Modern Marketing
Nearly every company on the planet sets out with the main objective of making money. This is usually done by manufacturing some form of product, or offering a service, and then charging customers money for it.
Firstly, it is a very rare case that a company can offer a product or service that is genuinely unique and cannot be supplied 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 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 main 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 influenced 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 benefits, although spending this time efficiently can yield extraordinary outcomes.
So where should you begin when creating a marketing strategy for your own business? Well, each situation is different, and each business will have its own set of strengths 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.
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 demonstrates the fact that marketing is not a straightforward, blunt-edged business tool, but rather a delicate balance of different elements of business operations.
The term was later built upon to include the idea of “four P’s” that described the essential elements of the marketing mix. The formalisation of these P’s made it very clear for business managers and marketers to quickly relate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly create a customised and effective marketing plan.
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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 identifies the physical product or intangible service that your business will be offering, 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 adequately managed then your company will find it hard to survive.
Several people don’t think that marketing has any role to play when it comes to the actual product that your business is selling. In fact, the typical train of thought very often bears the exact opposite sentiment. Surely it should be the opposite 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?
Consider the computer software market as an example. There are many established brands of both operating system as well as software application products on the market already, and because the market is relatively well saturated it would be incredibly tough (and expensive) to “take on the big boys”.
Rather than creating an operating system and then attempting to craft a marketing strategy to take on the likes of Microsoft or Apple, it would be more effective to look at what sorts 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 stage.
Once your goods have been fashioned and created it is still a vital skill to be able to objectively review your own products to recognise the reasons that a customer would 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.
A different form of this part of the marketing mix is called product variation and is typically used to either extend the lifecycle of a product already in the market, or to make your new product attractive to as many consumers as possible.
The car 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 extremely competitive marketplace. Whilst these companies may have substantial marketing budgets, the same principles can be applied to all businesses.
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Price
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 pay (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 goals your business has.
Whilst it may seem obvious, it is still worth noting that price has always been, and probably 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 constantly consider the cheapest price to be the best price.
There are many questions that you need to ask yourself while devising a good pricing strategy, key among which are the price sensitivity of your customers, 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 penetration pricing.
Price skimming
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 prepared to spend a large amount of money to get a product or service early on. Not only can this technique yield excellent economic advantages, but it can also advertise an exclusive and high quality image of your product.
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. Makers could set nearly any price they wanted to and there would still be a loyal base of customers that would pay it. By making use of this method as part of a pre-ordering strategy, a firm can help to smooth its own cash flow.
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 rewards 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 establishing a price for penetration it is still critical to not give a bad impression of your product by aiming for too low a number.
Another thing to keep in mind is that “price” is the one 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 carry out. So it is even more essential to get your pricing strategy right.
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Place
Place is the part of the marketing mix that is often disregarded by companies, but it’s still an important part of selling your product effectively. In a nutshell, it describes the method in which you deliver your product to your consumer, and subsequently how you collect money from them. It can be a fantastic marketing approach when applied appropriately.
The most typical implications of place-based marketing are the physical locations in which your products are sold. For the vast majority of consumer products, this involves the distribution network between your manufacturing plants and shops and other outlets around the world. Since distribution of a physical product costs money it is important to determine your own priorities and alter your distribution network appropriately. This is the principal use of this element of the marketing mix.
With the increasing use of the Internet by your potential customers, marketing strategies have had to consider how they use the Internet to help deliver their products. By using the Internet as a place of contact (or even as a whole distribution route in download-based markets such as MP3s) firms are now able to reach out to a large pool of potential customers. Effective positioning of your product or service can therefore yield impressive financial results.
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 employed 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. Typically it would be done by posting on billboards, creating short clips for TV and radio or by physically handing out flyers or leaflets to potential buyers. With the arrival of the information age we have witnessed a great increase in promotion via e-mail and the Internet, or simply as targeted advertising material posted through your front door.
Another significant part of promotion involves branding, which may not necessarily yield more sales directly, but goes back to one of the initial functions of marketing; getting customers to choose your product over those of your competitors.
Putting it into Practice
As previously mentioned every business is unique and will have different marketing requirements. By using a balance of the four P’s reviewed above you can take an effective view of your own marketing strategy.
