Business Strategy: Marketing
Nearly 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 customers money for it. This fundamental theory is fairly straight-forward, though it contains many specific details.
First of all, it is a very rare case that a business can offer a product or service that is truly unique and cannot be supplied by anyone else. This means that your enterprise will be competing with other businesses that sell a similar item and you will both be trying to make money from the same shoppers, 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 extensive topic that is affected by a great deal of internal and external factors, but when done well it can be the one business practise that can make or break a company.
So where should you begin when creating a marketing strategy for your own business? Well, each situation is different, and every industry 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 platform. It is called 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. It got its name because it is similar to the ingredients list for a recipe.
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 swiftly associate the elements of marketing to the strengths of their own companies, and by doing so could very quickly create a customised and effective marketing strategy. The four P’s are Product, Price, Place and Promotion.
The “product” element of the four P’s could pertain to a product, like chiropractic Ruddington, or even any kind of intangible asset being provided for sale by a business.
Product
Whilst every aspect of the marketing mix is a requirement, the “product” element mentioned as one of the four P’s is possibly the most crucial 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 don’t 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 other way around – your manufacturing department creates a product 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.
Take the computer software market as an example. There are many well-known brands of both operating system and software application products in the marketplace 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 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 products 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 should 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 already 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 products in an incredibly competitive marketplace.
To maintain a standard corporate image a business ought to redesign their own site an example is how to make curry that reflect colours, text and also images associated with their own branding.
Price
Another important factor in the marketing mix relates to 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 particular goals your company has.
Whilst it may seem obvious, it’s still worth noting that price has always been, and probably always will be, one of the crucial factors that shoppers 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 price. In fact 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 strategy, key amongst 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 though, pricing can be covered by two main principals; price skimming and penetration pricing. These are outlined below.
Price skimming
The principal idea driving price skimming is to make as much money as possible from the sector 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. Not only can this technique yield excellent financial advantages, but it can also advertise an exclusive and high quality image of your product.
This pricing technique 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 core of customers that would pay it. By making use of this method as part of a pre-ordering strategy, a company 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 benefits can be made long into the future. It can be a high risk strategy, but when used correctly it can setup revenue streams for many years to come.
Yet another thing to keep 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 create or undertake. So it is even more essential to get your pricing technique right.
Before our company started studying online marketing regarding fleece body warmers there didn’t seem an obvious choice of keyword to use as our main focus.
Place
Place is the component of the marketing mix that is often disregarded by companies, but it is still an important part of selling your product effectively. In short, it describes the way in which you provide your product to your customer, 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 majority of consumer products, this includes the distribution infrastructure between your manufacturing plants and shops and other outlets around the world. Since distribution of a physical product costs money it is important to identify your own priorities and modify your distribution network appropriately. This is the main use of this element of the marketing mix.
With the increasing use of the Internet by your prospective customers, marketing strategies have had to take into account 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 route in download-based markets such as MP3s) companies are now able to reach out to a huge pool of potential customers.
Promotion
When you say the word “marketing”, many people immediately 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 instrument, and whilst it might 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, 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 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 functions of marketing; getting customers to choose your product over those of your rivals. When all other pieces of the marketing mix are equal it can be branding that swings a customer’s decision.
Putting it into Practise
As previously mentioned each company is unique and will have different marketing needs. By using a mixture of the four P’s discussed above you can take a good view of your own marketing strategy.