Marketing is not advertising

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: A young founder-CEO of a five-year-old company was worried about his company’s future. He had just learnt that his company had lost two important contracts. In addition, three other contracts had slipped out of his hands. Worse—his company wasn’t even invited to make a proposal. His company operated in a large, fast-growing but immensely fragmented industry.

In his city alone, there were over 3,000 companies competing for the same business.

The CEO had built his company into a profitable, fast-growing business with a set of well-known customers. He realised that there was a terrific opportunity to create a full-service and nationally admired company in the industry, given its charactertistics.

Starting a company just after a year working experience following graduation, there was naturally a lot of ‘seat-of-the-pants’ and ‘learning by doing’ management. His team comprised people he knew from his years at IIT. The company had grown through sheer diligence, persistence and hard work.

His organisation had clearly identifiable teams responsible for technology, operations and delivery but there was no clear sales and marketing team. The CEO and a his team members were doing all the sales which basically meant leveraging contacts to procure business. And marketing? "I don’t want to waste money advertising in newspapers as our business doesn’t need it" was his refrain.

Equating marketing with advertising is one of the most common errors made. And our CEO too was committing it! It is a legacy of our lack of familiarity with a market economy given that we’ve only been exposed to it since 1991, the year of India’s economic liberalisation. In a market-based economy, it is essential to understand the market. Market can be defined as the sum of suppliers, customers and the dynamics of interchange (e.g. pricing) between them.

Macro-economic and regulatory variables impact these dynamics. Coming down a notch from the understanding of the definition of the market in general to specifics, the following questions need to be answered:

* Who is my customer? What are the characteristics of my ideal customer. It is therefore important to understand the various customer segments, needs of each segment and size and growth opportunities per segment.

* Why should my customer buy from me? How do I add value to my customer? How much of their budget is coming to us? How do we get more share of their wallet? Cost is but one determinant of customer relationship but the one that most of us focus on.

* What does my customers think of me? Who else do they give business to? How well do I know my customers? Do they know me? Will they refer me to others? Usually, companies either have a terribly inflated or sometimes, a very deflated self-image. Unfortunately, the opinion of the one who really matters—the customer is not factored into the creation of this self-image!

* How do I compare with my competitors in my industry on multiple dimensions such as type, number, quality of customers, pricing, services, products offered and financial performance.

* What do our employees, partners, experts and industry players in general think of me? How do I build relationships with external stakeholders to create a win-win equation?

An honest answering of these questions is a critical part of understanding marketing. Fixing the gaps that will inevitably arise out of such a critical analysis leads to the creation of a marketing plan to fix these gaps. Communicating the company’s value proposition to customers and other stakeholders is one of the outcomes of the marketing plan. And advertising is but one of the elements of this marketing communication!

So, the next time you dismiss marketing as wasteful advertising, think again.