Nearly every business on the planet sets out with the main 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. This fundamental theory is fairly straight-forward, although it contains many intricate details.
First of all, it is a very rare case where a business can offer a product or service that is truly unique and cannot be supplied by anyone else. This means that your company 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 main tool used by modern businesses 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 variables, but when done well it can be the one business practice that can make or break a company.
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 flaws 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.
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 describe the fundamental building blocks of any marketing system. 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 developed to include the idea of “four P’s” that described the critical elements of the marketing mix. The formalisation of these P’s made it very clear for company managers and marketers to quickly relate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly form a tailored and efficient marketing system. The four P’s are; Product, Price, Place and Promotion.
This marketing style is not limited to physical items, services such as Atlantis could gain via fresh marketing ideas or a new perspective.
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 business will be selling, and at the end of the day it is the reason that customers are going to spend money with you. If this part is not correctly managed then your organisation will find it hard to make it through.
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 typical train of thought very often bears the precise opposite sentiment. Surely it should be the other way around – your manufacturing 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 always the case.
Consider the computer software market as an example. There are many established brands of both operating system as well as software application products in the marketplace already, and because the market is fairly well saturated it would be very tough (and expensive) to “take on the big boys”.
Rather than creating an operating system and then trying to craft a marketing strategy to rival the likes of Microsoft or 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 aware of the marketing mix early on in your product development cycle you can prevent business dead-ends at a later time.
Once your products have been fashioned and created it is still a critical skill to be able to objectively review your own products to identify the reasons that a customer should buy your product rather than a competitors’. The skill is called product differentiation and forms one of the basic skills of the product part of the marketing mix cake.
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 currently in the market, or to make your 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 great effect to sell their own goods in an incredibly competitive marketplace. Whilst these companies may have huge marketing budgets, the same concepts can be applied to all businesses.
With the rise of the Internet and e-commerce businesses see their own website could be utilised for a direct sales channel and distribution system.
Price
Another key 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 useful tool to use), but rather using the price of your products as a strategic weapon designed to achieve any specific objectives your company has.
Although it may seem obvious, it is still worth noting 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 don’t 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 amongst which are the price sensitivity of your clients, 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 primary principals; price skimming and also penetration pricing. These are outlined below.
Price Skimming
The main idea behind 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 premium amount of money to receive a product or service early on. Not only can this approach deliver excellent financial benefits, but it can also promote an exclusive and high quality image of your product.
This pricing strategy 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 financial benefits can be made 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 setting 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 keep in mind is that “price” is the only 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 create or carry out. So it is even more essential to get your pricing strategy right.
We were able to use our past marketplace research about how to avoid speeding fines to kick off the on-line keyword optimisation we were doing.
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 effectively. In a nutshell, it describes the way in which you deliver your product to your customer, and subsequently how you receive money from them. It can be a great marketing technique when used correctly.
The most typical implications of place-based marketing are the physical venues in which your products are sold. For the majority of consumer products, this includes the distribution infrastructure between your production centres and retailers or other outlets around the country. Since distribution of a physical product costs money it is crucial to determine your own priorities and adapt your distribution network accordingly.
With the increasing use of the Internet by your potential customers, marketing techniques have had to take into account how they use the Internet to help deliver 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) companies are now able to reach out to a large pool of potential customers.
Promotion
When you say the word “marketing”, most people instantly think of the promotional aspect of the marketing mix, although as we have seen, this is only one branch of a more complete system. Promotion can be used on a very individual basis or as a mass communication instrument, and whilst it can be an expensive 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, producing short clips for TV and radio or by physically handing out 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 just as targeted advertising materials posted through your door. The potential for individualised advertising has never been so good.
Another significant part of promotion involves branding, which may not necessarily yield more sales directly, but goes 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 unique and will have different marketing needs. By using a balance of the four P’s reviewed above you can take a good view of your own marketing plan.