Nearly every company on the planet sets out with the primary objective of earning money. This is usually done by manufacturing some form of product, or offering a service, and then charging customers money for it.
First of all, it is a very rare case that a company can offer a product or service that is genuinely unique and cannot be supplied by anyone else. This means that your company will be competing 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.
Marketing is the primary tool used by modern businesses to draw potential customers to do business with them and not with their competitors. It is a very extensive topic that is affected by a great deal of internal and external factors, but when done well it can be the single business practice that could make or break a corporation. Any time spent on marketing will reap rewards, although spending this time correctly can yield extraordinary outcomes.
So where should you start when creating a marketing strategy for your own business? Well, every situation is different, and each business will have its own set of advantages and flaws that must be taken into consideration, but there is a marketing principle that can be applied to almost any corporation to be used as a marketing framework.
The Marketing Mix
The marketing mix was a phrase that was first coined in the 1950’s and is a phrase that is used to express the fundamental building blocks of any marketing strategy. It demonstrates the fact that marketing is not a simple, blunt-edged business technique, but rather a subtle balance of different elements of business operations.
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 clear for business managers and marketers to quickly associate the elements of marketing to the strengths of their own companies, and by doing so could very quickly form a customised and effective marketing strategy. The four P’s are Product, Price, Place and Promotion.
The “product” aspect of the four P’s can pertain to any service, such as shot blasting, or any intangible service being offered for sale by a company.
Product
Although every element of the marketing mix is a necessity, the “product” element mentioned as one of the four P’s is possibly the most crucial of all. It identifies the physical product or intangible service that your company will be offering, 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 organisation will find it hard to survive.
Many people don’t think that marketing has any role to play when it comes to the physical product that your company is selling. In fact, the common train of thought very often bears the precise opposite sentiment. Surely it should be the opposite way around – your manufacturing 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 always the case.
Consider the computer software market as an example. There are many well-known brands of both operating system as well as software application solutions on the marketplace already, and because the market is relatively well saturated it would be very tough (and expensive) to “take on the big boys”. So how could the principles of the marketing mix help in this situation?
Rather than developing an operating system and then trying to craft a marketing strategy to take on the likes of Microsoft or Apple, it would be more effective to look at what types of product are sought after in the current marketplace, and how feasible it would be to manufacture and sell them.
Once your products have been fashioned and created it is still a critical skill to be able to objectively review your own products to identify the reasons that a customer would buy your product rather than a competitors’.
A different form of this part of the marketing mix is called product variation and is typically used to either extend the lifecycle of a product currently in the market, or to make your brand new product attractive to as many consumers as possible. Again, this technique can be applied at all stages of product development.
The car industry uses this technique 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 goods in an extremely competitive marketplace.
An example of one of the most recent forms of promotional advertising is the new fish cooking website that provides versatile and accessible means to reach potential customers.
Price
Another important factor in the marketing mix concerns the price of your products or services. This is not a simple case of performing market research to determine the top price that your customers would pay (although that can be a handy tool to use), but rather using the price of your products as a strategic tool designed to achieve any specific goals your business has.
Whilst it may seem obvious, it is still worth noting that price has always been, and likely 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. In fact a price that is too low can sometimes turn customers away.
There are many questions that you need to ask yourself when devising a good pricing plan, key among which are the price sensitivity of your clients, what your rivals are doing and how can pricing boost your own profits. From a strategy point of view though, pricing can be covered by two primary principals; price skimming and also penetration pricing. These are outlined below.
Price skimming
The main idea behind price skimming is to make as much cash as possible from the segment of the market which is price-insensitive and are going to be willing to spend a large amount of money to receive a product or service early on. Not only can this approach deliver excellent financial advantages, but it can also promote an exclusive and high quality image of your item.
This pricing technique is very often used in the consumer electronics industry where customers will often eagerly await the launch 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 firm can help to smooth its own cash flow.
Penetration pricing
Penetration pricing is at the other end of the pricing spectrum, and is geared towards gaining a large market share at a short-term cost so that financial rewards can be earned long into the future. It can be a risky strategy, but when used correctly it can setup revenue streams for many years to come.
Yet another thing to bear in mind is that “price” is the only part of the marketing mix that will generate earnings for a business. The other members of the four P’s will all cost money to create or undertake. So it is even more essential to get your pricing technique right.
Our company wanted to appeal to a broader market and targeting become a singer helped to boost our precense within the international business network.
Place
Place is the portion of the marketing mix that’s often disregarded by companies, but it is still an important part of selling your product successfully. In a nutshell, it describes the way in which you provide your product to your customer, and consequently how you collect money from them.
The most typical implications of place-based marketing are the physical locations in which your products are sold. For the vast majority of consumer products, this includes the distribution network between your manufacturing centres and retailers or other outlets around the world. Since distribution of a physical product costs money it is crucial to determine your own priorities and adapt your distribution network appropriately.
With the increasing use of the Internet by your potential customers, marketing methods have had to consider how they use the Internet to help distribute their products. By using the Internet as a point of contact (or even as a complete distribution channel in download-based markets such as MP3s) companies are now able to reach out to a large pool of potential customers. Effective positioning of your product or service can therefore deliver impressive financial results.
Promotion
When you mention the word “marketing”, most people instantly think of the promotional aspect of the marketing mix, although as we have seen, this is merely one branch of a more comprehensive system. Promotion can be employed on a very individual basis or as a mass communication instrument, and whilst it may be a costly undertaking it is often an essential one.
Advertising is one of the most typical forms of promotion. Typically it would be done by posting on billboards, producing short clips for TV and radio or by physically handing out flyers or leaflets to potential customers. With the coming of the information age we have seen a great increase in promotion via e-mail and the Internet, or just as targeted advertising material posted through your door. The potential for individualised advertising has never been so great.
Another important part of promotion involves branding, which will not necessarily yield more sales directly, but relates back to one of the preliminary purposes of marketing; getting customers to choose your product over those of your rivals. When all other parts of the marketing mix are equal it can be branding that swings a customer’s choice.
Putting it into Practice
As previously mentioned each business is different and will have different marketing requirements. By using a balance of the four P’s discussed above you can take a good view of your own marketing strategy.