Practically every company on the planet sets out with the primary objective of making money. This is generally done by manufacturing some form of product, or offering a service, and then charging customers money for it. This fundamental principle is fairly straight-forward, though it contains many specific details.
Firstly, it is a very rare case where a company can offer a product or service that is genuinely unique and cannot be provided by anyone else. This means that your enterprise will be contesting with other businesses that sell a similar product and you will both be trying to make money from the same shoppers, who only want to spend their cash once. So how can you improve the chances of them spending money with you?
Marketing is the primary tool used by modern firms to draw potential customers to do business with them and not with their rivals. It is a very broad topic that is affected by a great number of internal and external variables, but when done well it can be the one business practice that can make or break a company.
So where should you begin when constructing a marketing strategy for your own business? Well, each situation is different, and every business will have its own set of advantages and weaknesses that must be taken into consideration, but there is a marketing principle that can be applied to almost any company to be used as a marketing platform. It is known as the “Marketing Mix”.
The Marketing Mix
The marketing mix was a phrase that was first coined during the 1950’s and is an expression that is used to describe the fundamental building blocks of any marketing strategy. It reflects the fact that marketing is not a simple, blunt-edged business tool, but rather a subtle balance of different aspects of business functions.
The term was later developed to include the concept of “four P’s” that described the essential elements of the marketing mix. The formalisation of these P’s made it very easy for business managers and marketers to swiftly associate the elements of marketing to the strengths of their own companies, and by doing so could very quickly create a personalised and effective marketing system. The four P’s are Product, Price, Place and Promotion.
Marketing is a worldwide business idea which may be carried out on floor resin products as well as almost any amount of different products and services.
Product
Although every element of the marketing mix is a requirement, the “product” element mentioned as one of the four P’s is possibly the most critical of all. It identifies the physical product or intangible service that your company will be selling, and at the end of the day it is the reason that customers are going to spend money with you. If this element is not correctly managed then your company will find it hard to survive.
Many people do not think that marketing has any role to play when it comes to the physical product that your business is selling. In fact, the typical train of thought very often bears the exact opposite sentiment. Surely it should be the opposite way around – your production department creates an item for sale and then it is the task of the marketing department to discover ways to sell it, right? This is not necessarily the case.
Take the computer software market as an example. There are many established brands of both operating system and software application solutions on the market already, and since the market is relatively well saturated it would be incredibly tough (and expensive) to “take on the big boys”. So how can the principles of the marketing mix help in this circumstance?
Rather than developing an operating system and then trying to craft a marketing strategy to take on the likes of Microsoft and Apple, it would be more effective to look at what sorts of product are desired in the current marketplace, and how viable it would be to produce and sell them. By being mindful of the marketing mix early on in your product development cycle you can prevent business dead-ends at a later stage.
Once your products have been fashioned and created it is still a critical skill to be able to objectively review your own products to recognise the reasons that a customer should buy your product rather than a competitors’.
A different form of this part of the marketing mix is known as product variation and is generally used to either prolong the lifecycle of a product currently in the market, or to make your brand new product attractive to as many customers as possible. Once again, this method can be applied at all stages of product development.
The car industry uses this approach very effectively by offering various engines, trim packages and interior options with the cars that they offer. They use the marketing mix to good effect to sell their own products in an incredibly competitive marketplace. Whilst these companies may have huge marketing budgets, the same principles can be applied to all businesses.
“Product is paramount” is one of the slogans used within our chees graters firm that aims to emphasise to all employees that we expect top quality production.
Price
Another key factor in the marketing mix relates to the price of your products or services. This is not a simple case of performing market research to determine the highest price that your customers would pay (although that can be a handy tool to use), but rather making use of the price of your products as a strategic weapon designed to achieve any particular goals your company has. The potential benefits of an effective pricing strategy are surprisingly large!
Whilst it may seem obvious, it’s still worth pointing out that price has always been, and probably always will be, one of the key factors that shoppers take into account when they are making a purchase. It is also worth noting that customers do not always consider the cheapest price to be the best value. Actually a price that is too low can sometimes turn buyers away.
There are many questions that you need to ask yourself while devising a good pricing plan, key amongst which are the price sensitivity of your clients, what your rivals are doing and how can pricing maximise your own profits. From a strategy point of view however, pricing can be covered by two primary principals; price skimming and also penetration pricing.
Price skimming
The main idea behind price skimming is to make as much money as possible from the sector of the market which is price-insensitive and will be willing to spend a premium amount of money to receive a product or service early on. Not only can this technique deliver excellent economic advantages, but it can also advertise an exclusive and high quality image of your product.
This pricing technique is frequently used in the consumer electronics market where customers will often eagerly await the release of a new mobile phone or computer games console. Makers could set nearly any price they wanted to and there would still be a loyal core of customers that would pay it. By using this method as part of a pre-ordering strategy, a company can help to smooth its own cash flow.
Penetration pricing
Penetration pricing is at the other end of the pricing spectrum, and is tailored towards gaining a large market share at a short-term cost so that monetary rewards can be made long into the future. It can be a risky strategy, but when employed correctly it can setup revenue streams for many years to come. When setting a price for penetration it is still essential to not give a poor impression of your product by aiming for too low a figure.
Yet another thing to bear in mind is that “price” is the one part of the marketing mix that will generate income for a business. The other members of the four P’s will all cost money to produce or undertake.
When our organization was doing market research before a brand new product launch I identified that get a boyfriend was the key word that promoted the best “value for money” image.
Place
Place is the component of the marketing mix that is often not addressed by companies, but it is still an important part of selling your product effectively. In a nutshell, it describes the method in which you deliver your product to your customer, and consequently how you receive money from them. It can be a fantastic marketing technique when applied appropriately.
The most common implications of place-based marketing are the physical venues in which your products are sold. For the majority of consumer products, this includes the distribution infrastructure between your manufacturing plants and shops and other outlets around the world. Since distribution of a physical product costs money it is crucial to identify your own priorities and adjust your distribution network accordingly.
With the growing use of the Internet by your prospective customers, marketing techniques have had to take into account how they use the Internet to help deliver their products. By using the Internet as a place of contact (or even as an entire distribution route in download-based markets such as MP3s) companies are now able to reach out to a huge pool of possible customers. Effective positioning of your product or service can therefore yield impressive economic results.
Promotion
When you say the word “marketing”, most people immediately think of the promotional side of the marketing mix, although as we have seen, this is only one branch of a more comprehensive system. Promotion can be used on a very individual basis or as a mass communication instrument, and whilst it may be a costly undertaking it is often an important one.
Advertising is one of the most typical forms of promotion. Classically it would be done by posting on billboards, creating short clips for TV and radio or by physically distributing flyers or leaflets to potential customers. With the arrival of the information age we have seen a great increase in promotion via e-mail and the Internet, or just as targeted advertising materials posted through your front door. The potential for individualised advertising has never been so good.
Another important part of promotion involves branding, which may not necessarily yield more sales directly, but goes back to one of the initial functions of marketing; getting customers to choose your product over those of your rivals.
Putting it into Practice
As previously mentioned every business is unique and will have different marketing needs. By using a mixture of the four P’s discussed above you can take an effective view of your own marketing plan.