The Four Stages of Marketing of Small Businesses

What is the main goal of your current marketing efforts? You can only choose one answer. Are you trying to:

  • Increase awareness?
  • Generate leads?
  • Build a trusted brand?
  • Become part of the community?

Based on your answer I am able to make a few fairly good assumptions about what stage your business is in and predict if it will grow or survive. 

In academia, marketing is segmented into four different philosophies. The philosophy you have will drive the activities that are important to you and the metrics that you pay attention to. After a couple of decades working with businesses in a variety of industries and of many different sizes, I have found that these are more than philosophies, these are stages. My own observations have confirmed the downside that academia warns about for two of the four philosophies. I understand why those philosophies are valued in the early stages of a company and that understanding has helped me to be able to guide clients from those early stages to a more mature marketing philosophy that will make their life easier and growing their company much more enjoyable. 

Production Orientation (Who am I and what do I want to do?)

The production orientation philosophy focuses on the internal capabilities of the company. This is when an entrepreneur or small business owner is in the ideation stage of their business. They look at their skill set, resources, talents and ask “what can I do best?” 

Companies in this stage are focused on what their offer is and their marketing goal is typically awareness. The business owner feels good about the offering they put together. It makes sense to them that there is a need in the marketplace. They know what they can accomplish for their clients, so they focus on making sure as many people as possible are aware of what they have to offer expecting that their offering will be just as obvious to the marketplace as it is to the business owner. 

Figuring out what you’re good at and putting together a product or offering based on your resources and skills is a good start but it is just a start. A production orientation marketing philosophy falls short because it does not consider whether the goods and services that the firm produces really meet the needs and desires of the marketplace. Oftentimes the message from such businesses is “here I am, let’s do business!” without consideration of knowing fully who they should serve, what problem they are really solving and what the customer feels about the problem or their solution. 

If you have ever heard someone say that an entrepreneur (usually tech entrepreneurs) created a solution in search of a problem, this is an example of a production orientation marketing philosophy and unfortunately, unless they move to the next stage they will not stay in business long. 

Sales Orientation (Do you wanna buy a chicken?)

When I was a young salesperson I sat in a training class where a couple of the instructors ran around the room asking everyone if they wanted to buy a chicken. It made us all uncomfortable, and that was the point. People don’t want sales messages in their face. However, many small business owners focus on the sales orientation marketing philosophy and for good reason. It is usually at this point that the company is in the profit stage, or at least the stage where they really need to make a profit. 

Companies in this stage are focused on “selling a chicken” and their marketing goal is sales leads. They may have started with a marketing goal of awareness and when that did not turn into profit they decided it was time to focus on direct sales. They want email addresses, phone numbers, introductions to as many leads as possible so they can offer the product or service they offer. Because their marketing includes a call to action and hopefully some good targeting of prospects who would be interested in the product or service, a business will make a profit with a sales orientation marketing philosophy. 

The fundamental problem with this approach is that it is focused more on selling and collecting money. It relies heavily on constantly finding leads and sales leads are expensive. There is typically a higher turnover rate of clientele in companies that are marketing with a sales orientation philosophy which means profit margins are smaller because the business is always replacing one customer with another. A business can survive with a sales orientation marketing philosophy but oftentimes the owner gets burned out. 

Marketing Orientation (You are who they say you are)

My favorite definition of brand is from Jeff Bezos who said: “your brand is what people say about you when you are not in the room.” Unfortunately for Jeff, according to his own definition, his brand is suffering in some circles. 

The reason I like his definition of a brand is it relates to what people know about you (awareness), their experience doing business with you (sales and service), and how you make them feel. The feelings are where the marketing orientation philosophy lives. It is based on an understanding that a sale does not depend on an aggressive sales force but rather on a customer’s decision to make a purchase. What a business thinks it produces is not of primary importance to its success. Instead, how the client feels about the purchase, how it made their life better or helped them achieve a specific goal is what is most important. To achieve this a business needs to truly understand who their customer is, what problem they have, how they feel about that problem, and what their values are. From that understanding, all marketing efforts are geared to leading customers to a goal that the customer has, not the company goal. 

When a company has this level of understanding they are able to retain clients longer or have repeat customers and exponentially increase their referral business. The marketing goal of a company like this is to build a trusted brand. This company is past the profit stage and is in a growth stage. Not only that, a company with a marketing orientation, who knows what problems they are solving as opposed to what products or services they are selling is able to innovate and adapt to market changes. 

In 1990 Encyclopedia Britannica earned more than $40 million. Four years later it collapsed. Why? Because they thought their business was printing and selling books. They did not realize the problem they solved was providing trusted information. When competitors came along and provided the same information on small, lightweight disks, no one was interested in the big heavy books that Encyclopedia Britannica was selling. 

The problems that people have don’t change often, but solutions change constantly. Don’t be so committed to the solution your company offers, instead commit to the problems you solve. 

Societal Marketing (Doing good for all)

A societal marketing philosophy focuses on not only solving their client’s problems but also meeting society’s long-term interest. We can see this marketing philosophy in action with large businesses that run great foundations, smaller businesses that support nonprofits, social good businesses like Toms Shoes who donates a pair of shoes for every pair of shoes sold, or small businesses with a social mission such as my local coffee shop, Brewable, which is dedicated to the training and employment of adults with intellectual and developmental disabilities. 

The marketing goal of a business with a societal marketing philosophy is to be part of the community. There are several benefits of a societal marketing approach. People will want to support you just to make sure you succeed in your mission, or to feel like they are supporting your mission. People will refer business to you and buy from you and feel good about you because you are doing good.

Even though companies with a societal marketing philosophy have the “doing good” advantage, they will still need to have a solid marketing orientation that focuses on serving their actual customers’ needs. Toms Shoes still need to be the kind of shoes people want to wear. Brewable still needs to be a coffee shop that people want to hang out at and have meetings there. The societal marketing philosophy isn’t necessarily a marketing philosophy as described by academia but a business approach. It still leans on the philosophies or stages discussed above.

I feel that academia was just a little off when they referred to each of these approaches as philosophies instead of stages. Almost every start-up business I have worked with has the production orientation philosophy at the beginning. They are in the ideation stage and want to increase the awareness of who they are and what they do. Businesses that have survived a few years are typically in the sales orientation stage focused on the bottom line and making a profit with the marketing goal of sales leads. 

Unfortunately, too many business owners get stuck at the second stage and don’t mature into the stage of creating a trusted brand and it breaks my heart. The other day, I was driving and needed to send a text. Since I don’t text and drive I pulled into a shopping center that I was unfamiliar with. From the sign on the street it looked like there were fun and creative small businesses in there, but when I pulled in what I saw were real estate signs on the doors of great ideas that didn’t last. I wonder if they thought their clever ideas were enough to grow and sustain a business.

If you are struggling to get from one stage to the next, please contact me. Don’t let another good idea get lost in the land of awareness and sales leads. 

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