The Fundamentals Of Marketing
Almost 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 customers money for it. This fundamental principle is fairly straight-forward, though it contains many intricate details.
Firstly, it is a very rare case where a business can offer a product or service that is genuinely unique and cannot be supplied by anybody else. This means that your enterprise will be competing with other businesses that sell a similar product and you will both be trying to make money from the same shoppers, who only want to spend their money once. So how can you improve the chances of them spending money with you?
Marketing is the main tool used by modern businesses to draw potential customers to do business with them and not with their competitors. It is a very broad topic that is affected by a great deal of internal and external variables, but when done well 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 incredible outcomes.
So where should you begin when creating a marketing strategy for your own business? Well, every situation is different, and every company 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.
The Marketing Mix
The marketing mix was a phrase that was first coined during the 1950′s and is an expression that is used to describe 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 subtle balance of different aspects of business operations.
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 relate the elements of marketing to the strengths of their own organisations, and by doing so could very quickly create a customised and efficient marketing plan. The four P’s are Product, Price, Place and Promotion.
Our company already sells a successful variety of wheelchair hoist products however we still use fresh marketing ideas to improve our sales figures.
Product
Whilst every aspect of the marketing mix is a requirement, the “product” element mentioned as one of the four P’s is possibly the most crucial of all. It identifies the physical product or intangible service that your company 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 actual product that your business is selling. In fact, the typical train of thought very often bears the exact opposite sentiment. Surely it should be the opposite way around – your manufacturing department creates a product for sale and then it is the job of the marketing department to find ways to sell it, right? This is not always the case.
Take the computer software market as an example. There are many well-known brands of both operating system and software application solutions on the market already, and because the market is fairly well saturated it would be very tough (and expensive) to “take on the big boys”.
Rather than developing an operating system and then attempting 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 produce and sell them.
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.
A different form of this part of the marketing mix is known as product variation and is generally used to either extend the lifecycle of a product already in the market, or to make your brand new product attractive to as many customers as possible.
The car 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 extremely competitive marketplace. Whilst these companies may have huge marketing budgets, the same principles can be applied to all businesses.
We do not have a distinct marketing division in our own xbox 360 steering wheel and pedals operation though several of our managers have been able to adopt marketing as part of their work role.
Price
Another key factor in the marketing mix relates to the price of your products or services. This isn’t a simple case of performing market research to determine the top price that your customers would pay (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 specific objectives your business has. The potential advantages of an effective pricing strategy are surprisingly substantial!
Whilst it may seem obvious, it is still worth noting that price has always been, and likely 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 always consider the cheapest 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 when devising a good pricing strategy, key among 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 sector 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 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 making use of 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 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. When establishing a price for penetration it is still critical to not give a bad impression of your product by aiming for too low a number.
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 technique right.
SEO companies are more common nowadays and our company used them to have cooking times a dominant phrase on our website to attract more customers.
Place
Place is the portion of the marketing mix that is often not addressed by companies, but it is still a significant part of selling your product successfully. In a nutshell, it describes the way in which you deliver your product to your customer, and consequently how you collect money from them. It can be a great marketing approach when applied correctly.
The most typical implications of place-based marketing are the physical locations in which your products are sold. For the vast majority of consumer products, this involves the distribution infrastructure between your manufacturing centres and shops and other outlets around the world. Since distribution of a physical product costs money it is crucial to determine your own priorities and alter your distribution network accordingly.
With the increasing use of the Internet by your prospective customers, marketing techniques 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 channel in download-based markets such as MP3s) companies are now able to reach out to a large pool of possible customers.
Promotion
When you say the word “marketing”, many people immediately 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 tool, and whilst it can be an expensive undertaking it is often an important one.
Advertising is one of the most typical 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 seen a great increase in promotion via e-mail and the Internet, or simply as targeted advertising material posted through your 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 goes back to one of the initial functions of marketing; getting customers to choose your product over those of your competitors.
Putting it into Practice
As previously mentioned each company is different and will have different marketing requirements. By using a balance of the four P’s reviewed above you can take an effective view of your own marketing strategy.
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