. Then by examining the segments, the company can see which one(s) fits the company’s objective and capabilities.

Thus market segmentation meaning is to allow businesses to see the market in segments by similar characteristics, and prepare to select which segments to serve.

Segmenting the target market according to specifics characteristics can be made in many ways. Segmentation can be made by geographic locations (regions, cities, delivery /transportation coverage, population), demographic (age, gender, income, occupation, religion, education, ethnicity, generation), psychographic (social class, lifestyle, group preference), behavioral (locations, usage rate, benefit, user status, loyalty). And there are many other ways of segmenting the market.

For example: Apparels can be divided into men and women segments, while toddler’s toys may not be segmented by gender too clearly.

Segmenting only works if each of the resulting segments will respond to a marketing strategy differently, or different strategies must be devised for each segment.

With today’s technology, by utilizing cell phone user data, segmentation can be done more accurately by geographic location, as also by age, gender, behavior, and all sorts of preference.

After performing segmenting, the business can do market targeting, which is identifying and evaluating the selected segment.

What is market targeting? Market targeting is evaluating attractiveness of market segments and selecting one or more segments to enter. In targeting, the market segments are identified and evaluated, and is then selected which is (or are) the best to enter.

Targeting must bring answers to these two questions:
- What customers will we serve (what’s our target market)?
- And how can we serve these customers best (what’s our value proposition)?

A target market is a set of buyers who share common needs or characteristics the company decides to serve (Principles of Marketing 15ed, Kotler)

Three factors must be considered when evaluating the market segments: segment size and growth, segment structural effectiveness, and company objectives and resources.

Segment size and growth refers to the volume of market to serve and its growth rate. A small business may not have enough resources to serve a significantly large market. A business with little research capability may not have the speed to match quick-advancing-technology market segment. It might be too difficult to exploit with available resources.

Structural effectiveness presents how worthy it is to compete in the segment for a significant period. Among the factors are existence of strong or well-established or aggressive competitors, availability of substitute products, power of the consumers, and other factors.

If the competitors are high caliber, highly experienced players with loads full of ‘ammunition’, it may not just be wise to enter the battlefield. As such, another sample factor is price conscious buyers that can push prices down or require steep discount to get their attention.

Another consideration is the company’s objectives and resources. The objectives of the company may not suit a specific market segment albeit seemed profitable. The company’s resources also make a consideration. For example, luxury products for high income consumers might need specific resources only few businesses have and may require some historic experience.

After the market specific groups of buyers are identified and selected, the business can do differentiation and positioning, designing a marketing program for the segment allowable by available resources.

Each targeted segment will determine what specific marketing strategies or marketing mixes to take (see about marketing mix later below).

Differentiation is creating an offering to create a superior customer value (compared to competitor’s offerings) in the targeted market. A company may design separate, distinct offers for its similar products aiming for different segments.

A sport shoe company may launch similar products with different color schemes for men and women. Even a company may bring to the market the same product under different brands where a major differentiating factor is after sales service or warranty.

The objective of differentiation is to gain more sales and stronger position in each segment. Although more brands are created, the resulting sharper targeting helps to make targeted consumer acknowledge the product. This albeit the caused increasing business cost (to design, produce, promote) due to the differentation

A product position is the place the product occupies relative to competitors, in customer’s mind. Positioning means arranging for the offering to create a superior customer value.

 
In the case of affiliate marketing, the positioning must also consider competition between sellers (why a buyer buy from you instead of others). The positioning must be able to explain to the buyers that the seller is the one that gives the greatest advantage. A tagline such as “we make it easier for you to choose” could be the offered advantage by an affiliate marketer in competing with other sellers.

The company must also decide how it will serve targeted customers—how it will differentiate and position itself in the marketplace. A brand’s value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs.

To do positioning, the first thing to do is identifying the advantages upon which the position will be placed. The advantages offered against competitors could be more features, lower price, better warranty, better after sales service, or many others. The positioning must always consider the targeted market segment. The offer to buyers must give the consumers more value than what the competitors have to offer.

However, whatever advantage offered to the buyers, the seller must deliver it. Otherwise, the advantage will immediately considered as false claims by buyers which may result on disappointment, law suit, and worst of all, low sales.

What is the meaning of marketing mix? It is a set of controllable, tactical marketing tools blended to produce demanded response from the target market. It contains four variables known as “four Ps”, which are product, price, place, and promotion.

Product refers to the “goods-and-service” combination offered to the target market.
Price is the amount of money paid to get the product.
Place is how the product is made available to the consumers.
Promotion is the activities to communicate the merits of the product and persuade the consumers to make purchase.

Businesses must carefully blend and arrange these four elements to succeed in the market. The blend can vary differently for different target consumers. Even for one particular product, there can be more than one way to mix these elements, which may be affected by location, time, circumstances, and other factors.

