Practically every business on the planet sets out with the main objective of earning 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 that a business can offer a product or service that is genuinely unique and cannot be provided by anyone else. This means that your enterprise will be contesting with other businesses that sell a similar item and you will both be trying to earn money from the same shoppers, who only want to spend their money 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 rivals. It is a very broad topic that is influenced by a great number of internal and external factors, but when done well it can be the single business practice that could make or break a company. Any time spent on marketing will reap benefits, although spending this time efficiently can yield incredible outcomes.
So where should you start when constructing a marketing strategy for your own business? Well, every situation is different, and each company 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 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 describe the fundamental building blocks of any marketing system. It reflects the fact that marketing is not a simple, blunt-edged business technique, 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 built upon 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 quickly associate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly form a tailored and effective marketing plan. The four P’s are Product, Price, Place and Promotion.
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Product
Whilst every aspect of the marketing mix is a necessity, the “product” element mentioned as one of the four P’s is possibly the most crucial 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.
Several 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 typical train of thought very often bears the exact opposite sentiment. Surely it should be the other way around - your production department creates an item for sale and then it is the task of the marketing department to find 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 marketplace already, and since the market is relatively well saturated it would be incredibly tough (and expensive) to “take on the big boys”.
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 sorts of product are sought after in the current marketplace, and how feasible it would be to produce 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 goods have been fashioned and created it is still a critical skill to be able to objectively evaluate your own products to recognise the reasons why a customer should buy your product rather than a competitors’. The skill is called product differentiation and is one of the basic skills of the product part of the marketing mix pie.
A different form of this part of the marketing mix is called product variation and is generally used to either lengthen the lifecycle of a product currently in the market, or to make your new product attractive to as many consumers as possible. Again, this method can be applied at all stages of product development.
The motor industry uses this technique 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 products in an incredibly competitive marketplace. Although these companies may have huge marketing budgets, the same principles can be applied to all companies.
One quick and easy way to discover several producers of dragon toys who perform marketing and advertising effectively is to simply think of brand names connected to a certain market.
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 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 particular targets your business has.
Whilst it may seem obvious, it is still worth noting that price has always been, and probably 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 always consider the cheapest 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 clients, what your competitors 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.
Price skimming
The principal idea behind price skimming is to make as much cash 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.
This pricing technique is very often 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 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 monetary rewards 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 essential to not give a bad 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 earnings for a business. The other members of the four P’s will all cost money to produce or undertake.
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Place
Place is the portion of the marketing mix that’s often disregarded by companies, but it is still an important part of selling your product effectively. In a nutshell, it describes the way in which you provide your product to your customer, and subsequently how you receive money from them. It can be a fantastic marketing technique when used appropriately.
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 includes the distribution network between your production centres and retailers and other outlets around the world. Since distribution of a physical product costs money it is important to identify your own priorities and alter your distribution network appropriately. This is the principal use of this part of the marketing mix.
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 distribute their products. By using the Internet as a place of contact (or even as a complete distribution channel in download-based markets such as MP3s) firms are now able to reach out to a huge pool of potential customers. Effective placing of your product or service can therefore yield impressive financial results.
Promotion
When you mention 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 comprehensive system. Promotion can be employed on a very individual basis or as a mass communication instrument, and whilst it might be a costly undertaking it is often an essential one.
Advertising is one of the most typical 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 material posted through your front door.
Another significant part of promotion involves branding, which will 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 competitors.
Putting it into Practice
As previously mentioned every business is different and will have different marketing needs. By using a mixture of the four P’s reviewed above you can take a good view of your own marketing strategy.
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