Practically every business on the planet sets out with the primary objective of making money. This is generally done by manufacturing some form of product, or offering a service, and then charging people money for it. This fundamental theory is fairly straight-forward, though it contains many intricate details.
First of all, it is a very rare case where a company can offer a product or service that is genuinely unique and cannot be supplied by anyone else. This means that your company 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 cash once.
Marketing is the primary tool used by modern businesses to draw prospective customers to do business with them and not with their rivals. 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 could make or break a company. Any time spent on marketing will reap rewards, although spending this time efficiently can yield incredible outcomes.
So where should you start when constructing a marketing strategy for your own business? Well, each situation is different, and each business 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 corporation to be used as a marketing framework.
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 express the fundamental building blocks of any marketing strategy. It demonstrates the fact that marketing is not a simple, blunt-edged business technique, but rather a delicate balance of different aspects of business operations. It got its name since it is similar to the ingredients list for a recipe.
The term was later developed 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 business 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 personalised and effective marketing system. The four P’s are Product, Price, Place and Promotion.
While we were preparing the release for some of our event management services we employed concepts from the marketing mix to devise a plan.
Product
Whilst 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 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.
Many people do not think that marketing has any role to play when it comes to the physical product that your company 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 production department creates an item for sale and then it is the job of the marketing department to discover 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 marketplace already, and since the market is fairly well saturated it would be very tough (and expensive) to “take on the big boys”.
Rather than developing an operating system and then attempting to craft a marketing strategy to rival the likes of Microsoft and Apple, it would be far more effective to look at what sorts of product are sought after in the current marketplace, and how feasible it would be to manufacture 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 that a customer would buy your product rather than a competitors’.
Another form of this part of the marketing mix is called product variation and is typically 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. Again, this technique can be applied at all stages of product development.
The car industry uses this approach very effectively by offering different engines, trim packages and interior options with the cars that they sell. They use the marketing mix to great effect to sell their own goods in an extremely competitive marketplace. Whilst these companies may have substantial marketing budgets, the same concepts can be applied to all companies.
As part of our individual marketing strategy, our business thoroughly studied what exactly made our products stand out from the masses.
With the rise of the Internet and ecommerce companies see their website might be utilised for a direct sales channel and distribution system.
Price
Another important factor in the marketing mix concerns the price of your products or services. This isn’t a simple case of performing 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 tool designed to achieve any specific objectives your company has. The potential benefits of an effective pricing plan are surprisingly substantial!
Whilst 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 don’t constantly consider the cheapest price to be the best value. Actually a price that is too low can sometimes turn buyers 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 boost your own profits. From a strategy point of view though, 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 cash as possible from the segment 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. Not only can this technique deliver excellent economic advantages, but it can also promote an exclusive and high quality image of your item.
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 almost any price they wanted to and there would still be a loyal core of customers that would pay it.
Penetration pricing
Penetration pricing is at the other end of the pricing spectrum, and is tailored 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 high risk strategy, but when employed correctly it can create 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 revenue for a business. The other members of the four P’s will all cost money to create or carry out.
Grabbing some of the on-line search market is extremely beneficial, so choose any key phrase, like robotic toys and assess if the phrase has an adequate search marketplace for your needs.
Place
Place is the part of the marketing mix that’s often overlooked by companies, but it’s still an important part of selling your product effectively. In short, it describes the method in which you deliver your product to your customer, and subsequently how you receive money from them.
The most common implications of place-based marketing are the physical locations in which your goods are sold. For the vast majority of consumer products, this involves the distribution infrastructure between your production centres and shops and other outlets around the country. Since distribution of a physical product costs money it is crucial to identify your own priorities and adjust your distribution network accordingly.
With the increasing use of the Internet by your prospective customers, marketing strategies have had to take into account how they use the Internet to help deliver 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) firms are now able to reach out to a huge pool of potential customers.
Promotion
When you say the word “marketing”, most people immediately 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 employed on a very individual basis or as a mass communication instrument, and whilst it can be a costly undertaking it is often an essential one. The key concern of promotion is to deliver a certain message that will increase sales.
Advertising is one of the most common forms of promotion. Typically it would be done by posting on billboards, creating short clips for TV and radio or by physically distributing flyers or leaflets to potential customers. With the coming of the information age we have seen a great increase in promotion via e-mail and the Internet, or just as targeted advertising materials posted through your front door.
Another important part of promotion involves branding, which may not necessarily yield more 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 sways a customer’s decision.
Putting it into Practice
As previously mentioned each business is different and will have different marketing requirements. By using a mixture of the four P’s reviewed above you can take an effective view of your own marketing strategy.
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