The Four P’s
Nearly every business on the planet sets out with the main objective of earning money. This is usually done by producing some form of product, or offering a service, and then charging people money for it. This fundamental theory is fairly straight-forward, although it contains many intricate details.
First of all, it is a very rare case that a company can offer a product or service that is genuinely unique and cannot be provided by anyone else. This means that your enterprise will be competing with other businesses that sell a similar item 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 organisations to draw prospective customers to do business with them and not with their rivals. It is a very broad topic that is influenced by a great number of internal and external factors, but when done right it can be the single business practice that could make or break a corporation. Any time spent on marketing will reap benefits, although spending this time efficiently can yield incredible outcomes.
So where should you start when creating a marketing strategy for your own business? Well, each situation is different, and each company will have its own set of strengths and flaws 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 phrase that was first coined in the 1950’s and is a phrase that is used to express 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 delicate balance of different elements of business functions.
The term was later built upon 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 swiftly relate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly form a customised and efficient marketing system. The four P’s are Product, Price, Place and Promotion.
When we were planning the release for our own floor scarifiers we used concepts in the marketing mix to devise a strategy.
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 critical of all. It describes the physical product or intangible service that your business will be offering, 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 make it through.
Several people do not think that marketing has any role to play when it comes to the actual product that your company is selling. In fact, the typical train of thought very often bears the exact opposite sentiment. Surely it should be the opposite 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 well-known brands of both operating system and software application solutions 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”. So how could the principles of the marketing mix assist in this circumstance?
Rather than developing 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 sorts of product are desired in the current marketplace, and how viable it would be to produce and sell them.
Once your goods have been designed and created it is still a critical skill to be able to objectively review your own products to recognise the reasons why a customer would 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 called product variation and is generally used to either lengthen the lifecycle of a product currently in the market, or to make your brand new product attractive to as many customers as possible. Again, this technique can be applied at all stages of product development.
The car industry uses this technique very effectively by offering various 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. Whilst these companies may have huge marketing budgets, the same principles can be applied to all businesses.
Marketing plays a key function in our own cheese graters company strategy and should not get treated as an afterthought.
Price
Another key factor in the marketing mix concerns the price of your products or services. This is not a simple case of carrying out market research to determine the highest price that your customers would spend (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 objectives your business has.
Whilst it may seem obvious, it is still worth pointing out that price has always been, and likely 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 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 though, pricing can be covered by two main principals; price skimming and also penetration pricing. These are outlined below.
Price skimming
The main idea behind price skimming is to make as much cash as possible from the sector of the market which is price-insensitive and are going to be willing to spend a large amount of money to receive a product or service early on.
This pricing strategy is frequently used in the consumer electronics market where customers will often eagerly await the launch 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 benefits can be earned long into the future. It can be a high risk strategy, but when employed correctly it can setup revenue streams for many years to come. When setting a price for penetration it is still essential to not give a poor impression of your product by aiming for too low a figure.
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 produce or undertake. So it is even more vital to get your pricing technique right.
Grabbing any of the on-line search market is extremely beneficial, so pick any phrase, like become a doctor and evaluate if the phrase has an adequate search market for your needs.
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 method in which you deliver your product to your consumer, and consequently how you collect money from them. It can be a great marketing technique when applied appropriately.
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 infrastructure between your production plants and shops and other outlets around the world. Since distribution of a physical product costs money it is crucial to identify your own priorities and modify your distribution network accordingly.
With the increasing use of the Internet by your prospective customers, marketing methods have had to consider how they use the Internet to help distribute their products. By using the Internet as a point 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 large pool of possible customers. Effective placing of your product or service can therefore deliver impressive financial results.
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 only 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 essential 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 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 just as targeted advertising material posted through your 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 purposes of marketing; getting customers to choose your product over those of your competitors. 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 company is unique and will have different marketing requirements. By using a mixture of the four P’s discussed above you can take an effective view of your own marketing strategy.
