Almost every business on the planet sets out with the main objective of making money. This is generally 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, although it contains many specific details.
Firstly, it is a very rare case that a company can offer a product or service that is genuinely unique and cannot be supplied by anybody else. This means that your business will be competing with other businesses that sell a similar product and you will both be trying to earn money from the same customers, 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 organisations to draw potential customers to do business with them and not with their rivals. It is a very extensive topic that is influenced by a great deal of internal and external variables, but when done right it can be the one business practice that could make or break a company. Any time spent on marketing will reap rewards, although spending this time efficiently can yield extraordinary outcomes.
So where should you start when creating a marketing strategy for your own business? Well, each situation is different, and every business 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 company to be used as a marketing platform. It is known as the вЂњMarketing MixвЂќ.
The Marketing Mix
The marketing mix was a term that was first coined during the 1950вЂ™s and is a phrase that is used to describe the fundamental building blocks of any marketing system. It demonstrates the fact that marketing is not a straightforward, blunt-edged business tool, but rather a delicate balance of different aspects of business operations. It got its name because it is similar to the ingredients checklist for a recipe.
The term was later built upon to include the concept of вЂњfour PвЂ™sвЂќ that described the essential elements of the marketing mix. The formalisation of these PвЂ™s made it very easy for business managers and marketers to quickly relate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly create a personalised and efficient marketing system. The four PвЂ™s are Product, Price, Place and Promotion.
The вЂњproductвЂќ element of the four PвЂ™s can pertain to any service, such as this supplier, simply “, or any kind of intangible asset being provided for sale by a business.
Although every element of the marketing mix is a requirement, the вЂњproductвЂќ element mentioned as one of the four PвЂ™s is possibly the most critical of all. It describes the physical product or intangible service that your company 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.
Many people donвЂ™t think that marketing has any role 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 other way around вЂ“ your production department creates an item for sale and then it is the task 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 established 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 вЂњtake on the big boysвЂќ. So how could the principles of the marketing mix assist in this circumstance?
Rather than creating 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 types of product are sought after in the current marketplace, and how feasible it would be to manufacture and sell them. By being mindful of the marketing mix early on in your product development cycle you can avoid 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 review your own products to recognise the reasons why a customer would buy your product rather than a competitorsвЂ™.
Another form of this part of the marketing mix is known as product variation and is generally 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 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 goods in an extremely competitive marketplace.
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Another key factor in the marketing mix relates to the price of your products or services. This isnвЂ™t a simple case of carrying out market research to figure out the highest price that your customers would spend (although that can be a useful tool to use), but rather using the price of your products as a strategic weapon designed to achieve any particular goals your business has.
Although it may seem obvious, itвЂ™s still worth noting that price has always been, and likely always will be, one of the key factors that shoppers 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 price. In fact a price that is too low can often turn customers away.
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 maximise your own profits. From a strategy point of view though, pricing can be covered by two main principals; price skimming and penetration pricing. These are outlined below.
The main idea driving price skimming is to make as much cash as possible from the segment of the market which is price-insensitive and will be willing to spend a premium amount of money to get a product or service early on.
This pricing technique is very often used in the consumer electronics market where customers will often eagerly await the launch of a new mobile phone or computer games console. Manufacturers could set almost any price they wanted to and there would still be a loyal base of customers that would pay it. By making use of this method as part of a pre-ordering strategy, a company can help to smooth its own money flow.
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 high risk strategy, but when used correctly it can create revenue streams for many years to come. When setting a price for penetration it is still essential to not give a poor impression of your product by aiming for too low a number.
Another thing to keep in mind is that вЂњpriceвЂќ is the only part of the marketing mix that will generate income for a business. The other members of the four PвЂ™s will all cost money to produce or carry out.
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Place is the component of the marketing mix thatвЂ™s often overlooked by companies, but it is still an important part of selling your product effectively. In a nutshell, it describes the method in which you provide your product to your customer, and consequently how you collect money from them. It can be a fantastic marketing approach when applied appropriately.
The most common implications of place-based marketing are the physical locations in which your goods are sold. For the majority of consumer products, this includes 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 modify your distribution network appropriately. This is the main application of this element of the marketing mix.
With the growing use of the Internet by your potential customers, marketing strategies have had to consider 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 large pool of potential customers.
When you say the word вЂњmarketingвЂќ, 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 instrument, and whilst it might be an expensive undertaking it is often an essential one. The primary concern of promotion is to deliver a particular message that will boost sales.
Advertising is one of the most common forms of promotion. Typically it would be done by posting on billboards, creating short clips for TV and radio or by physically distributing flyers or leaflets to potential customers. With the coming of the information age we have witnessed a great increase in promotion via e-mail and the Internet, or simply 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 may 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 rivals.
Putting it into Practice
As previously mentioned each company is unique and will have different marketing requirements. By using a balance of the four PвЂ™s discussed above you can take an effective view of your own marketing strategy.