Episode 88 Transcript

Welcome to Episode 88 of the Business in Morocco Podcast today we are going to do something a little bit different Ryan is working on some projects in Canada right now and so I'm gonna talk a little bit about the marketing concept as I mentioned in uh previous podcasts due to uh coronavirus and the government's mandated shutdown and the uh proceeding uh economic recession or depression that we are in right now uh many of us have had to pivot what we do for work and for business uh just in order to survive in order to pay the bills so one of the things I'll be doing this fall is teaching marketing and strategic management at SIST University here in Casablanca which is in partnership with Cardiff Metropolitan University in Great Britain and so I'll be teaching marketing and strategic management and I wanted to go over uh one of the ideas in marketing that I'll be teaching in the class now this is just a basic overview of one concept but I wanted to to share it with with the podcast audience and if anyone is interested in getting a college degree from a British university go ahead and and send us an email at ryan@moroccopodcast.com and I can show you the details um regarding the course the location the degree program um and some of the classes that I'll be teaching and and what will be the uh the subjects that we'll be covering and here's an example of one in marketing, it's called the marketing concept and it's it's the idea that that each firm has a strategy and your overall strategy is to to satisfy customer demand customer needs you want to do that and you want to do it well and you know you're doing it well if your sales increase and you know you have a good company if you sell for more than it costs you to produce the product or the service so you're you're maximizing your profits you also know you're doing well if you have increased market share if as a percentage of the total market you have a uh a good chunk of it you know a third a quarter half of it for example google has more than three quarters of the search traffic in the world when you combine all of their products uh more than three quarters of all search uh happens on a google product so so they have a very large market share okay and that's one of the ways you know that you're you're succeeding and beating the competition but when it comes to uh marketing your products or services there are five concepts that organizations adopt and execute that guides their strategy and i want to talk a little bit about those five concepts today so so here they are um the first one is the production concept then we have product selling marketing and societal marketing so we'll go ahead and get into each one of these the first one the production concept and if you look down the bottom here i have uh the logo for disruptive advertising and here's their website down here disruptiveadvertising.com and you can read more about these concepts on their website i wanted to give them credit for for some of this information but this is a definition from their website the production concept is businesses assume that consumers are primarily interested in product availability and low prices while customers needs might not be fully addressed now this is true all over the world and and here morocco it's true as well people uh including myself we often look for low priced items we like to get as much as we can and pay as little as we can and companies understand this and that's why they focus on this production concept which is making their products available as as widely as they can for as low cost as they possibly can and that's the first focus of these products is low cost in order to get low cost oftentimes you have to do mass production you have to sell them in very high volumes so that you can get economies of scale economies of scale is where you have production efficiencies meaning i can buy my raw materials in very large quantities and get a reduced price and we know this if you buy one shirt you're going to pay a certain retail price for that shirt 50 100 150 200 germs but if you buy a thousand shirts then the price per shirt will go down dramatically and it's the same for all types of commodities and raw materials the more you buy the better price that you're going to get and if you're trying to produce a low cost item then you want to be able to buy your raw materials in very large quantities and again this comes down to sourcing manufacturing and distribution if you produce a very large quantity then the overhead costs as a portion of each product goes down so you you are able to charge lower price per unit because you're having more efficiencies the more products that you sell the more volume that you sell the more efficient you can become in terms of your production process and your sourcing and your distribution if you work with a distributor and you say i want you to distribute 1 000 products for me or a volume of 1 000 items they're going to give you a certain price but if you tell that say that same company i will give you a million units then the price to distribute that product is going to go down versus 1 000 because you're giving them more business all right the last idea here is that it's important for your cheap products or low-cost items to be widely available whether it's through e-commerce through distribution retail locations sales agents direct to consumer usually low-cost items are widely available in order to get as many sales as possible now here we look at three items that are very common here in morocco we have tissues the dossier logan and android devices now all three of these products come under this category of the production concepts tissues are made out of paper wood pulp and it is the definition of a low-cost item it is a generic commodity item there is very little difference between a box of kleenex and a boss of branded tissues from marjan for example very little product differentiation when it comes to tissues you you buy it you know what you're going to get and many of the people who the companies that sell tissues they produce millions and millions of units per year very efficiently at a very low cost and so tissues would be a great example of the production concept uh dossier dossier logan same idea this car is about as basic as you can get you know maybe no power windows no air conditioning um no cruise control very basic car i think it only gets like three stars for safety okay so so this is not the safest car it doesn't have the most features it's not a luxury car it is a low-cost car dossier builds this car to target the low-cost buyer who either cannot afford a more expensive car or just simply doesn't care about all of the fancy features like um cameras reverse cameras or bluetooth in the car or the best stereo or um you know the the safest car in the world like a volvo you vo volvos usually get five-star crash safety but the dossier is is just your bare bones your basic type of car it's one of the cheapest on the