Practically every company on the planet sets out with the main objective of making money. This is usually done by producing some form of product, or offering a service, and then charging customers money for it.
Firstly, it is a very rare case that a company can offer a product or service that is genuinely unique and cannot be supplied 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 shoppers, who only want to spend their money once.
Marketing is the main tool used by modern businesses to draw potential customers to do business with them and not with their competitors. It is a very broad topic that is affected by a great deal of internal and external variables, but when done well it can be the one business practice that could make or break a corporation.
So where should you start when creating a marketing strategy for your own company? Well, each situation is different, and each industry will have its own set of strengths 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 called the “Marketing Mix”.
The Marketing Mix
The marketing mix was a term that was first coined in 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 elements of business operations. It got its name since it is similar to the ingredients list 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 easy for company managers and marketers to quickly relate the elements of marketing to the strengths of their own organisations, and by doing so could very quickly create a personalised and efficient marketing system. The four P’s are; Product, Price, Place and Promotion.
Marketing is a worldwide business concept and may get applied to balloon decoration as well as any number of different products and services.
Product
Although 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 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.
Several people do not think that marketing has any place to play when it comes to the actual product that your company 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 an item for sale and then it is the task of the marketing department to find ways to sell it, right? This is not necessarily the case.
Consider 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 marketplace already, and since the market is fairly well saturated it would be very tough (and expensive) to “take on the big boys”. So how could the principles of the marketing mix assist in this circumstance?
Rather than creating an operating system and then trying to craft a marketing strategy to take on the likes of Microsoft or Apple, it would be more effective to look at what types of product are desired in the current marketplace, and how viable it would be to produce and sell them. By being aware of the marketing mix early on in your product development period you can avoid business dead-ends at a later time.
Once your goods have been designed and created it is still a critical skill to be able to objectively review your own products to identify the reasons why 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 pie.
A different form of this part of the marketing mix is known as product variation and is generally used to either lengthen the lifecycle of a product currently in the market, or to make your new product attractive to as many customers as possible.
The car 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 good effect to sell their own products in an extremely competitive marketplace. Whilst these companies may have huge marketing budgets, the same principles can be applied to all businesses.
To preserve a standard corporate image a business should update their website to echo colors, text and also images associated with their branding.
Price
Another key 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 useful tool to use), but rather using the price of your products as a strategic weapon designed to achieve any specific targets your company has.
Although it may seem obvious, it’s 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 do not always consider the cheapest price to be the best value.
There are many questions that you need to ask yourself while devising a good pricing plan, key amongst which are the price sensitivity of your clients, what your rivals 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 behind price skimming is to make as much money as possible from the segment of the market which is price-insensitive and are going to be willing to spend a premium amount of money to get a product or service early on. Not only can this technique yield great financial advantages, but it can also advertise an exclusive and high quality image of your item.
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 core 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 monetary 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. When setting a price for penetration it is still essential to not give a poor impression of your product by aiming for too low a number.
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 create or undertake.
We were able to make use of our past marketplace analysis regarding charity promotional sashes to launch all on-line key phrase optimisation we were undertaking.
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 method in which you provide your product to your customer, and consequently how you collect money from them.
The most typical implications of place-based marketing are the physical locations in which your goods are sold. For the majority of consumer products, this involves the distribution network between your manufacturing centres and shops and other outlets around the world. Since distribution of a physical product costs money it is crucial to determine your own priorities and alter your distribution network accordingly.
With the increasing use of the Internet by your prospective 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) firms are now able to reach out to a large pool of potential customers. Effective placing of your product or service can therefore yield impressive economic results.
Promotion
When you say the word “marketing”, many people instantly think of the promotional side of the marketing mix, although as we have seen, this is only one branch of a more complete system. Promotion can be employed 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 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 just as targeted advertising material posted through your front door. The potential for individualised advertising has never been so good.
Another significant part of promotion involves branding, which may not necessarily yield more product sales directly, but goes back to one of the preliminary purposes 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 sways a customer’s choice.
Putting it into Practice
As previously mentioned every business is different and will have different marketing needs. By using a balance of the four P’s discussed above you can take an effective view of your own marketing plan.
