Modern Marketing
Thursday, March 4th, 2010Practically 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 customers money for it. This fundamental principle is fairly straight-forward, though it contains many intricate details.
Firstly, it is a very rare case that a company can offer a product or service that is truly unique and cannot be supplied by anyone else. This means that your enterprise will be contesting 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 cash once.
Marketing is the primary tool used by modern businesses 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 deal of internal and external variables, but when done well it can be the one business practice that can make or break a company.
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 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 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 strategy. It demonstrates the fact that marketing is not a straightforward, blunt-edged business technique, but rather a subtle 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 essential elements of the marketing mix. The formalisation of these P’s made it very easy for company managers and marketers to swiftly relate the elements of marketing to the strengths of their own companies, and by doing so could very quickly create a customised and efficient marketing strategy. The four P’s are Product, Price, Place and Promotion.
When we were preparing the release of our diamond grinding range we used ideas from the marketing mix to devise a plan.
Product
Although every aspect 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 buyers are going to spend money with you. If this element is not adequately 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 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 production department creates an item for sale and then it is the job of the marketing department to discover ways to sell it, right? This is not necessarily the case.
Take the computer software market as an example. There are many established brands of both operating system as well as software application products on the marketplace already, and because 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 circumstance?
Rather than developing an operating system and then attempting to craft a marketing strategy to take on the likes of Microsoft or 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 produce and sell them. By being aware of the marketing mix early on in your product development period you can avoid business dead-ends at a later time.
Once your goods have been fashioned 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’. The technique is called product differentiation and forms one of the fundamental skills of the product part of the marketing mix cake.
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 consumers as possible. 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.
An example of one of the most recent forms of public marketing is this horse games for girls website that offers versatile and accessible means to reach potential customers.
Price
Another important factor in the marketing mix relates to the price of your products or services. This isn’t a simple case of performing market research to determine the top price that your customers would spend (although that can be a useful 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 is still worth noting 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 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 rivals are doing and how can pricing boost your own profits. From a strategy point of view however, pricing can be covered by two primary principals; price skimming and also penetration pricing. These are outlined below.
Price skimming
The principal idea behind 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 prepared to spend a large amount of money to receive a product or service early on.
This pricing strategy 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. Makers 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 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 setup revenue streams for many years to come. When setting a price for penetration it is still important 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 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 carry out.
Our company wanted to appeal to a wider marketplace and focusing on become a singer helped improve our profile within the international business community.
Place
Place is the part of the marketing mix that’s often overlooked by companies, but it is still an important part of selling your product effectively. In a nutshell, it describes the way in which you provide your product to your customer, and subsequently how you receive money from them.
The most typical implications of place-based marketing are the physical venues in which your goods are sold. For the majority of consumer products, this includes 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 determine your own priorities and alter your distribution network accordingly.
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 distribute their products. By using the Internet as a point of contact (or even as a whole distribution channel in download-based markets such as MP3s) firms are now able to reach out to a large pool of potential customers.
Promotion
When you say the word “marketing”, many people instantly think of the promotional side of the marketing mix, although as we have seen, this is only one branch of a more complete system. Promotion can be used on a very individual basis or as a mass communication tool, and whilst it can be a costly undertaking it is often an important one.
Advertising is one of the most common forms of promotion. Typically it would be done by posting on billboards, producing short clips for TV and radio or by physically distributing flyers or leaflets to potential buyers. With the coming of the information age we have witnessed a great increase in promotion via e-mail and the Internet, or simply as targeted advertising materials posted through your door. The potential for individualised advertising has never been so great.
Another important part of promotion involves branding, which may not necessarily yield more sales directly, but relates back to one of the preliminary functions of marketing; getting customers to pick your product over those of your rivals.
Putting it into Practice
As previously mentioned each company is different and will have different marketing requirements. By using a mixture of the four P’s discussed above you can take a good view of your own marketing strategy.
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