Almost every business on the planet sets out with the primary objective of earning money. This is usually done by producing some form of product, or offering a service, and then charging customers money for it. This fundamental principle is fairly straight-forward, though it contains many intricate details.
Firstly, it is a very rare case that a business 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 product and you will both be trying to make money from the same shoppers, who only want to spend their cash once.
Marketing is the main tool used by modern businesses to draw prospective customers to do business with them and not with their competitors. It is a very extensive topic that is affected by a great number of internal and external factors, but when done well it can be the single business practise that can make or break a company.
So where should you begin when constructing a marketing strategy for your own business? Well, each situation is different, and every industry 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 company to be used as a marketing framework. It is called 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 demonstrates 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 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 relate the elements of marketing to the strengths of their own companies, and by doing so could very quickly create a personalised and efficient marketing system.
Marketing is a global business concept and may be applied to Nottingham floor maintenance or almost any amount of different products and services.
Product
Whilst every aspect 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 company 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 don’t 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 other way around – your manufacturing department creates a product for sale and then it is the job of the marketing department to discover ways to sell it, right? This is not necessarily the case.
Take the computer software market as an example. There are many well-known brands of both operating system and software application solutions in the market already, and because 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 take on the likes of Microsoft and Apple, it would be 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. By being aware of the marketing mix early on in your product development cycle you can prevent business dead-ends at a later time.
Once your products have been fashioned and created it is still a critical skill to be able to objectively evaluate your own products to recognise the reasons that a customer should buy your product rather than a competitors’. The skill is called product differentiation and forms one of the basic skills of the product part of the marketing mix pie.
Another form of this part of the marketing mix is called product variation and is generally used to either lengthen the lifecycle of a product currently in the market, or to make your brand new product attractive to as many consumers as possible.
The car industry uses this technique very effectively by offering different engines, trim packages and interior options with the cars that they offer. They use the marketing mix to good effect to sell their own products in an incredibly competitive marketplace.
Product is paramount is one of the main mottos used in our stainless steel cheese graters company which tries to emphasise to all employees that we expect high quality manufacturing.
Price
Another key factor in the marketing mix relates to the price of your products or services. This isn’t a simple case of performing market research to figure out 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 business has. The potential advantages of an effective pricing strategy are surprisingly substantial!
Although it may seem obvious, it is still worth noting that price has always been, and probably always will be, one of the crucial factors that shoppers take into account when they are making a purchase. It is also worth noting that customers do not always consider the cheapest price to be the best value.
There are many questions that you need to ask yourself when devising a good pricing strategy, key amongst which are the price sensitivity of your customers, 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 main 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 will be prepared to spend a large amount of money to get a product or service early on.
This pricing technique is frequently 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 tailored towards gaining a large market share at a short-term cost so that monetary benefits can be earned long into the future. It can be a high risk strategy, but when employed correctly it can setup revenue streams for many years to come. When setting a price for penetration it is still important to not give a poor impression of your product by aiming for too low a figure.
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 produce or undertake.
When our company was doing market research before a brand new product launch I found get a boyfriend was the key word that promoted the most value for money impression.
Place
Place is the part of the marketing mix that’s often not addressed by companies, but it’s still an important part of selling your product successfully. In a nutshell, it describes the way in which you provide your product to your consumer, and consequently how you receive money from them. It can be a fantastic marketing approach when used correctly.
The most common ramifications 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 manufacturing centres and retailers or 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. This is the primary application of this element of the marketing mix.
With the growing use of the Internet by your potential customers, marketing techniques have had to consider 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) companies are now able to reach out to a huge pool of possible customers.
Promotion
When you mention the word marketing, many people instantly think of the promotional side of the marketing mix, although as we have seen, this is only 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 can be a costly 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 buyers. 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 material posted through your door. The potential for individualised advertising has never been so good.
Another important part of promotion involves branding, which will not necessarily yield more product sales directly, but relates back to one of the initial purposes of marketing; getting customers to pick your product over those of your competitors. When all other pieces of the marketing mix are equal it could be branding that swings a customer’s choice.
Putting it into Practise
As previously mentioned each company is different and will have different marketing needs. By using a balance of the four P’s discussed above you can take a good view of your own marketing plan.