Almost every company on the planet sets out with the primary objective of earning money. This is generally 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 business can offer a product or service that is genuinely unique and cannot be supplied by anybody else. This means that your company will be contesting with other businesses that sell a similar product and you will both be trying to earn money from the same shoppers, who only want to spend their money once.
Marketing is the primary 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 influenced by a great number of internal and external variables, but when done right it can be the single business practice that can 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 begin when creating a marketing strategy for your own company? Well, every situation is different, and every industry will have its own set of advantages and flaws 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 platform. 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 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 elements of business operations.
The term was later developed 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 clear for business managers and marketers to swiftly relate the elements of marketing to the strengths of their own organisations, and by doing so could very quickly create a customised and effective marketing plan.
The “product” aspect of the four P’s could refer to any service, like king size bedding, or any kind of non-physical asset being provided for sale by a company.
Product
Although every aspect of the marketing mix is a necessity, the “product” element mentioned as one of the four P’s is perhaps the most crucial of all. It identifies 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.
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 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 as well as software application solutions on the market already, and since the market is relatively well saturated it would be incredibly tough (and expensive) to “take on the big boys”.
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 far more effective to look at what types of product are sought after in the current marketplace, and how feasible 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 goods have been fashioned and created it is still a critical skill to be able to objectively evaluate 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 known as 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 motor industry uses this approach very effectively by offering various engines, trim packages and interior options with the cars that they sell. They use the marketing mix to great effect to sell their own products in an extremely competitive marketplace. Whilst these companies may have huge marketing budgets, the same principles can be applied to all businesses.
“Product is paramount” is one of the main mottos applied in our xbox 360 steering wheel firm which aims to emphasise to all employees that we expect top quality manufacturing.
Price
Another important factor in the marketing mix concerns the price of your products or services. This is not a simple case of performing market research to determine the top 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 weapon designed to achieve any particular objectives your business has. The potential benefits of an effective pricing plan 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 crucial factors that customers 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 value.
There are many questions that you need to ask yourself while devising a good pricing strategy, key amongst 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 however, pricing can be covered by two primary principals; price skimming and penetration pricing.
Price skimming
The principal idea driving price skimming is to make as much money as possible from the segment 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. 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 tailored towards gaining a large market share at a short-term cost so that monetary benefits can be made 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 establishing a price for penetration it is still important to not give a bad 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 revenue for a business. The other members of the four P’s will all cost money to create or carry out.
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Place
Place is the portion of the marketing mix that is often not addressed by companies, but it’s still a significant part of selling your product effectively. In a nutshell, it describes the method in which you provide your product to your consumer, and subsequently how you receive money from them. It can be a great marketing technique when applied appropriately.
The most typical ramifications of place-based marketing are the physical venues in which your goods are sold. For the vast majority of consumer products, this involves the distribution network between your manufacturing centres and shops and other outlets around the world. Since distribution of a physical product costs money it is important to determine your own priorities and alter your distribution network accordingly. This is the main application of this part of the marketing mix.
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 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) firms are now able to reach out to a large pool of potential customers.
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 only one branch of a more comprehensive system. Promotion can be employed on a very individual basis or as a mass communication tool, and whilst it may be a costly undertaking it is often an important one. The key concern of promotion is to deliver a specific message that will improve sales.
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 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 product sales directly, but relates back to one of the preliminary functions of marketing; getting customers to choose your product over those of your competitors. When all other pieces of the marketing mix are equal it could be branding that sways a customer’s choice.
Putting it into Practice
As previously mentioned each company is different and will have different marketing requirements. By using a mixture of the four P’s reviewed above you can take a good view of your own marketing strategy.
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