market the low cost is another great example of the production concept and here we have over here your basic android charging cable again tens if not hundreds of millions of these cables are made every year there's hardly any difference between them they do the job some of them do the job a little bit better than others but you can get these here in morocco for 10 durhams 20 durhams 30 durhams they're very cheap and this is another great example of the production concept all right so that was uh overview of the production concept the next concept that we have is the product concept and it's essentially the exact opposite of production meaning this marketing concept believes in potential customers and how their brand loyalty is closely tied to options of products the quality of those products and the benefits they get from the product and the business they invest in so this this actually is targeting a a completely different mindset in the customer when you're focusing on product you're focusing on the customer who wants great features they want great quality they they appreciate things that work well things that are durable uh things that are reliable and they're willing to pay more for products like this and they are not looking for the cheapest item on the market the idea of product concept is that you're looking at product differentiation okay you're not looking for a tissue that's the same no matter what brand you buy you're looking for a product that is different based on the brand and so if you're a company focusing on product concept you are focusing on brand recognition and brand loyalty you want people to associate your company and your brand with very high quality products that have a very specific reputation uh and associated with them meaning uh when i think of bmw for example i think of a certain quality of product at a certain price and certainly not low cost another aspect of this product concept is that you're trying to produce something that is not easily copied okay as we mentioned before um you know the android charging cable or the tissue that is very easily copied there are factories all over the world especially in asia that can just produce millions of units of those two items very cheaply and very easily and so those items are very easily copied the production the product concept focuses on making products that are not easily copied and that allows you to have a competitive advantage if you can produce something that not many other firms can produce you have a competitive advantage now this concept is customer focus and it's generally found in the luxury goods and services sector so you're going to be in the high higher priced markets when you're talking about the product concept because in order to create something that is different that is high quality that is not easily copied you're going to have to spend some money on on raw materials and the production process you're going to have to actually make something unique and valuable in the market now here are three examples of the product concept everybody knows apple they have been producing fantastic products for many many years and the latest iphone 12 is another example i think most everyone would say that apple produces the best quality phones i mean there are companies that are that are competing with them but apple does have the reputation for having very high quality very reliable products with excellent customer service so so apple is a great example of the product concept as i mentioned before bmw again not the low-cost leader this this car this bmw m5 here is not the same price as a dossier logan it's not even close bmw is not focusing on low cost consumers on price sensitive consumers they are focusing on people who want to drive the ultimate driving machine i mean that's that's their their motto the ultimate driving machine it's not the low cost driving machine it's the ultimate driving machine and as a result they have many features and aspects of this car that are very advanced very high quality and they're trying to appeal to that customer who is able to afford uh and appreciates a better product with a higher quality and the last example we have here is nespresso and if you make coffee at home you know that you know one cup of coffee is fractions of a durham you can you can make some drip coffee or even um some espresso for fractions of a derm if you grind your own beans nespresso however is they they offer these pods and these pods range from two to two durums uh three four or five durums per pod because nespresso is going for a different customer they are offering convenience you take your pod you pop it in you press a button and out comes your coffee there's no messy cleanup you don't have to do a lot of work uh you know they would claim that it tastes a lot better they have a high higher quality experience in terms of taste and so they're not appealing to the low cost buyer they they are appealing to a different customer segment that appreciates convenience and quality um and they're making something unique their pod size is unique the pod size of the of the coffee um and um you know it's not easily replicated creating this machine and the pods and the marketing and the distribution system it's it's not easily replicated they do have some some competition but it's not like tissues or you know other low-cost products all right the the third concept that we're going to talk about is the selling concept businesses that choose this sort of marketing concept they have to be good at finding potential customers and emote doing the emotional sell basically convincing them to buy something where the the customer may not see the benefits or they might might not believe that it's needed so these are the types of products where there isn't a lot of differentiation you know maybe i can't hold the product in my hands i i need someone to explain it to me i need someone to convince me to buy it and that's because i'm not out looking for products like this you know i i need to have someone tell me what are the benefits they need to explain to me what is the product what are the benefits what are the advantages of buying it and and get me to make an emotional decision or at least convince me logically why i need to buy it and again when you're talking about the selling concept people are not out looking generally they're not out looking for these products um they're not going to the store they're not um they're not in need of them thinking i i really need this right now let me go buy it and therefore the selling concept is needed in the sense that your companies to to go out and find these people and engage them in order to get them to buy it you know unfortunately this concept is often associated with with scammers or fraudsters people are trying to sell like get rich quick schemes um i'm not saying that that whenever someone's using the selling concept they're they're they're scamming you or they're trying to commit fraud but a lot of people who