Practically every business on the planet sets out with the primary objective of making money. This is usually done by producing 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 supplied by anyone else. This means that your enterprise will be competing with other businesses that sell a similar product and you will both be trying to make money from the same customers, who only want to spend their cash once.
Marketing is the primary tool used by modern businesses to draw potential customers to do business with them and not with their rivals. It is a very broad topic that is affected by a great number of internal and external variables, but when done well 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, every situation is different, and every business will have its own set of strengths and weaknesses that must be taken into consideration, but there is a marketing principle that can be applied to almost any corporation to be used as a marketing framework. It is known as the “Marketing Mix”.
The Marketing Mix
The marketing mix was a phrase that was first coined during the 1950’s and is a phrase 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 tool, but rather a subtle balance of different aspects of business operations.
The term was later built upon to include the concept of “four P’s” that described the critical 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 rapidly form a tailored and effective marketing plan.
The “product” element of the four P’s could refer to any service, like this supplier, to see their site Click Here, or even any kind of non-physical service being offered for sale by a business.
Product
Whilst every aspect of the marketing mix is a necessity, 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 offering, 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 adequately managed then your organisation will find it hard to survive.
Several people do not think that marketing has any place to play when it comes to the physical product that your business is selling. In fact, the typical train of thought very often bears the precise opposite sentiment. Surely it should be the opposite way around - your production department creates an item for sale and then it is the task 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 products 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 help in this situation?
Rather than developing an operating system and then trying to craft a marketing strategy to take on the likes of Microsoft and Apple, it would be more effective to look at what types of product are sought after 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 period you can avoid business dead-ends at a later stage.
Once your products have been designed and created it is still a vital skill to be able to objectively evaluate your own products to recognise the reasons that a customer would buy your product rather than a competitors’.
Another form of this part of the marketing mix is known as product variation and is generally used to either lengthen 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 technique very effectively by offering various engines, trim packages and interior options with the cars that they offer. They use the marketing mix to great effect to sell their own products in an incredibly competitive marketplace.
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Price
Another key factor in the marketing mix concerns the price of your products or services. This is not a simple case of performing market research to figure out the top price that your customers would pay (although that can be a useful tool to use), but rather making use of the price of your products as a strategic weapon designed to achieve any specific targets your company has. The potential advantages of an effective pricing strategy are surprisingly large!
Whilst 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 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 price.
There are many questions that you need to ask yourself while devising a good pricing plan, key amongst which are the price sensitivity of your clients, what your rivals are doing and how can pricing maximise your own profits. From a strategy point of view however, pricing can be covered by two main principals; price skimming and penetration pricing. These are outlined below.
Price skimming
The main 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 prepared to spend a large amount of money to receive a product or service early on.
This pricing strategy 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. Makers could set almost 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 tailored 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 high risk strategy, but when used correctly it can create revenue streams for many years to come. When establishing a price for penetration it is still critical to not give a poor impression of your product by aiming for too low a figure.
Yet another thing to bear 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 undertake. So it is even more vital to get your pricing technique right.
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Place
Place is the portion of the marketing mix that’s often disregarded by companies, but it is still an important part of selling your product successfully. In short, it describes the way in which you deliver your product to your consumer, and consequently how you receive money from them. It can be a great marketing technique when used appropriately.
The most typical implications of place-based marketing are the physical venues in which your goods are sold. For the majority of consumer products, this involves the distribution network between your manufacturing plants and shops and other outlets around the country. Since distribution of a physical product costs money it is crucial to determine your own priorities and alter your distribution network appropriately.
With the increasing use of the Internet by your potential 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 route in download-based markets such as MP3s) companies are now able to reach out to a huge pool of potential customers. Effective placing of your product or service can therefore deliver impressive financial results.
Promotion
When you mention the word “marketing”, many people immediately think of the promotional side 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 a costly undertaking it is often an essential one. The primary concern of promotion is to deliver a particular message that will increase sales.
Advertising is one of the most typical forms of promotion. Typically it would be done by posting on billboards, producing short clips for TV and radio or by physically distributing flyers or leaflets to potential buyers. With the arrival 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. 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 could be branding that sways a customer’s choice.
Putting it into Practice
As previously mentioned each business is different and will have different marketing needs. By using a mixture of the four P’s reviewed above you can take an effective view of your own marketing strategy.