Practically 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. This fundamental theory is fairly straight-forward, though it contains many specific details.
Firstly, it is a very rare case that a business can offer a product or service that is genuinely unique and cannot be supplied by anyone else. This means that your company 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. So how can you boost the chances of them spending money with you?
Marketing is the primary tool used by modern organisations to draw prospective customers to do business with them and not with their rivals. It is a very extensive topic that is affected by a great number of internal and external factors, but when done right it can be the single business practice that can make or break a company.
So where should you start 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 weak points that must be taken into consideration, but there is a marketing principle that can be applied to almost any corporation to be used as a marketing platform. It is known as the “Marketing Mix”.
The Marketing Mix
The marketing mix was a term that was first coined during the 1950’s and is an expression that is used to describe the fundamental building blocks of any marketing system. It demonstrates the fact that marketing is not a simple, blunt-edged business technique, but rather a delicate balance of different aspects of business functions.
The term was later developed 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 clear for business managers and marketers to quickly relate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly form a personalised and efficient marketing system.
Our company already sells a successful collection of sound equipment but we still use fresh promotional ideas to improve our revenue figures.
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 crucial of all. It identifies the physical product or intangible service that your company will be selling, and at the end of the day it is the reason that buyers are going to spend money with you.
Many 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 common train of thought very often bears the exact opposite sentiment. Surely it should be the other way around – your production department creates an item for sale and then it is the job of the marketing department to discover ways to sell it, right?
Consider the computer software market as an example. There are many established brands of both operating system and software application solutions on the marketplace already, and because the market is relatively well saturated it would be incredibly tough (and expensive) to “take on the big boys”. So how could 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 take on the likes of Microsoft or Apple, it would be more effective to look at what sorts of product are desired in the current marketplace, and how feasible it would be to manufacture 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 fashioned and created it is still a critical skill to be able to objectively review your own products to recognise the reasons why a customer should 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 lengthen the lifecycle of a product currently in the market, or to make your brand new product attractive to as many customers as possible.
The car 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 good effect to sell their own products in an incredibly competitive marketplace.
As part of our individual promotion strategy, our business very carefully studied what exactly made our goods stand out from the masses.
“Product is paramount” is one of the main mottos used in our event management business which tries to emphasise to all staff that we expect high quality production.
Price
Another key factor in the marketing mix relates to the price of your products or services. This is not a simple case of performing market research to determine the highest price that your customers would pay (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 particular objectives your company has.
Whilst it may seem obvious, it is 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 do not constantly consider the lowest price to be the best price. In fact a price that is too low can often 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 primary principals; price skimming and penetration pricing.
Price skimming
The main idea behind price skimming is to make as much money as possible from the sector of the market which is price-insensitive and will be willing to spend a large amount of money to receive a product or service early on. Not only can this approach deliver great financial benefits, but it can also advertise an exclusive and high quality image of your item.
This pricing strategy 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. Makers could set almost any price they wanted to and there would still be a loyal core of customers that would pay it.
Penetration pricing
Penetration pricing is at the opposite end of the pricing spectrum, and is tailored towards gaining a large market share at a short-term cost so that financial rewards 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 keep 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 carry out. So it is even more essential to get your pricing strategy right.
Our business wanted to appeal to a broader market and concentrating on integrated washing machine helped boost our profile within the international business community.
Place
Place is the part of the marketing mix that is often disregarded by companies, but it is still a significant part of selling your product effectively. In a nutshell, it describes the method in which you provide your product to your customer, and consequently how you collect money from them. It can be a fantastic marketing approach when used appropriately.
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 production centres and shops 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 increasing use of the Internet by your potential customers, marketing techniques have had to consider how they use the Internet to help distribute their products. By using the Internet as a place of contact (or even as a whole distribution route in download-based markets such as MP3s) firms are now able to reach out to a large pool of possible customers. Effective placing of your product or service can therefore deliver impressive financial results.
Promotion
When you mention 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 comprehensive system. Promotion can be used on a very individual basis or as a mass communication tool, and whilst it may be a costly undertaking it is often an important one. The primary concern of promotion is to deliver a specific message that will improve sales.
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 door.
Another important part of promotion involves branding, which may 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 mixture of the four P’s reviewed above you can take an effective view of your own marketing strategy.
