Business Strategy: Marketing
Almost every company on the planet sets out with the primary objective of making money. This is generally done by manufacturing some form of product, or offering a service, and then charging people money for it.
Firstly, it is a very rare case where a business can offer a product or service that is truly unique and cannot be provided by anyone else. This means that your business will be competing 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 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 rivals. It is a very extensive topic that is influenced by a great number of internal and external factors, but when done well it can be the single business practice 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 each business will have its own set of strengths and weak points 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 demonstrates the fact that marketing is not a simple, blunt-edged business technique, but rather a delicate balance of different aspects of business operations. It got its name since it is similar to the ingredients checklist 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 quickly relate the elements of marketing to the strengths of their own organisations, and by doing so could very quickly create a tailored and efficient marketing plan. The four P’s are; Product, Price, Place and Promotion.
Our company specialises at providing custom balloons and although we all thought our marketing plan was adequate we have seen advancements after using marketing mix concepts.
Product
Although every element 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 company 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 element is not correctly managed then your company will find it hard to survive.
Several people don’t think that marketing has any place to play when it comes to the physical 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 job of the marketing department to discover 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 since the market is fairly well saturated it would be very tough (and expensive) to “take on the big boys”. So how can the principles of the marketing mix help in this situation?
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.
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 why 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 pie.
Another form of this part of the marketing mix is known as product variation and is typically used to either prolong the lifecycle of a product already in the market, or to make your brand 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 sell. They use the marketing mix to great effect to sell their own goods in an incredibly competitive marketplace. Although these companies may have huge marketing budgets, the same principles can be applied to all companies.
It is very common to find a significant amount of companies that budget for production and sales but not properly for marketing.
Price
Another important factor in the marketing mix relates to the price of your products or services. This is not a simple case of performing market research to figure out the top price that your customers would pay (although that can be a handy tool to use), but rather using the price of your products as a strategic tool designed to achieve any particular goals your business has.
Although it may seem obvious, it is still worth pointing out that price has always been, and probably always will be, one of the key factors that shoppers take into account when they are making a purchase. It is also worth noting that customers do not always consider the cheapest price to be the best value. In fact a price that is too low can often turn customers away.
There are many questions that you need to ask yourself when devising a good pricing plan, 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 main principals; price skimming and penetration pricing.
Price skimming
The principal idea behind price skimming is to make as much money as possible from the segment of the market which is price-insensitive and will be prepared to spend a premium amount of money to get a product or service early on. Not only can this approach deliver great economic benefits, but it can also promote 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. Manufacturers could set almost 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 tailored 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 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 poor 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 income 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 technique right.
When marketing your company web site it’s important to select an appropriate key phrase. Custom printed flag fitted our business best and we have made the suitable marketing changes.
Place
Place is the portion of the marketing mix that’s often disregarded by companies, but it’s still a significant part of selling your product successfully. In a nutshell, it describes the way in which you deliver your product to your customer, and subsequently how you receive money from them.
The most common 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 infrastructure between your manufacturing plants and shops or 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.
With the growing use of the Internet by your potential customers, marketing techniques have had to take into account 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.
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 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 might be a costly undertaking it is often an essential one.
Advertising is one of the most typical forms of promotion. Typically 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 witnessed a great increase in promotion via e-mail and the Internet, or just as targeted advertising material posted through your door.
Another important part of promotion involves branding, which may not necessarily yield more product sales directly, but goes back to one of the preliminary functions of marketing; getting customers to pick 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 Practice
As previously mentioned each business 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 strategy.
