Practically 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. This fundamental principle is fairly straight-forward, though it contains many intricate details.
Firstly, it is a very rare case where a company can offer a product or service that is genuinely unique and cannot be provided 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 customers, who only want to spend their money once. So how can you increase the chances of them spending money with you?
Marketing is the primary 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 deal of internal and external variables, but when done well it can be the one business practice that could make or break a corporation.
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 strengths and weak points that must be taken into consideration, but there is a marketing rule that can be applied to almost any corporation 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 an expression that is used to express the fundamental building blocks of any marketing strategy. It demonstrates the fact that marketing is not a simple, blunt-edged business technique, but rather a delicate balance of different aspects of business operations. It got its name because it is similar to the ingredients list for a recipe.
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 business managers and marketers to swiftly relate the elements of marketing to the strengths of their own companies, and by doing so could very rapidly create a personalised and effective marketing plan. The four P’s are Product, Price, Place and Promotion.
Our business already sells a successful collection of cotton bed linen products however we have used fresh promotional ideas to improve our sales numbers.
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 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. If this part is not adequately managed then your organisation will find it hard to survive.
Many people don’t think that marketing has any place 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 other 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?
Take the computer software market as an example. There are many established brands of both operating system and software application solutions 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 desired in the current marketplace, and how viable it would be to manufacture and sell them. By being mindful of the marketing mix early on in your product development period you can prevent business dead-ends at a later stage.
Once your goods have been designed and created it is still a critical skill to be able to objectively evaluate your own products to recognise the reasons that a customer would buy your product rather than a competitors’.
A different form of this part of the marketing mix is called product variation and is generally used to either lengthen 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 approach very effectively by offering different engines, trim packages and interior options with the cars that they offer. They use the marketing mix to great effect to sell their own products in an incredibly competitive marketplace. Although these companies may have huge marketing budgets, the same concepts can be applied to all businesses.
An example of one of the most recent forms of public advertising is the new maytag side by side refrigerators site that provides versatile and accessible means to reach potential consumers.
Price
Another important 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 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 tool designed to achieve any specific objectives your company has. The potential advantages of an effective pricing strategy are surprisingly substantial!
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 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. In fact a price that is too low can sometimes turn customers away.
There are many questions that you need to ask yourself when devising a good pricing strategy, key among which are the price sensitivity of your customers, what your rivals 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 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 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 strategy is frequently 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 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 other end of the pricing spectrum, and is geared towards gaining a large market share at a short-term cost so that financial benefits can be earned long into the future. It can be a risky strategy, but when employed correctly it can setup 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 create or undertake.
When our organization was doing market research before a new product release I identified that get a boyfriend was the key word that promoted the most “value for money” impression.
Place
Place is the portion 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 deliver your product to your consumer, and consequently how you receive money from them. It can be a great marketing technique when applied appropriately.
The most common implications of place-based marketing are the physical venues in which your products are sold. For the vast majority of consumer products, this includes the distribution infrastructure between your production plants 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 modify your distribution network accordingly.
With the increasing use of the Internet by your potential customers, marketing methods have had to consider 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 potential customers.
Promotion
When you say the word “marketing”, most people instantly 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 may be an expensive undertaking it is often an important one. The primary concern of promotion is to deliver a particular message that will improve sales.
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 distributing flyers or leaflets to potential buyers. With the coming 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 will not necessarily yield more product sales directly, but relates back to one of the initial purposes of marketing; getting customers to choose your product over those of your competitors. When all other parts of the marketing mix are equal it can be branding that swings a customer’s choice.
Putting it into Practice
As previously mentioned each company is different and will have different marketing requirements. By using a balance of the four P’s discussed above you can take a good view of your own marketing plan.