are trying to commit fraud you will see them using this selling concept and here's a couple examples so you have insurance you know whether it's life insurance or home insurance these products are indistinguishable it's not tangible i i don't go to the store and buy it and hold it in my hands and so the idea of insurance sometimes is is not well understood by people why why would i buy life insurance well um you know they employ agents these and companies employ insurance agents to tell people hey look if you're you're a man you're they're a head of the household and you're working if you were to die then what's going to happen to your wife and children what if if you are no longer able to earn your salary so they will sell products like life insurance which will give money to uh your spouse and your children if you die so that they can continue to live and and be educated and housed and fed but this is not a product you're going to go to the store and buy off the shelf therefore selling is essential to products like life insurance now down up here in the right i don't know if you've watched much youtube but if you have you you might have seen a tai lopez um uh advertisement or or other people selling information products ebooks and what they basically are saying and you watch any of their videos or their ads is how it goes they say i'm rich i have a secret and if you pay me money then i will share my secret with you so that you can be rich and i'm not saying that tai lopez is a scam artist or he's committing fraud i'm not saying any of that what i'm saying is he engages in selling he is heavily engaged in selling because he needs to convince you to buy what his his ebook or his his course that he's offering that's going to make you very rich and you may be not convinced by just going to his website you need to listen to him give the argument and oftentimes he gives it in videos or seminars or conferences where he's heavily selling you on why you should believe him that he's rich and how he got rich and how he can make you rich also and that is is is a great example of the selling concept and the last one here on the bottom right is real estate especially here in in morocco we know that there are new real estate developments all over the place casablanca is a great example here's one from ayn sabah these apartment buildings are all essentially the same you know one bedroom two bedroom three bedrooms one bath two bath there's not a lot of differentiation they're all about the same price per square meter um i guess it depends on which neighborhood you're in for differentiation but there isn't a lot of differentiation in terms of the product quality or price so a lot of these folks have to engage in very heavy selling and that's why you'll see billboards all over the place for new developments you'll see ads on instagram on facebook you'll see ads on youtube for new developments you'll have people going down the street handing out flyers of agencies for developments in places like darbwaza they will rent an office in casablanca in order to engage potential customers and convince them to move out of casablanca into darbwaza so this is another example of selling where you really have to engage the customer and convince them why your development is the best place for them because they're just so many to choose from and there's not a lot of difference the only way you're going to get them rented or sold is if you go out and sell them to individual customers all right the fourth concept is the marketing concept it is the marketing concept in the marketing concept and this concept focuses on matching the company's product or service service offerings with the needs and wants of the company's target customer base now this concept is very closely linked to the product concept but it's it's a little bit more specific you you you as a company you engage in storytelling you're really trying to create that brand story and that brand loyalty and you're showing the customer that that your products match their needs and their wants and their desires and so companies engaging in the marketing concept are constantly engaged in brand promoting the brand through a variety of activities they're promoting the brand because they they want to create a lifetime customer and so companies that do this are very good at understanding who their customer is and how to reach them and they know this by doing research about their customers doing surveys doing market research really understanding who is their ideal and likely buyer and and and really brand loyalty and the respect of the brand and the products is their highest priority so you'll see companies that engage in marketing concept they will have excellent customer service they will have very high customer satisfaction and they're not focusing on one purchase they're not focusing on one customer experience they want to retain these customers for their entire lifetime so so that's why you'll see companies like amazon if you have a problem with the product or service it is incredibly easy to just return it or get an exchange because amazon knows that if they keep you happy and satisfied you're going to be buying products from them for years and years and years and it's not worth fighting with you over one experience maybe one missed delivery or or one defective product they are focusing on your overall satisfaction so that they can retain you as a customer and as i mentioned many companies they link the product concept and the marketing concepts together when they're doing their business strategy now he's here's three great examples of this strategy mcdonald's if you go anywhere in the world and you walk into a mcdonald's the experience is going to be very very similar the ordering experience the layout of the store the branding the colors the seating the uniforms of the employees the menu it's going to be very very similar all over the world and they do this specifically because they want you to know exactly what to expect when you go to a mcdonald's they want to be reliable and consistent now i think we can all agree that mcdonald's is not the best meal you've ever had in your life it's not a gourmet meal but it's also not the worst meal that you've ever had in your life and you know if you go to mcdonald's you know you're going to get something reliable you know that it's not going to be terrible and it'll be at a reasonable price and that's exactly what mcdonald's trying to do they engage in the marketing concept because they care about their brand loyalty customer satisfaction and retention another example in the entertainment industry is disney disney has a reputation for producing very high quality entertainment whether it's videos or tv shows and this logo actually here is disney plus which i don't believe is available in morocco yet but it's available in other countries around the world where for for a relatively low price uh uh 60 or 70 dirhams per month you can watch any show or movie that