What is customer satisfaction? Customer satisfaction is the satisfaction of customer value (what the customer expect) by the value preposition (what is delivered) by the products /services to meet the demand of the customer.

Customer satisfaction is getting more significant than ever, and even more with existence of the digital era.

With customer value being inexact, customer satisfaction becomes uneasy to measure. Surveys or other methods can be used to probe for customer satisfaction. Among the answers to find are customer’s opinion on their products or services, how they feel about the interaction or experience in the relationship.

Some important subjects to assess could be purchase motivation, buying process experience, use, warranty claim, product maintenance, and to when it’s time for a new replacement.

Making a customer satisfied is getting more difficult. What is defined as ‘extra features’ by producers soon becomes ‘standard’ as viewed by consumers. And the power on customer’s hands (the gadgets and Internet) makes it easy for them to make complain, make comparisons, or even switch to other offers of competitors. Consumers can switch to the competitor only by a minor disappointment on a certain aspect.

A consumer can switch to a competitor only because a call to the customer service is not answered after a few rings or an email not soon replied to. Thus A business must seriously and carefully cater to their customers.

Therewith, a business must be careful in creating value (offering advantages or benefits) to the consumers. Offers should not generate too much hype or expectation which are difficult or impossible to meet. Consumers will consider the offer like a promise, and will take it as something that must be delivered. All means must be exhausted to deliver to promise, to avoid having a dissatisfied customer.


On the other side, a satisfied customer will easily return for another purchase, which means that the next sales will be made at a lower cost. A product then will even ‘sell itself’. The cost benefit may also be ‘returned’ to the customer as discounts or extra bonus, which will lead to even better satisfaction. Having such loyal customers is a sign of good customer satisfaction.

To apply the marketing knowledge points above in affiliate marketing, here are some things an affiliate marketer can do:

1. Get some basic marketing knowledge.
Upgrade your knowledge on marketing and affiliate marketing from reliable sources or books. The book ‘Principles of Marketing (Kotler)’ could be a good start. For affiliate marketing knowledge and courses, Wealthy Affiliate is worth a try (free try-out is available from them). Also learn about SEO (search engine optimization), which is necessary for online marketing. Also learn how the online market progresses, and its fast pace changes.

2. Know the niche (market segment) you are going to enter.

Check whether the segment does exist. Find how many searches are for the products, such as keyword search from Jaaxy. The product popularity or category may also be checked using search result on marketplaces such as Amazon or Helium (there is a plug in for Amazon to sort by most purchase made).

3. Stay focused on the market segment.

Focusing on a specific segment and subject will help optimizing available resources. Staying focused also makes a person a specialist in the field. And in customer’s mind, it is easier to recall or spot a specialist business than a general seller when it comes to a specific need. Moreover, a specialist is worth more in a market.

4. Keep an eye of market changes.

Markets are dynamic. They change, shift, expand, contract, have new sector /category emerged /fade, etc. Be familiar with the flow and how the world changes. Learn to know how changes occur or would occur. Read newspapers, magazines, economic reviews, etc. See where the trends are going. Prepare of big shifts or changes predicted to happen. Changes may not only shrink your sales, but may also present big new opportunities.

Five major trends and forces that are changing the marketing landscape and challenging marketing strategy: (a) the changing economic environment, (b) the digital age, (c) rapid globalization, and (d) the call for more ethics and (e) the call for more social responsibility.

An example is recession. Recession caused many consumers to rethink their spending priorities and cut back on their buying. After a crisis, new consumer values and consumption patterns will likely remain for many years to come.

5. Learn about the online market

The online market has its unique properties aside from the classic brick-and-mortar market. Product competition, presentation, customer interaction, product delivery, and some other new subjects which are unique to online market are important to know and understand. An updated marketing knowledge is a good help.

6. Learn the latest progress in building a business

New business formats are emerging. There is now the so called MO (mobilization and orchestration) where a business can have a large amount of customers without using a large organization. It runs by mobilization and orchestration, where the business only arranges and controls the core, while most of its activities are done by other parties. More about this will be discussed in another article (about Mobilization and Orchestration) later.

7. Always stress on the customers

The customers are the people who give us the opportunity to run business. An entrepreneur must always see what the customers really need, not only what a business must sell. Be obsessed with customers. A business exists to solve a customer’s problem, not adding to it.

8. Remember that it takes time to build a business

A business, including an affiliate marketing business, requires some knowledge, learning, experience to thrive and develop. Always use common sense when dealing with instant success offer. Just be disciplined and patient with the results.

Finally, good luck with your affiliate business!

Thus those are some points in marketing that an affiliate marketer might find useful. Of course there are still many other aspects that are interesting too. They may be covered in other articles.

If you have questions or suggestion, just leave a comment below. Thank you for reading. See you in other articles.

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