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 customers money for it.
First of all, it is a very rare case that a company can offer a product or service that is genuinely unique and cannot be supplied by anybody else. This means that your business will be contesting with other businesses that sell a similar product and you will both be trying to make money from the same shoppers, who only want to spend their cash once. So how can you improve the chances of them spending money with you?
Marketing is the main tool used by modern businesses to draw prospective customers to do business with them and not with their competitors. It is a very broad topic that is influenced by a great number of internal and external factors, but when done well it can be the single business practise that could make or break a company.
So where should you begin when creating a marketing strategy for your own company? Well, every situation is different, and every industry will have its own set of strengths 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. It is called the “Marketing Mix”.
The Marketing Mix
The marketing mix was a term 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 reflects the fact that marketing is not a straightforward, blunt-edged business tool, but rather a delicate balance of different aspects of business operations.
The term was later developed to include the idea 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 relate the elements of marketing to the strengths of their own companies, and by doing so could very quickly form a customised and effective marketing system. The four P’s are Product, Price, Place and Promotion.
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Product
Whilst 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 describes the physical product or intangible service that your company will be offering, 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 role to play when it comes to the actual product that your business is selling. In fact, the common train of thought very often bears the precise opposite sentiment. Surely it should be the opposite 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 well-known brands of both operating system as well as software application products on the market already, and because the market is fairly 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 or Apple, it would be far more effective to look at what types of product are desired in the current marketplace, and how feasible it would be to manufacture and sell them. By being mindful of the marketing mix early on in your product development cycle you can avoid business dead-ends at a later stage.
Once your goods have been designed and created it is still a vital skill to be able to objectively evaluate your own products to identify the reasons that a customer would 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 pie.
A different 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 brand 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 sell. They use the marketing mix to great effect to sell their own goods in an incredibly competitive marketplace. Whilst these companies may have huge marketing budgets, the same principles can be applied to all businesses.
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Price
Another important factor in the marketing mix relates to 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 particular objectives your company has.
Whilst 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 constantly consider the lowest price to be the best price.
There are many questions that you need to ask yourself when devising a good pricing strategy, key amongst which are the price sensitivity of your customers, what your competitors are doing and how can pricing maximise your own profits. From a strategy point of view however, pricing can be covered by two primary principals; price skimming and penetration pricing.
Price skimming
The main idea driving price skimming is to make as much money as possible from the sector of the market which is price-insensitive and will be prepared to spend a large amount of money to get a product or service early on.
This pricing technique is frequently used in the consumer electronics industry 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.
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 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.
Another thing to bear in mind is that “price” is the one 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 create or undertake. So it is even more vital to get your pricing technique right.
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Place
Place is the portion of the marketing mix that’s often disregarded by companies, but it’s still an important part of selling your product effectively. In short, it describes the method in which you deliver your product to your customer, and subsequently how you collect money from them.
The most common ramifications of place-based marketing are the physical venues in which your goods are sold. For the vast majority of consumer products, this includes the distribution infrastructure 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 accordingly. This is the primary use of this part of the marketing mix.
With the growing use of the Internet by your potential customers, marketing strategies have had to take into account how they use the Internet to help deliver 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) companies are now able to reach out to a huge pool of possible customers.
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 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 might be a costly undertaking it is often an important one. The key concern of promotion is to deliver a particular message that will boost sales.
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 customers. With the coming of the information age we have seen a great increase in promotion via e-mail and the Internet, or simply as targeted advertising materials posted through your door.
Another significant part of promotion involves branding, which will not necessarily yield more sales directly, but relates back to one of the initial purposes of marketing; getting customers to choose your product over those of your rivals.
Putting it into Practise
As previously mentioned every business is different and will have different marketing needs. By using a mixture of the four P’s discussed above you can take a good view of your own marketing strategy.
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