Nearly every business 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.
First of all, it is a very rare case where a company can offer a product or service that is truly unique and cannot be supplied by anybody else. This means that your company will be contesting with other businesses that sell a similar item and you will both be trying to earn money from the same customers, who only want to spend their cash once. So how can you improve the chances of them spending money with you?
Marketing is the main tool used by modern organisations to draw prospective 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 factors, but when done right it can be the one business practice that could make or break a corporation. Any time spent on marketing will reap rewards, although spending this time efficiently can yield incredible results.
So where should you start when constructing a marketing strategy for your own business? Well, each situation is different, and each industry will have its own set of strengths 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 platform. It is called the “Marketing Mix”.
The Marketing Mix
The marketing mix was a phrase that was first coined in 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 straightforward, blunt-edged business technique, but rather a subtle balance of different elements of business operations.
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 clear for company managers and marketers to swiftly associate the elements of marketing to the strengths of their own organisations, and by doing so could very quickly form a personalised and efficient marketing plan.
Our organisation excels in providing white orchid plants and while we all thought our marketing plan was adequate we have seen advancements after using marketing mix concepts.
Product
Although every aspect of the marketing mix is a necessity, the “product” element mentioned as one of the four P’s is perhaps 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 buyers are going to spend money with you. If this part is not adequately managed then your company 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 typical train of thought very often bears the exact 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 find ways to sell it, right? This is not necessarily the case.
Consider the computer software market as an example. There are many well-known brands of both operating system and software application solutions on the market already, and because 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 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 sought after in the current marketplace, and how viable 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 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 known as product variation and is typically 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. Again, this technique can be applied at all stages of product development.
The car industry uses this technique very effectively by offering various engines, trim packages and interior options with the cars that they offer. They use the marketing mix to good effect to sell their own goods in an extremely competitive marketplace.
With the rise of the Internet and ecommerce businesses find their own sites such as tractor toy might be utilised for a direct sales channel and distribution system.
Price
Another key factor in the marketing mix concerns 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 tool designed to achieve any particular objectives your business has.
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 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. Actually a price that is too low can sometimes turn customers away.
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 boost your own profits. From a strategy point of view however, pricing can be covered by two primary principals; price skimming and also penetration pricing. These are outlined below.
Price skimming
The principal idea behind 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 prepared to spend a premium amount of money to get a product or service early on.
This pricing strategy is very often used in the consumer electronics industry where customers will often eagerly await the release 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.
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 earned long into the future. It can be a high risk strategy, but when used correctly it can create 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 undertake. So it is even more essential to get your pricing strategy right.
When our company was performing market research before a new product release I discovered that get a boyfriend was the key phrase that promoted the most “value for money” impression.
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 effectively. In short, it describes the way in which you provide your product to your consumer, and consequently how you collect money from them.
The most common ramifications of place-based marketing are the physical venues in which your products are sold. For the vast majority of consumer products, this involves the distribution network between your production plants and retailers and other outlets around the country. Since distribution of a physical product costs money it is important to determine your own priorities and adjust your distribution network accordingly.
With the increasing use of the Internet by your prospective customers, marketing methods 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 whole distribution channel in download-based markets such as MP3s) firms are now able to reach out to a large pool of potential 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 complete system. Promotion can be employed on a very individual basis or as a mass communication tool, and whilst it may be an expensive undertaking it is often an essential one. The key concern of promotion is to deliver a specific message that will improve 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 arrival of the information age we have witnessed a great increase in promotion via e-mail and the Internet, or just as targeted advertising material 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 pick your product over those of your rivals. When all other parts of the marketing mix are equal it can be branding that swings a customer’s choice.
Putting it into Practice
As previously mentioned every company is different and will have different marketing requirements. By using a mixture of the four P’s discussed above you can take an effective view of your own marketing strategy.