The 3 Principles of Small Business Marketing

4 min read • Aug 29, 2021 • Derek Miller

Your marketing will determine whether you sink or swim as an entrepreneur. Whether you’re a B2B SaaS company operating out of a home office or a B2C storefront trying to attract foot traffic, the marketing choices you make can bring in customers—or leave you hanging out to dry. 

While dozens of marketing strategies are at your disposal, there are a few key principles that can guide your investment strategy and marketing goals. Learn about the 3 guiding principles of small business marketing and how to apply them to your business model.  

1. Principle of Customer Value

Whether you like it or not, your customers will always be evaluating your products or services, attaching a monetary value to them. They may compare your products to competitors or past purchases, making a judgment as to the perceived value you provide.

As a rule of thumb, the formula for customer value is:

  • Perceived Value = Total Customer Benefit – Total Customer Cost

This formula might seem basic at face value, but there are multiple elements to consider. 

Customer costs come in many forms: there are the monetary costs of buying your product but also the time and energy that customers invest, both tangible and intangible. Along with the benefits of receiving your product or service, other customer benefits include time saved or stress reduced from engaging with your brand. 

For example, a cheap airline ticket might have monetary value, but paying more for a better flight could save you from a 6-hour layover. The cost is higher, but the value might make the price worth it.  

When evaluating value, you aren’t just thinking about your competitors. You’re also considering the costs or benefits of not buying a product at all. Consider the time and money of taking a weekend getaway versus saving the money and staying home. 

In your marketing efforts, you need to prove value to your customers. 

2. Principle of Differentiation

Differentiation is the process of distinguishing your products from your competitors’. What makes your business and services different? Your marketing materials will focus on differentiation when making a case to potential customers. 

The marketing experts at MailChimp explain multiple types of differentiation:

  • Vertical differentiation: This approach is when you’re able to differentiate based entirely on quality or price. For example, take Mercedes-Benz vs. Mitsubishi Motors—the customer is immediately able to delineate between the 2 based on perceived quality and price expectations. Vertical differentiation is when businesses can separate themselves by objective measurables like ingredients, materials, or price.
  • Horizontal Differentiation: This option is when there are no obvious differences between products or services. At a brewery, one type of beer isn’t objectively better than the other: some customers prefer IPAs while others want pilsners or stouts. To differentiate yourself horizontally, focus on making your products stand out. If your products or experiences are memorable, then your customers will want to choose your brand again. 
  • Mixed differentiation: This is the most common way customers decide between products. A customer will use vertical differentiation to determine what type of restaurant they want to eat at and then use horizontal differentiation to pick their favorite. This is why McDonald’s is focused on competing with Burger King, not with every restaurant that happens to have a burger on its menu.

Differentiation should always be the focus of your marketing efforts. Consider developing a list of why your brand is both objectively and subjectively better than others so that you can focus on these traits in your development process.  

3. Principle of Segmentation

The principle of segmentation is actually the principle of segmentation, targeting, and positioning. This is the idea that your customers aren’t acting as a monolith—multiple audience segments view your products in multiple ways.

Consider how airlines market to different travelers. Major carriers like Delta and United have basic seats that are more affordable and come with fewer perks. They also have more spacious seats and business class upgrades. The target markets for these 2 classes are completely different, even though everyone is boarding the same flights to the same cities. 

Your business will likely have at least 3 audiences that all perceive the value of your company in different ways. They differentiate your products and services at various levels. If you only focus on a single audience, you’ll likely isolate other customers in your marketing efforts. 

Use These Principles as Marketing Touchpoints

Marketing is an incredibly creative process. You can explore multiple outlets to promote your brand and develop brand materials that attract attention. However, as you explore new ideas, turn back to these principles to ensure that you’re following them. Are you differentiating? How are you providing value? This will keep your message on-brand and effective.

Derek Miller

Derek Miller is the CMO of Smack Apparel, the content guru at Great.com, and a marketing consultant for small businesses. He specializes in entrepreneurship, small business, and digital marketing, and his work has been featured in sites like Entrepreneur, GoDaddy, Score.org, and StartupCamp.