Almost every business on the planet sets out with the main objective of earning money. This is generally 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.
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 provided by anyone else. This means that your enterprise will be contesting 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 money once. So how can you improve the chances of them spending money with you?
Marketing is the main tool used by modern organisations to draw prospective customers to do business with them and not with their competitors. It is a very extensive topic that is influenced by a great deal of internal and external variables, but when done right it can be the one business practise that can make or break a company. Any time spent on marketing will reap benefits, although spending this time correctly can yield extraordinary results.
So where should you begin when constructing a marketing strategy for your own business? Well, each situation is different, and each company will have its own set of advantages 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 platform.
The Marketing Mix
The marketing mix was a term 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 straightforward, blunt-edged business tool, but rather a subtle 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 built upon 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 swiftly associate the elements of marketing to the strengths of their own companies, and by doing so could very quickly form a tailored and efficient marketing system.
This marketing model is not limited to physical goods, other services such as upliftingcould gain from new marketing ideas or a new perspective.
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 offering, and at the end of the day it is the reason that customers are going to spend money with you.
Several people do not think that marketing has any role 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 precise opposite sentiment. Surely it should be the opposite way around – your manufacturing department creates a product for sale and then it is the job of the marketing department to discover 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 on the marketplace already, and since the market is relatively 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 developing an operating system and then trying to craft a marketing strategy to take on the likes of Microsoft or Apple, it would be more effective to look at what sorts of product are desired in the current marketplace, and how viable it would be to produce and sell them.
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’. The skill is called product differentiation and forms one of the basic skills of the product part of the marketing mix cake.
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 currently 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 different engines, trim packages and interior options with the cars that they sell. They use the marketing mix to good effect to sell their own goods in an extremely competitive marketplace. Although these companies may have substantial marketing budgets, the same concepts can be applied to all companies.
As part of our own promotion strategy, our BBQ Rotisserie company very carefully studied exactly what made our goods stand out from the masses.
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 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 company has.
Whilst it may seem obvious, it is still worth noting that price has always been, and likely always will be, one of the key factors that shoppers take into account when they are making a purchase. It is also worth noting that customers do not always consider the lowest price to be the best value. Actually 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 amongst which are the price sensitivity of your clients, what your competitors are doing and how can pricing boost your own profits. From a strategy point of view however, 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 are going to be willing to spend a premium amount of money to receive a product or service early on. Not only can this approach deliver great financial advantages, but it can also promote an exclusive and high quality image of your product.
This pricing technique 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 almost any price they wanted to and there would still be a loyal core of customers that would pay it. By using this method as part of a pre-ordering strategy, a company can help to smooth its own cash 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 figure.
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 carry out. So it is even more essential to get your pricing technique right.
When our business was doing market research before a brand new product release I discovered get a boyfriend was the key word that promoted the best “value for money” impression.
Place
Place is the component of the marketing mix that’s often disregarded by companies, but it is still an important part of selling your product successfully. In a nutshell, it describes the method in which you provide your product to your consumer, and subsequently how you collect money from them.
The most typical implications of place-based marketing are the physical locations in which your products are sold. For the majority of consumer products, this involves 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 crucial to determine your own priorities and alter your distribution network accordingly. This is the primary application 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 distribute 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) companies are now able to reach out to a large pool of potential customers.
Promotion
When you mention 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 can be an expensive undertaking it is often an essential 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 handing out flyers or leaflets to potential customers. 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 material posted through your front door.
Another important part of promotion involves branding, which will not necessarily yield more sales directly, but goes back to one of the initial functions of marketing; getting customers to pick your product over those of your competitors. When all other pieces of the marketing mix are equal it could be branding that swings a customer’s choice.
Putting it into Practise
As previously mentioned every company is different and will have different marketing requirements. By using a mixture of the four P’s discussed above you can take an effective view of your own marketing strategy.