Practically every company on the planet sets out with the main objective of earning money. This is usually done by producing some form of product, or offering a service, and then charging people money for it.
Firstly, it is a very rare case where a company can offer a product or service that is truly unique and cannot be supplied by anyone else. This means that your business will be contesting 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 businesses to draw potential customers to do business with them and not with their competitors. 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 corporation.
So where should you start when creating a marketing strategy for your own business? Well, every situation is different, and each company will have its own set of strengths and weak points 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 an expression that is used to describe the fundamental building blocks of any marketing strategy. It reflects the fact that marketing is not a straightforward, 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 checklist for a recipe.
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 clear for company managers and marketers to quickly associate the elements of marketing to the strengths of their own organisations, and by doing so could very quickly form a tailored and efficient marketing system. The four P’s are Product, Price, Place and Promotion.
When we were preparing the unveiling of our own company products we used ideas from the marketing mix to create a plan.
Product
Although every element of the marketing mix is a requirement, the “product” element mentioned as one of the four P’s is possibly the most crucial of all. It describes the physical product or intangible service that your company will be selling, and at the end of the day it is the reason that customers 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.
Many 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 typical train of thought very often bears the precise opposite sentiment. Surely it should be the opposite way around – your production department creates an item for sale and then it is the task of the marketing department to find 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 on the market 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 assist in this circumstance?
Rather than creating an operating system and then trying to craft a marketing strategy to take on the likes of Microsoft and 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. By being aware of the marketing mix early on in your product development cycle you can avoid business dead-ends at a later time.
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’.
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 new product attractive to as many consumers as possible. Once again, this technique can be applied at all stages of product development.
The motor 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 extremely competitive marketplace.
“Product is paramount” is one of the mottos applied within our sunny plants firm that aims to remind all employees that we expect top quality manufacturing.
Price
Another important factor in the marketing mix concerns the price of your products or services. This is not a simple case of performing market research to determine 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 weapon designed to achieve any particular targets your company has.
Although it may seem obvious, it’s still worth pointing out 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 value. In fact a price that is too low can often turn customers away.
There are many questions that you need to ask yourself when devising a good pricing plan, key among which are the price sensitivity of your clients, what your competitors 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 main idea behind price skimming is to make as much money as possible from the segment of the market which is price-insensitive and will be willing to spend a premium amount of money to get a product or service early on.
This pricing technique is very often used in the consumer electronics industry where customers will often eagerly await the launch of a new mobile phone or computer games console. Makers could set nearly any price they wanted to and there would still be a loyal core of customers that would pay it. By making use of this method as part of a pre-ordering strategy, a firm 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 monetary rewards can be made long into the future. It can be a risky strategy, but when employed correctly it can create revenue streams for many years to come.
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 create or carry out. So it is even more vital to get your pricing technique right.
When our organization was doing market research before a new product launch I discovered get a boyfriend was the key phrase that promoted the most “value for money” impression.
Place
Place is the component of the marketing mix that is often overlooked by companies, but it is still a significant part of selling your product successfully. In short, it describes the way in which you provide your product to your customer, and consequently how you collect money from them. It can be a great marketing technique when applied appropriately.
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 infrastructure between your production plants and retailers or other outlets around the country. Since distribution of a physical product costs money it is important to identify your own priorities and modify 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 prospective customers, marketing techniques 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 an entire distribution channel in download-based markets such as MP3s) companies are now able to reach out to a huge pool of potential customers. Effective placing of your product or service can therefore deliver impressive financial results.
Promotion
When you mention the word “marketing”, most people immediately think of the promotional aspect 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 tool, and whilst it might be an expensive undertaking it is often an important one. The primary concern of promotion is to deliver a certain message that will increase 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 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 materials posted through your door.
Another important part of promotion involves branding, which will not necessarily yield more product sales directly, but relates back to one of the preliminary functions of marketing; getting customers to pick your product over those of your competitors. When all other parts of the marketing mix are equal it can be branding that swings a customer’s decision.
Putting it into Practice
As previously mentioned every business is different 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 plan.
