titleThe Marketing Mix/titlecategory1/category
Almost every company on the planet sets out with the main 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. This fundamental theory is fairly straight-forward, although it contains many intricate details.
First of all, it is a very rare case where a company can offer a product or service that is genuinely unique and cannot be provided by anyone else. This means that your company will be contesting with other businesses that sell a similar item and you will both be trying to earn money from the same customers, 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 organisations to draw prospective customers to do business with them and not with their rivals. It is a very extensive topic that is influenced 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 company. 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 business? Well, each situation is different, and every company will have its own set of advantages and flaws 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.
strongThe Marketing Mix/strong
The marketing mix was a term that was first coined during the 1950′s and is a phrase that is used to express the fundamental building blocks of any marketing system. It demonstrates the fact that marketing is not a simple, blunt-edged business tool, but rather a delicate balance of different elements of business operations.
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 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 tailored and effective marketing strategy. The four P’s are Product, Price, Place and Promotion.
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strongProduct/strong
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 identifies the physical product or intangible service that your company will be offering, 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 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 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? This is not necessarily the case.
Take 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 because the market is relatively well saturated it would be very tough (and expensive) to take on the big boys. So how can the principles of the marketing mix assist in this circumstance?
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 manufacture 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 stage.
Once your goods have been designed and created it is still a vital skill to be able to objectively review your own products to recognise the reasons why a customer would buy your product rather than a competitors’.
Another form of this part of the marketing mix is known as product variation and is typically used to either extend the lifecycle of a product currently in the market, or to make your new product attractive to as many customers as possible.
The motor industry uses this technique very effectively by offering various 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 extremely competitive marketplace. Whilst these companies may have huge marketing budgets, the same principles can be applied to all companies.
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strongPrice/strong
Another important 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 making use of the price of your products as a strategic weapon designed to achieve any particular objectives your business has.
Whilst it may seem obvious, it’s still worth pointing out that price has always been, and likely always will be, one of the key factors that customers 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 value.
There are many questions that you need to ask yourself while devising a good pricing plan, key among 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 however, pricing can be covered by two main principals; price skimming and also penetration pricing. These are outlined below.
strongPrice skimming/strong
The main idea behind price skimming is to make as much cash as possible from the segment of the market which is price-insensitive and are going to be willing to spend a large amount of money to receive a product or service early on.
This pricing technique is frequently used in the consumer electronics industry 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. By using this method as part of a pre-ordering strategy, a company can help to smooth its own money flow.
strongPenetration pricing/strong
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 benefits 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 setting a price for penetration it is still critical to not give a bad impression of your product by aiming for too low a figure.
Another thing to bear 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 produce or carry out.
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strongPlace/strong
Place is the part of the marketing mix that’s often disregarded by companies, but it is still an important part of selling your product successfully. In short, it describes the method in which you provide your product to your consumer, and subsequently how you collect money from them.
The most common implications of place-based marketing are the physical venues in which your goods are sold. For the majority of consumer products, this includes the distribution infrastructure between your manufacturing centres and retailers and other outlets around the country. Since distribution of a physical product costs money it is important to determine your own priorities and modify your distribution network appropriately.
With the increasing use of the Internet by your potential customers, marketing techniques have had to consider how they use the Internet to help distribute their products. By using the Internet as a point of contact (or even as a complete distribution route in download-based markets such as MP3s) companies are now able to reach out to a huge pool of potential customers.
strongPromotion/strong
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 instrument, and whilst it can 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, creating short clips for TV and radio or by physically distributing flyers or leaflets to potential buyers. 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.
Another significant part of promotion involves branding, which may not necessarily yield more sales directly, but goes back to one of the initial purposes of marketing; getting customers to pick your product over those of your rivals. When all other parts of the marketing mix are equal it could be branding that swings a customer’s decision.
strongPutting it into Practice/strong
As previously mentioned every company is different and will have different marketing requirements. By using a mixture of the four P’s reviewed above you can take a good view of your own marketing plan.