The Four P’s
Almost 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 customers money for it.
Firstly, it is a very rare case that a company can offer a product or service that is truly unique and cannot be supplied 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 customers, who only want to spend their money once. So how can you boost the chances of them spending money with you?
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 influenced by a great deal of internal and external variables, but when done right it can be the one business practice that can 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 every business 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 framework.
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 express the fundamental building blocks of any marketing system. It demonstrates the fact that marketing is not a straightforward, blunt-edged business tool, but rather a delicate balance of different aspects of business functions. It got its name because it is similar to the ingredients checklist for a recipe.
The term was later developed to include the concept 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 associate the elements of marketing to the strengths of their own organisations, and by doing so could very quickly form a tailored and efficient marketing plan.
Our company already sells a prosperous variety of helium balloons but we have used new promotional suggestions to improve our sales numbers.
Product
Whilst every element of the marketing mix is a necessity, 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. If this element is not correctly managed then your organisation 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 common train of thought very often bears the exact opposite sentiment. Surely it should be the other way around – your manufacturing department creates an item for sale and then it is the task 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 in the marketplace already, and since the market is relatively well saturated it would be very tough (and expensive) to “take on the big boys”.
Rather than creating an operating system and then attempting to craft a marketing strategy to take on the likes of Microsoft or Apple, it would be more effective to look at what types of product are sought after 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 prevent business dead-ends at a later time.
Once your products have been designed and created it is still a critical skill to be able to objectively evaluate your own products to identify the reasons that a customer would 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 extend the lifecycle of a product already in the market, or to make your new product attractive to as many consumers 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 goods in an incredibly competitive marketplace.
We do not have a defined promotion department in our company though many of our administrators have been able to adopt marketing as part of their work function.
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 top price that your customers would pay (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 goals your business has. The potential advantages of an effective pricing plan are surprisingly large!
Whilst it may seem obvious, it’s still worth noting 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. Actually a price that is too low can sometimes turn buyers away.
There are many questions that you need to ask yourself while devising a good pricing plan, key amongst which are the price sensitivity of your clients, what your competitors are doing and how can pricing maximise your own profits. From a strategy point of view however, pricing can be covered by two primary 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 willing to spend a premium amount of money to receive a product or service early on. Not only can this approach yield great financial advantages, but it can also advertise an exclusive and high quality image of your item.
This pricing strategy 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 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 financial benefits can be earned long into the future. It can be a high risk strategy, but when used correctly it can setup revenue streams for many years to come. When setting a price for penetration it is still important to not give a bad impression of your product by aiming for too low a figure.
Yet another thing to bear 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. So it is even more essential to get your pricing technique right.
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Place
Place is the component of the marketing mix that is often disregarded by companies, but it’s still a significant part of selling your product successfully. In a nutshell, it describes the way in which you provide your product to your consumer, and subsequently how you collect money from them. It can be a fantastic marketing technique when used appropriately.
The most typical ramifications of place-based marketing are the physical locations in which your goods are sold. For the vast majority of consumer products, this involves the distribution network between your manufacturing plants and shops or other outlets around the country. Since distribution of a physical product costs money it is important to determine your own priorities and alter your distribution network accordingly.
With the increasing use of the Internet by your potential 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 a complete distribution route in download-based markets such as MP3s) companies are now able to reach out to a huge 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 only 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 essential one. The key concern of promotion is to deliver a specific message that will boost 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 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 material posted through your front door. The potential for individualised advertising has never been so good.
Another significant part of promotion involves branding, which may not necessarily yield more sales directly, but relates back to one of the preliminary functions of marketing; getting customers to pick your product over those of your rivals.
Putting it into Practice
As previously mentioned each business 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 plan.