Nearly 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 customers 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 truly unique and cannot be provided by anybody 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 customers, who only want to spend their money once. So how can you increase the chances of them spending money with you?
Marketing is the main tool used by modern businesses 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 well it can be the one business practice that can make or break a corporation.
So where should you begin when constructing a marketing strategy for your own business? Well, each situation is different, and every industry will have its own set of advantages 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. It is called the “Marketing Mix”.
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 tool, but rather a subtle balance of different aspects of business operations.
The term was later built upon 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 easy for business managers and marketers to quickly relate the elements of marketing to the strengths of their own companies, and by doing so could very rapidly create a tailored and efficient marketing system. The four P’s are Product, Price, Place and Promotion.
Our business already sells a prosperous range of organic bed linen products but we have used fresh marketing ideas to improve our revenue figures.
Product
Although every aspect of the marketing mix is a requirement, the “product” element mentioned as one of the four P’s is possibly the most critical of all. It identifies the physical product or intangible service that your business will be selling, 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 actual 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 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? This is not necessarily the case.
Take the computer software market as an example. There are many well-known brands of both operating system and software application products in the market already, and since the market is relatively well saturated it would be very tough (and expensive) to “take on the big boys”.
Rather than creating an operating system and then attempting to craft a marketing strategy to rival the likes of Microsoft or Apple, it would be far more effective to look at what types of product are desired in the current marketplace, and how feasible it would be to produce and sell them.
Once your products have been fashioned and created it is still a critical skill to be able to objectively review your own products to identify the reasons why a customer would buy your product rather than a competitors’. The technique is called product differentiation and forms one of the fundamental 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 generally used to either prolong the lifecycle of a product currently in the market, or to make your 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 offer. They use the marketing mix to great effect to sell their own products in an extremely competitive marketplace. Whilst these companies may have substantial marketing budgets, the same concepts can be applied to all companies.
With the rise of the Internet and ecommerce companies see their sites, for instance free view boxes may be used as a direct sales channel and distribution system.
Price
Another key factor in the marketing mix concerns the price of your products or services. This is not a simple case of performing market research to figure out the top 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 tool designed to achieve any particular targets your business has. The potential benefits of an effective pricing strategy are surprisingly large!
Although 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 customers take into account when they are making a purchase. It is also worth noting that customers don’t always consider the lowest 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 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 main principals; price skimming and also penetration pricing.
Price skimming
The principal idea behind price skimming is to make as much cash as possible from the sector of the market which is price-insensitive and are going to be prepared to spend a large amount of money to get a product or service early on.
This pricing strategy 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 base of customers that would pay it.
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 benefits can be made long into the future. It can be a risky strategy, but when used correctly it can setup revenue streams for many years to come.
Another thing to keep in mind is that “price” is the only part of the marketing mix that will generate earnings for a business. The other members of the four P’s will all cost money to produce or undertake.
Before our corporation began looking into on-line promotion relating to Greek worry beads there didn’t seem the obvious choice of key phrase to use as our primary target.
Place
Place is the part of the marketing mix that is often disregarded by companies, but it’s still an important part of selling your product successfully. In short, it describes the way in which you provide your product to your consumer, and subsequently how you receive money from them. It can be a great marketing approach when applied appropriately.
The most typical ramifications of place-based marketing are the physical venues in which your goods are sold. For the vast majority of consumer products, this includes the distribution network between your manufacturing centres and shops and 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.
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 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. Effective positioning of your product or service can therefore deliver impressive economic results.
Promotion
When you mention the word “marketing”, most 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 used on a very individual basis or as a mass communication instrument, and whilst it may be a costly undertaking it is often an important one. The primary concern of promotion is to deliver a specific message that will boost sales.
Advertising is one of the most typical 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 significant part of promotion involves branding, which will not necessarily yield more product sales directly, but goes back to one of the initial functions of marketing; getting customers to pick your product over those of your rivals.
Putting it into Practice
As previously mentioned each company is different and will have different marketing requirements. By using a balance of the four P’s reviewed above you can take an effective view of your own marketing strategy.
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