Almost every business on the planet sets out with the main objective of earning money. This is usually done by manufacturing some form of product, or offering a service, and then charging people money for it.
Firstly, 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 enterprise will be contesting with other businesses that sell a similar product and you will both be trying to earn money from the same customers, who only want to spend their cash once.
Marketing is the main tool used by modern organisations to draw prospective 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 variables, but when done well it can be the one business practice that could make or break a company.
So where should you start when constructing a marketing strategy for your own company? Well, every situation is different, and each company 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 company to be used as a marketing framework.
The Marketing Mix
The marketing mix was a term that was first coined during the 1950's and is an expression that is used to express 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 aspects of business operations.
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 quickly create a customised and efficient marketing strategy. The four P's are Product, Price, Place and Promotion.
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Product
Whilst every element of the marketing mix is a requirement, the "product" element mentioned as one of the four P's is possibly the most critical of all. It describes 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 do not think that marketing has any role 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 manufacturing department creates a product 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 well-known brands of both operating system as well as software application solutions on the market already, and since the market is fairly well saturated it would be very tough (and expensive) to "take on the big boys".
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 far more effective to look at what types of product are desired 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 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 review your own products to identify the reasons why a customer should buy your product rather than a competitors'.
Another form of this part of the marketing mix is known as product variation and is generally used to either extend the lifecycle of a product already in the market, or to make your new product attractive to as many customers as possible.
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 concepts can be applied to all companies.
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Price
Another key factor in the marketing mix relates to the price of your products or services. This is not a simple case of performing market research to determine the highest 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 specific goals your company has.
Although it may seem obvious, it's still worth noting that price has always been, and likely 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 constantly consider the lowest price to be the best price. Actually a price that is too low can sometimes turn customers away.
There are many questions that you need to ask yourself when devising a good pricing plan, key among which are the price sensitivity of your customers, what your rivals 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 are going to be willing to spend a premium 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 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.
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 earned long into the future. It can be a risky strategy, but when employed correctly it can setup revenue streams for many years to come. When establishing a price for penetration it is still critical 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 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 carry out. So it is even more vital to get your pricing technique right.
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Place
Place is the part of the marketing mix that is often not addressed by companies, but it's still an important part of selling your product successfully. In short, it describes the way in which you deliver your product to your consumer, and consequently how you collect money from them.
The most common implications of place-based marketing are the physical locations in which your goods are sold. For the vast 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 determine your own priorities and adapt your distribution network accordingly. This is the principal application of this part 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 point 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 economic results.
Promotion
When you say the word "marketing", most people immediately think of the promotional aspect 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 tool, and whilst it might be an expensive undertaking it is often an important one.
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 customers. With the coming of the information age we have seen a great increase in promotion via e-mail and the Internet, or just as targeted advertising materials posted through your door.
Another important part of promotion involves branding, which may not necessarily yield more sales directly, but relates back to one of the preliminary purposes of marketing; getting customers to pick your product over those of your competitors.
Putting it into Practice
As previously mentioned each business is unique and will have different marketing requirements. By using a mixture of the four P's discussed above you can take a good view of your own marketing plan.