disney has ever made and that is incredible value and disney is very concerned about their brand they're protective of their brand and you know that when you watch a disney movie there's going to be a certain quality to it and you're going to have a certain experience and and they're trying to keep that and guard it because they want you to appreciate their brand and to come keep coming back year after year to to buy those movies and those clothes and toys um they're they're very protective of their brand and they also have their their theme parks and if you've ever been to disneyland in china or in france or in the united states you know it's an incredible experience and they care very much about giving everyone a great experience going on rides playing games having your kids interact with the characters in the movies and and the tv shows so so again they're focused on having a very high quality product but they're also engaged in the marketing concept by building up their brand and keeping their brand consistent and reliable um year after year and the last example is amazon which i already mentioned they have pioneered many customer-centric products and services in the united states it was unheard of to get a product in two days before amazon came around and amazon amazon made two day delivery completely normal it's now expected that i'm not only going to get delivery in two days but it's going to be free you know quote unquote free if you have a amazon prime membership so again amazon's focus on customer service they're focused on customer lifetime value and and their brand they want you to associate great customer service low cost um and and and brands consistency and loyalty when you when you think of them the last concept that we'll talk about is uh relatively new it's it's the newest of the concepts of the five concepts and it's societal marketing concept and this concept uh is basically adding the idea of having a positive impact on the world to making money and having an operating business and you're you're basically trying to convey to the world and your buyers that you're you're not just about profits but you're giving back to society as well and you're trying to make the world a better place and usually there are three goals associated with this idea the first is customer satisfaction the second is profits and the third is positive societal impact and in this in this model you're not going to be maximizing profits okay you're going to be balancing these three goals um and so sometimes you're going to sacrifice profits in order to have a positive societal impact or in order to have more customer satisfaction you will not try to maximize your profits and like the marketing and product concepts what you're focusing on here is customer loyalty customer appreciation and those customers they're going to be willing to pay more for your product or service because they believe in your company's mission now three examples of this all right the first one is toms thomas makes shoes and when they first started their business the whole idea was if i buy a pair of their shoes toms is going to give a pair of shoes to someone who can't afford them around the world to give to a poor person you are by buying tom's shoes you are giving someone else shoes as well and customers were willing to pay more for their shoes because they knew that someone around the world was going to get shoes who didn't have any and you know their business model has evolved over the years they've listened to customer feedback they've partnered with charity organizations to come to to come to understand what's the best way for them to impact the world so now not only are they giving away shoes they're they're sourcing their shoes locally they're hiring local producers of show of shoes around the world so that they can employ people and they can buy raw materials from from local people and not just give away shoes in places like africa and asia which before had the unintended consequence of putting local shoemakers out of business so they've evolved and now they're using local artisans to make shoes for toms but the whole idea is that is that they didn't care about profits over everything else they wanted to have an impact on the world the next example is tesla tesla's mission is to essentially reduce the use of of carbon fuel reduce the use of of gasoline and diesel and thus reduce pollution around the world through electric cars and if you know tesla their cars are high quality they're they're very um unique driving experience and they are not the cheapest on the market a tesla does not cost the same as a dossier logan and it does not have nearly the same features you know many teslas have drive assist and they're working on autonomous driving but this this tesla you plug it in there's no engine i mean there's no gas engine you don't need any fuel you just plug it in and you get uh recharged um and in the long run that has a better effect impact on the environment and so people are willing to pay more for a tesla because they agree with their mission to help improve the the quality of life and and reduce pollution around the world last example is a is a company here right here in casablanca organic kitchen there are restaurants they they want to offer healthy products they source a lot of their food from local farmers organic farmers and they're trying to have a positive impact on the world now they're just one restaurant but they're trying to reduce the use of pesticides and they're trying to have a positive impact not only selling and offering very high quality healthy food but also having a good relationship with their customers and their suppliers and so you when you go to organic kitchen it's not the cheapest meal that you're going to buy they're not engaged in the lowest cost okay you're gonna pay more to eat organic kitchen than you will in other places but their customers appreciate the mission and the quality and they're willing to pay more for it all right so here are the the five concepts as i mentioned and i do get a lot of questions about marketing you know how do we how do we market our products or services when you're thinking about what you're going to sell and how you're going to promote it you need to understand which of these concepts applies to my product or my service and when you really understand the type of product or service you have you can use one or more of these marketing concepts which should guide your overall marketing strategy in terms of who is my customer where am i going to find them how am i going to reach them and what arguments are am i going to use in order to convince them to to become my customer so if you're thinking about marketing a product or you have a product that you're marketing right now go through the the five concepts here and help and use them to help you shape your your strategy for marketing and customer acquisition and overall increasing sales you

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