Nearly every business on the planet sets out with the primary objective of earning money. This is usually done by manufacturing 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 specific details.

First of all, it is a very rare case where a business can offer a product or service that is genuinely unique and cannot be supplied by anyone else. This means that your business will be competing with other businesses that sell a similar product and you will both be trying to earn 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 affected by a great number of internal and external variables, but when done well it can be the one business practice that can make or break a company.

So where should you begin when constructing a marketing strategy for your own business? Well, each situation is different, and each business 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 corporation to be used as a marketing platform.

The Marketing Mix

The marketing mix was a term that was first coined in the 1950’s and is an expression 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 subtle balance of different aspects of business functions.

The term was later built upon 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 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.

The “product” aspect of the four P’s can refer to a service, just like painting concrete floors, or any kind of intangible service being provided for sale by a company.

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 describes the physical product or intangible service that your business 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 part is not adequately 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 business 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 production department creates a product for sale and then it is the job of the marketing department to find ways to sell it, right?

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

Once your products 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 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 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 approach very effectively by offering different 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.

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Price

Another key factor in the marketing mix relates to the price of your products or services. This is not a simple case of carrying out market research to determine the highest price that your customers would pay (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 objectives your business has. The potential benefits of an effective pricing plan are surprisingly large!

Whilst 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 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 when 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 penetration pricing. These are outlined below.

Price skimming

The main idea driving 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 premium amount of money to receive a product or service early on. Not only can this technique deliver excellent economic benefits, but it can also promote 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 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 opposite 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 used correctly it can create revenue streams for many years to come. When establishing a price for penetration it is still essential to not give a bad impression of your product by aiming for too low a number.

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 vital to get your pricing technique right.

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Place

Place is the part of the marketing mix that’s often disregarded by companies, but it is still a significant part of selling your product effectively. In short, it describes the method in which you provide your product to your customer, and consequently how you receive money from them. It can be a fantastic marketing technique when applied appropriately.

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

With the growing use of the Internet by your potential customers, marketing techniques have had to consider how they use the Internet to help deliver their products. By using the Internet as a point 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 large 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 merely one branch of a more comprehensive 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 essential one. The key 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 distributing flyers or leaflets to potential buyers. With the coming 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 front door.

Another important part of promotion involves branding, which will not necessarily yield more product 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 every business is unique and will have different marketing requirements. By using a balance of the four P’s reviewed above you can take a good view of your own marketing strategy.