February 18th, 2012 by admin
Practically every business on the planet sets out with the main objective of earning 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 genuinely unique and cannot be supplied by anybody else. This means that your business will be contesting with other businesses that sell a similar product and you will both be trying to earn money from the same shoppers, who only want to spend their cash once.
Marketing is the primary tool used by modern firms to draw potential 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 factors, but when done well it can be the single business practice that could make or break a corporation. Any time spent on marketing will reap rewards, although spending this time efficiently can yield incredible outcomes.
So where should you begin when constructing a marketing strategy for your own business? Well, every situation is different, and each industry 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 framework.
The Marketing Mix
The marketing mix was a phrase that was first coined during 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 simple, blunt-edged business tool, but rather a subtle balance of different aspects 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 swiftly relate the elements of marketing to the strengths of their own organisations, and by doing so could very quickly create a customised and effective marketing system. The four P’s are Product, Price, Place and Promotion.
When we were planning the launch of some of our organic bedding products we employed ideas from the marketing mix to devise a plan.
Product
Although every aspect of the marketing mix is a requirement, the “product” element mentioned as one of the four P’s is perhaps 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 buyers are going to spend money with you. If this element is not correctly managed then your organisation will find it hard to survive.
Many people don’t think that marketing has any place to play when it comes to the actual 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 job 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 as well as software application solutions on the marketplace already, and because the market is fairly well saturated it would be incredibly tough (and expensive) to “take on the big boys”. So how could the principles of the marketing mix help in this situation?
Rather than developing an operating system and then trying to craft a marketing strategy to rival the likes of Microsoft and Apple, it would be 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 aware of the marketing mix early on in your product development cycle you can prevent business dead-ends at a later stage.
Once your products have been fashioned and created it is still a vital skill to be able to objectively evaluate your own products to recognise the reasons that a customer would buy your product rather than a competitors’. The technique is called product differentiation and is one of the basic 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 generally used to either extend the lifecycle of a product currently in the market, or to make your brand new product attractive to as many consumers as possible. Again, this technique can be applied at all stages of product development.
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. Although these companies may have huge marketing budgets, the same principles can be applied to all companies.
“Product is paramount” is one of the slogans applied in xbox hard drive 360 organisation which tries to emphasise to all staff that we expect top quality production.
Price
Another important factor in the marketing mix relates to the price of your products or services. This isn’t a simple case of carrying out market research to figure out the top price that your customers would spend (although that can be a useful tool to use), but rather making use of the price of your products as a strategic tool designed to achieve any particular goals your business has.
Although it may seem obvious, it’s still worth pointing out that price has always been, and probably always will be, one of the key 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 price. In fact a price that is too low can often turn customers away.
There are many questions that you need to ask yourself when devising a good pricing plan, key amongst 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 also penetration pricing. These are outlined below.
Price skimming
The principal 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 large amount of money to get 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 launch 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 monetary rewards 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 bear in mind is that “price” is the only 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 create or undertake.
Our business wanted to appeal to a larger market and focusing on become a singer helped boost our precense in the international business network.
Place
Place is the portion of the marketing mix that’s often not addressed by companies, but it’s still an important part of selling your product successfully. In short, it describes the method in which you provide your product to your customer, and consequently how you receive money from them. It can be a great marketing approach when used appropriately.
The most typical ramifications of place-based marketing are the physical venues in which your goods are sold. For the majority of consumer products, this involves 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 identify your own priorities and alter your distribution network appropriately. This is the main application of this element of the marketing mix.
With the increasing use of the Internet by your prospective 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 channel in download-based markets such as MP3s) firms are now able to reach out to a large pool of possible customers. Effective placing of your product or service can therefore deliver impressive economic results.
Promotion
When you mention the word “marketing”, many people immediately think of the promotional side of the marketing mix, although as we have seen, this is only one branch of a more comprehensive 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 important 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 distributing 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 materials posted through your door. The potential for individualised advertising has never been so great.
Another significant part of promotion involves branding, which may not necessarily yield more product sales directly, but relates back to one of the preliminary functions of marketing; getting customers to pick your product over those of your rivals. When all other pieces of the marketing mix are equal it can be branding that swings a customer’s choice.
Putting it into Practice
As previously mentioned each business is different and will have different marketing requirements. By using a mixture of the four P’s discussed above you can take an effective view of your own marketing strategy.