No matter whether you’re a successful business founder, yet to become one, or are struggling, there are some essential marketing theories you need to know to go to the next level.
Brief Descriptions of Marketing Theories
Marketing Mix (4Ps/7Ps)
The 4 Ps and 7 Ps describe the very foundations of your product.
The core, 4 Ps are:
- Product (features/quality)
- Price (pricing strategy)
- Place (distribution channels)
- Promotion (advertising)
There are additional 3 Ps if you wish to go into the analysis further. You may add:
- People (staff/customers),
- Process (customer experience),
- Physical Evidence (tangible brand elements).
Example
Apple offers premium-priced (price) products that just work and that heavily focus on usability and UX over the number of features (product). They have direct channels (Apple Stores & Apple Online Store) as well as indirect ones (authorized retailers such as Best Buy, network carriers (AT&T), resellers. They also heavily lean on word of mouth, TV shows and movies.
SWOT Analysis
SWOT is your first step to strategic planning. It’s your way to determine the external factors and the internal factors. Identify competitive advantages and risks. Align resources with market opportunities.
Strengths: What are your advantages? What are you good at? What is your pride?
Weaknesses: What you aren’t really good at? The key is to identify weaknesses but, as a smart person once said, if you focus on your weaknesses your strength will no longer be your strengths.
Opportunities: Do you see something that others do not? Do you see a gap in the market? Try the Blue Ocean Strategy.
Threats: What do you hope to avoid? What threatens your business? Any direct/indirect competition?
Example
SWOT Analysis for an AI Startup in Poland
Strengths:
- Advanced AI Technology: The startup has developed proprietary AI algorithms that outperform competitors in specific applications, such as natural language processing or image recognition.
- Highly Skilled Team: A team of experienced AI researchers and engineers with a strong track record of innovation and problem-solving.
Weaknesses:
- Dependence on Foreign Technology: The startup relies heavily on imported AI chips, particularly GPUs from the US, which are now subject to export restrictions.
- Competition from Established Players: Competition from larger, more established AI companies that have better access to resources and technology.
Opportunities:
- Diversification of Suppliers: The need to find alternative suppliers for GPUs could lead to partnerships with emerging European or Asian chip manufacturers.
- DeepSeek’s Approach to AI: DeepSeek, a Chinese AI company, showed that developing AIs does not need to be as costly as once believed.
- Government Incentives: Potential for additional government incentives or exemptions if Poland aligns its policies with US interests.
- Growing Market: Increasing demand for AI solutions across various industries in Poland and Europe.
Threats:
- US Export Restrictions: The ongoing restrictions on GPU imports could limit the startup’s ability to scale AI model training and deployment.
- Geopolitical Uncertainty: Changes in international relations could further restrict access to critical technologies, impacting business operations.
- Competition from European Alternatives: The push for European self-sufficiency in AI technology might lead to local competitors developing their own AI solutions, reducing reliance on foreign startups.
Segmentation, Targeting, Positioning (STP)
You can’t offer your product or service to everybody. Divide the market into segment and create an offering for each group.
- Segmentation: Divides markets into groups (demographics, behavior).
- Targeting: Selects the most viable segments.
- Positioning: Stand out in the crowd. Create a memorable brand.
Example
Let’s look at an example company creating mobile apps called “AppCraft” - a hypothetical example.
Segmentation The company, develops mobile apps focused on productivity and personal development. To segment its market, AppCraft considers the following criteria: • Demographic Segmentation: Focus on young professionals aged 25-40, with a medium to high income, and a strong interest in technology. • Psychographic Segmentation: Target individuals who value efficiency, self-improvement, and are motivated by achieving personal goals. • Behavioral Segmentation: Identify users who frequently use productivity apps, have high engagement levels, and are likely to pay for premium features.
Targeting Based on segmentation, AppCraft decides to target the “Ambitious Achievers” segment: They are young professionals seeking to enhance their productivity and personal growth. They need efficient task management, goal-setting tools, and personalized advice for career advancement. Lastly, their pain points are difficulty managing time effectively, staying organized, and maintaining motivation.
