Nearly every company on the planet sets out with the primary 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.
First of all, 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 enterprise 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 cash once. So how can you increase the chances of them spending money with you?
Marketing is the main tool used by modern organisations to draw potential customers to do business with them and not with their competitors. It is a very extensive topic that is influenced by a great number of internal and external variables, 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 outcomes.
So where should you start when creating a marketing strategy for your own company? Well, every situation is different, and every 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 framework. It is known as the “Marketing Mix”.
The Marketing Mix
The marketing mix was a term that was first coined during the 1950′s and is an expression 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 delicate balance of different aspects of business operations. It got its name since it is similar to the ingredients checklist 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 company managers and marketers to swiftly associate the elements of marketing to the strengths of their own companies, and by doing so could very quickly form a personalised and efficient marketing strategy. The four P’s are; Product, Price, Place and Promotion.
Our company excels in providing cheap printed balloons and although we thought our marketing plan was adequate we have seen advancements after using marketing mix ideas.
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 business will be offering, and at the end of the day it is the reason that buyers are going to spend money with you. If this part is not correctly managed then your company will find it hard to make it through.
Several people do not think that marketing has any place 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 production department creates an item for sale and then it is the job of the marketing department to discover 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 solutions in the marketplace already, and since the market is fairly well saturated it would be very tough (and expensive) to “take on the big boys”.
Rather than creating an operating system and then trying to craft a marketing strategy to rival the likes of Microsoft and Apple, it would be more effective to look at what sorts of product are desired in the current marketplace, and how feasible it would be to produce and sell them. By being mindful of the marketing mix early on in your product development cycle you can prevent business dead-ends at a later stage.
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 that a customer would buy your product rather than a competitors’. The skill is called product differentiation and is one of the fundamental skills of the product part of the marketing mix pie.
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 car industry uses this approach very effectively by offering various 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 incredibly competitive marketplace.
We do not have a specific marketing department within our company though many of our managers have been able to adopt marketing as part of their job role.
Price
Another key factor in the marketing mix concerns the price of your products or services. This isn’t a simple case of carrying out market research to figure out the highest price that your customers would spend (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 particular objectives your business has. The potential advantages of an effective pricing plan are surprisingly large!
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 don’t constantly consider the lowest price to be the best value. In fact a price that is too low can sometimes turn customers away.
There are many questions that you need to ask yourself while devising a good pricing strategy, key among which are the price sensitivity of your clients, what your rivals are doing and how can pricing maximise your own profits. From a strategy point of view though, pricing can be covered by two primary principals; price skimming and penetration pricing.
Price skimming
The main 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 willing to spend a large amount of money to receive a product or service early on.
This pricing technique is very often used in the consumer electronics market where customers will often eagerly await the launch 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 base of customers that would pay it. By making use of 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 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 earned 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 important to not give a bad 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 carry out. So it is even more essential to get your pricing strategy right.
Before our corporation started studying online promotion hand waver did not seem the obvious choice of key phrase to use as our main focus.
Place
Place is the part of the marketing mix that is often disregarded by companies, but it is still an important part of selling your product effectively. In short, 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 approach when used correctly.
The most common 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 or other outlets around the world. Since distribution of a physical product costs money it is important to identify your own priorities and alter your distribution network accordingly. This is the primary application of this part of the marketing mix.
With the increasing use of the Internet by your potential customers, marketing methods have had to take into account how they use the Internet to help deliver their products. By using the Internet as a point of contact (or even as a complete distribution channel in download-based markets such as MP3s) firms are now able to reach out to a huge pool of possible customers. Effective placing of your product or service can therefore yield impressive economic results.
Promotion
When you mention the word “marketing”, most people instantly 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 can 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. Classically 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 materials posted through your door.
Another significant part of promotion involves branding, which may 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. When all other parts of the marketing mix are equal it can be branding that sways a customer’s choice.
Putting it into Practice
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.