Almost every business on the planet sets out with the main objective of earning money. This is generally 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 that a company can offer a product or service that is truly unique and cannot be provided by anybody else. This means that your enterprise will be competing 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 money once.
Marketing is the main tool used by modern organisations to draw prospective customers to do business with them and not with their rivals. It is a very broad topic that is affected by a great deal of internal and external variables, but when done right it can be the one business practice that could make or break a corporation. Any time spent on marketing will reap benefits, although spending this time efficiently can yield incredible outcomes.
So where should you begin when constructing a marketing strategy for your own company? Well, each situation is different, and every company will have its own set of advantages and flaws that must be taken into consideration, but there is a marketing rule that can be applied to almost any corporation to be used as a marketing platform.
The Marketing Mix
The marketing mix was a phrase that was first coined in the 1950’s and is an expression that is used to describe the fundamental building blocks of any marketing system. It reflects the fact that marketing is not a straightforward, blunt-edged business technique, but rather a delicate balance of different aspects of business operations. It got its name because it is similar to the ingredients checklist for a recipe.
The term was later built upon 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 swiftly associate the elements of marketing to the strengths of their own companies, and by doing so could very rapidly create a personalised and efficient marketing strategy. The four P’s are Product, Price, Place and Promotion.
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Product
Whilst every aspect of the marketing mix is a necessity, the “product” element mentioned as one of the four P’s is perhaps the most crucial 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 buyers are going to spend money with you.
Several people do not think that marketing has any role 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 precise 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 find ways to sell it, right? This is not always the case.
Consider the computer software market as an example. There are many established brands of both operating system and software application products 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”.
Rather than creating an operating system and then trying to craft a marketing strategy to take on the likes of Microsoft and Apple, it would be far more effective to look at what sorts 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 designed and created it is still a vital skill to be able to objectively evaluate your own products to identify the reasons why a customer would buy your product rather than a competitors’.
Another form of this part of the marketing mix is known as 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.
The motor 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 great effect to sell their own products in an incredibly competitive marketplace.
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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 carrying out market research to figure out the highest 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 targets your business has. The potential benefits of an effective pricing strategy are surprisingly large!
Although it may seem obvious, it’s still worth pointing out that price has always been, and likely 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 always consider the lowest price to be the best value.
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 competitors 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 penetration pricing. These are outlined below.
Price skimming
The principal idea behind price skimming is to make as much cash as possible from the sector of the market which is price-insensitive and are going to be prepared to spend a large amount of money to receive a product or service early on.
This pricing strategy is frequently 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 base of customers that would pay it. By using this method as part of a pre-ordering strategy, a company 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 benefits can be made 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.
Another thing to bear in mind is that “price” is the only part of the marketing mix that will generate revenue for a business. The other members of the four P’s will all cost money to produce or undertake.
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Place
Place is the portion of the marketing mix that’s often overlooked by companies, but it is still an important part of selling your product effectively. In a nutshell, it describes the way in which you provide your product to your consumer, and subsequently how you collect money from them. It can be a fantastic marketing approach when applied appropriately.
The most typical ramifications of place-based marketing are the physical locations in which your goods are sold. For the majority of consumer products, this includes the distribution network between your manufacturing plants and shops or 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 appropriately. This is the principal application of this part of the marketing mix.
With the increasing use of the Internet by your potential customers, marketing methods 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 channel in download-based markets such as MP3s) companies are now able to reach out to a huge pool of possible customers.
Promotion
When you mention the word “marketing”, most people immediately think of the promotional side of the marketing mix, although as we have seen, this is merely 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 may be a costly 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, producing short clips for TV and radio or by physically distributing 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 simply as targeted advertising material posted through your door.
Another significant part of promotion involves branding, which will not necessarily yield more product sales directly, but goes back to one of the initial purposes of marketing; getting customers to choose your product over those of your competitors.
Putting it into Practice
As previously mentioned each business is unique and will have different marketing requirements. By using a mixture of the four P’s reviewed above you can take an effective view of your own marketing plan.