Thursday, October 31, 2013

The Essence of Marketing

I am not a big fan of Mercedes (of course this 1955 300SL is an exception) but I have to admit that to me Mercedes does represent a very good example about proper Marketing.

Long time ago, Henry Ford said "You can have any color as long as it's black" referring to the cars he produced. Later, it was obvious that many people preferred different colors for their cars and this is just one reason why we have so many different car models nowadays. Mercedes was able to analyze the needs of its customers then categorize customers into major groups (Segments) and capture those needs with different product offerings. For example: The S Class targets those who want a sense of luxury, while the A Class is a compact car, on the other hand the E Class is for the executive segment and the G Class is an all terrain vehicle.

Proper Marketing starts by identifying a common need between a group of customers who share certain traits like a specific lifestyle, gender, age group, income level, social class, or location; which in Marketing terminology is referred to as Segmentation. Secondly, a product is developed to match the identified needs of the specific segment. Sometimes a generic product serves for a huge majority of tastes and then it is referred to as a Mass product (e.g. bottled water).

What impresses me the most is when Segmentation meets Economies of Scale, here is one observation. A local restaurant in Amman (called Batata) sells french fries, customers can also pick one out of ten sorts of dips to have aside. As the plain product consists of potatoBatata would probably be buying wholesale quantities of french fries - which lowers the price per unit. However, the last stage of making the final product is differentiated from the plain product with the help of dips; thus the restaurant is able to cater to ten different segments with a simple alteration to the plain product!
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