Nearly every business on the planet sets out with the main objective of earning money. This is usually done by producing some form of product, or offering a service, and then charging customers money for it. This fundamental theory is fairly straight-forward, though it contains many specific details.

Firstly, it is a very rare case where a business can offer a product or service that is truly unique and cannot be provided by anybody else. This means that your company 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 money once.

Marketing is the main tool used by modern firms to draw prospective customers to do business with them and not with their competitors. 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 single business practice that can make or break a corporation. Any time spent on marketing will reap benefits, although spending this time correctly can yield incredible outcomes.

So where should you begin when constructing a marketing strategy for your own business? Well, every situation is different, and each industry will have its own set of advantages and weak points 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 framework. It is known as the “Marketing Mix”.

The Marketing Mix

The marketing mix was a term 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 simple, blunt-edged business tool, but rather a delicate balance of different elements 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 clear for company managers and marketers to quickly relate the elements of marketing to the strengths of their own organisations, and by doing so could very quickly form a personalised and effective marketing strategy.The four P’s are Product, Price, Place and Promotion.

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Product

Although every aspect 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 buyers 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 don’t think that marketing has any place to play when it comes to the actual product that your business is selling. In fact, the typical train of thought very often bears the precise opposite sentiment. Surely it should be the opposite way around – your production department creates an item 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 established brands of both operating system as well as software application solutions on the market already, and since the market is relatively well saturated it would be incredibly 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 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 manufacture and sell them.

Once your goods have been fashioned and created it is still a critical skill to be able to objectively evaluate your own products to recognise the reasons that a customer would buy your product rather than a competitors’.

Another form of this part of the marketing mix is known as product variation and is typically used to either extend the lifecycle of a product currently in the market, or to make your brand new product attractive to as many consumers as possible. Once again, this method can be applied at all stages of product development.

The car 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 products in an incredibly competitive marketplace. Although these companies may have huge marketing budgets, the same principles can be applied to all businesses.

It might seem evident that marketing is vitally important for a company like ours, although particular suggestions still need to be put into practice, which is not always simple.

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 top 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 weapon designed to achieve any particular objectives your company has.

Whilst it may seem obvious, it is still worth pointing out that price has always been, and likely always will be, one of the key factors that shoppers take into account when they are making a purchase. It is also worth noting that customers do not constantly consider the cheapest price to be the best value.

There are many questions that you need to ask yourself when devising a good pricing plan, key among which are the price sensitivity of your clients, what your rivals 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.

Price skimming

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

This pricing strategy is very often 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. 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 monetary rewards 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.

Another thing to bear 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 produce 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’s often not addressed by companies, but it’s still an important part of selling your product effectively. In a nutshell, 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 great marketing technique when applied appropriately.

The most common implications of place-based marketing are the physical venues in which your products are sold. For the vast majority of consumer products, this involves the distribution infrastructure between your production plants and shops and other outlets around the world. Since distribution of a physical product costs money it is crucial to identify your own priorities and modify your distribution network accordingly. This is the main use of this element of the marketing mix.

With the growing use of the Internet by your prospective 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 whole distribution channel in download-based markets such as MP3s) firms are now able to reach out to a huge pool of potential customers.

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 only one branch of a more comprehensive system. Promotion can be used on a very individual basis or as a mass communication instrument, and whilst it can be a costly undertaking it is often an essential one.

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

Another significant part of promotion involves branding, which may not necessarily yield more sales directly, but relates back to one of the preliminary purposes of marketing; getting customers to choose your product over those of your rivals.

Putting it into Practice

As previously mentioned every business is different and will have different marketing requirements. By using a mixture of the four P’s reviewed above you can take an effective view of your own marketing strategy.