Nearly every company 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 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 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 earn money from the same customers, who only want to spend their cash once. So how can you increase 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 influenced by a great deal of internal and external variables, but when done right 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 company will have its own set of strengths and weaknesses 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.
The Marketing Mix
The marketing mix was a phrase that was first coined in the 1950′s and is a phrase that is used to describe the fundamental building blocks of any marketing system. It reflects 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 customised and effective marketing plan.
The “product” aspect of the four P’s can refer to a service, such as remove floor adhesive, or any intangible service being offered for sale by a business.
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 crucial 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.
Many people don’t think that marketing has any place to play when it comes to the actual product that your company is selling. In fact, the typical train of thought very often bears the exact opposite sentiment. Surely it should be the other way around – your manufacturing department creates a product for sale and then it is the job of the marketing department to find ways to sell it, right?
Consider the computer software market as an example. There are many well-known brands of both operating system and software application products in the marketplace already, and since the market is relatively well saturated it would be very tough (and expensive) to “take on the big boys”. So how could the principles of the marketing mix help in this circumstance?
Rather than creating an operating system and then attempting to craft a marketing strategy to take on the likes of Microsoft or Apple, it would be far more effective to look at what sorts of product are sought after in the current marketplace, and how viable it would be to manufacture 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 goods have been designed and created it is still a vital skill to be able to objectively evaluate your own products to recognise the reasons why a customer should buy your product rather than a competitors’. The technique is called product differentiation and forms 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 called product variation and is typically used to either lengthen the lifecycle of a product already in the market, or to make your brand new product attractive to as many customers as possible.
The car 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 products in an extremely competitive marketplace. Whilst these companies may have huge marketing budgets, the same principles can be applied to all businesses.
With the rise of the Internet and ecommerce organisations see their own sites, for instance car electrical may be utilised as a direct sales channel and distribution network.
Price
Another key factor in the marketing mix relates to the price of your products or services. This isn’t a simple case of performing market research to determine the top price that your customers would spend (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 business has. The potential benefits of an effective pricing plan are surprisingly substantial!
Although it may seem obvious, it is still worth noting 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 don’t always consider the cheapest price to be the best value. In fact 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 among which are the price sensitivity of your clients, what your rivals 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 penetration pricing.
Price skimming
The principal 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 premium amount of money to receive 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. 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 financial 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.
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 produce or undertake.
Our company wanted to appeal to a larger marketplace and targeting helium balloons helped improve our presence in the international business community.
Place
Place is the portion of the marketing mix that’s often overlooked by companies, but it is still an important 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 receive money from them. It can be a fantastic marketing approach when applied correctly.
The most typical ramifications of place-based marketing are the physical locations in which your goods are sold. For the vast majority of consumer products, this involves the distribution infrastructure between your production centres and retailers and other outlets around the country. Since distribution of a physical product costs money it is important to determine your own priorities and alter your distribution network accordingly. This is the main application of this element 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 a complete distribution route in download-based markets such as MP3s) firms are now able to reach out to a huge pool of potential customers. Effective positioning of your product or service can therefore deliver impressive economic results.
Promotion
When you mention the word “marketing”, many 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 might be a costly 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, 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 just as targeted advertising material posted through your front door.
Another significant part of promotion involves branding, which may not necessarily yield more sales directly, but goes back to one of the preliminary functions of marketing; getting customers to choose your product over those of your rivals.
Putting it into Practise
As previously mentioned each company is different and will have different marketing needs. By using a mixture of the four P’s reviewed above you can take a good view of your own marketing strategy.