Nearly every business on the planet sets out with the primary objective of making money. This is usually done by producing some form of product, or offering a service, and then charging people money for it. This fundamental theory is fairly straight-forward, though it contains many intricate details.
Firstly, it is a very rare case where a business can offer a product or service that is truly unique and cannot be provided by anyone else. This means that your enterprise will be contesting 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 money once. So how can you improve the chances of them spending money with you?
Marketing is the main tool used by modern firms to draw prospective customers to do business with them and not with their rivals. It is a very extensive topic that is influenced by a great number of internal and external factors, but when done well it can be the one business practice that could make or break a company. Any time spent on marketing will reap benefits, although spending this time correctly can yield incredible outcomes.
So where should you begin when constructing a marketing strategy for your own company? Well, each situation is different, and each industry will have its own set of strengths 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 framework. It is known as the “Marketing Mix”.
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 system. It demonstrates the fact that marketing is not a simple, blunt-edged business tool, but rather a subtle balance of different aspects of business operations.
The term was later built upon to include the concept of “four P’s” that described the critical elements of the marketing mix. The formalisation of these P’s made it very clear for company managers and marketers to swiftly relate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly form a tailored and effective marketing plan. The four P’s are Product, Price, Place and Promotion.
When we were planning the release of our own single duvet cover products we applied concepts from the marketing mix to devise a plan.
Product
Although every aspect of the marketing mix is a necessity, the “product” element mentioned as one of the four P’s is possibly the most crucial 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 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 job of the marketing department to discover ways to sell it, right? This is not always the case.
Take the computer software market as an example. There are many well-known brands of both operating system and software application solutions in 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 attempting to craft a marketing strategy to rival the likes of Microsoft and Apple, it would be far 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 cycle you can prevent business dead-ends at a later stage.
Once your products have been fashioned and created it is still a vital skill to be able to objectively review your own products to identify the reasons that a customer should buy your product rather than a competitors’. The technique is called product differentiation and is one of the fundamental skills of the product part of the marketing mix cake.
Another form of this part of the marketing mix is known as product variation and is generally used to either extend the lifecycle of a product already in the market, or to make your new product attractive to as many customers 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 various 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 incredibly competitive marketplace. Although these companies may have substantial marketing budgets, the same principles can be applied to all companies.
We do not have a specific promotion division in our own xbox 360 steering wheel and pedals enterprise though many of our administrators have been able to adopt marketing as part of their job function.
Price
Another key factor in the marketing mix concerns the price of your products or services. This is not a simple case of performing market research to figure out the top price that your customers would spend (although that can be a handy tool to use), but rather using 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 pointing out that price has always been, and likely 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 constantly consider the lowest price to be the best value.
There are many questions that you need to ask yourself when devising a good pricing strategy, key among which are the price sensitivity of your customers, what your rivals are doing and how can pricing maximise your own profits. From a strategy point of view though, pricing can be covered by two primary principals; price skimming and also penetration pricing. These are outlined below.
Price skimming
The main idea behind 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 premium amount of money to get a product or service early on.
This pricing strategy is very often used in the consumer electronics market where customers will often eagerly await the release 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 firm can help to smooth its own money flow.
Penetration pricing
Penetration pricing is at the other end of the pricing spectrum, and is geared towards gaining a large market share at a short-term cost so that monetary benefits 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.
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 undertake. So it is even more vital to get your pricing technique right.
Our organisation has tweaked its company webpage so glass salt and pepper pots occurs very regularly and more people can locate us through search engines.
Place
Place is the portion of the marketing mix that’s often not addressed by companies, but it is still a significant part of selling your product successfully. In a nutshell, it describes the method in which you deliver your product to your consumer, and consequently how you receive money from them.
The most typical implications of place-based marketing are the physical locations in which your products are sold. For the vast majority of consumer products, this includes the distribution network between your manufacturing centres and retailers and other outlets around the country. Since distribution of a physical product costs money it is crucial to identify your own priorities and adjust your distribution network accordingly. This is the primary use of this element of the marketing mix.
With the increasing use of the Internet by your potential customers, marketing methods have had to take into account how they use the Internet to help deliver their products. By using the Internet as a point of contact (or even as a whole distribution channel 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 immediately 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 used 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 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 customers. With the coming 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. The potential for individualised advertising has never been so great.
Another important part of promotion involves branding, which will not necessarily yield more sales directly, but goes back to one of the preliminary purposes of marketing; getting customers to choose your product over those of your rivals.
Putting it into Practice
As previously mentioned every company 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.