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Nearly every business on the planet sets out with the primary objective of making money. This is generally done by manufacturing some form of product, or offering a service, and then charging people money for it.

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 contesting 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 main tool used by modern firms to draw potential customers to do business with them and not with their competitors. It is a very extensive topic that is affected by a great deal of internal and external factors, but when done well it can be the one business practise that could make or break a corporation.

So where should you begin when constructing a marketing strategy for your own company? Well, each situation is different, and each industry will have its own set of advantages and flaws 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 framework.

The Marketing Mix

The marketing mix was a phrase that was first coined during the 1950’s and is a phrase that is used to describe 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 subtle balance of different elements of business operations. It got its name because it is similar to the ingredients checklist for a recipe.

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 company managers and marketers to swiftly associate the elements of marketing to the strengths of their own companies, and by doing so could very quickly form a personalised and effective marketing plan. The four P’s are Product, Price, Place and Promotion.

The “product” aspect of the four P’s can pertain to any service, just like remove floor adhesive, or even any intangible asset being offered for sale by a business.

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 critical of all. It identifies the physical product or intangible service that your business 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 place 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 other way around - your production department creates an item for sale and then it is the task of the marketing department to discover 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 and software application products on the market already, and because 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 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 feasible 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 time.

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 why a customer would buy your product rather than a competitors’. The technique is called product differentiation and is one of the basic skills of the product part of the marketing mix cake.

Another form of this part of the marketing mix is known as product variation and is generally used to either lengthen the lifecycle of a product currently in the market, or to make your new product attractive to as many consumers as possible. Again, this technique can be applied at all stages of product development.

The motor industry uses this technique very effectively by offering different engines, trim packages and interior options with the cars that they sell. They use the marketing mix to great effect to sell their own products in an incredibly competitive marketplace.

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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 top price that your customers would spend (although that can be a handy tool to use), but rather using the price of your products as a strategic tool designed to achieve any particular targets your company has.

Although it may seem obvious, it’s 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 don’t always consider the cheapest price to be the best price. In fact 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 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 main principals; price skimming and penetration pricing. These are outlined below.

Price skimming

The principal 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. Not only can this approach deliver great financial advantages, but it can also advertise an exclusive and high quality image of your product.

This pricing technique is frequently 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 making use of this method as part of a pre-ordering strategy, a firm can help to smooth its own money flow.

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 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. When setting a price for penetration it is still important to not give a poor impression of your product by aiming for too low a number.

Yet 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 carry out. So it is even more vital to get your pricing technique right.

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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 way in which you deliver 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 common implications of place-based marketing are the physical locations in which your products are sold. For the majority of consumer products, this includes the distribution infrastructure between your production plants and retailers and 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 main application of this element of the marketing mix.

With the increasing use of the Internet by your potential customers, marketing strategies have had to take into account how they use the Internet to help distribute their products. By using the Internet as a point of contact (or even as a complete distribution route in download-based markets such as MP3s) firms are now able to reach out to a large pool of potential customers.

Promotion

When you mention the word “marketing”, many people instantly 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 used on a very individual basis or as a mass communication instrument, and whilst it may be an expensive undertaking it is often an important one. The key concern of promotion is to deliver a certain message that will boost sales.

Advertising is one of the most typical forms of promotion. Typically 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 witnessed a great increase in promotion via e-mail and the Internet, or simply as targeted advertising materials posted through your front door. The potential for individualised advertising has never been so great.

Another significant part of promotion involves branding, which will not necessarily yield more sales directly, but relates back to one of the preliminary 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 choice.

Putting it into Practise

As previously mentioned every company is different 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.

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