Practically every company on the planet sets out with the primary objective of making money. This is generally done by producing some form of product, or offering a service, and then charging people money for it.
Firstly, it is a very rare case that a company can offer a product or service that is truly unique and cannot be provided by anyone else. This means that your business 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 main tool used by modern organisations to draw prospective customers to do business with them and not with their competitors. It is a very extensive topic that is affected by a great number of internal and external factors, but when done right it can be the one business practice that could make or break a company. Any time spent on marketing will reap rewards, although spending this time correctly can yield incredible outcomes.
So where should you begin when constructing a marketing strategy for your own company? Well, each situation is different, and each industry will have its own set of strengths and weak points 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 term that was first coined during the 1950′s and is an expression that is used to express the fundamental building blocks of any marketing strategy. It demonstrates the fact that marketing is not a straightforward, blunt-edged business tool, but rather a subtle balance of different aspects of business functions.
The term was later built upon to include the idea of “four P’s” that described the critical elements of the marketing mix. The formalisation of these P’s made it very easy for business managers and marketers to quickly associate the elements of marketing to the strengths of their own organisations, and by doing so could very quickly form a tailored and effective marketing strategy.
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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 crucial of all. It describes 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 adequately managed then your company will find it hard to survive.
Several people don’t think that marketing has any role to play when it comes to the actual product that your company 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 find ways to sell it, right?
Take 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 since the market is fairly well saturated it would be incredibly tough (and expensive) to “take on the big boys”. So how could the principles of the marketing mix help in this circumstance?
Rather than creating an operating system and then attempting to craft a marketing strategy to rival the likes of Microsoft or Apple, it would be far more effective to look at what sorts of product are desired in the current marketplace, and how viable it would be to manufacture and sell them.
Once your goods have been fashioned and created it is still a vital skill to be able to objectively evaluate your own products to recognise the reasons that a customer should buy your product rather than a competitors’. The skill is called product differentiation and forms one of the fundamental skills of the product part of the marketing mix cake.
A different form of this part of the marketing mix is called product variation and is typically used to either prolong the lifecycle of a product already in the market, or to make your new product attractive to as many customers as possible. Again, this method can be applied at all stages of product development.
The motor 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 goods in an incredibly competitive marketplace.
As part of our own marketing system, our business very carefully studied what exactly made our goods stand out from the masses.
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Price
Another key factor in the marketing mix concerns the price of your products or services. This isn’t a simple case of performing market research to figure out the highest price that your customers would spend (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 objectives your business has.
Although it may seem obvious, it’s still worth pointing out that price has always been, and likely always will be, one of the crucial factors that customers take into account when they are making a purchase. It is also worth noting that customers don’t constantly consider the lowest price to be the best price. In fact a price that is too low can often turn buyers away.
There are many questions that you need to ask yourself when devising a good pricing strategy, 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 though, pricing can be covered by two main 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 sector of the market which is price-insensitive and will be prepared to spend a large amount of money to get a product or service early on.
This pricing technique is frequently used in the consumer electronics market where customers will often eagerly await the launch of a new mobile phone or computer games console. Manufacturers 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 money 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 financial rewards can be earned long into the future. It can be a high risk strategy, but when used correctly it can setup revenue streams for many years to come. When establishing a price for penetration it is still important to not give a bad impression of your product by aiming for too low a number.
Another thing to keep 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 carry out. So it is even more vital to get your pricing strategy right.
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Place
Place is the portion of the marketing mix that’s often overlooked by companies, but it is still a significant part of selling your product effectively. In short, it describes the method in which you provide your product to your customer, and subsequently how you receive money from them. It can be a fantastic marketing technique when used correctly.
The most common ramifications 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 production centres and retailers or other outlets around the country. Since distribution of a physical product costs money it is important to determine your own priorities and alter your distribution network accordingly.
With the growing use of the Internet by your potential customers, marketing strategies have had to take into account 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 route in download-based markets such as MP3s) firms are now able to reach out to a huge pool of possible customers. Effective placing of your product or service can therefore deliver impressive financial results.
Promotion
When you mention the word “marketing”, many people immediately 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 tool, and whilst it might be an expensive undertaking it is often an essential 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 buyers. With the coming of the information age we have seen a great increase in promotion via e-mail and the Internet, or simply as targeted advertising material posted through your door. The potential for individualised advertising has never been so good.
Another important part of promotion involves branding, which may not necessarily yield more product sales directly, but goes back to one of the initial purposes of marketing; getting customers to pick your product over those of your competitors. When all other parts of the marketing mix are equal it could be branding that swings a customer’s decision.
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 a good view of your own marketing plan.
