Pre-selling products as a marketing strategy by firms
Olufemi Adedamola Oyedele, MPhil. in Construction Management, managing director/CEO, Fame Oyster & Co. Nigeria, is an expert in real estate investment, a registered estate surveyor and valuer, and an experienced construction project manager. He can be reached on +2348137564200 (text only) or email@example.com
May 15, 2023131 views0 comments
The American Marketing Association (AMA) defines marketing as the activity, institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value. It is “the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchange and satisfy individual and organisational objectives”. The UK Chartered Institute of Marketing (CIM) defines marketing as: “The management process which identifies, anticipates, and supplies customer requirements efficiently and profitably”. Philip Kotler, Gary Armstrong, John Saunders and Veronica Wong in “Principles of Marketing, 2nd Edition, on page 5, published by Financial Times Prentice Hall in 2001, defined marketing as “a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with each other.”
Placing these three definitions side by side, we can see consistency in ‘the scope of marketing’. Marketing is a management process, that is, a business function which involves managing a complex business process. It is about the exchange of goods and services; that is, marketing is about exchanges of things between two parties. Normally, this is expressed as the exchange of goods or services for payment. In recent times, marketing techniques are applied in some ways that have relegated or complicated this definition. For example “political marketing” might be seen as the exchange of a preferred set of policies in return for a vote and ongoing support, while “person marketing’ or public relation is for popularity. So, marketing is actually done to gain an advantage or compensation which may not necessarily be monetary. It anticipates and meets consumers’ needs. It generates profits or returns.
Central to the idea of marketing is that individuals have needs that can be met through the purchase of goods and services. These needs are most obviously physical (food, drink, shelter, clothing, transport, etc), but may also be social (interaction with others and community belonging), and psychological (self-expression, self-identity). Psychological and social needs can be met through a wide variety of different services and products, so marketing also ensures competition. For example the ‘need’ to be respected by others could be met by living in a highbrow area, an expensive luxury car, designer suits, an adventure holiday, or a higher degree. Each business organisation attempts to produce goods or services that are more effective at meeting needs. Business organisations also attempt to find new ways to meet new needs. In return for satisfying consumers’ needs, organisations expect to make a profit.
In other words marketers do not market solely with the aim of meeting consumer needs; they select those needs which their organisation can meet most profitably. This also suggests that choice is a key aspect of marketing management. Organisations select what they judge to be the most profitable market from all the possible markets they operate. However, some marketing exercises’ compensation is “organisational objectives” or “value” rather than profit. Some organisations do grow their volume of customers at the expense of profit. With increased customer-base, there will be competition amongst the customers and these organisations will be able to increase the price of their products or services.
The practice of pre-selling a product is constantly growing. From pre-ordering books before they are published to buying tickets to a concert or football match coming up in the future. It is so common now that, in many cases, people do not even think about the fact that they are paying for a product that they cannot physically see, before actually paying for it. Pre-selling is all about selling a product or service before it is released or produced. In property development, it is called “off-plan sale”. Simply put, pre-selling is selling goods that do not even exist yet or only exist on paper. Pre-selling is a great way to trigger and measure your potential customer’s interest in your product, see their first reaction and collect feedback before making your product available in the market. It can also be used for funding your early business operations and predicting upcoming sales. Pre-sales can be a valuable tool for testing the water in your new business with minimal risks. It will save you time and money, as you would not need to invest a lot before turning out your products.
Good products and a well-conducted marketing campaign are what matter the most. The goal is to share your vision with your target customers to see if there is enough demand and determine if all the efforts will be worth it. Pre-selling your product gives you the opportunity to point out the weak spots and the grey areas concerning the product or the marketing decisions, make some improvements, and better position your product in the market. The decision to do pre-selling before your product actually goes live should be based on the characteristics of your business activity, your goals, and your objectives. It should be a considerate choice with a well-defined plan. Thus, the very first thing before tracing your pre-sale strategy should be to decide what you want to achieve in the end. Are you pre-selling to raise funds and get a budget, getting reviews from potential customers, better knowing the market competition, just providing an opportunity for extra supportive and interested customers to get it before launch?
In most cases, you can sell lower than intended during pre-selling as a promotion, but inform your customers that it is a limited offer. Give them the opportunity to try the product and give feedback. Another option is to make it pricier than intended and give your customers premium access. The motives for doing a pre-sale are numerous, and defining the results that you aim for is what you need to create a successful campaign. Auto sellers usually do presale, especially on models that they know will sell well. The idea is to get as many customers as possible before manufacturing. Autos are about vogues and the earlier sets to use a new model, get the greatest respect. Houses, especially residential houses, are usually pre-sell. In this type of presale, it is common for property developers to seek ideas from prospective buyers on the internal arrangements of the houses. Presale may also be a mutually beneficial arrangement between buyers of houses and the sellers in that the buyers can pay in instalments and with ease.
The challenges of marketing include rushing to launch your product without careful consideration; which can lead to critical losses, sometimes even irrevocable. Thus, testing your business idea by pre-selling helps you to measure its viability and acceptability in the market. Not all products and services can be presold. A business that cannot get adequate customers is doomed and in this case, it is better for the business promoters to close shop. No matter how perfect your idea may sound in your head, understanding if you will be able to sell it eventually and make money is not a guess work. Pre-selling will solve the problem of over-production of an unaccepted product.
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