Almost every company on the planet sets out with the primary objective of making money. This is generally 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, although it contains many intricate details.
Firstly, it is a very rare case that a company 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 improve the chances of them spending money with you?
Marketing is the primary tool used by modern organisations to draw prospective customers to do business with them and not with their rivals. It is a very broad topic that is influenced by a great number of internal and external variables, but when done well it can be the single business practise that could make or break a company. Any time spent on marketing will reap benefits, although spending this time correctly can yield incredible results.
So where should you start when creating a marketing strategy for your own company? Well, each situation is different, and every company 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.
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 describe the fundamental building blocks of any marketing system. It reflects the fact that marketing is not a simple, blunt-edged business tool, but rather a subtle balance of different aspects 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 concept of “four P’s” that described the critical elements of the marketing mix. The formalisation of these P’s made it very easy for business managers and marketers to quickly associate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly create a personalised and effective marketing system.
This marketing model is not limited to physical goods, other services like sports injury clinics could gain via new marketing ideas or a new point of view.
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 offering, and at the end of the day it is the reason that customers are going to spend money with you.
Many 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 common train of thought very often bears the precise opposite sentiment. Surely it should be the other way around - your manufacturing department creates an item for sale and then it is the task of the marketing department to discover ways to sell it, right?
Take the computer software market as an example. There are many established brands of both operating system and software application solutions on the marketplace already, and because the market is fairly well saturated it would be very tough (and expensive) to “take on the big boys”.
Rather than creating an operating system and then attempting to craft a marketing strategy to rival the likes of Microsoft or Apple, it would be more effective to look at what sorts of product are sought after in the current marketplace, and how viable it would be to manufacture and sell them. By being mindful 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 designed and created it is still a critical skill to be able to objectively evaluate your own products to identify the reasons that a customer would buy your product rather than a competitors’.
A different 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 currently in the market, or to make your brand new product attractive to as many consumers as possible. Again, this technique can be applied at all stages of product development.
The car 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 good effect to sell their own goods in an incredibly competitive marketplace.
One quick and simple method to discover numerous producers of mod clothing who carry out advertising effectively is to simply think of brand names related to a certain market.
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 top price that your customers would spend (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 goals your business has. The potential advantages of an effective pricing strategy are surprisingly substantial!
Whilst it may seem obvious, it is 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 don’t constantly consider the lowest price to be the best price.
There are many questions that you need to ask yourself when 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 though, pricing can be covered by two main principals; price skimming and also penetration pricing. These are outlined below.
Price skimming
The main idea driving price skimming is to make as much cash as possible from the sector of the market which is price-insensitive and will be prepared to spend a large amount of money to receive a product or service early on.
This pricing technique is frequently used in the consumer electronics industry where customers will often eagerly await the release 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 opposite end of the pricing spectrum, and is tailored towards gaining a large market share at a short-term cost so that monetary rewards can be earned long into the future. It can be a risky strategy, but when used correctly it can create 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 bear 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 produce or undertake.
Grabbing any of the on-line search market is very beneficial, so pick a key phrase, like edible cake decorating then consider if that phrase has an ample search marketplace for your needs.
Place
Place is the component of the marketing mix that is often overlooked by companies, but it is still a significant part of selling your product successfully. In a nutshell, it describes the way in which you provide your product to your customer, and consequently how you collect money from them. It can be a fantastic marketing technique when used correctly.
The most typical implications of place-based marketing are the physical locations in which your products are sold. For the vast majority of consumer products, this includes the distribution network between your production centres and shops or other outlets around the world. Since distribution of a physical product costs money it is crucial to determine your own priorities and adjust your distribution network appropriately.
With the growing use of the Internet by your potential customers, marketing techniques have had to consider how they use the Internet to help deliver their products. By using the Internet as a place of contact (or even as a complete distribution route in download-based markets such as MP3s) firms are now able to reach out to a large pool of potential customers. Effective positioning of your product or service can therefore deliver impressive economic results.
Promotion
When you say 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 comprehensive system. Promotion can be used on a very individual basis or as a mass communication instrument, and whilst it may be an expensive undertaking it is often an essential 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 handing out 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 materials 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 relates back to one of the initial purposes of marketing; getting customers to choose your product over those of your rivals. When all other pieces of the marketing mix are equal it could be branding that swings a customer’s choice.
Putting it into Practise
As previously mentioned every company is unique and will have different marketing needs. By using a balance of the four P’s discussed above you can take an effective view of your own marketing strategy.
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Building Blocks, Business Operations, Business Tool, External Variables, Fundamental Principle, Intricate Details, Marketing Mix, Marketing Strategy, Marketing System, Marketing Tool, Objective, Organisations, Phrase, Practise, Prospective Customers, Rare Case, Rivals, Shoppers, Spending Money, Subtle Balance