Nearly every business on the planet sets out with the primary objective of earning money. This is generally done by producing some form of product, or offering a service, and then charging people money for it.
First of all, it is a very rare case that a business can offer a product or service that is truly unique and cannot be supplied by anyone else. This means that your company will be competing with other businesses that sell a similar item and you will both be trying to make money from the same customers, who only want to spend their cash once.
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 extensive topic that is influenced by a great deal of internal and external variables, but when done well it can be the single business practice that can make or break a company. Any time spent on marketing will reap benefits, although spending this time correctly can yield extraordinary outcomes.
So where should you begin when constructing a marketing strategy for your own business? Well, every situation is different, and each business will have its own set of advantages and weak points 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 framework.
The Marketing Mix
The marketing mix was a phrase that was first coined during 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 straightforward, blunt-edged business technique, but rather a subtle balance of different elements of business operations. It got its name since it is similar to the ingredients checklist for a recipe.
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 company managers and marketers to quickly associate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly form a customised and efficient marketing plan.The four P’s are Product, Price, Place and Promotion.
Our company specialises in supplying planning services and while we all believed our marketing strategy was adequate we have seen advancements since using marketing mix principles.
Product
Although every aspect 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 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 physical product that your company is selling. In fact, the typical train of thought very often bears the precise opposite sentiment. Surely it should be the other way around – your production department creates a product for sale and then it is the job 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 and software application solutions in the market already, and because the market is relatively well saturated it would be very tough (and expensive) to “take on the big boys”.
Rather than creating an operating system and then trying to craft a marketing strategy to rival the likes of Microsoft and Apple, it would be more effective to look at what sorts of product are sought after in the current marketplace, and how feasible it would be to produce and sell them.
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 that a customer would 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 known as product variation and is generally used to either prolong the lifecycle of a product already in the market, or to make your brand new product attractive to as many customers as possible.
The motor industry uses this technique 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 goods in an extremely competitive marketplace.
Marketing plays a critical role within any business strategy and it shouldn’t be treated as an afterthought.
Price
Another important factor in the marketing mix concerns the price of your products or services. This is not a simple case of carrying out market research to determine 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 specific targets your business has.
Although it may seem obvious, it is still worth noting 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 don’t always consider the cheapest price to be the best price. Actually a price that is too low can sometimes turn customers away.
There are many questions that you need to ask yourself while devising a good pricing plan, key among which are the price sensitivity of your customers, what your competitors are doing and how can pricing boost your own profits. From a strategy point of view though, pricing can be covered by two main principals; price skimming and 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 premium amount of money to get a product or service early on. Not only can this technique deliver great economic benefits, but it can also promote an exclusive and high quality image of your product.
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 almost 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 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 earned long into the future. It can be a risky strategy, but when used correctly it can create revenue streams for many years to come. When setting a price for penetration it is still critical to not give a poor impression of your product by aiming for too low a number.
Yet another thing to bear in mind is that “price” is the only 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.
SEO firms are more common these days and our company used them to make parmesan cheese graters a notable phrase on our web site to attract more customers.
Place
Place is the component 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 way in which you provide your product to your consumer, and subsequently how you receive money from them.
The most typical ramifications of place-based marketing are the physical venues in which your goods are sold. For the vast majority of consumer products, this involves the distribution network between your manufacturing centres and retailers and other outlets around the world. Since distribution of a physical product costs money it is important to identify your own priorities and modify your distribution network appropriately.
With the growing use of the Internet by your prospective customers, marketing methods 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 channel 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 yield impressive financial results.
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 only one branch of a more complete system. Promotion can be used on a very individual basis or as a mass communication instrument, and whilst it can be a costly undertaking it is often an important one.
Advertising is one of the most common 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 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 materials posted through your front door.
Another significant part of promotion involves branding, which may not necessarily yield more product 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 company is unique and will have different marketing needs. By using a balance of the four P’s discussed above you can take a good view of your own marketing plan.