However, recognizing the importance of marketing does not mean knowing its fundamentals. In agencies and elsewhere, we too often come into contact with entrepreneurs who, aside from the more strictly operational issues (which, we agree, are not at all mandatory to know in order to be successful in business) have only a vague and intuitive idea of the basic dynamics that affect the market and the relationship between supply and demand. Once again, this is understandable: otherwise, what would be the point of business consultants?
But there are some key models that entrepreneurs who want to stay ahead of the competition and get the most out of their business need to understand. To help them, we’ll look at three key marketing models that we think every entrepreneur should know to succeed in the marketplace: the S-curve of return on promotional investment, the Rogers-Moore curve for innovation, and the Ansoff matrix , which outlines the relationship between product and market.
The S-Curve of Promotional Return on Investment
The first model we will look at is the S-curve of promotional return on investment. This model describes the relationship between marketing costs and the return obtained from promotional campaigns. The S-curve is so named because of its shape, which shows how the return on promotional investment grows nonlinearly as the marketing budget increases , until it reaches a saturation point.
The S-curve is divided into three distinct areas:
Low Promotional Investment : At this early end of the curve, marketing investments have a low impact on returns. Companies must invest significant resources to create awareness and interest in their product or service, but the return on investment is still limited.
Medium Investment : As the marketing budget increases, the return on investment begins to grow rapidly. In this segment of the invested budget, promotional campaigns become more effective and begin to generate significant sales and profits.
Saturation : Return on investment reaches a saturation point where further marketing investments no longer produce a significant increase in sales or profits.
Why is this model important for every entrepreneur who invests in promoting their value proposition? Simple: because through it you have a very important help in determining the optimal marketing budget and identifying the point at which further investments may not generate a significant increase in returns. Understanding the S-curve can allow entrepreneurs to allocate marketing resources more effectively and maximize the return on investment.
ARE YOU PLANNING YOUR PROMOTIONAL INVESTMENTS BUT NOT SURE YOU'RE DETERMINING THEM IN THE CORRECT WAY? LET'S TALK ABOUT IT
The Rogers-Moore Curve for Innovation and Chasm
The second model we will examine is the Rogers-Moore curve. This often misquoted model was developed in the last century by sociologist Everett Rogers and later expanded by writer and consultant Geoffrey Moore to describe the process of consumer adoption of new products and technologies.
