02 Apr How can marketing models help your business
Marketing models are guidelines that help you analyse specific areas of your business. They can act as a roadmap and help figure out such things as your business’ objectives, performance, internal and external environments, specific tactics and many more. This article will cover everything you need to know about the most commonly used marketing models.
Where can I use these and why should I?
Marketing models can and often should be used in a variety of situations. They can be extremely helpful when starting a new business and trying to figure out if your idea will work well in practice. Having a template with the most important information to cover will make sure that you don’t forget anything during the brainstorming.
Besides the start-ups, marketing models are often used by well-established businesses as well. For example, you can include them in executive summaries, business plans, campaign descriptions or any other internal presentations. Not only are they going to make communicating complex information a lot easier, but it will also look more professional, clear and concise. Such documents as business plans need to cover a lot of information in a short amount of words, so the marketing models will be especially helpful there.
The most common marketing models
Now, there are hundreds of different marketing models you could make use of in your business. However, there are a couple that really survived the challenge of time and are commonly used by organisations of all sizes. These include:
It is most likely that you have heard of SWOT at some point in your career. This is because SWOT is perhaps the most used model of all times, as it is very comprehensible and can be easy to make yet covers a lot of important information. SWOT stands for Strengths, Weaknesses, Opportunities and Threats - these four areas successfully cover the internal and external sides of your business.
Strengths - This covers the internal strengths that your company has. This can be anything from unfair advantages to the way your business differentiates in the market. It will help you see the positives and aims of your business that may get forgotten sometimes.
Weaknesses - This is where you have to be critical and see what is it that your business lacks or is weak at. Remember, this is about the internal side of the company, so you should only include such things as limitations, disadvantages and areas that need improvement.
Opportunities - This part of the SWOT is for the external analysis of your business. Here you include any possibilities and chances in the market that could improve your performance and gain you more sales.
Threats - The last part outlines the negative external implications for your business. For example, any trouble and obstacles in the industry that your company may face or something that your competitors are doing.
Once you have your SWOT analysis, you can use it to make a well informed business strategy. All of these together will give you a clear view of what your business is good or bad at as well as what changes in the market you can utilise to your advantage.
Although you can just simply write these down, it is usually put into a more presentable framework. It should look something like this:
PESTLE is a model that is often used alongside SWOT as it is a useful extension of it. This model is all about the external environment of the company - it is about understanding what is happening in your market and how it can affect it. PESTLE stands for:
Political - Any recent political affairs, government or foreign trade policies and restrictions, etc.
Economic - Such current trends as economic growth, exchange rates, inflation, employment rates, interest rates, etc.
Sociological - Mostly concerned with population, demographics, cultural barriers, lifestyle and behavioural choices and so on.
Technological - Latest innovations, R&D activities, technological incentives, technological changes and awareness.
Legal - New important laws in areas such as discrimination, antitrust, employment, consumer protection, health and safety, etc.
Environmental - Weather, climate (change), environmental policies and so on.
The way you should be using this model is by finding an important recent trend in each one of these areas and evaluating whether this is an opportunity or a threat specifically for your business. For example, the trend of Coronavirus is a threat for most of the companies while being an opportunity for some (such as mask or sanitary product providers).
You don’t have to use all 6 of the factors if you don’t think it affects your business - a lot of the time PESTLE is shortened to PEST. Don’t forget that this model should be updated as well, as it can become outdated within months.
PESTLE is usually presented in a form of infographics or simply a table like the one below.
The Marketing Mix (7 P's)
The Marketing Mix is a foundation model for businesses. It can either be used when starting a new business or when introducing new products to the market. The 7P’s cover all the main areas that help you achieve your marketing objectives in the desired market. It is all about introducing the right product at the right time to the right audience.
Here are the 7P’s:1. Product - The first step is to introduce your product - tangible or intangible, goods or services. You should explain what customer needs this product satisfies and how it is different from competition.
2. Price - Getting the price of your product right is extremely important, as it determines the company’s profits and survival. You should explain your pricing tactics - what are your costs and margins? Are you going to skim or penetrate the market? What are the prices of your direct competitors?
3. Place - Placing or the distribution of your product is another important factor to think about. This is about making sure that your products or services are accessible to your buyers. Any additional tactics such as franchising or exclusive distribution should be explained.
4. Promotion - This part should include a detailed promotional strategy for your product or service. For instance, how and through what channels you will be advertising, what sort of special offers you will do and so on.
5. People - Don’t get mixed up- this is not about your consumers. Here you explain what sort of specialists you will need to implement the project, their training length and process, remuneration, etc.
6. Process - Any processes that will be involved in the campaign. For example, R&D activities, complaint management, service delivery, response time and many more.
7. Physical evidence - This covers everything that you use in your campaign to make your customers’ experience better. For example, your website, your well-trained staff, product packaging or buildings.
Keep in mind that you don’t have to cover every one of these if you don’t think they’re necessary. You can use the 4P’s version (product, place, price and promotion) as these are the most significant ones. Besides, you can also change irrelevant ones to different P’s that you find more useful, such as partners or productivity & quality.
Porter’s Five Forces
This model helps you understand which areas of your business are not very stable and may need improvement. It is all about the stakeholders of your company and the relationship you have with them. The five forces include:1. Competitive rivalries - It is extremely important to understand your direct competition. You should know how many competitors you have, what are your major differences, their pricing, customer loyalty and so on.
2. Threat of new entrants - Analyse how easy it is for a new player to enter your market, what are the times and costs of entrance as well as how specialised your business is.
3. Threat of substitution - This covers the indirect competition of your business and whether your products / services can be easily substituted. For example, if your product is coffee this will be tea or juice for you.
4. Buyer power - The number of customers, order sizes, price sensitivity, cost of change to a different brand and anything else that relates to your customers having bargaining power over you.
5. Supplier power - How many suppliers you have and how dependent you are on them, your ability to substitute, uniqueness of their services and so on.
Got any questions?
Marketing models are not difficult to understand on their own, but you may run into an issue or two when trying to fill these in based on your own business. If you feel like you’re stuck on one of them or your business strategy in general, we are here to help.
Our experienced ASfB team is always happy to answer any questions or concerns about your business as well as offer solutions tailored specifically to your situation.
Call us on 01202 755600 or email firstname.lastname@example.org to get in touch.