Positioning AppCraft positions its apps as “Your Personal Success Partner”: • Unique Selling Proposition (USP): Offers a holistic approach to productivity, combining AI-driven task management with personalized coaching and community support. • Brand Image: Innovative, supportive, and empowering. • Key Messages: “Unlock your potential”
Maslow’s Hierarchy of Needs
Aligns your product with psychological needs, from basic (food, safety) to self-actualization (personal growth).
Example
Let’s look at another hypothetical company. “EcoLife”, a sustainable home goods company, aims to promote eco-friendly living through its products. They want to align their marketing with the needs of their target audience using Maslow’s Hierarchy.
Physiological Needs • Product Focus: Highlight how EcoLife’s products contribute to a healthier living environment (e.g., air-purifying plants, non-toxic cleaning supplies). • Marketing Message: “Breathe easier with EcoLife’s eco-friendly solutions.” Safety Needs • Product Focus: Emphasize the durability and reliability of EcoLife’s products, ensuring customers feel secure in their purchasing decisions. • Marketing Message: “Trust EcoLife for long-lasting, sustainable home solutions.” Love and Belonging Needs • Product Focus: Introduce community-driven initiatives, such as workshops on sustainable living. • Marketing Message: “Join the EcoLife community to connect with like-minded individuals passionate about sustainability.” Esteem Needs • Product Focus: Offer premium eco-friendly products that reflect a customer’s commitment to sustainability, enhancing their self-image. • Marketing Message: “Elevate your home and your values with EcoLife’s premium sustainable products.” Self-actualization Needs • Product Focus: Develop products that support personal growth, such as mindfulness journals or meditation tools made from sustainable materials. • Marketing Message: “Find harmony with nature and yourself through EcoLife’s mindful living solutions.”
Diffusion of Innovation
Last, but not least, how do innovations spread through different social groups. There are five main groups segmented by the way in which they approach innovations. There are:
- Innovators (risk-takers),
- Early Adopters (influencers),
- CHASM
- Early Majority (pragmatists),
- Late Majority (skeptics),
- Laggards (traditionalists).
The most difficult bit is going from Early Adopters to Early Majority. Your product must be polished if you wish to go over this gap, and can’t be in the “prototype” stage anymore. I wrote about it once in my other blog post. Click here to read more..
If you want to know more about moving from one group to another, and about crossing the chasm, read this book by Geoffrey A. Moore.
Interestingly, if you skip one of the early groups, intentionally or not, they won’t want to use your product.
Example
Sustainable Fabrics • Innovators: Luxury brands like Stella McCartney and Patagonia are among the first to adopt sustainable fabrics in their designs. These brands are known for their commitment to environmental responsibility and are often seen as trendsetters in the industry. • Early Adopters: Brands like H&M and Marks & Spencer follow the innovators by integrating sustainable fabrics into their collections. These brands are more accessible to a wider audience and help popularize the use of eco-friendly materials. • Early Majority: As more clients become aware of the benefits of sustainable fabrics, mid-range brands begin to adopt this innovation. This phase sees a significant increase in the use of sustainable materials across various fashion brands. • Late Majority: Eventually, even budget-friendly fast-fashion brands start incorporating sustainable fabrics into their products. This is often driven by customer demand and regulatory pressures. • Laggards: The last to adopt are typically small, niche brands or those with limited resources. However, even these brands may eventually adopt sustainable fabrics as they become more mainstream and cost-effective.
Conclusion
To create comprehensive strategies, you need to blend some or all of these frameworks. For instance, the Marketing Mix helps in crafting a product’s core elements, while SWOT Analysis aids in strategic planning by identifying strengths, weaknesses, opportunities, and threats. STP allows businesses to tailor their offerings to specific market segments, ensuring relevance and appeal. Maslow’s Hierarchy of Needs aligns products with psychological needs, from basic to self-actualization. Lastly, the Diffusion of Innovation explains how new ideas spread through different social groups, highlighting the importance of transitioning from early adopters to the early majority.