Modern Marketing
Practically every business on the planet sets out with the primary objective of earning money. This is generally done by producing 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 company can offer a product or service that is truly unique and cannot be provided by anybody else. This means that your enterprise will be competing with other businesses that sell a similar item and you will both be trying to make money from the same customers, who only want to spend their cash once.
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 affected by a great deal of internal and external variables, but when done well it can be the one business practice that could make or break a corporation.
So where should you begin when constructing a marketing strategy for your own business? Well, each situation is different, and every company will have its own set of strengths and weaknesses 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 called 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 strategy. It reflects the fact that marketing is not a straightforward, blunt-edged business technique, but rather a delicate balance of different elements of business functions.
The term was later built upon 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 associate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly form a customised and effective marketing system. The four P’s are Product, Price, Place and Promotion.
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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 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 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 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 job of the marketing department to find ways to sell it, right?
Take the computer software market as an example. There are many well-known brands of both operating system and software application products in the market already, and because the market is relatively well saturated it would be very tough (and expensive) to “take on the big boys”. So how could 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 rival 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 manufacture and sell them.
Once your products have been designed and created it is still a vital skill to be able to objectively evaluate your own products to identify the reasons that a customer should 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 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 different engines, trim packages and interior options with the cars that they offer. They use the marketing mix to great effect to sell their own products in an extremely competitive marketplace. Although these companies may have substantial marketing budgets, the same concepts can be applied to all businesses.
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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 particular objectives your company has. The potential advantages of an effective pricing plan are surprisingly large!
Although it may seem obvious, it’s 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 lowest price to be the best price.
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 rivals are doing and how can pricing boost your own profits. From a strategy point of view however, pricing can be covered by two primary principals; price skimming and 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 are going to be willing to spend a premium amount of money to get a product or service early on. Not only can this approach yield excellent financial advantages, but it can also promote an exclusive and high quality image of your product.
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 nearly any price they wanted to and there would still be a loyal core of customers that would pay it. By making use of this method as part of a pre-ordering strategy, a company can help to smooth its own money 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 monetary rewards can be made long into the future. It can be a high risk strategy, but when used correctly it can setup revenue streams for many years to come.
Yet another thing to keep 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.
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Place
Place is the component of the marketing mix that is often not addressed by companies, but it’s still an important 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 great marketing approach when applied correctly.
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 manufacturing plants and shops and other outlets around the country. Since distribution of a physical product costs money it is crucial to identify your own priorities and modify your distribution network accordingly. This is the principal use of this part of the marketing mix.
With the growing use of the Internet by your potential customers, marketing strategies have had to consider 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 route in download-based markets such as MP3s) firms are now able to reach out to a large pool of possible customers.
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 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 may be an expensive undertaking it is often an essential one. The primary concern of promotion is to deliver a specific message that will increase sales.
Advertising is one of the most typical forms of promotion. Classically it would be done by posting on billboards, creating short clips for TV and radio or by physically handing out flyers or leaflets to potential customers. 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 door. The potential for individualised advertising has never been so great.
Another important part of promotion involves branding, which will not necessarily yield more product sales directly, but relates back to one of the preliminary purposes of marketing; getting customers to pick your product over those of your rivals.
Putting it into Practice
As previously mentioned every company is different 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.