Modern Marketing
Nearly every business on the planet sets out with the main objective of making money. This is usually done by producing 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 truly unique and cannot be supplied by anyone else. This means that your enterprise will be contesting 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 increase the chances of them spending money with you?
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 broad topic that is affected by a great deal of internal and external variables, but when done well it can be the single business practice that can make or break a corporation.
So where should you begin when creating a marketing strategy for your own company? Well, each situation is different, and each business 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 corporation to be used as a marketing platform. It is known as 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 tool, but rather a subtle balance of different elements of business functions. It got its name because it is similar to the ingredients checklist for a recipe.
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 rapidly create a tailored and efficient marketing plan.The four P’s are Product, Price, Place and Promotion.
Our organisation specialises in offering planning services and while we all believed our marketing plan was adequate we have seen advancements since using marketing mix ideas.
Product
Whilst every aspect of the marketing mix is a necessity, the “product” element mentioned as one of the four P’s is perhaps the most critical of all. It identifies the physical product or intangible service that your company 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 don’t think that marketing has any place to play when it comes to the actual product that your company 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 production 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 and software application products in the market 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 attempting to craft a marketing strategy to rival the likes of Microsoft and Apple, it would be far 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. By being aware of the marketing mix early on in your product development cycle 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 identify the reasons that a customer should buy your product rather than a competitors’. The skill is called product differentiation and is one of the fundamental skills of the product part of the marketing mix pie.
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 already in the market, or to make your brand new product attractive to as many customers 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 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 extremely competitive marketplace.
One of the newest forms of public advertising is via websites which provide versatile and accessible means to target potential customers.
Price
Another key factor in the marketing mix concerns the price of your products or services. This is not a simple case of carrying out market research to figure out 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 weapon designed to achieve any specific objectives your company has.
Although 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 customers take into account when they are making a purchase. It is also worth noting that customers do not constantly 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 among which are the price sensitivity of your clients, what your competitors are doing and how can pricing boost your own profits. From a strategy point of view however, pricing can be covered by two main principals; price skimming and also penetration pricing.
Price skimming
The main idea driving price skimming is to make as much money as possible from the segment of the market which is price-insensitive and will be prepared to spend a large amount of money to get a product or service early on. Not only can this approach yield great financial benefits, but it can also promote an exclusive and high quality image of your product.
This pricing strategy 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. Manufacturers could set nearly 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 rewards can be made 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. When setting a price for penetration it is still important to not give a poor impression of your product by aiming for too low a figure.
Yet another thing to bear in mind is that “price” is the only part of the marketing mix that will generate income 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.
Grabbing some of the on-line search market is extremely beneficial, so pick any phrase, like buy jagermeister, then assess if that phrase has an adequate search market for your needs.
Place
Place is the portion of the marketing mix that’s often disregarded by companies, but it’s still a significant part of selling your product effectively. In a nutshell, it describes the way in which you provide your product to your consumer, and consequently how you collect money from them.
The most common ramifications of place-based marketing are the physical locations in which your goods are sold. For the majority of consumer products, this includes the distribution network between your production plants and shops and 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. This is the primary application of this element of the marketing mix.
With the increasing use of the Internet by your prospective 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 huge pool of potential customers.
Promotion
When you mention the word “marketing”, most 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 employed 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.
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 customers. 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 door.
Another important part of promotion involves branding, which will not necessarily yield more product sales directly, but goes back to one of the preliminary functions of marketing; getting customers to choose your product over those of your rivals.
Putting it into Practice
As previously mentioned each company is unique and will have different marketing needs. By using a mixture of the four P’s discussed above you can take an effective view of your own marketing strategy.