Practically every business 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 customers money for it.
First of all, it is a very rare case where a business can offer a product or service that is genuinely unique and cannot be supplied by anybody else. This means that your business will be competing with other businesses that sell a similar item and you will both be trying to earn money from the same customers, who only want to spend their money 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 rivals. It is a very extensive topic that is affected by a great deal of internal and external factors, but when done well it can be the single business practice that could make or break a company.
So where should you start 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 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 term that was first coined in the 1950’s and is a phrase that is used to express the fundamental building blocks of any marketing system. It reflects the fact that marketing is not a straightforward, blunt-edged business technique, but rather a subtle balance of different aspects of business operations. It got its name since 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 critical elements of the marketing mix. The formalisation of these P’s made it very easy for company managers and marketers to swiftly associate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly form a tailored and efficient marketing system.
While we were planning the release of our own custom printed balloons we employed ideas from the marketing mix to devise a plan.
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 critical of all. It describes the physical product or intangible service that your business will be offering, 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 adequately managed then your organisation will find it hard to survive.
Several people don’t think that marketing has any role to play when it comes to the physical 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 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?
Consider 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 because the market is fairly 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 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 sought after in the current marketplace, and how feasible it would be to manufacture and sell them.
Once your goods have been fashioned and created it is still a vital 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 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 known as product variation and is generally used to either prolong the lifecycle of a product already in the market, or to make your new product attractive to as many consumers as possible.
The car industry uses this technique very effectively by offering various engines, trim packages and interior options with the cars that they offer. 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 concepts can be applied to all businesses.
As part of our own promotion plan, our hand flag team thoroughly researched exactly what made our goods stand out from the masses.
Price
Another key factor in the marketing mix concerns the price of your products or services. This isn’t a simple case of carrying out market research to determine the highest price that your customers would pay (although that can be a useful tool to use), but rather making use of the price of your products as a strategic weapon designed to achieve any particular goals your company has. The potential benefits of an effective pricing plan are surprisingly substantial!
Although it may seem obvious, it is 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.
There are many questions that you need to ask yourself when devising a good pricing strategy, key among which are the price sensitivity of your clients, 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 main principals; price skimming and penetration pricing. These are outlined below.
Price skimming
The principal idea behind 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 large amount of money to receive a product or service early on.
This pricing technique is very often 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 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 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 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 important to not give a bad impression of your product by aiming for too low a number.
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 produce or undertake. So it is even more vital to get your pricing strategy right.
Following using on-line tools to compare key word lookup frequency we chose trade balloons to guide our campaign for on-line promotion as well as off-line marketing materials.
Place
Place is the portion of the marketing mix that’s often overlooked by companies, but it’s still a significant part of selling your product successfully. In short, it describes the way in which you provide your product to your consumer, and consequently how you collect money from them.
The most typical implications of place-based marketing are the physical venues in which your goods are sold. For the majority of consumer products, this includes the distribution infrastructure between your production plants and retailers 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 accordingly. This is the main application of this element of the marketing mix.
With the growing use of the Internet by your potential customers, marketing strategies 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 an entire distribution channel in download-based markets such as MP3s) firms are now able to reach out to a large pool of potential customers.
Promotion
When you say the word “marketing”, many people instantly think of the promotional side 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 tool, and whilst it might be an expensive undertaking it is often an essential one. The key concern of promotion is to deliver a particular message that will increase sales.
Advertising is one of the most typical forms of promotion. Typically it would be done by posting on billboards, creating short clips for TV and radio or by physically distributing flyers or leaflets to potential buyers. With the arrival of the information age we have witnessed 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 great.
Another important part of promotion involves branding, which will not necessarily yield more sales directly, but goes back to one of the preliminary purposes of marketing; getting customers to pick your product over those of your competitors. When all other parts of the marketing mix are equal it can be branding that sways a customer’s decision.
Putting it into Practice
As previously mentioned every company is different 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.