Practically every business on the planet sets out with the primary objective of earning 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 specific details.
First of all, it is a very rare case that a company can offer a product or service that is truly unique and cannot be provided by anyone 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 shoppers, who only want to spend their cash once.
Marketing is the primary tool used by modern firms to draw prospective customers to do business with them and not with their rivals. It is a very extensive topic that is influenced by a great number of internal and external variables, but when done well it can be the one business practise that can make or break a company.
So where should you start when creating a marketing strategy for your own business? Well, every situation is different, and each industry will have its own set of strengths and flaws 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 platform.
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 describe the fundamental building blocks of any marketing system. It reflects the fact that marketing is not a simple, blunt-edged business technique, but rather a delicate balance of different aspects of business functions.
The term was later developed to include the idea of “four P’s” that described the critical elements of the marketing mix. The formalisation of these P’s made it very clear for business managers and marketers to quickly relate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly form a personalised and effective marketing plan. The four P’s are Product, Price, Place and Promotion.
The “product” element of the four P’s can pertain to any service, like remove floor adhesive, or any kind of intangible service being provided 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 perhaps the most critical of all. It identifies the physical product or intangible service that your company will be selling, and at the end of the day it is the reason that buyers are going to spend money with you.
Several people do not think that marketing has any place to play when it comes to the physical product that your company 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 an item for sale and then it is the task of the marketing department to find ways to sell it, right?
Consider the computer software market as an example. There are many established brands of both operating system and software application solutions in the marketplace already, and since the market is fairly well saturated it would be incredibly 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 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 avoid 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 should buy your product rather than a competitors’.
Another form of this part of the marketing mix is known as product variation and is generally used to either prolong the lifecycle of a product currently 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 different engines, trim packages and interior options with the cars that they offer. They use the marketing mix to good effect to sell their own products in an incredibly competitive marketplace.
As part of our own promotion method, our how to make icing enterprise thoroughly researched exactly what made our goods stand out from the crowd.
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 figure out the highest price that your customers would pay (although that can be a useful tool to use), but rather making use of the price of your products as a strategic tool designed to achieve any particular targets 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 customers take into account when they are making a purchase. It is also worth noting that customers don’t constantly consider the cheapest price to be the best price.
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 main principals; price skimming and 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 willing to spend a premium 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. Makers 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 tailored towards gaining a large market share at a short-term cost so that financial rewards 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. 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 keep in mind is that “price” is the only 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.
When our company was doing market research before a new product launch I discovered get a boyfriend was the key phrase that promoted the most “value for money” image.
Place
Place is the part of the marketing mix that is often not addressed by companies, but it is still an important part of selling your product successfully. In a nutshell, it describes the method in which you deliver your product to your customer, and consequently how you collect money from them. It can be a great marketing technique when applied correctly.
The most typical ramifications of place-based marketing are the physical venues in which your products are sold. For the majority of consumer products, this includes the distribution network between your manufacturing centres and shops and other outlets around the world. Since distribution of a physical product costs money it is important to determine your own priorities and adjust your distribution network accordingly. This is the principal use of this part of the marketing mix.
With the growing use of the Internet by your prospective 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 complete distribution channel 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 employed 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.
Advertising is one of the most common 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 arrival of the information age we have witnessed a great increase in promotion via e-mail and the Internet, or simply as targeted advertising material posted through your front door.
Another important part of promotion involves branding, which will not necessarily yield more sales directly, but relates back to one of the preliminary purposes of marketing; getting customers to pick your product over those of your rivals.
Putting it into Practise
As previously mentioned every company is different and will have different marketing needs. By using a mixture of the four P’s discussed above you can take an effective view of your own marketing strategy.