Practically every business 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 people money for it. This fundamental principle is fairly straight-forward, though it contains many intricate details.
Firstly, it is a very rare case that a business can offer a product or service that is truly unique and cannot be supplied by anyone else. This means that your company will be competing with other businesses that sell a similar item and you will both be trying to make money from the same shoppers, who only want to spend their cash once.
Marketing is the main tool used by modern firms to draw potential customers to do business with them and not with their rivals. It is a very broad topic that is influenced by a great number of internal and external factors, but when done right 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 creating a marketing strategy for your own business? Well, every situation is different, and each company will have its own set of strengths and weak points that must be taken into consideration, but there is a marketing principle that can be applied to almost any company to be used as a marketing framework.
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 straightforward, blunt-edged business technique, but rather a subtle balance of different elements of business operations.
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 company managers and marketers to swiftly associate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly form a tailored and efficient marketing strategy. The four P’s are Product, Price, Place and Promotion.
Our organisation created a promotional strategy for our event management services by using the marketing mix to determine our marketing advantages.
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 identifies the physical product or intangible service that your business will be offering, and at the end of the day it is the reason that customers are going to spend money with you. If this element is not adequately managed then your organisation will find it hard to make it through.
Several people don’t think that marketing has any place to play when it comes to the physical product that your business is selling. In fact, the typical train of thought very often bears the exact opposite sentiment. Surely it should be the opposite way around – your production department creates a product 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 established 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 developing an operating system and then trying to craft a marketing strategy to take on the likes of Microsoft and Apple, it would be more effective to look at what types of product are sought after in the current marketplace, and how feasible it would be to produce and sell them. By being aware 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 fashioned and created it is still a critical skill to be able to objectively evaluate your own products to recognise the reasons that a customer should buy your product rather than a competitors’.
A different form of this part of the marketing mix is called product variation and is typically used to either extend the lifecycle of a product already in the market, or to make your brand new product attractive to as many consumers as possible. Once again, this technique can be applied at all stages of product development.
The motor 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 great effect to sell their own goods in an incredibly competitive marketplace.
As part of our individual marketing strategy, our business very carefully researched what exactly made our products stand out from the masses.
Marketing plays a critical role within any business plan and should not be treated like an afterthought.
Price
Another key factor in the marketing mix relates to the price of your products or services. This isn’t a simple case of carrying out market research to figure out the top price that your customers would pay (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 business has. The potential advantages of an effective pricing strategy are surprisingly substantial!
Although it may seem obvious, it is still worth pointing out that price has always been, and probably always will be, one of the key 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.
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 clients, what your competitors are doing and how can pricing maximise 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 principal idea driving 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.
This pricing strategy is very often 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 core of customers that would pay it.
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 rewards can be made long into the future. It can be a risky strategy, but when used correctly it can setup revenue streams for many years to come. When setting a price for penetration it is still critical 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 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.
We do not have a defined promotion department in our spiked running shoes service although many of our own managers have been able to take up marketing as part of their job role.
Place
Place is the component 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 way in which you deliver your product to your consumer, and subsequently how you collect money from them.
The most typical implications 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 retailers and other outlets around the world. Since distribution of a physical product costs money it is important to determine your own priorities and adapt your distribution network appropriately. This is the main use of this part of the marketing mix.
With the growing use of the Internet by your potential customers, marketing strategies 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 an entire distribution channel in download-based markets such as MP3s) firms are now able to reach out to a large pool of possible customers.
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 instrument, and whilst it may be a costly undertaking it is often an essential one. The primary concern of promotion is to deliver a specific message that will improve sales.
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 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 simply as targeted advertising materials posted through your door. The potential for individualised advertising has never been so great.
Another important part of promotion involves branding, which will not necessarily yield more product sales directly, but relates back to one of the initial purposes of marketing; getting customers to pick your product over those of your competitors.
Putting it into Practice
As previously mentioned every company is unique and will have different marketing requirements. By using a balance of the four P’s discussed above you can take an effective view of your own marketing plan.