Practically every company on the planet sets out with the primary objective of earning money. This is usually done by manufacturing some form of product, or offering a service, and then charging people money for it.
First of all, it is a very rare case that a company can offer a product or service that is genuinely unique and cannot be provided by anyone else. This means that your business will be contesting with other businesses that sell a similar item and you will both be trying to earn money from the same shoppers, who only want to spend their money once. So how can you increase 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 competitors. It is a very extensive topic that is affected by a great number of internal and external factors, but when done right it can be the single business practice that could make or break a company.
So where should you start when constructing a marketing strategy for your own business? Well, every situation is different, and every industry will have its own set of strengths and weak points 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 framework. It is called the “Marketing Mix”.
The Marketing Mix
The marketing mix was a term that was first coined during the 1950’s and is an expression that is used to describe 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 delicate balance of different elements of business functions.
The term was later developed 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 create a personalised and effective marketing system.
The “product” aspect of the four P’s could pertain to a service, just like drama lesson plans, or even any intangible service being provided for sale by a business, see our website here.
Product
Although every element of the marketing mix is a requirement, 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 selling, and at the end of the day it is the reason that customers are going to spend money with you. If this element is not correctly managed then your company will find it hard to make it through.
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 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 find ways to sell it, right?
Take the computer software market as an example. There are many established brands of both operating system as well as software application solutions on the marketplace already, and since the market is fairly well saturated it would be incredibly tough (and expensive) to “take on the big boys”.
Rather than creating an operating system and then trying to craft a marketing strategy to rival the likes of Microsoft and Apple, it would be far more effective to look at what sorts of product are sought after in the current marketplace, and how viable it would be to produce 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 identify the reasons why a customer would buy your product rather than a competitors’. The skill is called product differentiation and is one of the basic 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 prolong the lifecycle of a product already in the market, or to make your brand new product attractive to as many customers as possible.
The motor industry uses this approach very effectively by offering different engines, trim packages and interior options with the cars that they sell. They use the marketing mix to great effect to sell their own goods in an incredibly competitive marketplace.
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Price
Another important 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 determine 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 specific objectives your company has.
Although it may seem obvious, it is still worth pointing out that price has always been, and probably always will be, one of the crucial 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.
There are many questions that you need to ask yourself while devising a good pricing plan, key among which are the price sensitivity of your customers, 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 primary principals; price skimming and penetration pricing.
Price skimming
The principal idea behind price skimming is to make as much cash as possible from the sector of the market which is price-insensitive and are going to be willing to spend a large amount of money to receive a product or service early on. Not only can this technique yield great economic advantages, but it can also advertise an exclusive and high quality image of your item.
This pricing technique is very often 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 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 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 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 produce or carry out.
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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 successfully. In a nutshell, it describes the method in which you deliver your product to your customer, and consequently how you receive money from them.
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 network between your production centres and retailers and other outlets around the world. Since distribution of a physical product costs money it is crucial to identify your own priorities and adjust your distribution network appropriately. This is the primary use of this part of the marketing mix.
With the growing use of the Internet by your prospective customers, marketing strategies 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 potential customers. Effective placing of your product or service can therefore yield impressive economic results.
Promotion
When you mention the word “marketing”, many people instantly think of the promotional aspect 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. Classically 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 coming of the information age we have seen a great increase in promotion via e-mail and the Internet, or simply as targeted advertising material posted through your front door. The potential for individualised advertising has never been so good.
Another significant part of promotion involves branding, which may not necessarily yield more sales directly, but goes back to one of the initial functions of marketing; getting customers to pick your product over those of your rivals.
Putting it into Practice
As previously mentioned every company 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 plan.
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