Nearly every company on the planet sets out with the primary objective of earning money. This is usually done by manufacturing some form of product, or offering a service, and then charging customers money for it. This fundamental theory is fairly straight-forward, though it contains many specific details.
First of all, it is a very rare case that a business can offer a product or service that is truly unique and cannot be provided by anyone else. This means that your enterprise 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 boost 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 extensive topic that is affected by a great deal of internal and external variables, but when done right it can be the one business practise that could make or break a company. Any time spent on marketing will reap benefits, although spending this time efficiently can yield incredible outcomes.
So where should you begin when creating a marketing strategy for your own business? Well, each situation is different, and each business will have its own set of advantages and weaknesses 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 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 delicate balance of different elements of business operations.
The term was later developed 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 company managers and marketers to swiftly relate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly form a customised and effective marketing plan. The four P’s are Product, Price, Place and Promotion.
Our organisation created a marketing strategy for our own decorative concrete floor range by applying this marketing mix to determine our marketing advantages.
Product
Although every element 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 business 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 element is not correctly managed then your company will find it hard to make it through.
Several people do not think that marketing has any role 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 exact opposite sentiment. Surely it should be the opposite way around – your manufacturing department creates an item for sale and then it is the job of the marketing department to find ways to sell it, right?
Take the computer software market as an example. There are many well-known brands of both operating system and 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”. So how could the principles of the marketing mix assist in this circumstance?
Rather than developing an operating system and then attempting to craft a marketing strategy to take on 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 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 review your own products to identify the reasons that a customer should buy your product rather than a competitors’. The skill is called product differentiation and is one of the basic skills of the product part of the marketing mix pie.
A different 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 already in the market, or to make your brand new product attractive to as many customers as possible.
The motor 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 good effect to sell their own goods in an incredibly competitive marketplace.
An example of one of the most recent forms of public advertising is the new electricity prices comparison site that provides flexible and accessible means to target potential consumers.
Price
Another key factor in the marketing mix relates to the price of your products or services. This isn’t a simple case of carrying out market research to figure out the top price that your customers would spend (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 specific objectives your business 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 crucial 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 value. Actually 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 though, pricing can be covered by two primary principals; price skimming and also penetration pricing.
Price skimming
The principal idea driving price skimming is to make as much money as possible from the sector of the market which is price-insensitive and are going to be willing to spend a premium amount of money to get a product or service early on.
This pricing strategy is frequently 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. By using this method as part of a pre-ordering strategy, a company can help to smooth its own money 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 financial rewards can be made long into the future. It can be a risky strategy, but when employed correctly it can setup revenue streams for many years to come.
Yet 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 create or carry out. So it is even more vital to get your pricing technique right.
SEO companies are more common these days and our company used one to have Spanish DVD for children a prominent phrase on our website so we can attract more shoppers.
Place
Place is the part of the marketing mix that is often overlooked by companies, but it’s 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 receive money from them.
The most typical implications of place-based marketing are the physical locations in which your products are sold. For the vast majority of consumer products, this includes the distribution network between your production plants and shops or other outlets around the country. Since distribution of a physical product costs money it is important to determine your own priorities and modify your distribution network appropriately. This is the principal application of this part of the marketing mix.
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 distribute their products. By using the Internet as a place of contact (or even as an entire distribution route in download-based markets such as MP3s) firms are now able to reach out to a huge pool of possible customers.
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 comprehensive system. Promotion can be employed 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.
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 customers. 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 materials posted through your door. The potential for individualised advertising has never been so good.
Another significant part of promotion involves branding, which will not necessarily yield more sales directly, but relates back to one of the preliminary purposes of marketing; getting customers to choose 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 choice.
Putting it into Practise
As previously mentioned every company is unique and will have different marketing requirements. By using a mixture of the four P’s reviewed above you can take a good view of your own marketing strategy.