Practically every company on the planet sets out with the primary 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 theory is fairly straight-forward, although it contains many intricate details.
Firstly, it is a very rare case that a business can offer a product or service that is truly unique and cannot be supplied by anyone else. This means that your business will be competing with other businesses that sell a similar item and you will both be trying to earn money from the same shoppers, who only want to spend their cash 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 variables, but when done right it can be the single business practice that could make or break a corporation.
So where should you start when constructing a marketing strategy for your own company? Well, each situation is different, and every industry will have its own set of strengths and weak points 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 term that was first coined in the 1950’s and is an expression that is used to express 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 delicate balance of different aspects of business functions.
The term was later built upon to include the concept of “four P’s” that described the essential elements of the marketing mix. The formalisation of these P’s made it very clear for business managers and marketers to quickly associate the elements of marketing to the strengths of their own companies, and by doing so could very quickly create a tailored and efficient marketing strategy.
Our business already sells a successful collection of environmental flags however we still use fresh marketing suggestions to improve our sales figures.
Product
Whilst every aspect of the marketing mix is a necessity, the “product” element mentioned as one of the four P’s is perhaps 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 buyers are going to spend money with you. If this element is not correctly managed then your organisation will find it hard to survive.
Several people do not think that marketing has any role to play when it comes to the actual product that your business is selling. In fact, the common train of thought very often bears the precise opposite sentiment. Surely it should be the other way around – your manufacturing department creates an item for sale and then it is the task of the marketing department to discover ways to sell it, right?
Consider 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 because the market is fairly well saturated it would be incredibly 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 sorts of product are desired in the current marketplace, and how viable it would be to produce and sell them.
Once your products have been designed and created it is still a vital skill to be able to objectively review 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 called product variation and is generally used to either extend 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 approach 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 goods in an incredibly competitive marketplace. Although these companies may have huge marketing budgets, the same principles can be applied to all companies.
It is very common to find a large number of companies who budget for production and product sales but not adequately for marketing.
Price
Another key factor in the marketing mix relates to the price of your products or services. This is not a simple case of carrying out 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 weapon designed to achieve any specific targets your business has.
Although it may seem obvious, it is still worth pointing out 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 do not always consider the lowest price to be the best value.
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 boost your own profits. From a strategy point of view however, pricing can be covered by two primary principals; price skimming and penetration pricing. These are outlined below.
Price skimming
The principal 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 receive a product or service early on.
This pricing technique is frequently 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 nearly 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 monetary rewards can be earned long into the future. It can be a high risk 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 revenue for a business. The other members of the four P’s will all cost money to produce or undertake. So it is even more vital to get your pricing technique right.
Our organisation has tweaked its corporate website so that balloon release appears more regularly and more people can find us through search engines.
Place
Place is the portion of the marketing mix that is often overlooked by companies, but it’s still an important part of selling your product effectively. In a nutshell, it describes the method in which you deliver your product to your customer, and consequently how you collect money from them.
The most typical ramifications of place-based marketing are the physical locations in which your goods are sold. For the vast majority of consumer products, this includes the distribution network between your manufacturing plants and shops and other outlets around the world. Since distribution of a physical product costs money it is important to identify your own priorities and modify your distribution network accordingly.
With the growing use of the Internet by your prospective 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 complete distribution channel in download-based markets such as MP3s) companies are now able to reach out to a large pool of potential customers. Effective positioning 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 side 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 instrument, 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 boost sales.
Advertising is one of the most common forms of promotion. Classically it would be done by posting on billboards, creating short clips for TV and radio or by physically handing out flyers or leaflets to potential buyers. With the coming 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 will not necessarily yield more sales directly, but goes back to one of the initial purposes of marketing; getting customers to pick your product over those of your competitors. When all other parts of the marketing mix are equal it could be branding that sways a customer’s decision.
Putting it into Practice
As previously mentioned every company is different and will have different marketing requirements. By using a balance of the four P’s discussed above you can take an effective view of your own marketing plan.