Business Strategy: Marketing
Nearly every company on the planet sets out with the main 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.
Firstly, it is a very rare case that a business can offer a product or service that is genuinely unique and cannot be provided by anybody else. This means that your company will be contesting with other businesses that sell a similar product and you will both be trying to earn money from the same shoppers, who only want to spend their cash once.
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 affected by a great number of internal and external factors, but when done right it can be the single business practise that could make or break a corporation.
So where should you begin when creating a marketing strategy for your own company? Well, every situation is different, and each industry 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 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 straightforward, blunt-edged business tool, but rather a subtle balance of different elements of business functions. It got its name because 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 companies, and by doing so could very rapidly form a customised and effective marketing plan. The four P’s are Product, Price, Place and Promotion.
This marketing style is not restricted to physical goods, services such as sports injury clinics could gain from new marketing ideas or a new point of view.
Product
Whilst every aspect of the marketing mix is a necessity, the “product” element mentioned as one of the four P’s is perhaps the most crucial of all. It identifies 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 part is not correctly managed then your organisation will find it hard to make it through.
Several people do not think that marketing has any place to play when it comes to the actual 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 manufacturing 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 well-known brands of both operating system and software application products 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”.
Rather than creating an operating system and then trying to craft a marketing strategy to take on the likes of Microsoft and Apple, it would be 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 period you can avoid business dead-ends at a later time.
Once your products have been fashioned and created it is still a critical skill to be able to objectively review your own products to identify the reasons why a customer should buy your product rather than a competitors’. The technique is called product differentiation and is 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 lengthen the lifecycle of a product currently in the market, or to make your new product attractive to as many customers 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 products in an extremely competitive marketplace.
We do not have a specific marketing department in our how to make bread service although many of our own managers have been able to adopt marketing as part of their work function.
Price
Another key 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 figure out the highest price that your customers would pay (although that can be a useful tool to use), but rather using the price of your products as a strategic weapon designed to achieve any specific objectives your business has.
Although it may seem obvious, it’s 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 constantly consider the lowest price to be the best value. Actually a price that is too low can often turn customers away.
There are many questions that you need to ask yourself while devising a good pricing strategy, key among which are the price sensitivity of your customers, what your competitors 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 main idea driving price skimming is to make as much cash as possible from the segment of the market which is price-insensitive and will be willing to spend a large amount of money to get a product or service early on. Not only can this approach yield excellent financial benefits, but it can also promote an exclusive and high quality image of your item.
This pricing strategy is frequently used in the consumer electronics industry 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 other 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.
Another thing to keep in mind is that “price” is the only part of the marketing mix that will generate earnings for a business. The other members of the four P’s will all cost money to create or undertake.
To optimise our web site for Google search marketing we selected buying sunny plants as a targeted phrase because it relates to our business and what we do.
Place
Place is the part of the marketing mix that’s often overlooked by companies, but it is still a significant 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 technique when used appropriately.
The most common implications of place-based marketing are the physical venues in which your products 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 crucial to determine your own priorities and adjust your distribution network appropriately.
With the increasing use of the Internet by your prospective customers, marketing techniques have had to consider how they use the Internet to help distribute their products. By using the Internet as a place of contact (or even as an entire distribution channel in download-based markets such as MP3s) companies are now able to reach out to a huge pool of possible customers.
Promotion
When you say 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 comprehensive 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. The primary concern of promotion is to deliver a specific message that will boost sales.
Advertising is one of the most common 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 coming 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.
Another important part of promotion involves branding, which will not necessarily yield more product sales directly, but goes back to one of the preliminary functions of marketing; getting customers to choose your product over those of your rivals.
Putting it into Practise
As previously mentioned every business 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.
This entry was posted on Friday, September 30th, 2011 at 3:46 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.