The Fundamentals Of Marketing
Nearly every company on the planet sets out with the primary objective of making money. This is generally done by producing some form of product, or offering a service, and then charging people money for it. This fundamental principle is fairly straight-forward, though it contains many specific details.
Firstly, it is a very rare case that a company can offer a product or service that is truly unique and cannot be provided by anybody else. This means that your enterprise 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 cash once. So how can you increase the chances of them spending money with you?
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 factors, but when done right it can be the single business practice that could make or break a corporation.
So where should you start when constructing a marketing strategy for your own business? Well, each situation is different, and every company 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 company to be used as a marketing platform.
The Marketing Mix
The marketing mix was a term that was first coined during the 1950’s and is an expression that is used to express 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 delicate balance of different aspects 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 clear for business managers and marketers to swiftly associate the elements of marketing to the strengths of their own companies, and by doing so could very rapidly create a tailored and efficient marketing strategy.
Our organisation created a marketing plan for our own event management services by making use of this advertising and marketing mix to identify our marketing strengths.
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 critical 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 customers are going to spend money with you.
Many people do not 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 exact opposite sentiment. Surely it should be the opposite way around - your manufacturing department creates an item for sale and then it is the job of the marketing department to find ways to sell it, right? This is not necessarily the case.
Consider the computer software market as an example. There are many established brands of both operating system as well as software application products on the market already, and since the market is relatively well saturated it would be very tough (and expensive) to “take on the big boys”. So how could 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 and Apple, it would be more effective to look at what types of product are sought after in the current marketplace, and how viable it would be to manufacture 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 stage.
Once your products have been designed and created it is still a vital skill to be able to objectively evaluate your own products to identify the reasons that 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 extend the lifecycle of a product already in the market, or to make your brand new product attractive to as many customers as possible.
The car industry uses this technique very effectively by offering various engines, trim packages and interior options with the cars that they offer. They use the marketing mix to good effect to sell their own products in an extremely competitive marketplace.
As part of our individual promotion plan, our business very carefully researched what exactly made our products stand out from the crowd.
“Product is paramount” is one of the slogans applied within our event management business which tries to point out to all employees that we expect high quality manufacturing.
Price
Another key factor in the marketing mix relates to the price of your products or services. This isn’t a simple case of carrying out market research to figure out the highest price that your customers would spend (although that can be a useful tool to use), but rather using the price of your products as a strategic tool designed to achieve any particular objectives your business has.
Although it may seem obvious, it’s still worth pointing out that price has always been, and likely 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 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 strategy, key amongst which are the price sensitivity of your customers, 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.
Price skimming
The main idea behind 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 technique yield excellent economic benefits, but it can also advertise an exclusive and high quality image of your item.
This pricing strategy is very often 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.
Penetration pricing
Penetration pricing is at the other 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 risky strategy, but when used 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 bad impression of your product by aiming for too low a figure.
Another thing to bear in mind is that “price” is the one part of the marketing mix that will generate income 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 strategy right.
Our business wanted to appeal to a broader marketplace and concentrating on become a singer helped to increase our profile within the international business network.
Place
Place is the part of the marketing mix that’s often disregarded by companies, but it is still a significant part of selling your product effectively. In a nutshell, 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 fantastic marketing approach when applied appropriately.
The most common implications 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 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 modify your distribution network appropriately. This is the principal use of this part 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 point of contact (or even as a complete 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”, most people instantly think of the promotional side of the marketing mix, although as we have seen, this is merely one branch of a more comprehensive system. Promotion can be employed on a very individual basis or as a mass communication instrument, and whilst it might be an expensive undertaking it is often an essential one.
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 arrival of the information age we have witnessed a great increase in promotion via e-mail and the Internet, or just as targeted advertising materials posted through your door.
Another important part of promotion involves branding, which may not necessarily yield more sales directly, but relates back to one of the initial functions of marketing; getting customers to choose your product over those of your competitors. When all other parts of the marketing mix are equal it can be branding that sways a customer’s decision.
Putting it into Practice
As previously mentioned every business is unique and will have different marketing needs. By using a balance of the four P’s discussed above you can take an effective view of your own marketing strategy.
