Practically every company on the planet sets out with the main objective of making money. This is generally done by producing some form of product, or offering a service, and then charging customers money for it. This fundamental theory is fairly straight-forward, though it contains many intricate details.
Firstly, it is a very rare case where a business can offer a product or service that is truly unique and cannot be provided 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 make money from the same customers, who only want to spend their cash once. So how can you improve 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 deal of internal and external factors, but when done right it can be the single business practice that can make or break a company.
So where should you start when constructing a marketing strategy for your own business? Well, each situation is different, and each company will have its own set of advantages and weaknesses that must be taken into consideration, but there is a marketing rule that can be applied to almost any company to be used as a marketing framework.
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 strategy. It demonstrates the fact that marketing is not a simple, 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 essential elements of the marketing mix. The formalisation of these P’s made it very clear for company managers and marketers to quickly relate the elements of marketing to the strengths of their own companies, and by doing so could very quickly create a personalised and efficient marketing strategy.
Our company has risen to become a forerunner for commercial floor cleaning since using customised marketing and advertising concepts across our complete range of offerings.
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 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.
Many people don’t 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 opposite way around – your production department creates an item for sale and then it is the task of the marketing department to discover ways to sell it, right? This is not always the case.
Take the computer software market as an example. There are many established brands of both operating system and software application solutions in the marketplace already, and because the market is relatively well saturated it would be incredibly tough (and expensive) to “take on the big boys”. So how can the principles of the marketing mix help in this circumstance?
Rather than developing an operating system and then attempting 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 manufacture and sell them. By being mindful of the marketing mix early on in your product development period you can prevent business dead-ends at a later stage.
Once your goods have been designed and created it is still a vital 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 called product variation and is generally used to either prolong the lifecycle of a product currently in the market, or to make your brand new product attractive to as many customers as possible. 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 offer. They use the marketing mix to good effect to sell their own goods in an incredibly competitive marketplace. Although these companies may have huge marketing budgets, the same principles can be applied to all businesses.
An example of one of the most recent forms of public advertising is this fish cooking site that offers flexible and accessible means to target potential customers.
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 figure out the top price that your customers would spend (although that can be a handy tool to use), but rather making use of the price of your products as a strategic tool designed to achieve any particular targets your business has. The potential advantages of an effective pricing plan are surprisingly substantial!
Although 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 constantly consider the lowest price to be the best price. Actually a price that is too low can sometimes turn buyers away.
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 competitors are doing and how can pricing boost your own profits. From a strategy point of view though, pricing can be covered by two main principals; price skimming and penetration pricing. These are outlined below.
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 willing to spend a premium amount of money to get a product or service early on. Not only can this approach deliver great economic benefits, but it can also advertise an exclusive and high quality image of your item.
This pricing strategy is very often used in the consumer electronics industry 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 base of customers that would pay it. By using this method as part of a pre-ordering strategy, a company can help to smooth its own cash flow.
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 financial benefits can be earned long into the future. It can be a risky strategy, but when employed correctly it can create 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.
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 produce or undertake.
Place
Place is the component of the marketing mix that’s often disregarded by companies, but it’s still an important part of selling your product successfully. In a nutshell, it describes the method in which you deliver your product to your customer, and subsequently how you receive money from them.
The most common ramifications of place-based marketing are the physical venues in which your products are sold. For the majority of consumer products, this includes the distribution infrastructure between your production plants and shops or other outlets around the world. Since distribution of a physical product costs money it is crucial to identify your own priorities and adapt your distribution network appropriately. This is the principal use of this part of the marketing mix.
With the increasing use of the Internet by your prospective customers, marketing strategies 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) firms are now able to reach out to a huge pool of possible customers. Effective placing of your product or service can therefore deliver impressive financial results.
Promotion
When you say the word “marketing”, many people immediately think of the promotional aspect 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 tool, and whilst it can be an expensive undertaking it is often an important one. The primary concern of promotion is to deliver a specific message that will improve sales.
Advertising is one of the most typical 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 simply as targeted advertising material posted through your front door.
Another important 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 rivals.
Putting it into Practice
As previously mentioned every business is unique and will have different marketing needs. By using a balance of the four P’s discussed above you can take a good view of your own marketing strategy.