Almost every company on the planet sets out with the main objective of making money. This is usually 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 intricate details.

First of all, it is a very rare case where 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 earn money from the same customers, who only want to spend their cash once.

Marketing is the primary tool used by modern organisations to draw potential customers to do business with them and not with their rivals. It is a very extensive topic that is influenced by a great deal of internal and external factors, but when done well it can be the one business practice that could make or break a corporation. Any time spent on marketing will reap rewards, although spending this time correctly can yield extraordinary results.

So where should you start when creating a marketing strategy for your own business? Well, every situation is different, and each business will have its own set of strengths and weaknesses that must be taken into consideration, but there is a marketing principle that can be applied to almost any company to be used as a marketing framework.

The Marketing Mix

The marketing mix was a phrase 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 straightforward, 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 essential elements of the marketing mix. The formalisation of these P’s made it very easy for business managers and marketers to quickly relate the elements of marketing to the strengths of their own organisations, and by doing so could very rapidly create a personalised and efficient marketing system. The four P’s are Product, Price, Place and Promotion.

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Product

Although every element of the marketing mix is a requirement, the “product” element mentioned as one of the four P’s is possibly the most crucial of all. It describes 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.

Many people don’t think that marketing has any role to play when it comes to the physical 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 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.

Take the computer software market as an example. There are many well-known brands of both operating system as well as software application products on the marketplace already, and because the market is relatively well saturated it would be incredibly tough (and expensive) to “take on the big boys”. So how could the principles of the marketing mix assist in this situation?

Rather than developing an operating system and then trying to craft a marketing strategy to rival the likes of Microsoft or Apple, it would be far 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 mindful 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 vital skill to be able to objectively review your own products to recognise the reasons why a customer should buy your product rather than a competitors’.

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 already in the market, or to make your 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 goods in an incredibly competitive marketplace. Whilst these companies may have huge marketing budgets, the same principles can be applied to all businesses.

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Price

Another key factor in the marketing mix concerns 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 handy tool to use), but rather using the price of your products as a strategic weapon designed to achieve any particular 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 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 lowest price to be the best value.

There are many questions that you need to ask yourself when devising a good pricing strategy, key among 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. These are outlined below.

Price skimming

The principal idea behind price skimming is to make as much money as possible from the segment of the market which is price-insensitive and will be prepared to spend a large amount of money to get a product or service early on.

This pricing technique is frequently used in the consumer electronics market where customers will often eagerly await the release 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 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 financial benefits can be earned long into the future. It can be a high risk strategy, but when employed correctly it can create revenue streams for many years to come. When establishing a price for penetration it is still critical to not give a bad impression of your product by aiming for too low a figure.

Another thing to keep in mind is that “price” is the only 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 create or undertake. So it is even more vital to get your pricing technique right.

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Place

Place is the component of the marketing mix that’s often overlooked by companies, but it’s still a significant part of selling your product effectively. In a nutshell, it describes the method in which you provide your product to your consumer, and consequently 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 vast majority of consumer products, this involves the distribution infrastructure 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 modify your distribution network appropriately. This is the primary use of this part of the marketing mix.

With the growing use of the Internet by your prospective customers, marketing strategies 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 route in download-based markets such as MP3s) firms are now able to reach out to a large pool of possible customers. Effective positioning of your product or service can therefore deliver impressive economic results.

Promotion

When you mention the word “marketing”, most people immediately 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 tool, and whilst it may be a costly undertaking it is often an essential one. The key concern of promotion is to deliver a specific message that will increase sales.

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 customers. 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 significant part of promotion involves branding, which will not necessarily yield more sales directly, but relates back to one of the initial functions of marketing; getting customers to pick your product over those of your rivals. When all other parts of the marketing mix are equal it could be branding that swings a customer’s choice.

Putting it into Practice

As previously mentioned every company is different and will have different marketing needs. By using a mixture of the four P’s reviewed above you can take a good view of your own marketing plan.

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