Product, Price, Place & Promotion
Almost every company on the planet sets out with the primary objective of making money. This is usually 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, though it contains many specific details.
Firstly, 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 business will be competing with other businesses that sell a similar product and you will both be trying to make money from the same customers, who only want to spend their money once. So how can you boost the chances of them spending money with you?
Marketing is the main tool used by modern organisations to draw prospective customers to do business with them and not with their rivals. It is a very broad topic that is affected by a great deal of internal and external factors, but when done right it can be the single business practice that can make or break a corporation. Any time spent on marketing will reap rewards, although spending this time efficiently can yield incredible results.
So where should you begin when creating a marketing strategy for your own company? Well, each situation is different, and every industry will have its own set of advantages 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. It is called the “Marketing Mix”.
The Marketing Mix
The marketing mix was a phrase that was first coined during 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 straightforward, blunt-edged business technique, but rather a subtle balance of different elements of business operations.
The term was later developed 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 easy for company managers and marketers to quickly relate the elements of marketing to the strengths of their own companies, and by doing so could very rapidly create a customised and efficient marketing system. The four P’s are Product, Price, Place and Promotion.
The “product” aspect of the four P’s could refer to a product, like turnout seat services, or even any kind of intangible service being offered for sale by a business.
Product
Whilst every aspect of the marketing mix is a necessity, 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.
Several people don’t think that marketing has any role to play when it comes to the physical 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 production department creates a product for sale and then it is the job 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 and software application products in the marketplace already, and since the market is fairly well saturated it would be incredibly 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 more effective to look at what types 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 designed and created it is still a critical skill to be able to objectively evaluate your own products to recognise the reasons why a customer should buy your product rather than a competitors’.
A different form of this part of the marketing mix is known as product variation and is generally used to either lengthen 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 various engines, trim packages and interior options with the cars that they sell. They use the marketing mix to good effect to sell their own goods in an extremely competitive marketplace.
It might seem evident that marketing is incredibly important for a AA battery seller like ours, but particular suggestions still need to be put into practice, which is not always easy.
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 highest price that your customers would pay (although that can be a handy tool to use), but rather making use of the price of your products as a strategic weapon designed to achieve any specific targets your company has. The potential benefits of an effective pricing plan are surprisingly large!
Although 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 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 value. In fact a price that is too low can often turn buyers 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 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 main principals; price skimming and also 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 receive a product or service early on. Not only can this approach yield great financial 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 release 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 core of customers that would pay it.
Penetration pricing
Penetration pricing is at the opposite end of the pricing spectrum, and is tailored towards gaining a large market share at a short-term cost so that monetary rewards can be earned 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.
Another thing to bear 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 undertake.
Our company wanted to appeal to a wider marketplace and concentrating on become a singer helped to boost our profile in the international business community.
Place
Place is the portion of the marketing mix that is often not addressed by companies, but it’s still a significant 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 receive money from them.
The most common ramifications 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 or 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.
With the growing use of the Internet by your prospective customers, marketing methods 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 large pool of possible customers.
Promotion
When you mention the word “marketing”, many people instantly think of the promotional aspect of the marketing mix, although as we have seen, this is merely 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 important 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 arrival of the information age we have seen a great increase in promotion via e-mail and the Internet, or just as targeted advertising material posted through your front door.
Another important 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 choose your product over those of your rivals.
Putting it into Practice
As previously mentioned every company is different and will have different marketing needs. By using a balance of the four P’s reviewed above you can take an effective view of your own marketing strategy.
