October 25, 2014


Business principles for marketing, practically applied

John Klein

John Klein

Peter Drucker was a successful management consultant who translated his talents and observations into a comprehensive theory of business. 

As an old-guard, pre-technology practitioner, he built bridges to both the nonprofit sector and the modern view of work in the 21st Century. 

Even his detractors gave him his grudging due for his insights, which constitute the basis for many business strategies employed today.

One of those insights was the role and value of marketing in both for-profit and nonprofit organizations. He believed it should be elevated to one of the most important functions of any business, along with innovation. 

Over 50 years ago, Drucker recognized the concepts of brands, consumer focus, market segmentation and positioning - all elements of modern marketing and communications planning.

However, Drucker was not an empiricist, nor did he write how-to manuals.  The challenge is to take his philosophical, common-sense approach and translate it into useful applications. 

In addition, his seminal works were written a long time ago. But if you take a crack at "The Practice of Management," written in 1954, you'll find relevant thoughts that apply to nonprofit marketing. 

The following are some topics, quotes and applications for today's challenges:

Drucker on customers

"There is only one valid definition of business purpose:  to create a customer...It is the customer alone who determines what a business is."

Applications:

  • Your customers - donors, patrons, constituents, opinion leaders - are in essence buying your mission. Their currency is money, time and goodwill.
  • Communicating with your customers in the most effective way, based on their similarities and differences, will keep them close, and keep them buying your mission.

Drucker on consumer segmentation

"The first step toward finding out what our business is, is to raise the question:  ‘Who is the customer?' - the actual customer and the potential customer?"

Applications:

  • Your success is based on the strength of current customer relationships and the cultivation of new customers who will sustain and grow your mission.
  • Reaching out to potential customers - for example, using social media to reach like-minded and engaged individuals - will help balance the value of existing and new customers, and the communication efforts against each.

Drucker on market segmentation

"The question can therefore be answered only by looking at the business from the outside, from the point of view of the customer and the market."

Applications:

  • While board members and employees have good intentions, sometimes they don't reflect an objective view of the organization, the mission, the market it serves, and competitive threats.
  • Even a simple SWOT (strengths, weaknesses, opportunities and threats) analysis, conducted by a local university intern, can provide the foundation of an outside view, which can help refine target markets and communication tactics.

Drucker on brand

"What does the customer consider value?"

Applications:

  • The value of your mission is a combination of the market it serves, and how the market sees you, through personal interests and point of view - one of the basic components of branding.
  • Consumer insight - in the form of demographic analysis, or online surveys on websites likes Zoomerang - can provide information about current and potential customer attitudes, and in turn help refine the mission and how the mission is communicated.

Above all, Drucker was pragmatic. He believed that all aspects of business related to the people involved in it - both employees and customers. 

These ultimate human qualities often transcend time and are as rich in insight today as when he first wrote about them.

John Klein is president of Trilithon Partners, a marketing consulting agency based in Cary, N.C.


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