Business Strategy: Marketing
Practically every company on the planet sets out with the primary objective of making money. This is generally 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 where 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 shoppers, who only want to spend their money once. So how can you improve the chances of them spending money with you?
Marketing is the primary tool used by modern firms to draw prospective 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 variables, but when done right it can be the one business practice that could make or break a corporation. Any time spent on marketing will reap rewards, although spending this time correctly can yield incredible outcomes.
So where should you begin when creating a marketing strategy for your own company? Well, each situation is different, and each industry will have its own set of advantages and weak points 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. It is known as the “Marketing Mix”.
The Marketing Mix
The marketing mix was a phrase 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 simple, blunt-edged business technique, but rather a delicate balance of different aspects of business functions.
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 customised and efficient marketing plan. The four P’s are Product, Price, Place and Promotion.
Our company created a marketing approach for our fee protection concepts by making use of the marketing mix to identify our marketing strengths
Product
Whilst every aspect of the marketing mix is a requirement, 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 company will be offering, and at the end of the day it is the reason that customers 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 business is selling. In fact, the common train of thought very often bears the exact 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 find ways to sell it, right?
Consider 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 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 creating an operating system and then trying to craft a marketing strategy to take on 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 produce and sell them. By being mindful of the marketing mix early on in your product development period you can prevent business dead-ends at a later time.
Once your goods have been designed 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’.
Another form of this part of the marketing mix is called product variation and is typically used to either lengthen the lifecycle of a product already in the market, or to make your brand new product attractive to as many customers as possible. Once again, this technique can be applied at all stages of product development.
The car industry uses this approach 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 goods in an incredibly competitive marketplace.
With the rise of the Internet and e-commerce companies find their own sites, for instance lace tablecloths may be used for a direct sales channel and distribution system.
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 figure out the top price that your customers would spend (although that can be a useful tool to use), but rather using the price of your products as a strategic tool designed to achieve any specific goals your business has.
Whilst 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 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 value. Actually a price that is too low can sometimes turn buyers away.
There are many questions that you need to ask yourself while devising a good pricing plan, key amongst which are the price sensitivity of your customers, 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 primary principals; price skimming and also penetration pricing.
Price skimming
The main idea driving price skimming is to make as much money as possible from the sector 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 strategy is frequently 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 nearly 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 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.
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 produce or carry out. So it is even more essential to get your pricing strategy right.
When our business was doing market research before a brand new product release I discovered get a boyfriend was the key word that promoted the most “value for money” impression.
Place
Place is the portion of the marketing mix that is often disregarded by companies, but it is still a significant part of selling your product effectively. In a nutshell, it describes the method in which you provide your product to your consumer, and subsequently how you receive money from them.
The most common ramifications 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 plants and retailers and other outlets around the country. Since distribution of a physical product costs money it is crucial to identify your own priorities and adapt your distribution network accordingly.
With the increasing use of the Internet by your prospective customers, marketing techniques have had to consider how they use the Internet to help deliver their products. By using the Internet as a point 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.
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 only one branch of a more comprehensive system. Promotion can be used 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. The primary 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, producing short clips for TV and radio or by physically distributing 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 good.
Another important part of promotion involves branding, which may not necessarily yield more sales directly, but relates back to one of the preliminary functions of marketing; getting customers to pick your product over those of your rivals.
Putting it into Practice
As previously mentioned each business is different and will have different marketing requirements. By using a balance of the four P’s discussed above you can take a good view of your own marketing strategy.