Nearly every company 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.
Firstly, it is a very rare case where a business can offer a product or service that is genuinely unique and cannot be supplied by anybody 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 shoppers, 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 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 right it can be the one business practice that can make or break a company. Any time spent on marketing will reap benefits, although spending this time correctly can yield incredible results.
So where should you begin when creating a marketing strategy for your own company? Well, every situation is different, and each industry 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 company 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 express the fundamental building blocks of any marketing strategy. It reflects the fact that marketing is not a simple, blunt-edged business tool, but rather a delicate balance of different elements of business functions.
The term was later built upon to include the concept of “four P’s” that described the critical elements of the marketing mix. The formalisation of these P’s made it very easy for business managers and marketers to swiftly relate the elements of marketing to the strengths of their own organisations, and by doing so could very quickly create a customised and efficient marketing system.
Our company has grown to become a leader in office refurbishment after employing customised marketing concepts across our complete range of products.
Product
Although every aspect 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 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 don’t think that marketing has any place to play when it comes to the physical 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 opposite way around – your manufacturing department creates a product for sale and then it is the task of the marketing department to find ways to sell it, right? This is not always the case.
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 since the market is relatively 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 trying to craft a marketing strategy to rival the likes of Microsoft and Apple, it would be more effective to look at what types of product are sought after in the current marketplace, and how feasible it would be to manufacture and sell them.
Once your goods have been fashioned and created it is still a critical skill to be able to objectively evaluate your own products to recognise the reasons why 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.
Another form of this part of the marketing mix is known as product variation and is typically used to either extend the lifecycle of a product currently in the market, or to make your new product attractive to as many consumers as possible.
The car industry uses this technique 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.
It might seem obvious that marketing is incredibly important for any company like ours, although the suggestions still must be put into practice, which is not always simple.
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 determine the top price that your customers would spend (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 objectives your company has.
Whilst it may seem obvious, it is still worth pointing out that price has always been, and probably always will be, one of the crucial 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. Actually a price that is too low can sometimes turn buyers 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 however, pricing can be covered by two primary principals; price skimming and also penetration pricing.
Price Skimming
The main idea behind price skimming is to make as much money 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. Not only can this approach yield great economic advantages, but it can also advertise an exclusive and high quality image of your product.
This pricing strategy is frequently used in the consumer electronics industry 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 base of customers that would pay it.
Penetration Pricing
Penetration pricing is at the opposite 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 risky strategy, but when employed correctly it can create 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 figure.
Yet another thing to keep 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 create or carry out.
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Place
Place is the portion 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 way in which you deliver your product to your customer, and consequently how you receive money from them.
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 involves the distribution network between your manufacturing centres and retailers or other outlets around the country. Since distribution of a physical product costs money it is crucial to determine your own priorities and adjust your distribution network accordingly. This is the main use of this element of the marketing mix.
With the increasing use of the Internet by your potential customers, marketing strategies 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 whole distribution channel in download-based markets such as MP3s) companies are now able to reach out to a huge pool of possible customers.
Promotion
When you mention the word “marketing”, many people immediately think of the promotional side 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 tool, and whilst it can be a costly undertaking it is often an important one. The key concern of promotion is to deliver a certain message that will improve sales.
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 buyers. With the arrival of the information age we have seen a great increase in promotion via e-mail and the Internet, or just as targeted advertising material posted through your door.
Another important part of promotion involves branding, which may not necessarily yield more 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 business is unique and will have different marketing needs. By using a balance of the four P’s discussed above you can take an effective view of your own marketing strategy.