Practically every business on the planet sets out with the main objective of making money. This is usually done by manufacturing some form of product, or offering a service, and then charging people money for it.
Firstly, it is a very rare case where a business can offer a product or service that is genuinely 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 earn money from the same customers, who only want to spend their cash once.
Marketing is the primary 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 deal of internal and external variables, but when done well it can be the single business practice that could make or break a company. Any time spent on marketing will reap rewards, although spending this time efficiently can yield extraordinary outcomes.
So where should you start when constructing a marketing strategy for your own company? Well, every situation is different, and every 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 called 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 express the fundamental building blocks of any marketing strategy. It reflects the fact that marketing is not a straightforward, blunt-edged business technique, 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 create a tailored and effective marketing plan.
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Product
Whilst every element of the marketing mix is a requirement, the “product” element mentioned as one of the four P’s is perhaps the most critical of all. It identifies 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.
Several people don’t think that marketing has any role to play when it comes to the actual product that your business is selling. In fact, the common train of thought very often bears the exact opposite sentiment. Surely it should be the opposite way around – your manufacturing department creates a product for sale and then it is the task of the marketing department to discover 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 products 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 attempting to craft a marketing strategy to rival the likes of Microsoft or Apple, it would be far more effective to look at what types of product are sought after in the current marketplace, and how viable it would be to produce and sell them.
Once your goods 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 called product variation and is generally used to either extend the lifecycle of a product already in the market, or to make your brand new product attractive to as many consumers as possible. Once again, this method can be applied at all stages of product development.
The motor industry uses this approach very effectively by offering different engines, trim packages and interior options with the cars that they sell. They use the marketing mix to great effect to sell their own products in an incredibly competitive marketplace.
As part of our individual promotion strategy, our business thoroughly researched what made our goods stand out from the crowd.
Marketing plays a key role in a business plan and it should not be treated like an afterthought.
Price
Another important factor in the marketing mix relates to the price of your products or services. This isn’t a simple case of performing market research to figure out the top price that your customers would pay (although that can be a useful tool to use), but rather making use of the price of your products as a strategic weapon designed to achieve any specific targets your company has.
Whilst it may seem obvious, it’s still worth pointing out that price has always been, and probably always will be, one of the crucial factors that shoppers 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 value.
There are many questions that you need to ask yourself while devising a good pricing strategy, key among which are the price sensitivity of your customers, what your competitors are doing and how can pricing maximise 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 principal 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 prepared to spend a large amount of money to get a product or service early on. Not only can this approach deliver excellent financial benefits, 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 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 base of customers that would pay it.
Penetration pricing
Penetration pricing is at the opposite end of the pricing spectrum, and is geared towards gaining a large market share at a short-term cost so that monetary rewards can be earned long into the future. It can be a high risk 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 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 create or carry out. So it is even more essential to get your pricing technique right.
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Place
Place is the part of the marketing mix that’s often overlooked by companies, but it is still an important part of selling your product successfully. In a nutshell, it describes the way in which you deliver your product to your customer, and subsequently how you collect money from them.
The most common ramifications of place-based marketing are the physical venues in which your goods are sold. For the majority of consumer products, this involves the distribution infrastructure between your manufacturing plants and retailers and other outlets around the world. Since distribution of a physical product costs money it is important to determine your own priorities and adapt your distribution network accordingly.
With the growing use of the Internet by your prospective customers, marketing techniques have had to consider 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 potential customers.
Promotion
When you mention the word “marketing”, many people instantly think of the promotional aspect of the marketing mix, although as we have seen, this is merely one branch of a more complete system. Promotion can be employed on a very individual basis or as a mass communication tool, and whilst it may be an expensive undertaking it is often an important one.
Advertising is one of the most common forms of promotion. Classically 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 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 front door. The potential for individualised advertising has never been so good.
Another important part of promotion involves branding, which will not necessarily yield more sales directly, but relates back to one of the preliminary functions of marketing; getting customers to choose your product over those of your rivals. When all other pieces of the marketing mix are equal it could be branding that swings a customer’s choice.
Putting it into Practice
As previously mentioned each company is different and will have different marketing needs. By using a mixture of the four P’s reviewed above you can take a good view of your own marketing plan.
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