Nearly every business 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, although it contains many specific details.
First of all, it is a very rare case that a business can offer a product or service that is truly unique and cannot be provided by anyone else. This means that your business will be contesting with other businesses that sell a similar product 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 boost 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 factors, but when done right it can be the single business practice that can make or break a company. Any time spent on marketing will reap benefits, although spending this time efficiently 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 business will have its own set of strengths and weaknesses that must be taken into consideration, but there is a marketing principle that can be applied to almost any corporation to be used as a marketing platform. It is known as the “Marketing Mix”.
The Marketing Mix
The marketing mix was a phrase that was first coined during the 1950′s and is a phrase that is used to describe the fundamental building blocks of any marketing strategy. It reflects the fact that marketing is not a simple, blunt-edged business technique, 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 easy for company managers and marketers to quickly relate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly create a tailored and efficient marketing strategy.
The “product” element of the four P’s can pertain to a product, like drama lesson plans, or any intangible service being offered for sale by a business, see our website here.
Product
Whilst every element of the marketing mix is a necessity, the “product” element mentioned as one of the four P’s is possibly the most critical 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 customers are going to spend money with you.
Several people don’t think that marketing has any role 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 exact 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 find ways to sell it, right? This is not necessarily the case.
Consider the computer software market as an example. There are many established brands of both operating system and software application products in the market already, and since the market is fairly well saturated it would be very tough (and expensive) to “take on the big boys”. So how can the principles of the marketing mix help in this situation?
Rather than developing an operating system and then attempting to craft a marketing strategy to take on the likes of Microsoft and Apple, it would be 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.
Once your goods have been fashioned and created it is still a vital 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 lengthen the lifecycle of a product already in the market, or to make your brand new product attractive to as many customers as possible. Once again, this method can be applied at all stages of product development.
The motor industry uses this technique very effectively by offering various 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 extremely competitive marketplace.
To preserve a standard corporate image a company should redesign their web presence an example we found was childrens bean bags who echo colors, text and also graphics associated with their own branding.
Price
Another key factor in the marketing mix concerns the price of your products or services. This is not a simple case of carrying out market research to figure out the top price that your customers would pay (although that can be a handy tool to use), but rather using the price of your products as a strategic tool designed to achieve any specific objectives your business has. The potential advantages of an effective pricing strategy are surprisingly large!
Although 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 shoppers take into account when they are making a purchase. It is also worth noting that customers do not 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 amongst 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 though, pricing can be covered by two primary principals; price skimming and penetration pricing. These are outlined below.
Price skimming
The main idea driving price skimming is to make as much money as possible from the segment of the market which is price-insensitive and are going to be willing 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 industry 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.
Penetration pricing
Penetration pricing is at the opposite end of the pricing spectrum, and is tailored 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 used correctly it can create revenue streams for many years to come. When setting a price for penetration it is still essential to not give a bad impression of your product by aiming for too low a number.
Another thing to bear in mind is that “price” is the one 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.
When our company was performing market research before a brand new product release we identified 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 not addressed by companies, but it’s still a significant part of selling your product effectively. In a nutshell, it describes the method in which you provide your product to your consumer, and consequently how you collect money from them.
The most typical implications of place-based marketing are the physical venues in which your products are sold. For the majority of consumer products, this involves the distribution network between your production centres and shops or other outlets around the world. Since distribution of a physical product costs money it is important to determine your own priorities and adapt your distribution network appropriately. This is the main application of this part of the marketing mix.
With the increasing use of the Internet by your prospective customers, marketing techniques have had to take into account 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 large pool of possible customers. Effective placing of your product or service can therefore deliver impressive financial results.
Promotion
When you say the word “marketing”, many people instantly think of the promotional aspect of the marketing mix, although as we have seen, this is only one branch of a more comprehensive system. Promotion can be employed on a very individual basis or as a mass communication instrument, and whilst it might be an expensive undertaking it is often an important one. The primary concern of promotion is to deliver a specific message that will improve sales.
Advertising is one of the most common 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 arrival of the information age we have seen a great increase in promotion via e-mail and the Internet, or simply as targeted advertising material posted through your front door. The potential for individualised advertising has never been so great.
Another significant part of promotion involves branding, which may not necessarily yield more product sales directly, but goes back to one of the preliminary purposes of marketing; getting customers to choose your product over those of your competitors.
Putting it into Practice
As previously mentioned every company is unique 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 strategy.
Steaks