Quick Marketing Primer

We understand not everyone is a marketing or sales expert. Most technical people are less marketing savvy and incline less towards marketing jargons and terminology. Keeping that target audience in mind, we have developed a quick 9 minute sales/marketing introduction for the masses.

Here is a quick marketing primer for those of you who don't have advanced marketing degrees from fancy schools:

Marketing 101

4Ps of Marketing or the Marketing Mix: Product, Price, Place, and Promotion

  • Product: The physical product or service must be made to fulfill a need or want of the target market. Some important aspects of the product are: packaging, quality and characteristics.
  • Price: The price of the product being sold should be based on various things including; perceived benefit to the consumer, production volume, competition and pricing strategy.
  • Place: Place is the method of distributing the product to the consumer and the method of storing inventory. This step includes: transportation, warehousing and distribution channels.
  • Promotion: Promotion is your method of communicating with your target market, informing them about your product. Promotion includes: promotional strategy, advertising, personal selling and public relations.

4Cs of Customers or Customers' 4 Cs: Customer, Cost, Convenience and Communication.

The successful marketer will try to understand the target market's needs, wants, and demands. The 4P components of Marketing Mix are: Product, Price, Place, and Promotion. Robert Lauterborn (Professor at the University of North Carolina) suggested that the sellers' four Ps correspond to the customers' four Cs:

Four Ps Four Cs
Product Customer solution/wants
Price Customer cost
Place Convenience
Promotion Communication

Product manufacturers, advertisers and marketers who have understood the right correlation between the 4 P's to the 4 C's have been successful in what they do. Pick up any company, product or idea, and look for the clues above. You will notice that successful companies or ideas are the ones which have meshed their Ps to the Cs.

Account: A customer, usually a business-to-business organization; a major account is a large organization; a national account is a customer with branches or sites that constitute a nationwide coverage, which typically requires special pricing and senior sales attention.

Added Value: The element(s) of service or product that a sales person or selling organization provides, that a customer is prepared to pay for because of the benefit(s) obtained. Added values are real and perceived; tangible and intangible.

Benefit: The gain (usually a tangible cost, but can be intangible) that accrues to the customer from the product or service.

CarveOut: Market which has existing competitors, but with an excellent product plan, market share can be gained over competition. CarveOut is exclusive to XC Slides terminology and was coined by Mr. Misra.

Equity Carve-out: A situation in which a parent company sells a minority share (usually 20% or less) of a child company, usually in an IPO, while retaining the rest. The child company will have its own board of directors and financial statements, but will benefit from the parent company's resources and strategic support. Usually, the parent company will eventually sell the rest of the child company in the open market. also called partial spinoff.

Sales Cycle: The Sales Cycle term generally describes the time and/or process between first contact with the customer to when the sale is made. Sales Cycle times and processes vary enormously depending on the company, type of business (product/service), the effectiveness of the sales process, the market and the particular situation applying to the customer at the time of the enquiry. The Sales Cycle time is also referred to as the Sale Gestation Period (i.e. from conception to birth - enquiry to sale). The Sales Cycle in a sweet shop is less than a minute; in the international aviation sector or civil construction market the Sales Cycle can be many months or even a few years. A typical Sales Cycle for a moderately complex product might be:

  1. Receive enquiry
  2. Qualify details
  3. Arrange appointment
  4. Customer appointment
  5. Arrange survey
  6. Conduct survey
  7. Presentation of proposal
  8. Close Sale

SAM: SAM is Served Available Market or Serviceable Addressable Market. These are the customers that you can actually reach out of TAM (Total Available Market).

SOM: SOM is Share of Market for your product. To calculate SOM, you should apply a final filter on SAM, for penetrated market / market share of competitors, yielding the Share of Market or SOM. SOM is the number you should use to form your market forecast in your business plan or presentations.

TAM: TAM or Total Available Market is the dollar or unit value of a particular market opportunity. In layman's terms, TAM is the number of potential customers there are who share a pain related to your product or solution. TAM can be calculated several ways. If there is a trade group in your industry, you can get at it from them - how many units produced for a particular product. If such data is not available, you can calculate from the top down by defining consumers using demographic data and estimating the number from population data. Based on assumptions on how many of the products are purchased per consumer per year and average selling prices, you can calculate TAM.

TAM, SAM, SOM example: Before breaking ground or entering the market with your new product, you should have a good idea of your TAM, SAM and SOM. It is easy to explain the above concepts using an example:

You are an entrepreneur who has an earth-shattering online app for Microsoft Outlook that syncs with social media websites. Your TAM or Total Available Market in this example would be all Microsoft Outlook users. Your SAM or Served Available Market is Outlook users who regularly use social media. This is because your product is only used with both Outlook and social media. It is a bridge between the two. You SOM or Share of Market is the actual number of SAM users minus competition. It is the market share you have in your SAM. This is because some other company already has a similar app out there for an Outlook/social media plug-in. To get a good market forecast, you need to discount for market that has already been penetrated by competitors.

This further goes on to show how important Research is ("R" in XUTURE CAPITAL slides) before launching a product, or requesting funding.

UnCarved: An UnCarved market is one which has not yet been touched by competitors. It is an untouched territory with tremendous potential for sales and growth. UnCarved is an XC Slides terminology, and was coined by Mr. Misra.

Unique/uniqueness: A feature that is peculiar to a product or service or supplier - no competitor can offer it.

UPB - Unique Perceived Benefit: UPB is one of the central strongest mechanisms in the modern selling process, an extension and refinement of the product offer, based on detailed understanding of the prospect's personal and organizational needs. A UPB is your USP from the customer's perspective, in other words, what your USP means to your customer, which is a very different way of approaching selling than from the traditional angle of seller-oriented USPs. It is essential to discuss your offering in these terms with your customer.

USP - Unique Selling Point or Proposition: USP is what makes the product offer competitively strong and without direct comparison; generally the most valuable unique advantage of a product or service, for the market or prospect in question; now superseded by UPB.