Significance of Customer Profiling in Marketing Strategy

The consumer is the focal point of a marketing strategy. Therefore, the starting point of a Marketing Strategy is identifying consumer needs and segmenting the consumers in categories. This is followed by a decision on what category should be a focus for marketing. This is known as targeting, which is followed by positioning the product in the market to penetrate the target consumers’ mind. The consumer’s mind is the battlefield on which marketing warfare is fought.

Customer profiling is a study of various characteristics of the consumers in order to develop a strategy to target a market and position the product. It also involves an on-going analysis of changing traits and expectations of the consumers to make an effective response to the changing circumstances. For example, a diet conscious consumer class triggered a range of salads and roasted recipes from McDonalds.

It also serves as a basis for targeting prospective customers for advertising in order to maximise the benefits of advertising. For instance, a company that seeks to develop an advertisement campaign for a product will first identify the characteristics in people that will most likely induce those people to buy the product. This is followed by surveys to find out the areas where people with such characteristics are concentrated. Also, the survey will assist in finding out the similarities and deviations of the people in that survey. On the basis of the findings, the details of the Ad campaign can then be developed.

For instance, it may be found through surveys, that people buying energy drinks are most likely to be members of Gymnasiums or students who regularly study in University libraries. On the basis of this finding, it would make marketing sense to promote the product i.e. energy drinks in and around libraries and gyms. This will maximise chances of penetration in the minds of the prospective customers.

The nature of data that is analysed includes demographic data, disposable incomes, education, purchasing patterns etc. Customer Profiling is done through the use of data mining techniques which are based on statistical models such as regression analysis, Median and dispersion analysis of data. The models can be broadly divided into descriptive and predictive techniques.

Descriptive techniques are those that set out the existing data to identify patterns of interest to marketing strategy. Predictive Techniques are those that employ statistical tools such as regression analysis for identifying prospective target customers. This is done by using descriptive data about present customers and identifying clusters that are similar to the presently analysed sample of customers. The predictive models are especially useful in ad campaigns.

The descriptive models have wider applicability in that they are required in the course of predictive analysis as also in the course life cycle of the product to introduce changes in qualitative, price or strategic aspects of the product.

Can the Price Of A Product Be A Marketing Weapon?

The pricing strategy of marketing any product is defined as a plan which determines the best (at the time of making) pricing decision. The selling price of products and services represents one of the most important elements in deciding the marketing mix for any product or service as it is the only factor which affects profitability through revenue generation for the business concern.

The other 3 factors – Product, Promotion and Place – all involve cost to the manufacturer. Yet, most of the times, price is the most ignored factor while deciding the marketing mix for any product or service in question.

It is important to understand the importance of the price factor in a marketing mix as it can have major consequences for the business concern. The selling price can be used as a marketing weapon to conquer the minds of the target audience or the consumer. However, it has to be kept in mind that also other factors like branding play a crucial role for success. E.g. a good trade show booth called Messestand in german can have a mjor impact on the perception of the company image.

The most appealing variable in the Price is the flexibility it provides in deciding the marketing mix. Unlike the long durations of time taken in deciding the other marketing mix variables, price can be easily and quickly decided based on costs and profitability desired. Moreover, this flexibility can come handy in adjusting the promotion as per the market needs. A very common example of instant flexibility of the price variable is when a salesperson is in the middle of a sales pitch and calls up the senior person to adjust prices to be able to crack the deal.

The price is also important as it can help you to create the image of your product in the minds of the target audience. Often the consumer forms a certain perception of the product in his / her mind based on the price of the product. Although the price does not affect the purchase decision singularly, it may affect the chances of the product being considered for purchase or not. In cases where the marketer expects the consumer to form such an opinion on the product based on the price, the price becomes the most important marketing decision.

The price variable also comes handy when immediate boost to sales is needed and it is desired to achieve the same through short term promotions. In such cases, usually the firm announces a price discount or a sale to increase the interest levels of the target audience.

Given the above, the price definitely enjoys a top slot in the order of importance amongst the different variables of the marketing mix. However, although the flexibility of the variable may seem easy to adjust as per changing market scenario, at the same time the marketers must guard against the temptation to change the prices too frequently as that may lead the customers to keep expecting the price to fall thereby leading to a decline in chances of immediate purchase.

What Is Marketing and Why Do Companies Need It More Than Ever

“Marketing! Marketing! That’s what we need to grow our sales.”
It’s not uncommon in today’s times to hear your sales head saying something similar to the business head. Marketing indeed has become an essential tool for today’s sales teams to lay the foundation for the sales pitch. But what does this term mean?

According to the Marketing guru Philip Kotler, “Marketing is the set of human activities directed at facilitating and consummating exchanges”. To put this in simpler words, Marketing is the process linking the business to customer needs; by which goods and services move from being a concept to reaching a consumer.

In today’s business scenario, Marketing of products and services is crucial given the competitiveness in the market. There are a number of companies targeting the same customer base for their similar products and services. In such a situation, the way a company markets its products and services is the only differentiator and quite often the customer puller. In the absence of an effective marketing strategy, a company risks itself to losing out on customer base and a stunted growth.

In practical terms, marketing rests on 4 pillars called the “4Ps”. These for pillars are (1) Product, (2) Price, (3) Place and (4) Promotion. These for Ps are used to determine the right ‘marketing mix’ for a particular product or service.

The first P stands for the Product or service being marketed. The marketer needs to carefully consider on the life cycle of the product – i.e. how long is the product expected to stay alive from the introduction to phasing out stage.

The second P or Price is also crucial because it not only determines the company’s profit and survival but also plays an important role in determining the sale of the product (for example, a very high price may lead to less interest and sale)

The third P refers to Place being used to market the product. It is important to ensure that the product is marketed and sold at a place that is easily accessible to the target consumer. Depending on the type of product being marketed (commodity, premium, luxury etc) various selling outlets like general stores, franchisee, exclusive showrooms, etc may be used.

The last P stands for Promotion and it encompasses all the methods of communication that a company may use to disseminate information about the product to the prospective buyers.

For any company it is important to devise the right marketing mix comprising of the 4 Ps and ensure that the products and services are marketed in a way that captures the prospective customer’s attention and persuades them to buy the product or service.