Business Strategy: Marketing

Practically every business 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 customers money for it. This fundamental principle is fairly straight-forward, though it contains many specific details.

First of all, 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 business will be competing with other businesses that sell a similar item and you will both be trying to earn 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 primary tool used by modern organisations to draw potential 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 right it can be the one business practise that can make or break a corporation. Any time spent on marketing will reap benefits, although spending this time correctly can yield incredible results.

So where should you start when creating a marketing strategy for your own business? Well, every situation is different, and every business will have its own set of strengths 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.

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 system. It reflects the fact that marketing is not a simple, blunt-edged business technique, but rather a subtle balance of different aspects of business operations.

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 business managers and marketers to swiftly associate the elements of marketing to the strengths of their own organisations, and by doing so could very quickly create a tailored and effective marketing strategy. The four P’s are Product, Price, Place and Promotion.

Our company excels at offering decorative concrete floors and although we thought our marketing strategy was adequate we have seen improvements since using marketing mix ideas.

Product

Although every element 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 offering, and at the end of the day it is the reason that customers are going to spend money with you.

Several people do not think that marketing has any role 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 exact opposite sentiment. Surely it should be the opposite way around – your production department creates a product for sale and then it is the task of the marketing department to find ways to sell it, right?

Take the computer software market as an example. There are many established brands of both operating system and software application solutions on the market already, and because the market is relatively well saturated it would be incredibly tough (and expensive) to “take on the big boys”.

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 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 cycle you can avoid business dead-ends at a later stage.

Once your goods have been designed and created it is still a vital skill to be able to objectively evaluate your own products to recognise the reasons why a customer would buy your product rather than a competitors’.

A different form of this part of the marketing mix is called product variation and is generally used to either lengthen the lifecycle of a product already in the market, or to make your new product attractive to as many consumers 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 goods in an incredibly competitive marketplace. Whilst these companies may have huge marketing budgets, the same principles can be applied to all companies.

Price

Another important 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 top 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 specific goals your business has.

Although it may seem obvious, it is 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 constantly consider the lowest price to be the best price. In fact a price that is too low can often turn buyers away.

There are many questions that you need to ask yourself while devising a good pricing plan, key among which are the price sensitivity of your clients, what your competitors 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 penetration pricing.

Price skimming

The main idea driving price skimming is to make as much money as possible from the segment of the market which is price-insensitive and will be willing to spend a premium amount of money to receive a product or service early on. Not only can this approach deliver excellent financial benefits, but it can also promote an exclusive and high quality image of your product.

This pricing technique 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. Makers could set nearly any price they wanted to and there would still be a loyal core 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 tailored towards gaining a large market share at a short-term cost so that monetary rewards can be made long into the future. It can be a high risk 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 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. So it is even more vital to get your pricing strategy right.

After using on-line tools to compare key phrase lookup frequency we chose chicken cooking to guide our strategy for on-line promotion as well as off-line marketing materials.

Place

Place is the part of the marketing mix that is often disregarded by companies, but it’s still an important part of selling your product successfully. In a nutshell, it describes the method in which you provide your product to your consumer, and subsequently how you receive money from them.

The most typical implications of place-based marketing are the physical locations in which your goods are sold. For the vast majority of consumer products, this includes the distribution infrastructure between your manufacturing centres and retailers and other outlets around the world. Since distribution of a physical product costs money it is crucial to determine your own priorities and alter your distribution network accordingly.

With the growing use of the Internet by your prospective customers, marketing methods 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 complete distribution route in download-based markets such as MP3s) companies are now able to reach out to a huge pool of possible customers. Effective placing of your product or service can therefore yield impressive economic results.

Promotion

When you mention the word “marketing”, most people immediately 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 instrument, and whilst it might be an expensive 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 handing out 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 materials posted through your door. The potential for individualised advertising has never been so good.

Another important part of promotion involves branding, which will not necessarily yield more sales directly, but goes back to one of the preliminary functions of marketing; getting customers to choose your product over those of your rivals. When all other pieces of the marketing mix are equal it can be branding that swings a customer’s choice.

Putting it into Practise

As previously mentioned every company is different 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.