Almost every company on the planet sets out with the primary objective of making money. This is usually done by manufacturing some form of product, or offering a service, and then charging people money for it. This fundamental principle 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 company will be competing with other businesses that sell a similar item and you will both be trying to make money from the same customers, who only want to spend their cash once. So how can you increase the chances of them spending money with you?
Marketing is the main tool used by modern businesses to draw potential customers to do business with them and not with their rivals. It is a very extensive topic that is affected by a great number of internal and external factors, but when done well it can be the one business practice that can make or break a company.
So where should you begin when creating a marketing strategy for your own company? Well, each situation is different, and each industry will have its own set of strengths and flaws that must be taken into consideration, but there is a marketing principle that can be applied to almost any company to be used as a marketing platform.
The Marketing Mix
The marketing mix was a phrase that was first coined in the 1950’s and is a phrase that is used to express 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 elements of business operations. It got its name since it is similar to the ingredients list for a recipe.
The term was later developed to include the idea 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 form a tailored and efficient marketing system. The four P’s are Product, Price, Place and Promotion.
Our company has risen to become a forerunner for Egyptian cotton bedlinen after using tailored marketing concepts across our complete range of products.
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 company 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 part is not correctly managed then your company will find it hard to make it through.
Several people do not 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 - your production 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 and 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 could the principles of the marketing mix assist in this circumstance?
Rather than developing an operating system and then trying to craft a marketing strategy to take on the likes of Microsoft or Apple, it would be more effective to look at what types of product are desired 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 period you can avoid business dead-ends at a later time.
Once your goods have been designed and created it is still a critical skill to be able to objectively review your own products to recognise the reasons why a customer should buy your product rather than a competitors’. The technique is called product differentiation and forms one of the fundamental skills of the product part of the marketing mix pie.
A different form of this part of the marketing mix is known as product variation and is typically used to either extend the lifecycle of a product already in the market, or to make your new product attractive to as many customers as possible.
The car 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 good effect to sell their own products in an incredibly competitive marketplace. Whilst these companies may have huge marketing budgets, the same principles can be applied to all businesses.
One quick and simple method to discover numerous producers of mod clothing who carry out promoting effectively is to simply think of brand names related to a certain market.
Price
Another important factor in the marketing mix concerns the price of your products or services. This isn’t 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 targets your business has. The potential benefits of an effective pricing plan are surprisingly substantial!
Although 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 do not always consider the cheapest price to be the best value. In fact a price that is too low can sometimes 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 competitors 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 behind price skimming is to make as much money as possible from the sector 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 strategy is frequently used in the consumer electronics market where customers will often eagerly await the launch 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 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 made long into the future. It can be a high risk strategy, but when employed correctly it can setup revenue streams for many years to come. When setting a price for penetration it is still critical to not give a poor impression of your product by aiming for too low a number.
Yet another thing to keep 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 undertake. So it is even more essential to get your pricing strategy right.
We were able to make use of our previous market analysis about lamb cooking to start the on-line key word optimisation we were undertaking.
Place
Place is the component of the marketing mix that’s often overlooked by companies, but it is still a significant part of selling your product effectively. In short, it describes the method in which you deliver your product to your customer, and consequently how you receive money from them.
The most typical implications of place-based marketing are the physical locations in which your products are sold. For the majority of consumer products, this involves the distribution network between your manufacturing 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 modify your distribution network appropriately.
With the growing use of the Internet by your prospective 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 place of contact (or even as a whole distribution channel in download-based markets such as MP3s) companies are now able to reach out to a large pool of potential customers. Effective placing of your product or service can therefore deliver impressive financial results.
Promotion
When you say the word “marketing”, most people instantly think of the promotional side of the marketing mix, although as we have seen, this is merely 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 can be a costly undertaking it is often an important one. The key concern of promotion is to deliver a particular message that will boost sales.
Advertising is one of the most typical forms of promotion. Classically 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 arrival of the information age we have witnessed 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 important part of promotion involves branding, which may not necessarily yield more sales directly, but goes back to one of the preliminary functions of marketing; getting customers to pick your product over those of your competitors.
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 plan.
McDavid