Simply stated, marketing is everything you do to place your product or service in the hands of potential customers. The purpose of marketing is to get the word out about your product—and in turn to make sales of your product or service. Sales is only a part of marketing, however. While sales is simply the act of converting a prospect from prospect to customer, marketing is the process that makes sales possible including brand development, partnership creation, publicity, and advertising. Marketing is the background work that gets prospects in the door. Sales is the process of converting those prospects to lifetime customers.

The cause of the failure of many businesses is a breakdown in or lack of marketing. You can develop a wonderful product or provide a high value-add service, but if the marketing is not there, your business will not succeed.

There are two different types of marketing. The type you’ll learn in most business schools can be generally defined as corporate marketing. In a business school class on corporate marketing, you’ll learn about things like branding strategy, demographics, and positioning statements. While these subjects are important to know, they will not be of great benefit to the bootstrapping entrepreneur who does not have a million dollar budget, ten ad designers, and a sales force of one hundred.

The other type of marketing is entrepreneurial marketing. In entrepreneurial marketing, instead of concentrating on brand recognition you concentrate on sales. Without much money to spend, the return on investment (ROI) of every ad, of every campaign, is that much more important. In this chapter, I will present both the basics of marketing, the core of much of what corporate marketing is based on, as well as a complete step-by-step marketing strategy to launching your business and building it to one million dollars in sales, without spending a dime in upfront costs.

One of the most basic and most important concepts in marketing is known as the Four Ps. The four Ps are product, price, place, and promotion. If you can develop a good product at the right price, position it in a place where buyers are, and promote it well to create desire in the customers’ mind, you’ll quickly succeed in making a lot of sales.

Product

As we talked about before, your product is crucial to your success. If you have a good product, getting the other three Ps right will be that much easier. The ‘product’ includes both the actual physical product as well as product decisions such as function, appearance, packaging, labeling, and warranty. The word ‘product’ also encompasses any services you may provide. The service you provide is your product.

Price

If your price is too high, not enough people will be able to afford it. If your price is too low, you will not make any profit. On the other hand, if your price is too low, many will not buy it because they may see it as an inferior good. To best manage these forces and optimize your net profits, you will have to test many different prices of your product(s).

Place

Place is essential to building sales. Place essentially rests on positioning—the positioning of your marketing message and the positioning of your product.

In both retail stores and online, how to properly position your product is a very important skill. Without proper positioning, no one will know you exist. If you are hidden in the back corner of a store on the bottom shelf and your web site is number 3425 in the search engines for your targeted keywords, you likely will not make many sales, no matter how good your product is. We’ll talk more about how to position your product both online and off later in this chapter.

The positioning of your product is also known as your distribution strategy. A distribution strategy is developed by determining where on the value chain you want your business to be positioned, and who the buyer will be. You may sell your product to a retail store who then resells it to the buyer, a manufacturer who sells exclusively to jobbers and regional representatives, or directly to your end consumers. We’ll talk more about distribution models and strategies later in this section.

Promotion

Promotion is an essential part of the marketing process. Promotion decisions include those related to communicating your message, advertising, and public relations.

Important Definitions for Marketers

B2B – Business to Business.

B2C – Business to Consumer

Brand – The aggregate representation and reputation of your business across all those who interact with it. Includes much more than simply the logo and corporate identity.

CRM – Customer Relationship Management

Demographics – Data on customers and prospects such as gender, location, birth date, past purchases, income level, marriage status, and birth date. A marketer can better target their promotions with good demographic data.

Direct-to-consumer – Selling a product directly to the buyer without any middlemen.

Distribution Model – The levels of companies through which a product is sourced, manufactured, and then sold.

Distribution Strategy – Where and how a company positions itself in the value chain, including what type of distribution model it follows.

LTV – The Lifetime Value (of a customer).

Market Research – research about a market including the competitors and competing products, its size, and growth rate.

Retail – Selling a product to an end buyer

ROI – Return on Investment

Target Market – Who your business will be targeting with the promotions for your product. Those that are most likely to buy.

USP – Unique Selling Point, also known as the value proposition; what you do that differentiates you from your competitors.

Value Chain – A representation of the distribution model based on the value added by each type of business at each level.

Wholesale – Selling of a product to another business who will later resell it.