Nearly every business on the planet sets out with the main objective of earning money. This is generally done by producing some form of product, or offering a service, and then charging customers money for it.
First of all, it is a very rare case that a business can offer a product or service that is genuinely unique and cannot be provided by anybody 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 shoppers, who only want to spend their cash once. So how can you boost the chances of them spending money with you?
Marketing is the primary tool used by modern firms to draw potential customers to do business with them and not with their competitors. 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 single business practise that can make or break a company. Any time spent on marketing will reap rewards, although spending this time efficiently can yield incredible outcomes.
So where should you begin when constructing a marketing strategy for your own company? Well, each situation is different, and each company 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 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 straightforward, blunt-edged business technique, but rather a subtle balance of different elements of business operations.
The term was later built upon 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 easy for company managers and marketers to quickly relate the elements of marketing to the strengths of their own organisations, and by doing so could very quickly create a personalised and effective marketing plan. The four P’s are Product, Price, Place and Promotion.
The “product” aspect of the four P’s could pertain to a product, such as chiropractor Nottingham, or any kind of intangible service being provided for sale by a business.
Product
Whilst 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 offering, and at the end of the day it is the reason that buyers are going to spend money with you.
Many people do not think that marketing has any place to play when it comes to the actual product that your business is selling. In fact, the common train of thought very often bears the precise 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? This is not always the case.
Consider the computer software market as an example. There are many well-known brands of both operating system as well as software application products on the market already, and because the market is fairly well saturated it would be incredibly tough (and expensive) to “take on the big boys”. So how can the principles of the marketing mix help in this situation?
Rather than creating an operating system and then attempting to craft a marketing strategy to rival the likes of Microsoft and Apple, it would be more effective to look at what types of product are desired 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 vital skill to be able to objectively review your own products to recognise the reasons why a customer would buy your product rather than a competitors’.
Another form of this part of the marketing mix is called product variation and is typically used to either lengthen the lifecycle of a product currently in the market, or to make your new product attractive to as many consumers as possible. Once again, this technique can be applied at all stages of product development.
The motor industry uses this approach 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.
It might seem evident that marketing is incredibly significant to any physics text books seller similar to ours, but the ideas still need to be put into practise, which is not always simple.
Price
Another key factor in the marketing mix concerns the price of your products or services. This isn’t a simple case of performing market research to figure out the highest price that your customers would pay (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 targets your business has. The potential benefits of an effective pricing strategy are surprisingly large!
Whilst it may seem obvious, it’s still worth noting that price has always been, and likely 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 cheapest price to be the best price. 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 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 also penetration pricing. These are outlined below.
Price skimming
The principal idea behind price skimming is to make as much cash as possible from the segment of the market which is price-insensitive and are going to be willing to spend a premium amount of money to receive a product or service early on.
This pricing technique 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. Manufacturers 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 benefits can be earned long into the future. It can be a risky strategy, but when used correctly it can setup revenue streams for many years to come. When setting a price for penetration it is still essential to not give a bad impression of your product by aiming for too low a figure.
Yet another thing to keep in mind is that “price” is the one 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.
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Place
Place is the part of the marketing mix that’s often overlooked by companies, but it is still a significant part of selling your product effectively. In a nutshell, 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 fantastic marketing approach when applied correctly.
The most common implications of place-based marketing are the physical venues in which your products are sold. For the majority of consumer products, this involves the distribution infrastructure between your manufacturing plants and retailers or other outlets around the world. Since distribution of a physical product costs money it is important to determine your own priorities and adapt your distribution network appropriately. This is the principal use of this element of the marketing mix.
With the growing use of the Internet by your potential customers, marketing techniques 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 a whole distribution route in download-based markets such as MP3s) companies are now able to reach out to a large pool of potential customers.
Promotion
When you say 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 employed on a very individual basis or as a mass communication instrument, and whilst it can be a costly undertaking it is often an essential one. The key concern of promotion is to deliver a certain message that will improve sales.
Advertising is one of the most typical forms of promotion. Typically 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 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.
Another significant part of promotion involves branding, which may not necessarily yield more product sales directly, but relates back to one of the initial functions of marketing; getting customers to pick your product over those of your competitors. When all other parts of the marketing mix are equal it could be branding that swings a customer’s choice.
Putting it into Practise
As previously mentioned every business is unique and will have different marketing needs. By using a balance of the four P’s reviewed above you can take an effective view of your own marketing strategy.