28May2010
Business Strategy: Marketing
Almost every company on the planet sets out with the main objective of earning money. This is generally done by producing some form of product, or offering a service, and then charging people 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 anybody else. This means that your company will be contesting 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 money once. So how can you increase the chances of them spending money with you?
Marketing is the main tool used by modern businesses to draw prospective customers to do business with them and not with their competitors. It is a very broad topic that is influenced by a great deal of internal and external variables, but when done well it can be the one business practise that can make or break a company. Any time spent on marketing will reap rewards, although spending this time correctly can yield extraordinary results.
So where should you begin when constructing a marketing strategy for your own business? Well, each situation is different, and every industry will have its own set of advantages and weaknesses 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.
The Marketing Mix
The marketing mix was a term that was first coined in the 1950′s and is a phrase that is used to describe the fundamental building blocks of any marketing system. It reflects the fact that marketing is not a simple, blunt-edged business tool, but rather a subtle balance of different elements of business functions.
The term was later developed to include the idea 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 organisations, and by doing so could very rapidly form a tailored and efficient 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 Nottingham, or even any non-physical asset being provided for sale by a business.
Product
Although 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 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 buyers are going to spend money with you. If this part is not correctly 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 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 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 in the marketplace already, and because 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 attempting to craft a marketing strategy to take on the likes of Microsoft and Apple, it would be far more effective to look at what sorts of product are desired in the current marketplace, and how viable it would be to manufacture and sell them.
Once your goods have been designed and created it is still a vital skill to be able to objectively evaluate your own products to identify the reasons why a customer would buy your product rather than a competitors’. The skill is called product differentiation and forms one of the fundamental skills of the product part of the marketing mix pie.
A different 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 consumers as possible.
The motor industry uses this technique very effectively by offering different engines, trim packages and interior options with the cars that they offer. They use the marketing mix to great effect to sell their own goods in an extremely competitive marketplace.
It might seem obvious that marketing is vitally important to any physics text books producer like ours, but the suggestions still must be put into practise, which isn’t always simple.
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 tool designed to achieve any particular targets your company has.
Whilst it may seem obvious, it’s still worth pointing out 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 don’t 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 strategy, key amongst which are the price sensitivity of your clients, 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 primary principals; price skimming and also 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 large amount of money to receive a product or service early on.
This pricing technique is frequently used in the consumer electronics industry where customers will often eagerly await the launch 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 base of customers that would pay it. By using this method as part of a pre-ordering strategy, a company can help to smooth its own money 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 earned long into the future. It can be a risky strategy, but when used correctly it can create revenue streams for many years to come.
Another thing to bear in mind is that “price” is the one 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 carry out. So it is even more essential to get your pricing strategy right.
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Place
Place is the portion of the marketing mix that is often disregarded by companies, but it is still a significant part of selling your product successfully. In short, it describes the way in which you provide your product to your consumer, and subsequently how you receive money from them. It can be a great marketing approach when applied appropriately.
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 production centres and retailers or other outlets around the country. Since distribution of a physical product costs money it is important to identify your own priorities and adapt 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 techniques have had to take into account 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) companies 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 merely 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 a costly undertaking it is often an essential one. The primary concern of promotion is to deliver a particular message that will boost sales.
Advertising is one of the most typical forms of promotion. Classically it would be done by posting on billboards, creating short clips for TV and radio or by physically distributing 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 simply as targeted advertising material posted through your front door. The potential for individualised advertising has never been so great.
Another significant part of promotion involves branding, which will not necessarily yield more sales directly, but goes back to one of the preliminary purposes of marketing; getting customers to pick your product over those of your competitors.
Putting it into Practise
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 plan.