Marketing Versus The Stockmarket

There are many complicated strategies out there on the subject of marketing and advertising, covering demographics, different media types, seasonality and other ingredients of a successful formula. But most of us, who run a small or medium sized business, don’t want complicated, so for the benefit of this article, lets define marketing as anything that promotes your business.

I see marketing a bit like investing on the stock market; invest some money, with the intent of a good return from the investment. For example some shares (offer of the day) could be bought to yield an immediate return, some shares could be bought for a longer but safer term to mature and some are just high risk. A seasoned investor will probably have a portfolio that covers all these options.

To relate this to your business, do you have stock you need to sell immediately (special offers), are you advertising to bring long term brand awareness to your business or are you trying new forms of advertising that has never been tried before in the hope of a large return. Just like the investor a seasoned marketer would consider marketing over all these sectors, immediate special offers, long-term branding and possibly a small amount of high-risk options. Spread the risk and then measure the return.

However some small businesses see advertising or marketing as an unnecessary expense and tend only to invest in it when sales are low or at start up. This often means they are only marketing for an immediate return, focusing on your special offers just to get customers in. Ironically if a longer-term strategy had been in place, the need for panic advertising might never occurred, sales could be more consistent and the products or services sold could be based more on market prices rather than on specially created deals.

Longer-term marketing is seen every day in the media as the biggest brand names in the world still consistently market themselves even though everyone knows who they are. They know it is cheaper to stay at the top than to get back up there, if their market share slips.

A seasoned investor would also regularly keep in touch with share prices to measure their return on investment. A mistake many businesses make is not to measure their costs against return on sales. Using reference numbers in adverts or just asking the question when receiving phone calls can give you indications of what advertising is working and what is not. You may find that just one simple advert in a local paper is paying you dividends, but the radio advertising is not bringing in anything. How do you know, unless you measure it? You can then adapt to bring the greatest return from the least investment.

Another point that marketing experts agree on, is that customers very rarely buy the first time they see any advertising for a product or service from an "unbranded" business. At best, initial advertising just raises awareness. It is only after the customer becomes familiar with the adverts, product or service, will the decision to buy be made. Of course within "branded" businesses, the trust with the customer is already there, so the decision process is much quicker. So if your potential customers don’t know you, don’t expect immediate custom. This suggests that one off panic advertising may still not bring in the custom you were expecting, even though you have a fantastic priced product or service.

This is also relevant for start up businesses. A typical strategy would be to form the company, put everything in place and then start your marketing. An experienced businessman would start the marketing plan much earlier. Knowing that the initial advertising would just stimulate interest and hopefully real sales would coincide with the true start date of the company.

What type of advertising is the next question? Look at what other successful related businesses are doing, and then do the same but to better standard. The key word here is "successful". If they are successful, then they are doing things right and have already gone through the measuring stages.

High-risk marketing should only be done, at times when your other marketing strategies can support it, unless you have nerves of steel of course. Certain entrepreneurs have broke world records crossing the Atlantic in boats and hot air balloons and have built international mega brands through clever PR. So the rewards are there if done right but if it is done wrong, can bring no return and even damage a company.

To summarise, if you are running a businesses that is intended to be around for a long time, then see your marketing strategy as a long-term investment. Long-term customer awareness eventually brings word of mouth marketing, which is the best, and cheapest you can get. If you run one off adhoc marketing campaigns, it is unlikely you will get the best return on your campaign until people know who you are, single "one off" adverts in your local paper rarely achieve anything. High-risk advertising is just that, can be fruitful if successful, but can be damaging with little or no return.

Finally, measure and review all your marketing costs against the return you are receiving then change your plan to suit. You wouldn’t invest your life savings on the stock market and not check how much you shares are worth, so why have a different process for your marketing costs.

Yorkshire Business Adviser
Network of business advisers based in Yorkshire, England