How Goodwill Marketing works

Economics... When your team can agree on what products and services it can deliver at a price customers are willing to pay that will provide a dandy profit, then you know where you economically fit into the marketplace. This, so far, is based on price, quality, and some other factors. But that’s not the end.

You don’t have to stay there! Next, you get to decide where you want to fit into the marketplace based on image to optimize product sales and increase company value.

What does this mean?

For example, among ten producers of a good, including your company, where do you fit into the mix of price and quality against the others?  Suppose it’s a narrow market without much product differentiation, like toilet paper.  You can either sell at X price to get an acceptable profit with bare bones or no marketing, or you can differentiate by building your brand.  Your value of your branding over time translates into “goodwill” on the accounting books.

Goodwill in business is an intangible asset that quantifies the reputation, know-how and market position of a company.  It’s what makes your product or service appear to be different and better, and goodwill increases profit by shear perception that your product or service has more value, and therefore can warrant a higher price to the buyer.

The increase in goodwill isn’t free.  It takes marketing dollars.  However, those marketing dollars can continuously increase your company value larger than the marketing dollars you invest.  That’s right.  Creating goodwill is like anything else; when you invest in the right way, you get the best return on your investment.

Here’s another example. You can be anyone you want to be. If you decide you’re going to be a salesman, then what kind of salesman are you? What makes you unique and different than your peers? Do you want to be known for your high class attire and etiquette or for your casual “nice guy” appeal?  Two salespeople can sell the same amount in dollars, but use a completely different appeal. They use different marketing to portray the person their customers want. They are slicing out a piece of the pie for themselves by jumping into a position they can win with, and keeping it a constant never wavering part of their image.

Of course you can’t decide you want to be the crème de la crème if the rest of your business operations don’t fit with that image. All the pieces need to work together.

Marketing can drive your company name and market position, as well as the desired perception, into the place you want to be in. Once you get there, don’t stop. Keep building and adding valuable goodwill.

This is a practical and very real way to show the finance executives what they are getting for their money, and why marketing is so important.