Business Strategy: Marketing

Nearly 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 that a business can offer a product or service that is genuinely unique and cannot be provided by anyone else. This means that your business will be contesting with other businesses that sell a similar product and you will both be trying to make money from the same shoppers, who only want to spend their cash once. So how can you increase 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 competitors. It is a very extensive topic that is influenced by a great number of internal and external factors, but when done right it can be the single business practice that could make or break a company.

So where should you begin when constructing a marketing strategy for your own company? Well, every situation is different, and each business will have its own set of advantages and weaknesses 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 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 straightforward, blunt-edged business tool, but rather a subtle balance of different elements of business functions.

The term was later developed 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 clear for business managers and marketers to swiftly relate the elements of marketing to the strengths of their own organisations, and by doing so could very quickly form a tailored and effective marketing system. The four P’s are; Product, Price, Place and Promotion.

While we were planning the launch of our own custom printed latex balloons we used concepts in the marketing mix to devise a strategy.

Product

Whilst every element of the marketing mix is a requirement, the “product” element mentioned as one of the four P’s is possibly the most critical of all. It identifies 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.

Many people do not think that marketing has any role to play when it comes to the physical product that your business 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 production department creates a product for sale and then it is the task of the marketing department to discover ways to sell it, right?

Take the computer software market as an example. There are many well-known brands of both operating system as well as software application solutions on the market already, and because the market is fairly well saturated it would be incredibly tough (and expensive) to “take on the big boys”. So how could the principles of the marketing mix help in this situation?

Rather than developing an operating system and then attempting 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 desired in the current marketplace, and how feasible it would be to produce and sell them. By being aware of the marketing mix early on in your product development cycle you can avoid business dead-ends at a later stage.

Once your products have been fashioned and created it is still a critical skill to be able to objectively evaluate your own products to recognise the reasons that a customer should buy your product rather than a competitors’. The technique is called product differentiation and is one of the fundamental skills of the product part of the marketing mix cake.

Another form of this part of the marketing mix is called 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 consumers as possible. Again, this technique can be applied at all stages of product development.

The motor industry uses this approach very effectively by offering various engines, trim packages and interior options with the cars that they offer. They use the marketing mix to great effect to sell their own products in an extremely competitive marketplace.

One of the most recent forms of promotional marketing is by means of websites which provide versatile and accessible means to target potential consumers.

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 handy tool to use), but rather using the price of your products as a strategic weapon designed to achieve any specific objectives your company 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 crucial factors that shoppers 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. 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 competitors are doing and how can pricing boost your own profits. From a strategy point of view though, pricing can be covered by two primary principals; price skimming and penetration pricing.

Price skimming

The principal idea behind price skimming is to make as much cash as possible from the sector of the market which is price-insensitive and will be willing to spend a premium amount of money to get a product or service early on. Not only can this technique yield excellent economic benefits, but it can also promote an exclusive and high quality image of your product.

This pricing technique 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. 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 firm can help to smooth its own money flow.

Penetration pricing

Penetration pricing is at the opposite end of the pricing spectrum, and is geared towards gaining a large market share at a short-term cost so that monetary benefits can be made long into the future. It can be a risky strategy, but when employed correctly it can create revenue streams for many years to come.

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 produce or undertake. So it is even more vital to get your pricing technique right.

SEO companies are more common these days and our organisation used them to have in store sash a dominant phrase on our website so we can attract more shoppers.

Place

Place is the portion of the marketing mix that is often not addressed by companies, but it is still an important part of selling your product effectively. In short, it describes the way in which you deliver your product to your customer, and subsequently how you collect money from them. It can be a great marketing approach when applied appropriately.

The most common ramifications of place-based marketing are the physical locations in which your goods are sold. For the vast majority of consumer products, this involves the distribution network between your production centres and shops and other outlets around the country. Since distribution of a physical product costs money it is important to identify your own priorities and alter your distribution network accordingly. This is the principal application of this element of the marketing mix.

With the increasing use of the Internet by your potential customers, marketing techniques 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 complete distribution route in download-based markets such as MP3s) companies are now able to reach out to a large pool of possible customers. Effective positioning of your product or service can therefore yield impressive financial results.

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 merely 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 an expensive undertaking it is often an important one. The key concern of promotion is to deliver a particular message that will improve sales.

Advertising is one of the most common 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 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.

Another significant part of promotion involves branding, which may not necessarily yield more product sales directly, but relates 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 each business is unique and will have different marketing needs. By using a balance of the four P’s discussed above you can take a good view of your own marketing plan.

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