The Z Reviews

Almost every company on the planet sets out with the main objective of earning money. This is generally done by producing some form of product, or offering a service, and then charging people money for it. This fundamental theory is fairly straight-forward, although 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 make money from the same customers, who only want to spend their money once.

Marketing is the primary tool used by modern businesses to draw potential customers to do business with them and not with their competitors. It is a very extensive topic that is influenced by a great number of internal and external variables, but when done right it can be the one business practice that can make or break a corporation. Any time spent on marketing will reap benefits, although spending this time efficiently can yield extraordinary results.

So where should you begin when creating a marketing strategy for your own company? Well, each situation is different, and every company will have its own set of strengths and flaws 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. It is called the “Marketing Mix”.

The Marketing Mix

The marketing mix was a phrase that was first coined in the 1950’s and is a phrase that is used to describe the fundamental building blocks of any marketing strategy. It demonstrates the fact that marketing is not a simple, blunt-edged business tool, but rather a delicate balance of different aspects of business functions. It got its name since it is similar to the ingredients checklist for a recipe.

The term was later built upon to include the concept of “four P’s” that described the critical 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 system.

Our company specialises at supplying the ability to efficiently paint concrete for floors and while we believed our marketing strategy was adequate we have seen improvements after using marketing mix concepts.

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 company will find it hard to survive.

Several people don’t think that marketing has any place to play when it comes to the physical 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 as well as software application products in the market already, and since 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 creating an operating system and then attempting to craft a marketing strategy to rival the likes of Microsoft and Apple, it would be more effective to look at what types of product are desired in the current marketplace, and how feasible it would be to manufacture and sell them. By being mindful of the marketing mix early on in your product development period you can prevent business dead-ends at a later stage.

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 that a customer would buy your product rather than a competitors’. The skill is called product differentiation and forms one of the fundamental skills of the product part of the marketing mix pie.

Another form of this part of the marketing mix is known as product variation and is typically used to either lengthen the lifecycle of a product already in the market, or to make your brand new product attractive to as many consumers as possible.

The car 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 extremely competitive marketplace. Whilst these companies may have huge marketing budgets, the same concepts can be applied to all businesses.

It might seem evident that marketing is vitally important to any physics text books producer like ours, although particular ideas still need to be put into practice, which is not always easy.

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 useful tool to use), but rather making use of the price of your products as a strategic tool designed to achieve any particular objectives your company has. The potential advantages of an effective pricing strategy are surprisingly large!

Although it may seem obvious, it is still worth noting that price has always been, and probably always will be, one of the crucial factors that customers 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 often turn buyers away.

There are many questions that you need to ask yourself while 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. 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.

This pricing technique is very often used in the consumer electronics market where customers will often eagerly await the launch of a new mobile phone or computer games console. Makers could set almost 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 cash 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 setup revenue streams for many years to come.

Yet another thing to keep 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 produce or undertake. So it is even more essential to get your pricing strategy right.

When our company was doing market research before a new product launch I found that get a boyfriend was the key phrase that promoted the most “value for money” image.

Place

Place is the component of the marketing mix that is often not addressed by companies, but it’s still an important part of selling your product effectively. In short, it describes the way in which you provide your product to your consumer, and subsequently how you receive money from them.

The most common ramifications of place-based marketing are the physical venues in which your products are sold. For the majority of consumer products, this involves the distribution network between your production plants and retailers or other outlets around the country. Since distribution of a physical product costs money it is crucial to identify your own priorities and modify your distribution network appropriately.

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) companies are now able to reach out to a huge pool of possible customers.

Promotion

When you mention the word “marketing”, many people immediately think of the promotional side 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 tool, and whilst it might be a costly undertaking it is often an important one. The primary concern of promotion is to deliver a certain message that will improve sales.

Advertising is one of the most typical forms of promotion. Typically it would be done by posting on billboards, creating short clips for TV and radio or by physically handing out flyers or leaflets to potential customers. With the coming 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.

Another significant part of promotion involves branding, which will not necessarily yield more product sales directly, but relates back to one of the preliminary purposes of marketing; getting customers to pick your product over those of your competitors. When all other pieces of the marketing mix are equal it could be branding that sways a customer’s decision.

Putting it into Practice

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