Nearly every company on the planet sets out with the primary objective of making money. This is usually done by manufacturing some form of product, or offering a service, and then charging customers money for it.
Firstly, it is a very rare case where a business can offer a product or service that is genuinely unique and cannot be supplied by anybody 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 customers, who only want to spend their cash once. So how can you improve the chances of them spending money with you?
Marketing is the primary tool used by modern businesses 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 factors, but when done well it can be the single business practice that could make or break a corporation. Any time spent on marketing will reap benefits, although spending this time correctly can yield extraordinary results.
So where should you begin when constructing a marketing strategy for your own company? Well, every situation is different, and each business 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 framework.
The Marketing Mix
The marketing mix was a term that was first coined in 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 straightforward, blunt-edged business tool, but rather a delicate balance of different aspects of business functions. It got its name because it is similar to the ingredients checklist for a recipe.
The term was later built upon 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 business managers and marketers to quickly associate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly create a customised and effective marketing strategy. The four P’s are Product, Price, Place and Promotion.
Marketing is a global business concept and could be carried out on website products as well as any number of different products and services.
Product
Although every aspect 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 describes the physical product or intangible service that your company will be selling, and at the end of the day it is the reason that customers are going to spend money with you.
Many 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 typical train of thought very often bears the precise opposite sentiment. Surely it should be the other way around – your manufacturing department creates an item for sale and then it is the job of the marketing department to find ways to sell it, right?
Take the computer software market as an example. There are many established brands of both operating system as well as software application products on the market already, and since the market is fairly well saturated it would be incredibly tough (and expensive) to “take on the big boys”.
Rather than developing 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 sought after in the current marketplace, and how feasible it would be to manufacture and sell them.
Once your products have been fashioned and created it is still a vital skill to be able to objectively review your own products to recognise the reasons why 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 cake.
A different form of this part of the marketing mix is called product variation and is generally used to either extend the lifecycle of a product currently 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 car industry uses this technique 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 extremely competitive marketplace. Although these companies may have huge marketing budgets, the same concepts can be applied to all companies.
An example of one of the most recent forms of public marketing is the new fish cooking site that provides versatile and accessible means to target potential customers.
Price
Another important factor in the marketing mix concerns the price of your products or services. This isn’t 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 tool designed to achieve any particular objectives your company has. The potential benefits of an effective pricing plan are surprisingly substantial!
Whilst it may seem obvious, it is still worth noting that price has always been, and likely always will be, one of the crucial factors that customers 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. Actually a price that is too low can often turn customers away.
There are many questions that you need to ask yourself when devising a good pricing plan, key amongst which are the price sensitivity of your clients, 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 main 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 prepared to spend a premium amount of money to get a product or service early on. Not only can this technique deliver great financial advantages, but it can also advertise an exclusive and high quality image of your item.
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. Manufacturers 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 opposite 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 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. When establishing a price for penetration it is still critical to not give a bad impression of your product by aiming for too low a figure.
Yet another thing to bear in mind is that “price” is the one 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 produce or undertake. So it is even more vital to get your pricing strategy right.
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Place
Place is the part of the marketing mix that’s 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 subsequently how you collect money from them.
The most typical implications of place-based marketing are the physical venues in which your products are sold. For the vast majority of consumer products, this involves the distribution infrastructure between your production plants and shops and other outlets around the country. 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 prospective customers, marketing techniques have had to take into account how they use the Internet to help distribute 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.
Promotion
When you say the word “marketing”, many 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 can be an expensive undertaking it is often an essential one. The primary concern of promotion is to deliver a particular message that will improve sales.
Advertising is one of the most common forms of promotion. Typically it would be done by posting on billboards, creating short clips for TV and radio or by physically distributing 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 just as targeted advertising material posted through your door. The potential for individualised advertising has never been so great.
Another important part of promotion involves branding, which may not necessarily yield more sales directly, but relates back to one of the initial functions of marketing; getting customers to choose your product over those of your rivals.
Putting it into Practice
As previously mentioned every company is unique 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.