Almost every business on the planet sets out with the main 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. This fundamental theory 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 supplied by anybody else. This means that your business will be contesting with other businesses that sell a similar item and you will both be trying to earn 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 competitors. It is a very broad topic that is influenced by a great deal of internal and external factors, but when done well it can be the single business practice that can make or break a company.
So where should you begin when constructing a marketing strategy for your own business? Well, every situation is different, and each industry will have its own set of advantages and weaknesses that must be taken into consideration, but there is a marketing rule 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 in the 1950′s and is a phrase that is used to express 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 elements of business operations. It got its name since it is similar to the ingredients list for a recipe.
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 swiftly associate the elements of marketing to the strengths of their own companies, and by doing so could very quickly create a customised and effective marketing strategy. The four P’s are Product, Price, Place and Promotion.
Our company excels at supplying duvet bedding and although we thought our marketing plan was adequate we have seen advancements after using marketing mix principles.
Product
Whilst every aspect of the marketing mix is a necessity, the “product” element mentioned as one of the four P’s is possibly the most critical of all. It describes the physical product or intangible service that your business will be selling, and at the end of the day it is the reason that customers are going to spend money with you.
Many people do not think that marketing has any place 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 other 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 established brands of both operating system as well as software application solutions on the market already, and because 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 assist in this situation?
Rather than developing an operating system and then trying to craft a marketing strategy to rival the likes of Microsoft or 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 manufacture and sell them. By being mindful of the marketing mix early on in your product development cycle you can avoid business dead-ends at a later stage.
Once your products have been designed and created it is still a vital skill to be able to objectively review your own products to recognise the reasons why a customer would buy your product rather than a competitors’. The technique is called product differentiation and is one of the basic skills of the product part of the marketing mix pie.
Another form of this part of the marketing mix is called product variation and is generally used to either extend 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 goods in an incredibly competitive marketplace. Although these companies may have huge marketing budgets, the same concepts can be applied to all businesses.
“Product is paramount” is one of the main slogans used within our chees graters organisation which tries to emphasise to all employees that we expect top quality manufacturing.
Price
Another key factor in the marketing mix concerns the price of your products or services. This isn’t a simple case of carrying out market research to figure out the top price that your customers would pay (although that can be a useful tool to use), but rather using the price of your products as a strategic weapon designed to achieve any specific goals your company has. The potential advantages of an effective pricing strategy are surprisingly substantial!
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 customers take into account when they are making a purchase. It is also worth noting that customers don’t constantly consider the cheapest price to be the best price.
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 customers, what your rivals are doing and how can pricing boost your own profits. From a strategy point of view however, pricing can be covered by two main principals; price skimming and also penetration pricing. These are outlined below.
Price skimming
The main idea driving price skimming is to make as much cash as possible from the segment of the market which is price-insensitive and will be willing to spend a large amount of money to receive a product or service early on. Not only can this technique yield excellent economic advantages, but it can also advertise an exclusive and high quality image of your item.
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. Makers could set nearly any price they wanted to and there would still be a loyal base 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 opposite 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 made long into the future. It can be a risky strategy, but when employed correctly it can create revenue streams for many years to come.
Yet another thing to keep 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 produce or undertake.
Our organisation has modified its corporate website so birthday presents men shows up very regularly and more people can find us through search engines.
Place
Place is the part of the marketing mix that is often disregarded by companies, but it is still a significant part of selling your product effectively. In a nutshell, it describes the way in which you deliver your product to your customer, and subsequently how you collect money from them. It can be a great marketing approach when applied appropriately.
The most common implications of place-based marketing are the physical locations in which your products are sold. For the majority of consumer products, this involves the distribution network between your production plants and shops or other outlets around the country. Since distribution of a physical product costs money it is important to identify your own priorities and modify your distribution network appropriately.
With the increasing 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 place of contact (or even as a complete distribution route in download-based markets such as MP3s) companies are now able to reach out to a large pool of possible customers. Effective positioning of your product or service can therefore yield impressive financial results.
Promotion
When you say the word “marketing”, most people instantly think of the promotional side of the marketing mix, although as we have seen, this is merely one branch of a more comprehensive system. Promotion can be used on a very individual basis or as a mass communication tool, and whilst it can be an expensive undertaking it is often an important one. The primary concern of promotion is to deliver a specific message that will improve sales.
Advertising is one of the most typical forms of promotion. Typically it would be done by posting on billboards, creating short clips for TV and radio or by physically handing out flyers or leaflets to potential buyers. With the arrival of the information age we have witnessed a great increase in promotion via e-mail and the Internet, or just as targeted advertising material posted through your door.
Another important part of promotion involves branding, which will not necessarily yield more product sales directly, but relates back to one of the preliminary purposes of marketing; getting customers to choose your product over those of your competitors.
Putting it into Practice
As previously mentioned every business is different and will have different marketing needs. By using a mixture of the four P’s reviewed above you can take an effective view of your own marketing strategy.